Declaration

Certificate

Acknowledgement

Executive summary

Why is consumer behaviour in rural and urban areas important for FMCG

companies? As we know consumer behaviour deals with psychological

process of decision making by consumer, by social context which also exerts

group pressure on them.The study of consumer behaviour provides marketers

with important information which help them in taking marketing mix decision.

Rural marketers are growing 5 times faster than urban markets simply because

75% of India’s population lies in rural area.Urban markets have reached a

saturation point and there is a cut throat competition in urban India.Ther is an

increase in rural income ,savings and standard of living.

The marketers can enter urban market but it is not as difficult as entering rural

markets.The marketers has to face various constraints such as low literacy

level, low income, seasonal demand, problems regarding transportation,

communication and distribution channel in rural markets. Where as it is

reverse in urban markets.There is need to understand rural and urban

consumers with regards to buyer, behavior, attitudes, beliefs and aspirations of

people.Next we would move to intelligent consumer behaviour.There are ten

points which shows how an intelligent consumer buy their products.As

marketing, segmenting, targeting and positing is important for all marketers in

FMCG sectors. Without thies it is very difficult bring a product in market.Then

there is analysis done on the FMCG sector with strength, weakness,

opportunities and threats.

The project deals with two companies i.e.Procter & Gamble and Hindustan

unilever limited (HUL) which relates to health care products.Health also

includes personal care products.

The urban consumers are more concerned about their health; but in rel;ation to

rural consumers, they are not so concerned.Therefore, how HUL entered the

rural market is explained in detail.Survey of 50 people is taken to know on

what basis purchases is done,what influence purchase, brand loyalty,etc.

This project helped me understand that consumer behaviour of urban and rural

are important for the marketers.It is not easy for the marketers to study

consumer behaviour but if things are done in right way the returns are many.

Research Methodology

Index

No Topic Page no1 Introduction 1-7

2 Changing consumer behaviour 8-12

a) Marketing conceptb) Segmenting,Targeting,Positioningc) Customer value d) Customer satisfactione) Customer retention

3 Intelligent consumer behaviour 13-14

4 FMCG Sector 15-17

5 Procter & Gamble 18-22

6 Hindustan Unilever Limited 23-26

7 Buyer decision process 27-30

8 Rural consumer behaviour 31-38

a) Profileb) Potential & changing pattern

9 Urban consumer behaviour 39

10 Case study-HUL 40-42

11 HUL dominates top 10 list 43-45

12 Questionaire 46-47

13 Conclusion 48-49

14 Annexure 50-53

Consumer Behaviour In Relation To

Health Care

Products

The aim of marketing is to meet and satisfy targeted customers needs and wants. The

field of consumer behavior studies how individuals, groups,&organizations

select,buy,use&dispose of goods,services,ideas or experiences to satisfy their needs &

desires.

Understanding the consumer behaviour & “knowing customers” is never

simple.Customers may say one thing but do another.they may not be in touch with deeper

motivation.They may respond to influences that change their minds at last

minute.Consumer behaviour is study of when,why,how,where &what people do or do not

buy products.It blends elements from psychology,sociology;social

psychology,anthropology & economics.It is the study of customer playing three distinct

roles of user,payer&buyer.Marketing provides services in order to satisfy customers.The

production system is consideredfrom the beginning at the production level to the end of the

cycle.

Belch and Belch define consumer behaviour as ‘ the process and activities

people engage in when searching for, selecting, purchasing,using, evaluating and disposing

of products and services so as to satisfy their needs and desires.’

-1-

Black box model

ENVIRONMENTAL FACTORS BUYER'S BLACK BOXBUYER'S

RESPONSEMarketing

Stimuli

Environmental

Stimuli

Buyer

Characteristics

Decision

Process

Product

Price

Place

Promotion

Economic

Technical

Political

Cultural

Attitudes

Motivation

Perceptions

Personality

Lifestyle

Problem

recognition

Information

search

Alternative

evaluation

Purchase

decision

Post-purchase

behavior

Product choice

Brand choice

Dealer choice

Purchase timing

Purchase amount

The black box model shows the interaction of stimuli, consumer characteristics, decision

process and consumer responses. It can be distinguished between interpersonal stimuli

(between people) or intrapersonal stimuli (within people). The black box model is related

to the black box theory of behaviorism, where the focus is not set on the processes inside a

consumer, but the relation between the stimuli and the response of the consumer. The

marketing stimuli are planned and processed by the companies, whereas the environmental

stimulus are given by social factors, based on the economical, political and cultural

circumstances of a society. The buyers black box contains the buyer characteristics and the

decision process, which determines the buyers response.

-2-

The black box model considers the buyers response as a result of a conscious, rational

decision process, in which it is assumed that the buyer has recognized the problem.

However, in reality many decisions are not made in awareness of a determined problem by

the consumer.

The study of consumer behavior enables marketers to understand and predict consumer

behavior in the marketplace; it is concerned not only with what consumers buy but also

with why, when, where, and how they buy it. Consumer research is the methodology used

to study consumer behavior; it takes place at every phase of the consumption process:

before the purchase, during the purchase, and after the purchase.

Consumer behavior is interdisciplinary; that is, it is based on concepts and theories about

people that have been developed by scientists in such diverse disciplines as psychology,

sociology, social psychology, cultural anthropology, and economics.

Consumer behavior has become an integral part of strategic market planning. The belief

that ethics and social responsibility should also be integral components of every marketing

decision is embodied in a revised marketing concept—the societal marketing concept—

that calls on marketers to fulfill the needs of their target markets in ways that improve

society as a whole.

-3-

Information search

Once the consumer has recognised a problem, they search for information on products and

services that can solve that problem. Belch and Belch (2007) explain that consumers

undertake both an internal (memory) and an external search.

Sources of information include:

Personal sources

Commercial sources

Public sources

Personal experience

The relevant internal psychological process that is associated with information search is

perception. Perception is defined as 'the process by which an individual receives, selects,

organises, and interprets information to create a meaningful picture of the world'

The selective perception process

Stage Description

- Selective exposure consumers select which promotional messages they will expose

themselves to.

- Selective attention consumers select which promotional messages they will pay attention

to

- Selective comprehension consumer interpret messages in line with their beliefs, attitudes,

motives and experiences

-4-

- Selective retention consumers remember messages that are more meaningful or important

to them

The implications of this process help develop an effective promotional strategy, and select

which sources of information are more effective for the brand.CV

Information evaluation

At this time the consumer compares the brands and products that are in their evoked set.

How can the marketing organization increase the likelihood that their brand is part of the

consumer's evoked (consideration) set? Consumers evaluate alternatives in terms of the

functional and psychological benefits that they offer. The marketing organization needs to

understand what benefits consumers are seeking and therefore which attributes are most

important in terms of making a decision.

Purchase decision

Once the alternatives have been evaluated, the consumer is ready to make a purchase

decision. Sometimes purchase intention does not result in an actual purchase. The

marketing organization must facilitate the consumer to act on their purchase intention. The

provision of credit or payment terms may encourage purchase, or a sales promotion such as

the opportunity to receive a premium or enter a competition may provide an incentive to

buy now. The relevant internal psychological process that is associated with purchase

decision is integration.

