2. • Unilever, the world's largest Fast Moving Consumer Goods (FMCG)
company with a worldwide revenue of $55 billion
• It's Indian subsidiary, the Hindustan Lever Limited (HLL) is the country's
largest FMCG company with combined volumes of about 4 million tonnes
and revenues $2.43 billion and 6.4 million retail outlets
• HLL was an established brand in India, largely successful in urban regions
3. • Low Price Segment – Local Players
•
•
•
•
Operating in small geographies
Little investment in brand building
Low selling price & High trade margin
Nirma – Laundry business, Personal wash category
• High Price Segment – National Brands
• Colgate Palmolive - market leader in oral-care category
• P&G - hair care, Fabric wash, Feminine hygiene categories
• Godrej & TOMCO
4. HLL
• Limitations :
• Not appropriate for small
markets
• Ill equipped for modern
trade
CFA
RS
Wholesaler
Retailer
Consumer
5. • Top End of Diamond :
• Represented modern trade encompassed self service stores and retail
chains
• Accounted for 10% of the overall FMCG market
• Middle Part of Diamond
• Largest part of the diamond
• Profit-center-based sales teams to cultivate, penetrate and grow markets
• Bottom End of Diamond
• Direct distribution in rural markets
• Accounted for 20% of HLL’s business
6. • Following HLL, some competitors were adopting Streamline
Strategy, hence HLL focused on a complete new market which
had Low Business Potential and was an Inaccessible Market.
Market/Business
Potential
Low Business
Potential
High Business
Potential
Accessible
Markets
Indirect Coverage
(25%) - A
Direct Coverage
(40%) - B
Inaccessible
Markets
Project Shakti Streamline (35%)
• A + B + C = 220 million population reach
• Project Shakti = Rest 500 million
-C
7. • Born in December 2000, in Nalgonda district of Andhra
Pradesh
• 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
8. • Business objective:
• To extend HLL's reach into untapped markets
and to develop its brands through local
influencers.
• To reach 100 million consumers by 2006
• Social objective:
• To provide sustainable livelihood opportunities for underprivileged rural
women.
• To scale up the number of Shakti entrepreneurs from 12000 (2004) to
25000 (2006)
10. Weakness
Strengths
• Local knowledge of markets through SelfHelp Groups (SHGs)
• Technology necessary to operationalize
the model
Opportunities
• Ever increasing demand due to untapped
rural market
• Increasing self awareness for
hygiene, beauty ,etc. which would lead to
high turnover over long run
• Create a channel for brand communication
• Integrating business with social
responsibility
•
Skepticism in the minds of local
people
• Untrained women entrepreneurs
Threats
• Time taken by the project to
break even
• Competitor’s entry into rural
market following the same
model
11. Analyze customer needs & wants
• Lot size – The number of units the channel permits a user
to Establishing Objectives & Constraints
purchase
• Waiting & delivery time – average time customers wait for
receipt of goods
• Objectives:
• Spatial •convenienceHLL’s reach into untapped markets
Identify channel to which marketing channel
To extend – degree alternatives
makes • easy for customer to purchase their product
it To develop the brand through local influencers
• Product•variety – Refers to the sales forces, distributors, dealers etc. have
Different
• Constraints: channels like assortment provided by the
marketing unique strengths and weaknesses. areas
channel
• Rural market scattered over large
Evaluate channel alternatives
Channel alternatives differ in three
• Service•• Low peradd on consumption delivery etc)
backup – capita services (credit, ways –
• Types of Intermediaries, rural intermediaries, Terms &
• Connectivity from urban to No. ofareas
• Economic Criteria
Responsibilities of channel members
• Control and HLL
• Available alternatives forAdaptive Criteria
• Profit center based sales and distribution model, Diamond
Model, Project Shakti
12. • Each channel alternative is evaluated against:
• Economic criteria
• Control Criteria
• Adaptive Criteria
• Profit center based model:
• Was based on geographies and product categories
• Not appropriate for small markets since potential business was small and
assigning one stockist exclusively for each profit center was not economical.
• Diamond Model:
• A three layered channel consisting of:
• Self service stores and retail stores : synergy across profit centers
• For cultivation, penetration and growing new markets : Profit center
based model was applied.
