Results-based Management

Evaluation Policy Renewal

Results for Canadians
Tools and Resources

Performance Reporting - Good Practices Handbook

Results-based management is a life-cycle approach to management

that integrates strategy, people, resources, processes and
measurements to improve decision-making, transparency, and
accountability. The approach focuses on achieving outcomes,
implementing performance measurement, learning and changing, and
reporting performance. Each phase of the of management life-cycle is
explained, and related resources are provided below:
Planning - Planning involves the articulation of strategic choices in
light of past performance and includes information on how an
organization intends to deliver on its priorities and achieve associated
results. Please visit the following links for additional information on
the:
• Management Resources and Results Structure (MRRS) Policy
Implementation and Monitoring
Ongoing performance measurement and periodic evaluation are key
tools through which progress is determined. Performance
measurement and evaluation present valuable opportunities to learn
and adjust so that the desired results may be achieved. Please visit the
following links for additional information:
• Evaluation
• Evaluation Policy Renewal
• Results-based Management Accountability Framework
(RMAF) Guide

Reporting The final stage of the life-cycle approach involves

reporting on results through the provision of integrated financial and
non-financial information. Results-based information is used for both
internal management purposes and for external accountability to
Parliament and Canadians. The reporting phase also provides
managers and stakeholders the opportunity to reflect on what has
worked and what has not: a process of learning and adjusting that
feeds into the next planning cycle. Please visit the following links for
additional information:

Rural Marketing

Where HLL's Shakti comes from

FMCG giant Hindustan Lever has embarked on yet another ambitious venture,
Project Shakti, to spur growth and penetration of its products in rural India while
changing lives and boosting incomes. Catalyst presents a first hand account.

