43471778 a Project Report on Hul

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Rural Marketing Strategies

HUL

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A PROJECT REPORT ON

RURAL MARKETING STRATEGIES.

CONTEXT:- HUL

SUBMITTED TO

With Combined Efforts of:-

Kamakshi Bakshi

Neha Yadav

Bipin Khanna

Ankan Goshal

Sidhartha Maithy


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Acknowledgement

Atthe outsetWe would liketo taketheprivilegeto convey our gratitudeto all

those who co-operated, supported, helped and suggested us as to how the

project could be completed. Thisproject bears imprint of advices, from many

people who wereeither directly or indirectlyinvolvedinit.

We would also liketo thank Mr. Mukesh Ranjan, Territory Sales Officer of HUL,

for histime and valuableinputsinthe course of my research.


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Table of Contents

Topic

No.TOPICS Page No.

1. Introduction to Rural markets. 13. Current scenario of Rural Markets. 5

5. Introduction of Hindustan Lever

Limited.

7

6. Highlights of HUL Marketing Strategy. 8

7. Challenges faced by HUL. 9

8. Case on Wheel Strategies. 11

9. Relationship Marketing Case: HUL 15

10. Conclusion. 1811. Recommendations. 19

12. Bibliography. 20


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Introductionto rural markets.

The rise of rural markets has been the most important phenomenon of the

1990s, providing volume growth to all leading companies. Many

corporates have been trying to get agrip on rural market. But challenges

are many:how to make the product affordable, how to penetratevillages

with small populations, connectivity, communications, language barriers,

spurious brands, etc.

Marketers and manufacturers are increasinglyaware of the burgeoningpurchasing power, vast sizeand demand base of the once neglected

Indian hinterland. Efforts are now on to understand theattitude of rural

consumers, and to walk their walkand talk their talk. The marketing mix

of many companies is now being tailored to rural tastes and lifestyles.


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Current Scenario of rural market.

Rural market - A world of opportunity

GONE are the days when a rural consumer went to a nearby city to buy

branded products and services". Time was when onlya select

household consumed branded goods, be it tea or jeans. There were days

when big companies flocked to rural markets to establish their brands.

Today, rural markets are critical forevery marketer - be it fora branded

shampoo oran automobile. Time was when marketers thought van

campaigns, cinema commercials and a few wall paintings would suffice

to entice rural folks under their folds. Thanks to television, todaya

customer in a ruralarea is quiteliterateabout myriad products that are

on offer in the market place.

There is a need to differentiate the brand according to regional disparities.

The differentiation may not necessarily be in terms of product content. It

mayalso be in terms of packaging, communication orassociation with the

brand.

The brand has to be made relevant by understanding local needs. Even

offering the same product in different regions with different brand names

could be adopted as a strategy. At times it is difficult to pass on an

innovation overan existing product to the rural consumer unlikehis urban


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counterpart - like increased calcium orherbal content oragerm-control

formula in toothpaste.

According to Mr. Mukesh Ranjan, of HUL, the four factors which

influence demand in rural Indiaare - Access, Attitude, Awareness and

Affluence. HUL has successfully used this to influence the rural market

for its shampoos in sachets. The sachet strategyhas proved so successful

that, according to an ORG - MARG survey, 95 per cent of total shampoo

sales in rural India is by sachets. The company had developed a direct

access to markets through wholesale channel and created awareness

through media, demonstration and on ground contact. This changed the

attitude of thevillagers.


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Hindustan Unilever Limited.

Introduction.

Hindustan Unilever Limited (HUL) is India's largest Fast Moving

Consumer Goods company, touching thelives of two out of three Indians

with over 20 distinct categories in Home & Personal CareProducts and

Foods & Beverages. Theyendow the company witha scale of combined

volumes ofabout 4 million tonnes and sales of Rs.10,000 crores.

HUL is also one of the country's largest exporters; it has been recognised

as a Golden Super Star Trading House by the Government of India

HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair &

Lovely, Pond's, Sunsilk, Clinic Plus, Pepsodent, Close-up, Lakme,

Brooke Bond, Kissan, Knorr-Annapurna, Kwality Wall's arehousehold

names across the countryand span many categories - soa ps, detergents,

personal products, tea, coffee, branded staples, ice cream and culinary

products. Theyare manufactured in close to 80 factories. The operations

involve over 2,000 suppliers and associates.

HUL's distribution network, comprising a bout 7,000 redistribution

stockists, directly covers the entire urban population, and a bout 250million rural consumers. HUL believes that an organizations worth is

also in the service it renders to the community. HUL is focusing on health

& hygieneeducation, women empowerment, and water management. It is


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also involved in education and rehabilitation of special or underprivileged

children, care for the destituteand HIV-positive, and rural development.

