New Product Development Process Hindustan Unilever

New Product Development Process
UNIVERSITY OF MUMBAI
(SEMESTER II)
MCOM I
SUBJECT
MARKETING STRATEGIES & PLANS
A PROJECT ON:
ACADEMIC YEAR:
2015-2016
SUBMITED BY:
Sagar Siddhant Sanjay
ROLL NO: 50
PROJECT GUIDE:
PROF. DINESH CHOTRANI
DATE OF SUBMISSION:
MALINI KISHOR SANGHVI COLLEGE OF

COMMERCE AND ECONOMICS
JUHU SCHEME, MUMBAI 400049
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Malini Kishor Sanghvi College of Commerce & Economics
Nirmaladevi Arunkumar Ahuja Marg, J.V. P. D., Juhu, Vile Parle (W),
Mumbai - 400049
DECLARATION BY THE STUDENT

I, Siddhant Sanjay Sagar student of M.com I (Semester II) Roll Number 50 hereby declare
that the project for the Paper MARKETING STRATEGIES & PLANS submitted by me for
Semester I, during the academic year 2015-16, is based on actual work carried out by me
under the guidance and supervision of Prof. Dinesh Chotrani
Project / Assignment Name - New Product Development Process
I further state that this work is original and not submitted anywhere else for any examination.
Name and Signature of student
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EVALUATION CERTIFICATE
This is to certify that the undersigned have assessed and evaluated the project on: New
Product Development Process submitted by Siddhant Sanjay Sagar Student of
M.com I (Semester II). This project is original to the best of our knowledge and has been
accepted for Internal and External Assessment.
Surname of the
Name of the
Fathers
Mothers
Roll No.
Student
SAGAR
Student
SIDDHANT
Name
SANJAY
Name
SHEFALI
50
Internal
External
Assessment
Examiner
Documentation (out of 10 marks x 2)

Presentation and Viva- Voce
(out of 10 marks x 2)
Total marks out of 40.._________
Name and Signature of the Internal Examiner
Name & Signature of the External Examiner
ACKNOWLEDGEMENT
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Principal

