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Marketing Management | " Competitive Strategies Followed by FMCG Sector in India Related to Two Companies HUL & ITC

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Competitive Strategies Followed by FMCG Sector in India
Related to Two Companies HUL & ITC

- by Ritesh Kumar Verma *


Page - 3

Overall Strategy Overall Strategy
HUL always believes in customer friendly products with major emphasis on low cost overall without compromising 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 product portfolio is also being tweaked to include premium offerings such as Pond’s Age Miracle and dove shampoo in skin and hair care. TC is focusing on delivering value at competitive prices. Its tremendous reach through extensive distribution chain has been a competitive advantage. Additionally, the company’s 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.   
Growth Drivers Growth Drivers
The Company has been launching new products and brand extensions, with investments being made towards brand-building and increasing its market share. HUL is also streamlining its various business operations, in line with the ‘One Unilever’ philosophy adopted by the Unilever group worldwide. Introduction of premium products and addition of new consumers via market expansion will be HUL’s growth drivers. ITC’s backward integration to ensure that its products pass efficiently from the farms to consumers has helped it to cut down supply and procurement costs. ITC’s non-cigarette FMCG business leverages the large distribution network the company has developed by selling cigarettes over the years. A rich product mix, along with ramp-up of investments in its new sectors, will be instrumental in charting ITC’s growth path.

Risk for both the companies


Being an MNC operating in India, HUL is more conservative in its strategies than its Indian counterparts. Moreover, given increasing competition, it faces the risk of being overtaken by domestic players in various categories. Prolonged inflation may lead to margin contraction, in case HUL is not able to pass on this burden to consumers. The company’s large size also poses a problem, since it does not give HUL the agility to address the competition it faces from national and regional players.


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. With its foray into the conventional FMCG space, ITC has entered the high-clutter branded products market. This will burden its resources in terms of ad spend and brand-building. Creating brand recall and building market share in new products are ITC’s key challenges. Export ban and rising crop prices pose a threat for its agri-business, taxing its margins.

Ritesh Kumar Verma,
IBSAR, Mumbai.

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