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Awhan Mohanty

on 22 October 2012

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Transcript of HUL 2

Rural Marketing Initiatives Hindustan Lever Limited HLL Distribution Strategy FUTURE OF RURAL MARKET Urban market has become congested with too many competitors.
The market have reached a near saturation point
Large population
Raising prosperity
Growth in consumption
Life-style changes
Market growth rates higher than urban
Rural marketing is not expensive 1990-2000 HLL Rural Marketing Strategy 2001 till date Rural Marketing Strategies COMPETITOR'S STRATEGY ` 1998 PROJECT STREAMLINE:
•Address rural distribution problems
•Increase no of rural outlets from 50,000 to 100,000 by year end 1999.

•Addressed issues of awareness, attitudes and habits of rural consumers
•Increase the penetration level of HLL products through Direct marketing.
•Created demand by selling detergents, toothpaste, face cream and talcum product for Rs 15 in small Packs. 1999 TWO PROJECTS:
•Integrated Rural Promotion Van( population>2000)
•Self-help groups (SHG’s)

1)Launched awareness programs related to health and hygiene with NGO’s ,United nations development Programme (UNDP)
Goal: cover 75% population from existing 43% (reaching 2,35,000 villages from existing 85000)
2)Target to reach 65% reach through TV from current 33%. Encouraged primary education in villages with help of V-Sat connections. 1999.. DENTAL AWARENESS CAMPAIGN:
Launched Dental health awareness programme with Indian medical Association(IMA)
Vision : to make every person in urban and rural India to adopt good oral care regime.
Target: 100 million people in rural area in 3 years.
Increase direct use of toothpaste to 1.25 lakh villages from existing 40,000.

•Informercials aired on DD.
•200 health fairs in rural areas
•Education & checkup modules. 2000 PROJECT MILLENIUM:
Campaign to increase share in tea market. Tap ‘chai ki dukan’

Rural communication programme
Setting up of company stalls
Product briefings, demos, interactive games, lucky draws, magic shows, screening of hit movies interspersed with product commercials PROJECT SHAKTI SHGs 1015 women come together to form a self help group to inculcate small savings
Groups promoted by the Government or NGOs to tackle poverty
Micro loans provided by rural bank to setup enterprises
Individual women take small loans from the group to start income generating activity (petty vegetable vending, fish trading, tailoring, dairy etc)
A classic case where social goals are helping achieve business goals.
Motive was to develop sales area for HUL by providing sales training to rural female entrepreneurs thereby making them independent.
Villages with a population of about 1000-2000 are selected.
HUL personnel approach the SHGs of the respective village & select “ Shakti Ammas”.
One Shakti entrepreneur is appointed for her own village & 3-4 other villages within a radius of 2 kms.
The training provided mostly centers around prices , discounts, buying ,selling & brand communication.
Post training , Shakti Amma is asked to put up Rs 20,000 as investment which is used to buy products for selling.
Products are then sold via door-to-door selling ,through home shops or through retailers.
Shakti Amma earns about Rs 700 – Rs 1000 per month on an average sales of Rs 10,000- Rs 15000 per month. 46,000 Shakti Entrepreneurs appointed
100,000 villages covered
10 million consumers serviced
Household income of Shakti Ammas have doubled.
Over the years the market penetration for HUL have been constantly rising.
Premium Products are sold in sachets & small packs & prices don’t exceed Rs5/ sachet. Initiated in 2010, its an IT enabled community portal across AP.
Kiosks set up with internet linked computers to provide free information access to villagers in their local language.
Questions can be posed via email on wide range of topics like HLL products , agriculture, health , education , finance & employment.
Currently around 1000 kiosks at
AP in partnership with the government. Women constrained by social restrictions.
Women cannot reach far off markets on foot.
Lack of stability of micro finance in SHGs.