A HARSH summer sun beats down mercilessly on the drive to Nalgonda district in Andhra Pradesh. The rock
landscape is parched, scorched by successive years of drought. The destination is Peddakaparthy village, 65 k
Hyderabad, and the seat of a brave new experiment by fast moving consumer goods major, Hindustan Lever
(HLL), where, undaunted by the vagaries of nature, a group of village women are attempting to bring about a
transformation in their lives. Through a combination of micro-credit and training in enterprise management, t
women from self-help groups have turned direct-to-home distributors of a range of HLL products and helping
company plumb hitherto unexplored rural hinterlands.
From the time HLL's new distribution model, named Project Shakti, was piloted in Nalgonda district in 2001
been scaled up and extended to over 5,000 villages in 52 districts in AP, Karnataka, Gujarat and Madhya Prad
around 1,000 women entrepreneurs in its fold. The vision is ambitious: to create by 2010 about 11,000 Shakt
entrepreneurs covering one lakh villages and touching the lives of 100 million rural consumers.
What's Project Shakti all about? How does it work and benefit the company? Catalyst was part of a media tea
HLL invited to visit Peddakaparthy village to see Project Shakti at work. The team visits the house of Jella
Sujathamma, whose spouse is a weaver who weaves the famous Pochampally sarees of AP. However, her inc
not enough for her family, which includes three children.
Five years ago, Sujathamma had joined a self-help group (SHG), formed by the district rural development au
HLL has operated Project Shakti through these self-help groups; AP was chosen for the pilot project as its ha
most number and better established SHGs - there are about 4.36 lakh SHGs in AP covering nearly 58.29 lakh
women. C.S. Ramalakshmi, Commissioner, Women Empowerment & Self employment, Govt of AP, points o
AP alone has about half of the SHGs organised in the country. Says Pradeep Kashyap, Managing Director, M
& Research Team (MART): "This network has ensured that AP is the incubator for all our experiments in wo
new models of distribution of FMCGs and other products." MART, an organisation which works in the socia
implements the on-ground activities for many companies wanting to work the rural sector, including HLL. Th
of Sujathamma, among the first Shakti entrepreneurs, have been chosen from these SHGs. She, HLL officials
is a shining example of the success of the model - Sujathamma, on an initial loan of Rs 10,000 from her SHG
the enterprise, has a turnover of Rs 10,000-Rs 25,000 a month earns a profit of Rs 750-Rs 2,000 a month, an
return of 8 per cent. Besides, she now also sells staples, sugar, edible oil and a variety of other household item
The objectives of Project Shakti, explains Dalip Sehgal, Executive Director, New Ventures & Marketing Serv
HLL, are to create "income-generating capabilities for underprivileged rural women by providing a sustainab
enterprise opportunity" and to improve rural living standards through "health and hygiene awareness". For H
"enlightened self-interest". Creating opportunities to increase rural family incomes puts more money in their
purchase the range of daily consumption products - from soaps to toothpastes - that HLL makes. It also enabl
access hitherto unexplored rural hinterlands. Says Sehgal, "We looked at several models of rural distribution,
the Grameen Bank model in Bangladesh, before we decided on the pilot in Nalgonda to figure out this model
the model has been refined based on our learning here and we expect to roll out quickly in other states."
For HLL greater penetration in rural areas is also an imperative - presently over 50 per cent of its incomes fo
of its product categories like soaps and detergents come from rural India. The challenge for HLL now is to ta
products to towns with a smaller population - under 2,000 people. As Sehgal points out, HLL's conventional
spoke distribution model which it uses to great effect in both urban and semi-urban markets, wouldn't be cost
effective in penetrating the smaller villages. Now, with this new distribution model, the smaller markets are n
being referred to as `Shakti markets'.
How it works
Typically, a woman from a SHG selected as a Shakti entrepreneur receives stocks at her doorstep from the H
distributor and sells direct to consumers as well as to retailers in the village.
Each Shakti entrepreneur services 6-10 villages in the population strata of 1,000-2,000 people
Typically, as Sehgal points out, a Shakti entrepreneur sets off with 4-5 chief brands from the HLL portfolio -
Lifebuoy, Wheel, Pepsodent, Annapurna salt and Clinic Plus. "These are the core brands, they we layer it wit
whatever else is in demand like talcum powder or Vaseline during winters," elaborates Sehgal. These brands
other brands which find favour with a rural audience are: Lux, Ponds, Nihar and 3 Roses tea. Typically, unit p
small. All the brands are national and HLL is cool to the idea of creating a rural-specific brand as it will only
the advertising media effort for the brands. To get started the Shakti woman borrows from her SHG and the c
itself chooses only one person. With training and hand-holding by the company for the first three months, she
her door-to-door journey selling her wares.
The impact is slow and HLL too is not expecting any quick returns on this project. In Andhra, so far, since th
experiment began, HLL has seen 15 per cent incremental sales from rural Andhra, which contributes 50 per c
overall sales from Andhra of HLL products. But analysts see this rural foray as something the company has g
As Nikhil Vora, Sr. Vice President of research group ASK Raymond James explains, if there is one company
take on the onus of developing the rural markets, it's HLL. Says he: "HLL contributes 20 per cent of the total
business in the country. So, clearly, the onus is on HLL to grow the market. Returns may not happen in the ne
years, but a lot of consumer understanding and insights comes from an exercise like Project Shakti, which in
lead to product innovation."
An analyst with a leading brokerage points out that a lot of HLL's rural initiatives in the recent past have not
because of poor rural incomes. But, a monsoon revival and greater rural incomes can mean payback time for
like Shakti. "Large companies like HLL have to push greater into rural areas. Brand loyalty is declining amon
consumers; they're looking mostly for consumer promos; regional brands too are snapping at their heels. So,
growth, going rural has become an imperative," she says. Concurs K.N. Siva Subramanian, Sr. Vice Presiden
Franklin Templeton India Ltd: "The (HLL) management had recognised the impending saturation of the urba
markets some time back and launched aggressive plans to capture the rural markets. However, a slowdown in
agricultural sector resulted in rural incomes remaining flat and affecting sales. We believe that by targeting lo
price points and further expanding the distribution network, companies can tap the potential of rural markets.
Initiatives like Project Shakti will help them in establishing and consolidating their base in rural markets." Re
brands, or even larger FMCG companies, do not have the kind of distribution reach that HLL has established
the long run, that could prove a winner for HLL, according to analysts.
The future of Shakti
Having perfected the model in Nalgonda, in 2003 HLL plans to extend Shakti to a 100 districts in Madhya Pr
Gujarat and UP. There are other plans brewing. One is to allow other companies which do not compete with H
get onto the Shakti network to sell their products. Talks are on with battery companies like Nippo, TVS Moto
mopeds, insurance companies for LIC policies. "We wanted to first stabilise the project before we can look a
companies. It requires somebody with scale and size to build a platform and then invite other companies onto
platform," elaborates Sehgal. The most powerful aspect about this model, emphasises Sehgal, is that it create
win partnership between HLL and its consumers, some of whom will also draw on the organisation for their
livelihood, and it builds a self-sutaining virtuous cycle of growth for all.
The next stage of Project Shakti is even more ambitious. HLL is now in the process of piloting `I-Shakti', an
rural information service that will provide solutions to key rural needs in the areas of agriculture, education,
vocational training, health and hygiene. The project will be piloted in Nalgonda district again. Based on a pal
HLL is looking at sourcing appropriate low-cost hardware from Hewlett-Packard while Unilever Research ou
London is developing the consumer interactivity software. As Sehgal puts it, women in the rural areas are the
of change and that is why its whole programme keeps women in focus. "It's like popcorn in a machine; one b
first and then everything begins popping; here too, one woman as an agent of change bursts into a movement
says. Clearly, it's the rural women who give Shakti its strength.
AP's self-help groups
THERE are about 4.36 lakh women self-help groups in Andhra Pradesh covering nearly 58.29 lakh poor wom
alone has about half of the SHGs organised in the country. The SHGs are also popularly called DWCRA grou
this name became popular after the DWCRA programme (Development of Women and Children in rural area
through which women's groups were assisted initially. The SHGs not only save but also take small loans out
corpus available with the group. The group corpus consists of savings , government assistance as well as ban
Members use the loan out of the group corpus for their personal needs initially. However, in the long run such
are utilised for income generation activities. Since the inception of the SHGs, an amount of Rs 1,362.98 crore
been mobilised as corpus by these groups and it is estimated to reach Rs 1,500 crore by the middle of this yea
The women's savings movement, explains C.S. Ramalakshmi, Commissioner, Women Empowerment, Govt o
started in 1993 as an offshoot of the total literacy campaigns conducted by the government. Rural women org
themselves into `thrift and credit' groups with one rupee saving a day and this mass movement, in which 58 l
members saved more than Rs 800 crore is rotated internally and lent amongst members twice in a year as per
interest rates fixed by the groups. Such amounts are used for their daily consumption needs as well as for ma
goods to sell. It is into this strong network that HLL tapped to launch Project Shakti. While the savings was t
among the SHGs, there was no channel of investment. Now, HLL has provided a window of opportunity to in
earn.

