DISTRIBUTION CHANNELS

DISTRIBUTION

 Distribution Strategy 
HUL has a strong distribution network through which it reaches to their target markets both urban and rural. it has an advantage of a large penetration in large and small towns something that it has built over the last few decades. Their distribution network of VPJ focuses on retail outlets. VPJ sales force should target other distributors and users such as institutional users for example hospitals with a first aid perspective. HUL's products are manufactured across the country and are distributed through a network of about 7000 redistribution stockists covering about 1 million retail outlets. The distribution directly covers their urban markets.
The distribution channel in general trade :

Direct and Indirect Channels:
Direct channel is a form of distribution in which the seller comes into direct contact with the buyer rather than employing intermediaries to sell the product. Such form of distribution helps sellers eliminate the extra cost incurred for intermediaries and helps develop a more personal relation with the customers. However, it limits the scope of reach that mass distribution through wholesalers and retailers achieves.
Indirect channels, on the other hand, consist of smaller organizations which act as intermediaries in the distribution of goods and services. Agents, wholesalers, retailers and other such distributors are facilitators that make the products available to the consumers across various geographical regions through departmental, supermarket and retail outlets.


Push and Pull Strategies of Distribution:
These are strategies by which sellers ensure that their products reach the target customers. In case of push strategies, the manufacturer’s sales force and trade promotion techniques (such as discount coupons, festival offers and schemes) come into play. They push the product to the customers and drive sales. Unlike this, the pull strategies are targeted at attracting the customers towards the products by way of advertising and other forms of communication. They persuade the customer that the usage of a certain product will benefit them greatly and provide the utility which has so far been unaddressed.

HUL has been able to introduce VPJ on the retail level with a high distribution penetration (92% in grocery stores and 96% in drug store). VPJ benefits from very good distribution converge and an intensive penetration on the retailer market. Regular distribution generated about 85% of the products ounce volume. these 85% of VPJ products are distributed through three principal retail outlets namely grocery stores, drugstores and mass merchandisers. 15 % are distributed through other outlets and variety stores.
However they still have to reach many untapped markets. Although 85% of the production to: grocery stores, drug stores, mass merchandise, food stores and 15% to other outlets.

There are various types of retailers:

Store retailers, Non store and franchising.

Hence we can conclude that most of HUL products and VPJ respectively have been directly sold through retailers to the final consumer. Thus the retailer plays a very important role in he distribution channel.

PRICING STRATEGY

PRICING

Price is one of the most important elements of the marketing mix which helps generate revenue.
The selling price is fixed after the study of various data about the market, the demand and the offer. More precisely, the price which the firm chooses to impose depends on the cost of the product, on the positioning choice, on the evaluation of the competition or of the vision of quality and the value perceived by the price. The price gives an element of differentiation to the customer; moreover it influences its choice and the image which the consumer guesses of the product. Indeed “the price-setting must be set in relation with the value offered to the customer and perceived by them”. Besides the relationship exiting between the price and the customer, the price takes part in the decision of the volume of the sales, of the rate of the profit and its global volume.

Uncontrollable economic conditions could lead to fluctuations in petroleum prices, increasing overall production costs and dragging down profit margins.
70% of homemakers responded that VPJ is "economical". Each Jar price depends on its size. As HUL enjoy its monopolistic position in the petroleum jelly market and has fairly kept the price low targeting at every household. They used the Market penetration pricing for years.

There are certain steps that need to be incorporated by the firm for developing the pricing strategy for the product:

Select the pricing objectives- Its objective is to have maximum market share being a leader to set price it could play with numbers, although VPJ was priced low.

Determining demand- Basically HUL wanted to target VPJ as an all rounder healing aid, something that is available in every household. there seems to be low price sensitivity for VPJ.

Estimating cost- Charging a price that can cover costs. here due to low price of VPJ the sales have increased and having a monopoly it need not worry about covering costs. VPJ is an FMCG product which is used by consumers in their day to day life hence costs will be covered easily.

Analysing competitors costs, prices and offers- Although we control the petroleum jelly market, there are specific-use products that compete against the versatility of VPJ. Uses for purposes such as baby care, sunburn treatment, skin treatment, and lip care can be addressed by our competitors, both from products that are currently on the market and those being developed. Additionally, competition could be realized by new market entrants into the petroleum jelly market from established companies such as Johnson & Johnson.

