the_ceo_factory.pdf

Transcript

1. Summary by: Krisha Jariwala Author: Sudhir Sitapati Designation: Former CEO of Hindustan Unilever Limited (HUL).
2. CONTENT 1. Middle class management 2. Why marketing is business 3. Be famous before being persuasive 4. Get the product right, the brand will follow 5. The art and science of pricing 6. Why sales is not a revenue function 7. Respect for money 8. Throwing toddlers in the deep end 9. From great to good
3. 1. Middle class management HUL characteristics Middle class soul Meritocratic culture Comfortable in Lakhimpur and in London The Entrepreneur Professional Unchanging Value System One HUL trait that sticks out is its unwavering integrity. Those HUL characteristics are unlikely to change as long as the company's operations continue. Employee characteristics at HUL include a desire to expand and cut costs wherever possible. The same characteristics that HUL clients pick up. Based on performance, it identifies, selects, and builds a leadership pipeline, and it sticks by these leaders even when they are faced with adversity. According to this HUL quality, people should feel at ease in all circumstances, whether they are outside of their comfort zone or confronting adversity. HUL managers are well paid, although not as well paid as entrepreneurs. Yet HUL managers have always shown a sense of entrepreneurship that many others admire.
4. Examples used to explain characteristics of HUL The 'carpet and tea' regulation specified that if you advanced to (WL)-2C grade manager, you would receive a carpet in your room as well as an attendant who would serve you tea at specific times. Those factors leads to motivate employees to grow which is one of the middle class trait. Middle class soul Meritocratic culture Nitin Paranjpe, the former CEO of HUL, had one of the worst years of his career. The company was entitled to a bonus, but due to poor performance, management was required to forego the incentive. Later, due to the company's success, Nitin was eligible to a bonus, which he declined because his team did not get to entertain any. Comfortable in Lakhimpur and in London When HUL met a problem of low milk yields in its ghee and milk facility, chairman T. Thomas sent managers to stay for eight weeks in Etah district to instill faith among the residents in the use of artificial insemination of cows to boost milk yields. Managers were tasked with constructing a road, inseminating 78 cows, and living in a rural setting since their hosts were a poor family. Time when HUL chose to exit coffee globally. This decision was made as the company was capital-heavy, and Nestlé was a strong rival. However, the Bru team in India refused to give up. They requested a year to develop a profitable concept. They raised production at low cost, switched advertising firms and rebuilt the brand. Resulting in the faster growth of business at cheaper cost. Bru is now one of HUL's most successful brands. The Entrepreneur Professional Nitin Paranjpe was promoted to branch manager of the Madras branch, HUL’s largest region. He was given a job usually reserved for much senior managers. Shortly after he took over, retailers in Kerala started agitating for higher margins from consumer goods companies, the retailers announced a boycott of HUL products. Despite having almost no sales for several months, Nitin and HUL stuck to their guns Unchanging Value System
5. “Marketing is what consumer wants.” It is the publicity department, where people do not have content but persuade customers to buy the product with clever speaking. Marketing is fulfilling consumer needs in short it is a business. 2. Why marketing is business What is marketing? What is a brand? Defining the problem Brands are trust marks for consumers. A mark which has earned trust of many people due to its product’s significant quality which sets the product different from its substitutes. Strong brands usually have sharp associations and many people who are known to the association. Problem framing and problem structuring both are equally important aspects. While analyzing problem one should have narrow gaze of depth and broad gaze of synthesis. Written analysis and communication skills helps in improving problem structuring.
6. JTBD process helps in framing and structuring of problems. HUL definition of JTBD is to provide a specific job to specific person. This involves making difficult choices among different alternatives. According to author the decision can be made easily if 2x2 matrix method is used. 2. Why marketing is business The ‘job to be done’ Buying Horlicks, the HUL way Do segmenting and targeting work? HUL chose to acquire GSK India in 2018, when its brands Horlicks and boost went up. But the problem to bid for it was, lately the brands had not been performing well. So the company had to be sure that Horlicks and boost had JTBD with a significant prize. Segment means dividing consumers into groups. Firms usually begins with a strict segmentation. Whatever behavior, most humans seem to want the same things and behave in a similar fashion. When there are choices among segments, marketers tend to be more definite in their targeting.
7. Brand is an association and positioning is guiding those association to your advantage. If brand is expected to have a premium then one should act in accordance with it for good positioning. Consumers want products that are not positioned as value. 2. Why marketing is business Are you a Ferrari or a Nano? Not everyone is Steve Jobs What makes HUL marketing different Consumer’s suggestions are the basis of marketing decision making. Author calls it as death by market research where consumer’s preferences are prioritized. For an efficient market research one should spend time with few well chosen consumers. Insights make HUL marketing different. Insights refers to “contradiction that is obvious in hindsight.” Insights may have different forms but are useful for marketing. Creating insights requires observation, making connections between observations and stating insights.
