Rural Marketing

Hindustan Unilever Limited (abbreviated to HUL), formerly Hindustan Lever Limited, is India's largest consumer products company and was formed in 1933 as Lever Brothers India Limited. It is currently headquartered in Mumbai, India and its 41,000 employees are headed by Harish Manwani, the non-executive chairman of the board. HUL is the market leader in Indian products such as tea, soaps, detergents, as its products have become daily household name in India. The Anglo-Dutch company Unilever owns a majority stake in Hindustan Unilever Limited. The company was renamed in late June 2007 to "Hindustan Unilever Limited" to provide 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". This decision will be put to the Shareholders for approval in next "Annual General Meeting". HUL is one among those companies in the country that derives huge revenues (over 50 per cent) from the rural areas. Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company, touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of nearly Rs.13718 crores. HUL is also one of the country's largest exporters; it has been recognised as a Golden Super Star Trading House by the Government of India. The mission that inspires HUL's over 15,000 employees, including over 1,300 managers, is to "add vitality to life." 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. The rest of the shareholding is distributed among 360,675 individual shareholders and financial institutions.


The operations involve over 2. which incorporates latest technology in all its operations. many with post-doctoral experience acquired in the US and Europe. Wheel. Knorr-Annapurna. The Hindustan Unilever Research Centre (HURC) was set up in 1958. Lakme. most recent being the village built by HUL in earthquake affected Gujarat. Sunsilk. Pond's. Clinic Plus. women empowerment. branded staples. Brooke Bond. comprising about 4.000 suppliers and associates. Kissan. and water management. HUL believes that an organisation's worth is also in the service it renders to the Lifebuoy. 2 . HURC and the Global Technology Centres in India have over 200 highly qualified scientists and technologists. covering 6. HUL has traditionally been a company. It is also involved in education and rehabilitation of special or underprivileged children. and rural development.Rural Marketing HUL's brands . detergents. They are manufactured over 40 factories across India. ice cream and culinary products. care for the destitute and HIV-positive.000 redistribution stockists. HUL has also responded in case of national calamities / adversities and contributes through various welfare measures. coffee. Fair & Lovely. and now has facilities in Mumbai and Bangalore. Kwality Wall's– are household names across the country and span many categories soaps.3 million retail outlets reaching the entire urban population. Surf Excel. and relief & rehabilitation after the Tsunami caused devastation in South India. HUL's distribution network. and about 250 million rural consumers. Lux. tea. personal products. Pepsodent. Rin. HUL is focusing on health & hygiene education. Close-up.

health is of paramount importance. or 50 paise) today constitute about 55% of Hindustan Lever's shampoo sales. if products have to come up the order in the rural purchase hierarchy. Example of HULs rural marketing strategy A unique example is Hindustan Lever's Lifebuoy soap.5. personal wash and beverages — already get over 50 per cent of their sales from rural areas. greater push and deeper penetration.Rural Marketing HUL has changed its strategy towards rural markets in order to tackle its somewhat flat growth in these areas.2. Brooke Bond Taaza tea at Rs. like sachets. Pond's Cold Cream at Rs. Surf Excel sachet at Rs. whose core equity is health and hygiene. sachets (Rs. As against its earlier strategy of each business division dealing with the rural market on an individual basis. This approach is expected to lead to better cohesion.5. The company has also taken initiatives to create markets even for apparently premium products. rural consumers today.1. where the media has its footprints. Pepsodent toothpaste at Rs. which would eventually lead to better sales. If rural India today accounts for about half of detergents sales.2. like Wheel. by offering them in pack sizes.Lux at Rs. In rural India. initiated in the 1980s. Re. share the same aspirations with their urban counterparts. HUL derives over 40 per cent of its sales from rural India. it is because HUL has developed low-cost value-for-money branded products.5. 5. officials say that it is not enough that individual business divisions push their own strategies for the rural market. However. Lifebuoy. the multinational has now adopted a single organisational-push approach to achieve greater penetration and sales. Fair & Lovely Skin Cream at Rs.The company is now looking at the rural market from an organizational point of view rather than from the individual businesses’ point of view. they have to be affordable. has for decades now been synonymous with soap in rural India. At the same time. Several of HUL’s major business categories — such as fabric wash. Lifebuoy at Rs. which makes this part of the market a critical growth aspect for the company. For example.1. because indisposition is very directly related to loss of income. HUL Penetration in Rural Market 3 . HUL has responded to the trend with low unit price packs of even other products . With media reach gradually increasing. whose unit prices are within the reach of rural consumers.5. Pond's Talc at Rs.50.5. adding the company would have to work in unison in order to achieve a balanced growth.

