Project Report On

RURAL MARKETING STRATEGIES OF HINDUSTAN UNILEVER

Submitted by
SHUBHAM MAHESH SATAM
Roll NO: 213

Submitted to

UNIVERSITY OF MUMBAI
MASTER OF COMMERCE
(ACCOUNTANCY / MANAGEMENT)
Semester- III / IV
(2022–23)

Project Guidance by
Professor: Ms. SWATI SHETYE

UTTARI BHARTI SABHA’S

RAMANAND ARYA D.A.V COLLEGE OF COMMERCE (AUTONOMOUS)
DATAR COLONY, BHANDUP (EAST)
 Ramanand Arya D.A.V. College (Autonomous)

Bhandup (East) Mumbai 400042

Certificate

This is to certify that SHUBHAM MAHESH SATAM has worked and duly completed
his/her Project Work for the degree of Master in Commerce under the Faculty of
Commerce in the subject of RURAL MARKETING and his/her project is entitled,
RURAL MARKETING STRATEGIES OF HINDUSTAN UNILEVER under my
supervision.

I further certify that the entire work has been done by the learner under my guidance and
that no part of it has been submitted previously for any Degree or Diploma of any
University.

It is his/her own work and facts reported by her/his personal findings and investigations.

Co-Ordinator: Principal:

Dr. Sushama Patil DR. AJAY M. BHAMARE

Project Guide/Internal Examiner: External Examiner:

Ms. Swati Shetye

 Ramanand Arya D.A.V. College

Bhandup (East) Mumbai 400042

Declaration by learner

I, the undersigned SHUBHAM MAHESH SATAM declare that the work embodied in
this project work hereby, titled RURAL MARKETING STRATEGIES OF
HINDUSTAN UNILEVER, forms my own contribution to the research work carried out
under the guidance of Ms. SWATI SHETYE is a result of my own research work and has
not been previously submitted to any other University for any other Degree to this or any
other University.

Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Name of the learner: Shubham Mahesh Satam

Signature:

Certified by

Name of the Guiding Teacher: Ms. Swati Shetye

Signature:
 Acknowledgment

To list who all have helped me is difficult because they are so numerous and the depth is
so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.

I would like to thank my Principal, Dr. Ajay M. Bhamare for providing the necessary
facilities required for completion of this project.

I take this opportunity to thank our Coordinator - Dr. Sushama Patil, for her moral
support and guidance.

I would also like to express my sincere gratitude towards my project guide Ms.
Swati Shetye whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books
and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in
the completion of the project especially my Parents and Peers who supported me
throughout my project.

SHUBHAM MAHESH SATAM

Topic No. TOPICS Page No.

Chapter – 1

1.1 Executive Summary 1-2

1.2 Introduction to Rural markets. 2-3

1.3 Objective of Study 3

Chapter – 2

2.1 Evolution of Rural marketing. 4

2.2 Rural Marketing Strategies. 5-14

2.3 Introduction of Hindustan Unilever Limited. 15-16

2.4 Highlights of HUL Marketing Strategy. 16-26

2.5 Challenges faced by HUL. 26-27

Chapter – 3

3.1 Research Methodology. 28-29

Chapter – 4

4.1 Review of Literature 30-34

Chapter – 5

5.1 Data Analysis 35-40

Chapter – 6

6.1 Case on Wheel Strategies 41-44

6.2 Relationship Marketing Case: HUL 44-46

6.3 Conclusion. 47

6.4 Recommendation 48

Chapter – 7

7.1 Questionnaire 49-51

7.2 Bibliography 52
 CHAPTER - 1

EXECUTIVE SUMMARY

The topic that was taken up for detailed study is ‘Rural Marketing Strategies’. The
procedure, not only varies in different sectors but also in different companies. The
marketing strategies that company adopt to launch their various new products keep
changing with time and the prevailing market situations. This study was undertaken to get
a deep insight into the marketing strategies adopted in rural areas. Companies must use
different combinations of Marketing mix variable for Rural Markets.

Product Strategy

In the rural market, the consumer is utility oriented. The quality of the product is always
given a very high preference as compared to the brand name of the product. The product
must have good purchase value in order for it to be purchased i.e., the product has to offer
value for money. The product must be affordable and must satisfy rural needs.

Pricing Strategy

The pricing of the product should be designed in such a way that it contributes to the
objectives of the marketers and needs of the consumers. The product cost must be low for
the product to be successful in the rural market.

Distribution Strategy

Whilst formulating specific strategies for distribution in rural areas the characteristics of
the product – whether it is consumable or durable, the life of the product and other factors
must be kept in mind. Distribution Strategies formulated for the rural areas could consider
the use of satellite distribution, private village shops etc. and various channels of
distribution and physical distribution facilities in Rural markets. Due to very regular
occurrence, shandies/haats/melas are of great importance keeping the distribution strategy
in mind.

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Promotion strategy.

Promotion strategies should be cost effective. Word-of-Mouth and Opinion Leaders are of
great significance in a promotion strategy. Another important attribute in promotion
strategy is Mass Media i.e., Television, Cinema, Radio, Print Media, etc. To understand
the marketing strategy and marketing mix used by companies in rural markets, the
strategies of HUL the major FMCG which was successful in penetrating in rural market
has been discussed and its few cases are mentioned in the project.

INTRODUCTION TO RURAL MARKETS

The rise of rural markets has been the most important phenomenon of the 1990’s, providing
volume growth to all leading companies. Many corporates have been trying to get a grip
on rural market. But challenges are many: how to make the product affordable, how to
penetrate villages with small populations, connectivity, communications, language
barriers, spurious brands, etc. Marketers and manufacturers are increasingly aware of the
burgeoning purchasing power, vast size and demand base of the once neglected Indian
hinterland. Efforts are now on to understand the attitude of rural consumers, and to walk
their walk and talk their talk. The marketing mix of many companies is now being tailored
to rural tastes and lifestyles. Government agencies like IRDA (Insurance Regulatory and
Development Authority) and NCAER (National Council for Applied Economic Research)
define ‘rural’ as “villages with a population of less than 5000, with 75% of the male
population engaged in agriculture, etc.” Two-third of the country’s consumer (more than
700 million) live in rural areas and almost 26% of the national income is generated there.
And 10 consecutive good monsoons have led to improved returns from agriculture (which
is India’s largest economic sector and accounts for 26% of GDP, increasing the spending
power in India’ s rural areas. India is divided into 597 districts, and has 638,667 villages,
of which 32% can be reached and are connected by pucca roads. However, 68% of the rural
market lies untapped due to various reasons ranging from inaccessibility to lack of
awareness. In all, there are more than 3.8 million retail outlets in rural India, 5.8 shops per
village (the term ‘shop’ refers to any type of premises – haats, stalls, shacks-that sell
goods). Overall, the rural market has been growing at 3-4%per annum, adding more than

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1 million new consumers every year, and now accounts for close to 50% of the volume of
consumption of fast-moving consumer goods (FMCG) in India. As a result, it is becoming
an important part of the market development strategies of all FMCG companies, including
multinational ones, as well as consumer durables business and services companies as well.
Further, the vast untapped potential of the rural markets is growing at a rapid pace. The
policies of the government largely favor rural development programs. This is clearly
highlighted by the fact that the outlay for rural development has risen from Rs 14000 crores
in the 7th plan to Rs 30000 crores in the 8th plan period. Thus, with the rural markets
bulging in both size and volume, any marketing manager will be missing a great potential
opportunity if he does not go rural.

OBJECTIVE OF STUDY

The main objective of this project is to find, what are the steps Hindustan Unilever Ltd. is
adapting to be market leader and to differentiate itself from its competitors. What is the
steps company is utilizing to find current trend in the market? Most of the product of HUL
comes in the category of convenience products. They are frequently used and bought by
the customers. There is large no. of players in the market, who are supplying similar
product to the customers. Now, customers have become smart, they have great knowledge
of market, product, and suppliers. So, they are looking for the product which is providing
something extra. HUL has a wide range of product in FMCG sector, covering almost every
need and wants of the customers. It has products for child, young & adult, male & female,
etc.so, it must differentiate its products taking into account the needs and demands of all
the sectors of the society. Not, only product but it must look upon the services and feedback
from customers also. It should do something to give after sales service and collect feedback
from the customers. The basic objective of this project is as mentioned above to find ways
so that HUL remain market leader by considering all the needs & wants and fulfilling their
demand.

