Unilever in India

Hindustan Lever’s Project ‘Shakti’ –Marketing FMCG to the Rural Consumer

Emerging Markets

• Huge opportunity, competition, no brand awareness, people don’t understand the need

• Instead of pushing the marketing from top-down, how do you shift the attention to bottom-up strategy

• How does a company succeed• Understand the Customer / Segments• Provide the Value /Educate • Cultural Aspects, Values, Needs => Win-Win

Definitions and Names

• Project Shakti = ‘Shakti’ means strength and empowerment. Also name of a Hindu Goddess

• FMCG = Fast Moving Consumer Goods

• iShakti = information ‘kiosk’ operated & hosted by the Shakti Entrepreneur

• Vani = Means Voice; reminds of a women name

• SHG = Self-Help Groups

• HLL = Hindustan Lever Limited

The Origin

• HLL was an established brand in India, largely successful in urban regions• Urban market growth rates slowing down • Urban competition heating up• HLL enjoyed greatest reach into rural markets, but rivals began to

emulate rural distribution initiatives• HLL new it needed to find new markets

• Direct reach was only 16% of rural markets

• Project Shakti - an ambitious venture by HLL to spur growth and penetration of its products in rural India while changing lives and boosting incomes.

• Sales and Distribution initiative – delivers growth• Communication initiative – build brand• Micro-enterprise initiative – creates livelihoods• Social initiative – improve standard of living in rural India

Project Shakti was born in Dec 2000, in the district of Nalgonda, in the Southern Indian state of Andhra Pradesh.

Project Shakti: The

Objectives

• HLL's New Venture Division identified rural India as a key source of growth and competitive advantage

• HLL argued that access to rural markets would be the big differentiator among FMCG companies

• Business objectives: extend HLL's reach into untapped markets and to develop its brands through local influencers.

• Social objectives: provide sustainable livelihood opportunities for underprivileged rural women.

Strategy

• SHG - functioned as mutual thrift societies• 10-15 women in a village would form a group• Small member contribution to common pool• Sponsoring agency gave micro-credit

• Shakti Entrepreneur• Borrowed money from SHG for purchases• Tasked to sell HLL products in the village• Generated significant income for themselves

Why Women?

• Women are the target consumers for most of HLL products

• Rural women constituted the most marginalized group in society 

• Rural women were more likely to appreciate the additional income than affluent ones in urban areas

• Women were more likely to access into homes of potential consumers in villages

• Focus on women would have greater impact on the entire household - leads to improvements in health, hygiene, and education levels

• Most men would be occupied with other employment and would not devote as much time to the activity

Crossing the Chasm

Challenge Solution

These women had never undertaken economic activities

A Rural Sales Person (RSP) hired to coach Shakti entrepreneurs

1st few months were the most difficult for entrepreneurs

Change in incentives: Cash rewards for number of homes visited, instead of sales made; and delayed first loan payment.

Lower-income consumers HLL introduced low-unit-price packs = Sachet

By 2004, HLL was selling sachets of shampoo, hair oil, detergent, skin creams, tea, toothpaste, and soap to rural India.

Shakti Vani: The

Communicator

• A branded social communication program targeted at the rural community• A local women was appointed as a

‘Vani’, trained and positioned as an expert on matters relating to personal and community health and hygiene

• A ‘Vani’ covered a cluster of villages

iShakti – The Portal

• The iShakti information ‘kiosk’ is operated and hosted by the Shakti Entrepreneur.

• Access to information on education, employment, agriculture, health, personal care, legal procedures, e-governance and entertainment.

• Users can post queries on these subjects to local experts who respond within 48 hours.

Scaling Up Issues

• HR (including management) costs ballooned - 10% to 15% of Shakti revenues

• Vani and iShakti programs ran at 3% to 5% of sales.

• Regional (State Specific issues)• Varying levels of prosperity > affected the level of

infrastructure and ability to access villages

• Status of women across rural societies differed

• At least 12 different languages and dialects - made it difficult for rural sales people to work across a state

• Many entrepreneurs, being barely literate and underprivileged and living in a male dominated society, had little self-confidence

Targets & Performance

• Target:• Original: To reach 250 million additional consumers

through 100k entrepreneurs by 2010• Revised: To increase the number of Shakti

entrepreneurs that we recruit, train and employ from 45,000 in 2010 to 75,000 in 2015.

• Performance:• In 2004, PS grew to >15% of HLL's rural turnover • By 2011, 45,000 entrepreneurs (‘Shakti ammas’)

were selling products to over 3 million households in 100,000 Indian villages.

Source: http://www.hul.co.in/sustainable-living/casestudies/Casecategory/Project-Shakti.aspx

Q. & A.

• A win-win for both sides – HUL makes money and also spreads good. Comments?

• Any ethical issue with Project Shakti? • Educating to create demand, increase consumption• Pollution from packaging

• How could they tackle regional issues?• Education differences• Status of Women in Rural society

• Is this an effective Marketing strategy for emerging Markets?