Hindustan Unilever Ltd: Rural Marketing Strategies

The Factors contributing to growth of rural Market

Changing mindset lifestyle of Rural Slide 3 Increase in productivity in agriculture. Slide 4 Increase in Government Rural Development programs Slide 5 Improved infrastructure Expansion in rural Retail network Expansion of TV network Manufactures & marketers placing special emphasis on rural markets

CHANGE
*MIND SET *LIFE-STYLE *ASPIRATIONS *DEMAND *CONSUMER BASKET

Area under High Yield Variety (Mn. Hectare)

1980-81
Wheat Rice Jowar Bajra
16.1 18.2 3.5 3.6

1990-91
23.0 27.4 7.1 5.7

2000-01
24.0 33.0 9.3 7.2

2005-6
32.0 39.1 10.5 9.6

% of High Yield Variety to the total cropped area

1980-81
Wheat Rice Jowar Bajra
72.3 45.4 22.1 31.2

1990-91
86.8 64.2 49.3 54.4

2000-01
87.2 73.7 95.0 76.9

2005-6
88.6 79.5 96.5 81.5

Development Programs implemented by Indian Government

For the Tenth Five Year Plan, the allocation of funds for rural development programmes has been enhanced to Rs. 76,774 crore from Rs. 42,874 crore in Ninth Plan.

Intensive Agricultural District Program (popularly known as package program) High yield variety program (Real Green revolution in India) Operation Flood I, II ( White revolution) High yield Oil seed variety program (Yellow revolution) Sampoorna Grameen Rozgar Yojana Desert development program (For combating drought and desertification) Integrated wasteland development program (For store waste water) Fisheries Development Program ( Blue revolution)

Source: India Year Book 2009

Implemented by the Ministry of Rural Development, National Rural Employment Guarantee Act (NREGA) is the flagship programme of the Government that directly touches lives of the poor and promotes inclusive growth. Increasing Employment Opprotunities: In 2007-08, 3.39 crore households were provided employment and 143.5 crore persondays were generated in 330 districts. Enhancing Wage Earning and Impact on Minimum Wage: Increasing Outreach to the poor: Strengthening Natural Resource Base of Rural India: PRADHAN MANTRI SADAK YOJANA INDIRA AWAAS YOJANA (IAY) COMPUTERISATION OF LAND RECORDS UPDATING OF LAND RECORDS

Classification of Products in Indian Rural markets

Goods

Product Buying Buying Type Frequency Decision

Simple

Buying Place
Paan shop, Kirana stores, Co-op stores & Mandi Fairs, Haats, Mandi and Feeder town Shops in town or Cities

Convenience Consuma Frequent & High goods ( Toiletries, bles

Cosmetics, Cigarettes)

Shopping goods (Clothing,

Furniture, Appliances)

Durables

Moderate

Complex

Durables Specialty goods (2 Wheeler

Tractors, Camera etc.

High

Very Complex

Contribution of Rural Market to All- India Market

Sr No.
1

Product Category
Washing & Cleaning Material Toiletries

Name of the Product

Detergents & Washing Powder Bars Premium Soaps Popular Soaps Tooth Paste Tooth Powders Shampoos Safety Razor Blades Shaving Rounds Shaving Creams

Contribution Rural Market (%)

55.0 68.0 26.0 50.5 39.0 24.5 16.5 58.0 42.0 8.0 43.0 25.0 23.0 45.5 18.0 22.0 15.0 42.0 59.0 33.0

Cosmetics

Talcum Powders Hair Oils Acne Preparations

Food & Beverages

Packaged Tea Coffee Milk foods Beverages

5 6

OTC Misc.

Glucose Powder Batteries Torches

% of Rural Sales to total sales

Company
HUL Colgate Godrej Cavin kare Marico Industries Cadbury Heinz Nerolac Paints Glaxo - Wellcome Cipla Ranbaxy Sun Pharma Toyota Kinetic Hero Honda

Rural Share (%)

52 50 30 33 28 25 20 10 25 23 18 10 48 32 43

Some PIGGY BACK Products

Piggy Products

Duplicate Products

Sr No.
1 2 3 4 5 6 7 8 9 10

Original Product
Homelites Rin 501 Bar Cadbury Eclairs Brooke bond Nirma Lifebuoy Colgate Tooth Paste Fair & Lovely Pan Parag

Piggyback Product
Homelifes Run 509 Bar Choudharys Eclairs Benson Brand Nilima, Narima Lifejoy, Liteboy College Tooth Paste Friends & Lovely Pan Prabhat

An Era of Rural Marketing

(a case study)

Hindustan Lever Limited

An Era of Rural Marketing

1980 to 1990 was the golden period of HLL In 1999 it stated its policy to DOUBLE its turnover in next 5 years (From Rs 10,000 cr to Rs 20,000 cr) It took 10 years to DOUBLE their sales After year 2000 HLL failed to deliver on the top line even though serving 10 lakh retail outlets ( now serves 700 Mn consumers) Stock fell down from Rs 200 in 1999 to Rs 125 in 2004 and now Rs 266 (last week) In order to fuel growth the Rs 11,000 cr HLL formulated set of new strategies to expand its presence in Indias Rural Market It implemented innovative projects Project SHAKTI and Operation BHARAT

