Definition

VRIO framework
 
is the tool used to analyze firm’s internal resources and capabilities to
find out if they can be a source of sustained competitive advantage.

Understanding the tool

In order to understand the sources of competitive advantage firms are
using many tools to analyze their external (Porter’s 5 Forces, PEST
analysis) and internal (Value Chain analysis, BCG Matrix) environments.
One of such tools that analyze firm’s internal resources is VRIO
analysis. The tool was originally developed by Barney, J. B. (1991) in his
work ‘Firm Resources and Sustained Competitive Advantage’, where the
author identified four attributes that firm’s resources must possess in order
to become a source of sustained competitive advantage. According to him,
the resources must be valuable, rare, imperfectly imitable and non-
substitutable. His original framework was called VRIN. In 1995, in his later
work ‘Looking Inside for Competitive Advantage’ Barney has introduced
VRIO framework, which was the improvement of VRIN model. VRIO
analysis stands for four questions that ask if a resource is: valuable? rare?
costly to imitate? And is a firm organized to capture the value of the
resources? A resource or capability that meets all four requirements can
bring sustained competitive advantage for the company.

Adopted from Rothaermel’s (2013) ‘Strategic Management’, p.91

Valuable
The first question of the framework asks if a resource adds value by
enabling a firm to exploit opportunities or defend against threats. If the
answer is yes, then a resource is considered valuable. Resources are also
valuable if they help organizations to increase the perceived customer
value. This is done by increasing differentiation or/and decreasing the price
of the product. The resources that cannot meet this condition, lead to
competitive disadvantage. It is important to continually review the value of
the resources because constantly changing internal or external conditions
can make them less valuable or useless at all.
Rare
Resources that can only be acquired by one or very few companies are
considered rare. Rare and valuable resources grant temporary competitive
advantage. On the other hand, the situation when more than few
companies have the same resource or uses the capability in the similar
way, leads to competitive parity. This is because firms can use identical
resources to implement the same strategies and no organization can
achieve superior performance.

Even though competitive parity is not the desired position, a firm should not
neglect the resources that are valuable but common. Losing valuable
resources and capabilities would hurt an organization because they are
essential for staying in the market.

Costly to Imitate
A resource is costly to imitate if other organizations that doesn’t have it
can’t imitate, buy or substitute it at a reasonable price. Imitation can occur
in two ways: by directly imitating (duplicating) the resource or providing the
comparable product/service (substituting).

A firm that has valuable, rare and costly to imitate resources can (but not
necessarily will) achieve sustained competitive advantage. Barney has
identified three reasons why resources can be hard to imitate:

 Historical conditions. Resources that were developed due to

historical events or over a long period usually are costly to imitate.
 Causal ambiguity. Companies can’t identify the particular resources
that are the cause of competitive advantage.
 Social Complexity. The resources and capabilities that are based on
company’s culture or interpersonal relationships.

Organized to Capture Value

The resources itself do not confer any advantage for a company if it’s not
organized to capture the value from them. A firm must organize its
management systems, processes, policies, organizational structure and
culture to be able to fully realize the potential of its valuable, rare and costly
to imitate resources and capabilities. Only then the companies can achieve
sustained competitive advantage.

Using the tool

Step 1. Identify valuable, rare and costly to imitate resources
There are two types of resources: tangible and intangible. Tangible assets
are physical things like land, buildings and machinery. Companies can
easily by them in the market so tangible assets are rarely the source of
competitive advantage. On the other hand, intangible assets, such as
brand reputation, trademarks, intellectual property, unique training system
or unique way of performing tasks, can’t be acquired so easily and offer the
benefits of sustained competitive advantage. Therefore, to find valuable,
rare and costly to imitate resources, you should first look at company’s
intangible assets.