-5-

Post purchase behaviour

After purchasing the product, the consumer will experience some level of satisfaction or

dissatisfaction. The marketers job does not end when the products are bought Marketers

must monitor postpurchase satisfaction,postpurchase actions&post purchase product use.

Post purchase satisfaction

The buyers satisfaction is a function of the closeness between expectation& the products

perceived performance.

Post purchase actions

Satisfactions and dissatisfaction with the product will influence a consumers subsequent

behaviour. If the consumer is satisfied, he or she will exibit a higher probabilityof

purchasing the product again.

Post purchase product use

If consumers store the product in a closet,the product is probably not very satisfying &

word of mouth will not be strong.If they sell or buy the product, new-product sales will be

depressend.

-6-

External influences

Consumer behavior is influenced by culture,sub-culture, locality, royalty, ethnicity, family,

social class, reference groups, lifestyle, and market mix factors.

-7-

Changing consumer behaviour

1. Consumer behavior has changed dramatically in the past decade.

2. For example, the use of the Internet has allowed consumers to order online, receive

information without leaving their homes, and sell products without advertising in the local

newspaper.

3. All of these new ways of selling products and services became available to consumers

during the past fifteen years and are the result of digital technologies. They exist today

because they reflect an understanding of consumer needs and consumer behavior.

4. Consumer behavior is defined as the behavior that consumers display in searching for,

purchasing, using, evaluating, and disposing of products and services that they expect will

satisfy their needs.

a) Consumer behavior focuses on how individuals make decisions to spend their available

resources on consumption-related items.

b) As consumers, we play a vital role in the health of the economy—local, national, and

international.

c) Marketers need to know everything they can about consumers.

d) Marketers need to understand the personal and group influences that affect consumer

decisions and how these decisions are made.

e) Marketers need to not only identify their target audiences, but they need to know where

and how to reach them.

5. The term consumer behavior is often used to describe two different kinds of consuming

entities: the personal consumer and the organizational consumer.

a) The personal consumer buys goods and services for his or her own use, for the use of the

household, or as a gift for a friend.

i) Products are bought for final use by individuals (referred to as end users or ultimate

consumers).

-8-

b) The organizational consumer—includes profit and not-for-profit businesses, government

agencies, and institutions, all of which must buy products, equipment, and services in order

to run their organizations6. Despite the importance of both categories of consumers,

individuals and organizations, this book will focus on the individual consumer, who

purchases for his or her own personal use or for household use. a) End-use consumption is

perhaps the most pervasive of all types of consumer behavior.

The Marketing Concept

1. The field of consumer behavior is rooted in a marketing strategy that evolved in the late

1950s.

2. Instead of trying to persuade customers to buy what the firm had already produced,

marketing-oriented firms found that it was a lot easier to produce only products they had

first confirmed, through research, that consumers wanted.

a) This consumer-oriented concept came to be known as the marketing concept.

b) Consumer needs and wants became the firm’s primary focus.

c) To be successful, a company must determine the needs and wants of specific target

markets and deliver the desired satisfactions better than the competition.

3. The marketing concept is based on the premise that a marketer should make what it can

sell, instead of trying to sell what it has made.

a) The older selling concept focused on the needs of the seller.

b) The marketing concept focuses on the needs of the buyer.

Segmentation, Targeting, and Positioning

1. The focus of the marketing concept is consumer needs.

2. The marketer must adapt the image of its product so that each market segment perceives

the product as better fulfilling its specific needs than competitive products.

-9-

a) The three elements of this strategic framework are: market segmentation, targeting, and

positioning.

3. Market segmentation is the process of dividing a market into subsets of consumers with

common needs or characteristics.

4. Market targeting is the selection of one or more of the segments identified for the

company to pursue.

5. Positioning refers to the development of a distinct image for the product or service in the

mind of the consumer, an image that will differentiate the offering from competing ones

and squarely communicate to the target audience that the particular product or service will

fulfill their needs better than competing brands.

a) Successful positioning centers around two key principles:

i) The first principle says that the marketer should communicate the benefits that the

product will provide rather than the product’s features.

ii) The second principle states that because there are many similar products in almost any

marketplace, an effective positioning strategy must develop and communicate a “unique

selling Proposition”—a distinct benefit or point of difference—for the product or service.

Providing Customer Value

1. Customer value is defined as the ratio between the customer’s perceived benefits

(economic, functional, and psychological) and the resources (monetary, time, effort,

psychological) used to obtain those benefits.

a) Perceived value is relative and subjective.

b) Developing a value proposition is the core of successful positioning.

Customer Satisfaction

1. Customer satisfaction is the individual’s perception of the performance of the product or

service in relation to his or her expectations.

2. The concept of customer satisfaction is a function of customer expectations.

-10-

3. With respect to customer satisfaction there might be several types of customers:

a) Loyalists—completely satisfied customers who keep purchasing

b) Apostles—those whose experiences exceed their expectations and who provide very

positive word of mouth about the company to others

c) Defectors—those who feel neutral or merely satisfied and are likely to stop doing

business with the company

d) Terrorists—those who have had negative experiences with the company and who spread

negative word of mouth

e) Hostages—unhappy customers who stay with the company because of no choice (or

other reasons)

f) Mercenaries—very satisfied customers but who have no real loyalty to the company and

may defect

Customer Retention

1. The overall objective of providing value to customers continuously and more effectively

than the competition is to have and to retain highly satisfied customers.

2. This strategy of customer retention makes it in the best interest of customers to stay with

the company rather than switch to another firm

3. In almost all business situations, it is more expensive to win new customers than to keep

existing ones.

4. Studies have shown that small reductions in customer defections produce significant

increases in profits because:

a. Loyal customers buy more products.

b. Loyal customers are less price sensitive and pay less attention to competitors’

advertising.

c. Servicing existing customers, who are familiar with the firm’s offerings and processes,

is cheaper.

d. Loyal customers spread positive word-of-mouth and refer other customers.

-11-

5. Sophisticated marketers build selective relationships with customers, based on where

customers rank in terms of profitability, rather than merely strive to “to retain customers”.

6. Customer profitability-focused marketing tracks costs and revenues of individual

customers and then categorizes them into tiers based on consumption behaviors that are

specific to a company’s offerings.

-12-

Intelligent Consumer Behaviour

Intelligent health consumers have the following characteristics:

1. They seek reliable sources of information. They are appropriately skeptical about

advertising claims, statements made by talk-show guests, and "breakthroughs" reported in

the news media. New information, even when accurate, may be difficult to place in

perspective without expert guidance.

2. They maintain a healthy lifestyle. This reduces the odds of becoming seriously ill and

lowers the cost of health care. Prudent consumers avoid tobacco products, eat a balanced

diet, exercise appropriately, maintain a reasonable weight, use alcohol moderately or not at

all, and take appropriate safety precautions (such as wearing a seat belt when driving).

