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Project Shakti

Marketing FMCG to the Rural Customers

Submitted by: Ashlesha Kadam Gandharv Madan Richa Singhal Tonmoyee Saikia Viveka Sra

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Hindustan Lever Ltd.


India's Largest FMCG Company Subsidiary of Unilever which holds 52% equity Unilever - world's largest FMCG Company with worldwide revenue of US$ 55 billion (2004) Annual Turnover: INR 110 billion (2004)

Indian Context
Worlds 2nd largest market after China in terms of number of people Every 2 out of 3 Indians is a HUL product user Low per-capita income Low purchasing power 250 million people still below the poverty line(2005)

Each profit center- own sales force and stockists Regional offices based on product categories Not Appropriate for small markets

Channel Approach

Product category

100+ brands

Introduction of self service stores in urban parts of the country Sales force organization structure customized to suit channel e.g. Modern trade serviced through single ASM negotiating on part of all HUL categories

HLL distribution channels


Manufacturer

Carrying & forwarding Agent

10% Modern Trade 70%

Redistribution Stockists Wholesaler

Profit Centre based Urban and Semi-Urban Markets

Rural Markets 20%

Retailers

HUL Shakti

Customers

HLL Rural Markets Approach


Indirect Coverage 25% of rural coverage Targeted retailers in accessible villages closer to urban markets Served through stockist atleast once a fortnight Low Business Potential Accessible Markets Direct Coverage 40% of rural coverage Common stockists to service all outlets within the town Stockists appointed for all product lines High Business Potential Streamline 35% of rural coverage Rural Distributors nominated who further appoint Star Sellers in accessible regions Star seller in turns distributes the stock to retailers in small villages via motorcycle, jeep etc

Untapped!!!
Project Shakti Untapped rural market of 500 million population

Inaccessible Markets

Features of Rural Market


High competition in FMCG space and maturing urban markets forced HLL to look for sustained competitive advantage in Rural Markets

Opportunities
Huge untapped potential in the Market Seen as a source of growth in future To be a source of competitive advantage in the industry Hurdles Highly scattered and low per capita consumption rates Lower accessibility of the rural markets by rail or road Low levels of brand awareness Poor reach of electronic media and lower literacy levels

Features of Project Shakti


Origin: Give opportunity to micro-credit recipients to form micro-enterprise The MACTS Model- Partnership with 3 federations of SHGs
Federations purchased products from HLL, sold them to constituent SHGs SHGs sold to village outlets Reached untapped markets; Low income generation; No ownership of enterprise

The Shakti Entrepreneur- Empowering underprivileged woman


A member of SHG appointed as Shakti entrepreneur, capital to purchase provided by SHG Sold to retailers and individual customers to retain margins Played Influencers; Impacted brand awareness; Valued additional income

RSP System- Coaching of Shakti Entrepreneurs


Shakti entrepreneurs had no experience of independent economic activity RSPs hired to coach Shakti entrepreneurs RSPs managed by third party; Selection & training by HLL;

Shakti Vani
Social Communication Program Promoting personal health & Community Hygiene

iShakti
Rural Community Portal Empowering rural community through access to information

HLL Shakti Initiative

A unique initiative to penetrate inaccessible rural markets Emphasis on increasing reach through employing local women Elements of Shakti:
Shakti entrepreneur: Entrepreneurial opportunities for rural women Increase in disposable income Shakti Vani: Increasing awareness in health, hygiene Aimed at creating prospective FMCG consumers in rural areas iShakti: Increasing access to information Introduction of Information Technology in Rural Areas

Creates positive impact on Business Estimated market size


5,00,000 villages 50 crore people

Value Created by Project Shakti


Economic Value to HLL
In 2004, Shakti accounted for over 15% of HLLs rural turnover Shakti entrepreneurs could earn a regular income of Rs 700 per month and achieve sales of Rs 120,000 per year Increased revenues through product innovation (sachets)

Progress of Project Shakti


2010 2006 100,000 villages 2004 12 states 12000 entrepreneurs 50000 villages 100,000 entrepreneurs 600 million customers

Social Value
Empowered 12,151 entrepreneurs across 12 states & 50,405 villages Shakti Vani program increased knowledge of personal & community health & hygiene in over 20,000 villages Increased disposable income Introduced internet in villages

Analysis of Project Shakti


Benefits to HLL

Attempt to create and dominate a new market


Increasing brand awareness and penetration in rural markets Expected high future revenue from these markets when growth in these markets increases dramatically iShakti provides direct communication link to rural markets

Benefits to Society Creating and empowering women micro-entrepreneurs


Improvement in health , hygiene and education of entire household Key source of regular additional household income

Drawbacks
Huge costs incurred on human resources question on scalability
Viability of iShakti due to lack of electricity supply in villages Cultural and linguistic differences across states in villages Challenge of switching customers from retailers to Shakti entrepreneurs

Is Project Shakti CSR?


Motivation for Shakti

Deliberate attempt by HLL to create and dominate a new market Attempt to capture a population of 500 million of rural markets Aimed at being commercial and profitable Attempt to make it a sustained competitive advantage Social benefit was a value proposition for the rural customers such that it is a winwin situation

Project Shakti is not a CSR venture. Its a business model with social benefits

Road ahead External Challenges


Scaling up Reaching 100 million consumers by 2006
Managing cost of human resources managing entrepreneurs while targeting exponential growth Vani: Investment by brands along while confirming to original purpose iShakti: Role in scaling up Shakti or Brand development

Support
Different degree of support from state governments Absence of SHG groups to partner with HLL

Cultural Complexities
Different status of women across societies in different states affecting viability as entrepreneurs A large number of languages spoken across states makes it mandatory to hire different RSPs

Shakti Entrepreneurs
Developing self confidence in underprivileged women Increasing Productivity of existing Shakti entrepreneurs Implementing a formal training program

Road Ahead Internal Challenges


Investing in Project Shakti
Getting Brand Managers to invest in Shakti
Bearing the Shaktis promotion costs

Educating them about Shaktis potential


Devising strategy for using Shakti for Brand Development

Retain the social objectives of Shakti


while scaling

Recommendations
Reduce Cultural differences
Leverage the women festivals to hard sell products Educate the husbands via panchayats about the Shakti initiatives Give Appreciation Awards to Shakti entrepreneur & her husband Leverage panchayats to create SHG Leverage Anganwadi to educate women about Shakti initiatives & create SHG Encourage SHG building in long term through Shakti Vaani

Increase self help groups

Convince Brand Managers to support Project Shakti

Share growth data about Shakti with Brand Managers Share information about the potential of rural markets

Brand Building

Set Up Shakti Outlets in community festivals involving women (Teej, Karva Chauth) , Provide information during Village Health camps Give information in TV programs like "Kheti Baadi" (Punjab), "Aamchi Maati Aamchi Maansa" (Maharashtra)

Inform the masses about Project Shakti

Thank You

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