HLL's `Shakti' to help partners in rural India

FMCG major Hindustan Lever plans to partner insurance companies to distribute their
products in remote rural areas through its Project Shakti.
The Project is a distribution model that HLL established in late 2000 to sell its products
through women self-help groups who operate like a direct-to-home team of sales women
in inaccessible areas where HLL's conventional sales system does not reach.
Mr. Dalip Sehgal, Executive Director, New Ventures & Marketing Services, HLL, told
Business Line that the company is in dialogue with non-competing companies for a
partnership to distribute their products through the network that HLL has established. The
company is in talks with insurance companies such as ICICI Prudential and Max New
York Life to sell policies through its `Shakti dealers'. Sources said that a battery maker is
also in talks with the company as it is not a product in the HLL portfolio.
HLL evolved Project Shakti to reach areas of low access and low market potential. The
Project currently covers all districts of Andhra Pradesh and Karnataka, reaching almost
5,000 villages through 800 self-help groups (SHGs). The company intends to extend the
model across Madhya Pradesh, Gujarat and UP in 2003. It is looking at the TN market
too. The Shakti vision, as outlined by Mr Sehgal, is to have by 2007 at least 10,000
Shakti dealers, covering a lakh villages and touching at least 100 million consumers.
"Thirty per cent of FMCG business comes from villages with a population less than
2,000, but business viability is an issue in this population strata," said Mr Sehgal.
The Shakti model trains women from SHGs to distribute HLL products of daily
consumption such as detergents, toilet soaps and shampoos - the latter's penetration being
only 30 per cent in rural areas. The women avail of micro-credit through banks. Mr
Sehgal explained that some of the established Shakti dealers are now selling Rs 10,000-
Rs15,000 worth of products a month and making a gross profit of Rs 700-Rs1,000 a
month. Each Shakti dealer covers 6-10 villages which have a population of less 2,000.
The company is creating demand for its products by having its Shakti dealers educating
consumers on aspects like health and hygiene.
Sources said that HLL might have seen incremental sales of Rs 1 crore a month each in
AP and Karnataka where it has covered the whole State. An analyst, commenting on
HLL's plans to partner other companies in using its Shakti distribution system said that it
is "enlightened self-interest" as more income in the hands of villagers could translate into
greater sales of the products of daily consumption that it sells.
The Rural Network to bring market issues centrestage

THE Rural Network, an alliance of leading rural marketing organisations in the country,
is spearheading a series of initiatives designed to put rural marketing issues squarely in
the reckoning of corporates looking for new markets.
The Network partners, Mr R.V. Rajan of Anugrah Madison, Chennai, Mr Pradeep
Kashyap of MART, New Delhi, Mr Pradeep Lokhande of Rural Relations, Pune and Mr
R.A. Patankar of Sampark, Mumbai, met in the city last week to finalise the initiatives.
Mr Kashyap, speaking to Business Line, said one of the key initiatives was a seminar that
the Rural Network is organising in association with FICCI in New Delhi on April 24 for
senior management. The seminar will have participation from both the government as
well as the private sector and will focus on what organisations need to do in their
structures to service the rural market. "One of the reasons for this lack of focus on rural
markets is the lack of commitment from the top. We need to get a buy-in from top
management," said Mr Kashyap. The Network expects 300 delegates from some of the
top FMCG and consumer durables companies to attend the seminar to debate some key
issues confronting rural marketers.
Another area that the Rural Network will collaborate on is research and data on the rural
markets, "Currently, it's a black hole, there's not enough data; we will try to create a
knowledge base," said Mr Kashyap. This year, two studies are planned - financing of
durables in small towns. The other, related study will look at how to promote and
distribute products of companies. It will study platforms like melas and mandis and
buying patterns of rural folk and how corporates can use this network to good effect. "It
will show the way for corporates on how to reach out," he added.
For now the Network will fund these qualitative studies, and will use students from
management institutes to undertake them. Another area that the Network will look at is
getting management schools interested in starting rural marketing courses. As Mr R.V.
Rajan of Anugrah pointed out, "More than 50 per cent of durables and FMCG sales come
from rural areas, but except for a few, not many institutions offer a course in rural
marketing." The Network will also look at publishing some case studies on rural markets
based on its collective experience.
Marketing the Kumbh Mela
This year, The Rural Network is looking to leverage the Kumbh Mela to make it a
marketer's delight. This year's Mela is at Nasik in Maharashtra and it starts on June 27.
Over 45 lakh pilgrims are expected. The Network has identified around 10 important
bathing ghats where pilgrims will congregate in great numbers.
"We've identified 40 important days to carry out branding activities for corporates," said
Mr R.A. Patankar of Sampark, who, along with Mr Lokhande, is coordinating the
activities there.
The Network is organising both the manpower and field vans which will be used to
distribute leaflets as well as carry out product samplings and trials. It will also put up
stalls and will also look at using the postal infrastructure like vans and post boxes for
advertising. It is also looking at companies wanting to launch products. It is already in
dialogue with interested corporates across several industries, including the mobile
companies.
"We've done an assessment study of the Mela; we've experience of fairs and the Kumbh
is one on a much larger scale. We will plan a post-impact study for brands as well," said
Mr Patankar. The Mela will be promoted as a must-be-there opportunity for corporates.
Mega conference planned
NEXT year, The Rural Network plans a mega conference, perhaps in New Delhi, which
will bring together under one roof all types of players dealing with rural marketing and
will provide a platform for sharing experiences. It will also explore the possibility of
starting a Rural Marketing Association on the lines of AAAI and other similar
professional bodies. Publishing a directory of all people in the industry is also on the
agenda. The directory will be a database of people ranging from rural wall painters to
folk artistes who can be used to promote products in rural areas.
The planned two-day mega show will consist of talks, panel discussions, case study
presentations as well as an expo. The conference will target all clients and ad agencies
dealing with agri-inputs, consumer durables, FMCGs and other services, rural event
managers, video-on-wheel operators and other vendors who are involved in rural
marketing in some form or the other.