Hindustan Lever Limited

An Era of Rural Marketing
Some of the strategies to retain the leadership are as follows
Divestment In 1990 HLL took to inorganic growth with a goal of building a Rs 10,000 cr Company HLL had gone on acquisition spree, took several brands It was left with lot of baggage to be sorted out In 2000, of total sales, 75% came from FMCG & remaining from non FMCG It divested in Nickel catalyst, adhesives, thermometers, seeds and mushroom business Low margin exports were also weeded off This released a cash for investment in core operation By 2003, 93% of sales came from FMCG and just 7 % from non- FMCG. By 2005 HLL was a focused FMCG with 35 power brands across 20 categories (Now caters to 14 categories only)

Hindustan Lever Limited

An Era of Rural Marketing
Some of the strategies to retain the leadership are as follows
Capital Investments in Tax Heavens Invested in State which offered Tax Holiday & excise rebates HLL invested about Rs 250 cr in 2 separate facilities in Uttaranchal & Himachal Personal care facility in Uttaranchal & Soaps & detergent in Himachal pradesh The benefits gave extra savings which were utilized for price cuts Corporate Restructuring In April 2004 HLLs all major businesses except few were merged under two divisions HOME & PERSONAL CARE (HPC) and FOODS ( foods ice-creams, confectionery & beverages) This was done to have a simple & leaner organization with less hierarchy, few levels and greater empowerment

Hindustan Lever Limited

An Era of Rural Marketing
Some of the strategies to retain the leadership are as follows
Rural Marketing Division Earlier each business division of HLL dealt with rural market on an individual basis Now with creation of this division, company deals with rural markets as single organization Which lead to better Cohesion, greater push & deeper penetration in Rural market. Duplicates were smashes out Major brand had duplicates which were swapping HLLs business Job training in rural Market Minimum 8 weeks training was given to the sales team/new recruits in rural areas The new recruits were asked to get engaged in rural development program The goal was to engage executives with local population to know them better

Hindustan Lever Limited

An Era of Rural Marketing
Some of the strategies to retain the leadership are as follows
Multiple price points Realizing that the customer do not necessarily upgrade in a linear fashion HLL offered every price point & provided value added options, especially in detergents eg low priced, mid priced & premium

Premium Mid priced

Low priced

Surf Excel International Surf Excel Blue Rin Shakti powder Sun light powder International wheel active 501 bar Wheel detergent powder Wheel laundry soap

Hindustan Lever Limited

An Era of Rural Marketing
Some of the strategies to retain the leadership are as follows
Product Line pruning Earlier Lot of brand extensions were developed. In a way lot of investment to the company and confusion for the customers Brands like Close-up Renew & Close-up Oxy fresh were pruned Even lifebuoys variants were pruned Line modernization Wheel was strengthened with a enhanced fragrance Vim bar was coated from 5 sides to save from wastage Lifebuoy was no more a carbolic soap, was given Green look, with Tulsi & Neem

Derive around 50% of the sale from Rural areas

No picture available

NOW

PROJECT SHAKTI

PROJECT SHAKTI
By Traditional Distribution system were serving just 15% of villages It was smart way of reaching 10 lakh homes Shakti AMMA A project a combination of micro credit, training in enterprise mgt & self-help Piloted in Nalgonda District in AP in 2001 With the vision of 11,000 Shakti Enterpreneurs touching 10 cr. rural consumers Reaching brands from home to home In 2004 latest IT based i Shakti was launched By yr 2005 most of the AMMAs were earning around Rs 1700 pm By 2007 HLLs Rural sales rises to 54%of the total sale

Operation HARVEST
( Harmonize All Resources in Village to Enhance Sales & Turnover )
In 1989 seeding exercise with initiated for homework of project Shakti 30,000 villages were selected with the population of 2000 Vans were developed for the promotion Each van was covering 6 villages for six days Films, songs, ads of HLL were shown A endure to assess the MPV of the village

Indias largest FMCG company, HLL has unveiled a new corporate identity represented by a new logo and also a new name Hindustan Unilever Limited (HUL). The new name reflects the companys heritage as well as the synergies it has with its global parent Unilever Plc. To reflect its India-specific focus, the company has chose to retain Hindustan as the first word in the name. The new identity positions the company as working on a local as well as a global platform. HUL also unveiled a new logo consisting of 24 different icons which symbolizes the companys brands, organization, values and its core idea of Vitality.

24 icons which symbolizes Companys brand association

Sun Bee DNA Palm Tree Hand & flower Hair Bowl liquid Mixing & blending Spoon Container Spice & flavor Fish Wave Clothes Sprarkle Bird Lip Ice cream Recycle Tea Particulars Frozen Heart

RURAL CONSUMER IS BECOMING MORE RICHER DAY BY DAY

Source : LG rural Marketing report 2006