I would like to thank Malini Kishor Sanghvi College of Commerce & Economics and the
faculty members of M.com for giving me an opportunity to prepare a project on New Product
Development Process. It has truly been an invaluable learning experience.
Completing a task is never one mans effort. It is often the result of invaluable contributions of
individuals in a direct or indirect way in shaping success and achieving it.
I would like to thank our Principal of the college Dr. (Mrs.) Krushna Gandhi and Co-ordinator
Prof. Rajesh Dharawat for granting permission for this project. I would like to extend my
sincere gratitude and appreciation to Prof. Dinesh Chotrani who guided me in the study of this
project. It has indeed been great learning, experiencing and working under his guidance during
the course of the project.
I am also thankful to Prof. B.K.Nair of NM College of Commerce for his logistical support
and for providing necessary guidance concerning projects implementation. I would like to
express my sincere thanks towards volunteer researchers who devoted their time and
knowledge in the implementation of this project.
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Nevertheless, I express our gratitude towards my family and colleagues for their kind cooperation and encouragement which helped me in the completion of this project.INDEX
Sr No.
Details
Page No.
1.
Introduction
2.
New Product Development: A Dispersed & Integrated Process
3.
Product development and launch Process
12
4.
Stages in New Product Development
14
5.
Case Study Hindustan Unilever
20
6.
HULs Product Development Process.
22
7.
Industry
24
8.
Product Development
30
9.
Conclusion
34
10.
Bibliography
37
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INTRODUCTION
Successful new product development (NPD) is a critical cornerstone of firm
success. Significant incentives exist for firms to continuously introduce viable
new products to the markets they serve. The financial payoff from successful
new product introductions can help many firms overcome the slowing growth
and profitability of existing products and services that are approaching the
maturity stages of their life cycles. A 1990 study sponsored by the Marketing
Science Institute found that 25% of successful firms current sales were derived,
on average, from new products introduced in the last three years. New product
development can also be a potential source of significant economies of scale for
the firm.
New products may be able to use many of the same raw material inputs as the
firms existing products, and may be able to be sold by the firms existing sales
force resulting in substantially lower unit costs (and in turn higher margins) for
the firm. Furthermore, new product development can be an important source of
leverage for the firm to use in its relationships with its distribution channel
partners. Firms that have multiple successful products in their portfolios can
command greater attention and priority treatment, such as preferred shelf space
and payment terms, from wholesalers and retailers. This is a particularly
important consideration given the fact that large retailers, such as Wal-Mart and
Target, have evolved into positions of significant channel power and influence.
Furthermore, the image and reputation of the firm and its brands is heavily
influenced by the number and caliber of successful products in its portfolio. Nike
has enhanced its overall brand reputation, well beyond the realm of athletic
footwear, as a result of its successful introduction of golf equipment and
supplies, swimwear, soccer equipment and apparel, as well as numerous
successful products that appeal to tennis, basketball, and baseball enthusiasts.
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From a broader marketing perspective, firms that develop the necessary
organizational structures and processes to continuously and efficiently generate
new products are more likely to be in tune with their customers needs and
wants. Direct communication with customers, an essential foundation of new
product development, allows firms to learn their needs and tailor products and
services to their unique requirements. This direct customer communication
permits firms to gain a wealth of useful customer insights that should influence
every area of the marketing mix including pricing, distribution channel, and
promotion mix decisions.
Unfortunately, new product development is an extremely challenging and
complex process. Innovation is inherently risky, and firms may invest
considerable time and money in new product ideas with no guarantee that they
will ever become commercially viable. Many new products fail, and the new
product development landscape is littered with expensive examples. Although
Henry Ford led the way in developing the automobile market, the Ford Motor
Company in the 1950s introduced the Edsel and lost more than $100 million.
DuPonts Corfam substitute for leather resulted in hundreds of millions of dollars
in losses. General Mills lost millions of dollars on the introduction of a line of
snacks called Bugles, Daisies, and Butterflies. Gillette lost millions on a facial
cleansing cream called Happy Face. Xerox invented the personal computer in
1973 (three years before Jobs and Wozniak got started), but failed to
commercialize the Alto in spite of it being a brilliant technical success. Exxon
lost hundreds of millions on its ill-fated forays into office information systems
and high-tech electric motors.
New product failure rates are substantial; the cost of failure can be enormous.
Various studies routinely report that 30 35% of products introduced to the
market end up failing, even when the product is simply a line extension of an
existing brand, or a new brand introduced in a category where the firm already
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has a successful product. The failure rate for new products introduced by firms
into altogether new product categories approaches 50%. Without a good new
product development (NPD) process, firms can lose the significant investments
in research and development, engineering, marketing research, and testing that
are made on products/ideas that never return revenue.
In this project we discuss a dispersed and integrated new product development
process that has proven to enhance success and mitigate failure in product
development. The project would describe each stage of this process and provide
examples of how to implement each stage. Throughout this process we focus on
the customer and how to respond to customer needs.
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NEW PRODUCT DEVELOPMENT: A DISPERSED AND INTEGRATED PROCESS
Without a good NPD process firms cannot efficiently manage the inherent risk of
new product development. However, even a good NPD process is inherently
complex to manage. A significant measure of complexity results from the fact
that communications and information management technologies now allow, and