Lessons for rural marketers

We see the re-emergence of mandis in the form of portals or virtual bazaars. After all, the
concept of mandis cannot be written off that easily. They have evolved over a period of
time and have lasted for several centuries. They lost their prominence temporarily due to
the brand marketing strategies adopted by companies.
The basic problem with brand marketing is its high cost. Mandis offer a cost-effective
method of marketing. With the virtual mandis the cost saving is still better. Consider for
example the case of marketing farm inputs like fertilisers, seeds and pesticides. In the
brand marketing approach, the same information is provided by several marketers
through different media and methods. In the virtual mandis, several people can join hands
and provide best possible information in a most cost effective manner to the farmers.
The virtual mandis operate on the principles of collaboration, co-operation and co-
evolution as opposed to the conflict, confrontation and competition approach followed by
brand marketers. At the very basic level several agencies, such as agricultural universities
and governmental agencies join hands with each other to provide the necessary
information to the villagers. As more and more people join the network, the member
benefits grow exponentially. Hence it makes sense to enrol as many member as possible,
be it the consumers or suppliers.
Technology is the key to achieving success in the new marketing approach. With the cost
of technology coming down day by day, it should not be a big problem to invest in
technology. Also, several firms and agencies can share the cost of building the necessary
infrastructure to build the virtual mandis.
Interestingly, it is the buyers of rural produce who have taken the initiative to exploit the
virtual mandi concept. What started as automation of procurement system by Amul or
streamlining of supply chain by ITC and EID Parry has led to the formation of virtual
mandis.
The rural market grab has already begun. Once the rural consumers get attached to these
new forms of virtual mandis they are going to procure most of their requirements from
the same source and sell their produce in the same mandis.
This offers an interesting challenge for those companies that are selling in the rural
market including the agri-input companies, farm equipment companies, FMCG and
consumer durable manufacturers. Are these companies going to continue the traditional
brand marketing approach or turn to the emerging virtual mandis? Once customers get
locked in with the new breed of virtual mandis, existing rural marketers are going to find
it hard to win them back.
 Rural Marketing: Challenges, Opportunities & Strategies
"The future lies with those companies who see the poor as their customers."
Concept
In recent years, rural markets have acquired significance, as the overall growth of the economy
has resulted into substantial increase in the purchasing power of the rural communities. On
account of green revolution, the rural areas are consuming a large quantity of industrial and urban
manufactured products. In this context, a special marketing strategy, namely, rural marketing,
has emerged. But often, rural marketing is confused with agricultural marketing - the latter
denotes marketing of produce of the rural areas to the urban consumers or industrial consumers,
whereas rural marketing involves delivering manufactured or processed inputs or services to rural
producers or consumers.
What Makes Rural Markets Attractive?
Rural market has following attributes and the following facts substantiate this: -
742 million people
Estimated annual size of the rural market -
FMCG Rs. 65,000 Crore
Durables Rs. 5,000 Crore
Agri-Inputs (including tractors) Rs. 45,000 Crore
2 / 4 Wheelers Rs. 8,000 Crore

In 2001-02, LIC sold 55% of its policies in rural India.

Of two million BSNL mobile connections, 50% are in small towns / villages.
Of the 6.0 lakh villages, 5.22 lakh have a Village Public Telephone (VPT).
41 million Kisan Credit Cards have been issued (against 22 million credit-plus-debit cards in
urban), with cumulative credit of Rs. 977 billion resulting in tremendous liquidity.

Of the 20 million Rediffmail sign-ups, 60% are from small towns. 50% of transactions from
these towns are on Rediff online shopping site.
42 million rural households (HHs) are availing banking services in comparison to 27 million
urban HHs.
Investment in formal savings instruments is 6.6 million HHs in rural and 6.7 million HHs in
urban.
Opportunities
 Infrastructure is improving rapidly -
In 50 years only, 40% villages have been connected by road, in next 10 years another 30%
would be connected.
More than 90% villages are electrified, though only 44% rural homes have electric
connections.
Rural telephone density has gone up by 300% in the last 10 years; every 1000+ pop is
connected by STD.
 Social indicators have improved a lot between 1981 and 2001 -
Number of "pucca" houses doubled from 22% to 41% and "kuccha" houses halved (41% to
23%).
Percentage of BPL families declined from 46% to 27%.
Rural literacy level improved from 36% to 59%.
 Low penetration rates in rural areas, so there are many marketing opportunities
Durables Urban Rural Total (% of Rural HH)
CTV 30.4 4.8 12.1
Refrigerator 33.5 3.5 12.0

FMCGs Urban Rural Total (% of Rural HH)

Shampoo 66.3 35.2 44.2
Toothpaste 82.2 44.9 55.6
 Marketers can make effective use of the large available infrastructure -
Post Offices 1,38,000
Haats (periodic markets) 42,000
Melas (exhibitions) 25,000
Mandis (agri markets) 7,000
Public Distribution Shops 3,80,000
Bank Branches 32,000
 Proliferation of large format Rural Retail Stores, which have been successful also -
DSCL Haryali Stores
M & M Shubh Labh Stores
TATA / Rallis Kisan Kendras
Escorts Rural Stores
Warnabazaar, Maharashtra (Annual Sale Rs. 40 crore)
Rural Consumer Insights
 Rural India buys -
Products more often (mostly weekly).
Buys small packs, low unit price more important than economy.

 In rural India, brands rarely fight with each other; they just have to be present at the right place.
 Many brands are building strong rural base without much advertising support.
Chik shampoo, second largest shampoo brand.
Ghadi detergent, third largest brand.
 Fewer brand choices in rural areas; number of FMCG brand in rural is half that of urban.
 Buy value for money, not cheap products.
Some Myths
Myth 1: Rural Market is a Homogeneous Mass
Reality: It's a heterogeneous population. Various Tiers are present depending on the incomes
like Big Landlords; Traders; Small Farmers; Marginal Farmers: Labourers; Artisans. State wise
variations in rural demographics are present viz. literacy (Kerala 90%, Bihar 44%) and population
below poverty line (Orissa 48%, Punjab 6%).
Myth 2: Disposable Income is Low
Reality: Number of middle class HHs (annual income Rs. 45,000 - 2,15,000) for rural sector is
27.4 million as compared to the figure of 29.5 million for urban sector. Rural incomes CAGR was
10.95% compared to 10.74% in urban between 1970-71 and 1993-94.