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 CHAPTER - 2

Evolution of Rural Marketing

The Glorious Past (1940-1990)

In 1949 Asian Paints was the first company to enter rural markets. In the 1960’s Hindustan
Unilever Ltd (HUL) saw rural markets as an opportunity and entered with Lifebuoy soap.
Today HUL dominates rural markets and has a presence in more than one lakh villages.
Major players like Colgate, Dabur, etc followed suit. In the 1980s. young companies like
Nirma, CavinKare and Marico entered rural markets. MNCs like Proctor & Gamble also
started rural marketing.

The Pulse of Present (1999-2000)

Today around 70 percent of the population lives in rural India (more than 700 million). A
one percent increase in their purchasing power would lead to an increase of Rs 10,000 crore
in government revenues. Companies are launching a plethora of products to cater to
changing lifestyles in rural India. MNCs like LG, Samsung and Revlon, and insurance
biggies like Birla Sunlife, Max New York life and Prulife are entering the rural market in
a big way; currently, however, these companies have tapped only one lakh of the 6 lakh-
odd villages.

The Furious Future (2000 onwards)

The media explosion and satellite invasion have brought about drastic changes in the
consuming habits of rural Indians and the future would hold a lot in store for companies
entering rural markets. New players like Nestle, Mc Donalds and MTV are eyeing rural
markets, and companies like HUL plan to extend their reach to almost 2.5 lakh villages in
the next 5-6 years (2006-2007).

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RURAL PRODUCT STRATEGIES

The following are the product strategies for the rural market and rural consumers:

1. Small Unit Packing: This method stands a good chance of acceptance in rural
markets. The advantage is that the price is low and is easily affordable by the rural
consumer. Products like shampoos, pickles, biscuits, etc. have tested this method.
2. New Product Designs: The manufacturer and the marketing men can think in terms
of new product designs, keeping in view the rural life style.
3. Sturdy Products: Sturdiness of the product either in terms of weight or appearance
is an important criterion for rural consumers. For the rural consumers, heavier
weight means that the product is more durable.
4. Utility Oriented Products: Rural consumers are more concerned with the utility
of the product and its appearance.
5. Brand Name: The rural consumers do give their own brand name on the name of
an item. A brand name or logo is very important for a rural consumer for
identification purposes.

Branding: Brand is the term, name, sign, symbol, design or a combination of them, which
helps to identify the seller products & identify them from competitor products. Its primary
purpose is creating an identity of the product. The brand names should be easily understood
& recognized by the rural consumer. Unfamiliar & absurd brand names cause hesitation in
the minds of the consumer. The rural brands are recognized through symbols, logos and
colours. E.g.- ‘Billi waali cell’ - Battery with the cat as a symbol- Eveready.

Packaging: It is providing a container/wrapper for a product for the purpose of handling

& protection. The three levels are

i. Primary package- To hold the product, e.g., bottles.

ii. Secondary package- To hold the primary package, e.g., cardboard boxes.
iii. Shipping package- To carry the secondary package from one place to another
e.g., corrugated boxes. All products need shipping package. HUL has made
‘bubble pack’ shampoos. They are neither sachets nor bottles & works on the

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 principle of capillary action. The rural markets were kept in mind & this type
of package was developed keeping in mind the convenience of storage after use.

The following strategies must be adopted by a marketer launching a product in rural

markets.

1. The product for rural market has to be simpler and easy to use.
2. The product has to be conveniently packaged for low price and convenient use.
Sachets were one of the popular methods through which companies targeted rural
markets.
3. The product literature has to be simple enough for the rural customer to understand.
There should be no product frills: only functional benefits should be communicated
even on the packs. Lack of information has led to rural folks finding alternative
uses for the same products.
4. Brand identity in rural markets is often created through the brands logo or the colour
of the product, at times even the taste of the product.

Packaging Strategies

Packaging is defining new paradigms in rural marketing, making it perhaps the most vital
component in marketing mix. According to the survey of National Council for Applied
Economics and Research (NCAER) in 1998, it is the low-income group which now
comprises of overwhelming majority of consumers for mass consumption products. The
study indicated that almost 90% of goods surveyed were purchased by people earning less
than 18,000 per annum. Marketers have realized, “To enter the rural market, it is necessary
to offer products at the lowest unit price”. At the same time, innovative packages are
necessary to add value to the premium products. Particularly, Innovations, which help
lower the price, are desirable. Small packs and combi-packs have become a major attraction
in rural India.

a) Small packs: The reasons for high preference to small pack low-unit prices are
i) Affordability: The income of rural consumers is unsteady. The sources of
income as well as the size of income earned per day vary. They cannot hence

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 make planned purchases and large purchases. Small pack sizes help the rural
consumer pick the product at a price that he can afford.
ii) Usage: Certain products like detergent and paste are bought in larger
quantities, whereas shampoos, toilet soaps, eatables are bought in small pack
sizes. The reason for this is: ‘The products that are common to family members
are bought in large pack sizes whereas individual-use products are preferred in
small packs.
iii) Storability: The storage life of a product also has a bearing on this decision.
Edibles, for example, cannot last long unless preserved and kept under ideal
conditions. Further shelf space of rural consumers is also limited as they live
in small huts or semi-pucca houses.
iv) Benefits to Retailer: The small pack sizes are convenient to the retailer to do
his business and promote the national brands. The shelf space of rural retailers
is less. He cannot afford big premises. Small pack sizes do not demand shelf
space.
v) Display: Smaller sizes are easy to display. They increase the visual appeal they
carry compared to large ones, the colors on the smaller packs are looked at
with more interest.
vi) Implications to marketers: Manufacturers prefer producing large pack sizes.
The economies of scale indicate that small pack sizes are less feasible.
However, on the marketing side, benefits are revealing.
• They induce strongly rural consumers to buy.
• Trail sales of national brands are on the rise.
• Regular sales are growing up for many products. The regional\ local
players are finding it difficult to face competition from the big players on
their home turf.
b) Combi-packs: Another packaging innovation is ‘combi-packs’. When related
products are packed together and sold at economy prices, the consumer finds it a better
option to buy. The combi-pack may become an assortment when more than two
products are packed together.

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c) See-through packs: Many companies are coming up with new packages that are
attractive as well as economical.

RURAL PRICING STRATEGIES:

Pricing strategies are linked to product strategies. The product packaging and presentation
also keeps the price low to suit the rural consumer.

I. Low Cost/Cheap Products: This is a common strategy widely adopted by

manufacturing and marketing concerns wherein the price can be kept low by low
unit packing like paisa pack of tea, shampoo sachets, etc.
To decrease the cost and thereby the price, company adopts the following methods:-
1. Refill Packs/Reusable Packaging: Health drinks available in the urban areas.
The containers can be put to multipurpose uses, which can have a significant
impact in the rural market. E.g., tea, coffee & many other consumer goods re
available in refill or reusable packages.
2. Application of Value Engineering: In the food industry, Soya protein is being
used instead of milk protein. The nutrition content of both being the same, Milk
protein is expensive whereas Soya protein is cheaper. The basic aim being to
reduce the value of the product so it becomes affordable to a larger segment,
thus expanding its market.
3. Discriminatory pricing: Discriminatory pricing is employed to charge
different customer groups differently projecting differences in quality of offer.
a) Product from pricing: Different versions of product are priced differently
but not proportionately to their respective costs. E.g.: Beverages are offered
in different sizes and packs. The unit price differs. New Lipton Tazgi tea is
available in 50 gms (Rs. 7.50), 100 gms (Rs. 14.50), 250 gms (Rs. 42) and
500 gms (Rs. 84).
b) Location pricing:The same product is priced differently at different
locations through the cost of offering at each location is the same.

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 c) Time Pricing: Prices are varied by day or season. Eg: Umbrella is
demanded in season so priced high during that time.
4. Penetration Pricing: Penetration is chosen when market is highly price
sensitive, and a low price stimulates market growth. Products like Chik
shampoo, Rin detergent penetrated the market with lower prices in the initial
stages and later went up the price ladder.
5. Value Pricing: It involves setting prices reasonably at a lower level compared
to competitors through careful streamlining of operations to become a low-cost
firm without sacrificing quality. It involves human development, quality
management, supply chain management, etc. In India many companies are
adopting this approach as the markets are saturated and competition has
intensified.