To overcome these obstacles, the following two models are being implemented aggressively across rural India :-
“Shaktimaan” model
“MART” model Initiative by HUL started in Orissa in 2010 covering 50000 villages with 1500 Shaktimaans with each village population less than 2000.
A Shaktimaan is a male member of a shakti entrepreneur family.
He is chosen based on his locational advantage and his proximity to villages which are to be covered.
Monthly income of Shaktimaan is around Rs 2500 i.e. 2.5 times of what Shakti entrepreneurs earn because of the arduous task he performs.
They cover 25000 odd outlets with each Shaktimaan covering 5-6 villages in his vicinity.
One of the main triggers for the move has been better connectivity in the form of roads and infrastructure to remote villages across India.
Redistribution stockists (RS) play a crucial role in identifying Shaktimaan & each RS is responsible for 20 Shaktimaans. Creation of many first time users who are generally loyal to a brand for long time.
Enhanced rural market penetration.
With better-income opportunities and various government schemes like NREGA (National Rural Employment Guarantee Act), rural consumers are expected to upgrade to higher price points. Market coverage
Daily visit to uncovered areas 1 haat and 2 villages in a day or
Retailers in 4 villages
Covers villages within 10km radius from own village
Retailer sale at trade margins and haat sale at price close to MRP Coverage of New Markets
-at least 4 haats every week
-30 villages
Average daily sale Rs 700/ youth
Cost to company Rs3000/ youth/ month (against Rs3000 /day van cost)
Creates awareness among consumers to identify & discard spurious brands. Source: MART Report Creating Sustainable Marketing Models in Base of the Pyramid 2008 KHUSIYON KI DOLI
Latest brand building initiative using technology.
A set of four palkhis or dolis move to different localities in the village drawing an audience of around 5 housewives and children.
Concealed within each doli is a LCD TV, a DVD player and a small generator .
Through the awareness module, consumers are shown ads for a range of HUL's products.
In engagement module, product demonstrations via films are done which tend to be highly interactive.
Interesting characters are created like Khushi Didi (main protagonist) , Vimla Didi( who uses Vim) & Rakhi Didi( who uses raakh to clean utensils)
Motive of the programme is to create awareness , long lasting relation & instant connection with consumer. Young managers spend 8 weeks or more, living in a remote rural village.
Helps them develop more intimate understanding of the rural consumer.
They become humane leaders through transformative experiences in these villages.
Initiative started with selling of Dalda.
The program faced some opposition during the formative years but was soon imbibed whole-heartedly. Source: MART Report Creating Sustainable Marketing Models in Base of the Pyramid 2008 Source: MART Report Creating Sustainable Marketing Models in Base of the Pyramid 2008 Source: MART Report Creating Sustainable Marketing Models in Base of the Pyramid 2008 Rural market is $1.8-trillion
opportunity: HUL's Manwani
“If our agricultural growth can pick up to 4% as envisioned by the Planning Commission, the cascading impact that rural prosperity will have on the national economy could add up to an additional 2% to our GDP and enable us to go for double-digits growth". Definition of “Rural” Urban Unit (or Town):
• All places with a municipality, corporation, cantonment
board or notified town area committee, etc. (known as
Statutory Town)
• All other places which satisfied the following criteria
(known as Census Town):
-A minimum population of 5,000
-At least 75 per cent of the male main workers engaged in non-agricultural pursuits
-A density of population of at least 400 per sq. km.

Anything which is not urban is Rural ! Migration Inclusion of New Areas under “Urban” Arguments Against Rural Market Natural Increase There has been a spurt in growth of population in Urban areas in the country, which could be due to:
Natural increase
Inclusion of new areas under ‘Urban’ Many people migrate temporarily or seasonally.
In many cases families stay in villages, only the male member migrates.
Even if they migrate, they carry the brand image with them. The proportion of rural population declined from 72.19% to 68.84%
Only four States recorded decline in Rural Population during 2001-11.
These are Kerala (by 26%), Goa (19%), Nagaland (15%) & Sikkim (5%).
Sharp decline of 8.9 million in child population in Rural areas Rural in today's world are defined as people living a different lifestyle as opposed to that of those who have settled in the bigger cities and towns. Macroeconomic Factors Boosting Rural Incomes "The increase in procurement prices has contributed to a rise in rural demand.
Government schemes like NREGS reduced rural underemployment and raised wages.
Continuously improving productivity due to advancements in agriculture and biotechnology. Major competitors Godrej Colgate palmolive Other Notable Initiatives e- Choupal by ITC
Hariyali Kisaan BazaarbyDCM Shriram Consolidated Ltd.(Sale of agri-inputs)
TRIVENI KUSHALI Bazaar to sell cement and FMCG products. P&G DABUR
CAVINKARE Colgate Palmolive – SAMPARK, SURAKSHA CHAKRA 1) Godrej Aadhaar is a program of Godrej Agrovet for rural India with its motto as -
“Khushiyon ka, Khushhali ka”

