ITC vs HUL ltd.

Benchmarking analysis of ITC over HUL.

1. ITC vs HUL Benchmarking Analysis By- Saurabh Shukla ( JIM,Lucknow )

2. Brief History

3. HUL- Hindustan Lever  Ltd-Indians largest FMCG sector company- A ll type of household products available. It has Home & Personal Care products, and also food and Water Purifier available with it. HUL has largest number of brands in most trusted brands list. 16 of HULs brands featured in AC-Nielson Brand Equity list of 100 most trusted brands. HUL sales turnover- 2013 – 25,810.21 to that of Rs. 22,116.37 in 2012.

4. ITC Limited Earlier  known as Imperial Tobacco Company of India Ltd. Headed by Yogesh Chander Deveshwar . Mainly operates in the industry like Tobacco, Foods, Hotels, Stationary and Greeting Cards with the major products constitutes Cigarettes, packed foods, hotels, and apparels . ITC Sales Turnover in 2013 – Rs. 29,901.27 to that of Rs. 35,247.25 in 2012.

5. HUL vs ITC Competitive Strategies Three basic competitive strategies are- Overall cost leadership Focus Differentiation

6. HUL- Largest pure-play FMCG company in the country . Widest portfolio of products sold via a strong distribution channel. It owns and markets some of the most popular brands in the country across various categories, including soaps, detergents, shampoos, tea and face creams.

7. ITC not pure play company-deal mainly in cigarettes and it is its primary business.  It is diversifying into non-tobacco.  FMCG segments like foods, personal care, paper products, hotels and agri-business to reduce its exposure to cigarettes.

8. HUL vs ITC- Targeting Strategies HUL divide the customers into three types of the customers striving, aspiring and affluent  andmake  targeting strategies accordingly. They are as follows:  Personal  Care :  HUL  targets  different  types  of  customers  with   different  set  of  bath  products .  For   striving  customers  -Lifebuoy   and  Breeze, For   aspiring  customers- Hammam   and  basic  Lux   variants For   affluent  - Pears ,  Dove  and  superior  range of Lux.  Key strategy- T o  straddle  the  pyramid  and  move  consumers  up  to  more  aspiration   brands . Grow share by growing ahead of the Market  Detergent :  In case of  detergents- For striving customers-Wheel For aspiring  customers- Rin F or  affluent  customers-Surf  Excel   Key  Strategy:   Work  the  pyramid;  Grow  profitably  ahead  of  the  market;  regain  profitability  through judicious price increases and cost effectiveness  programs. Tooth Paste:     For   striving   customers-smaller  packing  For aspiring customers Pepsodent For   affluent-Close   Up,      Key  Strategy:  Grow with market with the  our  brands Close Up  on freshness  platform  and   Pepsodent  on family & health platform 

9. Tea:  For  the striving customers it has  Taaza  tea . For  aspiring customers it has Red  Label. For   affluent  customer  it offers  Taj   Mahal  and Lipton Yellow  Label   Key  strategy:   Presence  across  the  pyramid;  drive  up­trading   of  consumers;  Convert  loose   tea  drinkers to packet tea  consumers Personal  Care :  ITC also targets   different  types  of  customers with  different  set  of  bath products.  For  striving  customers  - Vivel , Superia For  aspiring  customers- Fiama and its variants For  affluent  - Essenza di wills Key strategy- To target more and more customers and bring it in category of aspiring customers. Detergent :  In case of detergents- For striving customers- Henko , Mr. White, Ghadi For aspiring customers- Tide For affluent  customers-Wheel, Ariel    Key  Strategy:   Profitability and large share in the market ITC

10. HUL vs ITC- Performance ITC- getting threaten by regulatory authorities!!! HUL is more conservative in its strategies than its Indian counterparts. M oreover , given increasing competition, HUL faces the risk of being overtaken by domestic players in various categories. ITC- Increased regulatory clamps on tobacco, along with rising tax burden, pose a business risk for ITC. So, it has started an ambitious diversification plan, which has its own set of risks. ITC now has entered the high-clutter branded products market. Creating brand recall and building market share in new products are ITCs key challenges. Export ban and rising crop prices pose a threat for its agri-business, taxing its margins .

