a project report on hul

Rural Marketing StrategiesHUL

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A PROJECT REPORT ON

RURAL MARKETING STRATEGIES.

CONTEXT:- HUL

SUBMITTED TO

With Combined Efforts of:-

Kamakshi Bakshi

Neha Yadav

Bipin Khanna

Ankan Goshal

Sidhartha Maithy


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Acknowledgement

At the outset We would like to take the privilege to convey our gratitude to all

those who co-operated, supported, helped and suggested us as to how the

project could be completed. This project bears imprint of advices, from many

people who were either directly or indirectly involved in it.

We would also like to thank Mr. Mukesh Ranjan, Territory Sales Officer of HUL,

for his time and valuable inputs in the course of my research.


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Table of Contents

Topic No.

TOPICS Page No.

1. Introduction to Rural markets. 13. Current scenario of Rural Markets. 55. Introduction of Hindustan Lever

Limited. 7

6. Highlights of HUL Marketing Strategy. 87. Challenges faced by HUL. 98. Case on Wheel Strategies. 11 9. Relationship Marketing Case: HUL 1510. Conclusion. 1811. Recommendations. 19

12. Bibliography. 20


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Introduction to rural markets.

The rise of rural markets has been the most important phenomenon of the

1990’s, providing volume growth to all leading companies. Many

corporates have been trying to get a grip on rural market. But challenges

are many: how to make the product affordable, how to penetrate villages

with small populations, connectivity, communications, language barriers,

spurious brands, etc.

Marketers and manufacturers are increasingly aware of the burgeoning

purchasing power, vast size and demand base of the once neglected

Indian hinterland. Efforts are now on to understand the attitude of rural

consumers, and to walk their walk and talk their talk. The marketing mix

of many companies is now being tailored to rural tastes and lifestyles.


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Current Scenario of rural market.

Rural market - A world of opportunity

GONE are the days when a rural consumer went to a nearby city to buy

“branded products and services". Time was when only a select

household consumed branded goods, be it tea or jeans. There were days

when big companies flocked to rural markets to establish their brands.

Today, rural markets are critical for every marketer - be it for a branded

shampoo or an automobile. Time was when marketers thought van

campaigns, cinema commercials and a few wall paintings would suffice

to entice rural folks under their folds. Thanks to television, today a

customer in a rural area is quite literate about myriad products that are

on offer in the market place.

There is a need to differentiate the brand according to regional disparities.

The differentiation may not necessarily be in terms of product content. It

may also be in terms of packaging, communication or association with the

brand.

The brand has to be made relevant by understanding local needs. Even

offering the same product in different regions with different brand names

could be adopted as a strategy. At times it is difficult to pass on an

innovation over an existing product to the rural consumer unlike his urban


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counterpart - like increased calcium or herbal content or a germ-control

formula in toothpaste.

According to Mr. Mukesh Ranjan, of HUL, the four factors which

influence demand in rural India are - Access, Attitude, Awareness and

Affluence. HUL has successfully used this to influence the rural market

for its shampoos in sachets. The sachet strategy has proved so successful

that, according to an ORG - MARG survey, 95 per cent of total shampoo

sales in rural India is by sachets. The company had developed a direct

access to markets through wholesale channel and created awareness

through media, demonstration and on ground contact. This changed the

attitude of the villagers.


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Hindustan Unilever Limited.

Introduction.

Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company, touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of Rs.10,000 crores.HUL is also one of the country's largest exporters; it has been recognised as a Golden Super Star Trading House by the Government of India

HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Clinic Plus, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna, Kwality Wall's – are household names across the country and span many categories - soaps, detergents, personal products, tea, coffee, branded staples, ice cream and culinary products. They are manufactured in close to 80 factories. The operations involve over 2,000 suppliers and associates. HUL's distribution network, comprising about 7,000 redistribution stockists, directly covers the entire urban population, and about 250 million rural consumers. HUL believes that an organization’s worth is also in the service it renders to the community. HUL is focusing on health & hygiene education, women empowerment, and water management. It is


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also involved in education and rehabilitation of special or underprivileged children, care for the destitute and HIV-positive, and rural development. HUL has also responded in case of national calamities / adversities and contributes through various welfare measures, most recent being the village built by HUL in earthquake affected Gujarat, and relief & rehabilitation after the Tsunami caused devastation in South India.