HUL has also responded in case of national calamities / adversities and

contributes through various welfare measures, most recent being thevillage built by HUL in earthquake affected Gujarat, and relief &

rehabilitation after the Tsunami caused

devastation in South India.

HUL STRATEGY.

The Rs 11,000 crore Hindustan lever (HUL) is formulatinga new strategyto expand its presence in Indias Rural markets. HUL is oneamong those

companies in the country that derives huge revenues (over 50%) from the

ruralareas. But in the past one-year, owing to the failure of the monsoon

in many parts of the country farmers have registered a substantial fall in

incomes and consequently the purchasing power. For the company this

has resulted in a flat growth of these markets. Witnessing the flat sales

growth in ruralareas. HUL has shifted its rural markets strategy. Earlier

each business division of the company dealt with the rural market on an

individual basis; now the shift in strategy means the company will deal

with rural markets as a single organization to achievegreater penetration

and sales. This approach is expected to lead to better cohesion, greater

pushand deeper penetration which would eventually lead to better sales.

HUL officials say it is not enough that individual business divisions push

their own strategies for rural market; the company willhave to work in

unison in order to achievea balanced growth. Over thelast threeyears the

company has embarked on an ambitious programme, Shakti. Through

Shakti, HUL is creating micro-enterprise opportunities for rural women,

thereby improving their livelihood and the standard of living in rural

communities. Shakti also includes healthand hygieneeducation through


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the Shakti Vani Programme, and creatingaccess to relevant information

through the i-Shakti community portal. The programme now covers about

50,000 villages in 12 states. HUL's vision is to take this programme to

100,000 villages impacting thelives of overa 100 million rural Indians..

Challenges faced by HUL in rural markets are:-

1) Dispersed Markets

Rural areas are scattered and it is next to impossible to ensure the

availability ofa brand all over the country. Seven Indian states account

for 76% of the country's rural retail outlets, the total number of which isplaced at around 3.7 million. HUL reaches their product in this dispersed

markets. Their coverage is around 85%- 90% in ruralareas. District fairs

are periodic and occasional in nature. HUL prefer such occasions as they

allow greatervisibilityand capture theattention of the target audience for

larger spans of time. The fairs at Pushkar, Ujjain, Kotaand Bulandshesher

are major sources ofattention for the rural buyer but arent concentrated

unlike urban markets. Advertising in suchahighlyheterogeneous market,which is widely spread, is veryexpensive.

2) No Reachibility

India's 6,27,000 villages are spread with 128 million households, the rural

population is nearly three times the urban. 700 million Indians maylive in

ruralareas, finding them is not easy. Many ruralareas are not connected

by rail transport. At least 50 % of rural roads are poorly surfaced, many

are totally destroyed or severly damaged by the monsoon and remainunserviceable, leaving interior villages isolated. Thus HUL faces

difficulty in reaching their products to potential rural consumers.


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3) Infrastructure in rural areas

The use of bullock carts look inevitable for manyyears into the future . Of

the 15 million carts in the country , 12 million areestimated to be in rural

areas ,transportingabout 6 million tones of freight peryear. Camel cartsoperate in Rajasthan and Gujrat in both urban and rural sectors. In

Haryana, Punjab and Western Up, buffaloes also are used for carts. These

make the HULs product available in rural markets but very slowlyas it

consumes time.

4) Prevalence of spurious brands and seasonal demand.

For HULs product therearea multitude of'localvariants', whichare

cheaper, and, therefore, more desirable to villagers. Rural consumers are

cautious in buyingand decisions are slow. Theylike to givea product a

trialand onlyaftergetting personal satisfaction do they buy it again.

Rural markets there is seasonal demands of products as thereare crops

grown twiceayearand peopleearn during this timeand would like to

buy the products. The demand for HULs products during this period is

not highas rural consumers would not like to buyand store soaps and

detergent instead they would prefer consumer durables.


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`

WHEELs STRATEGIES

WHEEL in rural markets

Wheel was launched as an Economy segment brand by HUL. It was

launched in 1987. It belongs to Fabric wash Segment of HUL.

Wheel includes under it the following brands:-

1. Wheel Green bar

2. Wheel Active(Blue) bar

3.Wheel Green Powder

4.Wheel Active(Blue) Powder

Brand:- WHEEL, Logo is in shape ofa wheel of cart i.e CHAKRA

Positioning of Wheel :- 'Best clean withless effort' .

It Cleans Effectively withlessereffort and lesser physicalexertion. Wheel

makes alaborious chorelike washinglight and easy.

Difference :- Tough on Dirt and soft on Hand.

Wheel does not burn hands orharm clothes like some other detergents,

which contain a high percentage of soda. It has Active Radiant which


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makes it different from others. The consumers seeka solution to heavy

dutylaundry, like bed sheets and curtains.