800 `Shakti' entrepreneurs covering 1-lakh villages in 15 States at the end of 2006 through its project shakti. The next stage of Project Shakti was even more ambitious. HUL conceptualized Project Streamline to enhance its control on the rural supply chain through a network of rural sub-stockists based in these villages. Along with Operation Bharat. and is functional since August 2003. vans from HUL and its distributors did the rounds of 30. education. During these exercise. showing products ads and identifying key retail and distribution points. Based on these insights. HUL has piloted `I-Shakti'. health and hygiene. This gave the company the required competitive edge. Secondly in 1998 HUL’s personal products unit initiated Project Bharat. The principal issue in rural development is to create income-generating opportunities for the rural population. the first and largest rural home-to-home operation to have ever been prepared by any company. and extended its direct reach to 37 per cent of the country’s rural population. The project covered 13 million rural households by the end of 1999. Evolution of HUL Distribution Model 4 . in keeping with the purpose of integrating business interests with national interests. Then HUL started Operation Harvest which was used as a medium of communication with the villagers. vocational training. an IT-based rural information service that provides solutions to key rural needs in the areas of agriculture. The project has been set up in 8 villages in Andhra Pradesh. HUL launched Project Shakti in the year 2001. Today Hindustan Unilever Ltd has more than doubled its direct rural reach with 30. Such initiatives are successful and sustainable when linked with the company’s core business and is mutually beneficial to both the population for whom the programme is intended and for the company.000 villages giving promotional packs.Rural Marketing The First major step taken by HUL to penetrate the rural market is that it evolved its distribution model.

 Phase I 5 . has penetrated well into the rural market. This includes. HUL has set up a distribution network that ensures availability of all their products. innovative incentives to retailers and organizing demand generation activities among host of other things. in all outlets. HUL has followed a strategy of building its distribution channels in a transitional manner. at all items. maintaining favorable trade relations.Rural Marketing To meet the ever-changing needs of the consumer. and in different successive phases of the evolution of its distribution system. providing.

The REDISTRIBUTION STOCKIST also undertook demand stimulation activities on behalf of the company. The REDISTRIBUTION STOCKIST was required to provide the distribution units to the company salesman.” a stock point for the company’s products in that market. He would then distribute stocks from the Registered Wholesaler through distribution units maintained by the company. The second characteristic of this period was the changes brought in as the company realised that the REDISTRIBUTION STOCKIST would be able to provide customer service only if he was serviced well. The REDISTRIBUTION STOCKIST financed his stocks and provided warehousing facilities to store them. therefore. While consumables are purchased in the village shop or Shandies or in bigger villages. Goods were sent to these markets. which spanned the decades of the 40s. The company salesman grouped all these orders and placed an indent with the Head Office. 6 .  Phase III The highlight of the third phase was the concept of “Redistribution Stockiest” (RS) who replaced the REGISTERED WHOLESALERSs. and the money was remitted to the company. The salesman then collected and distributed the products to the respective wholesalers. bulk breaking. The Registered Wholesaler was given a margin of 1 per cent to cover the cost of warehousing and financing the stocks held by him. was to provide desired products and quality service to the company’s customers. one wholesaler in each market was appointed as a “Registered Wholesaler. canvassing for orders from the rest of the trade. In order to achieve this. The company salesman still covered the market.Rural Marketing The first phase of the HUL distribution network had wholesalers placing bulk orders directly with the company. This knowledge led to the establishment of the “Company Depots” system. This system helped in transshipment. Large retailers also place direct orders. which comprised almost 30 percent of the total orders collected. increased the distribution reach of the company to a larger number of customers. against cash payment. The Distribution Strategy in Rural Market The strategy of distribution should take into account the purchasing habit of the rural people.  Phase II The focus of the second phase . The Registered Wholesaler system. and acted as a stock point to minimise stock-outs at the REDISTRIBUTION STOCKIST level. with the company salesman as the consignee.

