Hindustan Unilever Ltd: The Wheel Saga MM I Individual Assignment (Weightage: 5%) In April 2009 at the Goafest, one of India’s top DJs, set the dance floor ablaze by playing a remix of the Nirma jingle.
Truth though is he would have been better off playing a remix of the Wheel jingle that was inspired by the 1960s, Shammi Kapoor hit song Dekho Dekho Dekho from An Evening in Paris. That commercial, set in motion a Wheel that would roll on over the decades to become the blockbuster brand in the Lever stable. Today with sales of over Rs. ,000 crore Wheel is ‘Brand No 1’ in the HUL portfolio not to mention the world’s largest selling detergent in volume terms. If Wheel were to be a standalone company it would rank 228 on the ET 500. Nitin Paranjpe, CEO, HUL, puts it rather succinctly when he says that every second Indian is a Wheel consumer. Says Paranjpe, “Relevant consumer insight, optimum supply chain and wide distribution reach together have delivered a winning proposition. ” Yet, few had imagined in 1987 that Wheel would one day serve half the country or earn half a billion dollars.
That was a time when FMCG companies were still the kings of marketing and HLL was the undisputed emperor of all that it surveyed. And then from out of nowhere came Karsanbhai Patel’s Nirma. If there was ever a Mahabharat in the annals of Indian marketing, this was it. Lever’s was caught in the mythical chakravyuh, unable to curb the ascending star of Nirma. Never before had a brand shaken the Lever citadel so decisively. Alyque Padamsee, former CEO Lintas (the agency that worked on the detergents portfolio back then), recalls that Nirma was priced at a third of Surf and was as aggressive as HLL.Says Padamsee, “Surf was Rs 21/kilo and Nirma was Rs 7/kilo. Importantly Karsanbhai borrowed a leaf out of HLL’s marketing manual and outadvertised us.
” Ashok Ganguly, former chairman of Hindustan Lever, who back then was leading the company concurs that Karsanbhai Patel’s bottom of the pyramid approach (well before CK Prahalad coined the term) was one of the most astute marketing moves that he has ever encountered. Before the managers at Levers realised, Nirma was more than just another regional brand. It was time to find a way out of the chakravyuh.The company decided that Surf could not take on the Nirma challenge by dropping prices (there was actually a committee called C.
R. I. S.
P. — Cost Reduction In Surf Prices) and that a new strategy was needed to combat this challenger. And all this led to the birth of Operation S. T.
I. N. G. — STRATEGY TO INHIBIT NIRMA’S GROWTH. It was not a question of business growth, but business survival,” says Ganguly. It might seem like that’s a strong statement coming from a player credited with creating the detergent category in India. But it was true — an acknowledgement that the playing field had shifted, right under its nose.
From Surf accounting for 70% of the market, the low cost detergents had grown rapidly enough to account for 80% of volumes — a statistic that remains true to date with mass market detergents making up 80% of volumes and 68% in value. Even the choice of the name Wheel was not strategic, rather it was a matter of compulsion. In those days given the stringent FERA regulations it was not easy to launch international brands. According to Padamsee, HLL had launched a detergent bar called Wheel some years prior to 1987 (with the famous Leela Mishra commercial), which had not done too well in the market and been canned.But given the FERA issue they were forced to look at an existing basket of names and decided to go with Wheel. HLL set up a group outside the company to take the battle to Nirma’s doors. Ravi Dhariwal, then, former marketing head for the detergents business at HLL and currently CEO, Publishing at Bennett, Coleman & Co says that as Wheel was the first low-price product from Hindustan Lever, the company decided to have a different management system. For example, even as the rest of Hindustan Lever was headquartered in Mumbai, the Wheel operations were controlled from Chandigarh.
We wanted Wheel to be a standalone business of its own to dominate the low price segment,” says Dhariwal. Sudhanshu Vats, vice president, home care and skin cleansing, HUL says, “At that time the management understood the importance of going to the bottom of the pyramid. ” Naren Nanda, founder of executive coaching firm, Enen consulting, who was then heading Operation STING believes that Wheel would have never happened if it had not been for the “board at HLL that did what it took to empower people to go ahead and do it”.The first big challenge was to come up with a low cost product that conformed to the HLL quality standards.
Ganguly was determined to prove that it was possible. He says that he was convinced that it was time to move out of the long-held beliefs that MNCs would not sell low-end products. To him low-end products did not have to be synonymous with low quality.
