Rural Marketing Strategies - Hll

A PROJECT REPORT ON

RURAL MARKETING STRATEGIES. CONTEXT:- HLL

SUBMITTED TO

UNIVERSITY OF MUMBAI

BY

SHRUTI ASHOK BHATTER T. Y. B.M.S.

YEAR 2005-2006

THROUGH

TOLANI COLLEGE OF COMMERCE ANDHERI (EAST), MUMBAI – 400 093

Acknowledgement At the outset I would like to take the privilege to convey my gratitude to all those who co-operated, supported, helped and suggested me as to how the project could be completed. This project bears imprint of advices, from many people who were either directly or indirectly involved in it. The Internet has been a veritable treasure throve of information, the websites and the information they contained helped me to do the project in a much easier and better manner. I am also desirous of placing on record profound indebtness to my guide Prof. Vijaya Krishna, Tolani College of Commerce , Andheri for her valuable advices, guidance, precious time and support that she lent to me. I would also like to thank Mr. Shubhankar Bhattacharya, Sales Training Manager of HLL, for his time and valuable inputs in the course of my research.

DECLARATION

I Shruti Bhatter of Tolani College of Commerce of TYBMS (Sem V) hereby declare that I have completed this project on Rural Marketing Strategies (Context:- HLL) , for the Academic Year 2005 – 2006. The information submitted is true and original to the best of my knowledge.

Place: MUMBAI Date:

Shruti Bhatter

CERTIFICATE

I Prof. Vijaya Krishna hereby certify that Shruti Bhatter of Tolani College of commerce of TYBMS (Sem V) has completed its project tittled Rural Marketing Strategies (Context:- HLL) in the academic year 2005 2006. The information submitted is true and original to the best of my knowledge.

Prof. Vijaya Krishna

Dr. A. Rashid

Dr. Sheela Purohit

(Project Guide)

(BMS Co-ordinator)

(Principal)

Table of Contents Topic No.

TOPICS

Page No.

1.

Executive Summary

2.

8.

Introduction to Rural markets. History. Features of Indian Rural markets. Profile of Rural consumer. Evolution of Rural marketing. Current scenario of Rural Markets. Why Companies Go Rural?

9.

Problems in Rural marketing.

14-16

10.

Rural product strategies.

17-20

11.

Rural Pricing strategies.

21-22

Rural Promotion strategies.

23-26

Rural Distribution strategies. Introduction of Hindustan Lever Limited. Highlights of HLL Marketing Strategy. Challenges faced by HLL. Questionnaire. Case on Wheel Strategies. Relationship Marketing Case: HLL Smarter than one Imagines. Conclusion. Recommendations. Bibliography.

27-37

3. 4. 5. 6. 7.

12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23.

1-2 3 4–6 7 8-9 10 11-12 13-14

38-42 43-66 66-68 68-70 71-74 75-76 77-79 80 81 82

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. 1

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 HLL the major FMCG which was successful in penetrating in rural market has been discussed and its few cases are mentioned in the project.

2

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.

3

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.

History. At the time of independence in 1947, the rural markets were practically non-existent. They consumed what they produced. What they bought as manufactured goods (products) used to be only some salt, tea , tobacco, kerosene, gold and silver ornaments etc. For shelter they depended on the construction material available in the village; for agricultural implements, the blacksmith; for clothes, the weaver; for vessels, the potter. They went to local quacks and vaids for medicine and maternity. For fuel, fertilizer transport and ploughing, there was the cox and oxen. For water, either the pond or well or the wayward monsoons.

In the post Independence period considerable thinking has been laid by the Indian planners in developing the rural areas by giving substantial emphasis on promoting the social and economic status of rural people. The need for overall development in rural areas has been stressed in India planning all through the years. The era of rural development started with the Second Five Year Plan which emphasized the implementation of various community development projects in different sectors through the Panchayat Raj Institutions (PRI’s).

4

Even in 1940’s and 1950’s many manufacturers invested in rural markets. They were mainly consumer product manufacturers as Levers with Sunlight and Dalda; Geoffrey manners with Anacin; Union carbide with Eveready batteries and few others.