Myth 3: Individuals Decide About Purchases

Reality: Decision making process is collective. Purchase process - influencer, decider, buyer, one
who pays - can all be different. So marketers must address brand message at several levels.
Rural youth brings brand knowledge to Households (HH).
Why Different Strategies?
Rural markets, as part of any economy, have untapped potential. There are several difficulties
confronting the effort to fully explore rural markets. The concept of rural markets in India is still in
evolving shape, and the sector poses a variety of challenges. Distribution costs and non-
availability of retail outlets are major problems faced by the marketers. The success of a brand in
the Indian rural market is as unpredictable as rain. Many brands, which should have been
successful, have failed miserably. This is because most firms try to extend marketing plans that
they use in urban areas to the rural markets. The unique consumption patterns, tastes, and needs
of the rural consumers should be analyzed at the product planning stage so that they match the
needs of the rural people.
Therefore, marketers need to understand the social dynamics and attitude variations within each
village though nationally it follows a consistent pattern. The main problems in rural marketing are:
-
Understanding the Rural Consumer
Poor Infrastructure
Physical Distribution
Channel Management
Promotion and Marketing Communication

Dynamics of rural markets differ from other market types, and similarly, rural marketing strategies
are also significantly different from the marketing strategies aimed at an urban or industrial
consumer.
Strategies to be Followed
 Marketing Strategy
Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural
marketing involves more intensive personal selling efforts compared to urban marketing. Firms
should refrain from designing goods for the urban markets and subsequently pushing them in the
rural areas. To effectively tap the rural market, a brand must associate it with the same things the
rural folks do. This can be done by utilizing the various rural folk media to reach them in their own
language and in large numbers so that the brand can be associated with the myriad rituals,
celebrations, festivals, "melas", and other activities where they assemble.
 Distribution Strategy
One of the ways could be using company delivery van which can serve two purposes - it can take
the products to the customers in every nook and corner of the market, and it also enables the firm
to establish direct contact with them, and thereby facilitate sales promotion.
However, only the bigwigs can adopt this channel. The companies with relatively fewer resources
can go in for syndicated distribution where a tie-up between non-competitive marketers can be
established to facilitate distribution. Annual "melas" organized are quite popular and provide a
very good platform for distribution because people visit them to make several purchases.

According to the Indian Market Research Bureau, around 8000 such melas are held in rural India
every year. Rural markets have the practice of fixing specific days in a week as Market Days
(often called "Haats') when exchange of goods and services are carried out. This is another
potential low cost distribution channel available to the marketers. Also, every region consisting of
several villages is generally served by one satellite town (termed as "Mandis" or Agri-markets)
where people prefer to go to buy their durable commodities. If marketing managers use these
feeder towns, they will easily be able to cover a large section of the rural population.
 Promotional Strategy
Firms must be very careful in choosing the vehicle to be used for communication. Only 16% of
the rural population has access to a vernacular newspaper. So, the audio visuals must be
planned to convey a right message to the rural folk. The rich, traditional media forms like folk
dances, puppet shows, etc., with which the rural consumers are familiar and comfortable, can be
used for high impact product campaigns.
Some Live Examples
One very fine example can be quoted of Escorts where they focused on deeper penetration.
They did not rely on TV or press advertisements, but rather concentrated on focused approach
depending on geographical and market parameters like fares, melas, etc. Looking at the 'kuchha'
roads of village, they positioned their bike as tough vehicle. Their advertisements showed
Dharmendra riding Escort with the punch line 'Jandar Sawari, Shandar Sawari'. Thus, they
achieved whopping sales of 95000 vehicles annually.
HLL started 'Operation Bharat' to tap the rural markets. Under this operation, it passed out
low-priced sample packets of its toothpaste, fairness cream, Clinic plus shampoo, and Ponds
cream to twenty million households.
Conclusion
Thus, looking at the challenges and the opportunities, which rural markets offer to the marketers,
it can be said that the future is very promising for those who can understand the dynamics of rural
markets and exploit them to their best advantage. A radical change in attitudes of marketers
towards the vibrant and burgeoning rural markets is called for, so they can successfully impress
on the 230 million rural consumers spread over approximately six hundred thousand villages in
rural India.

HLL rewrites strategy for greater penetration of rural markets new s

Mumbai: The Rs 11,000-crore Hindustan Lever (HLL) is formulating a new strategy to expand
its presence in India’s rural markets. HLL is one among those companies in the country that
derives huge revenues (over 50 per cent) from the rural areas.
But in the past one year, owing to the failure of the monsoon in many parts of the country,
farmers have registered a substantial fall in incomes and consequently the purchasing power. For
the company this has resulted in a flat growth of these markets.
Witnessing the flat sales growth in rural areas, HLL has shifted its rural markets strategy. Earlier
each business division of the company dealt with the rural market on an individual basis; now the
shift in strategy means the company will deal with rural markets as a single organisation to
achieve greater penetration and sales.
This approach is expected to lead to better cohesion, greater push and deeper penetration, which
would eventually lead to better sales. HLL officials say it is not enough that individual business
divisions push their own strategies for the rural market; the company will have to work in unison
in order to achieve a balanced growth.
HLL plans to reach 2,35,000 villages, up from the current 85,000; 75 per cent of the population,
up from 43 per cent today; and a message reach of 65 per cent, up from the current television
reach of 33 per cent.
HLL is aiming at reaching villages with populations less than 2,000. The rural penetration
exercise is going to be complemented by a 15-per cent hike in advertisement expenditure.
In 1998 HLL’s personal products unit initiated Project Bharat, the first and largest rural home-to-
home operation to have ever been prepared by any company. The project covered 13 million rural
households by the end of 1999.
During the course of operation, HLL had vans visiting villages across the country distributing
sample packs comprising a low-unit-price pack each of shampoo, talcum powder, toothpaste and
skin cream priced at Rs 15. This was to create awareness of the company’s product categories and
of the affordability of the products.
The personal products unit subsequently rolled out a second phase of the sampling initiative to
target villages with a population of over 2,000.
Along with Operation Bharat, HLL conceptualised Project Streamline to enhance its control on
the rural supply chain through a network of rural sub-stockists based in these villages. This gave
the company the required competitive edge, and extended its direct reach to 37 per cent of the
country’s rural population.
The Indian rural market has a huge demand base and offers great opportunities to marketers.
Two-thirds of Indian consumers live in rural areas and almost half of the national income is
generated here.
As a rule the rural market is much more price elastic and involves more intensive personal selling
efforts compared to urban marketing, and here HLL has been more than successful.
Bharat project

Consumer products giant Hindustan Lever Ltd (HLL) is quietly working on a mammoth task of reaching out to the last rural consumer in the deepest part of India's
hinterland. The mission: to deepen its roots and cover the whole of rural India by the end of 2005. The vehicle: Project Shakti.

