In this article we have selected HUL to show how they have formulated the Brand rationalization strategy to increase their dropping sales as this company os considered a leader in FMCG. Hindusthan Unilever Limited (HUL) formerly HLL knows it cannot create some brands and leave them unto themselves. The portfolio has to be closely monitored.
HLL’s sales and profits have been slowing down during the years 2000 and 2001. HLL the company with nearly 110 brands was naturally facing strong compulsions for taking a re-look at its brand portfolio.
A lot of brands on which HLL had spent enormous amount of time, energy and money were not contributing enough; there were little or no returns from many of them. It was in this context that HLL attempted a substantial brand rationalization program. In the year 2001, HLL initiated a series of measures towards rationalizing its portfolio of brands.
Keeps 30 power brands plays down 80 others: In 2001, HLL initiated plans to prune its brand portfolio – to almost one quarter of its size. HLL located around 30 brands to be focused upon as the brands of the future. HLL called them Power Brands. The 30 power brands shown contribute almost 75 percent of HLL’s turnover and profits. Of the 30 brands, 18 are international brands of parent company Unilever and the rest are India grown. The future warfare is to be fought on the strength of these 30 power brands.
The list includes brands like Lifebuoy and Lux, which contributes 25 per cent to profits as well as brands like Pears, which do not contribute much profit are assessed to become star brands of the future. In the selection, HLL’s criteria were: brand’s current performance, its competitive differentiation vis-à-vis the rest of the market and its future potential.
Pears for instance, has less than five per cent of the toilet soaps market, but it has a unique position that has been successfully extended to other reacted categories like face wash. In emerging categories lime deodorants, HLL will be focusing on two brands, Rexona and Axe. Rexona is the brand, which Lever uses internationally to build the deodorant category. Axe, since its launch has been picking up well. Deodorants and face wash are products of the future and brands like Pears and Rexona should become leaders therein.
In the fabric wash market, there will be three distinct brands: Wheel Rin and Surf; Wheel in the mass market, Rin at the top and Surf in the middle, with different benefits. Surf occupies the stain removal platform while Rin assures whiteness.
HLL will out all its energy and resources behind the chosen 30 brands. To quote HLL, We are going to ensure we put disproportionate assets behind these brands, whether it’s advertising monies, or the quality of people working on the brands. We will grow them into increasing opportunities of contact with the consumer by taking them into other relevant product forms and into services. That’s the game plan.
HLL is not planning to totally vacate any product category it is presently in. Brands are chosen all our categories, so we are not de-prioritizing any of our categories. The 30 brands also span all the key consumer segments.
The 80 odd Brands outside the chosen list to be handled differently:
The remaining 80 odd brands, which contribute about 25 per cent of HLL’s turnover, fall under three categories; they will be given different treatments.
1. The regional jewels in this category of brands are exceptionally strong in certain geographic areas; Hamam, for instance, gets about 60 per cent of its volumes from Tamil Nadu. Where it has 30 per cent market share; HLL will keep such brands as purely regional brands and support them in these areas.
2. Brands, which are both small and unprofitable. They will be discounted or sold off. Example: two variants of close Up, Oxy Fresh and Renew, Revel washing powder and Aim toothpaste.
3. Brands with overlapping positioning; the bulk are here; they also overlap in market targeting with one of the power brands. Whenever you have the same benefits and same price point, there is no advantage to carry two brands. So, what we should do is merge those brands with some of the power brands. For instance, in toilet soap, HLL has Breeze, a real winner, which is growing at 50 per cent plus per annum. There is no need for another mass brand like Jai.