By the 1960’s there was a flood of other manufacturers in rural markets. The green revolution was started in 1960. With green revolution many companies like Siemens with a package of products for water drilling; marketers of fertilizers, pesticides, seeds, bicycles, motor cycles etc. took their products to rural consumers.

Later, in 1969, the government formulated schemes with direct intervention to assist the rural poor. In the subsequent years many programmes and schemes have been designed and floated in rural areas assessing the local needs and programme objective at micro level. Many of these development programmes have undergone considerable changes in implementation process observing setbacks at different levels of functionaries.

In late seventies, reviewing the efforts made to uplift the rural economy through various development programmes in successive five year plans, the policy on rural development has largely stressed on achieving the sustainable development within the broad objectives.

Since 1980’s India’s industrial sector had gained in strength and maturity. Its contribution to GNP increased substantially. Mean while due to the development programmes of Central and State governments, service organizations and socially responsible business groups like Mafatlal, Tatas, Birlas, Goenkas and others, the rural areas witnessed an all round socioeconomic progress.

The National Council For Applied Economic Research’s (NCAER), Market Information Survey of Household (MISH) shows that the 1980’s saw a faster improvement in the distribution of income in rural than in urban India. This trend accelerated from 1989-90 number of households with income over Rs 25000 per annum of nine million(around 50 million people), and above Rs 12500 per annum of 35 million households (around 160 million people). 5

The economic reforms of 1991-92 further accelerated the process by introducing competition in the markets. Steadily the rural market has grown for household consumables and durables.

Prominent rural markets in India in 1999.

STATE

BIHAR ANDRA PRADESH UTTAR PRADESH WEST BENGAL KERALA MAHARASHTRA KARNATAKA GUJARAT HARYANA PUNJAB

NUMBER OF VILLAGES 5,000 – 9,000 ABOVE 10,000 POPULATION POPULATION 1604 330 1474 313

TOTAL

1934 1787

1336

129

1465

1117 252 762 570 575 364 202

208 1007 192 100 75 74 14

1325 1259 954 670 650 448 216

6

Current Distribution of No of villages and population in villages Population

No of villages

% of total villages

Less than 200

92,541

15.6

200-500

127,054

21.4

501-1000

144,817

24.4

1001-2000

129,662

21.9

2001-5000

80,313

13.5

5001-1000

18,758

3.2

Total no of villages

593,154*

100.0

*Inhabited villages, total number of villages is 638, 691 .

Features of Indian Rural Markets •

Large and Scattered market:

The rural market of India is large and scattered in the sense that it consists of over 63 crore consumers from 5,70,000 villages spread throughout the country. •

Major income from agriculture:

Nearly 60 % of the rural income is from agriculture. Hence rural prosperity is tied with agricultural prosperity. •

Low standard of living:

The consumer in the village area do have a low standard of living because of low literacy, low per capita income, social backwardness, low savings, etc. •

Traditional Outlook:

The rural consumer values old customs and tradition. They do not prefer changes. •

Diverse socio-economic backwardness:

Rural consumers have diverse socio-economic backwardness. This is different in different parts of the country •

Infrastructure Facilities:

The Infrastructure Facilities like roads, warehouses, communication system, financial

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facilities are inadequate in rural areas. Hence physical distribution becomes costly due to inadequate Infrastructure facilities.

Profile of the Rural Consumer 1)

Low Literacy levels: It is estimated that the literacy level in Rural India is 45% as

compared to 52% for the whole country. The literacy rate is low so this comes in way for promotion. Therefore marketer cannot use Print media and Hoardings, he has to adopt Product Demonstrations.

2)

Low Income Levels: Though Rural incomes have grown in the past decade the per

capita incomes of rural consumer are low compared to urban counterpart. A large part of the income is spent on basic necessities, leaving a smaller portion for other consumer goods.

3)

Location pattern of rural consumers: India’s urban population is concentrated in

3,200 cities and towns, whereas the rural population is scattered over 638,667 villages. Of these, only 6,300 have a population of more than 5000 persons. More than three lakh villages are in the category of 500 people or less (55 percent of the total), and more than 1.5 lakh villages have 200 people or less( 25 percent of the total). Rural consumers therefore are scattered over a large area, unlike their Urban counterparts who are highly concentrated.

