ITC PROJECT SHAKTI.docx

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RURAL MARKETING STRATEGY OF HINDUSTAN UNILEVER

PROJECT SHAKTI

Introduction

Hindustan Unilever Limited (HUL) to tap this market conceived of Project Shakti.

This project was started in 2001 with the aim of increasing the companys rural distributionreach as well as providing rural women with income-generating opportunities.

This is a case where the social goals are helping achieve business goals.

4,00,000 VILLAGES

States covered by Project shakti


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HOW IT WORKS?

Villages with a population of about 2000-3000 are selected.

Personnel from HUL approach SHGs.

Selection of the Shakti Amma.

HUL vouches for Shakti Ammas with banks from credit.

One Shakti entrepreneur is appointed for one village & villages that are about 2kilometres apart from her village.

The Shakti dealer places initial orders worth Rs.15000(principal customer of HUL The Shakti dealer organizes a Shakti Day in the village(display o f products & free

gifts)

The recruitment of a Shakti Entrepreneur or Shakti Amma (SA) begins with theexecutives of HUL identifying the uncovered village.


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The representative of the company meets the panchayat and the village head and identifythe woman who they believe will be suitable as a SA.

After training she is asked to put up Rs 20,000 as investment which is used to buy products for selling. The products are then sold door-to-door or through petty shops at

home.

On an average a Shakti Amma makes a 10% margin on the products she sells .

PRICING AND PACKAGING

Rural consumers are price sensitive

Sachets and small packs of premium products.

Price doesnt exceed Rs.5 per sachet.

Lux at Rs.5,

Lifebuoy at Rs.2,

Surf Excel sachet at Rs.1.50,

Pond's Talc at Rs.5,

Pepsodent toothpaste at Rs. 5,

Fair & Lovely Skin Cream at Rs.5,

Pond's Cold Cream at Rs.5,

Brooke Bond Taaza tea at Rs.5.

SOME OF THE PRODUCTS SOLD THROUGH PROJECT SHAKTI

LUX Rs 5 LIFEBUOY RS 5 SURF EXCEL RS 1.50


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Distribution

It is the combination of the 3 ways: Door to door selling (11% margin on sales) Sells from own home (11% margin on sales)

Retailers (3% margin) averages sales : Rs. 10,000 - Rs. 15,000/month, profit - Rs.1,000 per month

HLLs approach to rural distribution

Direct coverage

Factory Depot Stockiest / Distributor Trade


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Indirect Coverage

The role of micro-finance

The self-help group Grameen Bank: mutual thrift societies of village women A rapidly spreading movement: 6 million groups in India 70% of rural households in AP A micro-finance revolution 8 million families have received micro-credit 76% of micro-credit recipients have crossed the poverty line 95% of micro-credit recipients are women Effectiveness depends on opportunities for micro-enterprise

Future plans

Project Shakti plans to extend to the states of West Bengal, Punjab and Rajasthan. Partnership with other non-competitor companies to sell their products through the Shakti

network. Nippo, TVS Motor for mopeds, insurance companies for LIC policies.


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Issues

Low margins . Difficulty in acquiring finance

transportation Low disposable income (dependence on monsoon)

Profile of Indian rural Economy

Sector %

Agriculture 78.0

Manufacturing 7.1

Service 5.8Trade 4.4

Others 4.3

Why all these program

To take people aware

To increase the consumption.

To increase the income.

To increase behavior in

Awareness & living standard Lifestyle

Self consciousness.

WHY SHAKTI???

It was soon felt that HUL's sales and distribution system which had protected it from competitorswould be soon replicated by its rivals and to maintain its edge, the company had to increase itsreach beyond the urban markets

Carrying and forwarding agents(CFA)

more than 70% of India's population lived in villages and made a big market for the FMCGindustry


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BENEFITS

Earnings about 7%, after 3% goes towards principal and interest Improves her per-capita income by about 50% to 100% 100,000 entrepreneurs by 2010

PROMOTIONAL STRATEGY With lack of TV or Radio medium Promotion through demonstration of HUL products at the Haat Bazaar. Star sellers made up for this lack of audio-visual brand advertising.

Questionable Strategies

Differential pricing for rural costumers purchasing from SHG Two different channels of same company competing on PRICE.

Undermining local retailers Negligence of flooding of counterfeit products into market place

PROGRAMMES UNDERTAKEN

SHAKTI VANI SHAKTI ENTREPRENEUR iSHAKTI COMMUNITY PORTAL

Shakti Vani

Social communication anchored on brands

health and hygiene womens empowerment Village women are recruited as Vanis and trained to communicate Vani audience: key opinion leaders, schools, SHG meetings, other village gatherings Specially designed communication material easy-to-carry kit: flip-charts, leave-behind posters, banners content developed after in-depth understanding of local context


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Shakti Activities

i - Shakti

a. In 2010, they started i -Shakti an IT -enabled community portal across the state of

Andhra Pradesh. i-Shakti is designed to give rural people access to information via anetwork of village kiosks containing internet linked computers run by entrepreneurs.

b. Villagers can access free content, developed in their local language, or email questionson a wide range of topics, including Unilever products, health and hygiene, agriculture,education, finance and employment.

c. The aim is to have 3000 i-Shakti kiosks on stream by the end of 2010 covering 9500villages and 18m people.

d. Rural community portal that creates access to information

II. Villagers can register as users and surf content areas:a. Agriculture, health, veterinary services, education, employment opportunities,

education, personal grooming, entertainment, gamesb. All content backed by local language voice-overc. On all content areas, users can pose queriesd. 1,000 kiosks in AP, partnership with government

Appearance of ishakti kiosks


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SHAKTI ENTREPRENEUR PROGRAMME

It helps women in rural India set up small businesses as direct-to-consumer retailers.

The scheme equips women with business skills and a way out of poverty as well as

creating a crucial new distribution channel for Unilever products in the large and fast-growing global market of low-spending consumers.

By 2010 the Shakti network aims to have reached 600 million consumers .

Objective

The Shakti entrepreneur program creates livelihood opportunities for underprivilegedrural women.

The Shakti Vani program works to improve the quality of life in rural India, by spreading

awareness of best practices in health and hygiene. They are also studying the consumption habits of the rural people .

Other Activities

To improve the business skills of the SHG women, extensive training programmes are beingheld.

Workshops have already covered a large number of Shakti Entrepreneurs in Andhra Pradesh,Karnataka, Gujarat, Madhya Pradesh, Uttar Pradesh, Tamilnadu, Chattisgarh and Orissa.

As part of their training programme, all HUL Management Trainees spend about 4 weeks onProject Shakti in rural areas

The factories that HUL continued establishing in less-developed regions of the country have beenengaged in developing rural market in adjacent villages.

These factory-centered activities mainly focus on training farmers, animal husbandry, generatingalternative income, health & hygiene and infrastructure development.

Participated States

Andhra Pradesh

Karnataka

Gujarat

Chattisgarh


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Maharashtra

Orissa

Punjab

Rajasthan

Tamilnadu

Uttar Pradesh

West Bengal

Bihar

Haryana

Jharkhand

Shakti shall reach every home in every village, create sustainable livelihood opportunities, andenhance the quality of life in rural India

Now SHAKTI has been extended 80,000 villages in 15 states with 45,000 women entrepreneurs& generating Rs.700-1000 per month to each women.

CONCLUSION Project Shakti is enabling families to live with dignity and in better health & hygiene, educationof the children and an overall betterment in living standards.

it creates a win-win partnership between HUL and the rural consumers for mutual benefit andgrowth.

Documents

ITC PROJECT SHAKTI.docx