even encourage, the process to be rightfully dispersed both organizationally as
well as geographically. The benefits of managing NPD as a dispersed process are
many.
Organizationally, the NPD process operates best when it is able to capitalize on
key inputs from multiple functional areas within the firm, including marketing,
engineering, production, finance, etc. In general, no single organizational unit
optimally represents at the same time the voice of the customer, as well as all of
the technical, operational, and financial competences of the firm. The
interactions between multiple organizational units are instrumental in influencing
the efficacy of the NPD process and, in turn, the likelihood of introducing
commercially viable products. The process clearly benefits from inputs gathered
from sources outside of the organization from key customers, from important
competitors, and from strategic partners such as the firms principal suppliers. It
is generally accepted that limiting the new product development process to the
insights of only a few people in one certain functional area inside the firm will
generally restrict its long term effectiveness, and have a negative influence on
the firms product portfolio.
The NPD process is also becoming increasingly geographically dispersed. Even
within a given organization, it is entirely possible that employees representing
the important functional areas of the firm may be situated in different locations
around the country and across the world. Key marketing personnel may be
located in California, the finance department may be headquartered in New
York, while the relevant engineering and production personnel for a new product
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project may be found in several locations across western Europe. As we move
into the 21st century, new challenges and opportunities are arising, driven by
global markets, global competition, and the global dispersion of engineering
talent. The current and future vision of product development is that of a highly
dispersed process that capitalizes on the skills and insights of people and
organizations spread throughout the entire world.
However, the benefits of dispersion come at a cost. The greater the
organizational and geographic dispersion, the more complex and difficult it may
be to manage the process. As a result, it is critical that new product development
must be managed as an integrated process that acknowledges tradeoffs between
key measures of new product development success such as customer satisfaction,
time-to-market, and cost efficiency, as depicted in figure below.
Tradeoffs in New Product Development
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All else equal, a product will be more profitable if it delivers customer benefits
better, is faster to market, costs less to produce, and costs less to develop.
However, while delivering customer benefits is the principal goal, it cant be
accomplished at the expense of prudent cost management. While time to market
may be a critical concern in intensely competitive markets, it cant be achieved
at the expense of delivering the features and benefits that the firms target market
values. How the organization manages these tradeoffs, and coordinates and
integrates the many different inputs to its dispersed new product development
process, is both difficult and crucial to its success. Marketing, as the primary
(yet, not exclusive) advocate of the customer throughout the organization, must
acknowledge its responsibility to oversee the new product development process
in a way that capitalizes on the benefits of organizational and geographic
dispersion, while at the same time managing the process in an integrated,
accountable, cost-effective manner.
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Product development and launch Process
To enable constant growth companies should master the process of a product
launch through introducing new competitive products into the market. Product
launches help increasing sales revenue and expanding the customer base. By
introducing new products a company can also target new groups of customers.
The launch of new products can also influence the company expansion and new
internal investments. Continuous research and planning are necessary if a
company wants to achieve a successful product launch. During this process all
the employees of the company are involved, from the R&D to the Sales and
Marketing team
To be successful and attract the customer attention, the new product must fulfil
their needs and maintain the brand promise. In todays market quality of the
product is not the only aspect which customers are looking for. The price,
function and status of the product are also very important. An adequate research
and strategic planning are necessary before presenting the new products to the
customer. In a product launch strategy defines several important stages of
product launch process. Such important stages are; development, internal testing,
external testing, objective and goal setting, positioning, excitement building and
event timing.
The product development & launch process is different from one company to
another. For instance in business to business (B2B) the decision process is
different from business to consumer (B2C). The market size in B2B is generally
smaller comparing to B2C. In B2B the sales are based in value and not quantity
as commonly happens in B2C. The mass marketing in B2C can generate many
prospects, which will not necessarily turn into sales; however in B2B mass
marketing is not effective. The Sales process and purchasing process is also
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different in these two markets. In B2B the decision-making can go through many
gatekeepers, which is unlikely to happen in B2C.
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Stages in New Product Development
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Step 1: Generating
Utilizing basic internal and external SWOT analyses, as well as current
marketing trends, one can distance themselves from the competition by
generating ideologies which take affordability, ROI and widespread distribution
costs into account.
Lean, mean and scalable are the key points to keep in mind. During the NPD
process, keep the system nimble and use flexible discretion over which activities
are executed. You may want to develop multiple versions of your road map
scaled to suit different types and risk levels of projects.
Idea generation, at individual or team level, emerges as an essential component
of creativity and consequently of the innovation process. The most innovative
firms usually exploit various sources of ideas from new products as well as
various means to process those ideas. They also need to stimulate employees
imagination to feed the pipeline that nourishes the design and development of
new products. Creative capabilities of organization are essential to their ability to
innovate and survive in todays competitive environment.
Step 2: Screening the Idea