As part of its new ventures, Project Shakti had initially started operating in rural parts of Andhra Pradesh, empowering women through self-help groups to increase
awareness of HLL's products. The project has now been extended to Madhya Pradesh, Gujarat, Karnataka, Tamil Nadu, Chattissgarh, Uttar Pradesh and Orissa, which, as
planned, will cover 100 million rural population.

"Project Shakti will be our vehicle to deepen our rural reach to the entire rural India," MS Banga, chairman, HLL, told FE.

HLL has married its rural penetration programme with Project Shakti to achieve better results, as coverage through the stockist route will not be as effective as using the
rural women folk as agents for marketing its products, in a manner which is similar to door-to-door selling.

"In 10 years from today, Project Shakti will contribute in a major way to HLL's sales," said Mr Banga.

HLL currently draws a larger sales contribution from the urban market, of about 60 per cent, even as the Rs 10,138 crore maker of Lifebuoy, Surf Excel and Lux is
considered to have the largest rural backbone — its key strength — among consumer product companies. Launch of this major mega offensive to increase rural penetration
to 100 per cent would eventually lead to HLL's sales contribution coming from the rural market to go well beyond 50 per cent. Statistics show that there are over six lakh
villages in India, with a population of over 650 million.

The multinational had about six years back launched Project Bharat, a massive rural sampling initiative in two phases. According to Mr Banga, the current plan will be at a
much more larger scale as compared to Project Bharat.
The company had earlier also launched Operation Streamline to further increase its rural reach with the help of rural sub-stockists. It had appointed 6,000 such sub-
stockists, with the distribution network directly covering about 50,000 villages reaching about 250 million consumers.

Since 70 per cent of the country's population resides in rural India, penetration into this critical market is every marketer's dream.

HLL’s Project Bharat

Hindustan Lever Ltd (HLL) has changed its strategy towards rural markets in order to
tackle its somewhat flat growth in these areas. As against its earlier strategy of each
business division dealing with the rural market on an individual basis, the multinational
has now adopted a single organisational-push approach to achieve greater penetration and
sales.
HLL derives over 40 per cent of its sales from rural India, which makes this part of the
market a critical growth aspect for the company.
According to a senior HLL official, the company is now looking at the rural market from
an organisational point of view rather than from the individual businesses’ point of view.
This approach is expected to lead to better cohesion, greater push and deeper penetration,
which would eventually lead to better sales.
For instance, HLL’s Project Bharat was the first and largest rural home-to-home operation
to have ever been mounted by any company. This initiative was started by HLL’s
personal products unit in 1998, and covered 13 million households by the end of 1999.
In the course of the operation, its vans visited villages across the country and distributed
sample packs comprising a low-unit-price pack each of shampoo, talcum powder,
toothpaste and skin cream priced at Rs 15. This not only generated awareness of its
product categories but also made way for availability of affordable packs.
The personal products unit subsequently rolled out a second phase of the sampling
initiative to target villages with a population of over 2,000.
Earlier, Project Streamline was conceptualised to enhance its control on the rural supply
chain through a network of rural sub-stockists based in these very villages. This gave
HLL the required competitive edge, and extended its direct reach to 37 per cent of the
country’s rural population.
The aim now is to expand the coverage to 50 per cent of rural population. While Project
Streamline focused on extending distribution, Project Bharat concentrated on raising
penetration and awareness levels.
Several of HLL’s major business categories — such as fabric wash, personal wash and
beverages — already get over 50 per cent of their sales from rural areas.
However, officials say that it is not enough that individual business divisions push their
own strategies for the rural market, adding the company would have to work in unison in
order to achieve a balanced growth.
HLL’s Project Bharat
Abstract:
Set in India in the 1980s and 1990s, this series of cases concerns the attempts by the Unilever
division Hindustan Lever Limited (HLL) to create, market, and distribute a detergent for India's
rural poor. The upstart, low-priced Nirma detergent, manufactured by a former chemist, has
overtaken HLL in the detergent market primarily because Nirma is being distributed and sold to
this previously ignored segment of India's population. In this war of laundry powders, HLL must
revise its traditional practices in manufacturing, marketing, and distribution pursuant to C. K.
Prahalad and Allen Hammond's theory of the worldwide four-tiered market, in which the "bottom
of the pyramid" is an untapped and potentially lucrative market. See also the A (UVA-E-0266), B
(UVA-E-0267), and C (UVA-E-0268) cases.