Developing on this insight, wheel sought to eliminate the trouble of tough

dirt orheavy-duty laundry. Mass market consumers have welcomed thesolution, making it the number one.

Effectiveness:- Wheel is effectiveas an Aspirational part at a low cost

for rural consumer.

Communicated by:- The stars of rural India promoted this brand through

Advertisements. Firstly it was advertised by a Hero who worked in the

serial Buniad and now it is communicated by famous film star

GOVINDA.Wheel is also advertised by Wall paintings in Rural areas.

Wheel is also promoted through vans demonstrating its usage and

functions to rural consumer.

Promotions:- Wheel aims at fulfilling the aspiration of this segment of

population.Wheel follow certain promotion strategies theyare;-

1. Buy Wheel and get Consumer offers as Get things free with the

product. Wheel offers to give ornaments, Gold, Scholarships for study,


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Household Utensils , White goods free with the product. It also give

chance to Get a new flat foryourself.

2. Wheelalso follows a strategy to promote its products bygivingan offer

to Buy 3 and get 1 free. This ensures the customer to buy more. Thisforces consumer to decideand store the product for one month.

3. Wheel undergoes Rural Based Activities to promote its products.

Wheel offers demonstrations to people a bout How to use it? Near the

Wells and Bathing Ghaats.

Wheel also sponsors Film Shows in villages known asChitrahar to

advertise its products. The next is it also adopts Sampling operations in

villages of offering free samples to the consumers.Pricing:- Wheel is priced at Rs 20 per Kg now. Previously , HUL priced

the bluevariant of Wheelat Rs 22 per kg, just above thegreen variant

priced at Rs 18 per kg.

Wheel is now availableeven in smaller packs ranging between 1Rs 5Rs.

The powder is available in packs of 1Rs, 2Rs, and 5Rs and Bar is

available for both 5Rs and 2Rs.

Expectation of rural areas:-Rural consumer needs smaller packs of

products as there is No Storage space in ruralareas as in Urban and their

Disposable Income is also low. The Shopkeeper in rural areas provide

disposable packs by cutting the bigger pack into smaller oneas needed by

the consumer.

Eg;:- The 2 Rs pack of Wheel powder is used by the rural consumer to

take it with them to the Riverand wash clothes. One pack cleans about 25

clothes. There is no additive required, it provides instant latherand is a

sensory Quo for Cleanlinees.

The Rural markets where there is Hard water that affects lather, they

prefer to use Wheel rather than an Oily Soap. Eg- In Southand Western

India they prefer Wheel because there is Hard water.


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Wheel Jug Mug

Wheel Jug Mug was launched in the discount bars segment, by Hindustan

Lever Ltd (HUL) attempting to wade off competition that has emerged in

this price category in 2001. It is a dishwash bar in the discount segment.PRICING:- Wheel Jug Mug was launched at alow price point of Rs 10

fora 400 gm bar. There was a competitive pricing strategy so faras the

discount dishwash bars segment is concerned.

The strategic intent is to dominate the discount segment with Wheel Jug

Mug. The mix has the potential of becoming the branded market leader in

the dishwash category in smaller urban towns and rural India, said MrSanjay Behl, marketing manager, HUL.

The targeted consumer falls in the income level of under Rs 4,000 per

month salary, and thus price is integral to the brand strategy.

The launch of Wheel Jug Mug offered an acceptable consumer price-

valueequation which is a bigger trigger to conversion in low per capita

income markets. Wheel Jug Mug increased penetration through its

competitive price-value equation via-a-vis other available products

(brands/ proxy products) at that range.

It offers superior performancevis-a-vis the consumers current habit of

dosing detergent powder with ash to wash dishes. There are strongly

entrenched barriers to conversion amongst ash/ mud users, the mix had

performed superiorat an acceptable cost vis-a-vis their practice forany

conversion to happen.

PROMOTIONS :-Incentivizing the trade channel by offering better

margins, market activation, visibility, consumer offers and such other

novel concepts areall part of the trade channel promotions

The company processed for defining new mediavehicles to promote the

product in rural markets, where the only channel which is high on

visibility is Doordarshan.


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Wheel is promoted through a good communication strategy, market

activation to distribution, live product demonstrations, etc.

The marketing strategy is to exploit the full potential of the Wheel

equity into logical dish wash extension given that consumer habitrevolves around using cheap detergent powders for washing dishes.

HUL is working on maximizing consumervalue in every market segment

and this will be offered, as is appropriate, through the integrated brand

Wheel.

Relationship Marketing: The case of HUL.