HUL STRATEGY.

The Rs 11,000 crore Hindustan lever (HUL) is formulating a new strategy to expand its presence in India’s Rural markets. HUL is one among those companies in the country that derives huge revenues (over 50%) 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. HUL 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 organization 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. HUL officials say it is not enough that individual business divisions push their own strategies for rural market; the company will have to work in unison in order to achieve a balanced growth. Over the last three years the company has embarked on an ambitious programme, Shakti. Through Shakti, HUL is creating micro-enterprise opportunities for rural women, thereby improving their livelihood and the standard of living in rural communities. Shakti also includes health and hygiene education through


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the Shakti Vani Programme, and creating access to relevant information through the i-Shakti community portal. The programme now covers about 50,000 villages in 12 states. HUL's vision is to take this programme to 100,000 villages impacting the lives of over a 100 million rural Indians..

Challenges faced by HUL in rural markets are:-

1) Dispersed Markets

Rural areas are scattered and it is next to impossible to ensure the availability of a brand all over the country. Seven Indian states account for 76% of the country's rural retail outlets, the total number of which is placed at around 3.7 million. HUL reaches their product in this dispersed markets. Their coverage is around 85%- 90% in rural areas. District fairs are periodic and occasional in nature. HUL prefer such occasions as they allow greater visibility and capture the attention of the target audience for larger spans of time. The fairs at Pushkar, Ujjain, Kota and Bulandshesher are major sources of attention for the rural buyer but aren’t concentrated unlike urban markets. Advertising in such a highly heterogeneous market, which is widely spread, is very expensive.

2) No Reachibility

India's 6,27,000 villages are spread with 128 million households, the rural population is nearly three times the urban. 700 million Indians may live in rural areas, finding them is not easy. Many rural areas are not connected by rail transport. At least 50 % of rural roads are poorly surfaced, many are totally destroyed or severly damaged by the monsoon and remain unserviceable, leaving interior villages isolated. Thus HUL faces difficulty in reaching their products to potential rural consumers.


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3) Infrastructure in rural areas

The use of bullock carts look inevitable for many years into the future . Of the 15 million carts in the country , 12 million are estimated to be in rural areas ,transporting about 6 million tones of freight per year. Camel carts operate in Rajasthan and Gujrat in both urban and rural sectors. In Haryana, Punjab and Western Up, buffaloes also are used for carts. These make the HUL’s product available in rural markets but very slowly as it consumes time.

4) Prevalence of spurious brands and seasonal demand.

For HUL’s product there are a multitude of 'local variants', which are cheaper, and, therefore, more desirable to villagers. Rural consumers are cautious in buying and decisions are slow. They like to give a product a trial and only after getting personal satisfaction do they buy it again.

Rural markets there is seasonal demands of products as there are crops grown twice a year and people earn during this time and would like to buy the products. The demand for HUL’s products during this period is not high as rural consumers would not like to buy and store soaps and detergent instead they would prefer consumer durables.


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`WHEEL’s STRATEGIES

WHEEL in rural markets

Wheel was launched as an Economy segment brand by HUL. It was launched in 1987. It belongs to Fabric wash Segment of HUL. Wheel includes under it the following brands:- 1. Wheel Green bar 2. Wheel Active(Blue) bar 3.Wheel Green Powder 4.Wheel Active(Blue) Powder Brand:- WHEEL, Logo is in shape of a wheel of cart i.e CHAKRA

Positioning of Wheel :- 'Best clean with less effort' . It Cleans Effectively with lesser effort and lesser physical exertion. Wheel makes a laborious chore like washing light and easy. Difference :- ‘Tough on Dirt and soft on Hand.’ Wheel does not burn hands or harm clothes like some other detergents, which contain a high percentage of soda. It has Active Radiant which


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makes it different from others. The consumers seek a solution to heavy duty laundry, like bed sheets and curtains. Developing on this insight, wheel sought to eliminate the trouble of tough dirt or heavy-duty laundry. Mass market consumers have welcomed the solution, making it the number one. Effectiveness:- Wheel is effective as an Aspirational part at a low cost for rural consumer. Communicated by:- The stars of rural India promoted this brand through Advertisements. Firstly it was advertised by a Hero who worked in the serial Buniad and now it is communicated by famous film star ‘GOVINDA’. Wheel is also advertised by Wall paintings in Rural areas.

