PROJECT REPORT ON:

RURAL MARKETING STRATEGIES OF HINDUSTAN UNILEVER

SUBMITTED BY:

NISHIT KOTHARI

ROLL NO: 6924

T. Y .BACHELOR IN MANAGEMENT STUDIES

(SEMESTER V)

SUBMITTED TO:

PROJECT GUIDE:

DR. PARUL SINHA

Academic Year: 2017-18

 DECLARATION

I, NISHITT KOTHARI from THAKUR COLLEGE OF

SCIENCE AND COMMERCE, Student of T.Y.B.M.S.
[BACHELOR OF MANAGEMENT STUDIES], hereby submit my
project report on RURAL MARKETING STRATEGIES OF
HINDUSTAN UNILEVER..
I also declare that this project which is partial fulfillment of the
requirement for the degree of T.Y.BMS (BACHELOR IN
MANAGEMENT STUDIES) offered by UNIVERSITY OF
MUMBAI is the result of my own efforts with the help of experts.

NISHIT KOTHARI

Date:
Place:
 CERTIFICATE

This is to certify that the project entitled is successfully done by

NISHIT KOTHARI during the Third year, fifth semester of BMS
(Bachelor of Management Studies) under UNIVERSITY OF
MUMBAI through THAKUR COLLEGE OF SCIENCE &
COMMERCE, Kandivali (E),
Mumbai- 400101.

Coordinator Project Guide Principal

Date:-
Place:-

Internal Examiner External Examiner

 ACKNOWLEDGEMENT

It gives me immense pleasure in presenting the project on

RURAL MARKETING STRATEGIES OF HINDUSTAN UNILEVER.

Firstly, I take the opportunity in thanking our very dear principal Dr. C.T.
CHAKRABORTY then I would like to thank the almighty and my parents
without whose continuous blessings, I would not have been able to complete
this project.
I would like to thank my project guide DR.PARUL SINHA for her great,
valuable opinions, advice and supporting me, giving me encouragement and
for providing me with the material and knowledge to make this project a
success. I convey my deep appreciation to her for sparing her valuable time
and efforts, so as to make me capable of presenting this project.
I am thankful to our college for all the possible assistance and support,
specially our library by making available the required books and internet
room which have proved useful to me in successful completing my project.
I hope that I have succeeded in presenting this project to the best of my
abilities.

Date:
Place:
Topic No. TOPICS Page No.

Chapter – 1
1.1 Executive Summary 1-2

1.2 Introduction to Rural markets. 3-4

1.3 Objective Of Study 5

Chapter – 2
2.1 Evolution of Rural marketing. 6
2.2 Rural Marketing Strategies. 7-19

2.3 Introduction of Hindustan Lever Limited. 20-22

2.4 Highlights of HUL Marketing Strategy. 23-35

2.5 Challenges faced by HUL. 36

Chapter – 3
3.1 Research Methodology. 37-38

Chapter – 4
4.1 Review of Literature 39-42

Chapter – 5
5.1 Data Analysis 43-48

Chapter – 6
6.1 Case on Wheel Strategies 49-52
6.2 Relationship Marketing Case: HUL 53-54
6.3 Conclusion. 55

6.4 Suggestions. 56

Chapter – 7
7.1 Questionnaire 57-59
7.2 Bibliography 60
 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 companies 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 have to 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 has to have good purchase value in order for it to be
purchased i.e. the product has to offer value for money. The product has to be
affordable and has to 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 has to be low in order 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 has to be kept in mind.
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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.

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.

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 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 lead 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 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.

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 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 favour rural development programmes. 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.

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 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 needs and wants of the
customers. It has products for child, young & adult, male & female, etc.so, it has to
differentiate its products taking into account the needs and demands of all the sectors of the
society.

Not, only product but it has to look upon the services and feed back from customers also.
It should do something to give after sales service and collect feed back 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

5
 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
Lever 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

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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 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.

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 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 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.

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(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

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

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 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.
Eg: 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:0 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.

6) Psychological Pricing:
Some smart sellers quote their prices that end in an odd number e.g. Rs. 99.95 paise. It
conveys two notions.
i. There is a discount or bargain
ii. It belongs to a lower price range.
Eg;- Bata Shoe Company has been using this price tactics since long. It is present in both
Rural and Urban markets.
a) Reference Pricing: Marketers position and sell products at higher prices by
endorsement of products by celebrities, placing product along with classy products,
referring to the purchases made by aspiration or associate group members or by stating that
the current price is lower than the original one.
Eg: A shampoo is referred to Re 1, Match box at 50 paise , etc.

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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’.
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 The main advantage of this system is that it facilitates market penetration in the interiors of
market. However, the firm must ensure is that it facilitates market penetration in the
interiors of the market. The firm must ensure that in the process, the motivation of the
earlier generation stockist is not destroyed due to overzealous and premature elevation of
the retailers into stockist.