RURAL PROMOTION STRATEGIES:

The promotion measure should be cost effective. Word of mouth is an important message
carrier in the rural areas and ‘opinion leader’ play a significant role in influencing the
prospective rural consumers about accepting or rejecting a product or a brand. Other
attributes are explained as under:

1. Mass Media: Mass media is a powerful medium of communication. The mass media
generally used are:
a. Television b. Cinema c. Radio d. Print Media: handbills, booklets, posters,
banners, etc.
2. Personal Selling and Opinion Leaders: In personal selling it is required that the
potential users are identified and awareness is created among them. A highly
motivated sales person can achieve this. Word of Mouth holds a lot of validity in the
rural areas. This is the reason why opinion leaders are thriving among rural consumers.
3. Special Campaigns: These should be undertaken during harvest & marketing seasons
in rural areas. E.g., Tractors owners meet (tonee) conducted by MRF.

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RURAL DISTRIBUTION STRATEGIES.

I. The Private Village Shops: Private shops are the main

channels in the rural market for a large variety of
products. They are also the cheapest and the most
convenient channel to align with. The village
shopkeeper is forced to deal in a large number of
products in order to make his operations viable, which
means a large inventory. The larger lead-time for replenishments from urban based
production point enlarges the inventory holding further. And as his sales are not
uniform throughout the year, he has to carry inventory over a longer period of time,
leading to the blocking up of his capital.
II. Satellite Distribution: A concept known as ‘Satellite Distribution’ can be tried in
developing a distribution channel in the rural market. Under this system, the firm
appoints stockist in feeder towns, who take care of financing, warehousing the
goods and sub-distribution of goods. The firm also appoints a number of retailers
in and around the feeder towns and attaches them to the stockist. The goods are
supplied to the stockist either in cash or credit or on consignment basis. The sales
volume of the retailers will vary depending on the potential of the area covered and
the capacity on the dealer concerned. Over a period of time, some retailers grow in
terms of business turnover. If such retail points also happen to be transportation
centers within the feeder town area, the firm elevates them as a stockist. The area
of operation of the original stockist shrinks in this process, but care has to be taken
to see that his volume of business does not shrink. This is achieved, in practice, on
account of growth in demand and deeper market penetration. If twenty retailers
operate in the network of an original stockist, five or six of them get elevated over
a period of time as stockist. Out of the retailers some remain attached to the original
stockist and other relevant factors. The process continues as long as the market
keeps expanding. And at any point of time, enough retail points in variably hover
around or particular stockist, hence the name ‘Satellite Distribution’.
III. Syndicated Distribution

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 Channels of distribution are a major problem for a new company targeting the rural
market for the first time. The biggest problem a new company faces is that there
are too many levels in the channels (multiple-tier), and setting up a distribution
channel for rural markets is a costly proposition. Coca Cola India purchased the
Parle brands (Thums Up, Limca, etc.) for Rs. 550 crores in 1993 mainy to use
Parle’s existing distribution network. But small companies cannot afford to buy
another company for distribution.

The solution for small companies: tie up with a leading company that already has a
presence in the rural market to distribute products through its distribution network.
The golden rule is the small companies should not deal in the same product that the
leading company sells. A successful model of syndicated distribution is P&G using
the rural distribution network of Marico to sell Ariel, Tide, etc. In the initial stages,
CavinKare uses the distribution network of Amrutanjan Pain Balm for its Chik
shampoo.

CHANNELS OF DISTRIBUTION

The various channels of distribution include; Wholesaler, Retailer, Vans, Weekly Haats,
Bazaars and Shandies.

i. Wholesalers
More than 70 per cent of the rural markets are still beyond the pale of direct
distribution, the consumer boom notwithstanding. Since, wholesale trade in
India has remained largely unchanged over the years, there is a need to
revitalize it. The Indian wholesaler is principally a galla-kirana (food-grain)
merchant who sustains the belief that business is speculative rather than
distributive in character. He is a trader/commodity merchant rather than a
distributor and therefore, tends to support a brand during boom and withdraws
support during slump. The reasons for this speculative character and dormant
role of wholesalers are:

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 • Indian market was largely seller’s market. There was no need for active
sales approach.
• Companies laid more emphasis on retailers in urban areas, who are very
large in number. As a result of retail-based distribution, wholesale-based
distribution was weakened.
• Rural markets were neglected by many. The occurrence of retail outlets
was low. Therefore, many companies were dependent on wholesalers. Few
companies operated mobile vans to distribute products to village
shopkeepers.
ii. Retailers
Village retailers have traditionally been amongst the most mobile of rural
residents. Often doubling up as money lenders, their occupation facilities multi
person interaction in the closed village society. As a result retailer plays the
significant role:
a) Credibility
He enjoys the confidence of the villagers. His views are accepted and
followed by the rural people whose awareness and media exposure
levels are low. The urban retailer is not trusted. He is seen as a
businessman with profit motto. His viewpoints are evaluated with other
sources of information.
b) Influence leader
His role as influence leader is indisputable. From tender twig of neem to
washing powder, retailer testimony has been vital part of the product
adoption process. The role of urban retailer, on the contrary, is weak. The
urban consumers have numerous sources of information. While the
retailer’s opinion is sought it may not be hundred percent believed and
followed.
c) Brand promoter
With the increasing number of brands in the place of commodities, concept
selling has come to a close. Brand choices are easy as the brand
characteristics and benefits are communicated through different promotion

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 media. Despite the direct one-to-one communication, the retailer remains
the deciding factor to sell a particular brand. There are no shelf displays or
point of purchase influences. It is the retailer who helps in identification and
selection of brands.
d) Relationship marketer
Village retailer practices relationship marketing. He caters to a set of buyers
who have incomes derivative from immovable land resources and would be
static over a such longer time span. The relationship could extend beyond
three generations, backed by historical credibility of the retailer as a product
referral. On the contrary, the urban retailer has to make an effort to adopt
relationship marketing. His customer base comprises largely the mobile
service class prone to shift residence atleast once, if not more, in less than a
decade. This limits the time span and perspective of the retailer-customer
relationship.
e) Harbinger of change
Village shopkeeper has not been merely a seller of wares. In an environment
relatively isolated from external developments, he has been harbingering of
change. He is one of the main sources of information and opinion as well as
supplier of product and services. As against this, we find urban retailer,
wielding limited influence in changing the product choices and quality of
life of consumers. The retail outlets are now in for a change with the
corporate marketers finding then as right places for promoting their
products.
iii. Vans
Marketers need to make more on- ground contact with their target audience as
well as make demonstration of products as consumers in rural markets rely on
the 'touch and feel experience. One of the ways could be using company
delivery vans which can serve both the purposes. Mobile vans long since have
an important place in distribution and promotion of the products in villages.
iv. Weekly haats, Bazaars, Shandies

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The haats are the oldest outlets to purchase household’s goods and for trade.
These markets are very well organized with shopkeepers having pre-assigned
spaces for them to sell their wares. A typical market is an open field with ample
space for displaying all sorts of goods. Its location changes every week. These
markets have different names in different regions. But they are strikingly
similar in what they sell. It is reported that there are, in all, about 47,000 haats
held throughout the country.
a) Merits
1. Convenience: The entire market can be related to large departmental
stores in cities, where the advantage is one stop shopping exercise.
These outlets crop up every week, providing consumers immense choice
and prices.
2. Attractive: The weekend shopping is not only convenient but also
entertaining. The markets start early and will be over by lunch.
Afterwards there will be entertainment. In respect of transactions, it is
an attractive place to those who want to buy second hand durables and
to those who prefer barter transactions. Further the freshness of the
produce, buying in bulk for, a week and the bargaining advantage attract
the frugal and weeklong hard working rural folk.
3. Availability: It is a market for every one and for everything. Household
goods, clothes, durables, jewellery, cattle, machinery, farming
equipment, raw materials and a host of products are available.

