about pepsodent and its rivalries in the market

1. Company name : hindustan unilever limited(HUL)
Product : pepsodent
By:
Patha santhosh
Mba-a
M14A035

2. About HUL :
• Hindustan Unilever Limited (HUL) is an Indian consumer
goods company based in Mumbai, Maharashtra. It is owned by
Anglo-Dutch company Unilever which owns a 67% controlling
share in HUL. HUL's products include foods,
beverages, cleaning agents and personal care products.
• HUL was established in 1933 as Lever Brothers and, in 1956,
became known as Hindustan Lever Limited, as a result of a
merger between Lever Brothers, Hindustan Vanaspati Mfg. Co.
Ltd. and United Traders Ltd. It is headquartered in Mumbai,
India and employs over 16,500 workers, whilst also indirectly
helping to facilitate the employment of over 65,000
people.[6] The company was renamed in June 2007[7] as
"Hindustan Unilever Limited".
• Hindustan Unilever's distribution covers over 2 million retail
outlets across India directly and its products are available in
over 6.4 million outlets in the country. As per Nielsen market
research data, two out of three Indians use HUL products.[8]

3. Products from HUL:

4. Economics definition:
 Humans have unlimited wants and means for
satisfying wants and means for satisfying
these wants are scarce.
 Economics studies economic human behavior
scientifically.it studies how humans try to
optimize certain objective under given
constraints.

5. About pepsodent
• Pepsodent was launched in 1993 in India and since then the brand
has raised the benchmark on Oral Care solutions in India.
• Pepsodent has a range of toothpastes and toothbrushes that could
take care of specific oral care needs. Pepsodent toothpaste fights
germs to protect teeth against cavities and gives strong teeth, fresh
breath and healthy gums.
• Pepsodent as an oral care expert offers solution to specific problems
like bleeding gums and sensitive teeth.
• KEY FACTS
• Endorsed by FDI ( the largest dental association globally)
• Among the most trusted brands in India (Brand Equity, Economic
Times, India)
• Also sold as Mentadent, Zhonghua, PS and Signal in other countries

6. Production process of pepsodent:

7. Cost analysis:
A process by which business decisions are analyzed.
The benefits of a given situation or business-related action
are summed and then the costs associated with taking that
action are subtracted. Some consultants or analysts also
build the model to put a dollar value on intangible items,
such as the benefits and costs associated with living in a
certain town. Most analysts will also factor opportunity cost
into such equations.

8. Various Cost Concepts
Nominal Cost and Real Cost: Nominal cost is the
money cost of production. The real costs of production
are the pain and sacrifices of labour involved in the
process of production.
Explicit and Implicit costs: Explicit costs are the
accounting costs or contractual cash payments which the
firm makes to other factor owners for purchasing or
hiring the various factors. Implicit costs are the costs of
self-owned factors which are employed by the
entrepreneur in his own business. These implicit costs
are the opportunity costs of the self-owned and self-employed
factors of the entrepreneur, that is, the money
incomes which these self-owned factors would have
earned in their next best alternative uses.

9. Accounting Costs and Economic
Cost: Accounting costs are the actual or explicit
costs which are paid by the entrepreneurs to the
owners of hired factors and services. On the other
hand, economic costs not only include the explicit
costs but also the implicit costs of the self-owned
factors or resources which are used by the
entrepreneur in his own business.
Opportunity Cost: The opportunity cost (or
transfer earnings) of any good is the expected
return from the next best alternative good that is
forgone or sacrificed.

10. Business Cost and Full Cost: Business costs include all
the expenses which are incurred in carrying out a business.
The concept of business cost is similar to the accounting or
actual cost. The concept of Full cost includes two other
costs: the opportunity cost and normal profit. Normal profit
is a necessary minimum earning which a firm must get to
remain in its present occupation.
Private costs and Social Costs: Private costs are the
economic costs which are actually incurred or provided for
by an individual or a firm. It includes both explicit and
implicit costs. Social cost, on the other hand, implies the
cost which a society bears as a result of production of a
commodity. Social cost includes both private cost and the
external cost. External cost includes (a) the cost of free
goods or resources for which the firm is not required to
pay for its used, e.g., atmosphere, rivers, lakes etc. (b) the
cost in the form of ‘disutility’ caused by air, water, and
noise pollution, etc