2) Project Dharti P&G’s ‘kamyaab jodi’ campaign KAMYAAB JODI CAMPAIGN UNDERSTANDING THE RURAL MARKET AFFORDABILITY ACCEPTABILITY AWARENESS AVAILABILITY Average income of less Rs.2000/- per month (Rs.24,000/- per Annum), rural Indians have a very low disposable income.
Minimal storage space and no refrigeration.
Very few people own or have access to cars
Poor roads
Power problems
Inaccessibility to conventional advertising media.
“earn today, spend today” mentality “The future lies with those companies who see the poor as their customers” says C. K. Prahalad in his book ” The Fortune at the Bottom of the Pyramid “ APPROACH
main problem with the MNC’s entering India is that they think the world is one homogenous market
4 aspects in rural marketing: Availability, Affordability, Acceptability & Awareness. 1st challenge is to ensure availability of the product or service.

India’s 627,000 villages are spread over 3.2 million sq km; 700 million Indians live in rural areas.

Hindustan Lever, has built a strong distribution system which helps its brands reach the interiors of the rural market

Service remote village, stockists use Auto rickshaws, Bullock-carts and even boats in the backwaters of Kerala. 2nd challenge is to ensure affordability of the product or service.

Some companies have addressed the affordability problem by introducing small unit packs.

Hindustan Lever, among the first MNC’s to realize the potential of India’s rural market, has launched a variant of its largest selling soap brand, Lifebuoy at Rs.2 for 50 gm. 3rd challenge is to gain acceptability for the product or service.

Need to offer products that suit the rural market

HLL introduced Lifebuoy

Insurance companies that have tailor-made products for the rural market Since large parts of rural India are inaccessible to conventional advertising media, building awareness is another challenge.

Hindustan Lever relies heavily on its own company-organized media.

Godrej Consumer Products, which is trying to push its soap brands into the interior areas, uses Radio to reach the local people in their language.

Coca-Cola uses a combination of TV, Cinema and Radio to reach rural households. THE KEY TO SUCCESS IN RURAL MARKET Source: Ministry of statistics and programme implementation, Govt. of India WHY RURAL MARKETING RURAL vs. URBAN MARKETING RURAL vs. URBAN MARKETING EVOLUTION OF HLL DISTRIBUTION Search for Sustainable Competitive Advantage
Growing Power of Retailers in Marketing Channels
The Need to Reduce Distribution Costs
The Increased Role and Power of Technology
The New Stress on Growth
Number of Consumers
Geographic Dispersion of Consumers IMPORTANCE OF BUILDING A
STRONG DISTRIBUTION SYSTEM Wholesalers placing bulk orders directly with the company.
1940’s : One wholesaler in each market was appointed as a "Registered Wholesaler"
"Redistribution Stockist“ (RS), "Company Depots"
1960’s : IDC
1990’s + : Rural Marketing
May 1999 : Goal of reaching 2,35,000 villages from existing 85,000 and covering 75% of the population from existing 43%
Target of 16Mn new Village households by 1999
Power Brands
Phased approach to address key issues of
Prevalent attitudes and habits of rural consumers
Penetrative Pricing Project Streamline : To address the problem Rural Distribution system
Enhance rural retail outlets from 50000 in 1998 to 100000 by 1999
Rural Distributor with 15-20 Rural sub stockist connected to him Frequency of Purchase
Tendency to Postpone Purchase
Level of Familiarity/Knowledge (of consumer) about the Product
Degree of Brand Loyalty
Purchased on Impulse
Level of Involvement (LOI) Speed & Complexity of Decision Making Process
Present of Expert Influencer in the Decision Making Process
Element of Crisis Purchase Exists
Element of Risk Aversion Exists
Perishability of the Product
Time Band Associated with the Purchase of the Product
Degree of Customization Possible
Negative or Positive Reinforcing Product
Value/Volume Ratio (Value Density) of the Product `
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