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?
