By Kala Vijayraghavan & Sagar Malviya
In February 2014, a manager of Hindustan Unilever Ltd (HUL) doing his rounds in Medaram village in Warangal district of Andhra Pradesh (now Telangana) stumbled into Sammakka Sarakka Jatara, a biannual tribal religious congregation. Some 10 million people had gathered at the festival that year. The manager was quick to alert the head office of the potential of the four-day festival. It fitted well with a new initiative that Sanjiv Mehta, CEO since 2013, was planning to kick off at the home & personal care giant. Called ‘Winning in Many Indias’, or WIMI, its objective was to transform HUL from a four-branch structure at the front end into 14 distinct consumer clusters.
The new structure will see many HUL managers spending more time out of their cubicles to cover smaller markets across India. The hope is that this will make Unilever’s India subsidiary nimbler and more proactive in responding to insights from the market, and to competition, particularly of the regional variety.
The Jatara in Warangal was perhaps the first experiment with the WIMI initiative: HUL undertook a sampling exercise at the festival for Rs 5 packs of Fair and Lovely that are meant for rural markets. The stall activation, sampling and sales, say HUL officials, resulted in an instant bump in the franchise’s numbers (the company won’t share exact figures). By the fourth quarter of 2014-15 (January-March), WIMI – along with 2,000-odd HUL managers – was on its way.
The 14 clusters are based out of seven physical locations and five sales branches; a new fifth branch for the central region has been carved out from the Hindi heartland of central Uttar Pradesh, Madhya Pradesh, Rajasthan, Bihar and Chhattisgarh, comprising over 500 million people. The first step for WIMI was a pilot that was done in the south branch by creating separate consumer clusters TAP (Tamil Nadu and Andhra Pradesh) and KK (Karnataka and Kerala).
The HUL mangers mobilised for the initiative began to move quickly. For instance, two of them on field duty in Punjab fed an insight about a significant mass market for tea in the ‘Punjab and Hills’ cluster. HUL was quick to respond, re-launching the Taaza brand after changing the blend to suit the local taste, and communicating aggressively on radio and in local media. This, claim HUL marketers, led to a spike in Taaza volume growth.
Similarly, Pepsodent clove oil and salt toothpaste was launched in south India; small packs of tea and unique sampling trade deals were offered in coastal Andhra Pradesh; variable price points were created in the laundry segment to shift consumers from local brands to Rin in Uttar Pradesh; and detergent brand Wheel, which was competing with a local label brand in the mass powders segment in Telangana, was relaunched with an improved formulation, pricing and communication customised for the new state.
“The numbers (of the June-ended quarter, in which total income grew by 5 per cent, in line with analysts’ expectations) reflects that the strategy is working in terms of volume growth and share,” says Mehta, who is keen to encourage a startup culture at the marketing behemoth and get young managers to keep their ears to the ground across India’s diverse markets. “It is imperative to win in all parts of our business and across all channels and geographies, in order to win decisively. We want to have the soul of a small company where speed is the currency, bias for action is the norm, where people are empowered on the frontline,” adds Mehta. “WIMI has helped us understand finer nuances about local consumers and provide us a more granular understanding of the market.” The cluster strategy is also leading to better productivity and accountability of managers across branches.
At a time when rural markets – which bring in roughly a third of HUL’s top line – are experiencing a slowdown, HUL claims WIMI helped 90 per cent of the portfolio gain market share last year, much of it from regional brands. The marketer now has six brands that have crossed Rs 2,000 crore in sales, five brands that are over Rs 1,000 crore and six that have hit Rs 500 crore.
Long-time HUL watchers who have seen CEOs come and go don’t rule this out as yet another ‘do, delete, redo’ strategy of a new CEO. For instance, if MS Banga (CEO between 2000 and 2005) had his ‘power brands’ strategy, his predecessor Keki Dadiseth almost single-handedly pursued acquisition-led growth. “Every new CEO brings in a new style of functioning, but I guess so long as the long term results are positive, it is good for all stakeholders,” is how an HUL veteran puts it.
Mehta for his part is clear that he wants his managerial team to represent the whole of India. “Our internal population represents the different clusters of the country and we don’t just have talent from urban India but people who represent the whole ethos and fabric of the country. Insights from these young managers are being taken right into the boardroom to ensure that our execution reflects such understandings.”
The 14 clusters have resulted in the creation of 14 new leadership positions to empower talent within the system. Typically, a young manager (in his 30s) leads each cluster. His mandate: to understand the local demand and competition and drive growth in non-metro geographies.
“Mehta ought to be credited for understanding that focus shoots up when you break geographies into smaller markets. Managers on the ground and in touch with consumers in a diverse market such as India can throw up huge opportunities for HUL,” says Amin Babwani, a former HUL marketer who now consults consumer companies.
Nitin Mathur, research analyst who covers consumer companies in emerging markets for Société Générale, says HUL has laid out a clear strategy to counter regional competition. “With 14 clusters, the focus is to increase the quality of distribution and increase bespoke products and strategies to counter local competition.” A recent JM Financial report said the central India cluster accounts for 40 per cent of the country’s population but has only 22 per cent share of the country’s GDP, which offers it (HUL) a much higher opportunity for growth relative to the rest of the country.” Small wonder then that that Mehta says he wants HUL to be “future-ready” to tap that opportunity.
Source:The Economic Times
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By Kala Vijayraghavan & Sagar Malviya