Organizational Scenarios, Problems and Issues Involved with Innovation - Hindustan Lever - Case Study Example

Organizational Innovation Table of Contents Table of Contents 2 Organizational Scenarios, Problems, Opportunities and Issues Involved With Innovation3 Leadership Concepts of HLL 5 Technology Concepts of HLL 6 Society Concepts of HLL 7 Future Direction of HLL 8 Detailed Action Plan of HLL 8 Brand Action Plan 9 Action Plan for Customers 9 Action Plan for Business Procedures 9 Works Cited 11 Organizational Scenarios, Problems, Opportunities and Issues Involved With Innovation In business, every problem can be viewed as an opportunity to innovate certain new things. Organizations that dynamically follow innovation can create more growths and returns than others which ignore innovative practices. Innovation can help a company to create high brand awareness and demand for products. Organizations can find concepts for innovation from the problems or opportunities and progress towards growth (Kingsland, “Finding Opportunities for Innovation and Growth”). With respect to Hindustan Lever Limited (HLL), the company provides great example for understanding that how the market scenario had provided decision makers to understand the problems and opportunities and turn them to innovation. Innovation may rake the shape of a unique product, different methods or new approach of performing business. It arrives from inside of a company. Successful innovations take place by different outlooks and concepts. HLL had put great deal of efforts to develop innovative approaches and increase sales in the rural poor market of India. Generally, the products of multinational companies are targeted for developed market and the price is often beyond the purchasing power of rural citizens. Thus, multinational companies always market their products for the top level customers in poorer nations. HLL seeks to take the opportunity of making products available for poor consumers. They seek to reach to the poor customers by research and development approach. HLL observed that to sell their products in the rural market of India there is need to shift from traditional media. In India, there were differences in using the television media among poor people and thus there was need for more direct and individual approach to communicate their message to the poor consumers. The main problem HLL faced for selling the products was illiteracy among poor Indian people. The decision makers had recognized that customers need to be educated first to understand the benefits they can get by using HLL products (Achtmeyer, “Hindustan Lever”). There was a great opportunity in front of HLL as the food market was strong in India. Food accounts for almost half of all commercial consumptions in India. India’s market was characterized by overwhelming national and social diversity. The HLL market researchers had studied the market of India and learned that majority of food purchased by poor people are raw in nature. The food products where made as well as sold locally. Each food products such as wheat, rice and salt among others have separate supply chain. As salt was the key input of majority of HLL products, the decision makers had selected salt as prospect for market growth (Achtmeyer, “Hindustan Lever”). HLL entered in the salt market of India by their new product ‘Kissan Annapuna’ in the year 1995. At that time, 10% of total consumer salt was sold branded. The decision makers had recognized the need for improving the customers’ knowledge. Besides the rural market, the consumers of urban market also purchased unbranded salt. In order to expand their business, HLL concentrated on the urban market to demonstrate the practicality of their branded salt. The demand and production of salt was well in India, thus HLL focused on upgrading the quality of their salt and purity in their products. The major issue for HLL was the price of product as their main competitor was local salt which was inexpensive. The cost of HLL salt was high because it included the shipping expenses, packaging expenses and refinery expenses that were absent in local products. To reduce the cost, HLL started to use rail transport and removed the middleman in distribution process. In the urban market, HLL had discovered the potentiality for purchasing branded salts among customers (Achtmeyer, “Hindustan Lever”). To increase the sales, HLL started to differentiate their products from other branded companies. The importance of iodine had helped HLL to innovate new idea about branding their product. The focus had changed from purity to product feature and health of customers. HLL tried to use the opportunity of iodized salts with respect to marketing viewpoint. Government was also encouraged to take positive part to make sure that people received adequate iodine. HLL started to educate consumers about the benefits of iodine. With the help of government authorization, HLL had aggressively executed the marketing strategy and focused greatly on highlighting the health concerns of iodine. Soon, HLL had discovered problems for salt products in Indian market. Unlike other nations, Indians use salt before cooking, for this reason the iodine becomes vaporized. This problem provided an opportunity for HLL to innovate new ways to restore iodine in salt. In the year 2002, HLL had developed ‘stable iodine’ by condensing the iodine in salt so that it remains even if used before cooking (Achtmeyer, “Hindustan Lever”). Thus, it can be seen that the scenario of Indian food market had provided the decision makers an opportunity to innovate new product. As a result of new innovation, HLL had succeeded in the salt market of India and had almost 17.7% share in branded salt (Achtmeyer, “Hindustan Lever”). Leadership Concepts of HLL HLL is one of the market leaders in India. HLL had successfully adopted itself according to the living standards of Indian people. The company had accomplished a great deal of appreciation for the giant strides that they had developed by their innovative approaches of new product. Their unique marketing strategy is appropriate for Indian customers. With their new creation of condensing the iodine in salt, HLL has successfully become one of the leaders in salt market. It has made a strong position in the consumer goods industry