Hindustan Unilever Ltd: The Wheel Saga
MM I Individual Assignment (Weightage: 5%)
In April 2009 at the Goafest, one of India’s top DJs, set the dance floor ablaze by playing a remix of the Nirma jingle. Truth though is he would have been better off playing a remix of the Wheel jingle that was inspired by the 1960s, Shammi Kapoor hit song Dekho Dekho Dekho from An Evening in Paris. That commercial, set in motion a Wheel that would roll on over the decades to become the blockbuster brand in the Lever stable.
Today with sales of over Rs. 2,000 crore Wheel is ‘Brand No 1’ in the HUL portfolio not to mention the world’s largest selling detergent in volume terms. If Wheel were to be a standalone company it would rank 228 on the ET 500. Nitin Paranjpe, CEO, HUL, puts it rather succinctly when he says that every second Indian is a Wheel consumer.
Says Paranjpe, “Relevant consumer insight, optimum supply chain and wide distribution reach together have delivered a winning proposition.” Yet, few had imagined in 1987 that Wheel would one day serve half the country or earn half a billion dollars.
That was a time when FMCG companies were still the kings of marketing and HLL was the undisputed emperor of all that it surveyed. And then from out of nowhere came Karsanbhai Patel’s Nirma. If there was ever a Mahabharat in the annals of Indian marketing, this was it. Lever’s was caught in the mythical chakravyuh, unable to curb the ascending star of Nirma. Never before had a brand shaken the Lever citadel so decisively.
Alyque Padamsee, former CEO Lintas (the agency that worked on the detergents portfolio back then), recalls that Nirma was priced at a third of Surf and was as aggressive as HLL. Says Padamsee, “Surf was Rs 21/kilo and Nirma was Rs 7/kilo. Importantly Karsanbhai borrowed a leaf out of HLL’s marketing manual and outadvertised us.” Ashok Ganguly, former chairman of Hindustan Lever, who back then was leading the company concurs that Karsanbhai Patel’s bottom of the pyramid approach (well before CK Prahalad coined the term) was one of the most astute marketing moves that he has ever encountered.
Before the managers at Levers realised, Nirma was more than just another regional brand. It was time to find a way out of the chakravyuh. The company decided that Surf could not take on the Nirma challenge by dropping prices (there was actually a committee called C.R.I.S.P. — Cost Reduction In Surf Prices) and that a new strategy was needed to combat this challenger. And all this led to the birth of Operation S.T.I.N.G. — STRATEGY TO INHIBIT NIRMA’S GROWTH.
It was not a question of business growth, but business survival,” says Ganguly. It might seem like that’s a strong statement coming from a player credited with creating the detergent category in India. But it was true — an acknowledgement that the playing field had shifted, right under its nose. From Surf accounting for 70% of the market, the low cost detergents had grown rapidly enough to account for 80% of volumes — a statistic that remains true to date with mass market detergents making up 80% of volumes and 68% in value.
Even the choice of the name Wheel was not strategic, rather it was a matter of compulsion. In those days given the stringent FERA regulations it was not easy to launch international brands. According to Padamsee, HLL had launched a detergent bar called Wheel some years prior to 1987 (with the famous Leela Mishra commercial), which had not done too well in the market and been canned. But given the FERA issue they were forced to look at an existing basket of names and decided to go with Wheel.
HLL set up a group outside the company to take the battle to Nirma’s doors. Ravi Dhariwal, then, former marketing head for the detergents business at HLL and currently CEO, Publishing at Bennett, Coleman & Co says that as Wheel was the first low-price product from Hindustan Lever, the company decided to have a...
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