Hindustan Lever - Rural Marketing Initiatives

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Case Details:

Case Code : MKTG031
Case Length : 12 Pages
Period :2001 - 2002
Pub Date : 2002
Teaching Note : Available
Organization : HLL
Industry : FMCG
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Hindustan Lever - Rural Marketing Initiatives Contd...

Industry observers also felt that HLL was at an advantage compared to most of its competitors - thanks to its consistent, pioneering efforts towards establishing well-entrenched distribution and marketing networks to reach the vast Indian rural masses.

Background Note

HLL's origins can be traced back to the England based company, 'William Hesketh Lever,' established in 1885 by Lever Brothers. The company entered India in 1888 through the export of its laundry soap 'Sunlight.' In 1930, the company merged with the Netherlands-based Margarine Unie, [an established player in India through the export of vanaspati (hydrogenated edible fat)] to form Unilever Ltd.³ in UK. The same year, the company established the Hindustan Manufacturing Company for production of edible oil. Initially, a majority of Unilever's revenues came from soaps and vanaspati.

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In 1932, HLL's Vanaspati accounted for almost three-fourth of India's production of nearly 6,000 tonnes. In October 1933, Lever Brothers (India) Pvt., Ltd. (LBIL) was incorporated as a wholly owned subsidiary of Unilever. Two years later, United Traders was set up for import and distribution of toilet products. These three subsidiaries were merged in 1956 to form HLL.

HLL offered 10% of its equity to the public by an initial public offer in the same year. In the late-1950s the company undertook modernization of its facilities. It also expanded its manufacturing capacity for vanaspathi by buying factories at Trichy (Tamilnadu), Shamnagar and Ghaziabad (near Delhi).

By 1960, HLL's annual production of vanaspati had gone up to 3,36,00 tonnes. In 1961, HLL introduced 'Lux' soap in a range of colors. The 1960s-1970s witnessed a series of new product launches - 'Anik' (clarified butter, in the early-1960s), Sunsilk (shampoo, in 1964), 'Rin' (washing-bar, in 1969), 'Clinic' (shampoo, in 1971), and 'Liril' (bathing soap, in 1974).

In 1975, HLL entered the oral care market with a gel toothpaste called 'Close-Up.' In late-1970s, HLL set up 70 medium and small-scale factories in the rural areas for manufacturing soaps and detergent. The company also diversified into manufacturing chemicals and set up chemical plants at Haldia (Calcutta, West Bengal), Taloja (Maharashtra) and Jammu (Jammu and Kashmir)...

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3] In 2002, Unilever's operations were spread across 40 countries. Its key businesses include food, home and personal care products. Many of its brands were leaders in the respective categories in various parts of the world.