3. They select practitioners with great care. It has been said that primary-care physicians

typically know a little about a lot and specialists typically know a lot about a little. The

majority of people would do best to begin with a generalist and consult a specialist if a

problem needs more complex management.

4. They undergo appropriate screening tests and, when illness strikes, use self-care

and professional care as needed. Excellent guidebooks are available to help decide when

professional care is needed.

5. They communicate effectively. They present their problems in an organized way, ask

appropriate questions, and tactfully assert themselves when necessary.

6. When a health problem arises, they take an active role in its management. This

entails understanding the nature of the problem and how to do their part in dealing with it.

-13-

People with chronic illnesses, such as diabetes or high blood pressure, should strive to

become "experts" in their own care and use their physicians as "consultants."

7. They understand the logic of science and why scientific testing is needed to test and

to determine which theories and practices are valid.

8. They are wary of treatments that lack scientific support and a plausible rationale.

Most treatments described as "alternative" fit this description.

9. They are familiar with the economic aspects of health care. They obtain appropriate

insurance coverage, inquire in advance about professional fees, and shop comparatively for

medications and other products.

10. They report frauds, quackery, and other wrongdoing to appropriate agencies and

law enforcement officials. Consumer vigilance is an essential ingredient of a healthy

society.

-14-

FMCG SECTOR

Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged

goods. Items in this category include all consumables (other than groceries/pulses) people

buy at regular intervals. The most common in the list are toilet soaps, detergents,

shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, household

accessories and extends to certain electronic goods. These items are meant for daily of

frequent consumption and have a high return.

A major portion of the monthly budget of each household is reserved for FMCG products.

The volume of money circulated in the economy against FMCG products is very high, as

the number of products the consumer use is very high. Competition in the FMCG sector is

very high resulting in high pressure on margins.

Analysis of FMCG Sector

Strengths:

1. Low operational costs

2. Presence of established distribution networks in both urban and rural areas

3. Presence of well-known brands in FMCG sector

-15-

Weaknesses:

1. Lower scope of investing in technology and achieving economies of scale, especially in

small sectors

2. Low exports levels

3. "Me-too" products, which illegally mimic the labels of the established brands. These

products narrow the scope of FMCG products in rural and semi-urban marke

Opportunities:

1. Untapped rural market

2. Rising income levels, i.e. increase in purchasing power of consumers

3. Large domestic market- a population of over one billion.

4. Export potential

5. High consumer goods spending

Threats:

1. Removal of import restrictions resulting in replacing of domestic brands

2. Slowdown in rural demand

Tax and regulatory structure

-16-

FMCG companies maintain intense distribution network. Companies spend a large

portion of their budget on maintaining distribution networks. New entrants who wish

to bring their products in the national level need to invest huge sums of money on

promoting brands. Manufacturing can be outsourced. A recent phenomenon in the

sector was entry of multinationals and cheaper imports. Also the market is more

pressurized with presence of local players in rural areas and state brands.

-17-

Procter and Gamble

Procter & Gamble Co. (P&G) is an American company based in Cincinnati, Ohio

that manufactures a wide range of consumer goods. In India Proctor & Gamble has

two subsidiaries: P&G Hygiene and Health Care Ltd. and P&G Home Products Ltd.

P&G Hygiene and Health Care Limited is one of India's fastest growing Fast Moving

Consumer Goods Companies with a turnover of more than Rs. 500 crores. It has in its

portfolio famous brands like Vicks & Whisper. P&G Home Products Limited deals in

Fabric Care segment and Hair Care segment. It has in its kitty global brands such as

Ariel and Tide in the Fabric Care segment, and Head & Shoulders, Pantene, and

Rejoice in the Hair Care segment.P&G has an employee base of 110000 people and

earned revenues of $68.22 billion in 2006.

Procter and Gamble Hygiene and Health Care Ltd. was set up in the

year 1985 under the name Procter and Gamble, India after the takeover of Richardson

Hindustan Limited.

In the year 1999, the company's name was changed to Procter and Gamble Hygiene

and Health Care Ltd. In the present scenario, the company is one of the major

providers of healthcare and hygiene consumables in the Indian market. Procter and

Gamble Hygiene is well-known for its innovative products in this segment. Some of

the ground-breaking products of Procter and Gamble Hygiene are Ariel detergent,

Vicks cough and cold products, and Whisper sanitary napkins, all of which have

become household names.In the survey conducted by International HR Consultancy

Hewittin association with Business Today magazine, P&G Hygiene &Health Care

Limited was voted as India’s Best Employer 2003 amongst 200 commpanies. Also in

a survey of 2001 & 2002,the company was ranked as India’s 2nd Best Employer.

-18-

The values followed at the Procter and Gamble Hygiene:

Passionate about winning

Leadership in the market

Integrity of the company

Trustworthiness of the work force

Ownership of the company

The objective of Procter and Gamble Hygiene:

To show respect to all individuals

To have a common interest for the company as well as for the human resource

of the company

To be tactically focused on the work

To encourage individual achievements

To be the best in the business

To have continuous innovations which would effect the overall success

To be dependent on each other i.e the company and the human resource

The company has one manufacturing unit in Goa. There are 2 business divisions of

Procter and Gamble Hygiene - the healthcare division and the feminine care division.

P&G Health care division: This division of the company indulges in the production of

various over-the-counter commodities under the brand name Vicks. It is a pain

reliever and a remedy for cough and cold. Some of the products under the Vicks

portfolio are:

o Vicks Inhaler

o Vicks Action 500+

o Vicks Vaporub

o Vicks Formula 44

o Vicks Cough Drops

-19-

P&G Feminine care division: This division is known for its immensely popular brand

Whisper. This product altered the concept of feminine hygiene in India. It has

improved the lives of innumerable Indian women. Whisper sanitary napkins come in

different variants such as:

Whisper Choice

Whisper Maxi regular

Whisper Ultra Wings

Whisper Maxi Wings

Whisper Ultra XL Wings

Effective July 1, 2007, the company's operations are categorized into three "Global

Business Units" with each Global Business Unit divided into "Business Segments"

according to the company's March 2009 earnings release.

Beauty Care

o Beauty segment

o Grooming segment

Household Care

o Baby Care and Family Care segment

o Fabric Care and Home Care segment

Health and Well-Being

o Health Care segment

o Snacks, Coffee, and Pet Care segment

Procter and Gamble Hygiene has a ubiquitous presence in lakhs of Indian households

today due to the immense popularity of its product lines.

-20-

Driven by its commercial success, core values, and business objectives, Procter and

Gamble Hygiene is sure to do even better in India in the near future.

Procter & Gamble is the 2nd largest MCG company in India after Hindustan Liver

Limited.

Throughout the years, Procter & Gamble has had a domination strategy similar to

that of the Roman Empire, albeit with a much friendlier platform.

The company is no stranger to market dominance, and it has made sure to keep it that

way through strategic acquisitions and sell-offs. The acquisition of Gillette in late

2005 for a cool $57 billion was the biggest buy in company history. P&G also bought

a majority of Wella in 2003 and sold off its Sure brand in September 2006 to Najafi

Companies' Innovative Brands to focus on more gender-specific deodorant products.

