INTRODUCTION

Hindustan Unilever Limited (HUL) is India's largest fast moving consumer goods
company, with leadership in Home & Personal Care Products and Foods & Beverages.
HUL's brands, spread across 20 distinct consumer categories, touch the lives of two out
of three Indians. They endow the company with a scale of combined volumes of about 4
million tones and sales of Rs.13,718 crores.

HUL has over 36,000 employees, and has created 2 lakhs indirect jobs. Its operations are
spread across 70 locations in India. There are over 50 factories, of which 28 are in
backward areas. The operations involve 2000 suppliers and associates and 7000 stockists
and agents. HUL has emerged as a major Exporter.

The mission that inspires HUL's over 15,000 employees is to "add vitality to life". With
35 Power Brands, HUL meets everyday needs for nutrition, hygiene, and personal care
with brands that help people feel good, look good and get more out of life.

It is a mission HUL shares with its parent company, Unilever, which holds 52.10% of the
equity. A Fortune 500 transnational, Unilever sells Foods and Home and Personal Care
brands in about 100 countries worldwide.

HISTORY OF HINDUSTAN UNILEVER

Hindustan Lever Ltd (HUL) is India's largest Fast Moving Consumer Goods (FMCG)
Company. HUL's brands like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely,
Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-
Annapurna, Kwality Wall's are household names across the country and span a host of
categories, such as soaps, detergents, personal products, tea, coffee, branded staples, ice
cream and culinary products. These products are manufactured over 40 factories across
India and the associated operations involve over 2,000 suppliers and associates.
Hindustan Lever Limited's distribution network comprises about 4,000 redistribution
stockists, covering 6.3 million retail outlets reaching the entire urban population, and
about 250 million rural consumers. HUL is also one of India's largest exporters. It has
been recognized as a Golden Super Star Trading House by the Government of India.
Presently, HUL has over 16,000 employees including over 1,200 managers. Its mission is
to "add vitality to life." The Anglo-Dutch company Unilever owns a majority stake in
Hindustan Lever Limited.

In the late 19th and early 20th century Unilever used to export its products to India. This
process began in 1888 with the export of Sunlight soap, which was followed by Lifebuoy
in 1895 and other famous brands like Pears, Lux and Vim soon after. In 1931, Unilever
set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed
by Lever Brothers India Limited (1933) and United Traders Limited (1935).
The three companies were merged in November 1956 and the new entity that came into
existence after merger was called as Hindustan Lever Limited. HUL offered 10% of its
equity to the Indian public, and it was the first among the foreign subsidiaries to do so.
Currently, Unilever holds 51.55% equity in the company while the rest of the
shareholding is distributed among about 380,000 individual shareholders and financial
institutions.

Brooke Bond entered Indian market in 1900 and in 1903 it launched Red Label tea in the
country. In 1912, Brooke Bond & Co. India Limited was formed. Unilever acquired
Brooke Bond through an international acquisition. Similarly, Lipton's link with India date
back to 1898. Unilever acquired Lipton in 1972 and in 1977 Lipton Tea (India) Limited
was incorporated.

Pond's (India) had been in Indian market since 1947. It joined the Unilever ranks through
an international acquisition of Chesebrough Pond's USA in 1986.

The liberalization of Indian economy in 1991 and subsequent removal of the regulatory
framework allowed HUL to explore every single product and opportunity segment,
without any constraints on production capacity. The 1990s witnessed a string of crucial
mergers, acquisitions and alliances. In 1992, the erstwhile Brooke Bond acquired Kothari
General Foods, with significant interests in Instant Coffee. In 1993, it acquired the Kissan
business from the UB Group and the Dollops Ice-cream business from Cadbury India. In
one of the most talked about events of India's corporate history, the erstwhile Tata Oil
Mills Company (TOMCO) merged with HUL, effective from April 1, 1993. In July 1993,
Brooke Bond India and Lipton India merged to form Brooke Bond Lipton India Limited
(BBLIL). Brooke Bond Lipton India Limited launched Wall's range of Frozen Desserts in
1994 and by the end of the year, HUL entered into a strategic alliance with the Quality
Ice-cream Group families. BBLIL merged with HUL, with effect from January 1, 1996.
HUL has also set up a subsidiary in Nepal, Nepal Lever Limited (NLL). The NLL factory
manufactures HUL's products like Soaps, Detergents and Personal Products both for the
domestic market and exports to India. In January 2000, as part of its divestment strategy,
the government decided to award 74 per cent equity in Modern Foods to HUL. In 2002,
HUL acquired the government's remaining stake in Modern Foods. In February 2007, the
company has been renamed to "Hindustan Unilever Limited" to strike the optimum
balance between maintaining the heritage of the Company and the future benefits and
synergies of global alignment with the corporate name of "Unilever".