Finding valuable resources:

An easy way to identify such resources is to look at the value chain and
SWOT analyses. Value chain analysis identifies the most valuable
activities, which are the source of cost or differentiation advantage. By
looking into the analysis, you can easily find the valuable resources or
capabilities. In addition, SWOT analysis recognizes the strengths of the
company that are used to exploit opportunities or defend against threats
(which is exactly what a valuable resource does). If you still struggle finding
valuable resources, you can identify them by asking the following
questions:

 Which activities lower the cost of production without decreasing

perceived customer value?
 Which activities increase product or service differentiation and
perceived customer value?
 Have your company won an award or been recognized as the best in
something? (most innovative, best employer, highest customer
retention or best exporter)
 Do you have an access to scarce raw materials or hard to get in
distribution channels?
 Do you have special relationship with your suppliers? Such as tightly
integrated order and distribution system powered by unique
software?
 Do you have employees with unique skills and capabilities?
 Do you have brand reputation for quality, innovation, customer
service?
 Do you do perform any tasks better than your competitors do?
(Benchmarking is useful here)
 Does your company hold any other strengths compared to rivals?

Finding rare resources:

  How many other companies own a resource or can perform capability
in the same way in your industry?
 Can a resource be easily bought in the market by rivals?
 Can competitors obtain the resource or capability in the near future?

Finding costly to imitate resources:

 Do other companies can easily duplicate a resource?

 Can competitors easily develop a substitute resource?
 Do patents protect it?
 Is a resource or capability socially complex?
 Is it hard to identify the particular processes, tasks, or other factors
that form the resource?

Step 2. Find out if your company is organized to exploit these

resources

Following questions might be helpful:

 Does your company has an effective strategic management

process in organization?
 Are there effective motivation and reward systems in place?
 Does your company’s culture reward innovative ideas?
 Is an organizational structure designed to use a resource?
 Are there excellent management and control systems?

Step 3. Protect the resources

When you identified a resource or capability that has all 4 VRIO attributes,
you should protect it using all possible means. After all, it is the source of
your sustained competitive advantage. The first thing you should do is to
make the top management aware of such resource and suggest how it can
be used to lower the costs or to differentiate the products and services.
Then you should think of ideas how to make it more costly to imitate. If
other companies won’t be able to imitate a resource at reasonable prices, it
will stay rare for much longer.

Step 4. Constantly review VRIO resources and capabilities

The value of the resources changes over time and they must be reviewed
constantly to find out if they are as valuable as they once were.
Competitors are also keen to achieve the same competitive advantages so
they’ll be keen to replicate the resources, which means that they will no
longer be rare. Often, new VRIO resources or capabilities are developed
inside an organization and by identifying them you can protect you sources
of competitive advantage more easily.

VRIO example
Google’s capability evaluated using VRIO framework

Google's VRIO capability

Excellent employee management

Valuable? Rare? Costly to Imitate? Is a company organized to exploit it?

Yes Yes Yes Yes

Result: sustained competitive advantage

Google’s ability to manage their people effectively is a source of both

differentiation and cost advantages. Unlike other companies, which rely on
trust and relationship in people management, Google uses data about its
employees to manage them. This capability allows making correct (data
based) decisions about which people to hire and the best way to use their
skills. As a result, Google is able to hire innovative employees that are also
very productive ($1 million in revenue per employee). Besides being
valuable, it is also a rare capability because no other company uses data
based employee management so extensively. Is it costly to imitate? It is
costly to imitate, at least, in the near future. First, companies should build
the highly sophisticated software, which is both costly and hard to do.
Second, HR managers should be trained to make data based decisions
and forget their old management methods. Is Google organized to capture
value from this capability? Certainly, it has trained HR managers that know
how to use the data and manage people accordingly. It also has the
needed IT skills to collect and manage the data about its employees.

https://www.scribd.com/document/330403212/International-Trade-Finance-Amity-Assignment-
Solved-MBA
What Is the Difference Between
Conglomerate & Concentric Diversity?

