hindustan lever rural marketing strategies

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

*MIND SET

*LIFE-STYLE

*ASPIRATIONS

*DEMAND

*CONSUMER BASKET

CHANGE

1980-81 1990-91 2000-01 2005-6Wheat 72.3 86.8 87.2 88.6

Rice 45.4 64.2 73.7 79.5

Jowar 22.1 49.3 95.0 96.5

Bajra 31.2 54.4 76.9 81.5

% of High Yield Variety to the total cropped area

1980-81 1990-91 2000-01 2005-6Wheat 16.1 23.0 24.0 32.0

Rice 18.2 27.4 33.0 39.1

Jowar 3.5 7.1 9.3 10.5

Bajra 3.6 5.7 7.2 9.6

Area under High Yield Variety (Mn. Hectare)

Development Programs implemented by Indian Government

•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)

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.

Source: India Year Book 2009

Implemented by the Ministry of Rural Development, National Rural EmploymentGuarantee 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 Type

Buying Frequency

Buying Decision

Buying Place

Convenience goods ( Toiletries, Cosmetics, Cigarettes)

Consumables

Frequent

& High

Simple Paan shop, Kirana stores, Co-op stores & Mandi

Shopping goods (Clothing, Furniture, Appliances)

Durables Moderate Complex Fairs, Haats, Mandi and Feeder town

Specialty goods (2 Wheeler Tractors, Camera etc.

Durables High Very Complex

Shops in town or Cities

Contribution of ‘Rural Market’ to All- India Market

Sr No. Product Category Name of the Product Contribution Rural Market (%)

1 Washing & Cleaning Material

Detergents & Washing Powder 55.0

Bars 68.0

2 Toiletries Premium Soaps 26.0

Popular Soaps 50.5

Tooth Paste 39.0

Tooth Powders 24.5

Shampoos 16.5

Safety Razor Blades 58.0

Shaving Rounds 42.0

Shaving Creams 8.0

3 Cosmetics Talcum Powders 43.0

Hair Oils 25.0

Acne Preparations 23.0

4 Food & Beverages Packaged Tea 45.5

Coffee 18.0

Milk foods 22.0

Beverages 15.0

5 OTC Glucose Powder 42.0

6 Misc. Batteries 59.0

Torches 33.0

% of Rural Sales to total sales

Company Rural Share (%)HUL 52

Colgate 50

Godrej 30

Cavin kare 33

Marico Industries 28

Cadbury 25

Heinz 20

Nerolac Paints 10

Glaxo - Wellcome 25

Cipla 23

Ranbaxy 18

Sun Pharma 10

Toyota 48

Kinetic 32

Hero Honda 43

Some PIGGY BACK Products

Sr No. Original Product Piggyback Product1 Homelites Homelifes

2 Rin Run

3 501 Bar 509 Bar

4 Cadbury Eclairs Choudhary’s Eclairs

5 Brooke bond Benson Brand

6 Nirma Nilima, Narima

7 Lifebuoy Lifejoy, Liteboy

8 Colgate Tooth Paste College Tooth Paste

9 Fair & Lovely Friends & Lovely

10 Pan Parag Pan Prabhat

Duplicate ProductsPiggy Products

An Era of Rural Marketing (a case study)

Hindustan Lever LimitedAn 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 India’s Rural MarketIt implemented innovative projects

Project SHAKTI and Operation BHARAT

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)


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 HLL’s 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



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 HLL’s 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



•Multiple price points

•Realizing that the customer do not necessarily upgrade in a linear fashionHLL offered every price point & provided value added options, especially in detergents – eg low priced, mid priced & premium

Surf Excel InternationalSurf Excel BlueRin Shakti powderSun light powderInternational wheel active501 barWheel detergent powderWheel laundry soap

Low priced

Premium

Mid priced



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 lifebuoy’s variants were pruned

Derive around 50% of the sale from Rural areas

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



No picture available

NOW

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

By yr 2005 most of the AMMAs were earning around Rs 1700 pm

In 2004 latest IT based i Shakti was launched

By 2007 HLLs Rural sales rises to 54%of the total sale

PROJECT SHAKTI

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

Operation HARVEST( Harmonize All Resources in Village to Enhance Sales & Turnover )

India’s 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 company’s 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 company’s brands, organization, values and its core idea of Vitality.

BeeBird

Bowl

Clothes

Container

DNA

Fish

FrozenHair

Hand & flower

Heart

Ice cream

Lip

liquid

Palm Tree

Particulars

Recycle

Mixing & blending

Sprarkle

Spice & flavor

Spoon

Sun

Tea

Wave

24 icons which symbolizes Company’s brand association

RURAL CONSUMER IS BECOMING MORE RICHER DAY BY DAY

Source : LG rural Marketing report 2006

hindustan lever rural marketing strategies

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