CORPORATE PROFILE
HUL, a 51.6% subsidiary of Unilever Plc, is the largest FMCG Company in the country,
with a turnover of Rs. 118 bn. The company’s business sprawls from personal and
household care products to foods, beverages and specialty chemicals. The company has a
dominating market share in most categories that it operates in such as toilet soaps,
detergents, skincare, hair care, color cosmetics, etc. It is also the leading player in food
products such as packaged tea, coffee, ice cream and other culinary products.
Market Share
HUL grew at a fast pace in the mid 90’s driven by its aggressive acquisition spree. From
Rs. 38 bn turnover (contributed 70% by soaps, detergents and personal products), HUL’s
turnover has now grown to Rs. 118 bn, with soaps and personal products contributing
57% to turnover and beverages and food products contributing to 29% of turnover.
Growth during the last few years has largely been driven by the personal products
business. However the pace of growth has slackened significantly in the last two years
with several key segments registering a degrowth in 2001.

M arket Capitalisation - HLL

60%

HLL
Other Brands

40%

Even as Hindustan Lever is armed with two brands -- Nihar and Cococare -- positioned to
take on Parachute, the clear strategy adopted by HUL is to attack Parachute indirectly by
targeting the loose oil consumer.

HUL's overall share in the Rs. 500-crore coconut hair oil market is about 24 %. Marico
leads with a 53 % share. HUL's Nihar has appreciated its market share to 17.2 % in May
2000, from 12 % in end-1999, as per ORG-Marg All-India retail audit. The brand's share
in the beginning of 1999 stood at 9.5 %.

Product Categories:
Soap and Detergent

The overall market growth for Soap & Detergent was sluggish during the year with a
sharp decline in the Popular & Premium segment of the market. In particular, rural
market where the business had a traditionally strong presence performed poorly
following decline in the agricultural growth. The discount segment continued to face
severe price led competition. Against this background, the business registered a relatively
better performance in term of growth. Major investment was made behind quality
enhancement of key brand like vim, Lux, Surf and Wheel during the year with clear
consumer benefit. These were backed by some strong consumer promotion during the
year including multi pack. Lifebuoy Active was launched during the year and in short
time, the brand grew handsomely with a 3.7 % share of the segment. This helped offset
the decline of Lifebuoy Carbolic. Major investment had been planned to retain and grow
the Lifebuoy franchise in 2002.

Overall, Power Brand grew significantly ahead of the market and are poised well for a
strong performance once the market turn around with the impending economic revival.
Innovation will continue to drive growth in the following year, with several projects in
the pipeline.

Major initiative to improve distribution reach, particularly in the rural market, were
undertaken during the year to build upon the competitive advantage that the business
currently hold in sales and distribution. Significant investment was also made in
networking and Information Technology IT to manage supply chain more efficiently and
make a quantum improvement in the customer service level. Project LEAP which bring
together the combined strength of IT, Sales and Commercial to deliver better customer
service and make the entire supply chain including the back end system connected with
supplier of material respond faster to the short term change in the market place, had been
implemented toward the end of the year in the Soap Business and the initial result were
encouraging. The focus in 2002 will be to stabilize the system and prepare for rolling it
out to other businesses.