Hindustan Leverhad launched in 1999 its relationship marketingexercise

said to be the first of its kind in Rural India by a ma jor FMCG

corporation. It is different from conventional campaign through media

hoardings, sponsored events, etc It involves building relationships with

the consumers in rural areas through education programmes, home-to-

home contacts and cinema shows.

Aim:

The aim is to build sales for its personal care brands including that of

Pepsodent, its mass market toothpaste. In the toothpaste market the main

competition was between HUL and Colgate. According to the figures of

July 1999, Colgatehad a 50 % share of the market (including all price

ranges ) down from 60 %. HUL had an overall share of 40 %. Pepsodent

was the fastest growing brand in its slot withannualgrowth rate of 22 %.


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Focus:

The objective in ruralareas is to tap first time users. Statistics includelow

usage patterns. In China, a bout 90% of the people use toothpaste

compared to 47% in India. About 27% use toothpowderand only 20 %

had visited a dentist. Even in the urban areas, where consumers have used

toothpaste right from childhood, the overwhelming majority uses

toothpaste only once in the morning whereas teeth required brushing most

at bed time.

Strategy:

1. Product: HUL introduced a 15 gm Pepsodent pack to target the first

time user. Also its up market brand Close up was introduced at retail

outlets in suburban and ruralareas witha price tag of Rs. 3.50.

2. Campaign: The Operation Bharat Programme. HULs door-to-door

campaign in rural areas, concentrates on educating the consumer by

holding free dental camps. It also had dental education programme in

association with New York University. In India, thereare scholarships

for students in dental colleges for collaborating in research at such

centers.

In Mysore, for instance, a dental check-up camp was conducted at all

schools ( where the students belong to comparativelylower SECs) in July

1999. In two years since 1996, some 12 lakh students have been covered

by such check-ups. There is Rural HygieneProgramme, a counterpart to


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the urban one. It has a target of reaching 20 crore people in 3,50,000

Villages.

3. Door-to-Door Sales: About 10 million homes in rural India have

been touched so farand target for that year was 12 million. The project

essentially involves selling a discounted personal care kit containing

mini-packs of shampoo, toothpaste, talcum powderand face cream. The

kit is sold at Rs. 15. Sold separately, the products would together cost

the consumer Rs. 27.

4. Cinema: Afterhome-to-home contact and sales in villages during the

day. HUL concentrates on cinema time in theevenings. Thereare still

villages which do not have TV. Cinema shows are quite popular there.

Effects:

The strategy has highly encouraging results. The market has become

awareand responsive for personal care products. Fairand Lovely cream

was test launched in Maharashtra for a target audience. About a year

before thelaunch the use of the cream was less than 1 % of zero in many

illages. It shot up to 20% in oneyear. In the same market shampoo use

was about 6% and went up to 18% even if used oncea week.


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CONCLUSION

Rural Market is Gold Mine which is paved with Thorns but HUL has

rightly tapped it. However there is a long way to go to capture all the

rural markets. In Rural markets company face various problems like

Underdeveloped People and Underdeveloped Markets, Lack of Proper

Physical Communication Facilities, Many Languages and Dialects,

Dispersed Market , Low Per Capita Income, Low Levels of Literacy ,

Different way of thinking of Rural Consumer, etc. HUL was the first

FMCG to tap rural markets and has generated huge revenues from rural

markets.

There were many other companies which entered rural markets and was

successful and gave competition to HUL some of them are Cavinkare

which launched Chik Shampoo for rural markets, ITC, Colgate, Nirma etc.

The key lies in understanding why, what and how of the rural consumer.

It would be a blunder to assume and apply the same principles as of

urban marketing. Rural marketing is completely different ball game talkabout its consumer tastes, competition, demographics, communication

media, socio-cultural milieu, or the infrastructure. The spread and

heterogeneity further complicate matters. One can conclude that

Marketing in the urban and the rural areas is different as product may

vary in rural & urban area and the marketing strategies to market the

product is also different mainly the packaging and distribution strategy in

rural area is designed keeping in mind the rural consumer. It is thereforeapt to do a thorough groundwork before jumping headlong into the rural

markets.


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RECOMMENDATIONS

HUL, a major FMCG to enter rural markets, but not the only one now.

There are many companies which entered rural markets. HUL needs to

be competitive and keep on updating its strategy to have a foothold in

the Rural markets.

For India to maintain and improve economic growth it is imperative to

improve rural markets. Even today there is imbalance in rural

development. Government and Marketers have to undertake measures

to improve the Rural markets.


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BIBLIOGRAPHY

1. Rural & Agricultural Marketing book Ramkishen.Y

2. Rural Marketing C.S.G. Krishnamacharyulu and Lalitha

Ramakrishna.

3. Marketing Management (10th

Edition) Philip Kotler

4. Marketing Management (13th

Edition) Philip Kotler

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43471778 a Project Report on Hul

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