UNILEVER IN INDIA: HINDUSTAN LEVER’S PROJECT SHAKTI – MARKETING FMCG TO THE RURAL CONSUMER

Team: Can Do! Members: Roman Ivasyshyn Antonina Volkotrub Danylo Hauk

CONTENTS  Assumptions  Current State & Goals  Solutions & Recommendations  Summary .

. but were not able to book them due to their tight schedules and decided to stick with a Shakti project. we sought to employ flying reindeers to distribute HLL goods to inaccessible villages with low business potential.REINDEERS & SLEIGH At first.

ASSUMPTIONS .

transporting the goods with the locally available means of transportation  Extrapolation of revenue growth rate from projects other than Shakti is 2%  Total revenue in 2010 approximated at 154. Rs)  .8 bln Rs. (Calculated using growth rate 2% yearly for projects other than Shakti (80%TR) and adding 20% of TR.999 residents (509.ASSUMPTIONS Project Shakti operates in villages with 200 to 4. coming from Shakti)  In 2010 Revenue from Shakti project should account for 20% of HLL Total Revenue (31 bln.416 potential villages)  Shakti entrepreneur purchases stocks from the nearest official distributor (with the discounts available to stockist (-5%) -2% additional percent ).

4 bln Rs (approximated from trends of average consumption and growth of number of consumers) .88 Rs (Revenue from Shakti (31 bln. different areas) Target average revenue per consumer per year in 2010 should be 123.000 )) Yearly average organic growth of revenue from a consumer should be 27% (2004-2010) Yearly average growth of Shakti consumers is 25.000 Rs target revenue per entrepreneur per year /4.8% (starting in 2004) 48 mln consumers in 2004 (estimated from the target growth trend of number of consumers) Revenue from Shakti in 2004 estimated at 1.000 (target number of consumers per entrepreneur in 2006 )) On average 1 Shakti entrepreneur covers 4.000.ASSUMPTIONS (CONTINUED)        In 2004 average revenue per consumer per year is 30Rs (120.000 consumers in 3 to 8 villages (different years. Rs) / target # of consumers(250.

CURRENT STATE & GOALS .

4* 48* 12 50 2006 4.8* 100 25 100 2010 31* 250 100 400* *Numbers brought up from assumptions OBSTACLES       Poor rural infrastructure( telecommunication and roads ) Problems with women rights in northern states of India Poor managerial and professional skills of most Shakti entrepreneurs Bad internal communication of project Shakti in HLL Business and social interest conflict in this project High human resources costs of the project (10%-15%) .) Consumers (mln) Entrepreneurs (k) Villages (k) 2004 1.CURRENT STATE & GOALS Current state & goals Revenue from Shakti (bln Rs.

00 Rs.00 Rs. 180.000.000.000. 100. 20. 140.000.4 bln Rs.000.000.000.000.000.000. .00 2004 EXPECTED REVENUES Revenue from Shakti TR without Shakti TR 2005 2006 2007 2008 2009 2010 The red line represents expected total revenue . The orange line represents the Revenue that should come from the project Shakti.000.000.00 Rs. This data was derived from TR in 2004. 0.00 Rs. (This trend was guesstimated from data extracted from the case ) .000. The numerical goal in 2010 was set from the percentage goal mentioned in the case (20% of TR should come from project Shakti). Expected growth rate was estimated at 2% yearly.000.000. The blue line is the sum of red and orange lines.000.8%. excluding expected revenue from project Shakti.00 Rs.000.00 Rs.000.000.000.(assumption) The target trend was estimated from target yearly growth trends of average consumption 27% and increase in number of consumers 25. 80. 60. 120.000.000.000.000.00 Rs. 160. 40.00 Rs.000. Starting with initial 1.00 Rs.Rs.000.000.

SOLUTIONS & RECOMMENDATIONS .

