NEW DELHI: Hindustan Unilever, the Indian arm of the Anglo-Dutch FMCG giant, will take an increasingly targeted approach to its marketing and pricing strategy, as it seeks to increase its sales levels in a number of different product categories.
According to ACNielsen, the research firm, the consumer packaged goods titan saw its market share fall by up to 6% in key sectors like soap, shampoo and toothpaste between April and May this year.
One reason for this trend, according to analysts, was that HUL opted to focus on premium brands like Dove and Ponds, which offered greater margins, at a time when consumers were trading down to cheaper goods.
Nikhil Vora, managing director of IDFC SSKI Securities, said this meant India's biggest advertiser lost out to emerging "price competitors such as Godrej and Ghadi."
These "price warriors have made enough profits in the mass end to take themselves to the next level of growth", he added, while Hindustan Unilever will have to pay "higher distribution costs" to restore some its products to retailers' shelves.
More broadly, multinational rivals like Reckitt Benckiser and Colgate Palmolive, and local manufacturers including Tata Tea, Dabur and Vatika, have also begun to encroach on its position.
Nitin Paranjpe, ceo of Hindustan Unilever, said there is a "clear communication that says we will not tolerate any uncompetitiveness in any part of the market and any part of our portfolio."
"If anyone notices uncompetitiveness for whatever reason, it is incumbent on them to escalate it and find a way to speedily resolve it," he added.
As part of this process, the CPG specialist will take a more nuanced approach to its pricing, marketing and distribution, in order to fit local needs.
"In certain categories, the differences across regions are significant in terms of the nature of competition. We will have different brands playing different roles in different parts of the country," said Paranjpe.
"We have, for every brand, a defined strategic price and a different relative price in the market. Now, we have systems to check the pricing of a brand with respect to the market, and with respect to key competitors," he continued.
When it comes to advertising, Hindustan Unilever bought the entire inventory on Star India's stable of ten television channels for a whole day on 17 September, followed by a similar deal with Zee Network a week later.
Data sourced from Economic Times; additional content by WARC staff