The ultimate consumer product reflects the lack of distribution network.takes or sales realization. the distribution can be left to the initiative of the shop keepers and dealers in larger villages and to the shopkeepers of 7 . so that product may be available at the appropriate location. But the expenses incurred resulted in the village shopkeepers charging consumers more than the maximum retail price. Generally.Rural Marketing the consumer durables are purchased only in Mandi centers. depending upon the off. so that the distribution cost can be minimized.  Distribution Strategies in Rural 1. Most of them commute to the nearby town to get the supply. the margins are also very meager. The frequency of visits may be fixed. but not at the cost of cutting down or rural population. Since the quantum of purchase by the village shopkeeper is very small. it is possible to reach distribution van to the villages. large towns or nearby cities. the village shopkeeper invest their funds in purchases and rarely ever get credit facilities. Coverage of Villages: With improved communication facilities. These distribution cabs can be used for promotion works also. the shopkeepers make their own arrangement for the procurement. which if available is made available for very short duration only. For villages with very less population. In villages beyond the reach of the distribution system. Hence the distribution centre has to take the purchasing habit of the rural people into account.

From the feeder market and mandi town. Given the number of such societies. 2. 4. These societies are linked to higher level of society like taluk. radios. The revamped PDS places more emphasis on reaching remote rural areas like hills and tribal areas.Rural Marketing the small villages. there is at least one corporative society of one form or another for every two or three villages. Effective utilization of the PDS system should be explored by the manufacturing and marketing men. torch cells and other durables and consumer product. Lux has established a good distribution network in the identified feeder market and mandi towns. Distribution to Feeder Markets / Mandi Towns: The villagers visit these town at regular intervals not only for selling the agricultural produce but also for the purchase of cloth. jewellery . The distribution arrangement requires serious consideration by manufacturing and marketing men. the stockiest or wholesaler arranges for distribution to the village shop in the interior places. farmer service corporative societies. Utilization of Public Distribution System: The Public Distribution System (PDS) in the country is fairly well organized. if they have to exploit the potential of the rural market. Such state level federation can be motivated to procure and distribute consumables items and low level durables items to the member societies for selling to the rural consumers 3. consumer corporative and other multipurpose corporative. marketing cooperatives. Use of Cooperative: Over three lakh cooperative society operate in the rural areas for or different purposes like. Initiatives taken to Improve the Distribution Strategy HUL has taken the following initiatives to improve its distribution strategy:  Setting up of a full‐scale sales organization comprising key account management and activation to impact. district or state level. hardware. dairy corporative. 8 . Thus these corporative have an arrangement for centralized procurement and distribution through their respective state level federation. fully engage and service modern retailers as they emerge. since they already have a distribution set up.

Rural Marketing  Servicing Channel partners and customers with continuous daily replenishment.000 villages. HUL has also included several NGOs and state governments as the initiative helps rural women to improve their financial position. and also includes a back‐end system connecting suppliers. particularly in rural areas by leveraging non‐conventional media like wall paintings. fairs and festivals. Backend processes have been combined into a common Shared Service infrastructure.  Revamping of its sales organisation in the rural markets to fully meet the emerging needs and increased purchasing power of the rural population. all company sites and stretching right up to stockists.  Leveraging scale and building expertise to service Modern Trade and Rural Markets.  Delayering of sales force to improve response times and service levels. HUL’s distribution network in rural India already directly covers about 50. IT tools have been deployed for connectivity across the extended supply chains. Started in 2003.000 sub stockists.  Launching of Project Shakti through which the company is able to extend its operations in villages.000 consultants across the country.  Implementation of supply chain system that connects stockists across the country.  Launching the Unicare scheme with upmarket pharmacies and retailers to sale its premium brands. it already has a base of 300. cinema vans. reaching about 250 million consumers through about 6. 9 .  Finding out Innovative ways to reach out to its consumers.  Launching of HUL Network to leverage the channel of direct selling by presenting customised offerings in 11 home and personal care and food categories. weekly markets (haats).

Under 'Project Dronacharya'. the FMCG major continuously imparted training to over 10. 10 .000 stockist salesmen. it has started the ‘Vijeta ‐ Rishta Jeet Ka’ scheme last year to provide a platform for the wholesaler and HUL to grow the business by earning points and redeeming them. For instance.Rural Marketing  Undertaking several initiatives for traditional channels in order to improve its capabilities at the front‐end by developing skills for stockists' sales force.  Launching of several promotional schemes for existing wholesalers and distributors.

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