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Hindustan Unilever Limited

Introduction

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 tons and sales of
Rs.10,000 crores. HUL is also one of the country's largest exporters; it has been recognized
as a Golden Super Star Trading House by the Government of India.

The mission that inspires HUL's 36,000 employees, including over 1,350 managers, is to
"add vitality to life." HUL meets every day 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 51.55% of the equity. The rest
of the shareholding is distributed among 380,000 individual shareholders and financial
institutions.

HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk,
Clinic Plus, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna,
Kwality Wall's – are household names across the country and span many categories - soaps,
detergents, personal products, tea, coffee, branded staples, ice cream and culinary products.
They are manufactured in close to 80 factories. The operations involve over 2,000 suppliers
and associates.

HUL's distribution network, comprising about 7,000 redistribution stockists, directly

covers the entire urban population, and about 250 million rural consumers.

HUL STRATEGY

The Rs 11,000 crore Hindustan Unilever (HUL) is formulating a new strategy to expand
its presence in India’s Rural markets. HUL is one among those companies in the country
that derives huge revenues (over 50%) from the rural areas. But in the past one-year, owing

15
to the failure of the monsoon in many parts of the country farmers have registered a
substantial fall in incomes and consequently the purchasing power. For the company this
has resulted in a flat growth of these markets. Witnessing the flat sales growth in rural
areas. HUL has shifted its rural markets strategy. Earlier each business division of the
company dealt with the rural market on an individual basis; now the shift in strategy means
the company will deal with rural markets as a single organization to achieve greater
penetration and sales. This approach is expected to lead to better cohesion, greater push
and deeper penetration which would eventually lead to better sales. HUL officials say it is
not enough that individual business divisions push their own strategies for rural market;
the company will have to work in unison in order to achieve a balanced growth.

Over the last three years the company has embarked on an ambitious programme, Shakti.
Through Shakti, HUL is creating micro-enterprise opportunities for rural women, thereby
improving their livelihood and the standard of living in rural communities. Shakti also
includes health and hygiene education through the Shakti Vani Programme, and creating
access to relevant information through the i-Shakti community portal. The programme now
covers about 50,000 villages in 12 states. HUL's vision is to take this programme to
100,000 villages impacting the lives of over a 100 million rural Indians

Highlights of HUL Marketing Strategy

There was an interview conducted with Mr. Shubramanyam

Bhattacharya who is the Sales Team Manager of HUL Belapur Branch.
He highlighted on the following points connected to rural markets where
HUL serves. He said firstly that: -

Mission of HUL: - To Make it products reach to the consumer where he wants it. The
product must be such that impacts daily life and change their living standards. Their main
purpose is to provide hygienic conditions to rural consumers and upgrade their standards
with their products.

The goal is to reach 2,35,000 villages, up from the current 85,000; 75 per cent of the
population, up from 43 per cent today; and a message reach of 65 per cent, up from the

16
current television reach of 33 per cent. The company is expressly aiming at reaching
villages with populations less than 2,000. The rural penetration exercise is going to be
complemented by a 15-per cent hike in advertisement expenditure. HUL is trying to reach
the potential market of 75% of rural areas. This is possible only if the disposable income
in the hands of rural consumer is increased. The GDP is 26% currently of rural areas and
is need to be increased. Currently rural consumers spend 6% on household’s products
which are produced by HUL. This should be increased to 8%. This growth is possible only
with increasing disposable income of rural consumer. The Rural people need to channelise
their aspirational needs combined with functional needs. In rural areas the Functional Need
takes the First Stage.

Product Mix of HUL

HUL is India's largest marketer of Soaps, Detergents and Home Care products. It has the
country’s largest Personal Products business, leading in Shampoos, Skin Care Products,
Colour Cosmetics and Deodorants. HUL is also the market leader in Tea, Processed Coffee,
branded Wheat Flour, Tomato Products, and Ice cream, Soups, Jams and Squashes.

Home & Personal Care

• Personal Wash
• Fabric Wash
• Home Care
• Oral Care
• Skin Care
• Hair Care
• Deodorants & Talcs
• Colour Cosmetics

Foods

• Tea
• Coffee

17
• Branded Staples
• Culinary Products
• Ice Creams

Personal Wash

Soaps

Some of the big brands in Soaps in rural markets are Lifebuoy, Lux, Liril, Hamam, Breeze,
Dove, and Rexona.

1) Lifebuoy
Making a billion Indians feel safe and secure by meeting their
health and hygiene needs is the mission of Lifebuoy.
The world's largest selling soap offers a compelling health benefit
to the entire family. Launched in 1895, Lifebuoy, for over 100
years, has been synonymous with health and value.

The brick red soap, with its perfume and popular Lifebuoy jingle, has carried the
Lifebuoy message of health across the length and breadth of
the country.
The 2002 and 2004 relaunches have been turning points in its
history. The new mix includes a new formulation and a repositioning to make it
more relevant to both new and existing consumers. Lifebuoy is now a milled toilet
soap with a new health fragrance and a contemporary shape. The new milled
formulation offers a significantly superior bathing experience and skin feel. This
new mix has registered conclusive and clear preference among existing and new
users.
2) Lux
Lux stands for the promise of beauty and glamour as one of
India's most trusted personal care brands. Lux continues to be
a favorite with generations of users for the experience of a
sensuous and luxurious bath.

18
 Since its launch in India in the year 1929, Lux has offered a range of soaps in
different sensuous colors and world class fragrances. 2003 saw one of the biggest
milestones in the history of Lux. From being just a beauty soap of film stars, Lux
recognized the need for a compelling message about beauty that would resonate
with women of today.

Fabric Wash

The Indian fabric wash market consists of synthetic detergents (comprising bars, powder
and liquids) and oil-based laundry soaps. Some of the big brands in Detergents are Surf
Excel, Surf, Rin, Wheel (the number one detergent brand in India, and HUL's largest), 501,
Sunlight.

1) Wheel
Wheel is India's number one detergent brand. Launched in
1987, it cleans effectively with lesser effort, making a
laborious chore like washing light and easy. Moreover, Wheel
does not burn hands or harm clothes like some other
detergents, which contain a high percentage of soda.
Ever since its relaunch in 2001, with the new positioning of 'best clean with less
effort', Wheel has been growing strongly. Research showed that consumers seek
a solution to heavy duty laundry, like bed sheets and curtains. Developing on
this insight, wheel sought to eliminate the trouble of tough dirt or heavy-duty
laundry. Mass market consumers have welcomed the solution, making it the
number one.

2) Surf excel
A pioneer in the Indian detergent powder market, Surf Excel
has constantly upgraded Today Surf Excel offers outstanding
stain removal ability on a wide range of stains. This means that

19
 mothers now have the freedom to let their kids experience life without worrying
about stains.

Personal Care

The products that would be included in this category are as follows: -

1) Sunsilk.
Launched in 1964, Sunsilk is the largest beauty shampoo brand in
the country. Positioned as the 'Hair Expert', Sunsilk has identified
different hair needs and offers the consumer a shampoo that gives
her the desired results. The benefits are more compelling and
relevant since the variants are harmonised in terms of the product mix - fragrance,
colour and ingredients are all well linked to cue the overall synergy.

2) Clinic plus.
Clinic Plus Health shampoo was launched in India in the year
1987. It is India's largest selling shampoo, offering the five most
important hair health benefits: strengthens weak hair, prevents
hair breakage, softens rough dry hair, shine for thick and healthy
hair, and contains anti-dandruff ingredient.

Skin care

The products included in skin care rang are as follows: -

1) Fair n lovely.
A woman's passion for beauty is universal and catering to this strong
need is Fair & Lovely. Based on a revolutionary breakthrough in
skin lightening technology, Fair & Lovely was launched in 1978.
Fair n lovely is also very popular among the Rural women. It is
selling well in rural areas.

20
2) Ponds.
Ponds has been synonymous with skin care in India since 1947.The
impressive track record of Pond's began when There on the Pond, a
pharmacist from Utica New York, introduced 'Pond's Golden Treasure'
in 1846, a witch-hazel based wonder product. In 1914, Pond's Cold
Cream and Vanishing Cream marked the brand's evolution to a beauty
icon. In 1955 Pond's Extract Company merged with Chesebrough
Manufacturing and in 1987 Unilever purchased Chesebrough-Pond's.
By this time the Pond's brand had built up a powerful international
presence.