Selecting a pricing method- Final keeping all the above mention constraints in mind the final price is set.

PRODUCT STRATEGY

PRODUCT STRATEGY

Product Mix

Product Width- refers to the variety of different items a company carries i,e how may product line a company carries. Vaseline is totally into skin care: lip care, hand care, body care. HUL the parent brand is into home care, personal care, food.

Product Length- total number if items available in the product mix. HUL has about 42 products

Product Depth- means that the store carries a large assortment of each item. the number of variantsof each product in the line. VPJ variants are vaseline jelly original, vaseline jelly cocoa butter, vaseline jelly baby, vaseline deep moisturising creamy formula.

Product Consistency- It describes how closely related the various product lines are in end use, production requirements, distribution channels or some other way.HUl products have consistency as they go through the same distribution channels and are consumer goods used daily. VPJ has been the best petroleum Jelly and enjoys its position and market share.

Product Hierarchy

Need Family- The core need of  VPJ is protective skin, nourishment of skin.
Product Family- VPJ belongs to the skin care category,
Product Class-  Petroleum jelly.

Product Line- Vaseline intensive care,vaseline petroleum jelly cream, vaseline spray and go.

Product Type- Vaseline the product type has expanded to original petroleum jelly to baby petroleum jelly, creamy petroleum jelly.
Item- VaselinePJ comes in different sizes

Product Levels
The various levels of a product a marketer needs to consider in planning 

Core product- the basic benefit the product provides/serves. its the basic need to buy that product. VPJ helps cure dry skin.

Basic product- The basic value the product gives. VPJ smoothens the dry skin, helps recover chapped lips, illuminates skin by the use of petroleum jelly which is a non-sticky gel

Expected product- they are the set of attributes that the target customers expect when they buy the product. For VPJ consumers expect diverse results such as smooth skin, cure form dry skin, chapped lips, baby rash etc

Augmented- Augmented product is that level of the product which gives the customers extra value with the core value. For VPJ consumers expect cure from dry skin but it provides extra benefits with its versatile uses such as a beauty product, used as a lubricant, helps cure baby rash, sun burns etc.

Potential- Potential product its the changes the product shall undergo in the future to give better service to the cutovers to satisfy and distinguish their offerings,

MARKETING MIX

The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. The 4Ps make up a typical marketing mix - Price, Product, Promotion and Place - The Economic Times

What are the 4Ps of marketing? 

Price: refers to the value for a product, cost of production etc. There can be several types of pricing strategies, each tied in with an overall business plan. Pricing can also be used as a criteria to differentiate and enhance the image of a product. VPJ is priced at a reasonable rate considering the target group and cost of each jar keeps increasing with an increase in size.

Product: refers to the item actually being sold. The product must deliver a minimum level of performance; otherwise even the best work on the other elements of the marketing mix won't do any good. Vaseline Petroleum Jelly is sold in two basic containers, jars and tubes. Jars sizes were: 1.75 oz., 3.75 oz., 7.50 oz., 12.0 oz., and 15.0 oz.. The tubes sizes were 1.0 oz. and 3.75 oz. VPJ sales were mainly concentrated in the 1.75 oz., 3.75 oz. and 7.50 oz jar sizes, which combined for 81% of VPJ factory shipments by size

Place: refers to the point of sale. In every industry, catching the eye of the consumer and making it easy for them to buy it is the main aim of a good distribution or 'place' strategy. Retailers pay a premium for the right location. In fact, the mantra of a successful retail business is 'location, location, location'.  VPJ is available at any departmental store, medical store etc .
VPJ was sold in two basic forms: regular and carbolated. Regular VPJ was distributed primarily through grocery, drug, and mass merchandise stores; these accounted for 85% of VPJ ounce volume. Carbolated VPJ was a specialized first aid product, containing an active ingredient. Carbolated VPJ accounted for a stable 7% of VPJ dollar sales to consumers, although it was sold primarily through drugstores, was rarely discounted, and never advertised separately.

Promotion: this refers to all the activities undertaken to make the product or service known to the people. This can includeadvertising, word of mouth, press reports, incentives, commissions and awards to the trade. It can also include consumer schemes, direct marketing, contests and prizes.
There were three principle areas of VPJ marketing: advertising, consumer promotion, and trade promotion. Advertising had historically shown the versatility of VPJ as a skin care product for adults and children through consumer ads concentrating on a theme of "In all seasons, for all reasons, do it with Vaseline Petroleum Jelly". VPJ came up with one ad which marked it existence ever since.