11. HUL – always brings customer friendly products with major emphasis on low cost overall but no compromise on the quality of the product. They are leveraging the capabilities and scale of the parent company and focusing on the value of execution. The entire product portfolio is also being tweaked to include premium offerings such as Ponds Age Miracle and dove shampoo in skin and hair care . ITC is focusing on delivering value at competitive prices. Its tremendous reach through extensive distribution chain has been a competitive advantage.  E- choupal model for direct procurement is well known under which ITC partners with over 100,000 farmers for spices and wheat procurement and an even larger number for oilseeds. This kind of rural pedigree is hard to beat

12. HUL vs ITC- Market Share- Ups and Downs ITC has overtaken Hindustan Unilever in branded food and beverages sales giving a shot in the arm to YC Deveshwar's ambition of making the cigarette maker India's largest FMCG firm. ITC, the maker of Sunfeast biscuits and Bingo chips, has posted branded food sales of over 4,600 crore in 2012-13, a 24% growth over the previous year, said a person with direct knowledge of the development . HUL -ahead of competitors in the total non-cigarettes FMCG market. Its total revenues of 25,810 crore during 2012-13 were more than three times ITC's sales of 6,982 crore from its pure-play FMCG portfolio consisting of packaged food, personal care, lifestyle retail, safety matches and agarbatti .

13. HUL Vs ITC- MARKET CAPITAL

14. HUL Vs ITC- New market news ITC Ltd shares are up 1.5 percent after touching an all-time high of 375.25 rupees while Hindustan Unilever Ltd (HUL) shares rose 2.4 percent after touching a record high of 720 rupees.  ITC is firming up plans to foray into non-carbonated beverages and dairy businesses next fiscal to establish itself as one of the largest food companies in the country, a senior industry executive aware of the company's plans said . Source - http://articles.economictimes.indiatimes.com/2014-02-20/news/47527368_1_chitranjan-dar-food-business-yc-deveshwar

15. HUL Vs ITC- Performance Measurement March 31, 2013 Data- Operating Profit per share HUL- Rs 18.51 ITC- Rs 13.45 Net Sales- HUL- Rs (m ) 25,810.21 ITC- Rs (m ) 29,901.27 Profit after tax- HUL- Rs (m ) 3,796.67 ITC- Rs (m) 7,418.39 Return on Net worth (%) HUL- 141.98 ITC- 33.28 Return on capital (%) HUL- 147.56 ITC- 48.18 In terms of return HUL is doing far better than ITC.

16. HUL has divided the whole market segment into three types of  consumer S triving   customers-they  are the largest in number as compared to other types of customers defined by HUL.  Aspiring   customers,  those  who  are  striving  for  recognition  or  advancement; They have relatively high purchasing power.  A ffluent  customers who are having an abundance  of wealth , they are relatively less in numbers as compared to other group of customers.  HUL  has designed a different targeting strategy for every ASIAN JOURNAL OF MANAGEMENT RESEARCH 556 segment of the market to satisfy the needs of customers under those segments with the aim of attaining organizational objectives  ITC  has  also  followed  in  the same  pattern  of  dividing  the  whole set  of  market  into  various  segments  mainly  based  on  the  purchasing  power  of  the  customers,   but  it  has  clearly differentiated the complete market. The brand names of the ITC products itself represent which particular segment  of  the  market  it  is  targeting.   ITC has also used  big  celebrities  as  brand ambassadors to promote their products . ITC also tend to target the various customers by using different distribution strategies for  the  various  products.  ITC  and  HUL  are  successfully segmenting the market,  which tends  to help in identifying the various needs of the customers in a particular segment in a better way and according to which the company can target the customer accordingly.