Oh, and there's also the continuing success of Olay, Pantene and Crest, just to name a

few of its 22 billion-dollar brands.

Due to its steady divide-and-conquer strategy, the company has managed to double its

size since 2000 and develop a platform of more than 300 brands sold in some 180

countries. (P&G is looking to expand further into the pharmaceutical sector and gain

as solid a footing there as it already has in personal care and home products.)

Acquisitions and restructuring have been quite profitable, as total revenue in 2006

increased by an astounding 26% from the previous year to $25.8 billion (thanks partly

to the Gillette purchase). P&G also padded the pockets of its research and

development departments, allocating more than $2 million to the cause in 2006.

-21-

The packaging sector has definitely reaped benefits, too. Since CEO A.G. Lafley put

a premium on design and innovation when he took over in 2000, the number of

designers at P&G has tripled. Many subsequent new packages exhibit top-notch

structure and graphics. The paired bottle design for Herbal Essences hair care

products, for example, reflects the contemporary character of the restaged brand. The

asymmetrical shape of the container combines with a new hologram logo to create a

fun and flirty motion on shelves, both in the store and at home.

Since the brand was a recent acquisition and Wall Street was watching closely, P&G

put the project on a fast track. Total time to market: six months. After four and a half

months of market research and brand development, it launched the new packaging

within six weeks. To save time, personnel from an outside design firm worked at the

P&G offices. The co-location was a first for both companies.

Innovation impacts many aspects of P&G's business. With an eye on improving

operational efficiencies, the packaging department was restructured last year. In its

typical Franchise role, the department will continue to serve a particular global

business unit (skin care, for example) in all aspects of packaging development and

implementation. Anew Capabilities role, however, capitalizes on a packaging

professionals' expertise in specific technologies. For example, someone with expertise

in pumps would be the go-to person for an Olay product or for a Crest product.

In early 2007, the company announced plans to fold some existing businesses into

global business units. The trifecta of global business units will then be renamed

Beauty Care, Global Health and Well Being, and Household Care.

-22-

Hindustan Unilever Limited

Hindustan Lever Ltd (HLL) is India's largest Fast Moving Consumer Goods

(FMCG) company. HLL's brands like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair &

Lovely, Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan,

Knorr-Annapurna, Kwality Wall's are household names across the country and span a

host of categories, such as soaps, detergents, personal products, tea, coffee, branded

staples, ice cream and culinary products. These products are manufactured over 40

factories across India and the associated operations involve over 2,000 suppliers and

associates. Hindustan Lever Limited's distribution network comprises about 4,000

redistribution stockists, covering 6.3 million retail outlets reaching the entire urban

population, and about 250 million rural consumers. HLL is also one of India's largest

exporters. It has been recognised as a Golden Super Star Trading House by the

Government of India. Presently, HLL has over 16,000 employees including over

1,200 managers. Its mission is to "add vitality to life." The Anglo-Dutch company

Unilever owns a majority stake in Hindustan Lever Limited.

In the late 19th and early 20th century Unilever used to export its products to India.

This process began in 1888 with the export of Sunlight soap, which was followed by

Lifebuoy in 1895 and other famous brands like Pears, Lux and Vim soon after. In

1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing

Company, followed by Lever Brothers India Limited (1933) and United Traders

Limited (1935). The three companies were merged in November 1956 and the new

entity that came into existence after merger was called as Hindustan Lever Limited.

HLL offered 10% of its equity to the Indian public, and it was the first among the

foreign subsidiaries to do so. Currently, Unilever holds 51.55% equity in the company

while the rest of the shareholding is distributed among about 380,000 individual

shareholders and financial institutions.

-23-

Brooke Bond entered Indian market in 1900 and in 1903 it launched Red Label

tea in the country. In 1912, Brooke Bond & Co. India Limited was formed. Unilever

acquired Brooke Bond through an international acquisition. Similarly, Lipton's link

with India date back to 1898. Unilever acquired Lipton in 1972 and in 1977 Lipton

Tea (India) Limited was incorporated. Pond's (India) had been in Indian market since

1947. It joined the Unilever ranks through an international acquisition of Chesebrough

Pond's USA in 1986.

The liberalization of Indian economy in 1991 and subsequent removal of the

regulatory framework allowed HLL to explore every single product and opportunity

segment, without any constraints on production capacity

Reasons to purchase

Support sales activities by understanding customers business better

Qualify prospective partners and suppliers

Keep fully up to date on competitors business structure, strategy and

prospects

In February 2007, the company has been renamed to "Hindustan Unilever Limited"

to strike the optimum balance between maintaining the heritage of the Company and

the future benefits and synergies of global alignment with the corporate name of

"Unilever".

In 2007, Hindustan Unilever was rated as the most respected company in India for the

past 25 years by Business World, one of India’s leading business magazines The

rating was based on a compilation of the magazines annual survey of India’s Most

Reputed Companies over the past 25 years. HUL is the market leader in Indian

consumer products with presence in over 20 consumer categories such as Soaps, Tea,

Detergents and Shampoos amongst others with over 700 million Indian consumers

using its products. It has over 35 brands. Sixteen of HUL’s brands featured in the AC

Nielsen-Brand Equity list of 100 Most Trusted Brands Annual Survey (2008)

-24-

According to Brand Equity, HUL has the largest number of brands in the Most

Trusted Brands List. It’s a company that has consistently had the largest number of

brands in the Top 50 and in the Top 10 (with 4 brands).

Hindustan Unilever distribution covers over 1 million retails outlets across India

directly and its products are available in over 6.3 million outlets in India, i.e. nearly

80% of the retail outlets in India. It has 39 factories in the country. Two out of three

Indians use the company’s products and HUL products have the largest consumer

reach being available in over 80 per cent of consumer homes across India.

The Anglo-Dutch company Unilever owns a majority stake (52%) in Hindustan

Unilever Limited. HUL was one of the eight Indian companies to be featured on the

Forbes list of World’s Most Reputed companies in 2007

Mercury pollution

In 2001 a thermometer factory in Kodaikanal run by Hindustan Unilever was accused

of dumping glass contaminated with mercury in municipal dumps, or selling it on to

scrap merchants unable to deal with it appropriately.

Skin lightening cream

Hindustan Lever was forced to withdraw television advertisements for its women's

skin-lightening cream, Fair and Lovely. Advertisements depicted depressed, dark-

complexioned women, who had been ignored by employers and men, suddenly

finding new boyfriends and glamorous careers after the cream had lightened their

skin.