4)

Reference Groups: Typically, in a rural area the reference groups are primary

health workers, doctors, teachers and panchayat members. The village trader or the grocer, commonly called ‘Baniya’ or ‘Mahajan’ may also be an important influence in decision making of the rural customers. This is because the trader extends credit to the farmers. Today, another person who is considered a change agent is the rural bank’s officer or manager.

8

5)

Occupation: Typically, in a rural area the principal occupation is farming, trading,

crafts, and other odd jobs like plumbing, electric works etc. There are also primary heath workers and teachers. The different types of farming activities include growing crops, cattle and poultry farming. The basis for differentiation is obviously the size and ownership of land. Consumption patterns differ according to income levels.

6)

Media Habits: Rural people are fond of music and folklore. In rural Maharashtra a

popular form of entertainment is the Tamasha. Rural folk listen to the brave deeds of their hero Shivaji. Likewise, in Uttar Pradesh, Nautanki entertains the Rural customer. And then there are T.V, Radio and Video films.

7)

Other variables: Culture, language, religion, caste and social customs are some

other important variables for profiling a rural consumer. Rural consumers have a lot of inhabitations and tend to be rigid in their behavior. A company has to take intense care while targeting them

9

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 (HLL) saw rural markets as an opportunity and entered with Lifebuoy soap. Today HLL 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 HLL plan to extend their reach to almost 2.5 lakh villages in the next 5-6 years (2006-2007).

10

Current Scenario of rural market. Rural market - A world of opportunity GONE are the days when a rural consumer went to a nearby city to buy “branded products and services". Time was when only a select household consumed branded goods, be it tea or jeans. There were days when big companies flocked to rural markets to establish their brands. Today, rural markets are critical for every marketer - be it for a branded shampoo or an automobile. Time was when marketers thought van campaigns, cinema commercials and a few wall paintings would suffice to entice rural folks under their folds. Thanks to television, today a customer in a rural area is quite literate about myriad products that are on offer in the market place. Trends indicate that the rural markets are coming up in a big way and growing twice as fast as the urban, witnessing a rise in sales of hitherto typical urban kitchen gadgets such as refrigerators, mixer-grinders and pressure cookers. According to a National Council for Applied Economic Research (NCAER) study, there are as many 'middle income and above' households in the rural areas as there are in the urban areas. There are almost twice as many 'lower middle income' households in rural areas as in the urban areas. At the highest income level there are 2.3 million urban households as against 1.6 million households in rural areas. According to Mr. D. Shivakumar, Business Head (Hair), Personal Products Division, of Hindustan Lever Limited, the money available to spend on FMCG (Fast Moving Consumer Goods) products by urban India is Rs. 49,500 crores as against is Rs. 63,500 crores in rural India. As per NCAER projections, the number of middle and high income households in rural India is expected to grow from 80 million to 111 million by 2007. In urban India, the same is expected to grow from 46 million to 59 million. Thus, the absolute size of rural India is expected to be double that of urban India. Even in lifestyle products, rural India will be significant over next five years. There is a need to differentiate the brand according to regional disparities. The differentiation may not necessarily be in terms of product content. It may also be in terms of packaging, communication or association with the brand.

11

The brand has to be made relevant by understanding local needs. Even offering the same product in different regions with different brand names could be adopted as a strategy. At times it is difficult to pass on an innovation over an existing product to the rural consumer unlike his urban counterpart - like increased calcium or herbal content or a germ-control formula in toothpaste. According to Mr. Shivakumar, of HLL, the four factors which influence demand in rural India are - Access, Attitude, Awareness and Affluence. HLL has successfully used this to influence the rural market for its shampoos in sachets. The sachet strategy has proved so successful that, according to an ORG - MARG survey, 95 per cent of total shampoo sales in rural India is by sachets. The company had developed a direct access to markets through wholesale channel and created awareness through media, demonstration and on ground contact. This changed the attitude of the villagers.

