summary of CEO factory

Transcript

1. Author:- Sudhir Sitapati [A CEO of Hindustan Unilever (HUL)] Summary by :- Madhav yadav 1.
2. CONTENT 2. From where it all began Why HUL is unique? Marketing lessons 3 P’s of marketing Sales don’t determine revenue Respect for money HUL regime of recruitment 3-4 5-6 7 8-13 14-15 16-17 18
3. From where it began 3. • In 1958, HUL freshly got listed, and with a PAT of 1crore rupees and was already one of the largest companies in country. • Since than Indian economy grew 1400x and HULs profits grew 6000x. HUL products Personal care Other Food and refreshment Home care British lever brothers Dutch margarine union Hindustan unilever Founders of Sunlight soap and transformers of advertising. Developers of vegetable oil based soaps and innovators An organization with characteristics of both the origins
4. Surviving in a highly regulated environment 1960- 1980 Competing in a open economy From 1990 onwards Market development phase till-1960’s 4. 1. 2. 3. • William lever of lever brother transformed advertisement from brand recognition to message conveying activity. • HUL uses ‘ization’ policy for delegating power to the ends of the company. • T.Thomas in 2nd phase said “It is better to bat through difficult overs than to give in” when they compelled to dilute majority stake of HUL by the government. From where it began
5. What makes HUL unique ? 5. A middle class soul A meritocratic culture Adaptable managers Unchanging value system Ability to transform employees into entrepreneurs • Idiosyncrasies is promoted via room division through carpet and a tea bearer who serves only 2C managers and ignores rest in the room. • Promotion based on previous years performance record. • Till Level 3 promotion batch and above then on your merit. • All entry level employees are sent to villages for training. • Also same employees when become managers are sent to attend meetings abroad. • Looking out for their own at all times. • Donations. • Taking on inconvenience for others. • Closing rather than compromising on values. • Considering employee initiatives. • Survival of BRU coffee due to creation of production technique by BRU team, which at low capex has high productivity.
6. Case study 6. In 1979, when HUL faced issue due to poor milk yields in its factory Etha, Uttar Pradesh(UP) , they sent all their newly recruited MBA graduates of IIM’s, on a 8 week campaign to do artificial insemination of Cow’s with high yielding varieties and among them were the author and his friend who were IIM-A graduates. There appointed host was a poor farmers family in Bakrai village close to their HQ. There they had to stay in a mud house perform all their chores just like other villagers and eat quick meal of potato and roti. After becoming brand manager for HUL in few years, he was given the task to accompany Aart Weijburg their director, for hi annual presentation in Singapore, there he experienced the “High Life” of HUL, when he stayed at a hotel costing $ a night, travelled in business class and ate expensive cuisine. This incident in authors life shows how and why HUL managers are adaptable in all situations whether its “Lakhimpur” or “London” Adaptable managers
7. Marketing lessons 7. What works and what doesn’t Problem statement Jobs-to-be-done Research Understanding customer wants, developing a cool product and letting people know Is essence of marketing • Segmenting • Targeting • Positioning • Product segmentation • Quantitative research • Syndicated research • Using insights • Get who to do what • Make target based on difficulties and size of prize. • Its easy to grow a category than to grow a brand • Problem structuring • Framing it into a crisp sentence • Finding a suitable solution. • Changing POV to look at problem
8. 8. 3 P’s of marketing Product Price Promotion
9. Promotion 2. Knowing your brand Measure “SPONT” Building Salient advertisement Goosebumps Test Media Planning Case Study Lets take and example of tea brand “Taj” so here knowing your brand accounts for knowing what is its purpose it serves in users life. SPONT can be measured by conducting among 100 people and see which brand they think when they think of tea if say 50 say Taj then your baseline is 50 and with additional advertisement this should increase. Salient advertisement consist of 2 features enjoyment and branding, creating an Advertisement which Is enjoyable and which includes branding example Taj when made and add with Zakir husssain playing table and singing and after tasting tea saying “Waah Taj Waah” and if this advertisement while in production gives you Goosebumps or a sensation making you feel that it is scenic and pleasant to the eye it’s a go for the advertisement in production. Also customer has place in his mind for a single association with the product and once that product has built and association it cannot be changed. 9.
10. Product 10. Components Understanding consumer needs Inhabiting innovation culture Testing phase Persist patiently Obsess over quality delivered Using consumer insight Analyzing same data in various ways to generate product idea Except R&D get your whole organization to obsess over the product Conducting a blind test with your and competitors product and than there should be a difference of at least 2 points on a scale of 10. Ground breaking product innovation happen slower than it is perceived. Quality of a product in factory and lab is different from what is delivered.
