Situation Analysis

Hindustan Unilever Limited is India‟s largest fast moving consumer goods and Services Company.

Over 70% population of India resides in villages so tap this market company need to develop
economically

viable and efficient distribution channels in villages.

Poor connectivity among villages and widely scattered consumers are main problems.

Recently it has launched a project „Shakti‟ to penetrate the rural market for FMCG goods. About
12000

women entrepreneurs had been appointed, covering nearly 50,000 villages in partnership with
nearly 300

NGO‟s.

Company wants to scale its operation so to achieve a consumer base of around 100 million by
2006. It is

estimated that this will require a network of about 25000 entrepreneurs.

HLL has also introduced Shakti Vani to create awareness in villages about personal health and
community

hygiene.

Problem Identification

How to improve the distribution channels to gain a consumer base of 100 million by 2006.

The greatest challenge that Shakti face is costs and management control to make it profitable.

Building confidence/self-sufficiency among Shakti Entrepreneurs

To achieve the objective of contributing 15-20% of HLL‟s revenue by 1lakh entrepreneurs

Project Shakti

Challenges:

Education level of indian women and cultural differences in different regions

Not many microfinance companies are interested in rural areas because of low income level of
population.

Scaling involves high process costs

More human resource needed to train people to become entrepreneurs and maintain them

Support needed from various sectors of government

Cultural issues like language and communication

Almost 10-15% of Shakti‟s revenues belonged to HR costs, a major concern

Lack of confidence of entrepreneurs to invest because of past failures

 Not many SHGs to collaborate with

Advantages:

New markets can be tapped

Even without the direct retail outlet channel final customer can be reached

A more personalized service

Preference to Entrepreneurs

o Credit was also given to regulars

o iShakti and Shakti Vani created a loyal customer base and improved market penetration as

visibility of HLL‟s products increased

o Discounts were given to consumers

o Creating a network , passing on part of profit to another person who sells your goods at

another place

Marketing Management | 06/09/2010

Managing Project Shakti in long term

In the long run HLL will need to take the following steps –

Expansion into new markets – HLL operations must expand to other villages within the state and
also

into other states.

Involve other agencies – HLL can also invite other microfinance companies into the market who
can

provide money to village entrepreneurs. Then people can buy an LIC policy with their regular HLL

products.

iShakti – Make use of IT for information exchange among entrepreneurs. IT portal can be used to

communicate information about personal health and community hygiene.

iShakti and Shakti Vani

Both initiatives were created to provide rural India with access to information and social
communication.

Although the setup costs are very high and funds can be generated thus Shakti can finance itself

Vani itself does not generate revenues directly, but it is a powerful tool to increase hygiene
awareness in

rural India, as a result indirectly increase HLL sales at long term.

 In short, iShakti and Vani will be workable and scalable to help Shakti success.

Social Impact and Role of Business

HLL should make a social impact on rural India.

HLL can and will continue to enjoy the competitive advantages as the main company to participate
in social

development.

The connection between business and communities will develop lifetime customers for HLL. This

involvement may not be the typical role of business, but as long as it is profitable to HLL without

compromising moral and legal issues, it will be a good move for HLL to increase its reputation as a
socially

responsible organization.

Recommendations

Shakti should continue as it is providing HLL a distinct competitive edge and increase HLL‟s profits
and

growth. Moreover, Shakti helps to position HLL as socially responsible organization.

Introduce “Project Shakti” as a low cost marketing tool to the brand managers

Shakti vani project will help in creating awareness among villagers and they will in turn use more
products.

Shakti Vani should be used to gain goodwill of people and can collaborate with NGO‟s to reduce
cost of

information delivery process.

Market saturation as seen in exhibit 3, clearly defines a need to come up with new products that
differentiate

themselves

Organizing workshops to enhance the marketing abilities of the Shakti Entrepreneurs.