Foods and Beverages

The food and beverages include the following range of products: -

1) Brooke bond.
In a nation of tea drinkers, the one brand that signifies tea in India is
Brooke Bond – ever since the launch of Brooke Bond Red Label in
1903. It is India's single largest tea brand. It has touched millions of
consumers with a range of tea offerings appealing to the diversity of
their tastes. It has the strongest foothold amongst any of the tea brands
in India and touches the homes of over 500 million consumers.

2) BRU coffee.
Bru, launched in 1969, created history in the first year of launch by
growing to a record market share of 21%. Ever since, it has grown from
strength to strength. Bru has been instrumental in virtually creating the
entire Instant Coffee category as it exists today. It has been at the
forefront of most innovations in the Instant Coffee category - whether in coffee-

21
 chicory blends, refill packaging, vending operations, or more recently the Low-unit-
price packs.

Pricing strategy of HUL.

Hindustan Unilever has taken many initiatives over the decades to create markets in the
rural hinterlands. By marketing relevant products, at affordable prices. HUL aims at
providing rural consumer a price which is acceptable and affordable by them. HUL adopts
low unit pricing as it targets rural consumer. It sells products mostly in the price range of
1Rs – 10Rs. HUL has adopted a strategy which offers rural consumer Volume point to
Price point packages mostly priced at Rs 10 as it is better connected to Rural consumer.

The strategic price point of HUL is Rs5 and Rs 10 and the price at this points are not hiked
even with an increase in price of products. If products have to come up the order in the
rural purchase hierarchy, they have to be affordable. If rural India today accounts for about
half of detergents sales, it is because HUL has developed low-cost value-for-money
branded products, like Wheel. The company has also taken initiatives to create markets
even for apparently premium products, by offering them in pack sizes, like sachets, whose
unit prices are within the reach of rural consumers. Pricing helps in synchronizing the
expenditure of the Indian consumers with his daily stream of income.

For example, initiated in the 1980s, sachets (Rs.2, Re.1, or 50 paise) today constitute about
55% of Hindustan Unilever's shampoo sales. With media reach gradually increasing, rural
consumers today, where the media has its footprints, share the same aspirations with their
urban counterparts. HUL has responded to the trend with low unit price packs of even other
products as follows; -

Lux at Rs.5,

Lifebuoy at Rs.2,

Surf Excel sachet at Rs.1.50,

22
Pond's Talc at Rs.5,

Pepsodent toothpaste at Rs. 5,

Fair & Lovely Skin Cream at Rs.5,

Pond's Cold Cream at Rs.5

Promotion strategies of HUL.

HUL follows various media mix of conventional and non-conventional media for
promotions of its products in the rural markets. Hindustan Unilever has taken initiatives to
circumvent the limitation in communication channels, by innovatively leveraging non-
conventional media. Among them the most commonly used forms of media by HUL are
wall paintings, cinema vans, weekly markets (haat), fairs and festivals etc. The various
forms include following: -

1. Advertisements through T.V. and Radio which provides a wider coverage of

consumers.
2. Wall painting that are used to capture the attention of the audience and is an economic
medium. It uses wall paintings for its products as Wheel, Lifebuoy etc. The wall
painting of Lifebuoy is displayed.
3. Cinema theatres and vans as rural consumer's fascinated by cinema and it has great
impact on them and a wider reach. The cinema vans show popular movies, interspersed
with products advertisements.
4. Puppet shows where the puppets are used to communicate the ideas and values to
rural consumer and is an inexpensive medium.
5. Folk theatre is used for informing and educating people about some products through
Tamasha’s, skits and plays.
6. Weekly markets, fairs and festivals are parts and parcel of rural life. They give an
opportunity to address consumers, spread over many tiny hamlets, at one location.

23
7. Demonstrations are done about products at various occasions which are used to
demonstrate product benefits and also sell such products. Such demonstrations have
played a significant role in creating, for example, the detergents market in rural India.
In recent times, such demonstrations are being deployed by HUL to illustrate how
visible clean is not hygienic clean, and how using soap is essential to prevent easily
avoidable infections. Communication through fairs and festivals are backed by direct
consumer contact.

Distribution strategies of HUL.

In rural India particularly, availability determines volumes and market share, because the
consumer usually purchases what is available at the outlet, influenced very largely by the
retailer.

Hindustan Unilever Limited, has a distribution network which is one of their key strengths
that helps them reach their products across the length and breadth of this vast country. To
meet the ever-changing needs of the consumer, HUL have set up a distribution network
that ensures availability of all its products, in all outlets, at all times. This includes,
maintaining favorable trade relations, providing innovative incentives to retailers and
organizing demand generation activities among a host of other things.

Therefore, over the decades, Hindustan Unilever has progressively strengthened its
distribution reach in rural India, which today has about 33 lakh outlets. Direct rural
distribution in Hindustan Unilever began with the coverage of villages adjacent to small
towns. The company's stockists in these towns were made to use their infrastructure to
distribute products to outlets in these villages. But this distribution mode could only be
extended to villages connected with motorable roads, and it could cover about 25% of the
rural population by 1995.

The evolution of HUL's Distribution Network: -

24
The first phase of the HUL distribution network had wholesalers placing bulk orders
directly with the company. Large retailers also placed direct orders, which comprised
almost 30 per cent of the total orders collected. The company salesman grouped all these
orders and placed an indent with the Head Office. Goods were sent to these markets, with
the company salesman as the consignee. The salesman then collected and distributed the
products to the respective wholesalers, against cash payment, and the money was remitted
to the company.

The focus of the second phase, which spanned the decades of the 40s, was to provide
desired products and quality service to the company's customers. In order to achieve this,
one wholesaler in each market was appointed as a "Registered Wholesaler," a stock point
for the company's products in that market. The company salesman still covered the market
canvassing for orders from the rest of the trade. He would then distribute stocks from the
Registered Wholesaler through distribution units maintained by the company. The
Registered Wholesaler system, therefore, increased the distribution reach of the company
to a larger number of customers.

The highlight of the third phase was the concept of "Redistribution Stockist" (RS) who
replaced the RWs. 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.

HUL, has been at the forefront of experimenting with innovative methods to reach the
rural consumer.

1) Indirect coverage
Under the Indirect Coverage (IDC) method, company vans were replaced by vans
belonging to Redistribution Stockists, which serviced a select group of neighbouring
markets.
2) Operation Harvest
The reach of conventional media and, therefore, awareness of different products in
rural markets is weak. It was also not always feasible for the Redistribution Stockist
to cover all these markets due to high costs involved. Yet, these markets are important

25
 since growth opportunities are high. Operation Harvest endeavored to supplement the
role of conventional media in rural India and, in the process, forge relationships and
loyalty with rural consumers. Operation Harvest also involved conducting of product
awareness programs on vans.
3) Cinema van operations
These are typically funded by the Redistribution Stockists. Cinema Van Operations
have films and audio cassettes with song and dance sequences from popular films, also
comprising advertisements of HUL products.
4) Single Distribution Channel
For rural India, HUL has established a single distribution channel by consolidating
categories. In a significant move, with long-term benefits, HUL has mounted an
initiative, Project Streamline, to further increase its rural reach with the help of rural
sub-stockists. It has already appointed 6000 such sub-stockists. As a result, the
distribution network directly covers about 50,000 villages, reaching about 250 million
consumers.

Challenges faced by HUL in rural markets are: -

1) Dispersed Markets
Rural areas are scattered and it is next to impossible to ensure the availability of a
brand all over the country. Seven Indian states account for 76% of the country's
rural retail outlets, the total number of which is placed at around 3.7 million. HUL
reaches their product in these dispersed markets. Their coverage is around 85%-
90% in rural areas. District fairs are periodic and occasional in nature. HUL prefer
such occasions as they allow greater visibility and capture the attention of the target
audience for larger spans of time. The fairs at Pushkar, Ujjain, Kota and
Bulandsheher are major sources of attention for the rural buyer but aren’t
concentrated unlike urban markets. Advertising in such a highly heterogeneous
market, which is widely spread, is very expensive.
2) No Reachability
India's 6,27,000 villages are spread with 128 million households, the rural
population is nearly three times the urban. 700 million Indians may live in rural

26
 areas, finding them is not easy. Many rural areas are not connected by rail transport.
At least 50 % of rural roads are poorly surfaced, many are totally destroyed or
severely damaged by the monsoon and remain unserviceable, leaving interior
villages isolated. Thus, HUL faces difficulty in reaching their products to potential
rural consumers.
3) Infrastructure in rural areas
The use of bullock carts look inevitable for many years into the future. Of the 15
million carts in the country, 12 million are estimated to be in rural areas,
transporting about 6 million tons of freight per year. Camel carts operate in
Rajasthan and Gujrat in both urban and rural sectors. In Haryana, Punjab and
Western Up, buffaloes also are used for carts. These make the HUL’s product
available in rural markets but very slowly as it consumes time.

