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summary of CEO factory

madhav yadav
October 21, 2023

summary of CEO factory

madhav yadav

October 21, 2023
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  1. Author:- Sudhir Sitapati
    [A CEO of Hindustan Unilever (HUL)]
    Summary by :- Madhav yadav
    1.

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  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

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  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

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  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

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  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.

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  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

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  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

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  8. 8. 3 P’s of marketing
    Product
    Price
    Promotion

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  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.

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  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.

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  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.

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  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.

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  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

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  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.

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  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.

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  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.

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  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.

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  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

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  19. Thank you!
    Creating brands, businesses and people with purpose remains at the very
    heart of Unilever.
    20.

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