Keywords: change implementation, ethical issues, market analysis, market segmentation,

marketing research, marketing strategy, product positioning
Rural Markets are defined as those segments of overall market of any economy, which
are distinct from the other types of markets like stock market, commodity markets or
Labor economics. Rural Markets constitute an important segment of overall economy, for
example, in the USA, out of about 3000 counties, around 2000 counties are rural, that is,
non-urbanized, with population of 55 million. Typically, a rural market will represent a
community in a rural area with a population of 2500 to 30000

Significance
In recent years, rural markets have acquired significance in countries like China and
India, as the overall growth of the economy has resulted into substantial increase in the
purchasing power of the rural communities. On account of the green revolution in India,
the rural areas are consuming a large quantity of industrial and urban manufactured
products. In this context, a special marketing strategy, namely, rural marketing has taken
shape. Sometimes, rural marketing is confused with agricultural marketing – the later
denotes marketing of produce of the rural areas to the urban consumers or industrial
consumers, whereas rural marketing involves delivering manufactured or processed
inputs or services to rural producers or consumers. Also, when we consider the scenario
of India and China, there is a picture that comes out,huge market for the developed
products as well as the labor support. This has led to the change in the mindset of the
marketers to move to these parts of the world.
Also rural market is getting an importance because of the saturation of the urban market.
As due to the competition in the urban market, the market is more or so saturated as most
of the capacity of the purchasers have been targeted by the marketers.So the marketers
are looking for extending their product categories to an unexplored market i.e. the rural
market. This has also led to the CSR activities being done by the corporate to help the
poor people attain some wealth to spend on their product categories. Here we can think of
HLL (now, HUL) initiatives in the rural India. One of such project is the Project Shakti,
which is not only helping their company attain some revenue but also helping the poor
women of the village to attain some money which is surely going to increase their
purchasing power. Also this will increase their brand loyalty as well as recognition in that
area. Similarly we can think of the ITC E-Chaupal, which is helping the poor farmers get
all the information about the weather as well as the market price of the food grains they
are producing.In other view these activities are also helping the companies increase their
brand value. So as it is given above the significance of the rural market has increased due
to the saturation of the urban market as well as in such conditions the company which
will lead the way will be benefited as shown by the success of HUL and ITC initiatives.