If a business sells only one kind of product, then its success or failure depends entirely
on demand for that single product. A business with a wide selection of offerings, by
contrast, is more insulated from shifts in demand. This is why companies value
diversification. It helps them increase sales and gain access to new markets while
reducing their risk. The difference between conglomerate and concentric diversity
demonstrates the breadth of diversification strategies available.

Conglomerate
In business, a conglomerate is a company involved in multiple lines of business that
have little relationship to one another. One well-known example is Warren Buffett's
Berkshire Hathaway, which owns companies as varied as utilities, newspapers, food
processors and furniture stores. Conglomerate diversity, then, refers to diversification by
entering entirely new and unrelated lines of business. If you owned, say, a hardware
store and then bought a car wash, you'd be engaged in conglomerate diversification.
Typically, companies achieve conglomerate diversity through acquisitions -- buying
existing businesses -- rather than starting new operations from scratch.

Concentric
Concentric diversification involves adding new products or services that are related to
your current offerings -- either because they appeal to the same market or because they
can be offered without much investment in new resources (or both.) If you own a bakery,
for example, you might add a deli counter and start serving sandwiches. If you produce
table linens, you might start making curtains. If you clean carpets for commercial
customers, you might add services for the residential market. You can achieve
concentric diversity with acquisitions, but often it's a natural outgrowth of what you're
already doing.

Advantages
Concentric diversity aims for synergy -- using your experience and strengths in one area
to gain a foothold in another area. You use what you know about your bakery customers
to sell them sandwiches, or you use the same equipment to make both napkins and
curtains, or you take your commercial carpet cleaning experience and apply it to homes.
Concentric diversification can also provide a gainful use for excess capacity. With
conglomerate diversification, the advantage is the diversification itself -- spreading the
market risk across more sectors. If the hardware store business falls into a funk, the car
wash business may be able to carry the company. This kind of advantage applies to
concentric diversity, too.

Disadvantages
Although diversification is supposed to reduce market risk, it carries dangers of its own.
With conglomerate diversity, there's no guarantee that the businesses will be a good fit.
A hardware store owner can buy a car wash, but if you don't know anything about how to
run one, you'll have problems. And even if you hire someone to run it, you may not be
able to tell with confidence if it's being run well. Dangers of concentric diversity include
line overextension -- diluting the value of your brand by trying to do too much. If your
new products or services don't measure up to the quality of your current offerings, that
could hurt your existing sales as customers lose faith. And with both types, there is
always the possibility that the diversification will just be a poor investment -- you'll
misread the market and end up offering something that customers don't want (at least
from you.)
Central to any successful marketing strategy is an understanding of customers and their  needs at first.
Cite some relevant Customer centric Marketing Industry.?
Driving Innovation And Value Creation Through A
Customer-Centric Culture
‘Customer centric culture’ is something that has been talked about in the pharma
industry for some time, but very few pharma companies actually deliver it to the same
degree as their ‘non-pharma’ counterparts.  Yet it is more important than ever as
changing market models mean that consistently providing real customer value and
positive customer ‘experience’ is ever more critical.    

Achieving sustainable, long-term organic profit growth requires a combination of several

elements: a clear, relevant customer promise that is valued; delivering on that promise
consistently; continuously improving on it; periodically innovating beyond the familiar;
and supporting all this with an organisation that’s open to new ideas and market
feedback.   

And yet if we are honest, the words ‘customer centric’ are used but this kind of culture is
not widespread either in pharma.   

So what is a ‘customer centric culture’?  Simply put, it is all about understanding your
brand value and delivering it consistently to customers.  This doesn't mean meeting
every customer’s need, nor satisfying every customer.  It means focusing on the things
they value most that link to your overall business strategy and brand promise.  The
essence of marketing strategy…   

The world’s most valuable brands make significant investments to ensure that they can
deliver on their customer promises day after day.  Although the business operations of
companies such as Google, Apple, UPS, Gillette and Amazon vary greatly, they all
recognise satisfied customers as one of the pillars of long-term success.  It is no surprise
that all of these companies are also recognised as leading innovators.   