III. Syndicated Distribution

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 crore 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.

Other Possible Experiments

Marketers can use the existing pattern with adaptations when necessary, they can also
undertake new experiments in the field of rural distribution. Some strategies are discussed
here.

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 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 not withstanding. 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:

• Indian market was largely sellers 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.

The current need is to activate and develop wholesaler of the adjoining market as a
distributor of products to rural retail outlets and build his loyalties to the company.

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It is necessary to adopt a conservative, go-slow approach. Overzealous marketers do not
like to depend on the uncertain loyalties of wholesalers. They may aggressively draw up
and implement direct service plans to reach retail outlets and village consumers. This will
adversely affect the interests of wholesalers.

(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 s profit motto. His viewpoints are evaluated wit
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 retailers 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 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.

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 The presence and sales of spurious brands is an ample testimony to this view. “Higher
retail margins with lower end consumer prices, supported by pack formats identical to the
original, these spurious brands sell on the premise of maximum retailer push though
maiming returns to the retailers.” No promotion, ads, customer pull .. the retailer does all.
The urban retailer has a limited role as a brand promoter. He cannot directly ,
recommend the brands. He has to intelligently drive home his recommendations, as urban
consumers do not trust him completely. It is through shelf displays and incentive offers that
he has to push the 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 harbinger 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'

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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

The haats are the oldest outlets to purchase households 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 week long
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.
(b) Implications to Marketers : Pradeep Kashyap, Director, Mart, who has conducted many
studies on these markets observed:
“These markets have high potential that corporate are now waking up to”.
They offer good scope for distribution. For urban marketers, who have stockist and
distributors that don’t service remote areas, this form of selling can be a boon. A simple re-
distributorship arrangement can be worked out.
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Hindustan Lever Limited.

Introduction.
Hindustan Lever 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 Rs.10,000 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 36,000 employees, including over 1,350 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 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 believes that an organization’s worth is also in the service it renders to the
community. HUL is focusing on health & hygiene education, women empowerment, and

20
water management. It is also involved in education and rehabilitation of special or
underprivileged children, care for the destitute and HIV-positive, and rural development.
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.

HUL STRATEGY.

The Rs 11,000 crore Hindustan lever (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 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.

21
HUL is also running a rural health programme – Lifebuoy Swasthya Chetana. The
programme endeavors to induce adoption of hygienic practices among rural Indians and
aims to bring down the incidence of diarrhoea. It has already touched 70 million people in
approximately 15000 villages of 8 states. The vision is to make a billion Indians feel safe
and secure. If Hindustan Lever straddles the Indian corporate world, it is because of being
single-minded in identifying itself with Indian aspirations and needs in every walk of life

22
 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
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.

Functional needs means the product required by consumer for a specified function. Eg:-For
Health & Hygeine – Lifebuoy , Clinic plus are the functional products. Aspirational need
means the product required by consumer for fullfiling an aspiration. Eg:- Lux is an
Aspirational Need its an Emotional Attachment to consumers.

HUL launched certain products which are Functional and Specified in Nature . It launched
Anti-Dandruff Shampoo- Clinic All Clear. It staged Health as a function and specifically
for removing Dandruff.

23
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
• Branded Staples
• Culinary Products
• Ice Creams
• Modern Foods ranges

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 a 100 years, has
been synonymous with health and value.

24
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.

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, Sunlig

25
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 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
26
and ingredients are all well linked to cue the overall synergy. The range comes in premium
packaging and design. The accent is on "It knows you, and hence knows exactly what your
hair needs

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.

The franchise also includes Clinic All Clear Total, first introduced in 1996. It is
a dual shampoo – it not only fights the last dandruff flake, but also adds back
lost nutrients to make hair healthy and beautiful. Clinic All Clear Total is a
dandruff solution for everyday use. It is also available in 1Rs Sachets for
convenience of rural consumers.

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 woman’s. It is selling well in rural areas.

27
2) Ponds.

Pond's 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 includes 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-chicory blends, refill packaging, vending
operations, or more recently the Low-unit-price packs.
28
Pricing strategy of HUL.

Hindustan Lever 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 Lever'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,

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.

29
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 Lever 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 theatre’s 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.
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.

30
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 Lever Limited, has a distribution network which is one of their key strengths
that help’s 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 Lever has progressively strengthened its
distribution reach in rural India, which today has about 33 lakh outlets. Direct rural
distribution in Hindustan Lever 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 :-

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,

31
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.

The second characteristic of this period we realized that the RS would be able to provide
customer service only if he was serviced well. This knowledge led to the establishment of
the "Company Depots" system. This system helped in transshipment, bulk breaking, and
as a stock point to minimize stock-outs at the RS level.
In the recent past, a significant change has been the replacement of the Company
Depot by a system of third party Carrying and Forwarding Agents (C&FAs). The C&FAs
act as buffer stock-points to ensure that stock-outs did not take place. The C&FA system
has also resulted in cost savings in terms of direct transportation and reduced time lag in
delivery. The most important benefit has been improved customer service to the RS.