This is the first evaluation of new product idea. It involves screening newproduct ideas in order to spot good ideas and drop poor ones as soon as possible.
In this stage, only product ideas that will turn into profitable products are
adopted.
Wichita, possessing more aviation industry than most other states, is seeing
many new innovations stop with Step two screening. Do you go/no go? Set
specific criteria for ideas that should be continued or dropped. Stick to the
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agreed upon criteria so poor projects can be sent back to the idea-hopper early
on.
Because product development costs are being cut in areas like Wichita,
"prescreening product ideas," means taking your top three competitors' new
innovations into account, how much market share they're chomping up, what
benefits end consumers could expect etc. An interesting industry fact: Aviation
industrialists will often compare growth with metals markets; therefore, when
Boeing is idle, never assume that all airplanes are grounded, per se.
Step 3: Testing the Concept

Concept testing is done after idea screening. And it is important to note, it is
different from test marketing.
In concept testing, new product concepts is been tested with a group of target
consumers to find out if the concepts have strong consumer appeal.
Aside from patent research, design due diligence, and other legalities involved
with new product development, knowing where the marketing messages will
work best is often the biggest part of testing the concept. Does the consumer
understand, need or want the product or service?
Step 4: Business Analytics

During the New Product Development process, build a system of metrics to
monitor progress. Include input metrics, such as average time in each stage, as
well as output metrics that measure the value of launched products, percentage
of new product sales and other figures that provide valuable feedback. It is
important for an organization to be in agreement for these criteria and metrics.
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Even if an idea doesn't turn into product, keep it in the hopper because it can
prove to be a valuable asset for future products and a basis for learning and
growth.
A decision is made to ascertain the technical feasibility of the product, the
products market potential and ultimately, the products financial contribution to
the company
Step 5: Beta/Marketability Tests
Arranging private tests groups, launching beta versions, and then forming test
panels after the product or products have been tested will provide you with
valuable information allowing last minute improvements and tweaks. Not to
mention helping to generate a small amount of buzz. Wordpress is becoming
synonymous with beta testing, and it's effective. Thousands of programmers
contribute code, millions test it, and finally even more download the completed
end-product.
Step 6: Technicalities and Product Development

Provided the technical aspects can be perfected without alterations to post-beta
products, heading towards a smooth Step seven is imminent.
The marketing department will make plans to distribute the product. The finance
department will provide the finance for introducing the new product".
As an example, in manufacturing, the process before sending technical specs to
machinery involves printing MSDS sheets, a requirement for retaining an ISO
9001 certification (the organizational structure, procedures, processes and
resources needed to implement quality management).
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In internet jargon, honing the technicalities after beta testing involves final
database preparations, estimation of server resources, and planning automated
logistics. Be sure to have your technicalities in line when moving forward.
Step 7: Commercialize
At this stage, your new product developments have gone mainstream, consumers
are purchasing your good or service, and technical support is consistently
monitoring progress. Keeping your distribution pipelines loaded with products is
an integral part of this process too, as one prefers not to give physical (or
perpetual) shelf space to competition. Refreshing advertisements during this
stage will keep your product's name firmly supplanted into the minds of those in
the contemplation stages of purchase.
Step 8: Post Launch Review and Perfect Pricing

Review the NPD process efficiency and look for continues improvements. Most
new products are introduced with introductory pricing, in which final prices are
nailed down after consumers have "gotten in." In this final stage, you'll gauge
overall value relevant to COGS (cost of goods sold), making sure internal costs
aren't overshadowing new product profits. You continuously differentiate
consumer needs as your products age, forecast profits and improve delivery
process whether physical, or digital, products are being perpetuated.
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New Product Development Funnel