Customer satisfaction builds trust, a key component of a valuable brand, which in turn
supports innovation.  In fact, every successful innovation strengthens the brand, while a
strong brand encourages customers to try the company’s new offerings and even makes
them a little more forgiving if these don’t immediately deliver as promised.  Companies
underestimate this link between customer satisfaction, innovation and growth at their
peril.   

So immediately we hit some challenges.   

‘Brand’ marketing is about the whole customer interaction, yet too often in pharma we
just focus on the tangible product or the ‘brand’ as a name and a visual expression of its
essence.  A truly strong and successful ‘brand’ has a number of different components,
which together build the customer experience of that ‘brand’ as a whole.   

Every valuable brand has two shared attributes: customer awareness (within

the relevant market) and trust.  Awareness can be achieved through market
presence and communications, but trust must be earned by delivering on the
brand promise and building familiarity over time.  Great brands are based on
great customer experience, and then reinforced with excellent
communications — not the other way round.   

Positive customer experience has been central to the success of Apple for
many years.  In addition to capturing headlines with its bold product
innovations, Apple develops the infrastructure and support required to ensure
that its products live up to customer expectations.   

Innovation in the molecular sense is a challenge.  We all know that the timelines,
complexity and regulatory hurdles within pharmaceutical development make major, rapid
product innovation a challenge.   

So perhaps we need to look elsewhere and think differently about innovation.  It’s
important for any innovative company to strike the right balance; overemphasis on trying
to identify breakthrough projects can distract from seeing customers’ immediate needs.
We all know from our own experience that customers can’t reliably identify their latent
needs, nor can they tell you whether they would buy such a product if they could.   

But that’s not the point. It is better to change our perspective from ‘completely new,
never been seen before’ to ’beyond the familiar.’  The latter builds on what customers
already know, rather than asking customers to gamble on something completely different
that the company may or may not be able to deliver profitably.   

Again, Apple is a good example of this.  Well known for systematically rethinking existing
product categories from the user’s perspective, it learns from the technology pioneers
and from its own early mistakes, and relentlessly improves functionality and ease of use
(building on what is already familiar and intuitive to customers) - while still ensuring high
reliability and stunningly attractive design.  Its brand promise is based on making
technology accessible and attractive to the wider market, not on breakthrough
functionality that only geeks will find useful.   

Though seen as an innovator, Apple is not a technology pioneer.  The early Mac wasn’t
the first personal computer with a graphical user interface.  Likewise, MP3 players were
common before the iPod, and iTunes wasn’t the first online music store.  Yet it is Apple
that dominates portable music players and, more recently, smart phones with the
iPhone.   

In each case, Apple’s customers really don’t care whether the technologies are radical or
incremental or whether Apple was first.  Their main concern is that the products meet
real needs and that they are attractive, easy to use, reliable and offer ‘value’.   

So what could a truly ‘customer centric’ approach be for the pharmaceutical industry?   

First up, LISTEN.  Understanding what truly satisfies customers and even more
importantly what causes dissatisfaction is key.  Really knowing what is important to them
is critical (i.e. being relevant).  This helps us understand the aspects of the brand
‘promise’ that we need to consistently deliver on.  For example, we cannot ignore the
fact that physicians want to understand the brand works in the real world as opposed to
the clinical trial setting; nor that payers want to understand the true value it brings to
healthcare delivery rather than the theoretical value.   

Next it is all about creating TRUST with the customer.  This comes from the customers’
whole experience of the ‘brand’.  The underlying product needs to deliver consistently on
its ‘promise’, one part of which is to meet or exceed performance expectations.  We can
help that by ensuring the product is used in the right patients.   

When it comes to INNOVATION, it is as much about the customer experience of using

the brand as it is about an entirely new molecule.  For some brands this can mean
innovating the delivery mechanism.  For others perhaps, it is about providing a stream of
evidence that fits neatly with where the physicians are heading in their treatment
thinking.   

Relevance and value are central to any good customer experience.  Too often
we do not offer the optimum level of either.