A few highlight of brand performance are:

• With Wheel and Rin, the business not only recorded brand leadership again after a
decade but also captured No 2 in Laundry.
• Lux recorded it highest ever share in the last 24 month.
• Wheel Green Powder share are at their highest in 24 month.
• Surf Excel had recorded it highest value share ever.
• The business also created new benchmark in capacity creation with 4 new plants 2
for NSD Bar, 1 for Soap for NSD Powder being commissioned in record time.
These factories had stabilised very quickly giving significant supply chain and tax
benefit to the business.
• Superior Technology in the business repertoire will be leveraged to deliver
improved quality at lower cost to achieve profitable growth. The Business sees a
big opportunity in market growth in the medium to long term, particularly in the
rural area, and had initiated programme to drive consumption of soap in the
context of the increased awareness of health and hygiene. For the year 2002,
market growth, which is linked to the turnaround of the economy, remains the
major risk factor.

Personal Product

Personal Product had led a good year in 2001, with double-digit growth. This was
achieved by focusing on the core brand and investing in building their equity. In spite of
slow market growth, your Company increased it investment in innovation, research and
advertising on it big brand resulting in growth ahead of the market.
The Hair Category had another year of growth, with high quality relaunches of Clinic
Plus, Clinic All Clear bottle were changed in line with international development, while a
new stand up pack was launched in the mid price segment. Your Company entered the
nascent category of hair colorant, with the launch of Sunsilk hair colour in the metro. In
order to address the opportunity at the low price end of sachet, Lux sachets were
launched at price of Re1 and Re0.50, and these had met expectation.
The Skincare Category had a very good year, with Fair & Lovely as star performer in
2001. In Fair & Lovely, the launches in 2001 included fairness soap, a dark circle under
eye cream, and sachet with a enclosable cap. The main Fair & Lovely cream brand was
also relaunched with improved packaging and communication. All these initiative, along
with investment in advertising and rural penetration, led to high growth for the franchise
through the year.
The Pond brand returned to double-digit growth after a slowdown for 2 year, with
comprehensive relaunches to it talc as well as skincare range. The growth was achieved
by improvement in the functionally of product, packaging and impact market activity. A
new talc variant, pond Light n Fresh, and a new mini Clod Cream jar priced at Rs5 were
successfully launched in 2001. The skin range of Lakme was renovated and strengthened
and a premium new product, Lakme Fair Perfect, was introduced toward the end of 2001.
In the Oral Category, Pepsodent was relaunched and emerged much stronger in 2001 as a
result of innovation, advertising and marketplace activation. The introduction of value
pack as well as new advertising helped increase market share of Pepsodent. Your
Company decided to deprioritize the toothpaste brand Aim, in order to focus all effort on
Pepsodent and Close Up this strategy had been successful as demonstrated by the growth
and brand building that had been achieved in the second half of 2001.
In the Deodorant business, Axe continued on a high growth plan, with many imaginative
market activities and new introduction in 2001. Rexona was relaunched with international
packaging and had achieved salience on the 24 hours delivery of deo benefit.

Colour cosmetics saw many innovations on both Lakme and Elle 18 including a new
range of colour based on the Lakme India Fashion Week. HUL acquired the asset and
liabilities of it colour cosmetics, fragrances and personal care business from Lakme Lever
Ltd at net book value, with effect from 31/3/2001. Post merger, Aviance business
continued to focus on direct marketing of personal care product to gain better
understanding of this channel.

Supply chain and souring efficiencies led to significant cost reduction, whilst quality
improvement came through technologies and innovation. Your Company continues to
focus on low unit price pack, which provide the consumer with quality product at low put
down price. A new Personal Product factory was commissioned in Doom Dooma in
Assam, to cater to the growing market demand. to other businesses.
Product-“VIM” HUL

“Khar Khar ka moh tod jawab”

In 1993 Vim Bar was launched. This product had many benefits including better clean,
ease of handling and easy storage. Vim Bar was re-
launched in 1997 with an improved formulation and new
communication, which tackled economy and
performance. Much appreciated by the mass market, it
resulted in conversions not just from powder users, but
also from proxy users who did not upgrade to powders
but preferred to use Vim Bar instead.

Vim Dishwash Bar is the market leader with 60 per cent share in the Rs 400 crore
branded dishwash market The brand has grown significantly registering strong double-
digit growths in both volume and value terms.