12

WHY COMPANIES GO RURAL? Over the years Rural India has seen an impressive growth. Substantial improvement in purchasing power, increasing brand consciousness, changing consumption pattern and rapid spread of communication network in rural areas has presented a growing potential for the corporate sector. It’s better to target the rural market as it is growing by the day. Rural India is emerging as a large market for a number of goods and services – financial services, health care, education and telecommunication…the list seems to be endless. Today rural markets are as critical as urban markets for marketers. Here are some of the reasons:

Urban Markets Are Getting Saturated

There is cutthroat competition in urban markets, with a wide variety of choices of products. It’s becoming difficult for existing companies to maintain their market shares in urban markets. For example, it is reported that there are around 86 branded cosmetic soaps in the urban markets! So there is no point for a new company to enter the urban market. The rural markets provide better opportunities.

A Huge Untapped Market

With only around 1,00,000 of the 6,38,667 villages tapped so far, there is huge potential and market areas. With a rural population of more than 700 million, it is a huge market.

Rising Disposable Incomes

Good monsoons during the past 10 years have raised farmers’ incomes. Nonfarm sectors now account for almost 50% of total rural incomes. It’s a market that corporates cannot afford to ignore. Another reason for the rising disposable incomes of villages is that agricultural income is not taxed.

13

Remittances from Abroad.

Many households in rural India have one of their family members abroad , mostly in Gulf countries . People working there send their saving to their families in India , which is an additional source of Income.

Impact of the Media

The growing rich of the electronics media has created a huge change in the lifestyles of rural consumers because of TV programmes like soaps and other serials. Rural people are spending more on lifestyle products like lipsticks. Modi, Revlons, for instant, sells more lipstick in the rural market than in urban areas.

The Indian rural market with its vast size and demand base offers a huge opportunity that MNCs cannot afford to ignore. To expand the market by tapping the countryside, more and more MNCs are foraying into India's rural markets. Among those that have made some headway are Hindustan Lever, Coca-Cola, LG Electronics, Britannia, Standard Life, Philips, Colgate Palmolive and the foreign-invested telecom companies.

Problems in the Booming Rural Marketing Although the rural market does offer a vast untapped potential, it should also be recognized that it is not that easy to operate in rural market because of several problems. Rural marketing is thus a time consuming affair and requires considerable investments in terms of evolving appropriate strategies with a view to tackle the problems. The major problems faced are: •

Underdeveloped People and Underdeveloped Markets:

The number of people below poverty line has not decreased in any appreciable manner. Thus underdeveloped people and consequently underdeveloped market by and large characterize the rural markets. Vast majorities of the rural people are tradition bound, 14

fatalistic and believe in old customs, traditions, habits, taboos and practices. They face frustrations of intermittent, inconsistent electrical power , archaic , scarce and unreliable and telephony , non-feudal politico-business associations that hinder development efforts, deeply ingrained ideologies of caste hierarchy , gender inequality , and religious-communal difference , as well as significant deprivations of basic human needs. •

Lack of Proper Physical Communication Facilities:

Nearly fifty percent of the villages in the country do not have all weather roads. Physical communication of these villages is highly expensive. Even today most villages in the eastern parts of the country are inaccessible during the monsoon. Morever, 3,00,000 villages in the country have no access to telephones. •

Media for Rural Communication:

Among the mass media at some point of time in the late 50's and 60's radio was considered to be a potential medium for communication to the rural people. Another mass media is television and cinemas. Statistics indicate that the rural areas account for hardly 2000 to 3500 mobile theatres, which is far less when compared to the number of villages •

Many Languages and Dialects:

The number of languages and dialects vary widely from state to state, region to region and probably from district to district. The messages have to be delivered in the local languages and dialects. Even though the numbers of recognized languages are only 16, the dialects are estimated to be around 850. it is difficult for marketers to design promotional strategies in different languages and local dialects. Facilities such as phone , telegram , fax are less developed in villages , adding to communication problems faced by marketers in distribution of goods etc. •

Dispersed Market:

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. District fairs are periodic and 15

occasional in nature. Manufacturer and retailers 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. •

Low Per Capita Income:

Even though about 33-35% of gross domestic product is generated in the rural areas it is shared by 74% of the population. Morever, demand for goods in rural markets depends upon the agricultural situation, as agriculture is the main source of income and agriculture to a large extent depends upon the monsoon. Therefore the demand is not stable or regular. Hence the per capita incomes are low compared to the urban areas. •

