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Competitive Strategy consists of move of companies in order to attract customers. With stand competitive
pressures and strengthen an organization?s market position. The main objective of Competitive Strategy
is to generate a competitive advantage, increase the loyalty of customers and to beat competitors.

Five main competitive strategies are:

› Overall low cost leadership strategy

› Best cost provider?s strategy
› Broad differentiation strategy
› Focused low cost strategy
› Focused differentiation strategy

Here competitive strategy varies from sector to sector and company to company. Thus, it is not easy to
predict a single or to find a single strategy for the whole sector. When we come on to FMCG Sector main
strategies lay behind market strategies, cost, and quality strategies. Here in this report you are going to
get information about such type of strategies of FMCG giants.



This Company is earlier known as Hindustan Lever Ltd. This is India?s

largest FMCG sector company with all type of household products available
with it. It has Home & Personal Care products, and also food and Water
Purifier available with it. According to Brand Equity, HUL has largest no of brands in most trusted brands

16 of HUL?s brands featured in AC-Nielson Brand Equity list of 100 most trusted brands in 2008 in an
annual survey. For the entire year ending March - 2009 net turnover of company is Rs. 20?239.33 Crore
which is 47.99% higher than 31st December 2007?s Rs. 13675.43 Crore driven mainly by dom estic
FMCG?s with net profit stood at Rs. 2?496.45 Crore.

 : Annapurna; Ayush; Axe; Breeze; Bru; Brooke bond; Clinic; Dove; Fair & Lovely;
Hamam; Liril; Lux; Pears; Ponds; Pepsodent; Pureit; Rexona; Rin; Sunlight; Surfexcel; Vaseline; Wheel.


This Company was earlier known as Imperial Tobacco Company of India Ltd. It is
Currently headed by Yogesh Chander Deveshwar. Company mainly operates in the
industry like Tobacco, Foods, Hotels, Stationary and Greeting Cards with the major
products constitutes Cigarettes, packed foods, hotels, and apparels. For the entire year
ending Mar-2009 the turnover of company is at Rs. 15388 Crore which is 10.3% higher
than previous year?s Rs. 13947.53 Crore, driven mainly by robust 20% growth in non
cigarette FMCG business with net profit stood at Rs. 3324 Crore.

HUL & ITC are major companies in FMCG market in India. When we compare both companies on the
basis of their strategies i.e. , their competitive strategies in the present market. When we look at the
present segment breakup for both of the companies then we came to know that their different products
vary too much in the market.



Now let us take a comparative analysis of both the companies under some heads:

Hindustan Unilever (HUL) is the largest pure-play ITC is not a pure-play FMCG company, since
FMCG company in the country and has one of cigarettes is its primary business. It is diversifying
the widest portfolio of products sold via a strong into non-tobacco. FMCG segments like foods,
distribution channel. It owns and markets some of personal care, paper products, hotels and agri-
the most popular brands in the country across business to reduce its exposure to cigarettes.
various categories, including soaps, detergents,
shampoos, tea and face creams.
Despite diversification, ITC?s reliance on
After stagnating between 1999 and ?04, the cigarettes is still huge. The tobacco business
company is back on the growth track. In the past contributes 40% to its revenues, and accounts for
three years, till 2008 HUL?s net sales have over 80% of its profit. This cash-generating
witnessed a CAGR of 11%, while net profit has business has enabled it to take ambitious, but
posted a CAGR of 17%. expensive bets in new segments and deliver
modest profit growth.
TC is focusing on delivering value at competitive
HUL always believes in customer friendly
prices. Its tremendous reach through extensive
products with major emphasis on low cost overall
distribution chain has been a competitive
without compromising on the quality of the
advantage. Additionally, the company?s e-
product. They are leveraging the capabilities and
choupal model for direct procurement is well
scale of the parent company and focusing on the
known under which ITC partners with over
value of execution. The entire product product
100,000 farmers for spices and wheat
portfolio is also being tweaked to include
procurement and an even larger number for
premium offerings such as Pond?s Age Miracle
oilseeds. This kind of rural pedigree is hard to
and dove shampoo in skin and hair care.
! "  ! " 
The Company has been launching new products ITC?s backward integration to ensure that its
and brand extensions, with investments being products pass efficiently from the farms to
made towards brand-building and increasing its consumers has helped it to cut down supply and
market share. HUL is also streamlining its various procurement costs. ITC?s non-cigarette FMCG
business operations, in line with the ?One business leverages the large distribution network
Unilever? philosophy adopted by the Unilever the company has developed by selling cigarettes
group worldwide. Introduction of premium over the years. A rich product mix, along with
products and addition of new consumers via ramp-up of investments in its new sectors, will be
market expansion will be HUL?s growth drivers. instrumental in charting ITC?s growth path.



Being an MNC operating in India, HUL is more conservative in its strategies than its Indian counterparts.
Moreover, given increasing competition, it faces the risk of being overtaken by domestic players in
various categories. Prolonged inflation may lead to margin contraction, in case HUL is not able to pass on
this burden to consumers. The company?s large size also poses a problem, since it does not give HUL
the agility to address the competition it faces from national and regional players.


Increased regulatory clamps on tobacco, along with rising tax burden, pose a business risk for ITC. So, it
has started an ambitious diversification plan, which has its own set of risks. With its foray into the
conventional FMCG space, ITC has entered the high-clutter branded products market. This will burden its
resources in terms of ad spend and brand-building. Creating brand recall and building market share in
new products are ITC?s key challenges. Export ban and rising crop prices pose a threat for its agri-
business, taxing its margins.

HUL?s up-and-running business model is a treat for investors seeking exposure in the FMCG segment.
The company has delivered in the past and has the potential to do better in future. In the small and
medium term. ITC?s growth story is still evolving.

ITC is eyeing the pie which HUL and other FMCG players currently enjoy. Though risky, the company?s
business model will pay off in the long run. ITC has proved its expertise in the cigarettes, hotels, paper
and agri-businesses. Investors who want to bank on its execution ability in FMCG can consider the stock
with a long-term horizon.


According to us the companies should continue with their CSR and also continue with their strategies.
The thing that need to be changed is that, ITC should go for more diversification in Non cigarette segment
(FMCG) while HUL should come up with the new strategies that could take the new product forward to
create a new segment. A common recommendation for both is that they should focus on rural area more.


› Msn Encarta
› Economic Times
› Financial Express
› 4Ps Magazine
› Business today
› Competitive Strategy by Michael Porter
› Mega
› Lots of
› Times of India