11. Total, Average and Marginal Costs: Total cost refers
to the total outlays of money expenditure, both explicit and
implicit on the resources used to produced a given output.
Average cost is the cost per unit of output which is obtained by
dividing the total cost (TC) by the total output (Q), i.e., TC/Q =
average cost. Marginal cost is the addition made to the total cost
as a result of producing one additional unit of the product.
Marginal cost is defined as ?TC/?Q.
Fixed Costs and Variable Costs: Fixed costs are the
expenditure incurred on the factors such as capital, equipment,
plant, factory building which remain fixed in the short run and
cannot be changed. Therefore, fixed costs are independent of
output in the short run i.e., they do not vary with output in the
short run. Even if no output is produced in the short run, these
costs will have to be incurred. Variable costs are costs incurred by
the firms on the employment of variable factors such as labour,
raw materials, etc., whose amount can be easily increased or
decreased in the short run. Variable costs vary with the level of
output in the short run. If the firm decided not to produce any
output, variable costs will not be incurred.

12. Short-run and Long-run Cost: Short-run costs are the costs
which vary with the change in output, the size of the firm remaining
the same. Short-run costs are the same as variable costs. On the
other hand, long-run costs are incurred on the fixed assets, like
plant, building, machinery, land etc. Long-run cost are the same as
fixed-costs. However, in the long-run even the fixed costs become
variable costs as the size of the firm or scale or production is
increased.
Relation Between Marginal Cost(MC) and Average Cost(AC): The
relationship between MC and AC may be explained as follows:
When MC falls, AC also falls but at lower rate than that of MC. So long as
MC curve lies below the AC curve, the AC curve is falling.
When MC rises, AC also rises but at lower rate than that of MC. That is,
when MC curve lies above AC curve, the AC curve is rising.
MC intersects AC at its minimum. That is, MC = AC at its minimum.

13. Some important marginal concepts:
The marginal use of a good or service is the specific use to which an agent
would put a given increase, or the specific use of the good or service that
would be abandoned in response to a given decrease.
The marginal utility of a good or service is the utility of the specific use to
which an agent would put a given increase in that good or service, or of
the specific use that would be abandoned in response to a given decrease.
In other words, marginal utility is the utility of the marginal use.
The marginal rate of substitution is the rate of substitution is the least
favorable rate, at the margin, at which an agent is willing to exchange
units of one good or service for units of another.
A marginal benefit is a benefit (howsoever ranked or measured) associated
with a marginal change.
The term “marginal cost” may refer to an opportunity cost at the margin,
or to marginal pecuniarycost — that is to say marginal cost measured by
forgone money.

14. Other marginal concepts include (but are not limited to):
i)marginal physical product (sometimes also known as
“marginal product”)
ii)marginal rate of transformation, the rate at which one
output or result must be sacrificed in order to increase
another output or result
iii)marginal revenue product
iv)marginal propensity to save and consume
v)marginal tax rate

15. MARKET SHARE OF pepsodent(HUL)

16. Price elasticity :
In the toothpaste , the quantity demanded rose
steadily as the price fell.it is general assumption
of economics that demand and price are
inversely related .that is , as price goes down ,
the quantity demanded rises ; as price rises , the
quantity demended declines.
The percentage change in
demand,relative to a percent change in price.

18.  Pepsodent has its products which cover
a large area.
 Their products are
 Pepsodent germicheck+
 Pepsodent whitening
 Pepsodent 2 in 1
 Pepsodent G
 Pepsodent kids

19. Market structure(monopolistic)
 In many industries , the products are differentiated.for
one reason or another, consumers view firm’s brand
as different from other brands.pepsodent toothpaste,is
perceived to be different from colgate,anchor,and
other tooth pastes.the difference is partly
flavour,partly consistency,and partly reputation-the
consumer’s image (correct or incorrect) of the relative
decay-preventive efficacy of pepsodent.as a
result,somecustomers will pay more for pepsodent.

20.  Because HUL is the sole producer of pepsodent,
it has monopoly power.but its mnopoly power is
limited because consumers can easily substitute
other brands if the price of pepsodent
rises.although consumers who prefers
pepsodent will pay more for it,most of them will
not pay much more.the typical pepsodent user
might pay rs 2 or even rs 3 a tube more,but
probably not rs 10 more.for most
consumers,toothpaste is tooth paste,and the
differences among brands are small.

21. Makings of monopolistic competition:
A monopolistically competitive market has two key
characteristics.
 Firms compete by selling differentiated products that
are highly substitutable for one another but not
perfect substitutes.in other words , the cross price
elasticities of demand are large but not infinite.
 There is free entry and exit:it is relatively easy for
new firms to enter the market with their own brands
for existing firms to leave if their products become
uprofitable.