32
The role performed by the Redistribution Stockists has also undergone changes over the
years. Financing stocks, providing manpower, providing service to retailers, implementing
promotional activities, extending indirect coverage, reporting sales and stock data,
screening for transit damages are some of the functions performed by the RS today.

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

At present, HUL's products, manufactured across the country, are distributed through a
network of about 7,000 redistribution stockists covering about one million retail outlets.
The distribution network directly covers the entire rural population.

In addition to the ongoing commitment to the traditional grocery trade, HUL is building a
special relationship with the small but fast emerging modern trade. Our scale enables us to
provide superior customer service including daily servicing, improving their range
availability whilst reducing inventories. We are using the opportunity of interfacing more
directly with our consumers in this retail environment through specially designed
communication and promotions. This is building traffic into the stores while yielding
high growth for our business.

An IT-powered system has been implemented to supply stocks to redistribution stockists on

a continuous replenishment basis. The objective is to catalyse HUL’s growth by ensuring
that the right product is available at the right place in right quantities, in the most cost-
effective manner. For this, stockists have been connected with the company through an

33
Internet-based network, called RS Net, for
online interaction on orders, despatches, information sharing and monitoring. RS Net
covers about 80% of the company's turnover. Today, the sales system gets to know every
day what HUL stockists have sold to almost a million outlets across the country. RS Net is
part of Project Leap, HUL's end-to-end supply chain, which also includes a back-end
system connecting suppliers, all company sites and stretching right upto stockists.

RS Net has come as a force multiplier for HUL Way, the company's action-plan to
maximise the number of outlets reached and to achieve leadership in every outlet, by
unshackling the field force to solely focus on secondary sales from the stockists to retailers
and market activation. HUL Way has also led to implementing best practices in customer
management and common norms and processes across the company. Powered by the IT
tools it has further improved customer service, while ensuring superior availability and
impactful visibility at retail points.

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 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 programmes on vans.

34
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.

35
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 this
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 Bulandshesher 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 Reachibility

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 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 severly 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 tones 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.
36
 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

37
SAMPLE PLAN

 Units. People residing Mumbai

 Size 43 respondents.

ANALYSIS OF DATA

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.

38
 CHAPTER – 4

REVIEW OF LITRETURE

The Economic Times Article

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

MUMBAI: Hindustan UnileverBSE 1.25 % has carved out 15 teams within the
organisation 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 reason 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 lead 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 Indias - 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
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.

39
GST IMPACT
HUL’s latest move comes at a time when the government is finalising 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 naturals 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 phenomena 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,
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 tha last two years, the pace of growth in the hinterlands
slowed down. HUL, however, feels it will pick up soon

40
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.

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 customise selling
strategies. IT has also been used to provide information to, and generate feedback from
doctors on Dabur’s formulations and ayurvedic products.

40
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
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
41
toothpaste, deodorants, skin care, hair care and liquid detergent segments.

Parent Unilever is setting up a deodorant-manufacturing plant in Khemgaon, Maharashtra,

at an investment of Rs 360 crore.
The thrust on innovation comes at a time when HUL is losing share in deodorants and oral
care markets. According to a presentation by rival Colgate last week, through the last two
years, HUL's share has consistently fallen in the toothpaste market; between January and
April this year, it stood at 21.5 per cent, against 22.8 per cent in 2013 and 23.8 per cent in
2012. Colgate, on the other hand, has increased its share in this segment from 54.5 in 2012
to 55.9 per cent in 2013 and 57.1 per cent in January-April this year.

In the deodorant space, Ahmedabad-based Vini Cosmetics' Fogg brand has raced ahead of
Axe, emerging as the new leader in this segment, sources say.

It is expected this year, HUL will mount a counteroffensive, through clutter-breaking

products (such as a Close-up whitening toothpaste) to regain lost ground, say persons in
the know.

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 CHAPTER - 5
Data Analysis
 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.
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’.

49
 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 give 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.

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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 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.
Eg;:- 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 Cleanlinees.
The Rural markets where there is Hard water that affects lather, they prefer to use Wheel
rather than an Oily Soap. Eg- 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.

51
 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.
It offer’s superior performance vis-a-vis the consumer’s current habit of dosing
detergent powder with ash to wash dishes. There are strongly entrenched barriers to
conversion amongst ash/ mud users, the mix had performed superior at an acceptable cost
vis-a-vis their practice for any conversion to happen.

PROMOTIONS :-Incentivising 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.

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 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 programmes,
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, 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 Programme. HUL’s door-to-door campaign in
rural areas, concentrates on educating the consumer by holding free dental camps. It also

53
had dental education programme 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 Programme, 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.
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.

54
 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.

55
 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.

56
 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.

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.

57
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, its 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?
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.

58
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?

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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