1.
Unilever
in
India
–
Hindustan
Lever’s
Project
Shakti
–
marketing
FMCG
to
the
Rural
Consumer
Submiited
to
Dr.
G
Sridhar
By
Garima
Dhamija
(ePGP-­‐03-­‐113)
As
a
part
of
Sales
and
Distribution
Management

2.
Q.
What
are
the
key
features
of
Shakti?
What
are
its
positive
aspects
and
what
are
its
drawbacks?
Facing
a
loss
in
turnover
in
sales
and
net
profit,
HUL
was
ready
to
launch
something
new
to
be
used
to
jumpstart
to
higher
level
of
revenues.
Keeping
this
in
mind
HUL
introduced
project
Shakti,
a
flag-­‐ship
program
with
this
and
another
objective
of
capturing
untapped
rural
markets.
In
other
words,
Project
Shakti
was
launched
with
the
aim
of
winning
a
share
the
rural
market
and
creating
a
social
impact.
HUL
partnered
with
recipients
of
the
micro-­‐credits
by
offering
the
village
women
to
be
micro-­‐entrepreneurs.
HUL
tied
up
with
MACTS
to
sell
its
products,
which
subsequently
would
sell
it
into
the
Self
Help
Groups
(SHGs).
One
member
in
each
group
was
selected
as
an
entrepreneur.
The
entrepreneurs
sold
the
products
to
the
local
outlets
at
a
price
keeping
in
mind
that
the
retailer
could
further
win
a
margin
when
selling
to
consumers.
HUL
sold
its
products
at
a
discount
to
the
entrepreneurs
at
a
price
that
would
enable
them
to
avoid
channel
conflict.
In
order
to
help
the
entrepreneurs
grow
their
businesses,
HUL
• hired
RSP
to
coach
women.
• pressed
into
service
the
incentive
mechanism
for
newly
appointed
entrepreneur
(cash
rewards
for
visiting
a
cluster
of
homes
in
addition
to
the
incentives
on
amount
.
Additional
incentives
on
selling
some
particular
brands)
• collaborated
with
local
banks
to
defer
the
first
installment
of
loans
by
a
few
months.
Positives
of
Shakti
• An
opportunity
to
capture
the
rural
market
and
to
add
to
revenue
• Created
a
possibility
to
increase
net
profit
• Initiated
a
communication
to
create
a
brand
name
synonymous
with
rural
population
• Is
s
social
platform
to
better
economic
prospects
and
therefore
standard
of
living
of
rural
India.
• Started
Shakti
Vani
to
create
health
consciousness.
Drawbacks-­‐
• High
dependence
on
SHG.
So
the
places
where
SHGs
are
not
prominent
it
there
are
no
mechanisms
for
Shakto
to
work
well.
• Possible
conflicts
in
selecting
an
entrepreneur
in
SHGs.
• Channel
conflicts
can
happen
with
the
discounts
that
are
offered
to
the
entrepreneurs.

3. • Margins
to
retailers
are
limited
,
so
also
the
margins
to
entrepreneurs.
Q.What
was
the
motivation
for
the
Shakti
initiative?
Was
it
a
CSR
activity?
To
handle
increasing
competition
as
a
result
of
the
changes
in
the
economy
(also
the
liberalization
brought
about
in
1991),
Unilever
tried
to
find
a
new
area
of
business.
There
was
a
gap
in
the
rural
markets
both
financially
and
socially.
As
per
as
the
case,
the
motivation
was
both
to
find
a
new
market
and
to
improve
the
standard
of
living
by
giving
a
boost
to
the
incomes
.
Since
CSR
entails
“community
growth
and
development”
and
“deliberate
inclusion
of
public
interest
into
corporate
decision
making”
(source
–
wikipedia),
Shakti
inititative
does
fall
into
CSR.
Q.
How
can
Shakti
make
a
contribution
to
HLL’s
bottom
line?
Make
an
economic
case.
What
is
the
Economic
Value
created
by
Shakti?
What
is
the
social
value?
Shakti
was
launched
to
capture
the
lower
ranks
of
the
economic
pyramid.
• There
are
above
600,000
villages
across
India.
• Unilever’s
reach
is
upto
100,000
villages.
• Shakti
can
tap
a
large
chunk
of
the
untapped
500
million
population.
• direct
distribution
to
rural
market.
• MACTS-­‐
partners
to
SHGs,
would
purchase
the
products
from
Unilever
and
the
sell
it
to
SGH
entrepreneur,
who
then
can
sell
it
directly
to
the
consumers
or
through
retailers.
• Many
incentive
mechanisms
to
the
entrepreneurs
to
motivate
them.
Tie
ups
with
some
local
banks
to
help
the
entrepreneurs
to
late
repay
loans.
This
project
was
also
bolstered
with
the
introduction
of
Shakti
Vani
and
iShakti.
• Shakti
Vani-­‐
encouraging
health
consciousness
• iShakti-­‐
Empoer
people
with
information
Economic
Value
–
• Number
of
villages-­‐
638,365.
• Total
population
-­‐700
million
• Tapped
village
market-­‐
100,000
• Total
Population-­‐
220
million
• Untapped
village
market-­‐
538,365
• Total
population-­‐
480
million
• In
2003
total
turnover
-­‐
2231.232
• In
2004
total
turnover-­‐
10040.54

4. (USD)
So,
Shakti
has
given
a
good
result
in
the
total
portfolio
and
good
growth
in
revenue
over
a
period
of
time
For
entrepreneurs
With
an
investment
of
Rs
10000,
they
had
the
potential
to
achieve
sales
of
upto
Rs
120,000
and
earn
Rs
700
per
month
(including
Rs
200
to
be
paid
out
for
loan
payment.)
This
would
be
over
and
above
other
incentives.
Q.What
are
the
critical
challenges
facing
HUL
in
making
Shakti
work?
What
should
Shakti’s
managers
do?
If
Shakti
can
not
become
profitable,
should
HUL
continue
the
programme?
Why?
Challenges
• Motivation
of
Entrepreneurs
–
They
should
organize
formal
training
to
develop
skills
and
create
a
viable
business.
• Shakti
Vani
should
be
kept
intact
and
thus
can
connect
it
to
the
people
there.
• Should
introduce
some
promotional
products
during
social
get
togethers
and
for
special
occasions
• Out
of
more
than
30
products,
4
products
have
50%
share.
So
managers
should
stress
upon
these
products
to
penetrate
rural
markets
further.
They
should
continue
with
the
project.
This
has
to
be
looked
at
from
the
long
term
perspective.
This
is
the
project
that
gives
them
a
very
first
mover
advantage
and
can
reap
much
benefit
in
years
to
come.
They
have
already
received
good
results
out
of
it
and
Shakti
had
contributed
1%
to
3%
in
its
total
revenues
in
one
or
two
years.
So
still
they
can
reach
as
much
as
an
additional
250
million
consumers
by
2010.
So
focusing
on
the
selected
geographies
(districts)
and
focusing
efforts
on
the
existing
entrepreneurs
should
help.
Also,
the
positioning,
as
a
socially
responsible
organization
will
also
hold
Unilever
in
good
stead
always.