Wheel is also promoted through vans demonstrating its usage and functions to rural consumer.

Promotions:- Wheel aims at fulfilling the aspiration of this segment of population. Wheel follow certain promotion strategies they are;- 1. Buy Wheel and get Consumer offers as Get things free with the product. Wheel offers to give ornaments, Gold, Scholarships for study,


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Household Utensils , White goods free with the product. It also give chance to Get a new flat for yourself. 2. Wheel also follows a strategy to promote its products by giving an offer to Buy 3 and get 1 free. This ensures the customer to buy more. This forces consumer to decide and store the product for one month. 3. Wheel undergoes Rural Based Activities to promote its products. Wheel offers demonstrations to people about How to use it? Near the Wells and Bathing Ghaats. Wheel also sponsors Film Shows in villages known as’Chitrahar’ to advertise its products. The next is it also adopts Sampling operations in villages of offering free samples to the consumers. Pricing:- Wheel is priced at Rs 20 per Kg now. Previously , HUL priced the blue variant of Wheel at Rs 22 per kg, just above the green variant priced at Rs 18 per kg. Wheel is now available even in smaller packs ranging between 1Rs – 5Rs. The powder is available in packs of 1Rs, 2Rs, and 5Rs and Bar is available for both 5Rs and 2Rs. Expectation of rural areas:-Rural consumer needs smaller packs of products as there is No Storage space in rural areas as in Urban and their Disposable Income is also low. The Shopkeeper in rural areas provide disposable packs by cutting the bigger pack into smaller one as needed by the consumer. Eg;:- The 2 Rs pack of Wheel powder is used by the rural consumer to take it with them to the River and wash clothes. One pack cleans about 25 clothes. There is no additive required, it provides instant lather and is a sensory Quo for Cleanlinees. The Rural markets where there is Hard water that affects lather, they prefer to use Wheel rather than an Oily Soap. Eg- In South and Western India they prefer Wheel because there is Hard water.


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Wheel Jug MugWheel Jug Mug was launched in the discount bars segment, by Hindustan Lever Ltd (HUL) attempting to wade off competition that has emerged in this price category in 2001. It is a dishwash bar in the discount segment. PRICING:- Wheel Jug Mug was launched at a low price point of Rs 10 for a 400 gm bar. There was a competitive pricing strategy so far as the discount dishwash bars segment is concerned.

“The strategic intent is to dominate the discount segment with Wheel Jug Mug. The mix has the potential of becoming the branded market leader in the dishwash category in smaller urban towns and rural India,” said Mr Sanjay Behl, marketing manager, HUL. The targeted consumer falls in the income level of under Rs 4,000 per month salary, and thus price is integral to the brand strategy. The launch of Wheel Jug Mug offered an acceptable consumer price-value equation which is a bigger trigger to conversion in low per capita income markets. “Wheel Jug Mug increased penetration through its competitive price-value equation via-a-vis other available products (brands/ proxy products) at that range. It offer’s superior performance vis-a-vis the consumer’s current habit of dosing detergent powder with ash to wash dishes. There are strongly entrenched barriers to conversion amongst ash/ mud users, the mix had performed superior at an acceptable cost vis-a-vis their practice for any conversion to happen. PROMOTIONS :-Incentivizing the trade channel by offering better margins, market activation, visibility, consumer offers and such other novel concepts are all part of the trade channel promotions The company processed for defining new media vehicles to promote the product in rural markets, where the only channel which is high on visibility is Doordarshan.


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Wheel is promoted through a good communication strategy, market activation to distribution, live product demonstrations, etc. The marketing strategy is to exploit the full potential of the Wheel equity into logical dish wash extension — given that consumer habit revolves around using cheap detergent powders for washing dishes. HUL is working on maximizing consumer value in every market segment and this will be offered, as is appropriate, through the integrated brand Wheel.

Relationship Marketing: The case of HUL.

Hindustan Lever had launched in 1999 its relationship marketing exercise

said to be the first of its kind in Rural India by a major FMCG

corporation. It is different from conventional campaign through media

hoardings, sponsored events, etc… It involves building relationships with

the consumers in rural areas through education programmes, home-to-

home contacts and cinema shows.