27
 CHAPTER – 3

RESEARCH METHODOLOGY

The Data for this project was collected through Primary and Secondary sources.

PRIMARY DATA

• It is essential to collect PRIMARY DATA to make sample survey. A successful and

the most popular technique of data collection is through a questionnaire. thus a
questionnaire was framed and distibuted manually among different people who are
residing in Mumbai

SECONDARY DATA:

• This Report is dedicated to Secondary information about company profile and various
decisions taken by the company regarding product line expansion. product line
pruning and various other matters related to product line I have collected this
information with the help of intemet and journals. This report gives you relevant
infomation about various activities laken by Hindustan Unilever limited.

DATA COLLECTION TOOL:

• I have collected all the information with the help of Journals and Secondary source.
• I have also taken many article on Hindustan Unilever to get complete knowledge of
the different strategies.
• With the help of Internet, I was able to get all the information and history of Hindustan
Unilever

SAMPLE PLAN

• Units People residing Mumbai

• Size 43 respondents.

ANALYSIS OF DATA

28
Three preliminaries should be followed for analyzing the data:

1. Editing
2. Classifying
3. Coding

The contents of data obtained in the study were carefully checked for any possible
inconsistencies or incompleteness. And then finally the data was interpreted to reach a final
conclusion.

29
 CHAPTER – 4

REVIEW OF LITERATURE

The Economic Times Article

HUL makes new game plan, forms crack teams to knock the wind out of Patanjali's
sails.

MUMBAI: Hindustan Unilever BSE 1.25 % has carved out 15 teams within the
organization for each category with separate targets in sales and innovations in an effort to
be more agile as it looks to fight nimbler rivals and mop up higher sales in a fast changing
consumer environment.

Each team called Country Category Business Teams or CCBTs have representatives from
all functions including R&D, sales and marketing, supply chain and finance and run as
independent groups with an entrepreneurial mindset, something that HULBSE 1.25 %
attributes as one of the key reasons for bucking the slowdown trend last quarter.

The new structure is in sharp contrast with the company’s earlier model of having central
marketing, brand and sales function team across categories

These are led by CCBT heads; most of them would be in early 30s and are fully empowered
to deliver the plan for the year. This has unleashed huge amount of trapped capacity. Our
job is to mentor and coach them,” HUL’s managing director Sanjiv Mehta told ET a day
after it posted an 8% rise in net sales with 4% volume growth, ahead of peers, including
Colgate, Dabur and Marico. “The functional representatives in the CCBT represent the
function and in turn dovetail CCBT agenda with the functional agenda.

About two years ago, the maker of Dove shampoo and Lux soap divided the country into
14 clusters - Winning in Many India’s - and added a fifth branch in central India to
accelerate sales in a relatively underpenetrated but high-growth market.

The company claimed its strategy of countering regional competition helped improve
market share for about 90% of its products. Just last year, HUL pruned its reporting layers

30
to make divisional heads report directly to their respective global function heads at
Unilever’s London headquarters as part of the parent’s global strategy to drive quick
decision making and cut rollout time of its innovations across markets.

GST IMPACT

HUL’s latest move comes at a time when the government is finalizing the nuts and bolts
of the new tax framework under GST, proposed to be rolled out from July. And most
companies including HUL expect some de-stocking of products in the trade due to GST,
albeit temporarily.

With parent Unilever recently announcing its target of expanding operating margins from
16.4% in CY16 to 20% in CY20, implying a 360-bps expansion, analysts expect HUL to
also plan for an accelerated margin expansion. India accounts for roughly 8% of Unilever's
sales and is the biggest among emerging markets for them.

“HUL’s new Assam factory has a ten-year excise duty exemption and has now started
production, we estimate that this can give them 70-80 bp of savings, assuming 8-10%
production shifts there,” wrote Arnab Mitra and Rohit Kadam of Credit Suisse in an
investor note adding that FY18 margins can expand by over 100 bps through potential cost
savings in logistics which can accrue along with some benefit of lower rates and input tax
credits under GST.

PATANJALI THREAT

With Patanjali's rise to a Rs 10,000 crore company in less than a decade, several MNCs
have shifted focus to the ayurveda sector. HUL, that launched Lever Ayush last year, is
also bringing a new brand Citra, an organic skin care brand from Indonesia and has also
rolled out natural’s variants under brands like Tresemme and Fair & Lovely.

We sensed that ‘natural’ will become a big play nearly 15 years back but it was a bit ahead
of time. Natural as a phenomenon is not just restricted to India but we are seeing this in
different parts of the world and are manifested in different ways such as chemical free,
31
organic, herbal, khadi or ayurveda.” said Mehta adding that the company has had an
incremental growth of Rs 12,000 crore in the past five years, bigger than the overall
turnover of most rivals in the country.

RURAL FOCUS

HUL gets more than a third of its sales from rural markets, which were growing twice as
fast than urban areas. But since the last two years, the pace of growth in the hinterlands
slowed down. HUL, however, feels it will pick up soon

The Hindu Business Line Article

Dabur India, Hindustan Unilever’s tech route to rural markets

July 14, 2013:

With urban consumers cutting back on their spending spree, fast-moving consumer goods
companies have redoubled efforts to tap into rural India in 2012-13. In their latest annual
reports, Dabur India and Hindustan Unilever (HUL) have both highlighted why the rural
markets are so critical and what they are doing to better their rural sales.

GOING TECHNICAL

HUL’s decade-old Project Shakti received a technology boost in 2012. About 40,000
Shakti Ammas were equipped with a basic smartphone. These smartphones had
specifically designed software enabled them to take and bill orders, manage inventory and
receive updates on promotional schemes run by the company. This improved their
efficiency The Shakti workforce rose to 48,000 in 2012, up by around 3,000 from the year
before. Project Shakti equips women with the basic entrepreneurial skills and facilities
needed to set up and market FMCG products.

32
If HUL depended on its Shakti Ammas to connect with consumers, Dabur India embraced
the idea of getting rural folk to sample products and experience the benefits for themselves.
The idea was to get word-of-mouth advertising of product benefits.

The company made the most of fairs and melas around the harvest seasons when
purchasing power is high. It also conducted school health camps to boost its toothpaste and
chyawanprash portfolio and beauty pageants, to showcase its ayurvedic beauty products.

That’s not to say the company ignored the power of the mobile phone. Dabur’s rural sales
force used mobile phones to report sales. Phones were equipped with maps showing the
demographics and market potential of each locality, to improve rural coverage. Over two
years, Dabur’s rural strategies saw it doubling the villages under its coverage to 30,091.

DISTRIBUTION

For any FMCG company, the efficiency and reach of its distribution systems is the most
important tool to improve profits and drive sales. In this regard, HUL has a giant coverage
reaching out to over 2 million outlets. To improve connect and with its distributors, HUL
set up a helpline for its distributors and retailers to address problems or questions quickly.

Dabur, meanwhile, armed more than half of its urban sales force with hand-held devices to
generate data, which is then used to decipher buying patterns and customize selling
strategies. IT has also been used to provide information to, and generate feedback from
doctors on Dabur’s formulations and ayurvedic products

The Business Standard Article

HUL to shift focus to rural markets, innovation and digital media In its annual report
for 2013-14,

Hindustan Unilever, India's largest fast-moving consumer goods company, has said in
coming months, innovation, rural distribution and digital media will be its priority areas.

