1 Kigagami

Project Shakti Unilever Case Study

Case | HBS Case Collection | February 2005 (Revised June 2007)

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

by V. Kasturi Rangan and Rohithari Rajan

Abstract

With liberalization of India's economy and the opening up of markets to foreign multinationals such as Procter & Gamble, the Indian subsidiary of Unilever--Hindustan Lever Ltd. (HLL)--was under pressure to grow revenues and profits. HLL had a long and stellar record of market leadership in India (with market shares of nearly 60%) in categories such as soap, detergent, and shampoos. Documents HLL's innovative approach to penetrate rural markets (with populations less than 1,000), where two-thirds of India's population lives, with a scheme named "Shakti" (meaning empowerment). The central question is: How should the company scale Shakti and make it profitable?

Keywords: Economy; Market Entry and Exit; Business Subsidiaries; Revenue; Profit; Market Participation; Programs; Rural Scope; Poverty; Multinational Firms and Management; Consumer Products Industry; Beauty and Cosmetics Industry; India;

 

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Situation Analysis

Hindustan Unilever Limited is India‟s largest fast moving consumer goods and Services Company.

Over 70% population of India resides in villages so tap this market company need to develop economicallyviable and efficient distribution channels in villages.

Poor connectivity among villages and widely scattered consumers are main problems.

Recently it has launched a project „Shakti‟ to penetrate the rural market for FMCG

goods. About 12000women entrepreneurs had been appointed, covering nearly 50,000 villages in partnership with nearly 300

NGO‟s.

Company wants to scale its operation so to achieve a consumer base of around 100 million by 2006. It isestimated that this will require a network of about 25000 entrepreneurs.

HLL has also introduced Shakti Vani to create awareness in villages about personal health and communityhygiene.

Problem Identification

How to improve the distribution channels to gain a consumer base of 100 million by 2006.

The greatest challenge that Shakti face is costs and management control to make it profitable.

Building confidence/self-sufficiency among Shakti Entrepreneurs

To achieve the objective of contributing 15-

20% of HLL‟s revenue by 1lakh entrepreneurs

Project ShaktiChallenges:

Education level of indian women and cultural differences in different regions

Not many microfinance companies are interested in rural areas because of low income level of population.

Scaling involves high process costs

More human resource needed to train people to become entrepreneurs and maintain them

Support needed from various sectors of government

Cultural issues like language and communication

Almost 10-15% of 

Shakti‟s

revenues belonged to HR costs, a major concern

Lack of confidence of entrepreneurs to invest because of past failures

Not many SHGs to collaborate with

Advantages:

New markets can be tapped

Even without the direct retail outlet channel final customer can be reached

A more personalized service

Preference to Entrepreneurs

o

Credit was also given to regulars

o

iShakti and Shakti Vani created a loyal customer base and improved market penetration as

visibility of HLL‟s products increased

o

Discounts were given to consumers

o

Creating a network , passing on part of profit to another person who sells your goods atanother place

MarketingManagement|06/09/2010

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