Most marketers now view new product development as an integrated, end-to-end
process that involves multiple (iterative) stages as shown in the figure. This
process is represented by a funnel to represent the notion that many different
ideas are winnowed and developed into a few high-potential products that are
ultimately launched. The key management issues are (1) that it is much less
expensive to screen and eliminate products in the early stages than in the later
stages, and (2) that each stage can improve the product and its positioning so that
the likelihood of eventual success increases. Such a staged process, summarized
by a stage-gate process is likely to reduce overall new product development
costs significantly. A stage-gate process facilitates managerial judgment and
discipline through the use of a series of gates in which members of the NPD
team are asked to justify the decision to move to the next stage where later
stages dramatically increase the funds and effort necessary for getting a product
to market successfully.
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Case Study Hindustan Unilever Limited
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer
Goods Company with a heritage of over 80 years in India and touches the lives
of two out of three Indians.
HUL works to create a better future every day and helps people feel good, look
good and get more out of life with brands and services that are good for them
and good for others.
With over 35 brands spanning 20 distinct categories such as soaps, detergents,
shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged
foods, ice cream, and water purifiers, the Company is a part of the everyday life
of millions of consumers across India. Its portfolio includes leading household
brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Ponds,
Vaseline, Lakm, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke
Bond, Bru, Knorr, Kissan, Kwality Walls and Pureit.
The Company has over 16,000 employees and has an annual turnover of INR
30,170 crores (financial year 2014 15). HUL is a subsidiary of Unilever, one of
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the worlds leading suppliers of fast moving consumer goods with strong local
roots in more than 100 countries across the globe with annual sales of 48.4
billion in 2014. Unilever has 67.25% shareholding in HUL.
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HULs Product Development Process.
We are going to talk about the Product Development Process of one of the
products in the umbrella of HUL known as PureIt.
Genesis of the Idea