HUL continues to face pressure on the volume growth front. For the quarter ended March,
volume growth fell to three per cent, the lowest in two years. In the three preceding

33
quarters, HUL's volume growth was four-five per cent, against six per cent for the quarter
ended March 2013.

HUL, analysts say, is determined to raise volume growth to levels seen a year ago.
Announcing the company's results for the quarter ended march this year, Chairman Harish
Manwani had said, "We will take all the necessary action to see how we can accelerate
growth in these challenging times. We will also step up our emphasis on consumer insight,
as that will give us clues with regard to consumer behaviour. This will be a critical
exercise."

HUL's strategy is evident in its just-released annual report. "Rural continues to be a key
area of focus. During the (2013-14) year, we reached out to 8,500 villages across India,
with an ambition to improve the health and hygiene of children, through school contact and
mohalla (neighbourhood) programmes. Also, we significantly stepped up investment in
digital media, which is expected to be the media channel of the future," the report said.
According to the report, HUL primarily enhanced its direct retail presence in rural areas,
adding 17,000 Shakti Ammas (female distributors) in 2013-14.

According to estimates, HUL's retail footprint is about two million stores in rural areas; to
ensure the right set of products reaches the right set of consumers in these markets, the
company directly covers about a half of these stores. HUL is also driving the 'perfect
village' initiative, through which consumers are educated about categories such as
conditioners, face-wash, body lotions, fabric conditioners and liquid hand-wash. The
initiative, which began in eight key states last year, is expected to be expanded this year.
The company is also focusing on innovation across categories, especially in oral care,
personal products and soaps & detergents, which account for about 80 per cent of its
business. The annual report says the company will step up innovation in the toothbrush and
toothpaste, deodorants, skin care, hair care and liquid detergent segments.

34
 CHAPTER - 5

Data Analysis

35
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 CHAPTER - 6

WHEEL’s STRATEGIES

WHEEL in rural markets

Wheel was launched as an Economy segment brand by HUL. It was launched in 1987. It
belongs to Fabric wash Segment of HUL.

Wheel includes under it the following brands:

1. Wheel Green bar

2. Wheel Active (Blue) bar
3. Wheel Green Powder
4. Wheel Active (Blue) Powder

Brand: - WHEEL, Logo is in shape of a wheel of cart i.e CHAKRA

Positioning of Wheel: - 'Best clean with less effort’.

It Cleans Effectively with lesser effort and lesser physical exertion. Wheel makes a
laborious chore like washing light and easy.

Difference: - ‘Tough on Dirt and soft on Hand.’

Wheel does not burn hands or harm clothes like some other detergents, which contain a
high percentage of soda. It has Active Radiant which makes it different from others. The
consumers seek a solution to heavy duty laundry, like bed sheets and curtains.

Developing on this insight, wheel sought to eliminate the trouble of tough dirt or heavy-
duty laundry. Mass market consumers have welcomed the solution, making it the number
one.

Effectiveness: - Wheel is effective as an Aspirational part at a low cost for rural consumer.

41
Communicated by:- The stars of rural India promoted this brand through Advertisements.
Firstly, it was advertised by a Hero who worked in the serial Buniad and now it is
communicated by famous film star ‘GOVINDA’

Wheel is also advertised by Wall paintings in Rural areas.

Wheel is also promoted through vans demonstrating its

usage and functions to rural consumer.

Promotions: - Wheel aims at fulfilling the aspiration of this segment of population. Wheel
follow certain promotion strategies they are; -

1. Buy Wheel and get Consumer offers as Get things free with the product. Wheel offers
to give ornaments, Gold, Scholarships for study, Household Utensils, White goods
free with the product. It also gives chance to Get a new flat for yourself.
2. Wheel also follows a strategy to promote its products by giving an offer to Buy 3 and
get 1 free. This ensures the customer to buy more. This forces consumer to decide and
store the product for one month.
3. Wheel undergoes Rural Based Activities to promote its products. Wheel offers
demonstrations to people about How to use it? Near the Wells and Bathing Ghaats.
Wheel also sponsors Film Shows in villages known as’Chitrahar’ to advertise its
products. The next is it also adopts Sampling operations in villages of offering free
samples to the consumers.

Pricing: - Wheel is priced at Rs 20 per Kg now. Previously, HUL priced the blue variant
of Wheel at Rs 22 per kg, just above the green variant priced at Rs 18 per kg. Wheel is now

42
available even in smaller packs ranging between 1Rs – 5Rs. The powder is available in
packs of 1Rs, 2Rs, and 5Rs and Bar is available for both 5Rs and 2Rs.

Expectation of rural areas: -Rural consumer needs smaller packs of products as there is
No Storage space in rural areas as in Urban and their Disposable Income is also low. The
Shopkeeper in rural areas provide disposable packs by cutting the bigger pack into smaller
one as needed by the consumer. E.g.; - The 2 Rs pack of Wheel powder is used by the rural
consumer to take it with them to the river and wash clothes. One pack cleans about 25
clothes. There is no additive required, it provides instant lather and is a sensory Quo for
Cleanliness. The Rural markets where there is Hard water that affects lather, they prefer to
use Wheel rather than an Oily Soap. E.g.: - In South and Western India, they prefer Wheel
because there is Hard water.

Wheel Jug Mug

Wheel Jug Mug was launched in the discount bars segment, by Hindustan Lever Ltd
(HUL) attempting to wade off competition that has emerged in this price category in
2001. It is a dishwash bar in the discount segment.

PRICING: - Wheel Jug Mug was launched at a low price point of Rs 10 for a 400 gm
bar. There was a competitive pricing strategy so far as the discount dishwash bars
segment is concerned.

“The strategic intent is to dominate the discount segment with Wheel Jug Mug. The mix
has the potential of becoming the branded market leader in the dishwash category in
smaller urban towns and rural India,” said Mr Sanjay Behl, marketing manager, HUL.
The targeted consumer falls in the income level of under Rs 4,000 per month salary, and
thus price is integral to the brand strategy.

The launch of Wheel Jug Mug offered an acceptable consumer price-value equation
which is a bigger trigger to conversion in low per capita income markets. “Wheel Jug
Mug increased penetration through its competitive price-value equation via-a-vis other
available products (brands/ proxy products) at that range.

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PROMOTIONS: -Incentivizing the trade channel by offering better margins, market
activation, visibility, consumer offers and such other novel concepts are all part of the
trade channel promotions

The company processed for defining new media vehicles to promote the product in rural
markets, where the only channel which is high on visibility is Doordarshan. Wheel is
promoted through a good communication strategy, market activation to distribution, live
product demonstrations, etc.

The marketing strategy is to exploit the full potential of the Wheel equity into logical
dish wash extension — given that consumer habit revolves around using cheap detergent
powders for washing dishes.

HUL is working on maximizing consumer value in every market segment and this will be
offered, as is appropriate, through the integrated brand Wheel

Relationship Marketing: The case of HUL

Hindustan Lever had launched in 1999 its relationship marketing exercise said to be the
first of its kind in Rural India by a major FMCG corporation. It is different from
conventional campaign through media hoardings, sponsored events, etc. It involves
building relationships with the consumers in rural areas through education programs,
home-to-home contacts and cinema shows.

Aim: The aim is to build sales for its personal care brands including that of Pepsodent, its
mass market toothpaste. In the toothpaste market the main competition was between HUL
and Colgate. According to the figures of July 1999, Colgate had a 50 % share of the market
(including all price ranges) down from 60 %. HUL had an overall share of 40 %. Pepsodent
was the fastest growing brand in its slot with annual growth rate of 22 percent.

Focus: The objective in rural areas is to tap first time users. Statistics include low usage
patterns. In China, about 90% of the people use toothpaste compared to 47% in India.
About 27% use toothpowder and only 20 % had visited a dentist. Even in the urban areas,

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where consumers have used toothpaste right from childhood, the overwhelming majority
uses toothpaste only once in the morning whereas teeth required brushing most at bed time.

