Unilever in India: Hindustan Lever's Project Shakti - Marketing Fmcg to the Rural Consumer

U

2011

Unilever in India: Hindustan Lever's Project Shakti- Marketing FMCG to the Rural Consumer

Riddhi Biswas

PGP/14/236

Section E

Q1. What are the key features of Shakti? What are its positive aspects and what are its drawbacks?

Key features of Shakti:

Axiomatic truly , 'Rural caravan' of HUL as it can be popularly called is Project Shakti. Untapped and unexplored for years Indian rural market remain unnoticed and undiscovered as par as the business opportunities, especially in FMCG sectors, are concerned. As its Balance sheet and income statement had been quite less heavy due to the loss turnover in sales and net profit, HUL was all afoot to launch something new to be used as the springboard to jump to higher level of revenues and make its financial corpus to look promising.

Keeping these spectrum of issues in mind HUL introduced project Shakti, a flag-ship programme was initiated by HUL to capture untapped rural markets. The model of shakti built on the features that best suit the rural folks. So the project shakti featured to win a big pie of the rural market and also wanted to create a deep social impact.HUL partnered with recipients of the micro-credits by offering the village women to be micro-entrepreneurs. HUL tied up with MACTS to sell its products, which subsequently would sell it into the SHGs. A member of each SHG was appointed entrepreneur by the SGH members. The entrepreneurs sold the products to the local outlets at a price that enabled the retailer to win a margin when sold to consumers. HUL sold its products at a discount to the entrepreneurs in such a price that it can avoid the channel conflict. To help the entrepreneurs to create and grow businesses , HUL hired RSP to coach the women. Sensing the low sales volumes in initial months HUL pressed into service the incentive mechanism for newly appointed entrepreneurs, rewarding them in cash for visiting a cluster of homes independent of the amount sold attached with it the additional offering of incentives on selling some particular brands. In addition it also collaborated with local banks to ensure that the first installment towards loans be paid after a few months of set up.

Positive aspects

Shakti throws open a swathe of good aspects. These are discussed below

 A great opportunity to capture the rural market.

 To increase sales

 To net up profit

 A communication initiative to create a brand name synonymous with rural population

 A sales and distribution initiative to place it at a higher trajectory of growth

 A social platform to build up economic prospects in rural India and improve the standard of life

 I-shakti portal to make people information packed

 Shakti Vani to make people more health conscious

The whole positive aspects can be summerised as follows-

Project Shakti moves the wheel of business and society

Drawbacks-

Every rose has its thorns. Though 'Shakti" promises a lot of goods, it also spawns some drawbacks.

 It much depends on SHG. So the places where SHGs are not prominent it has not hammered out any kind of fit mechanisms that can work well.

 As its target entrepreneurs are women, it is less likely that women can work as efficiently as the men as in India there are so many social taboos are involved.

 Selecting an entrepreneur can be sometimes conflicting in nature in SHGs.

 The discounts that are offered to the entrepreneurs can be channel conflicts.

 The price that is asked for from retailers are not of a great margin, so the margins that entrepreneurs receive is limited.

 Being a diverse country India has cultural obstacles and language barriers to name a few. And dialects also differ from region to region

Q2.What was the motivation for the Shakti initiative? Was it a CSR activity?

Being economically liberalized in 1991, Indian market became competitive and other companies started breathing down the neck to the existing players and as a result the profit share and revenues both plummeted. As the proverbial maxim says "There is a will, there is a way." Feeling the competition HUL tried to find a new lease of business area. It was found that a large part of rural areas are badly snapped of the mainstream life and utterly inaccessible and non-communicable. They found an institutional void across this markets. There are 638,365 Indian villages but their reach is to only a meager amount of 100000 villages. So still more than 500 million people are yet to be brought under its consumer segments.

so the motivation starts in the chronological order shown below

As

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