Sustainable Growth of Unilever in the post covid scenario

Introduction: ?This topic is important since Consumer demand for everyday essentials manufactured by the FMCG industry and sold by both General trade and Modern Trade brick and mortar stores is not very high and hence sales offtakes are sluggish.

FMCG, Modern Trade Players, Online Players will spend more on advertising and promotions, despite subdued demand. It is a known fact that players in these industries spend heavily on advertising and promotions during festive occasions and on big holidays like Republic Day and Independence Day to drive volume offtakes.

Definition of the Business Problem:

Research is existing available theory and knowledge. Business research will be carried out by one department/ vertical of an organisation or at an organisation level.

Business research must be objective, helping managers take the right decisions when they are faced with challenges especially in the post covid scenario in growing? orgnisation revenues. Worldwide, countries including India are dealing with the aftereffects of the covid pandemic. Hence organisations are unable to drive sales offtakes to pre-pandemic levels. Consumers are buying smaller pack sizes of daily essential fmcg goods. However, fmcg manufacturers must make Big Pack sizes for consumers purchasing online.

The Bigger pack sizes are either discounted (having a price off) or a freebie added to it mostly in Modern retail physical stores or sold online.

Research Objectives.

Focus on revenue growth for Unilever in a sustained manner

?Unilever’s Increased spend on advertising to generate demand among consumers.

Manufacturing of premium products in the assortment will help in increased sales realization INR value

Manufacturing large pack sizes and small pack sizes to meet consumer demand and sales targets.

?Research Questions

How will Unilever as an organisation grow revenues in the post covid scenario?

Will manufacturing premium products in the product assortment lead to increased sales?

Will manufacturing of large pack sizes and small pack sizes to meet consumer demand online and offline

Will increased spending on advertising lead to growth despite demand for fmcg goods being sluggish?

Academic Literature Review

Growth drivers at Unilever. Among other growth strategies are market development and premiumisation. Premiumization has been a key growth driver at HUL (Hindustan Unilever Ltd) accounting for 33% of the product mix.

This measure stood at 22% in Full year 2012. The EBITDA margin expansion of almost 1000 bps seen over the past decade is due to the focus on premiumization of many of its products.

Focus on ecommerce: The company is also trying to grow its ecommerce channel. HUL’s digitized demand capture currently stands at more than 25% from zero a decade ago. (“HUL in for short-term growth pangs | Mint”)

“It's e-B2B app Shikhar has expanded rapidly and is now being used by over 1 million stores.” (“HUL in for short-term growth pangs | Mint”)

Spend on Advertising by FMCG companies and online & offline retailers

Some of India’s largest consumer goods makers and retailers will spend more on advertising despite poor demand. (“FMCG companies, retailers to spend big on ads despite subdued demand”).

Many organizations like Hindustan Unilever plan to escalate spending on advertising and promotion to boost sales. At Godrej consumer products, the Managing Director Sudhir Sitapati said that inflation pressures are reducing, and consumers are willing to spend more

Chief executives of Unilever, Aditya Birla Fashion and Retail, Tata consumer products, Titan company and Dabur clearly have stated that they will increase spend on advertising and marketing this quarter and the next to improve growth.

Mr. Ashish Dixit the Managing director of Aditya Birla Fashion and Retail said that spend on advertising will continue to grow since it is necessary for brands and Retailers to sustain high levels of growth trajectory.

The FMCG industry and Retailers are witnessing a high pace of growth after about 2.5 years and wants to fully funnel the need for consumers to spend on daily essentials and in Rural areas.

Name of organization Percentage spends on advertising

Tata consumer products Increase from 6.1% to 6.4%

Marico Industries Increase by 10% YOY in last quarter

Aditya Birla Fashion and Retail Branded apparel Increase from 4 to 5%

Pantaloons – departmental stores Increase from 2 to 3%

The company’s management pointed out that there is significant scope for growth in the long term. Favourable demographics, urbanisation, low penetration for several FMCG categories are some macro factors that can help drive growth. The Low FMCG per capita consumption versus other developing countries offers wide scope for growth. (“HUL in for short-term growth pangs | Mint”)

Unilever should focus on growing its core portfolio through superior products and purposeful advertising and communications strategies.

Online retail growth will shift to emerging markets: A growing middle class with increasing internet penetration among the population masses in Asia including India will see a 12% increase in online sales and FMCG companies will focus on building digital brands

?Short term concerns: Raw material inflation is a concern with more input prices (ex- palm oil still on the higher side and INR depreciation exerting pressure on prices

Conceptual Framework independent variable is covid scenario, dependent variable is sustainable growth

Business Research gaps that exist: Unilever is unable to meet the demand of consumers with respect to small pack sizes purchasing from the local Kirana stores and unable to satisfy consumers shopping for large pack sizes online?

?Research design/ Research philosophy We will have to evaluate the Research philosophy that refers to the development of knowledge pertaining to growth drivers within the FMCG industry. This will influence the strategy adopted by us in relation to the research plan / method adopted for the research. Simply put, it forms the connection between theory and argument.

In this context we must collect primary and secondary data on the research objectives which are, will HUL increase spend on advertising and promotions despite sluggish demand, thrust of HUL into ecommerce, premiumisation drive at Unilever.Data collection methods are suggested below. The data must be analyzed in certain research-based studies.

Research Approach is the second layer of Saunder’s Research onion.

The research approach is divided into the deductive and inductive approach.

Deductive approach is also used frequently in management research and business scenarios and frequently used to answer

Who What where how much how many.

The deductive approach evaluates literature to identify theories and ideas that the researcher will test using data. The theory that advertising increases sales is a known fact. However, consumer demand is sluggish, and advertising will be used by FMCG companies to get consumers to buy more. Survey strategy will be used here since it is associated with the deductive approach.

?Digital/online brands contribute revenue to an organisation more quickly than products that are marketed using the Traditional product mix strategies

The inductive approach involves collecting the data and developing a theory based on the results of data analysis.

We will have to use the Inductive approach that small sized pack sizes are generating lesser/ higher revenue than the large pack sizes sold by online Retailers basis sales data obtained from Unilever.

Research Methodology

Market research overview

Exploratory and Confirmatory

Exploratory divided into

Secondary data evaluation and analysis

How is Unilever planning toa achieve growth compared to Marico, Godrej, Tata consumer products.

Current demand for existing range of its core products

Current demand for competitive range of products

Research strategy is the third layer of Saunders et al research onion.

Primary Research Methods / Data Insights: Talking to employees in FMCG and Retail companies, interviews of management seniors working in FMCG companies

Secondary Research Methods: Trends in FMCG and Retail Industry for the future obtained from Economist intelligence white paper. Consumer goods and retail outlook 2023

The present study to be conducted will be Causal in nature since we will be exploring the impact of Advertising on sales when the demand among consumers is not robust.

Again, cause benefit relationship exists between faster revenue being generated for all those brands that have an online presence and consumers can order at their convenience

Time Horizon is the fourth layer: It is believed that cross – sectional descriptive survey is the most appropriate option in this context as it is conducted at a particular time.

Resources / Tools that have been used

a)???? Google scholar

b)???? Research conferences/ call for papers.

c)???? Questionnaire will be administered as part of the Qualitative technique to be used.

Executive summary:

After data collection and analysis using a mixed qualitative and quantitative method (use of statistic tools, descriptive statistics wherever applicable followed by quantitative methods like multiple regression, chi-square, anova –whichever is most suitable based on data collected and analysed and what will be the resultant outcome will it help to accept or fail to reject the null hypothesis …. all this will have to be worked out to ensure correct research methodology.