Comment on the Relaunches as a result of Turn around Strategies adopted by Company ?

From relaunching brands to strengthening its product

portfolio, Hindustan Unilever Ltd (HUL) has done a whole host of things
over the last few years. The company’s performance over the last eight
quarters seems to suggest its strategy is working. Harish Manwani,
HUL’s chairman and COO, Unilever, calls it the “and-and” strategy,
which is delivering product innovation, cost efficiency and profitable
growth — both in the short term and long term — simultaneously.
At the start of the financial year, few believed HUL would be able to
deliver growth in the face of growing competition, soaring costs and
slowing economic growth. But consistent performance through the year
shows its strategic focus has yielded the requisite results.

For starters, the decision to treble its rural reach last year has helped
HUL post double-digit growth quarter after quarter. Today, both rural and
urban markets have an equal share in the company’s total sales. And,
rural markets are growing at a faster clip than urban India. This explains
the company’s revenue growth of 18 per cent in FY12, with nine per cent
underlying volume growth. HUL says this growth is not only broad-based
but also ahead of the market.

In the fourth quarter, the company’s domestic business grew by 20 per

cent while net profit grew by 21 per cent. Though the cost push has not
abated entirely, HUL has expanded margins by 170 basis points in Q4.
In the third quarter, the assumption was that HUL would not be able to
sustain 21 per cent growth levels in the soaps and detergents segment,
but the category has grown by a stellar 28 per cent in Q4, way ahead of
the industry. The company claims after the relaunch of key brands,
double-digit growth has sustained.

The management believes that while the category will continue to grow,
some of it may come off this year as a lot of the growth is due to pricing.
Compared to the 14 per cent growth clocked in Q3, personal care has
grown at 17 per cent in Q4, and is entirely volume-led. This category is
keenly watched as the margin leverage is higher in this segment unlike
the low value-add business of soaps and detergents.

The food business has grown at a much slower pace at 7.7 per cent and
this could be a cause of concern going forward, as food was growing in
high double digits compared to the 13 per cent growth the segment
clocked in Q3. Nitin Paranjpe, CEO and MD of HUL, said company is
trying to figure out what led to the sudden slowdown in the Knorr range.
As a category, beverages has grown by eight per cent, while packaged
foods has grown at 10 per cent, buoyed by Kissan and Kwality Walls.

“In the next five years, the market is going to be 2-2.5 times its present size,” Vittal said.
Right now, his key concern is to ensure that HUL will be nimble enough to keep pace with
the rapid evolution of the market.

We are as passionate, as determined about doing a Rs10 crore opportunity as we are

about Rs2,000 crore,” says Vittal.
Rivals recognize the efforts made by the company.

The company wants to tap growth at both ends of the pyramid. The large categories at the
bottom, such as detergents and soaps, are growing well, while at the top, growth is
explosive, Vittal said.

As the economy continues to boom—India boasts of the second fastest pace of growth
globally—greater prosperity will put more disposable income in the hands of a larger
number of consumers, all with newly awakened aspirations. Or so the argument runs.

This is already happening in the rural areas, helped along by some of the government’s
social welfare programmes such as the Mahatma Gandhi National Rural Employment
Guarantee Scheme, better infrastructure and increased job opportunities. Meanwhile, in
urban India, consumers are looking for more choice and better products.

“Companies have to decide between high volumes and high-value growth. This is a
tactical decision,” said Sunil Duggal, chief executive officer of Dabur India Ltd, which
makes personal and Ayurvedic products such as Vatika and Uveda.

That won’t be an easy call to make considering HUL’s size and reach and the scope of its
ambition.

The country's largest consumer goods company, Hindustan Unilever,

reported a weak set of numbers for the December quarter. In a media
interaction, Sanjiv Mehta, managing director and chief executive officer,
says they'll continue to focus on volume growth as price growth remains
muted. Edited excerpts:

Volume growth for HUL has improved from 4.5-5 per cent last year
to six per cent. Do you see this getting better?