-25-

The company’s popular brands include:

Bathing soaps: Lux, Lifebuoy, Liril, Hamam, Breeze,

Dove, Pears and Rexona

Laundry items: Surf Excel, Rin and Wheel

Skin care: Fair & Lovely, Pond’s and Vaseline

Hair care: Sunsilk and Clinic

Oral care: Pepsodent and Close up

Deodorants: Axe and Rexona

Colour cosmetics: Lakme

Ayurvedic: Ayush

Tea: Brooke Bond and Lipton

Coffee: Bru

Foods: Kissan, Annapurna and Knorr

Ice cream: Kwality Wall’s

Hindustan Unilever has acquired several Indian FMCG companies so far. This

includes:

Tata Oil Mills Company

Brooke Bond

Lipton India

Modern Foods

It acquired Kissan brand from UB group; Dollops ice cream brand from Cadbury

India; Lakme cosmetics brands from Tata.

It has also launched Pureit, a home water purifier which supplies drinking water

without boiling/need of electricity.

Hindustan Unilever Network is the direct selling channel of the company. It has about

350,000 consultants, all independent entrepreneurs, trained and guided by HLN's

expert managers and trainers.

-26-

Buyer decision processes

Buyer decision processes are the decision making processes undertaken by

consumers in regard to a potential market transaction before, during, and after the

purchase of a product or service.

More generally, decision making is the cognitive process of selecting a course of

action from among multiple alternatives. Common examples include shopping,

deciding what to eat. Decision making is said to be a psychological construct. This

means that although we can never "see" a decision, we can infer from observable

behaviour that a decision has been made. Therefore we conclude that a psychological

event that we call "decision making" has occurred. It is a construction that imputes

commitment to action. That is, based on observable actions, we assume that people

have made a commitment to effect the action.

In general there are three ways of analysing consumer buying decisions. They are:

Economic models - These models are largely quantitative and are based on the

assumptions of rationality and near perfect knowledge. The consumer is seen

to maximize their utility. See consumer theory. Game theory can also be used

in some circumstances.

Psychological models - These models concentrate on psychological and

cognitive processes such as motivation and need recognition. They are

qualitative rather than quantitative and build on sociological factors like

cultural influences and family influences.

Consumer behaviour models - These are practical models used by marketers.

They typically blend both economic and psychological models.

-27-

Models of buyer decision making

In an early study of the buyer decision process literature, Frank Nicosia (Nicosia, F.

1966; pp 9-21) identified three types of buyer decision making models. They are the

univariate model (He called it the "simple scheme".) in which only one behavioural

determinant was allowed in a stimulus-response type of relationship; the multi-variate

model (He called it a "reduced form scheme".) in which numerous independent

variables were assumed to determine buyer behaviour; and finally the "system of

equations" model (He called it a "structural scheme" or "process scheme".) in which

numerous functional relations (either univariate or multi-variate) interact in a complex

system of equations. He concluded that only this third type of model is capable of

expressing the complexity of buyer decision processes. In chapter 7, Nicosia builds a

comprehensive model involving five modules. The encoding module includes

determinants like "attributes of the brand", "environmental factors", "consumer's

attributes", "attributes of the organization", and "attributes of the message". Other

modules in the system include, consumer decoding, search and evaluation, decision,

and consumption.

General model

A general model of the buyer decision process consists of the following steps:

1. Problem recognition;

2. Gathering Information

3. Alternative education

4. Purchase decision

5. Post-purchase behavior/buyer's remorse (cognitive dissonance)

There are a range of alternative models, but that of AIUAPR, which most directly

links to the steps in the marketing/promotional process is often seen as the most

generally useful.

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AWARENESS - before anything else can happen the potential customers

must become aware that the product or service exists. Thus, the first task must

be to gain the attention of the target audience. All the different models are,

predictably, agreed on this first step. If the audience never hears the message,

they will not act on it, no matter how powerful it is.

INTEREST - but it is not sufficient to grab their attention. The message must

interest them and persuade them that the product or service is relevant to their

needs. The content of the message(s) must therefore be meaningful and clearly

relevant to that target audience's needs, and this is where marketing research

can come into its own.

UNDERSTANDING - once an interest is established, the prospective

customer must be able to appreciate how well the offering may meet his or her

needs, again as revealed by the marketing research. This may be no small

achievement where the copywriter has just fifty words, or ten seconds, to

convey everything there is to say about it.

ATTITUDES - but the message must go even further; to persuade the reader

to adopt a sufficiently positive attitude towards the product or service that he

or she will purchase it, albeit as a trial. There is no adequate way of describing

how this may be achieved. It is simply down to the magic of the copywriter's

art, or based on the strength of the product or service itself.

PURCHASE - all the above stages might happen in a few minutes while the

reader is considering the advertisement; in the comfort of his or her favourite

armchair. The final buying decision, on the other hand, may take place some

time later; perhaps weeks later, when the prospective buyer actually tries to

find a shop which stocks the product.

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REPEAT PURCHASE - but in most cases this first purchase is best viewed

as just a trial purchase. Only if the experience is a success for the customer

will it be turned into repeat purchases. These repeats, not the single purchase

which is the focus of most models, are where the vendors focus should be, for

these are where the profits are generated. The earlier stages are merely a very

necessary prerequisite for this!

This is a very simple model, and as such does apply quite generally. Its lessons are

that you cannot obtain repeat purchasing without going through the stages of building

awareness and then obtaining trial use; which has to be successful. It is a pattern

which applies to all repeat purchase products and services; industrial goods just as

much as baked beans. This simple theory is rarely taken any further - to look at the

series of transactions which such repeat purchasing implies. The consumer's growing

experience over a number of such transactions is often the determining factor in the

later - and future - purchases. All the succeeding transactions are, thus, interdependent

- and the overall decision-making process may accordingly be much more complex

than most models allow for.

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Rural consumer behaviour

In recent years, rural markets have acquired significance in countries like China and

India, as the overall growth of the economy has resulted into substantial increase in

the purchasing power of the rural communities. On account of the green revolution in

India, the rural areas are consuming a large quantity of industrial and urban

manufactured products. In this context, a special marketing strategy, namely, rural

marketing has taken shape. Sometimes, rural marketing is confused with agricultural

marketing – the later denotes marketing of produce of the rural areas to the urban

consumers or industrial consumers, whereas rural marketing involves delivering

manufactured or processed inputs or services to rural producers or consumers. Also,

when we consider the scenario of India and China, there is a picture that comes

out,huge market for the developed products as well as the labor support. This has led

to the change in the mindset of the marketers to move to these parts of the world.

Also rural market is getting an importance because of the saturation of the urban

market. As due to the competition in the urban market, the market is more or so

saturated as most of the capacity of the purchasers have been targeted by the

marketers.So the marketers are looking for extending their product categories to an

unexplored market i.e. the rural market. This has also led to the CSR activities being

done by the corporate to help the poor people attain some wealth to spend on their

product categories. Here we can think of HLL (now, HUL) initiatives in the rural

India. One of such project is the Project Shakti, which is not only helping their

company attain some revenue but also helping the poor women of the village to attain

some money which is surely going to increase their purchasing power. Also this will

increase their brand loyalty as well as recognition in that area. Similarly we can think

of the ITC E-Chaupal, which is helping the poor farmers get all the information about

the weather as well as the market price of the food grains they are producing.In other

view these activities are also helping the companies increase their brand value. So as

it is given above the significance of the rural market has increased due to the

saturation of the urban market as well as in such conditions the company which will

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lead the way will be benefited as shown by the success of HUL and ITC initiatives

Profile of Rural Consumer

1)Low literacy level :

Literacy of rural India is 45% as compared to 52% for whole country.It is

high in Kerala and low in Bihar. Marketing communication depends on product

demonstration.