of India. Today, HLL is regarded as one of the leading players in personal care products, consumable products and detergents. The great success of HLL is the result of company’s research facility. The research of HLL provides competitive advantage by introducing innovative products and procedures. For example, in tea products, HLL had successfully enhanced the quality, color, smell and flavor of tea. HLL had developed different combinations of tea and have become one of the leading suppliers in the market. It is also the market leader with respect to soaps, shampoos and other products. It is the goal of HLL to provide customers with supreme experience and thus it continuously appraises the product performance and initiates customers; preferences. To maintain the leadership position, HLL always tries to cope up with the variations of people’s lifestyle and ambition of every income group (IILM Institute for Higher Education, “Hindustan Lever Limited: Restructuring Marketing Strategy”). Technology Concepts of HLL HLL always focuses upon continuous technology improvement. In the year 1999, HLL had transformed the entire arrangement format of research center to introduce a whole new research facility. It has always concentrated on procuring knowledge oriented applications for developing the knowledge of people. One of the grafts of HLL’s research based method was the introduction of Breeze 2 in 1. It was a blend of shampoo cum soap which was inexpensive and healthy for body as well. For research and development, HLL has associated with several educational institutions, for example, Indian Institute of Science, All India Institute of Medical Science and University of Pune among others. In addition to that, HLL has also initiated research tasks in several academies such as Jawahar Lal Nehru University. By the use of technology, HLL tries to provide greater and healthier products in the market. Technology helps HLL to develop new products. For example, HLL had developed Rin with out - of – the - box technology that provides better cleanliness, same happened with Brooke Bond tea that includes vitamin. With the help of technology, HLL had discovered how to condense iodine in the salt. By the use of nuclear imaging technique, HLL was capable to demonstrate that condensed materials to break apart throughout digestive procedure. (IILM Institute for Higher Education, “Hindustan Lever Limited: Restructuring Marketing Strategy”) & (Unilever, “Growing Sustainably”). Society Concepts of HLL Though India has had great market potential with respect to international standard, the average earning of Indian people was 2200 USD per annum in the year 1999. HLL understands the Indian society and thus tries to reduce the prices of products by several techniques. Majority of people of rural areas are uneducated and do not know the importance of iodine and other aspects of health such as cleanliness or refinery. HLL had successfully generated the awareness about making people understand the importance of health aspects. HLL is well aware of the Indian society concept and thus made their first move in salt category. Rice has not been chosen for expansion basically because Indian people make the purchase decision of rice after judging physically and visually. With respect to wheat, Indian people use great deal of effort for making bread and thus the quality cannot be judged till cooking. The salt was worthy as customers did not know about iodine and its impact on health. Thus, it was great prospect for HLL to educate and sell their products in the Indian society (Achtmeyer, “Hindustan Lever”). Future Direction of HLL The market of India is moving towards drastic changes in recent era. New media and new technologies such as computer and internet are shaping the Indian market. Television and Cable line is already very popular among Indian people, however in future the Direct Broadcast Satellite (DBS), Internet Television and Direct to Home (D2H) services will be popular among Indian consumers. The print media is also experiencing change because of technology innovation. HLL is trying towards drumming the rural market to expand the customer base and increase sales quantity. HLL is customizing the products according to preferences of consumers. Maximum people of rural areas are currently starting to purchase brands instead of products. Thus, the action plan will be changed in future for HLL (IILM Institute for Higher Education, “Hindustan Lever Limited: Restructuring Marketing Strategy”). Detailed Action Plan of HLL Significant aspects such as poverty, lesser awareness about heath aspects and cleanliness, shortage of water and natural resources will always be the major hindrances for growth of HLL. Thus, in order to improve, HLL needs to develop awareness among consumers about the benefit of healthy products by HLL. The action plan for HLL can be divided into three parts: Brand Action Plan Develop a positive influence of purchasing HLL products through brand awareness Maintain sustainable leadership in consumable products Develop new products for gaining competitive advantage Action Plan for Customers Ensure proper knowledge about consuming healthy products Establishing good reputation by corporate social responsibility Action Plan for Business Procedures Use appropriate advertising media to communicate the message to different customers Understand the trends of different cultures in Indian society and accordingly develop marketing strategy Maintain good relation with the stakeholders in an accountable way Ensure ecological performances in business operation There are several issues for innovation and thus the action plan can help to address them in methodical way. Using cutting edge technology can help HLL to control the production cost and thus maintain the leading position in Indian market. Works Cited Achtmeyer, William F. “Hindustan Lever”. September 08, 2011. Center for Global Leadership, 2002. IILM Institute for Higher Education. “Hindustan Lever Limited: Restructuring Marketing Strategy”. September 08, 2011. Theory and Practice of Case Method of Instruction, 2007. Kingsland, Blair. “Finding Opportunities for Innovation and Growth”. September 08, 2011. Spectrum Innovation Group, 2007. Unilever. “Growing Sustainably”. September 08, 2011. Annual Report, 2011. Read More