Vim Bar was relaunched a second time in 2002, with a unique “Stain Cutter” formulation
that removes the toughest stains such as burnt milk and ghee stains. This new formulation
evolved through research and is now setting benchmarks in tough stain removal. New
Vim offers the consumer a superior performance at a great value. . New Vim with its
contemporary packaging illustrates dynamism and swift stain cutting powers. HUL is
focused on research and development for consistent delivery of superior products. Thus,
New Vim has been developed with a unique stain-cutter formulation that removes the
toughest stains such as burnt milk and ghee stains. New Vim offers the consumer a
superior performance at a great value”. The new Vim has a totally new mix, right from
the packaging to the formulation of the product. New Vim with improved formulation
that solves the housewife’s yet unsolved problem of tough stain removal of burnt
milk/ghee stain.

Vim is the market leader in the dishwash category. Today Vim is available in powder, bar
and liquid form. Vim continuously strives to innovate its products to enhance the lives of
its consumers. Whether it be through its new 'Stain Cutter' formula in its Vim Bar or it's
the stain busters in its powders, Vim stands for the best quality in dishwash products.

Vim as a Brand

Vim, among Hindustan Lever's 30 power brands, is looking at scouring the

competition further. Though the brand — led by the flagship Vim bar —
remains the market leader in the overall Rs 1,000-crore dishwashing market,
HUL `complete kitchen cleaner'
Vim (utensil cleaner), which is ranked the fourth most preferred brand in urban market,
doesn’t find a place in the top ten in the rural market On brand equity ranking. Though it
was a market leader Vim Dishwash Bar is the market leader with 60 per cent share in the
Rs 400 crore branded dishwash market The brand has grown significantly registering
strong double-digit growths in both volume and valueterms.

HUL planned for brand extension

Another brand extension was planned is that of an `applicator', to be priced at parity with
nylon scrubbers. Currently, Scotchbrite is the only branded applicator in the market,
priced at a premium.HUL has projected a Rs 260-crore turnover for Vim this year, which
translates to a 21 per cent growth over the previous year.

Vim bar, which accounts for over three-fourths of the Vim brand's sales, is expected to be
the key driver of growth. "Of the projected Rs 260 crore, we expect Vim bar to be a Rs
240-crore brand by the year-end, with Vim detergent powder and Vim liquid accounting
for the remaining Rs 20 crore," the official sa Vim liquid, meanwhile, would continue to
be a slowburn brand.

Vim also planned to extend the brand by introducing Detergent liquids . detergent liquids
is a small, though emerging market and has a limited presence of brands such as Vim,
Teepol and Pril. The market is estimated at 600 tonnes, or roughly Rs 200 crore. Vim
liquid was rolled out recently in cities and towns with 10-lakh-plus population.

Market Size

The total size of the dish wash market, estimated at Rs1,000-crore, recorded a 40 per cent
growth over last year. Over 60 per cent of the market is dominated by bars, while dish
wash powders accounts for 32 per cent. The penetration levels are, however, still very
low. Estimates show that nearly 50 per cent of the urban population and 80 per cent of the
rural one still use proxy products like ash and other cheap detergents for dishwashing
purposes. HUL is the leading player, with its Vim Bar.

Market Share

Of the overall Rs 1,000-crore diswashing market, the branded sector accounts for Rs 400
crore. According to AC Nielsen data, within the dishwashing bar segment, Vim's market
share is estimated at 82 per cent share.

Competitors

The brand faces tough competition from Nirma (in the North and West), Odopic (in the
West) and Sabena (in the South) it was the strongest in maharashtra.
Marketing strategy adapted by HUL

The company handed over the marketing for vim to O&M in Maharashtra and
Andhrapradesh .O&M rural marketers adopted unique strategy in the initial stages to
market the product in rural areas Maharashta and Andhrapradesh. As the marketers knew
that it was the initial stage in rural areas and to provide a niche in the rural markets was
difficult as the product itself was not available in these areas.

First to target the market in rural areas they saw to it that the market which they are
targeting was in the 2 to 3 km range from the highways because they knew it wont create
sense to market the product in those areas which are away from the high ways as the
product was not available in those areas. The overall marketing was based on district-to-
district level. They had thought to enter in other areas beyond the 2to3km range after
making the product available to the initial targeted market. So that it becomes easy for the
marketers to introduce, as the product was available in the neighboring villages and the
product becomes familiar to the people.