Aim:

The aim is to build sales for its personal care brands including that of

Pepsodent, its mass market toothpaste. In the toothpaste market the main

competition was between HUL and Colgate. According to the figures of

July 1999, Colgate had a 50 % share of the market (including all price

ranges ) down from 60 %. HUL had an overall share of 40 %. Pepsodent

was the fastest growing brand in its slot with annual growth rate of 22 %.


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Focus:

The objective in rural areas is to tap first time users. Statistics include low

usage patterns. In China, about 90% of the people use toothpaste

compared to 47% in India. About 27% use toothpowder and only 20 %

had visited a dentist. Even in the urban areas, where consumers have used

toothpaste right from childhood, the overwhelming majority uses

toothpaste only once in the morning whereas teeth required brushing most

at bed time.

Strategy:

1. Product: HUL introduced a 15 gm Pepsodent pack to target the first

time user. Also its up market brand Close up was introduced at retail

outlets in suburban and rural areas with a price tag of Rs. 3.50.

2. Campaign: The Operation Bharat Programme. HUL’s door-to-door

campaign in rural areas, concentrates on educating the consumer by

holding free dental camps. It also had dental education programme in

association with New York University. In India, there are scholarships

for students in dental colleges for collaborating in research at such

centers.

In Mysore, for instance, a dental check-up camp was conducted at all

schools ( where the students belong to comparatively lower SECs) in July

1999. In two years since 1996, some 12 lakh students have been covered

by such check-ups. There is Rural Hygiene Programme, a counterpart to


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the urban one. It has a target of reaching 20 crore people in 3,50,000

Villages.

3. Door-to-Door Sales: About 10 million homes in rural India have

been touched so far and target for that year was 12 million. The project

essentially involves selling a discounted personal care kit containing

mini-packs of shampoo, toothpaste, talcum powder and face cream. The

kit is sold at Rs. 15. Sold separately, the products would together cost

the consumer Rs. 27.

4. Cinema: After home-to-home contact and sales in villages during the

day. HUL concentrates on cinema time in the evenings. There are still

villages which do not have TV. Cinema shows are quite popular there.

Effects:

The strategy has highly encouraging results. The market has become

aware and responsive for personal care products. Fair and Lovely cream

was test launched in Maharashtra for a target audience. About a year

before the launch the use of the cream was less than 1 % of zero in many

illages. It shot up to 20% in one year. In the same market shampoo use

was about 6% and went up to 18% even if used once a week.


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CONCLUSION

Rural Market is Gold Mine which is paved with Thorns but HUL has rightly tapped it. However there is a long way to go to capture all the rural markets. In Rural markets company face various problems like Underdeveloped People and Underdeveloped Markets, Lack of Proper Physical Communication Facilities, Many Languages and Dialects, Dispersed Market , Low Per Capita Income, Low Levels of Literacy , Different way of thinking of Rural Consumer, etc. HUL was the first FMCG to tap rural markets and has generated huge revenues from rural markets. There were many other companies which entered rural markets and was successful and gave competition to HUL some of them are Cavinkare which launched Chik Shampoo for rural markets, ITC, Colgate, Nirma etc. The key lies in understanding why, what and how of the rural consumer. It would be a blunder to assume and apply the same principles as of urban marketing. Rural marketing is completely different ball game – talk about its consumer tastes, competition, demographics, communication media, socio-cultural milieu, or the infrastructure. The spread and heterogeneity further complicate matters. One can conclude that Marketing in the urban and the rural areas is different as product may vary in rural & urban area and the marketing strategies to market the product is also different mainly the packaging and distribution strategy in rural area is designed keeping in mind the rural consumer. It is therefore apt to do a thorough groundwork before jumping headlong into the rural markets.


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RECOMMENDATIONS

HUL, a major FMCG to enter rural markets, but not the only one now.

There are many companies which entered rural markets. HUL needs to

be competitive and keep on updating its strategy to have a foothold in

the Rural markets.

For India to maintain and improve economic growth it is imperative to

improve rural markets. Even today there is imbalance in rural

development. Government and Marketers have to undertake measures

to improve the Rural markets.


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BIBLIOGRAPHY

1. Rural & Agricultural Marketing book– Ramkishen.Y

2. Rural Marketing – C.S.G. Krishnamacharyulu and Lalitha

Ramakrishna.

3. Marketing Management (10th Edition) – Philip Kotler

4. Marketing Management (13th Edition) – Philip Kotler

a project report on hul

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