If you see overall market growth over the past two years, value growth of
five per cent has come down to about 4.5 per cent. Volume growth, on
the other hand, virtually nil two years ago, is now 2.5-3 per cent.

We are ahead of the market in this and our focus on this metric will stay.
The previous time there was a commodity price deflation, in 2009, we
did not focus enough on volume growth. The result was a fall in both
price and volume. We were clear we would not repeat this mistake and
began taking measures early on, to ensure volume growth stayed intact.

What have you done to improve volume growth?

We have stayed on course in investing behind brands goes. Our

advertising & sales promotion expenditure has increased and we will
keep it that way. Our innovation pipeline remains intact, apart from the
price cuts we are taking, keeping the price-value equation in mind. A
combination of these has helped us sustain volume growth at six per
cent for the past three quarters.

Will you reduce your dependence on soaps & detergents, a mature

category and which contributed to the price de-growth you saw this
quarter?

It is our core category and we will not take our eyes off it. But, to answer
your question, the sales mix will change over time as emerging
categories evolve. Segments of the future today contribute 20 per cent
of our turnover. This number will go up as these categories get bigger.

You have a cash balance of Rs 5,000 crore on your books. Since

you have gone back to making acquisitions with Indulekha (the hair
care brand it recently acquired), will you deploy this money into
acquiring brands and businesses?

We have always maintained we're open to acquisitions if the fit is right.

Indulekha fitted the bill both in terms of our strategic intent and price. If
anything else matches our priorities and intent, we will consider it.

The December quarter saw the e-commerce launch of Ayush (their

brand of ayurvedic products). Will you take it offline?

Right now, the focus is online. The e-commerce platform is an evolving

channel of distribution and something we believe will work for Ayush,
which is positioned on the ayurvedic and naturals platform. We will take
it offline later.

Did Unilever, your parent and largest shareholder, influence your

decision to transfer the entire balance of Rs 2,187 crore in general
reserves to the profit & loss account ?

The decision was the result of an option that was available thanks to the
new Companies Act, which does not make transfer of profits to general
reserves mandatory. We felt instead of keeping the amount in general
reserve, we could give it back to the shareholders. We have sufficient
cash balance on our books and the amount in general reserve was in
excess of our needs. We will decide how to disburse it once necessary
approval from the high court to our scheme is received.

That should take about six months.

After a dismal 2009, Hindustan Unilever Ltd (HUL), India’s largest consumer company by
revenue, has seen volume growth return to double digits in three successive quarters this
calendar year. This comes after volume either fell or grew marginally in the corresponding
year-ago quarters. It also broke a run of 40 quarters during which volume didn’t expand
by more than single digits.

A year ago, the maker of Lux, Wheel, Dove and Knorr seemed to be floundering, caught in
a spiral of price cuts and shrinking margins.

The comeback has taken place amid a pitched battle with Procter and Gamble Home
Products Ltd (P&G), which also spilled over from the retail shelves into the courts as they
fought over claims made in advertisements.

That fight is reminiscent of its campaign in the 1980s to tackle Nirma, which was making
inroads at the lower end of the market, by launching Wheel, now India’s largest detergent
brand with 18% market share. It also brings to mind the 2004-05 laundry war with P&G,
during which both the companies took a hit on their margins, but eventually HUL emerged
stronger.

Keeping pace: Consumer products on display at a supermarket in Delhi. Close to 90% of

HUL’s portfolio is fresh—either a new product or one that’s been relaunched over the last
12 to 18 months.

The Indian arm of the Anglo-Dutch Unilever Plc, which has been present in the country
since 1933, did several things that seem to be working for it. The company completely
revamped the product range, cut prices to keep the competition on its toes, tweaked
advertising to better position the offerings, reduced its inventory levels and reached even
further into rural India, opening up new markets for branded goods.

What changed at HUL that allowed to it to succeed this time around? Gopal Vittal,
executive director of the company’s home and personal care (HPC) division, which
accounts for 70% of revenue, characterizes it as an internal transformation.