Marketing segmentation

The market segmentation was in those areas was done on the basis of the houses
that the people were living into. As the people in rural villages lived in different types of
houses. The type of the houses they lived were kaccha ghar, kaccha-pukka, pukka ghar
the marketers also surveyed the per capita income of individual in rural areas.

Challenge

1) The challenge for marketers was to convince the rural consumer and ask them to
spend money on a product where they use to spend no money on a particular
product. As the consumer used proxy products to clean their vessels, which was
available to them at, free of cost. The real challenge was to transform the prospect
to the consumer of the product.

2) The other challenge was to communicate to the rural people. It was difficult for
the marketers to communicate to the rural people unless they were communicated
in their own regional or local language of the rural consumer.

3) After the survey done it was found that the rural consumer used aluminum vessel
to cook their food this made the company to change their entire communication.
Earlier the company use to communicates as,
“apka chehra bhi dekha ga saf”.

Now seeing that the rural consumers were using aluminum vessel, it was a challenge for
the marketers to appeal and communicate the product to the rural consumer and as it
won’t be sensible to communicate them with the same communication or base line. To
come with new communication or tag line which the rural consumer can relate with their
usage and behavioral pattern.

Target consumer

Target consumer for “vim” were

 Households wives
 Restaurants
 Shops and hotel that offer cooked food products

Advertisement

HUL to advertise the vim used both medium of communicating that formal as well as
informal.

Formal advertising was done through:

1) Newspapers and magazines
2) Television
3) Radio
4) Cinema
5) Outdoor advertisement through:
 Signboards
 Wall painting
 Local bus boards
 Product display boards between villages

6) Point of purchase used were

a) Streamers
b) Tinplates
c) Hangings
Distribution Channel for VIM BAR

This strategy was used at village to village basis

Use of audio- video vans

Door to door marketing

Mohalla’s

Retail contact
 Central location
In the process of creating distribution channel for “vim” in rural areas. Keeping into mind
the dynamics of rural consumer and distribution infrastructure, the marketer had adopted
a different strategy to sell vim in rural areas.

The formal media used to communicate the product was T.V, radio, cinema, print
proportionately depending upon their reach and their influence on rural masses. The
informal strategy was formulated. The steps involved to promote the product in rural
areas.

The first step was the usage of audio- visual publicity vans. This publicity vans were
covered by beautiful banners, this banners were embossed with the product photos, the
base or tagline of the product and colorful picture that can attract the rural consumer. The
audible material used were a tunes of current filmy songs, which were composed with
new lyrics, this lyrics gave the special features about the vim. This step was used as an
introduction of the product vim in rural markets.

The second step in the promotion strategy was to do Door-to-door marketing. This step
was very well designed. To do Door- to- door marketing the marketer employed the
young local youths who can communicate with rural people in the local language. This
youth carried along with them flip charts as a substitute medium to T.V.

This flipchart contained a story. The story used in the flip chart was about two female
named “ Kamala” and “bimla”. Explaining that kamala used vim and bimla used other
proxy product. Kamala showed bimla the benefit of using vim in compare to other proxy
product and explaining the features of the product.
The Door-to-door marketing step was complementary to other step that involved the
participation of the rural housewives, which contained games. This games were
strategically designed so as to position the product and the price of the product in the
minds of consumer.

The games used were

 Spotting the right price.

 Match the pairs.
 Turn the wheel

These games were used to entice the people and pull them to “mohalla” the small place
between the houses so as to do mass marketing as much as possible. This all was
done as process of mass marketing.

The fourth step in promotion was Retail contact

In this step the marketers gave scratch coupons to the consumers who came to purchased
vim with incentive packages (i.e. packages one for two). The price given were on the.
The prizes distributed to whom so ever won was 12months soaps. Prizes were distributed
on the spot so to create better perception of the company and product in the mind of the
consumer. The same was made applicable for the retailers on the bulk purchase. This
retailers were also given special discount on their bulk purchase.