Strategy:

1. Product: HUL introduced a 15 gm Pepsodent pack to target the first-time user. Also,
its up market brand Close up was introduced at retail outlets in suburban and rural
areas with a price tag of Rs. 3.50.
2. Campaign: The Operation Bharat Program. HUL’s door-to-door campaign in rural
areas, concentrates on educating the consumer by holding free dental camps. It also
had dental education program in association with New York University. In India, there
are scholarships for students in dental colleges for collaborating in research at such
centers. In Mysore, for instance, a dental check-up camp was conducted at all schools
(where the students belong to comparatively lower SECs) in July 1999. In two years
since 1996, some 12 lakh students have been covered by such check-ups. There is
Rural Hygiene Program, a counterpart to the urban one. It has a target of reaching 20
crore people in 3,50,000 Villages.
3. Door-to-Door Sales: About 10 million homes in rural India have been touched so far
and target for that year was 12 million. The project essentially involves selling a
discounted personal care kit containing mini-packs of shampoo, toothpaste, talcum
powder and face cream. The kit is sold at Rs. 15. Sold separately, the products would
together cost the consumer Rs. 27.
4. Cinema: After home-to-home contact and sales in villages during the day. HUL
concentrates on cinema time in the evenings. There are still villages which do not have
TV. Cinema shows are quite popular there.

Effects: The strategy has highly encouraging results. The market has become aware and
responsive for personal care products. Fair and Lovely cream was test launched in
Maharashtra for a target audience. About a year before the launch the use of the cream was
less than 1 % of zero in many villages. It shot up to 20% in one year. In the same market
shampoo use was about 6% and went up to 18% even if used once a week.

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Conclusion:

What is Relationship marketing?

Marketers are going beyond the transactional selling to establish that they are not merely
interested in an immediate sale but in building a long-term customer supplier relationship.

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 CONCLUSION

Rural Market is Gold Mine which is paved with Thorns but HUL has rightly tapped it.
However, there is a long way to go to capture all the rural markets. In Rural markets
company face various problems like

Underdeveloped People and Underdeveloped Markets, Lack of Proper Physical

Communication Facilities, Many Languages and Dialects, Dispersed Market, Low
Per Capita Income, Low Levels of Literacy, Different way of thinking of Rural
Consumer, etc. HUL was the first FMCG to tap rural markets and has generated huge
revenues from rural markets.

There were many other companies which entered rural markets and was successful and
gave competition to HUL some of them are Cavinkare which launched Chik Shampoo for
rural markets, ITC, Colgate, Nirma etc.

The key lies in understanding why, what and how of the rural consumer. It would be a
blunder to assume and apply the same principles as of urban marketing. Rural marketing
is completely different ball game – talk about its consumer tastes, competition,
demographics, communication media, socio-cultural milieu, or the infrastructure. The
spread and heterogeneity further complicate matters. One can conclude that Marketing in
the urban and the rural areas is different as product may vary in rural & urban area and the
marketing strategies to market the product is also different mainly the packaging and
distribution strategy in rural area is designed keeping in mind the rural consumer.

It is therefore apt to do a thorough groundwork before jumping headlong into the rural
markets.

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 RECOMMENDATIONS

HUL, a major FMCG to enter rural markets, but not the only one now. There are many
companies which entered rural markets. HUL needs to be competitive and keep on
updating its strategy to have a foothold in the Rural markets.

For India to maintain and improve economic growth it is imperative to improve rural
markets. Even today there is imbalance in rural development. Government and Marketers
have to undertake measures to improve the Rural markets.

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 CHAPTER - 7

QUESTIONAIRRE

1. What attracted HUL to rural areas?

Ans: - The potential of the Rural economy attracted HUL to enter rural markets. The
vast size of population and growing scope for these markets attracted HUL.

2. Which products of HUL have gone Rural?

Ans: - The list of products of HUL is very wide but to name few of brands that went
Rural are Lifebuoy, Lux, Liril, Hamam, Rexona in Soap segment. Wheel, Surf Excel,
Rin among detergents. Personal Care includes Fair&Lovely, Clinic Plus, Sunsilk,
Pepsodent, Close-up. Ponds in Skin care. Food & Beverages segment has Brooke Bond
Tea, Bru Coffee, Kisan Products Knorr Annapurna Salt,etc.

3. What are the Product strategies for rural markets?

Ans:- The product strategies has been described under Highlights but some as
Transactional Marketing , Relationship Marketing, Branding etc are important for rural
markets as Trust is the most important for Rural consumer in a particular product.

4. What are the Pricing strategies for rural markets?

Ans: - The price does not drive rural markets but is very important to influence Rural
Consumer. Price Points and Value of the product is very important for Rural Consumer.
Further the pricing strategies have been described under Highlights.

5. What are the Promotion strategies for rural markets that you follow?

Ans: - HUL uses various Conventional and Non-Conventional media for promotion of
its products in Rural areas. Some of them are Advertising through T.V. & Radio, Wall
paintings , Haats and Melas , Folk Theatre , Puppetry Shows etc. These are briefly
described under Highlights.

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6. What is HUL’s Distribution strategy for Rural markets?

Ans: - HUL has a created a wide Distribution Network in rural markets which has been
briefly explained under the Highlights.

7. How different is promotion strategies in Rural areas?

Ans: - It is completely different as Aspirations of rural consumer are completely

different. Urban Consumer can wait but Rural consumer wants instant gratification.
Promotion must inspire rural consumer and the product must be linked to their lives.

8. What is the importance of packaging in rural areas?

Ans: - Packaging is very important as it is the Biggest visual Clue to the Rural
consumer. It creates impact in their minds as the person can be illiterate or semiliterate,
the pack graphics, hygiene, Image create impression for rural consumer.

9. What are the problems faced in rural areas by HUL?

Ans: - The major problems faced in rural areas by HUL are Reachability due to
Unmotorable Roads, Flow of money is not on time, it’s just twice in a year as
investment is to be made by shopkeeper, Unorganized malls as Kirana store exists
,there is no one stop solution etc.

10. Who are HUL’s competitors in rural markets?

Ans: - As such there is no particular MNC who is in competition with HUL but there
are many small and unorganized competitor’s but in particular segments it faces
competitions from majors as in Fabric segment its Nirma, Ghadi etc. In personal wash
segment its JO, Chik shampoo, Velvette shampoo etc. Tea segment includes regional
players as Bagh Bakri in Gujrat, Milan in Maharashtra, Girnar tea etc.

11. Rural consumers have a unique profile. How does it creates problems for HUL
in Rural marketing?

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 Ans:- Rural consumers needs are socio-based they do not like much of jazz . They need
to be exposed to environment to settle way. HUL to offer serious products has to work
more on Emotional platforms for the things rural consumer get related to they accept
the products easily.

12. What is the contribution of rural markets to HUL’s turnover?

Ans:- The contribution or rural markets in turnover is 30% of the HUL’s turnover and
generates around 50 % of revenues.

13. Among the products\brands which HUL are selling in rural areas, which are the
most popular there?

Ans:- The some of the most popular brands of HUL in rural areas are Lifebuoy, Lux,
Ponds, Fair and Lovely, Wheel, Vim, Pepsodent, Brooke bond, Annapurna salt,
Sunsilk, Clinic Plus etc.

14. What projects have HUL undertaken in rural areas in recent times?

Ans:- HUL has undertaken various projects it main project is Project Shakti. Recently
it undertook Project Vindhya Valley in Madhya Pradesh in Joint venture with the State
Government.

15. What is the contribution of HUL to Rural development in India?

Ans:- The contribution of HUL to rural development has been significant as It has
expanded size of rural markets for other companies, It gave immense value to rural
population, It contributed to economic development of the country by tapping rural
markets. HUL focused on health & hygiene, education, women empowerment, and
water management in rural areas. HUL has also responded in case of national calamities
/ adversities and contributes through various welfare measures, most recent being the
village built by HUL in earthquake affected Gujarat, and relief & rehabilitation after
the Tsunami caused devastation in South India.

Thanking you

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 BIBLIOGRAPHY

1. Rural & Agricultural Marketing (2nd Edition, 2004) – Ramkishen.Y

2. Rural Marketing – C.S.G. Krishnamacharyulu and Lalitha Ramakrishna, published in

2002.

3. Marketing Management (10th Edition) – Philip Kotler

4. Marketing Management (2nd Edition) – Rajan Saxena

Websites:

1. www.indiainfoline.com
2. www.thehindubusinessline.com
3. www.google.com
4. www.HUL.com
5. www.indiantelevision.com
6. www.domain-b.com
7. www.blonnet.com

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