 Appoint a newly selected Shakti entrepreneur (selected by SHG with our criteria) to an area with a population from 6000 to 8000 residents (3-8 villages)  Cascading project goals and growth to an individual entrepreneur  Shakti entrepreneur should have 3-6 month to reach the goal of 4000 customers (50-67% of population) and then a penetration rate growth should be 5-15% depending on the year of operation and area.2007-61Rs. starting with 38 Rs per consumer in 2005.2008-78Rs. 2009100Rs)  .49 Rs.  New entrepreneurs appointed and villages selected Identify the villages with the most business potential out of Shakti target area. (target 124 Rs in 2010) Those joining after 2005 will have 3-9 month to gain target average consumption for that particular year (2006.  Average consumption rate of clientele of a Shakti entrepreneur should grow 27% every year.SOLUTIONS & RECOMMENDATIONS Both intensive (growth of the revenue per consumer) and extensive (growth of the number of consumers out of the Shakti target areas) growth should be achieved.

If they were not completed. The third visit will be in a month. Good case practices should be shared as well as solutions to problems. additionally to the previous tasks. regular tasks should be done by entrepreneur herself.   Start Shakti clubs for entrepreneurs in an area  Shakti clubs for entrepreneurs in each area having 20-25 women should be started with monthly meetings. The forth in 3 months. will help to set goals and tasks for the first week on the first visit. On the second visit (in a week) she/he will check for completion of the goals and tasks. This time the goals will be set for a month as well. which would be adopted to the usual project tasks and goal setting  The coach. . This has a goal of women sharing their successes and problems concerning sales of HLL.SOLUTIONS & RECOMMENDATIONS (CONTINUED)  Optimize the skill training programs for the Shakti entrepreneurs Implement a Shakti notebook (not PC). coach should help analyze why not and devise solutions.

SOLUTIONS & RECOMMENDATIONS (CONTINUED 2)  Start an on-place market in every target village  Shakti entrepreneurs will set a small market place within the village and sell goods from it with the regular intervals. every Mon or every other Mon). No commercial communication will be done through them. Gifts to the newlyweds in HLL products at weddings. which would give information and feedback to the Shakti entrepreneur New communications for rural residents: use local gatherings as promotion possibilities organically (ex. iShakti should be sponsored by government and NGOs for 95-97%  Vani: the communicators should be volunteers from local NGOs. depending on the number of villages in the area of that entrepreneur (ex. Vani will give out for free small amounts of HLL products. (Since so far Shakti entrepreneurs are not eager to use door-to-door system)   Create an interactive communication entrepreneur social network through iShakti. (Not to disturb the sales channels)  More than 50% of CSR budget of HLL should be appointed to the women rights equality programs in northern states  . as well as free samples)  Distribute free samples through Vani   Development of Shakti social initiatives Optimize the iShakti project by using external funding (commonly with NGOs and Government).

Shakti Project Management Chain Structure General Shakti Sales Manager Regional Sales Manager (RSM) 1 RSM 2 RSM 3 RSN 4 Area Sales Manager (ASM) 1 Sales Officer 1 SO 2 ASM 2 SO3 ASM 2 SO 4 SO 5 ASM 3 SO 6 Territory Sales in –charge (TSI): 11 TSIs per Sales Officer + each Sales Officer has 1 personal supply assistant Shakti Entrepreneur Clubs (SEC): 4 SECs per Territory Sales in-charge Shakti Entrepreneurs (SE): 25 SE per Entrepreneur Club (covering 3-8 villages each) .

SUMMARY .

Project was called Shakti. profits fell to a 4-year low. As a result. HLL found a new niche not used yet. that should enable the project to grow exponentially using intensive as well as extensive measures.SUMMARY HLL led a tough price wars with some of the competitors. We presented a set of recommendations. But after a year it needed to grow. Intensive measures help to grow average consumption of clientele. despite some of the difficulties. Extensive measures help to grow clientele itself. . It was selling to consumers in inaccessible villages with low business potential. developing the regions as a result.