The final step was that all the people were invited to the central location. This central
location was usually a place were the entire village people assembled so that becomes
easy to communicate at large to the masses. The activity undertaken at the central
location was cleaning up the sweet makers vessels, which was the toughest to do.

It was communicated as

Saf kare mitaheewale ki kadai”

This exercise of promoting the product was one of the best as when it was proved in
front of the consumer as vim cleaned “ the mitaheewale ki kadai” without living any
greasiness. The advantages of the Vim were also shown to them.

The advantages of vim were that it relieved from the hardship of scrubbing the vessel,
which was done with ease with the help of “vim”. The other advantage was that it would
certainly save their lot of time, which can be utilized effectively for some other work.
This created a clear perception about the product. This process was used again and again
in capturing different markets.

The other promotion strategy to promote the product

Roadshows comprising attractively designed floats will traverse the length and breadth of
the country during the time span of the offer. The carnival, which will cover hundreds of
small towns and villages apart from the metros and is part of a massive rural promo
initiative that HUL plans to unleash. The company even had to promoted the product in
Haats & Melas of different villages.

To promote the vim HUL planned to distribute gold as prize

IN a bid to promote vim one of its leading dishwash soap, Vim Gold Bar, HUL had
launched a below-the-line advertisement. This medium proposes to bring Vim to the rural
households via direct interaction between customer and producer. This promotional
blitzkrieg across the country includes giving away gold worth Rs 5 crore. The offer gives;
customers stand a chance to win gold in different denominations by just scratching a card
received on every purchase of a Vim bar. Each scratch card carries an 8-digit number.
Every Sunday, one such number will be announced on Sony Entertainment TV between
8-9 p.m. and this number will be valid for the entire period of the offer. If the number on
the scratch card of the consumer matches with the number announced on TV, they would
be eligible for a 400 gm gold bar - the weight of the Vim bar in gold. In case of fewer
digits matching, the consumer stands to win 100 gm, 10 gm, or 1 gm of gold or Rs 100
off on purchase of HUL products from the retailer
Communication

Vim Bar has always created an impact in the market with its path-breaking
communication. The communication has been designed to powerfully communicate the
tough stain removal properties of the Vim Bar. HUL created a new consumer lingo for
the tough stain problem with the campaign baseline of Vim being the “Khar Khar ka moh
tod jawab”.

HUL had to completely change its communication when it entered into rural it had to
completely changed its communication from the previous one that was that after
cleaning the vessel with bar you can see your fac(apka chehra Bhi dekha ga saf) to
(khar khar ka moh tod jawab) just because the rural consumers used aluminum
vessels to cook their food. It won’t create sense to appeal them to buy that product
that did not suit their living.

Pricing
Initially Vim bar was priced at Rs 14 for 400 gm. An entry-level Rs 200-gm Vim bar
priced at R s 7 also exists. But with the launch of new vim it was priced at Rs 13 for a
400 gms pack and Rs 6.50 for a 200 gms pack. But with their foray into the rural areas
the price was changed to Rs4 for 200gm and Rs7.50 for400gm. The prices were revised
by keeping the consumer behavior, income, and consumption pattern of rural people.

Packaging

The rural customers are usually daily wage earners and they don’t have monthly incomes
like the ones in the urban areas have. So the packaging was done in smaller units and
lesser-priced packs that they can afford given their kind of income stream. Another
important factor is Convenience. Since many households don’t have proper bathrooms
and only have a window or things like that to keep such things

The packaging of “VIM” had done keeping in mind the rural characteristic. The paper
wrapped to vim bar was in yellow colors showing the brand name vim and containing the
picture of lime clearly to show that it got lime contents in it. The colures used are red,
yellow and green. This sort of packaging what made vim to be the market leader in the
dish wash market.
Distribution System of HUL

The distribution network of HUL is one of the key strengths that help it to supply most
products to almost any place in the country from Srinagar to Kanyakumari. This includes,
maintaining favorable trade relations, providing innovative incentives to retailers and
organizing demand generation activities among a host of other things. Each business of
HUL portfolio has customized the network to meet its objectives. The most obvious
function of providing the logistics support is to get the company’s product to the end
customer.

