Changing lives in rural India

Hindustan Lever Limited

Turnover of about 110 billion rupees in 2004 Product centers include:
Profit Center Detergents Categories Personal Wash Fabric Wash Household Care Key Brands Lux, Lifebuoy, Dove Surf Excel, Rin, Wheel Vim, Domex

Personal Products

Skin Applications Hair Care Oral Care Specialty

Tea Coffee Culinary Products Staples

Fair & Lovely, Pears, Vaseline, Ponds Clinic Plus, Sunsilk, Nihar Pepsodent, CloseUp Lakme
Lipton, Brooke Bond Bru, Deluxe Green Label Kissan, Knorr Annapurna

Beverages Foods

23 of Indias 150 most trusted brands

Hindustan Lever Limited

After liberalization, HLL faced tough competition In lower price segments, by unorganized local players In higher-price segment, from Colgate- Palmolive, P&G etc.

This lead to a price war with reduction in profits

HLLs strategy was to create new market and dominate them

HLL Sales Organization

Sources of Competitive Advantage Strong, well-established brands Local manufacturing capacity and supply chain Vast sales and distribution system Sales Organization: Product Category & Geography Based One depot per state, supplying to Carrying and Forwading Agents(CFA) CFA would supply to redistribution stockist who would sell to wholesale and retail outlets

HLL Sales Organization: Channel Approach

Modern Trade Organized retail Self-service stores General Trade Wholesale Family grocer Marginal retail Rural Trade Direct Distribution

Rural Sales Team

Rural India - challenge and opportunity

775 million Indians in 638,000 Indian villages A different life
Market scattered over large areas Low literacy, less media reach Low per-capita consumption rates Poor connectivity with urban centers

HLLs approach governed by 2 criteria

Accessibility Viability

HLLs approach to rural distribution

Indirect Coverage Direct Coverage

Accessibility

Streamline

Turnover per market

Direct coverage

Factory

Depot

Stockist / Distributor

Trade

Indirect Coverage
Village 3

Village 4

Retail Stockist (nearest urban center)

Village 2

Village 5 Village 1

Streamline

Star seller
Star seller

Rural Distributor

Star seller

Project Shakti
To reach inaccessible rural market with low turnover SHG:10-15 women form a group which would receive micro credit to be invested in an approved economic activity HLL to partner with SHGs by offering them microenterprise Social objective of providing sustainable livelihood opportunities to rural women Could not gather momentum as income was divided among the group

The role of micro-finance

Income MicroCredit

MicroEnterprise Investment Savings

The Shakti Entrepreneur program

Micro-enterprise opportunity

Underprivileged rural women are appointed as Shakti Entrepreneurs and trained to manage micro-businesses
Average earnings per entrepreneur:Rs 700-1000 a month
doubling monthly household income supplementing other income

Piloted in 2001, scaled up rapidly

Now a network of 45,000 entrepreneurs in fifteen states
(source: HUL website)

Impact
A network of local, credible brand endorsers, reaching 100 million people Market growth and brand equity
significant increase in penetration and market shares

15% of HLLs rural business in districts of operation

Unique direct to consumer channel
Contact with two million rural homes every month

Program created livelihood opportunities for underprivileged rural women

Challenges
SEs had no experience of economic activities
Rural Sales Promoters' were hired to coach SEs to create and grow viable businesses.

NGOs and Government were hesitant to support the project

Partnership with MART to execute project Shakti in new districts

Bulk of the sales came from a few key brands

Product offerings were reduced to the key brands in districts

Low penetration among low income groups

Developed Low Unit Price packs and sachets to target large mass of consumers

Shakti Vani: The Communicator

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 Increase awareness not only improved the quality of life, it also increased the market for HLLs products

iShakti: The Portal

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

Thank You