• Direct distribution in rural market which focused on economies of scale
13. • Project Shakti Model (Shakti entrepreneur)
• A direct distribution channel for rural market penetration
• Shakti entrepreneurs directly sold to retailers as well as consumers
• Initial reduction in profit margin but overall an increase in sales led to
increase in profits
• High control over the distribution channels.
• Aimed at building consumers for life
14. HLL
(Manufacturer)
Shakti
Entrepreneurs
SHG
• Advantages:
• Access to untapped market
Retailers
Consumers
• Integrated Multichannel System
• Drawback:
• Income Generated very small
• No sense of belongingness
• Advantages:
• Responsibility was not shared among many
• Income was not shared
15. • Channel Conflict :
• Generated when one channel member’s action prevent another channel from
achieving its goal
• Types :
• Horizontal Channel Conflict
• Occurs between channel members at same level
• Vertical Channel Conflict
• Occurs between channel members at different level
• Multichannel Conflict
• Exists when the manufacturer has established multiple channels that cater to the
same market
• Occurs when member of one channel gets a lower price or works with low margin
16. Channel Conflict
Cooperation
• HLL sold its products to Shakti
entrepreneurs at some discount
relative to general trade.
• Shakti entrepreneur can sell direct
to the consumers
• Entrepreneurs selling to a local
outlet which in turn sells to
consumers
• This allowed Shakti entrepreneurs
to earn more by retaining the
retail margin
• Have to sell at the price which can
enable the outlet to earn a viable
retail margin
• Limited the amount that the Shakti
entrepreneur can earn, which is
nothing but Channel conflict
• HLL can control the discount
offered to them to manage
channel conflict
17. SELECT
•
•
•
•
•
•
•
•
•
TRAIN
MOTIVATE
EVALUATE
MODIFY
Villages with a population of 2000 – 3000 are targeted.
• To train the approach SHG’s
Personnel from HLLShakti entrepreneur, RSP system was introduced.
Incentive programmes for newly appointed the whole product life cycle.
Thechannel strategy of the company meets entrepreneurs.
No representative remains effective over panchayat/village head and
Rewardingdatawould in income rural income group is very limited.sales
visiting a
identifies who evaluated cash asgrowth amma. specified the HUL
Shakti amma’s on low suitable forShahti and improvement in no. of
Customer them be on sales
homes, irrespective of density mapping technology to designvillage &
One shakti entrepreneur amount amma) is appointed for 1 its rural
techniques. GPS and the (shakti sold.
designed a
Additional incentives onnetworks.
villageschains and kms from her village brand popular in a region.
supply that are 2 sales sales of specific
• Population density helps in determining the no. of recruits, volume of
product that supply chain needs to handle.
• With seasonal migration a common occurrence in rural India, the
ability to continue to map population density quickly is a key
competitive advantage, and a critical factor in building a flexible supply
chain.
18. • Branded social communication program targeted at the rural community
• Program implemented by Ogilvy Outreach, the rural activation unit of
advertising agency Ogilvy & Mather
• Structure:
• To communicate best practices in the area of personal health
• Local woman appointed as Vani, trained and positioned as health and hygiene expert
• Cover cluster of villages, organize school-contact programs, SHG meetings & other
social occasions
• Advantages:
• Stable HLL brands cost 10-15 % of sales in promotion, while this program cost 3-5 %
• Primary awareness about personal health would benefit HLL by growing the market for
its products in long run
19. • Initiative to extend the benefits of information technology to rural
India and to empower the rural community by creating access to
information
• Structure:
• Dialogue-interactive software
installed in the desktop
• Registers user can log on to the site
and get various information free of
cost
• Advantage:
• Communication channel of HLL,
which other media failed to reach
Source: http://www.managementexchange.com/story/doingwell-doing-good-changing-lives-rural-india
20. • Low Pricing (LUPs)
• Brand Recognition (also Shakti Vani - HLL popularity due to
Project Shakti)
• Distribution and Information Systems
• Community Development – iShakti, NGOs and SHGs
• Women Empowerment – Shakti Entrepreneur
• Customer Service
• Consumer for life
21. •
•
•
•
Delivers growth with its sales and distribution initiative
Builds brands of HLL in the consumers’ mind
Extends HLL’s reach into untapped markets
Provides sustainable livelihood opportunities for underprivileged
rural women
• Improves standard of living in rural India