HUL's products are distributed through a network of 4,000 redistribution stockiest,

covering 6.3 million retail outlets reaching the entire urban population, and about 250
million rural consumers. There are 35 C&FAs in the country who feed these
redistribution stockiest regularly. The general trade comprises grocery stores, chemists,
wholesale, kiosks and general stores. Hindustan Unilever provides tailor made services to
each of its channel partners. It has developed customer management and supply chain
capabilities for partnering emerging self‐service stores and supermarkets. Around 2,000
suppliers and associates serve HUL’s 40 manufacturing plants which are decentralized
across 2 million square miles of territory.

Distribution at the Villages

The company has brought all markets with populations of below 50,000 under one rural
sale organization. The team comprises an exclusive sales force and exclusive
redistribution stockiest. The team focuses on building superior availability of products. In
rural India, the network directly covers about 50,000 villages, reaching 250 million
consumers, through 6000 sub-stockiest.
 (Fig. 2 – Rural Distribution Model of HUL)

HUL approached the rural market with two criteria: the accessibility and viability.
To service this segment, HUL appointed a Redistribution stockiest who was responsible
for all outlets and all business within his particular town. In the 25% of the accessible
markets with low business potential, HUL assigned a sub stockiest who was responsible
to access all the villages at least once in a fortnight and send stocks to those markets. This
sub-stockiest distributes the company's products to outlets in adjacent smaller villages
using transportation suitable to interconnecting roads, like cycles, scooters or the age‐old
bullock cart. Thus, Hindustan Unilever is trying to circumvent the barrier of motorable
roads. The company simultaneously uses the wholesale channel, suitably incentivising
them to distribute company products. The most common form of trading remains the
grassroots buy‐and‐sell mode. This enables HUL to influence the retailers stocks and
quantities sold through credit extension and trade discounts. HUL launched this Indirect
Coverage (IDC) in 1960s.Under the Indirect Coverage (IDC) method, company vans
were replaced by vans belonging to Redistribution Stockiest, which serviced a select
group of neighboring markets.

Distribution at the Urban centers

Distribution of goods from the manufacturing site to C & F agents take place through
either the trucks or rail roads depending on the time factor for delivery and cost of
transportation. Generally the manufacturing site is located such that it covers a bigger
geographical segment of India. From the C & F agents, the goods are transported to RS’s
by means of trucks and the products finally make the ‘last mile’ based on the local
popular and cheap mode of transport.
 Mother
Motherdepot(
depotC&Fa’s)
C&Fa’s

Ruraldistributors
Rural distributor

Sub-stockiest
Sub-stockiest

Retailer
Retailers

consumer
Consumers

HUL used the principle of project stream line .The principle of Project Streamline is to
leverage our scale and organizational synergy to increase reach in rural markets. The
pivot of Streamline is the Rural Distributor (RD), who has15-20 rural sub-stockiest
attached to him. Each of these sub-stockiest is located in a rural market. The sub-stockiest
then performs the role of driving distribution.

Project Streamline was conceptualized to significantly enhance control on the rural

supply chain through a network of rural sub-stockiest, who are based in these very
villages. As part of the project, higher quality servicing, in terms of frequency, credit and
full-line availability, would be provided to rural trade. Thereby, giving us a substantial
competitive edge over the next decade

The role performed by the Redistribution Stockiest has also undergone changes over the
years. Financing stocks, providing manpower, providing service to retailers,
implementing promotional activities, extending indirect coverage, reporting sales and
stock data, screening for transit damages are some of the functions performed by the RS
today.

The RS was required to provide the distribution units to the company salesman. The RS
financed his stocks and provided warehousing facilities to store them. The RS also
undertook demand stimulation activities on behalf of the company. The RS would be able
to provide customer service only if he was serviced well. This knowledge led to the
establishment of the "Company Depots" system. This system helped in transshipment,
bulk breaking, and as a stock point to minimize stock-outs at the RS level.
The diagram shows the model of Project Streamline.