At the turn of the century, as part of a major new ventures thrust, HUL undertook
a half-a-dozen new opportunities outside its traditional products and markets.
For example, in 2000, HUL began Project Shakti, a microcredit-based
entrepreneurial network for underprivileged rural women which enabled HUL to
extend its rural marketing reach beyond its traditional retail distribution network
while also empowering rural women with a source of income. Though the
project had not yet scaled up significantly, the strategy was of significance given
that India lived in its villages. Almost 72% of Indias one billion plus
population was rural and half of them had a per-capita monthly income of
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$14.12 Another of HULs ventures was to create a water purification and storage
system meant for consumer use at the point of water usage. Several options were
analyzed before they concluded:Boiling water to make it safe from germs was considered by consumers to be
cumbersome, time consuming, and expensiveand whats more, it altered
and spoilt the taste of water.
Existing water purifiers available in the market were not only expensive, but
also needed electricity and pressurized tap water to function and these three
constraints meant that, for most urban and rural consumers, this was not a
viable means for getting safe water.
The other alternative of bottled water was far too expensive for meeting the
large daily water consumption needs of consumers. This high cost of bottled
water was largely due to the two big costs of the plastic bottle and the cost of
transporting waterneither of which really related to water or to its purity.
Given this consumer context, a paradigm shift in the ability to provide safe
water would only be possible if one could affordably provide the gold
standard of water safety, without technologically depending on the
availability of electricity or pressurized tap water.
HULs move into water purifiers was thus the beginning of many firsts for the
organization - venturing into the consumer durables market; working backwards
by identifying the consumer opportunity rather than the top-down leveraging of
brand opportunity; developing new R&D and manufacturing capabilities in the
consumer durables area; building a direct-to-home sales capability, and building
consumer durables retail channel capability. HUL could not directly leverage
many of its existing corporate competencies and synergies.
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Industry
The in-home point-of-use (POU) water purifier market in India was estimated to
be worth $450 million in 2009, projected to grow at a CAGR of 20% from 2009
to 2014, to reach $1.1 billion in 2014.13. Current water purifier usage was just
8% the vast majority in India boiled or used ceramic filters, iodine, cloth filters,
or did nothing. However, by 2025, 41% of Indias 1.14 billion-strong population
was expected to be middle class. Rising literacy had led to higher awareness of
health issues.
Slowly, consumers were adopting POU technologies to replace traditional water
purifying methods. However, despite high awareness in urban areas, penetration
remained low because the vast majority of households didnt have access to fulltime electricity and pressurized water, which the UV (ultra-violet) and RO
(reverse osmosis) technology-based purifiers needed. The growth of the RO
technology products was centered in specific geographies that had excessively
hard water because under these conditions RO would improve the taste of
water (hard water by itself is not a health problem). Growth of both UV and RO
technology products was also limited by their high prices.
Countertop water purifiers, unlike UV and RO purifiers, did not require
electricity to work, and their lower costUSD 40 to 60, versus USD 100 to 300
had put them within reach of India's burgeoning middle class.16 But the
countertop purifier market had not developed prior to HULs entry because the
prevailing countertop products in the market offered inadequate safety from the
three types of germs viruses, bacteria, and parasites.
Boiling, the most popular consumer method, was effective in killing germs, but
was cumbersome, time-consuming and expensive process. Boiling also altered
the taste of waterand therefore many mothers found it difficult to get children
to drink boiled water.
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Key competitors in the water purification space, such as Eureka Forbes Limited
(EFL), Ion Exchange, Philips and Whirlpool, were focused at the top end of the
market with UV and RO based purifiers (Exhibit 5 contains product and price
point details). EFL, a consumer durables company set up in 1982, first
introduced UV-based POUs in India under the brand name Aquaguard.
Historically, EFL also had a countertop gravity-fed purifier under the name
Forbes. After Pureit started its test launch, Eureka Forbes improved the
germkill ability of their countertop purifier and changed the brand name from
Forbes to Aquasure. Later, EF also added the more expensive UV and RO
technology-based products under the Aquasure name. In general the prices of the
various models in the Aquasure range were lower than the ones in Aquaguard.
Recently the Aquasure brand was focused into the retail channel, and the
Aquaguard brand was focused into the DTH channel.
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The Eureka Forbes division of EFL, which made a range of consumer durables
such as vacuum cleaners, home security systems and the range of water purifiers
described in the case, was now a $160 million, multi-product and multi-channel
business, boasting Asias largest direct selling network with 7,000 sales
personnel that reached 1.5 million homes in more than 131 cities and 398 towns
across the country. It had 10,000 dealers and over 58 distributors, and was
gradually accelerating its rural penetration through Non-Governmental
Organizations (NGOs). It reported an average gross profit of 5% and a net profit
of 3% over the last several years. It was also considered one of Indias Best
Employers. Eureka Forbes is probably the only company in the world which
exclusively sells water purifying systems, door-to-door, by cold calling. RO
purifiers were introduced in the 1990s by Ion Exchange, a water and
environment management company. These required running water and
electricity, and were priced higher than the UV products. Unlike UV products,
RO products could improve the taste of water if the water happened to be
excessively hard. Other key players in water purifiers included major consumer
durable companies such as Kent, Philips and Whirlpool, all focused on retail
selling.
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However, most cities and towns faced infrastructural constraints such as shortage
of electricity and water, which meant that affordable gravity-fed countertop
purifiers would be able to gain significant consumer penetration where the UV
and RO purifiers had failed to do so. In this context the technological challenge
for HUL was to find a way to deliver virus kill and bacteria kill as per the
stringent international standards of the United States Environmental Protection
Agency (US EPA) which was something that all the expensive UV and RO
products targeted to do but now HUL wanted to achieve this at an affordable
consumer price that was one-third to one-seventh that of the expensive UV and
RO products. The relevance of meeting the very best international germ-kill
standards for lower income consumers was highlighted by the fact that the
drinking water accessible to the poor would generally be of a much poorer
quality than water available to the upper income consumers. HUL achieved this
objective through a series of technological breakthroughs that used a novel
biocide-cum-filter based approach to create a purifier in 2004 that achieved the
US EPA germkill requirements. In 2004 HUL test launched the product in India.
To rapidly establish leadership positions in their targeted consumer segments,
HUL followed a strategy of pricing the product at what the target consumer
could afford, rather than following a cost-based pricing approach.
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The Tata Group, an eminent, well-respected, Indian multinational conglomerate

