Hindustan Unilever Limited is the biggest player in the market share of FMCG sector of the country. The FMCG sector of the country is the fourth largest sector of the economy with a size 13.1 billion USD. It is being positioned in the market as brand adding “Vitality to Life”. It sought for market leadership in a wide range of product categories and also across a broad spectrum of price points in each category. In 2004, HLL responded to high competition by further lowering the price across categories. It started the concept of “power brands”, initiated a channel-based system, supply chain efficiencies were captured and innovations were launched. It was the company with the a better rural penetration than any other company Its schemes like providing low-unit-packs tells us the how the company wants to penetrate deeper into the market.
Q2) What was the motivation for the Shakti initiative? Was it a CSR initiative? The Shakti project by HUL can be termed as a Social Business Initiative rather than a completely Corporate Social Responsibility. It is a highly socialized business taking CSR elements into its operational strategy. It has two aspects 1. Social aspect – It includes supporting the independence women. 2. Business aspect – it includes developing sales area into untapped rural depths. ‘Shakti’ means strength and empowerment. The main motivation was to empower the women in rural areas along with business expansion. HLL realized the importance of rural markets and realized that it was the key source of growth and thus initiated project Shakti as a competitive advantage as it will be a big differentiator among FMCG companies. It also found this as a way to develop its brands through local influencers.
Apart from the business motives Unilever created this project as a social initiative to provide sustainable livelihood for underprivileged women in rural areas. It also creates a win-win partnership between HUL and rural consumers for mutual benefit and growth. HUL found it difficult to set up a distribution channel in rural parts of India. So project Shakti was an initiative to create a distribution system through a network of women micro-entrepreneurs to distribute the product directly to consumers. This also ensures tapping the fortune at the bottom of the pyramid
Q3) How will Project Shakti influence distribution in rural markets? Ans: The business objective was to extend the direct reach in rural markets and to build brands through local influencers i.e. build a distribution system through a network of women micro-entrepreneurs to get the product directly to consumers. Shakti utilizes women’s self-help groups (SHG) for entrepreneur development training to operate as a rural direct-to-home sales force, educating consumers on the health and hygiene benefits of HLL brands and in turn building brand loyalty among customers. Local entrepreneur’s knows their village’s needs and therefore able to influence the buying decisions of the villagers and can easily convince the villagers.
The Shakti entrepreneurs are also brand ambassadors for all HUL brands in rural India. Their relationship with consumers is formed by their home-to-home contacts and hence building a brand loyalty. A member from a SHG was selected as a Shakti entrepreneur, commonly referred as ‘Shakti Amma’. She received stocks from rural distributor. After being trained by the company, the Shakti entrepreneur then sold those goods directly to consumers and retailers in the village. Q4)If Shakti cannot become profitable, should HUL continue the program? Why? If Shakti cannot become profitable, HUL should continue the program because of the following reasons: 1. Growing Rural Market
* The rural market is makes up 72.74% of the overall Indian population. The untappedpotential of this market can be made viable only with deeper
penetration. The marketing techniques which suit to the urban population of the country cannot suffice for this new expanding market due to social causes like bad connectivity, lesser means of media communication and illiteracy. Project Shakti has been developed in such a way that it can market the product beyond these restrictions by one-to-one endorsement. Due to the social mind-set in most of the rural areas, it is easier to influence them by local people whom they find more credible.
2. Stagnant Urban Market
* The urban market is slowing on growth since the previous three years. It can be expected that it will reach a saturation point sometime in the future. Also there will be more competition in the market reducing the growth trajectory. There is a high need for creating new markets and leverage the first mover advantage.
3. Deeper Social Impact
* The Project Shakti is popular for the deeper social Impact it is creating in the minds of the people. With initiatives like “Shakti Vani” and “iShakti” HLL can reach the rural population with the message of social development on all fronts. While the project “Shakti” in itself has a widespread message of women empowerment, these other initiatives focus on the betterment of the rural life on health and internet connectivity fronts.
4. Brand building
* The Project Shakti does not only provide for creating market but on a broader horizon it creates a brand value for the rural customers who can be difficult to lure by other entertaining advertisement campaigns. The Project Shakti will not be just a source of awareness for this market but the way it has been progressing, it can be imbibed as a part of consumer’s life itself. In such a case the value which the HLL brand will connote will be beyond regular supply of quality products at lower prices. This value will be hard to earn for any other customer and will position the brand as harbinger of
development in such rural areas.
5. Communication Channel
* The rural market has poor connectivity in terms of supply chain. Project Shakti can be an efficient way to overcome this barrier to rural market. In terms of communicating the brand value, Project Shakti goes beyond the barriers of illiteracy and lack of media. There can be no better way than one-to-one endorsement which can be the key influencer and can impact category, brand awareness as well as usage.
With the Project Shakti, HLL will not only be able to enjoy the first mover advantage in a market which has a huge potential, but also create greater brand value which the competitors who might enter this market later will find tough to compete.
Thus, Project Shakti in short works efficiently on the rural market on the aspects of affordability, awareness, availability and acceptability for the rural consumers. But some changes can be made to make it more profitable by reducing costs. Better entrepreneurs can be selected for the procedure and