2)Low income level :

The money earned by rural consumer is lower than urban consumer.Low

purchasing power, low economic & social position,low per capita income are the

characteristics of rural consumer.

3)Location pattern:

The total rural population is across 6,38,667 villages.Rural consumer is

scattered over large area in the following pattern:

6,300 villages, there are 5000 people and above

3 lakh villages, there are 500 people and above

1.5lakh villages,there are 200 people and less people

4)Reference group:

Primary health workers,docytors,teachers,panchayat members,mahajan are

refrence group.They check and re-check the product before buying it.

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5)Occupation :

Typically 60% of people are engaged in agriculture related activities like

farmjng,poultry,cattle,etc.

6)Media:

Rural people are fond of music and folk shows.In Maharashtra the

traditional show is “Tamasha” and “Nautanki” in U.P.

7)Culture:

It refers to values,ideas,attitudes and meaningful symbols.While culture

and norms have a great hold on rural consumers perception tradition and values vary

from state to state.

Strategies

Dynamics of rural markets differ from other market types, and similarly rural

marketing strategies are also significantly different from the marketing strategies

aimed at an urban or industrial consumer. This, along with several other related

issues, have been subject matter of intense discussions and debate in countries like

India and China and focus of even international symposia organized in these

countries.

-33-

Challenges: There are significant challenges to the entire process the most important

being the capacity building of the rural entrepreneurs. For decades, the entrepreneurs

associated with very conventional/traditional knowledge of business, humiliation with

government, so they are likely to look at these initiatives with skepticism. Only

consistent performance can convince the skeptics. Therefore, the industries must play

a catalytic role to cope with this challenge and should also train the entrepreneurs to

develop their managerial and IT skills. On the other hand, the products of the existing

and popular brand also stand as threat to the rural products. These global giants

(brand) may try to suppress the rural products in the markets with its communication

hype. Therefore, developing alternative and additional market linkages for these

products is an absolute necessity. Moreover, the low volumes of rural products, high

operating cots, high attrition, and absence of local know how and relationships may

also create problem in the process. Henceforth, it is essential to make a way out to

cope with these odds.

Present position

Rural markets, as part of any economy, have untapped potential. There are several

difficulties confronting the effort to fully explore rural markets. The concept of rural

markets in India, as also in several other countries, like China, is still in evolving

shape, and the sector poses a variety of challenges, including understanding the

dynamics of the rural markets and strategies to supply and satisfy the rural consumers.

Conclusion: These issues gain added complexity under globalization, where markets

are characterized by extreme competition and volatility. While rural products has been

perceived traditionally as catering to the local market, or at best, to a wider national

market through limited formal channels, the reality of globalization since the 1990s

introduced a new dimension to the market for such products. The issue of rural

product generation through industrialization, therefore, needs to be viewed from a

new angle and on far more scientific lines.

-34-

The core of a scientific approach is to understand the market opportunities for rural

products along with the country's development priorities and to chalk out a strategy

where rural industries have an important role to play. While rural products are forced

to increasingly become part of global supply chains, these products need to adapt

themselves, not only according to the changing tastes of the national market, but also

according to changes in tastes in the international market. Therefore, a process is

essential to explore the market linkages and capacity building for SHGs through a

bottom up approach and continuous dialogue with stakeholders of rural enterprise.

This process should ensure the participation of rural people as consumers and

producers in the globalization mechanism, with better livelihoods and global access to

markets. The real challenge of building a sustainable market linkage starts here.

-35-

Potential and changing pattern of rural markets

1)Potential:

With urban market showing the sign of saturation ,companies are

getting increasing excited about the potential of rural India. In 1994-95

around 60%of rural population was in the low income group of

Rs.25,000p.a.By 2006-07 only 20%of them is left in this category.

Because of rise in income L.G.entered rural market with brand

“Sampoorna” in the television category which contributed 15% of its

turnover in the year 1991-2000.It is estimated by HUL that out of 5 lakh

villages in India only 1 lakh have been tapped through the number of

middle and higher income level farmer in rural India is 21.7 lakhs.

2) Increase exports:

The export policy of 2000 paved for open markets status for

agriculture.The WTO policy for agro exports has increased exports of

Indian agriculture products,there by increasing the income of rural

population.

3) Better banking facilities:

Credit facilities extended by public sector banks through Kisan credit

cards help farmers by seeds, fertilizers and even consumer goods on

installment basis.Bio-metric cards from ICICI are empowering women to

manage their money.

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4) The growth of SHG(Self Help Group):

These are the alternate channels for FMCG goods.The money

women make adds to the disposable income which could be spent on

consumer durables.

SHGs are popular for selling HUL products under the project Shakti in

south India.

5) Common policies and employment opportunities:

Jawahar Rojgar TRYSEM are the schemes created by the

government for new employment opportunities in rural India.Hence,the

socio-economic condition of rual India has increased.

6) Rural communication:

The mass madia has increased demand for goods and services in the

rural areas.

Companies like Colgate,HUL sell their products in the Khumbh Mela

festival.

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7) Total sales:

The percentage of total sales from rural markets are steadily increasing:

8) The following things are dynamically changing in rural India:

Literacy level

Penetration and influence of mass media

Aspirations and attitude of rural consumer

Disposable income

HUL 50%

COLGATE 50%

GODREJ 30%

ASIAN PAINTS 60%

L.G 50%

-38-

Urban Consumer Behaviour

Profile:

1) High Literacy level : Literacy level is high in urban areas as compared to rural areas. In urban areas people are more educated and they buy products according to their knowledge and information about the product.

Eg :- Fair & Lovely.

2) High income level : The income level in urban area are high .As the income increases the purchasing power also increases.

Eg :- Air conditions.

3) Reference Group : Urban consumers are concerned about what type of product to buy their quality, price, size etc.

4) Occupation : The occupation of urban consumers are teachers, doctors, bank manager,peons,etc.So they buy products according to their needs.

Eg:- Washing machine, T.V, etc.

5) Media: Media of communication in urban areas is through advertisements, hoardings,posters,etc.

-39-

Case study on HUL - Lifebuoy

Introduction

Ever since Hindustan unilever ltd.(HUL) announced its decision to focus on 30

power brans in Jan 2001, it has taken a series of initiatives ranging from refurbishing

fair and lovely to pulling on AIM, its tooth paste targeted at the rural market. Now the

focus is on Lifebuoy.The decision is to replace it with an entirely new product.

Laundhed in 1895, Lifebuoy for over 100 years has been synonymous with health

and value.the brick red carbolic soap with its cresylic perfume and “tandurasti ki

raksha”(safe guard to health) jingle have carried the lifebuoy message of health across

the length and breadth of the country,making it the largest selling soap brand in the

world.with Rs.500 crore plus sales,the brand has 18% volume share in the toilet soaps

and contributes as 25% to HUL’s profits.