was a recent entrant at the bottom-end of the market with Swach, a device that
combined low-cost and ecofriendly ingredients like rice husk ash, with nanosilver leach technology. Launched in select states in the country, it aimed to go
national soon and to sell one million units in 2010, scaling to three million units
annually within three years. A senior HUL manager offered this perspective: The
Tata Swach strategy to challenge Pureits leadership was based on launching
Swach at a very low price of $22, but doing so by significantly reducing the
germ-kill standard of their product for example, its design did not meet the US
EPA requirement for killing viruses in drinking water. This dilution from
international performance standards meant that Tata Swach had a significant
advantage over HULs Pureit in terms of product cost. Besides this cost
advantage, Tata had considerable experience in selling consumer durables such
as watches, refrigerators, and air conditioners and had their own consumer
durable retail store chain along with a well-entrenched rural network. Although
they did not have a direct-to-home channel for selling durables, they had been
test marketing Swach through a strong NGO network.
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Strong domestic contenders from other sectors also entered the fray, such as
Godrej who entered at the upper end of the market with their model Krystal,
and Asian Paints who entered at the lower end of the market with their 650 ml
personal water bottle purifier. As the unorganized sector mushroomed, the
market became highly fragmented with more than 150 national, regional, and
local players.
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Product Development
HUL followed a radically different process in developing Pureit. An interfunctional Innovation team was constituted which sought open-source
technologies and forged many external partnerships, including one with the
London School of Hygiene and Tropical Medicine, to understand what it would
take to meet the international germ-kill criteria for purifiers set by US EPA. In
addition to developing a product that would meet international standards for
water quality, HUL had to cope with a range of local constraints, such as the
requirement for the equipment to function without electricity and running water.
As explained earlier, a majority of the households did not have piped water
supply to their homes. Some gathered water from a common municipal pipe
within walking distance of their homes, and many others tapped into ground
water. Even where homes did have running water, since the supply was limited
to a few hours only, the water was often collected in overhead tanks for
distribution later on. Thus, HUL had the challenge of making Pureit work
without depending either on the availability of pressurized tap water or on the
presence of electricity. In addition, HUL wanted the device to be fail-safe from a
consumer perspective and so they wanted to have an indicator to signal the
approaching end-of-life of the consumable refill component (which was
subsequently named Germ-Kill Kit), and also to have an auto-shut off
mechanism that would shut the flow of water when the germ-kill power of the
consumable refill component was over. Notably, at the time, even premium UV
and RO purifiers that were priced at USD 100+ did not have an end-of-lif
indicator, or a safety auto-shut off mechanism. On the one hand having a
consumable component meant being able to get a steady revenue stream from
consumers over time, but on the other hand the challenge was to construct a
service delivery channel to fulfill that need. The product design was further
complicated by the fact that a sound understanding of the target consumer had
By - Siddhant Sagar
Page 30

translated into a whole range of ergonomic, aesthetic, and aspiration-related
design requirements for the product.
There were several technical challenges in developing such a product and an
extensive global scan by Unilever showed that no such product existed anywhere
in the world. The variance in water quality from area to area meant that the
device had to protect against the three different types of harmful germs - the
easy-to-kill bacteria, the harder-to-kill viruses, and the parasites that would have
to be physically removed from water because they were difficult to kill. Further,
the output water would not only have to be safe to drink, but would also have to
look clear, be odorless, and have a good taste since research revealed that it was
difficult for consumers to believe that water could be safe to drink unless the
aesthetics of the water also suggested so.
In developing Pureit, HUL was essentially recreating a miniature water treatment
plant. What towns and municipalities did using a batch process in huge volumes
was now being attempted as a continuous process within each piece of
equipment meant for use inside a small home. Simultaneously, the team was
learning how to use new materials, how to source from new vendors around the
world, and how to develop new manufacturing competencies. HUL estimated
that the team literally faced a new technical hurdle every week and it took
roughly 200 design changes spanning four years to resolve them all. At one point
in this innovation journey they had a product which met all the target design
specifications except one the Germ-Kill Kit was four times the desired cost
target. The team was under huge pressure to deliver since they had already
overshot the one year delivery deadline by more than by two years. In spite of
that pressure, they resisted the temptation of launching a purifier by diluting its
germ-kill performance standards. Instead they went back to the drawing board to
find innovative ways to dramatically reduce cost without compromising on
By - Siddhant Sagar
Page 31