In the recent past, a significant change has been the replacement of the Company Depot
by a system of third party Carrying and Forwarding Agents (C&FAs). The C&FAs act as
buffer stock-points to ensure that stock-outs did not take place. The C&FA system has
also resulted in cost savings in terms of direct transportation and reduced time lag in
delivery. The most important benefit has been improved customer service to the RS.

Certain C&FAs were selected across the country to act as mother depots. Each of them
has a minimum number of JIT depots attached for stock requirements. All brands and
packs required for the set of markets which the MD and JITs service in a given area are
sent to the mother depot by all manufacturing units. The JITs draw their requirements
from the MD on a weekly or bi-weekly basis.

New distribution channels

The other distribution system used was Project Shakti and Project Bharat. Our rural
growth engine raises incomes of rural families by channel intervention through rural Self-
Help Groups (SHG), which operates like direct-to-home distributors. The model consists
of groups of (15-20) villagers below the poverty line (Rs.750 per month) taking micro-
credit from banks, and using that to buy our products, which they will then directly sell to
consumers. In the process, generating employment and incomes for themselves, and
increasing the reach of our product.

This model creates a symbiotic partnership between HUL and its consumers. Started in
the late 2000, Project Shakti had enabled Hindustan Lever to access 80,000 of India's
638,000 villages .HUL's partnership with Self Help Groups(SHGs) of rural women, is
becoming an extended arm of the company's operation in rural hinterlands. Project Shakti
has already been extended to about 12 states‐ Andhra Pradesh, Karnataka, Gujarat,
Madhya Pradesh, Tamil Nadu, Chattisgarh, Uttar Pradesh, Orissa, Punjab, Rajasthan,
Maharashtra and West Bengal. The respective state governments and several NGOs are
actively involved in the initiative. The SHGs have chosen to partner with HUL as a
business venture, armed with training from HUL and support from government agencies
concerned and NGOs. Armed with micro‐credit, women from SHGs become direct-to-
home distributors in rural markets.

The model consists of groups of (15-20) villagers below the poverty line (Rs.750 per
month) taking micro‐credit from banks, and using that to buy our products, which they
will then directly sell to consumers. In general, a member from a SHG selected as a
Shakti entrepreneur, commonly referred as 'Shakti Amma' receives stocks from the HUL
rural distributor. After being trained by the company, the Shakti entrepreneur then sells
those goods directly to consumers and retailers in the village. Each Shakti entrepreneur
usually service 6‐10 villages in the population strata of 1,000‐2,000. The Shakti
entrepreneurs are given HUL products on a `cash and carry basis.'

The following two diagrams show the Project Shakti model as initiated by HUL.
Hindustan Lever Network (HLN)

It is the company's arm in the Direct Selling channel, one of the fastest growing in India
today. It already has about several lakh consultants- all independent entrepreneurs,
trained and guided by HLN's expert managers. HLN has already spread to over 1500
towns and cities, covering 80% of the urban population, backed by 42 offices and 240
service centers across the country. It presents a range of customized offerings in Home &
Personal Care and Foods.

The New Compensation plan for HLN partners provides new exciting ways of earning
substantial income in addition to offering rewards like revenue sharing through the
innovative concept of “pools”

Mother Depot and Just in Time System

In order to rationalize the logistics and planning task, an innovative step has been the
formation of the Mother Depot and Just in Time System (MD‐JIT). Certain C&FAs were
selected across the country to act as mother depots. Each of them has a minimum number
of JIT depots attached for stock requirements. All brands and packs required for the set of
markets which the MD and JITs service in a given area are sent to the mother depot by all
manufacturing units. The JITs draw their requirements from the MD on a weekly or bi‐
weekly basis.

Leveraging Information technology

HUL customers are serviced on continuous replenishment. This is possible because of IT

connectivity across the extended supply chain of about 2,000 suppliers, 80 factories and
7,000 stockiest. This sophisticated network with its voice and data communication
facilities has linked more than 200 locations all over the country, including the head
office, branch offices, factories, depots and the key redistribution stockiest. They have
also combined backend processes into a common Shared Service infrastructure, which
supports the units across the country. All these initiatives together have enhanced
operational efficiencies, improved the service to the customers and have brought us
closer to the marketplace.