Realization: On introspection and analysis of the changing scenario,HUL has its

own realizations.

Business has to now stand on their own feet to give a competitive edge to the

company.

It is unwise to blame the weak demand from rural markets any more for poor

sales.The responsibility of growing the market lies wiyh manufactures.

-40-

Changing rural consumer:

Rural market has new decision makers in children and women.

Rural consumers are adaptive.They donot buy brands based on sheer habit;

like urban folks they too try new products and enjoy advertising much the

same.

The loyalty to Lifebuoy is strong at emotional level.Its share in the mind

market is large and significant.Accordingly the following decisions were

taken.

Widen the health promise-Health and hygiene for the whole family in the

place of hard working victorious male.Now the target audience is family.

Maintain association with the core brand-Lever retained the brick shape of

the soap,the red colour,the jingle as well as the plus symbol.The product

form(carbolic to milled and the perfume cresylic to a health fragrance) were

new.The weight of the soap was reduced from 150-125 grams and the price

was increased by 8.50 paise to be Rs.9 per cake.

The new formulation has an ingredient,Active-B,which offers protection against

germs, which can cause stomach infection, eye infection and infection in cuts and

bruises.The new health perfume has been selected after one of the most extensive

perfume hunts in the industry.The new milled formulation offers a sisignificantly

soperior bathing experience and skin feel.The new lifebuoy range now includes active

red (125gm,100gm,60gm) and lifebuoy active orange (100gm).

Lifebuoy active orange offers the consumer a differentiated health perfumewhile

offering the health benefit of lifebuoy.It targeted today,s discernng house wifes with

a more inclusive family health protection for their family and themselves.The lifebuoy

active was launched in January 2001.It stemmed lifebuoys decline,increasing volumes

by 3% in the first quarter,even as the soap market shrunk by 9% in 2001.Lever refined

the same mix and tested it among its core users, the 45 year old male was neither

excited nor alienated by the new concept , and rated it on par.

-41-

Marketing communication

Lifebuoys new communication tack centered around health and hygiene.While

the first set of ads targeted the core consumers and told him about the

switch ,the next sets of ads were pitched at the mother and talk about how

lifebuoy prevents kids from picking up germs.The new formulation, new health

perfume and superior skin feel, along with popular red colour,have registered

conclusive and clear preference among existing and new users.

Lifebuoy offers ample scope for up gradation.At the upper end of the

market,lifebuoy offers specific health benefits through lifebuoy international

plus and gold.Lifebuoy international plus offers protection against germs which

cause body odour,while lifebuoy international gold helps protect against germs

which cause skin blemishes.The promotions of lifebuoy international is going to

be backed by one of the largest ever direct contact programmes launched across

rural India to drive the consumption of soaps starting in April 2000. HUL

expects to cover more than 10,000 villages in nine to ten states.

-42-

HUL dominates top 10 list

It’s one company which has a large number of brands featuring in the Most Trusted

Brands list. It’s a company that has consistently had the largest number of brands in

the Top 50 list. And it has also had the most number of brands in the Top 10 list over

the last five years. Hindustan Unilever (HUL), by virtue of its celebrated power

brands, is the undisputed king of the hill in the survey.

This year too, four brands from HUL — Pepsodent, Pond’s , Lux and Lifebuoy —

make it to the Top 10. Pepsodent has climbed from No 8 to No 4, its best ranking in

five years. Pond’s , which was at No 3 in 2004, lost ground to slip to No 9 last year;

this year, it’s back at No 5. Lux, though, finds itself out of the Top 5 list for the first

time, dropping to No 6, while Lifebuoy has slid from No7 to No9.

Priya Nair, GM – oral care, HUL, is pleased with Pepsodent’s gain, and attributes it to

the good stand that the brand has enjoyed with customers since launch. “New variants

like Pepsodent Complete and Pepsodent Kids have helped improve brand connect.

BTL activities done at schools and the tie-up with the World Dental Federation have

also helped,” she says. HUL’s other toothpaste brand, Close-up , has retained its No

14 position, and Nair doesn’t think there is any cause of worry. “Despite what your

survey results show, Close-up has gained market share last year,” she says.

Pond’s has been aggressive last year with a number of new product launches like

Flawless White and Age Miracle. Venkat Sridhar, GM – skincare, HUL, is optimistic

about the future of the brand: “Overseas, Pond’s is a market leader and is associated

with antiageing, skin lightening, moisturising and oil control. There is a skin care

evolution happening in India and our new products are addressing the changing needs

of consumers.” Though not in the Top 10, Fair & Lovely (FAL) has been one of the

gainers from the HUL stable (up from No 16 to No 11).

-43-

“Last year FAL’s growth contribution from increase in consumption has been 40%,

and most growth is happening because of increase in penetration,” says Sridhar.

Not all’s well with HUL brands, though, going by the survey results. Many HUL

brands have surrendered rank, particularly in categories like soaps and detergents. All

the beauty soap brands in the portfolio have lost rank, with Liril, Hamam and Breeze

being the most severely affected (Breeze, in fact, is the biggest loser this year,

shedding 52 ranks to end up atno174).

But Srikanth Srinivasamadhavan, category head – skin cleansing, HUL, counters:

“Because of our strong product portfolio that straddles across price points, we enjoy a

dominant position in soaps and will continue to do so.” He claims brands such as

Hamam and Breeze are popular in the southern and northern markets, respectively —

though the survey results say otherwise. Across all zones, Lux is the only brand that is

present among the Top 5 in the Personal Care category, while Hamam and Breeze are

languishing way below, very often behind rival offerings like Godrej No 1, Cinthol,

Medimix and Santoor.

Among detergents brands — Rin, Surf and Wheel — Wheel has fallen ten spots to No

45. Surf has been on a steady slide over the last five years (it was at No 9 in 2004) and

finds itself at No 33, while Rin, which was at No 3 in 2005, is now out of the Top 20

list. The only saving grace for HUL here is the fact that almost all detergent brands —

with the exception of Tide, which gained — have slipped this year. Other major HUL

brands like

Sunsilk, Lakme and Brooke Bond have also fallen. Lakme — once an iconic beauty

brand from HUL — runs the risk of being pushed out of Top 100 altogether, falling

14 spots this year.

In light of Nokia having overthrown Colgate as the No 1 trusted brand this year, it’s

interesting to note that HUL didn’t manage unseating Colgate and reclaiming pole

position — despite having had the firepower of multiple power brands. In fact, the

best ranking that an HUL brand has achieved over the last five years is No 2 — Lux

in 2005 and 2006.

-44-

-45-

PROJECT SHAKTI

It is one of Hindustan Unilever most ambitious projects to date and when

Project Shakti's mission fulfilled, it will give strength to the fast moving consumer

goods major's rural marketing drive.And in hte bargain, it is intend to bring about a

transformation in the lives of thousand women.