quality. Finally, Pureit was soft launched in 2004, test marketed from 2005-2007,
and taken national in 2008.
The final purifier operated on the principle of gravity and deployed four stages
of purification. First, water filled into the top chamber went through a Micro
Fiber Mesh (MFM) that removed suspended particles. Then the water flowed
quickly through a winding path in the Compact Carbon Trap (CCT) which
physically removed the parasites from the water because they would get stuck
inside the CCT. The CCT had to be designed to take care of two conflicting
technical requirements physical removal of parasites would be easier with
narrow water pathways, whereas the requirement of ensuring good flow rates (a
key consumer need) would be easier with wider water pathways. In the third
stage, the water passed through a Processor which contained a stack of biocidal
By - Siddhant Sagar
Page 32

tablets that were instrumental in killing all harmful viruses and bacteria. The last
tablet in the Processor was made of red-colored plastic, and when this red tablet
became visible through a window-like aperture in the front of the device, it
indicated the approaching end-of-life of the Germ-Kill Kit thereby letting the
consumer know that it was time to replace the Germ-Kill Kit. In addition to the
advance warning end-of-life-indicator, the Processor also had a unique autoshut-off technology which stopped water from reaching the dispensing chamber
if the Germ-Kill Kits life was over. In the fourth and final stage a Polisher
removed the chlorine and odors from the water, making it visually clear,
odorless, and with a good taste. The device could purify about six litres of water
an hour.
By - Siddhant Sagar
Page 33

Conclusion
Pureit had been a high-risk financial project for HUL. It had had a long gestation
and had incurred large upfront costs. The hope was to generate income once a
significant installed base of consumers had been established. Mr. Jain had
headed the team from its inception in 2000, and so far had run it like a venture
capital. Now with Tata Swach entering the market at a lower price point, with the
increase in private water purifying plants, and with the possible launch of
Proctor and Gambles purifying sachets, Jain wondered how they would scale up
their presence at the bottom-of-the pyramid. There were hundreds of millions of
people that needed to be protected at the lower end of the market where
penetration was low, but HUL needed to find ways of penetrating deeper within
rural India. In such rural markets, how would they sell the device and then track
purchases of the Germkill kits, which were a key component of the continued
usability of their purifier?
By - Siddhant Sagar
Page 34
At the other end of the market the growth and higher potential profitability on
Marvella made for a significant opportunity for HUL, but intense competition
was already driving down prices and margins. For Marvella HULs DTH system
needed critical changes, including upgrading their demonstrator profile and
compensation. They wondered how they would straddle both the low and high
ends of the market and create two diverse systems of reaching out to their
consumers. How would they build new competencies at the high end of the
market in order to compete head-on against stalwarts like EFL, Kent and
Philips?
Typical durable companies had a business model wherein consumers would call
them if there was a problem. For Pureit, HUL had tried to reach out and directly
contact consumers. But driving growth and service delivery through DTH was
becoming more difficult as the scale increased. Growth through the retail trade
By - Siddhant Sagar
Page 35

didnt have the challenges that the DTH channel had, but then the retail channel
was getting increasingly crowded and competitive.
Meanwhile, Unilever had firmed up its ambitious intent to launch Pureit
globally, in Latin America, Africa and South-East Asia (Indonesia and
Bangladesh) with the objective of protecting 500 million lives by 2020. HUL
had to now gear up to build the appropriate global deployment capability, and
build water businesses in other countries. In the meantime, the imperatives of
continuing to rapidly grow the Indian business remained - alongside the
significant additional challenge of financially turning around the business in the
near-term.
By - Siddhant Sagar
Page 36

Bibliography
Marketing Management by Philip Kotler
Marketing Management by Levitt
Marketing Management by William Stanton
Hindustan Unilever Staff
Forbes Magazine
Economic Times
By - Siddhant Sagar
Page 37
Thank You!
By - Siddhant Sagar
Page 38

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New Product Development Process

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