Low Levels of Literacy:

The literacy rate is low in rural areas as compared to urban areas. This again leads to problem of communication for promotion purposes. Print medium becomes ineffective and to an extent irrelevant in rural areas since its reach is poor and so is the level of literacy. •

Prevalence of spurious brands and seasonal demand:

For any branded product there are a multitude of 'local variants', which are cheaper, and, therefore, more desirable to villagers. Rural consumers are cautious in buying and decisions are slow. They like to give a product a trial and only after getting personal satisfaction do they buy it again. •

Different way of thinking:

There is a vast difference in the lifestyles of the people. The kind of choices of brands that an urban customer enjoys is different from the choices available to the rural customer. The rural customer usually has 2 or 3 brands to choose from whereas the urban one has multiple choices. The difference is also in the way of thinking. The rural customer has a fairly simple thinking as compared to the urban counterpart. Life in rural areas is still governed by customs and traditions and people do not easily adopt new practices. 16

RURAL PRODUCT STRATEGIES

A Typical shop in rural India stocked with sachets and various products. 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 17

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.

HLL 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 semipucca 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.

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

I.

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: The same product is priced differently at different

locations through the cost of offering at each location is the same 21

c)

Time Pricing: Prices are varied by day or season. Eg: Umbrella is demanded in season so priced high during that time.

Penetration Pricing:

4)

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.

Value Pricing:

5)

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.

Psychological Pricing:

6)

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.

Media Mix for Rural markets The firm has to choose a combination of formal & non-formal media in the rural context. Media is the channel for promotion of products in rural markets. The possibilities are enlisted below:

23

A)

The Formal Organised Media:

1.

T.V.: T.V is the prime medium for delivering a campaign’s Advertising message.

It has the potential to become the primary medium for rural communication, 77% of the villages in India receive T. V. transmission & 27% of all rural people actually watch T. V. E.g – HLL uses DD1 to promote its brands in rural areas through advertisements.

2.

Cinema: 29% of rural people watch cinema as a part of their regular lifestyle.

Most villages have cinema house. Advertisements, documentaries combining knowledge and entertainment can be employed for rural promotion of products. Eg – In western Indian Villages film stars like Govinda have been used to promote “Wheel” of HLL.

3.

Radio: It is a well-established Expansions in broadcasting facilities have taken

place over the years medium in rural areas. Radio has a reach of 99% of rural India.. FMCG’s brands mostly use radio in rural marketing.

4.

POP’s: The POP’s point of purchase promotion tools area is quite useful in rural

markets. They should be designed to suit rural requirements, using symbols & bright colours.

5.

Print: Print is gaining dominance as a advertising medium because of the

increasing literacy levels amoung rural folk. Newspapers like Dainik Bhaskar, Navbharat times, Eenadu and Malayala Manorma are very popular in Indian villages.

6.

Outdoor: Many companies are using Hoardings, Wall Paintings, etc., as part of

their outdoor medium. Wall paintings are an effective and economical medium for advertising in Rural areas. Eg: Some FMCG’s like HLL use wall-paintings to capture the attendance of their audience for products as Wheel, Lifebuoy etc.

24

B)

Informal/Rural Specific Media:

1.

Music Records, Harikatha, and Puppet Shows: Music cassettes/records are a

very effective, inexpensive and appealing medium, which can be used in cinema houses etc. where people gather regularly. The traditional art forms such as puppet shows, harikathas render themselves for communication in rural society and can be used at melas.

2.

Melas and Haats:- According to the Indian Market Research

Bureau, around 48000 haats and 25000 melas are held in rural India every year and annual sales at melas amount to Rs.350 crore. Besides these melas, rural markets have the practice of fixing specific days in a week as Market Days when exchange of goods and services are carried out. NCAER estimates half of these brands sold at haats and melas are FMCG brands.

