Unilever in INDIA: Hindustan Lever's Project Shakti-Marketing FMCG to the Rural Consumer

1. Hindustan Lever’s Project Shakti
By
A.Arputha Selvaraj
APMP IIM Calcutta

2. 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 company’s rural distribution reach
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

3. States covered by Project shakti

5. 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 2 kilometres 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 of products & free gifts)

6. • The recruitment of a Shakti Entrepreneur or Shakti
Amma (SA) begins with the executives of HUL
identifying the uncovered village.
• The representative of the company meets the
panchayat and the village head and identify the
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.

7. PRICING AND PACKAGING
• Rural consumers are price sensitive
• Sachets and small packs of premium products.
• Price doesn’t 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.

8. SOME OF THE PRODUCTS SOLD THROUGH
PROJECT SHAKTI
AT
RS.2
AT
RS.5
AT
RS.1.50
AT
RS.6
AT
RS.5
AT
RS.5
AT
RS.5
AT
RS.5

9. 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

10. HLL’s approach to rural distributionAccessibility
Streamline
Turnover per market
Indirect
Coverage
Direct
Coverage

11. Direct coverage
Factory Depot Stockiest / Distributor Trade

12. Indirect Coverage
Village 1
Village 2
Village 3
Village 4
Village 5
Stockist

13. Streamline
Star seller
Star seller
Distributor
Star seller

14. 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

15. 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.

16. Issues
• Low margins .
• Difficulty in acquiring
finance
• transportation
• Low disposable income
(dependence on monsoon)

17. Profile of Indian rural Economy
Sector %
Agriculture 78.0
Manufacturing 7.1
Service 5.8
Trade 4.4
Others 4.3

18. 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.

19. WHYSHAKTI???
• It was soon felt that HUL's sales and distribution
system which had protected it from competitors
would be soon replicated by its rivals and to
maintain its edge, the company had to increase
its reach 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 FMCG
industry

20. 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

21. • 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.

22. • 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

23. PROGRAMMES UNDERTAKENPROGRAMMES UNDERTAKEN
• SHAKTI VANI
• SHAKTI ENTREPRENEUR
• iSHAKTI COMMUNITY PORTAL

24. Shakti Vani• Social communication anchored on brands
– health and hygiene
– women’s 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

25. Hand-wash demo in schools

26. Shakti Activities
Free Health Camps in Shakti Village

27. Free Dental Camps in Shakti Villages

28. i - Shakti
• 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 a network of village
“kiosks” containing internet linked computers
run by entrepreneurs.
• Villagers can access free content, developed in
their local language, or email questions on a
wide range of topics, including Unilever
products, health and hygiene, agriculture,
education, finance and employment.
• The aim is to have 3000 i-Shakti kiosks on stream
by the end of 2010 covering 9500 villages and
18m people.

29. iShakti Contd……
• Rural community portal that creates access to
information
• Villagers can register as users and surf content areas:
– Agriculture, health, veterinary services, education,
employment opportunities, education, personal
grooming, entertainment, games
• All content backed by local language voice-over
• On all content areas, users can pose queries
• 1,000 kiosks in AP, partnership with government

30. Appearance of ishakti kiosks

31. SHAKTI ENTREPRENEUR PROGRAMMESHAKTI 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.

32. Objective
• The Shakti entrepreneur program creates
livelihood opportunities for underprivileged rural
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.

33. Other Activities
• To improve the business skills of the SHG women,
extensive training programmes are being held.
• 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 on
Project Shakti in rural areas

34. • The factories that HUL continued establishing in
less-developed regions of the country have been
engaged in developing rural market in adjacent
villages.
• These factory-centered activities mainly focus
on training farmers, animal husbandry,
generating alternative income, health & hygiene
and infrastructure development.

35. Participated States
• Andhra Pradesh
• Karnataka
• Gujarat
• Chattisgarh
• Maharashtra
• Orissa
• Punjab
• Rajasthan
• Tamilnadu
• Uttar Pradesh
• West Bengal
• Bihar
• Haryana
• Jharkhand

36. Vision 2010
100,000
Entrepreneurs
500,000
villages
600million
Consumers
Shakti shall reach every home in every village, create
sustainable livelihood opportunities, and enhance 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.

37. CONCLUSION
• Project Shakti is enabling families to live with
dignity and in better health & hygiene,
education of the children and an overall
betterment in living standards.
• it creates a win-win partnership between HUL
and the rural consumers for mutual benefit
and growth.