The Economic Times: September, 2014
Mumbai: Market leader Hindustan Unilever (HUL) is setting up 14 new consumer clusters as part of an aggressive initiative to drive growth across smaller but fast-growing markets cross India. Rural markets contribute to 55% of the total FMCG consumption in India.
"It is imperative to win in all parts of our business and across all channels and geographies, in order to win decisively," HUL BSE -1.80 % CEO Sanjiv Mehta told ET in an exclusive interview. "For this, we need a much more granular understanding of consumers, customers and competitors in all our markets (geographies) and (build) an execution machinery to leverage this understanding," he added.
Mehta, who completes one year as HUL CEO next month, is spearheading this initiative. The structure for 'Winning in Many Indias' or WIMI as the plan is code-named within the company, will transform the HUL organisation from a four-branch structure at the front-end to 14 distinct consumer clusters that will roll up into five sales branches based out of seven physical locations.
The new fifth branch for the central region has been carved out from the Hindi heartland of central Uttar Pradesh, Madhya Pradesh, Rajasthan, Bihar and Chhattisgarh, comprising over 500 million people. This largely media-dark region has lower per capita income but is growing faster than other major markets, said Mehta.
The previous organisational structure was geared to tap growth primarily in the four metros and did not effectively reach out to smaller markets. "We are calling it the zooming in and zooming out strategy where we are leveraging the national scale of HUL to win in smaller markets with a micro marketing strategy" Mehta said.
The new clusters will kick-off from September 21 with 14 new leadership positions to empower talent within the system. HUL has reshuffled its work force by taking out people from within the system into the new clusters and making new additions wherever necessary.
A young manager will lead each cluster and the executive's mandate will be to understand the local demand and competition and drive growth in non-metro geographies. The first step for WIMI was a pilot that was done in South Branch by creating separate consumer clusters TAP (Tamil Nadu and Andhra Pradesh) and KK (Karnataka and Kerala) clusters.
"The WIMI operating framework is not a new sales structure. It is a new planning and execution framework for HUL as an organisation with which all its functions (sales, marketing, supply chain, finance, etc) will operate," Mehta said. "We want HUL to be future-ready' to tap that consumption."
"HUL should have done this a couple of years ago," an FMCG analyst in a foreign brokerage firm said on the condition of anonymity. "This structure will enable it to push growth of its brands in the very small markets where it did not have significant presence," he added.