11. Case study 11. Blockbuster Invention of Fair&lovely the most sold and famous product of HUL was an invention which was intended to happen. Dr. Vibhav sanzgiri then R&D director of HUL, the team was actually working on a solution to cure vitamin B3 deficiency among children. The absence if niacinamide, a form of vitamin B3, lack of it can cause dark patches on the skin. While looking for solution in the foods, one of the scientists, asked if the dark patches could be treated by topically applying niacinamide on the skin and hence they experimented it on tadpoles and it was success the tail color of tadpoles tail returned back to their birth color temporarily until they were returned to water. And hence the discovery of fair&lovely was done, by mixing niacinamide with simple vanishing cream.
12. Pricing 12. Why discounting fails in recruiting new customers? Price precisely. Focus on accessibility . Differential pricing. Pricing in volatile market. • A brand dies with a GPM with which its is born with. • New users adopt a brand for 3 reasons :- access, awareness, availability. • Users entering at lower price exit as the price rise. • Pricing is a tool to maximize shareholders wealth. • Price like similar product available. • Don’t launch access to early. • Distribution to rural areas where daily wage is common • Price per kg of smaller pack should be more than the same of larger pack • If cost go spike up rapidly, do not pass on directly to customers. • Absorb loss by cutting non essential cost’s. • Don’t over stock a commodity.
13. Pricing strategy Case study 13. 2 Tools for competitive pricing:- • SPI(strategic price index) • RPI(relative Price index) The next tool is RPI, where ‘weighted average price’ of a entire category is taken and is assumed to be the RPI at 100 and then RPI od each product in that category is calculated based on weighted average price (RPI). RPI is more fundamental than SPI so HUL uses both for their products. HUL’s sales team use 2 indicator for competitive pricing. The SPI is an index for the key product/pack combinations compared to a key competitor. E.g. If brook bond 100 grams pack SPI is set at 100 and if the competitor moves its price from say 58 to 60 so the SPI would move accordingly indicating to hike the price. Drawback it accounts for single competitor. SPI RPI
14. Sales doesn’t determine revenue 14. Be available but never in too much quantity Focus on the volume not the margin. Monitor input not the output of sales system. Code of conduct. Sales benefit by increasing product availability and visibility. Salesperson should sell what is just adequate till his next visit. Focus on reducing working capital. Invest in infrastructure that drives more coverage and volume Reward sales team for creating source of revenue not for bringing revenue. Output of sales can be manipulated. Like no. of stores visited, etc. Salesperson should two wallet rule Use non-sales metrics like number of bills cut, to increase your sales.
15. 2 wallet rule 15. The two wallet rule simply states that anything spent for the purpose of company has to be done through a separate wallet and money for personal spending should be kept separately . In those days employees used to received cash advances, which would then settle with the company by submitting an expense statement. The second wallet at all times should contain the exact amount of the advance less the amount submitted un the expense statement. The company wallet would be randomly checked and if the amount was less than what it should be the person would be summarily dismissed.
16. Respect for money 16. As long as cost exist, savings are possible Materials: design for output and not input A lean supply chain Pay for media reach and cut every other cost Pay more = Save more • Costs exist so margins can improve. • Fix the profits and price and then determine cost . • Use price to achieve economies of scale. • Product formulation should be output focused. • What customer wants is the best quality at cheapest cost. • It extracts more from fixed capital. • Creatively reduces operating costs. • Produce close to market. • Produce one ad with lots of diligence. • Run ads until the customers remember it and get bored. • Pay higher to get more work done. • Stick to basics to cut employee cost.
17. Case study- Output centric production 17. HUL in production of Soaps is not input centric but its output centric Soap uses oil as a primary product, and with the variety of oil the texture and lather produced varies with changing composition of oil. E.g. Coconut oil gives great lather but its soft, PFAD, a fractionate of palm oil, is hard but doesn’t lather well. Palm kernel oil (PKO) does both moderately. So HUL being output focused they formulate a soap made up of 30% pal kernel and 50% PFDA. If in any case coconut prices hike through the roof, the you can replace it with PKO and reduce PFDA to compensate the reduced softness and lather, by constantly experimenting with formulation you find best quality at cheapest possible cost.
18. HUL regime of recruitment 18. Get them early Train them well Build careers Encourage diversity Reward performance Instil values Judgment, drive & influence Done through test and interviews. Develop training stint, which is inclusive of all skill. Teach them to numbers first and then interrogate reality. Start on field training, let them spend right time on positions. Leaders build leaders through controlled interaction. Gender balance. And equality in opportunity. Encourage creators and company men to the top. promote competitive culture and set objective goals Discourage collaboration and promote based on ratings Inculcate values of honesty, charity, determination. Value your employees till they are your employees
19. Thank you! Creating brands, businesses and people with purpose remains at the very heart of Unilever. 20.