http://shodhganga.inflibnet.ac.

in/bitstream/10603/20574/13/11_chapter
%208%20(final).pdf
http://www.marketing91.com/marketing-mix-hindustan-unilever/

STRATEGIES ADOPTED BY VARIOUS SELECTED FMCG PLAYERS IN RURAL

MARKETS The best way to exploit rural markets is by ruralising the strategies,
rather than treating them as inconvenient and poor extensions of urban markets.
Organizations have to create rural consumer specific products and they also
need to explore new distribution models, to tap the rural markets. Brands such
as Nirma and Videocon sell in the rural markets because they know their market
needs and also know how to sell their brand. Message, media, channel and
prices i.e. all the major constituents of marketing need to be tailored to meet the
needs of rural market. The development of rural markets involve the additional
cost both in terms of promotion and distribution, so only those companies can be
successful in the rural markets which develop efficient and cost effective
distribution channels. Cost cutting, distribution, strategic tie ups are the keys to
success in the rural India (Gopalaswamy, 2005; Easwaran, 2006).

Among the major FMCG companies, HUL, ITC, Godrej, Colgate Pamolive, Amul,
Eveready Batteries, Nirma, Jyothi Laboratories, etc. are the leading organizations
that have the strong focus on rural marketing. There is not any one principle that
that fits, when it comes to development of strategies for rural markets. The
organizations are investing huge amounts of money in creating separate sales
and marketing teams for rural markets and are also appointing special agencies
to advice them for implementing rural marketing endeavors. While the FMCG
sector has been looking at rural markets for quite some time, the largest spender
in the rural areas is HUL, followed by Colgate, ITC, Jyothi Labs, Eveready
Batteries, LG Electronics, etc. (Dogra and Ghuman, 2008)

Strategies Followed by Major FMCG Organizations The strategies followed by

various FMCG players are discussed below in terms of Promotion strategy, Pricing
strategy, Operational Efficiency, Disinvestment, Corporate restructuring,
Packaging, Product Line Pruning, Line Modernisation, Brand Management,
Operation Streamline, etc. The various FMCG players, who have been successful
in tapping the rural markets, are discussed below:

Hindustan Unilever Limited (HUL): HUL is amongst those companies in India that
derive huge revenues (over 50 percent) from the rural areas in their initial years
of penetration in rural markets. Later, when the company was unable to meet
the targeted goals, it focused on business restructuring, power brands strategy,
business divestments. In order to fuel growth, HUL formulated a set of new
strategies to expand its presence in Indias rural markets. It implemented
innovative projects like Project Shakti and Operation Bharat. HULs strategy
has been on penetrating the market down the line and focusing on price point.
According to the former HUL Chairman, M.S. Banga, This exercise of penetrating
in rural markets may not pay in the immediate future, but will definitely give
long-term dividends. Over 50 per cent of the sales of HULs fabric wash, personal
http://shodhganga.inflibnet.ac.in/bitstream/10603/20574/13/11_chapter
%208%20(final).pdf
wash and beverages are in rural areas and there is a great future in going rural in
a major way (Nagarajan, 2006). Some of the strategies implemented by the HUL
to retain its leadership in rural markets are as below:

Divestment In the 1990s, HUL took to inorganic growth with a goal of building a
Rs.10, 000 crore company. HUL decided to disengage from all non-FMCG or
commodity businesses. It divested and discontinued fifteen low margin and
unrelated businesses including even the big ones as animal feed, specialty
chemicals and oil and fats, with sales of Rs.1750 crores in 1999. It also divested
nickel catalyst, adhesives, thermometers, seeds and mushroom businesses. This
released cash for investments in core operations. Low margin exports were also
weeded out for greater attention to export of manufactured FMCG products. The
divestment by HUL resulted in increasing a large proportion of sales from FMCG
businesses and the rest came from several non FMCG businesses which were
neither very profitable nor did they offer prospects for long-term leadership. The
company then invested the amount realized from these divestments into building
the FMCG businesses. Today, HUL is a focused FMCGcompany consisting of 35
power brands across twenty categories and the branded business accounting for
90 per cent of the sales. (Vijayraghavan, 2005)

Capital Investments in Tax Havens HUL also invested about Rs.250 crores in two
separate facilities in the states providing excise rebates and tax holidays -
Personal care facility at Uttaranchal and for soaps and detergents in Himachal
Pradesh. These investments provided efficiency gains and huge savings on
account of excise and tax benefits provided by these states. These benefits have
made HUL more competitive and in the position to cut the prices of its product
whenever it is required to match the competitive offers by local and regional
brands. The edge of local brands, which were manufactured by small-scale
organization, who were exempted from certain form of taxation are also
neutralized by this move.

Corporate Restructuring HULs all major businesses except for new ventures were
merged under two divisions HPC (Home and Personal Care) and the Foods
(Foods, ice creams, confectionery and beverages). The organization was
restructured into eight profit centers and two divisions. This was done with an
objective to have a simple and leaner organization with less hierarchy, fewer
levels and greater empowerment. This move was aimed to eliminate complexity
and to increase the speed of strategic planning and decision-making.
http://shodhganga.inflibnet.ac.in/bitstream/10603/20574/13/11_chapter
%208%20(final).pdf
Rural Market Division Earlier each business division of HUL dealt with rural
market on an individual basis. Now with creation of rural market division,
company deals with rural markets as a single organization. This approach is
expected to lead to better cohesion, greater push and deeper penetration, which
might eventually lead to better sales and balanced growth.