[edit] Strategies
Dynamics of rural markets differ from other market types, and similarly rural marketing
strategies are also significantly different from the marketing strategies aimed at an urban
or industrial consumer. This, along with several other related issues, have been subject
matter of intense discussions and debate in countries like India and China and focus of
even international symposia organized in these countries[2].
Rural markets and rural marketing involve a number of strategies, which include:
• Client and location specific promotion
• Joint or cooperative promotion..
• Bundling of inputs
• Management of demand
• Developmental marketing
• Unique selling proposition (USP)
• Extension services
• Business ethics
• Partnership for sustainability
Client and Location specific promotion involves a strategy designed to be suitable to
the location and the client.
Joint or co-operative promotion strategy involves participation between the marketing
agencies and the client.
'Bundling of inputs' denote a marketing strategy, in which several related items are sold
to the target client, including arrangements of credit, after-sale service, and so on.
Management of demand involve continuous market research of buyer’s needs and
problems at various levels so that continuous improvements and innovations can be
undertaken for a sustainable market performance.
Developmental marketing refer to taking up marketing programmes keeping the
development objective in mind and using various managerial and other inputs of
marketing to achieve these objectives.
Media, both traditional as well as the modern media, is used as a marketing strategy.
Unique Selling Propositions (USP) involve presenting a theme with the product to
attract the client to buy that particular product. For examples, some of famous Indian
Farm equipment manufactures have coined catchy themes, which they display along with
the products, to attract the target client, that is the farmers. English version of some of
such themes would read like:
 • The heartbeats of rural India
• With new technique for a life time of company
• For the sake of progress and prosperity
Extension Services denote, in short, a system of attending to the missing links and
providing the required know-how.
Ethics in Business. form, as usual, an important plank for rural markets and rural
marketing.
Partnership for sustainability involve laying and building a foundation for continuous
and long lasting relationship.
'''Building sustainable market linkages for rural products: Industry’s role, scope,
opportunities and challenges'''
Introduction: Rural products of India are unique, innovative and have good utility and
values. Large number of these rural products (like handicraft items, food products,
embroidery, clothes & other products) sustains a significant segment of the population in
the rural areas. Several attributes of rural products can be identified, for which, it has a
demand in the market. Out of the lots, ‘ethnic origin’ and ‘indigenous design &
appearance’ are two traits of rural products, attracting a premium in the market. But,
contrary to this, the non-uniformity of rural products (from one another) and lack of its
quality control measures has been creating a negative demand. Besides, the small sized
and dispersed production units of these rural products hinder realization of the economies
of scale in marketing and result in high transaction costs per unit of output. Niche-based
products have no local market. Products in local use are also not marketed horizontally;
they often first travel down to market through a long chain of intermediaries and then up
to more difficult locations in the rural areas. In the process, the people in rural areas
suffer from both low prices as producers and high prices as consumers. In this conflict,
rural products loss its equilibrium and the supply side becomes exponentially high.
Because of this hazard, rural entrepreneurs face acute economic loss and rural markets
become stagnant. Therefore, there is an emergent need for Building sustainable market
linkages for rural products, so that, it can be connected to larger markets and farmers can
get a sustainable livelihood.
Market linkages for rural products: There are, broadly speaking, three ways in which
they can be connected to the markets. They can do it on their own — through
cooperatives. Or, the state can do it for them — through its procurement engines. Stages
one and two, in a manner of speaking. Today, developmental thinking on market linkages
has reached stage three — linkages through companies or industries.
Across India, previous attempts to create such linkages have floundered. Take Assam and
other eastern states itself. Around the Eighties, the state government here decided that
cooperatives were a great way to consolidate its political base. Loans went to the
undeserving. Debts were written off. The institutions slowly got corrupted. As for the
linkages provided by the state, these offer uncertain sustainability. Given this context, one
can conclude that profit-oriented industry linkages are a more sustainable, more scalable
alternative. In this scenario, companies can use the social infrastructure (the self help
group et al) as an alternative procurement and distribution chain and vise versa.
Industry’s role in building market linkages: To make an effective market linkage,
industries have to play as an engine of market, which can generate a brand image of the
rural products. This initiative of industries will also strengthen the backward and forward
linkages of the rural market, besides, accelerating the innovations of the rural products.
Definitely, this strategy will also give a remarkable dividend to the industries & profit
making companies. In micro level, it is observed that to create a sustainable market
linkage for rural products, industries can develop an ecosystem of Self Help Groups
(SHGs) by involving the local communities through village level empowerment. It is
nothing less than the next phase in the democratization of commerce. Under this
paradigm, industries can create a network with viable marketing channels covering all the
linkages from villages to the global level. This architecture provides the right value of
procurement through the village procurement centres and rural entrepreneurs can sell
their products faster with better price realization. This model is also capable of generating
a consumer business and an output business in a win-win scenario, where rural producers
can get a wide marketing horizon and the industries shall get a new, lower cost
‘salesforce’. Another role of industries in building market linkages for agro-based rural
products can be the ‘dynamic contract farming’. If a conventional industry can kick off a
contract farming business, and export niche horticulture crops like cucumbers, the small
and marginal farmers who could grow these small cucumbers would make Rs 30,000 in
profits in a year. KRBL, one of India’s largest basmati exporters, has contract farming
agreements with 24,000 farmers; Global Green buys from about 12,000 farmers.
Moreover, in the current era of information technology, industry and private companies
can also creatively use ICT for building sustainable marketing linkages. This approach
creatively leverages information technology (IT) to set up a meta-market in favour of
small and poor producers/rural entrepreneurs, who would otherwise continue to operate
and transact in 'unevolved' markets where the rent-seeking vested interests exploit their
disadvantaged position. ITC e Choupal is the best example in this context. Through
creative use of Information Technology, ITC eChoupal has been creating sustainable
stakeholder value by reorganizing the agri-commodity supply chains simultaneously
improving the competitiveness of small farmer agriculture and enhancing rural
prosperity. eChoupal also sidesteps the value-sapping problems caused by fragmentation,
dispersion, heterogeneity and weak infrastructure. ITC takes on the role of a Network
Orchestrator in this meta-market by stitching together an end-to-end solution. It
eliminated the traditional 'mandi' system which involved lot of middlemen as a result of
which farmers failed to get the right value for their produce. The solution simultaneously
addresses the viability concerns of the participating companies by virtually aggregating
the demand from thousands of small farmers, and the value-for-money concerns of the
farmers by creating competition among the companies in each leg of the value chain.
Scope & opportunities: The basic scope of this novel initiative will be the mutual
benefits of the rural entrepreneurs and industries. The entrepreneurs – primary
beneficiaries, SHGs – bridge with the community, participating companies/industries and
rural consumers have befitted through a robust commercial relationship. These models of
marketing linkages demonstrate a large corporation which can play a major role in
reorganizing markets and increasing the efficiency of a rural product generation system.
While doing so it will benefit farmers and rural communities as well as shareholders.
Moreover, the key role of information technology—provided and maintained by the
industry/company for building linkages, and used by local farmers—brings about
transparency, increased access to information, and rural transformation. Besides, this
strategy of market linkage, addresses the challenges faced by rural entrepreneurs due to
institution voids, numerous intermediaries and infrastructure bottlenecks. Moreover, the
prime scope of this model is the creation of opportunities for the rural entrepreneurs for
product differentiation and innovation by offering them choices. Because of this
sustainable market linkages, rural producers can participate in the benefits of
globalization and will also develop their capacity to maintain global quality standard.
Nonetheless, it creates new stakeholders for the industry sector. And subsequently, they
become part of the firms’ core businesses. The involvement of the private /industry sector
at the rural product and market development can also provide opportunities for the
development of new services and values to the customers, which will find application in
the developed markets. It will be worth mentioning that building a sustainable market
linkage through industry’s intervention will also empower the rural mass (producers,
farmers & entrepreneurs) to cope with socio-economic problems in the rural society and
will ensure economic self –reliance.
Challenges: There are significant challenges to the entire process the most important
being the capacity building of the rural entrepreneurs. For decades, the entrepreneurs
associated with very conventional/traditional knowledge of business, humiliation with
government, so they are likely to look at these initiatives with skepticism. Only consistent
performance can convince the skeptics. Therefore, the industries must play a catalytic
role to cope with this challenge and should also train the entrepreneurs to develop their
managerial and IT skills. On the other hand, the products of the existing and popular
brand also stand as threat to the rural products. These global giants (brand) may try to
suppress the rural products in the markets with its communication hype. Therefore,
developing alternative and additional market linkages for these products is an absolute
necessity. Moreover, the low volumes of rural products, high operating cots, high
attrition, and absence of local know how and relationships may also create problem in the
process. Henceforth, it is essential to make a way out to cope with these odds.
Conclusion: These issues gain added complexity under globalization, where markets are
characterized by extreme competition and volatility. While rural products has been
perceived traditionally as catering to the local market, or at best, to a wider national
market through limited formal channels, the reality of globalization since the 1990s
introduced a new dimension to the market for such products. The issue of rural product
generation through industrialization, therefore, needs to be viewed from a new angle and
on far more scientific lines. The core of a scientific approach is to understand the market
opportunities for rural products along with the country's development priorities and to
chalk out a strategy where rural industries have an important role to play. While rural
products are forced to increasingly become part of global supply chains, these products
need to adapt themselves, not only according to the changing tastes of the national
market, but also according to changes in tastes in the international market. Therefore, a
process is essential to explore the market linkages and capacity building for SHGs
through a bottom up approach and continuous dialogue with stakeholders of rural
enterprise. This process should ensure the participation of rural people as consumers and
producers in the globalization mechanism, with better livelihoods and global access to
markets. The real challenge of building a sustainable market linkage starts here.

[edit] Present position

Rural markets, as part of any economy, have untapped potential. There are several
difficulties confronting the effort to fully explore rural markets. The concept of rural
markets in India, as also in several other countries, like China[3], is still in evolving
shape, and the sector poses a variety of challenges, including understanding the dynamics
of the rural markets and strategies to supply and satisfy the rural consumers.
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