The Comeback

“The company has now become comfortable in a schizophrenic culture,” he said. He was
referring to the new attitude of the company—more aggressive, flexible and nimble
enough to take up both large and small opportunities that are sharply different in scope.

The gain has not come without its share of pain. For instance, HUL was forced to reduce
the price of Rin detergent and bars by close to 30% following the launch of Tide Naturals,
a 30% cheaper variant of the P&G flagship brand Tide. Then came a round of increases in
content and pack sizes.

The aggressive price cuts have resulted in a decrease of overall sector profit, meaning all
companies need to work that much harder and sell that much more merely to stay in
place, leave alone getting profit growth to hasten.

This battle between the two global consumer giants was inevitable, given that growth is
tapering in the developed markets. Cincinnati-based P&G, which made a serious push
into India only in 2009, although it has been present in the country since 1989, wants to
expand as fast as possible in emerging markets. HUL has a year-to-date market share of
34.5% in detergents and 45.9% in shampoo versus P&G’s 9.6% and 23%, respectively.

While the rivalry has exacted its toll, it has seen both companies benefiting from the
expansion in the market. “Despite risks associated with the tactics in laundry, P&G seems
confident in its strategy and has expressed a desire to continue competing with Unilever
and other companies in contested areas,” Dibadj said in his report.

While P&G has been seeking to make up for lost time, HUL, on the other hand, has single-
mindedly sought to “unblinkingly defend (its) market leadership,” as Harish Manwani,
president, Asia Africa, Unilever executive and non-executive chairman of HUL, put it at a
press briefing on 28 July.

That has meant a vigorous churning of the product range with as many as 41 launches
during the year. Close to 90% of HUL’s portfolio is fresh—either a new product or one
that’s been relaunched over the last 12 to 18 months.

The relaunches include the companies so-called local jewels—Breeze, Liril, Moti, Pears
and Hamam—aimed at taking on homegrown rivals such as Godrej Consumer Products
Ltd (GCPL), which makes Godrej No. 1 and Cinthol, and Wipro Ltd’s Wipro Consumer
Care and Lighting division, which has brands such as Santoor. HUL also reintroduced
what it calls power brands—Lifebuoy and Clinic Plus. It also launched premium products
such as anti-ageing formulas and hair conditioners under existing brands such as Ponds,
Dove and Lakme.

Earlier strategies had centred around big categories and big brands. In 2000, it sought to
focus on 30 power brands. In 2005-06, the Masstige(Mass Prestige) strategy sought to
make premium brands available to the masses through appropriate pricing.

That focus on size has widened to accommodate smaller segments.

“We are as passionate, as determined about doing a Rs10 crore opportunity as we are
about Rs2,000 crore,” says Vittal.

Rivals recognize the efforts made by the company.

The company wants to tap growth at both ends of the pyramid. The large categories at the
bottom, such as detergents and soaps, are growing well, while at the top, growth is
explosive, Vittal said.

As the economy continues to boom—India boasts of the second fastest pace of growth
globally—greater prosperity will put more disposable income in the hands of a larger
number of consumers, all with newly awakened aspirations. Or so the argument runs.

This is already happening in the rural areas, helped along by some of the government’s
social welfare programmes such as the Mahatma Gandhi National Rural Employment
Guarantee Scheme, better infrastructure and increased job opportunities. Meanwhile, in
urban India, consumers are looking for more choice and better products.

“Companies have to decide between high volumes and high-value growth. This is a
tactical decision,” said Sunil Duggal, chief executive officer of Dabur India Ltd, which
makes personal and Ayurvedic products such as Vatika and Uveda.

That won’t be an easy call to make considering HUL’s size and reach and the scope of its
ambition.

“In the next five years, the market is going to be 2-2.5 times its present size,” Vittal said.
Right now, his key concern is to ensure that HUL will be nimble enough to keep pace with
the rapid evolution of the market.