“The consumer was saying we cannot afford Lalitaji (Surf). If consumers wanted low-price detergents, who the hell were we to judge? ” he asks.The key was to not only develop the right product but get all the other elements as well. Pranesh Misra, former COO of Lowe Lintas says, “When you are fighting low cost competition the role of other elements like marketing, pricing and distribution are very critical. Lever’s managed to be at the right time at the right place. ” The company did try and take on Nirma with clever advertising for Surf — the famous ‘Surf ki khariddari mein hi samajhdari hai’. But Misra says that both the marketer and the agency decided that this stance could harm Surf. We needed a fighter brand to fight Nirma on its own turf.
Using Surf in that battle could affect its equity. Other options like using Sunlight to take on Nirma also did not work as Sunlight had an appeal that was restricted to the east. ” And a number of firsts were achieved by Levers for the same.
For the first time, the company used third party manufacturers as a primary source of production. Then while the entire portfolio of HLL had a stable pricing, Wheel opted for a dynamic pricing. For example, depending on local tax tructures, extent of competition in each state and other such factors, the pricing would differ from state to state. It also helped that the competition was not spread evenly. Says Vats, “Wheel’s success has been driven by its ability to leverage HUL’s distribution strength to reach consumers in even the most remote parts of the country. ” Communication was the other big challenge, since in those days Lever advertising for detergents was templated always showing housewives in white saris.
Padamsee says that Nirma broke that template with young people singing, dancing and leaping to a catchy jingle.Recalls Padamsee, “Everyone thought Karsanbhai must be a very modern man, given that all these people in the ad were dressed in short skirts and pants. ” It was decided that the advertising for Wheel would break the template.
So in order to combat Shiamak Davar’s dancers swinging to Washing Powder Nirma, Levers came up with the classic ‘Dekho Dekho Dekho’ jingle, a riot of colours and wild choreography. As Ganguly puts it: “That jingle was a big hit. A little like the Slumdog Millionaire of its times. ” Ganguly for one believes that Lintas was an equal partner in the success of Wheel.
While the brand did reasonably well, it yet had to hit the high notes and this came when HLL zoned in on a compelling consumer insight and the agency produced a great commercial. The insight was that many Nirma users complained of burning hands. Naren Nanda recalls, “Research picked up the insight that Nirma was not kind on hands because of its high soda ash content. ” Still it was not an easy task, because consumers felt if a powder burns it washes well. The insight resulted in the “Maine maangi thi safaai, aur tu ne di haathon ki jalan” commercial, which took the battle straight to Nirma’s turf.This was the take off point and suddenly it edged closer to Nirma. Since then the brand has constantly innovated with variants like Blue Wheel, Wheel for coloured clothes and Wheel Active Gold (which looks like P&Gs Tide Detergent) launched in 2008.
Today it has an 11% share nationally followed closely by Nirma with 10% and Ghari at 9%. In value terms however, the gap is large with Wheel having a 17. 6% share followed by Ghari at 12. 3% and Nirma at 11. 7%. For Wheel the battle is anything but over. According to HUL estimates, there are 450 brands across the country competing in this space.To engage with its audience, for the last few years Wheel has brought the homemaker to the centre stage through its programme Wheel Smart Shrimati.
From being a part of commercial breaks to becoming the programme, Wheel’s come a full circle. R ‘Balki’ Balakrishnan, chairman, Lowe Lintas, the agency that’s worked on the Wheel brand since inception puts it well: “Wheel worked on a simple proposition. Its Bollywood trailer style advertising was paisa-vasool entertainment for an audience which considered washing to be a cumbersome chore.
” Well it certainly has been paisa vasool for HUL.Assignment: 1. Based on the case study above, critically examine HUL’s Marketing strategy (STP) for Wheel since its inception and the reasons for the success of the brand. 2.
Assume you are the new Marketing head of HUL. Will the present value proposition, positioning and marketing strategy for Wheel hold good for the next 5 years? If not, suggest changes you would initiate. In either case give reasons for your answer. Instructions: 1. Use concepts learnt in the course to support your answers. 2. Both your answers together should not exceed a total of 3 typed pages (1. 5 spacing).
3.The typed assignment needs to be submitted to the undersigned in hard copy latest by 1. 00 pm on August Aug19. Deadlines are non – negotiable. 4. Assignments can be submitted to me in class or in F 5. Early submissions are most welcome. In no case should your assignment be mailed to me.
It will not be taken cognizance of. 5. Please ensure your name and section are written on the cover page of your assignment. 6.
Marks will be given for original thinking, not for reproducing chunks out of the case or from your friends. Assignments even faintly suspected of being copied from others will qualify for a zero.