1 Best book on FMCG Marketing – THE CEO FACTORY

This book is about how HUL as a company is not only producing and doing FMCG Marketing but is also a company that produces the CEO to the world. Sudhir on completing his MBA in IIM, Ahmedabad joined the HUL family in 1999 in the role of customer development and marketing.

Over the years he has gained the experience of Europe, South East Asia and African markets. So with the knowledge and experience that he gained in HUL, he has written this book which acts as a guide for as the young MBA graduates who are aspiring to become CEO in future and also indicates on FMCG marketing concepts.

FMCG Marketing

The book comprises nine chapters starting from describing the DNA of HUL the author takes through the concepts of marketing, branding, communication, product development, how HR is being the backbone of HUL and finally ends up with telling about the values HUL is following over years of its starting.

The chapters go as follows

1) Middle-Class Management The HUL Way

2) Why Marketing Is Business

3) Be Famous Before Being Persuasive

4) Get The Product Right, The Brand Will Follow

5) The Art And Science Of Pricing

6) Why Sales Is Not A Revenue Function

7) Respect For Money

8) Throwing Toddlers In The Deep End

9) From Great To Good.

DNA of HUL:

The chapter Middle-Class Management the HUL way explains the five most important characteristics which the author calls as the DNA of HUL and they are

1) Middle-class soul -That is people who are recruited by HUL would have the characteristics of hardworking, humble, aspiring, frugal which are found in every middle-class Indian

.2) Meritocracy-HUL gives promotions, rewards, salary increments for the most deserving employees based on the performance. HUL does not believe in the concept of favouritism, it is that every senior employee has reached the level only after a monumental struggle and also proving themselves that they deserve the position.

3) Walk with Kings-nor lose the common touch-by this the author tells that even being at the top management every employee in HUL is asked to go a remote village in India, stay there for some time and asked to gain insights regarding the FMCG marketing.

4) Entrepreneur professional- which is a quality that every employee of HUL has. Every employee of HUL thinks and feels it is their company, which makes them work in every situation to bring profits to the company.

5) Unchanging Value system-Integrity and Truth are twin values that HUL follows at every point in time and never compromise on these two values in which every situation it goes through.

FMCG MARKETING:

HUL Market Performance

FMCG Marketing according to HUL is the primary business by which all products could be designed and sold to a wide range of customers. The 1st step in FMCG marketing is to go into depth to understand the customer needs and then to design the product. They give the concept of Segmentation Targeting Positioning at most importance in HUL as this step decides the success and failure of the product. Segmentation.

A major step in FMCG marketing is problem structuring starting with situation analysis followed by problem definition, all options (solutions), ordering the solutions according to the priority and finally choosing one from that. Segmentation help in deciding which product to be designed for which category of people. The author tells that it is easier to grow a category, that it is to grow an all-new brand.

The brand is trust-marks that have specific associations for many customers. The brand is a shorthand to navigate an increasingly complex world. For targeting the author advises not to narrow down with the too much, he asks to have broad segments which might help in brand extensions, category extensions, etc. The cracks of positioning are to be clear on how to position and why to position.

FMCG MARKETING COMMUNICATION:

Next phase in FMCG marketing is to communicate about the products to the right target customers. It is good to have only four to five associations for a product while is being communicated to the customers. The salient elements that HUL has in all its ads are a feeling of enjoyment and perfect branding. A good advertisement is that people must be able to find the brand without the logo. The two ways of doing advertisements are

 

1) To be persuasive

2) eye-catching /attention-grabbing/memorable.

The author asks to conduct a Goosebump test where the advertisement is showed to an outsider and asks to explain the exact emotions after watching the ad. This test would help in understanding the genuine emotions towards the product that an outsider has who would be a customer.

The advertisement has to be given to an ad agency by only explaining the problem, and as a company person, the solution should not be given to the ad agency. This is because the ad agency would come up with their creative ideas instead of the company putting their ideas into. Once the ad agency is fixed it is important to decide upon a director who could bring in emotions, humour, and shoot beautifully.

In HUL it is a policy that once the ad is given to an ad agency, no one from the company should visit the shooting spot and give suggestions, it good only to view the ad one it is complete and ready to be published. Other lessons that the author gives regarding communication is.

1) whispering too many is better than shouting to a few.

2) Tv is the best way to communicate with a greater number of people.

PRODUCT DEVELOPMENT:

Product development the core job must be done carefully because Product is the most important P out of the 4P’s. There are three things with which they can differentiate product are.

1) Ingredients

2) Attributes

3) Benefits.