What is the importance of the marketing mix?
All the elements of the marketing mix influence each other and are equally important. They make up the business plan for a company and when handled right, can give it great success. But handled wrong and the business could take years to recover. The marketing mix needs a lot of understanding, market research and consultation with several people etc,

PRODUCT LIFE CYCLE

PRODUCT LIFE CYCLE

Every Product come with a shelf life. Product life cycle describes the stages a product goes through from when it was first thought of until it finally is removed from the market.

The Various stages in Product life cycle are:

Introduction stage
In the introduction stage, the product is released/introduced to the market; pricing and branding decisions are made and marketing begins. Robert Chesebrough first discover VPJ in 1880 at his oil fields in Pennsylvania

Growth stage
In the growth stage, sales are increasing at their fastest rate and vendors work to increase brand recognition and market share. By 1977, VPJ was considered a household staple used by over 90% of the population. The product accounted for $22.5 million in CPI sales in 1976, a healthy increase over the $17.8 million in sales realized in 1977. However, sales growth in 1977 was projected to be flat, budgeted at $22.9 million for the year.

Maturity Stage
In the maturity stage, market saturation has been achieved. The attempt is to maintain market share. Sales are near their highest, but the rate of growth is slowing down, e.g. new competitors in market or saturation. Sales begin to decrease, different strategies may be employed to try to keep the product in the maturity stage.

Decline Stage
The final stage of the cycle, when sales begin to fall and the product is dying and needs to exit the market. Not applicable for VPJ yet.

To Conclude:
Vaseline Petroleum Jelly is in its maturity phase as it is a market leading product and enjoys its market share of 90% in the petroleum jelly market and has stable sales, also VPJ is introducing new flavours in the same category. They are widening their scope to rural markets. All this has lead to sustainable growth of VPJ.

In the ILC for Skin care industry specially for petroleum jelly HUL has a monopolistic position of 90% market share.

COMPETITION AND INDUSTRY

COMPETITION AND INDUSTRY

To be a long term player in the market is the ultimate goal for any company.

Competition is commonly referred to the rivalry that exists between firms for selling their products of a particular category to the same segment of customers. However it may be defined more generally as rivalry between individuals and firms to gain greater advantage or superiority over each other. 

Competition is to be ahead of everyone else, to serve the consumer in the best possible way like no-one else, to always strive to be a leader and be competent at every level. These players of market are addressed as COMPETITORS.
They are those who can affect the business of a company directly or indirectly and are considered as major threats.

TYPES OF COMPETITORS

We can classify competitors in two categories Direct competitors and Indirect competitors.

DIRECT COMPETITORS
Within a market businesses are faced by direct competitors. These are firms that produce the same or very similar goods e.g. fruit and vegetable sellers on a Saturday market. However, most products are differentiated in some way. VPJ has a monopolistic position in the market since it represents 90% share in petroleum jelly market. Direct competition (mainly from private label petroleum jellies) that were sold through mass merchandisers such as K-Mart and competed only on price(usually 30% cheaper)holds the 10% share.

Although vaseline is one of the leading brands which has a high market share with 90% of the petroleum market, it still faces direct competition from Nivea (skin cream / lip care), ponds (skin care),
 Johnson & Johnson (petroleum jelly), Vasocare petroleum jelly, Vi-john petroleum jelly. 

INDIRECT COMPETITORS

In addition to direct competition, businesses also face indirect competition where products which are close substitutes for one another compete e.g. a butter company competes against a margarine company. However, most products are differentiated in some way. Although HUL controls the petroleum jelly markets there are specific use products such as sun-burn treatment, baby care, skin treatment, lip care which compete against the versatility of VPJ.

Some of the indirect competitors for VPJ are Parachute Coconut oil, Body shop cocoa butter/shea butter, Waxelene, Virgin coconut oil, Boroplus(Emami), Nivea, Garnier, Himaliya Nourishing cream, Olay nourishing cream, Lacto Calamin, lotus herbals, Lakme fruit moisturiser, Nuetrogena oil free moisturiser etc are some indirect competitors for Vaseline Petroleum Jelly.

The challenge here is to reach new consumers in the border skin care markets with specific needs for products like hand lotion, body lotion, moisturising creams etc.