8. 3. Be famous before being persuasive Advertising is an important factor of marketing. Some approaches to advertising: 1. Be clear on who you are: Effective communication involves saying exactly what you do. Your actions should match your words. One should have a clear idea who they are before they speak. 2. Fame important than persuasion: Factors of advertisement: enjoyment and branding. Enjoyment important as consumer should like the ad and enjoy seeing it on repeat. But this should mean that, consumers should be attracted to the product too which is said to be branding. 3. How to brief ‘mad men’ and women: Advertisements should be creative, memorable, insightful and most importantly brief. Ad can be of two types – it can be either attractive or promising. Promising only if you want to be persuasive. 4. The goosebump test: How consumers feel or judge an advertisement. Usually consumers judge ads emotionally whether the ad is scientifical or educational or any purpose. The test involves creating ad and making consumer to test whether it is enjoyable, branded and persuasive. 5. Backstory of great advertising: Production is the final step in advertising process. The director of the ad film builds the ads so agency should choose their director accordingly. The directors look at the film differently so agencies should show flexibility. Pre production meeting is where the agency and director meet to discuss how the script should be created.
9. 4. Get the product right, the brand will follow Product is the most important P in marketing. Some product development lessons are: • Value creation is the important factor in product development, value is created when consumer needs are fulfilled. • Great product insights leads to greater product satisfaction to consumer. To create product insight one should have curious mind and ability to make connections. • Understanding advantages, qualities, and ingredients is a critical mental formulation in developing products and eliminating unnecessary expenses. • Qualitative and quantitative testing is to be done. Consumers perceptions are taken into consideration. Making sure if the consumers are delighted using the product. • The quality of product differs in laboratory then factories then at shops and what consumer experience. But quality that consumer experiences is the important factor so it is necessary to ensure that there is no loss in this transition.
10. 5. The art and science of pricing Price discounts do not recruit new consumers. Most e – commerce companies tend to provide discounted rates of product in order to gain more consumers. But consumers tend to stick on the brand that they prefer. The price drop can earn consumers but for temporary period of time as once price rises consumers exit the brand. Price to what the consumer will pay The prices that consumers will pay should be fixed by also keeping in mind what margin the company needs, this will provide the correct cost. Combination of benchmark pricing and equity can help in pricing of the product of any category Access is more important than affordability Pricing access is to be done so that prices, the consumers are willing to pay benchmarks the company against the competitors. The consumers who want access to the category are not the only one to enter so companies should not launch access too early. Discount very large packs and small packs Price different pack sizes differently depending on consumer profile and cost structure. Lower price point is more important than cheaper price per kilo for low-income consumers. Lower price point is more important than cheaper price per kilo for low income consumers. Pricing in Volatile Market Conditions When costs rise dramatically, do not pass them on to consumers all at once. When a certain price increase occurs, buyers begin to consider other brands. They will discover another brand that better suits them once they begin looking. Pricing under volatile conditions requires special rules.
11. 6. Why sales is not a revenue function Be Available but Never in Too Much Quantity Focus on How Fast Your Product Sells, Not on the Margin Measure Input Not Output of a Sales System The Right Behavior in a Sales Team Physical availability is the reason for sales system. For sales people should sell just what is adequate till their next visit. for marketing people, the more the products are launched and insisted that they find their place on the shelf, the more retailer capital is blocked and the more likely it is that the core products will go out of stock. Sales, along with supply chain, is the most measurable function in an organization. It is easy to measure the costs of a factory and its productivity just as it is easy to measure the sales a salesperson makes. Sales is not a revenue function as then sales teams shouldn’t be rewarded for bringing in revenue; instead they should be rewarded for creating the enablers of revenue. Retailers don’t shop for high margin products but for high velocity products. The wholesalers don’t sell high margin products they only stock high rotation products. Rotation is important but margins also play an important role in ensuring availability. Range reduces the availability of what you really want to buy. There is a stereotype of the ideal salesperson: an aggressive go-getter with a can-do spirit. Apart from discouraging glory-seeking behaviour, sales systems should be rooted in fact and not anecdote. Build a fact-based and not an anecdote-based culture
12. 7. Respect for money As Long as costs exist, savings are possible. Fix the price and the profit you want to make; the cost is the target you have to achieve. HUL designs products for benefits that consumers seek and not ingredients that consumers do not really care about A lean supply chain does three things: it extracts more from fixed capital, creatively reduces operating costs and sells close to the factory Transportation of goods and services adds no value to the consumer experience, and you can always save money here
13. 1. 2. 3. 4. 5. 8. Throwing toddlers in the deep end HUL way of people management states that get people early, train them well, build careers, encourage diversity, reward performance and instill values. HUL recruits using three criteria – judgement, drive and influence. Building career involves early field responsibilities, breadth in beginning, depth in middle and again breadth at senior management. Always have simple, measurable, actionable goals for performance. Objectively judge candidates on performance Take the decision to separate someone with absolute ruthlessness, with only the interest of company. But execute the action with full empathy and compassion.
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