22. Diagram representing monopolistic
competition:

23. Demand forecasting:
Competition in India’s toothpaste market has
been heating up in the last few months. Procter
& Gamble(NYSE:PG) recently entered the market
with the launch of Oral-B Pro-Health, a specially
formulated toothpaste for Indians that contains a
patented
ingredient. Meanwhile, Unilever (NYSE:UL) has
been taking on the the market leader Colgate by
airing comparative advertisements on Indian
television, claiming that its Pepsodent
Germicheck toothpaste is 130% better than
Colgate.

24. • Key Trends Fueling Growth In India’s
Toothpaste Market?
• 1. Rising demand from rural India: Although
only 42% of the people living in India’s villages and small
towns use toothpastes, the proportion is increasing with
rising rural income and greater awareness about oral
hygiene through advertisements, dental camps and free
dental checkups.
• 2. Rife oral hygiene problems: More than 30% of
India’s population suffers from gum sensitivity and oral
hygiene problems. Thus, India’s urban population is
continuously upgrading from regular to functional
toothpastes due to which the category is growing
by 30%–40% annually.

25. Factors determining demand:
 We already know the dependency of demand on the
price of the commodity.there are some other factors
which influence demand.it is an iperative for the
marketers to know about these factors to undrstand
consumer demand and what could cause it to change.
 This dependency of demand on various factor is
described as demand function which can be expresses as,
 PRICE=the relationship between price and quantity
demanded has been discussed in detail under the law of
demand.we can recollect that quantity demanded is
inversely proportional to a change in price,ceteris
paribus(everything remaining constant).this implies an
increase in price causes an increase in quantity
demanded and vice cersa.

26. INCOME:the relationship between income and price
of a commodity is positive.ceteris paribus,a rise in
consumer income will increase his affordability thereby
having a positive impact on quantity demanded of a
product.
TASTES & PREFERENCES: consumers tastes and
preferences change with time and with trend and
fashion,causing demand for goods and services to
fluctuate accordingly.
PRICES OF RELATED GOODS:commodities may be
related each other and the demand for a commodity is
influenced by the price of related commodity.

28. Factors influencing supply:
The Price of Inputs
In addition to the price of the product being the
main factor as stated in the Law of Supply, the price of
production inputs also plays a part. The lowest price at
which a firm can sell a good without losing money is the
amount of money that it costs to produce it. Producing a
good or service involves taking inputs and applying a
process to them to produce an output. The output is the
finished good or service, and inputs are raw materials,
labor, utilities, liscensing fees, or even other goods.
These inputs are also known as factors of production. If
the price of inputs goes up, the cost of producing the
good increases. And therefore at each price producers
need to sell their good for more money. So an increase
in the price of inputs leads to a decrease in supply.
Simarly, a decrease in the price of inputs leads to an
increase in supply.

29. The Current State of Production
Technology
Production of a good involves taking inputs,
applying a process to them, and producing an output.
Well, production technology is involved in the process
part. Increases in the level of production technology
can make that process more efficient.

30. Goals of the firm:
Generally, the aim of the firm is to maximize profits.
Besides, maximum sales, maximum output and
maximum employment are also the goals of the firm.
These goals and change in them affect the supply of
the commodity.
Price of the substitutes:
The supply of particular goods is inversely related to the
price of its substitute

31. The price of the commodity:
The supply of a commodity very much depends on its
price. There is direct and positive relationship between
the price of the commodity and its supply.
Expected change in price:
In case producers expect an increase in the price, they
will withdraw goods from the market. Consequently,
supply will decrease. If price is expected to fall in future,
supply will naturally increase.

32. Number of producers:
If the number of producers producing a commodity
increases, its supply will increase. With the exit of
producers, the supply would decrease.
Internal peace and stability:
Existence of internal peace and stability will increase
the production and supply of a good. With political
disturbances, labor unrest and wars production and
supply of a good will be hampered.

33. Natural factors:
Natural calamities like flood, drought and cyclone
reduce the supply of a commodity. If natural
disasters are absent, production and supply of a
good will increase.
Means of transport:
Goods transport and communication facilitates free
and quick mobility of factors of production to the
producing centers and the final products to the
market. Presence of good means of transport and
communication thus increases the supply of a good.
The supply curve will shift to left.

34. Keep smiling 