Through a combination of micro-credit and training in enterprise management ,

women from various self-help groups in several states have turned direct -to - home

endorses and distributors of a range of HUL products and are helping the company

plumb hitherto unexplored rural hinterlands.

From the time HUL's new distribution model ,named Project Shakti was

piloted in Nalgonda district in 2001, it has been scaled up and extended to over 5000

villages in 63 districts in A.P, Karnataka, Gujarat, and Madhya Pradesh with around

1400 women enterpreneurs in its fold.

The vision is ambitious : to create by 2010 about 11,000 Shakti enterpreneurs

covering one Lakh villages and touching the lives of 100 million rural consumers.

What is Project Shakti ?

Over the past few years ,faced with stagnating urban sales, the FMCG

behemoth has constantly been looking at ways to increase rural penetration and sales

of a vats range of products . Indeed ,it has made inroads ,given the fact that over 50%

of its sales of Rs.9954 crore from rural India. In 2000 HUL looked at many ways to

many ways to make inroads into the rural markets and even looked at the renowned

Grameen Model and thrift and small savings in Bangladesh.

A senior member of the HUL New Venture Team was even dispatched to

examine the model at close quarters. Have defined the model, HUL launched it on a

trial basis in Naldgonda district of Andhra Pradesh in late 2000; the objectives were

clear ;

To create income-generating capabilities among underprivileged rural women

by providing a sustainable micro-enterprise oppurtunity for them.

To improve rural living standard through health and hygiene education.

The Shakti idea essentially :

Avail micro-credit from government / banks loans for self help groups ; and a

stable "income generating activity" offered by stimulate wealth creatoin in the

village.

Women form self help groups to operate like rural direct-to-home sales

distributors for HUL products.

An SHG, a govenment initiate,is basically a group of 10-15 women in a

village who come together to form a mutual thrift society, which inculcates

savings,discipline and self-worth among women. The SGH, as an entity,can avail of

micro-credit from therural banks to use for a bussiness proposition. The SGH,as a

movement has no bold-it is expected to be over 3 miilion groups -strong by 2005 from

1 million groups today.

The main brands of HUL that Shakti women sell are

Lifebouy,Lux,,Ponds,Wheel,Nihar,Pepsodent,Annapurna Salt,Clinic Plus and Three

roses tea. Packs are mostly small units ones but since three are wealthy farm holding

households there is some sale of larger packs . The above mentioned brands are the

core brands but then they layer it with what ever else is in demand like Talcum

powder in summer and Vaseline during winter. All the brands are national and HUL

is cool to the idea creating rural specific brand as it will only dispate the advertising

and media efforts for the brand.

HUL's conventional Hub and spoke distribution model which it uses in both

urban and semi-urban markets, wouldn't be cost-effective in penerating in smaller

villages. Now , with this new distribution model,the smaller markets are now being

reffered to as "Shakti markets" .

How it works ?

Typically, a women from a SHG, selected as a Shakti enterpreneur, receives

stocks at her doorstep from the HUL distributor and sells it directly to the customer as

well as the retailers in the village. To get started the Shakti women borrows from her

SHG and the company itself chooses a person from SHG. Each Shakti enterpreneur

services 6-10 villages in the population strata of 1000-2000 people. Some Shakti

enterpreneurs selling products upward of Rs. 15000 a month worth of products can

make a gross profit of Rs.1000 a month.HUL attempts to educate the rural consumers

on the value they can derive from HUL products.

In recruiting a Shakti agent MART,HUL' s implementing agency, found that

the initial phase of 3-6 months was extermely critical for the person's continuation in

the program. When begun the dropout rate was as high as 50% .

After figuring it out MART came out with few success criteria;

The SHG should have been in existence for atleast 3 years.

In the first 3 months there has to be atleast 3 visits per month by the Shakti

animators.

HUL used other methods as well it hosted Shakti days in villages to create

awarenees about the program.

It also developed a scalable enterprise training module , a health and hygiene

module -it all had to be simple with visual prompts .When HUL began to scale

up the project, it had an almost 95% success rate - dropouts were just 5% .

THE FUTURE OF SHAKTI

There are others plans brewing . One is to allow companies which do not

compete with HUL to

get on to the Shakti network to sell their prosducts. Talks are on with a variety of

companies selling batteries, mapeds and insurance companies fopr LIC policies. They

wanted to foirst stabiles the project before they can look at other companies .It

requires somebody with skill and size to build a platform and the invite other

companies on to this platform.The most powerful aspect about this model is that it

creates a Win-Win patnership between HUL and its consumers, some of whom will

also draw on the organisation for their livelihood , and it builds a self sustaining

virtuous cycle of growth for all.

Women in the rural areas are the catalyst of change and that is why this whole

program keeps women in focus It is like popcorn in machine ; one bursts at first and

then every thing begins popping here too; one woman as an agent change bursts into a

movement. And gives the movement strength.

SURVEY

Name: Age:

Place: Gender:

No. of members in family:

Q1. What is your monthly expenditure on Personal Care and Health care

products?

a)300-500 b) 500-1000

c)1000-1500 d) 1500 &above

Q2. On what basis is your purchase decision of personal care &health care

products based?

a)Price b) quality

c)Availability d) packaging

Q 3.How often do you change brands?

a)Often b) sometimes

c)Rarely d) never

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Q 4.What influence you to change the brands?

a)Free gifts & discounts b) advertisements

c)Other influence d) price

Q5. Are you brand loyal in buying health care & personal care products?

a)Yes b)no

Q6. Does celebrity marketing influence your purchase?

a)Yes b) no

Q7. Are you satisfied with the availability of products?

a)Yes b) no

Q8.Are you getting confused because of clutter of brands available in market?

How do you take decision to purchase?

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Conclusions

Rural communication task naturally demands greater creativity and

innovation. There is a need for specialization in developing and

delivering messages. The themes, messages, copy, language and the

delivery, must match the rural context.

For every company it is important to try and understand where the

purchasing activities happen in villages and cities. Such information

helps a company plan its products basket for Indian inter land .

The company needs to use appropriate memory devices that embed the

brand in the minds the rural and urban consumers.

Rural audience identified more with colours, symbols and numbers.

The communication has to be loud and colourful. Urban audience

identifies with name, picture and shape.

In urban markets most of the consumers are health conscious but rural

consumers are not. So the companies should aware the consumers

about the products.

Consumer behaviour is an important study for the marketers.

In states like U.P and Bihar the literacy level is low and hence the

other forms of communication methods such as radio, cinema are

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popular.This should be noted by a marketer and used

effectively.The literacy level in Kerala is high.

If the price of the product is not equal or closer to your

competitors price you might loose out on market share.

Project Shakti help in catering consumer needs in a better way

and also helped in understanding them better.

Therefore to enter urban and rural markets is challenging for the

companies, but if the strategies are used in right way, then the

profit is sure.

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Annexures

(Monthly expenditure on Personal and Health care products)

(Purchase decision of Personal and Health care products)

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(Change of brands)

(Influence to change brands)

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(Brand loyalty)

(Influence of celebrity marketing)

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(Satisfied with availability of products)

(Confused with clutter of brands)

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