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Assignment: Q 1. Based on the case study, critically examine HUL’s Marketing strategy (STP) for Wheel since its inception and the reasons for the success of the brand. Solution: Wheel Powder was launched by Hindustan Unilever Ltd. in 1987 in response to the success of Nirma detergent powder – a local Indian brand launched in 1977 by Karsanbhai Patel, a well known entrepreneur and philanthropist of Gujarat. Nirma was introduced at a price that attracted the cost-conscious Indian consumer.
Prior to 1988, Wheel had existed, for about a decade, in the bar form before it was launched as a powder. In its new avatar, the principal task of Wheel was to arrest the growth of Nirma and exploit the emerging low-end market potential. This product was created specifically by Hindustan Lever to counter Nirma, the low cost detergent, which had taken the ground away from Surf, the top selling detergent at that time From HLL. Earlier reaction of HUL towards Nirma was dismissive,saying,” That is not our market”,and “We need not be concerned. Their perspective was that Nirma was an inferior quality product being sold at Rs 7/kilo to people who weren’t currently purchasing Surf(priced at Rs 21/kilo that time), and that their sales would be unaffected by any growth in Nirma’s popularity. Stung by the falling market share,HUL recognized the disruptive threat posed by Nirma, and realized that although it was a undisputed leader in the FMCG sector as a whole, it catered only to the elite class of customers leaving the Bottom of pyramid open.
Hence ,they adapted their own strategy to compete, launching Wheel detergent to try and stem the tide of Nirma into the low end of the market. Today with sales of over Rs. 2,000 crore ,Wheel is ‘Brand No 1’ in the HUL portfolio and the world’s largest selling detergent in volume terms. The reason for the success of the brand Wheel lies in HUL’s Marketing Strategy of Segmentation,Targeting,Positioning(STP) since its inception. To cater to the wants of low-priced or the mass-market segment,HUL targeted to make a ow cost laundry detergent and positioned itself as a superior quality detergent available at an attractive price in the minds of the target buyers. Along with it, relevant consumer insight, optimum supply chain and wide distribution reach together have led to a win-win situation. Major reasons for success of Wheel since its inception can be summarized as below: 1)To dominate the low price segment,HUL came up with a low cost product without diminishing its quality and conforming to its brand value.
HHL noted that the primary source of water for washing was river water, and so created Wheel with a high percentage of oil relative to water. 2)For Wheel to have a standalone business of its own, HUL opted for a dynamic pricing technique i. e. the pricing would differ from state to state depending on local tax structures, extent of competition in each state and other such factors. 3)Wheel was marketed,advertised and distributed better than Nirma. Initially HUL used its detergents Surf and Sunlight in advertising to take on Nirma but these did not work out fine.
Hence it created entirely new production, distribution and marketing capabilities in order to deliver and sell Wheel, investing heavily in creating entrepreneurial door-to-door programs(colourful flyers,posters,street performances) aimed at driving sales at the village level by tapping into the networks of local rural women, just as Nirma had done. Also to counter Nirma’s lively advertisements,HUL Levers came up with the classic ‘Dekho Dekho Dekho’ jingle, a riot of colours and wild choreography. However, it became clear that a lot more was required to be done to accelerate further growth for the brand.
As a result of an extensive research in 1989, Wheel discovered a chink in Nirma’s armour. Research indicated that 60% of Nirma users complained of the harshness of the product on hands due to its high soda-ash content. Using this learning, the brand proposition was modified. The focus was directed against Nirma’s harshness, exploiting the ‘safety on hands’ platform. The advertising was geared to communicate that its formulation was not only safe on clothes, which it had been communicating earlier it was also safe on hands. This was a turning point, in the brand’s history. ) There was one problem that continued to plague the brand despite functionally building in a strong performance – Wheel continued to be perceived as a mild detergent. In 2001,when HUL’s net sales growth rate fell (4. 1%-2. 4%),it came up with a ‘Power’ brand strategy and re-launched ‘Best clean with less effort’. Tapping into the powerful insight that washing is a chore that leaves the resource-strapped housewife sapped of her energies, the Wheel formulation was revamped to lighten her burden in the area of washing. Henceforth, the brand constantly innovated with variants like Blue Wheel, Wheel for coloured clothes and Wheel Active Gold.
Wheel Active was introduced to upgrade consumers to a higher order product. 5) According to HUL estimates, there are 450 brands across the country competing in this marketspace. 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. Q 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. Solution: I ,being the Marketing head of HUL don’t think that the the present value proposition, positioning and marketing strategy for Wheel will entirely hold good for the next 5 years as well. Some may hold good,others may not. Hence,I need to do a SWOT analysis year after year. Weaknesses of HUL’s Wheel : * Strong competitors & availability of substitute products. * High advertising costs. Threats to HUL’s Wheel : * Mimic of brands * Temporary slowdown in Economy can have an impact on FMCG industry. Reasons :
I think HUL needs to continuously adopt new marketing strategies for Wheel in the next five years to cope up with the emerging market trends and also the economy change . It should also focus on the identification of threats, opportunities, or strategic uncertainties created by emerging or potential competitor (Nirma)moves, weaknesses ,or strengths. Depending on the economy and market conditions and also taking into account its own Strength,Weaknesses ,Opportunities and Threats,I can inculcate a few changes in HUL’s marketing strategies for Wheel : 1) Greater focus on Return on Marketing Investment .
HUL should look at different aspects like promotion, distribution and advertising to understand what drives growth of Wheel and how much growth. We can develop a model and use this to make decisions of investment dynamically. 2) Increase the quality and speed of innovations and launches that it brings to the market to stand out in the competition. 3) Keep on innovating with new variants of Wheel to cope up with better pricing and quality schemes of substitute products.