With the help of these three things, they can differentiate a product for its competitors and from previous products in the same category. The process of product development has five steps that are being followed in HUL.

They are

1) Understand consumer needs in-depth

2)create a product & innovation culture in the company

3)Test before you lunch

4)Persist patiently

5) Deliver product quality.

With the product, do a blind test where the product is given to the customer without the brands name.

FMCG MARKETING PRODUCTS PRICING:

“Pricing” the biggest jargon is in India, which has to be carefully worked upon and then fixed for products. HUL follows the tagline

“Price at a discount, recruit consumers &then take up the price”.

There are two ways of pricing an FMCG marketing product that is followed

1) Fix profit margin & then the price

2) Fix price consumers will pay & adjust margin accordingly.

In HUL they follow 3 steps for pricing

1) Figure out what consumers will pay

2) Have a margin in mind

3) Work backwards at the costs.

The author tells that access is more important than affordability. He advised to fix different prices for original pack sizes, and consumer profiles. Pricing under volatile conditions requires special rules.

FMCG MARKETING AND SALES:

Sales are the hot topic nowadays as many of the MBA graduates start their big career in FMCG marketing company. HUL considers sales to a cost function, so it does not spend more in sales whereas sales are revenue function. HUL’s core competence is

1) Building brands

2) Nurturing people.

Nurturing people is very effective in case of sales as. When people come into a sales career, it sends them to the most remote village of India to get trained. The qualities must for all salespeople in HUL are aggressive go-get with a can spirit, young trainees, drinks late into right & early in the morning to go back. To have growth in sales, there must be

1) Inevitably means higher stocks in trade

2) less focus on rotation

3) Increased selective margins which cause trade price instability.

The author tells that they should reward the sales team for bringing in revenue instead they should be rewarded for creating the enables of revenue.

MONEY AND ITS VALUE GIVEN BY HUL:

Respect for money is the at most philosophy that HUL follows. As we can see the DNA of HUL is itself middle-class management. So all the employees work the best to have a cost reduction at every point in production, FMCG marketing, sales, etc. The 4 big elements in the profit-and-loss account are

1) Cost of materials

2) Cost of the supply chain (includes making &distributing)

3) Cost of advertising

4) Indirect/overhead costs.

The author tells that HUL always has a loyal supplier base. He advised to maintain the old supplier even though a fresh supplier is agreeing to provide materials at a low cost. HUL considers all costs to be variable for calculation. HUL is one company that operates on negative working capital.

But HUL is liberal with advertising but is careful in capital spending. The author tells that spending money on one ad is better in terms of reach than spending money on 4/5 ads. HUL follows pay six people the salary of 8 people & get them to do the job of 10 people.

HR STRATEGIC PARTNER:

HR being a strategic partner is very rare now a day. But HUL is one such company to have HR as the backbone for its functioning. They call it the secret weapon of HUL. The steps followed in HUL are.

1) Get them early

2) Train them well

3) Build careers

4) Encourage diversity

5) Reward performance

6) Instil values.

The qualities that are looked for recent entries are Contribution, Competence, Character. In HUL they give the new entry-level employee with a totality of business exposure of the management stint. A way of cost reduction is that HUL gives a summer internship program so that the entry-level person will directly join the company as an employee and skip the probation period.

The HR in HUL has a structured and well-planned career planning to every employee that joins the company. They follow 70:20:10 i.e., development by a leader building a leader on a job: formal coaching interventions: classroom by external faculty. HUL has a 50: 50 gender balance which is taken care of by the HR team while recruitment. In HUL the HR has divided the entire employees as

1) Mavericks: Team players, rebellious, Genuine value creators, high integrity.

2) Company Men: Rigorous, Loyal, Process-driven team players, High integrity

3) Rogues: High energy, creative achievement-oriented, short-term self-interest ahead of long-term company goals. They consider these Rogues to be the destroyers of companies.

The criteria to test the calibre of employees in HUL is JDF.

J-judgement (the ability to take right decisions) for senior-level employees, D-drive (ability & desire to get things done) for junior-level employees, I- influence (getting the world to see your point of view) for middle-level employees.

VALUES (ACCT):

The HUL values as ACCT.

A-action (what that matters is to act, not to just keep deciding and generating ideas).

C-courage (ability to make the right decisions even if it to face a highly risky situation).

C-caring (the bond between the employees of HUL is very strong, such that everyone supports each other in any situation it comes).

T-truth (one of the twin value of HCL that is never given up by HUL at any point in time).

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