3.Wall Paintings:- Wall paintings are an effective and economical medium for advertising in rural areas. They are long-lasting, and remain as long as the weather permits. The message should be clear. The best way of attracting attention is to use bright colours that do not fade. Some FMCG’s like HLL, Pepsi, HMT use wall painting to capture the attention of their audience. A wall painting in rural area

4.Group Meeting, Demonstration, and House-to-House Campaigns: The promotion staff of the firm can effectively carry the product messages and demonstrations to the target audience at the group meetings. Promotion squads make house-to-house visits. They carry along product samples and promotion literature along with them. For eg:- HLL runs the program of Self-Help Groups (SHG), which operate like direct-to-home distributors.

25

5.Audio Visual Publicity Vans (AV Vans): The AV unit is very useful for rural communication. The firm can exhibit films, presentations, slide shows etc. The van can be used for sales campaigns in addition to promotions campaigns. They are quite popular with rural marketing firms.

6.Syndicated AV Vans: In recent years, rural publicity vans have become a purchasable service. Firms which afford to operate publicity vans of their own can utilize the syndicated AV vans service offered by independent agencies.

7.Interpersonal Media: They have a special merit since they facilitate two-way interactions. They also bring market feedback to the firm. Advantages of interpersonal media are they are segment specific, market specific and score high when it comes to participation and involvement of the audience.

8.Booklets/Calendars for Rural Areas: There are booklets in rural areas on folk heroes, folk songs and religious activities. There are also rural calendars (Panchang) which are effective promotion tools for rural advertisers. E.g Lifebouy prints Laxmi calendars with soap packaging.

26

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 subdistribution 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 27

keeps expanding. And at any point of time, enough retail points in variably hover around or particular stockist, hence the name ‘Satellite Distribution’.

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.

28

a)

Integrated marketing outlets: There has been some discussion

recently on developing outlets in the rural market to sell a variety of related products from the same point. The ‘package approach’ and ‘integrated marketing approach’ have been tried in some areas, particularly in the field of marketing agricultural inputs. Such grouping of products has some disadvantages. It may not necessarily contribute to distribution efficiency. Though both these functions are related to agriculture, they call for different types of resources, talents and facilities.

b)

Combining ‘in’ and ‘out’ operation in rural marketing: In some sectors, rural

marketing outlets are already combining the two operations of buying and selling. Cooperative marketing societies, in particular, help in the marketing of agricultural products and supply agricultural products and supply agricultural inputs to farmers. They also act as suppliers of credit in cooperatives with credit cooperative societies at the village level. But whether it is wise to adopt this pattern to cover the entire marketing structure in rural areas is a debatable point. The ‘in’ operations are quite different in nature from ‘out’ operations. The decision to combine or not will have to be taken depending on products and individual dealers. However, the distribution infrastructure is common to the ‘in’ as well as ‘out’ operations. One should always look for possibilities of combined planning and action covering the two operations.

c)

Rural supermarkets: It is quite likely that the supermarket

concept will sooner or later invade the rural market. Both cooperative supermarkets and departmental stores could function side by side.

29

Physical distribution

Physical Distribution is the process of delivering products to the marketing channels and consumers. It encompasses the various activities involved in the physical flow of the product, from the manufacturer to the consumer.

a)

Transportation

The transportation infrastructure remains underdeveloped in rural India. India has railway network, road transport, Waterways are an easy transport option in states like Kerala, Jammu and Kashmir etc.

Strategies: Many marketers, like HLL and LG use animal carts to carry their goods. Mobile traders are of immense help to FMCG companies that are penetrating rural India. There are around two lakh mobile cycle traders in rural India, who sell brands like lifebuoy etc..

b)

Communication

Communication plays a pivotal role in distribution for rural markets. Strategies: Companies like ITC are using Internet (e-choupal). Others like n-Logue Communications are harnessing the power of Internet for communication in rural areas. It provides e-mail services in vernacular languages. Companies that are in rural markets can take the help of such organizations and use them to communicate with dealers.

c)

Warehousing

Companies find difficult to find suitable godowns in many parts of rural India. There are no public warehousing facilities in the interiors of Rural India.

Strategies: HLL and ITC, the pioneers in rural marketing in India, have a fleet of delivery vans for rural distribution. The vans take the products to retailers in every nook and corner 30

of the country. It is better for companies to have their own mobile warehouses rather than using cooperative or central godowns. And thereby they save on the cost of constructing warehouses of their own.

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.

31

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.

32

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' 33

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) 1.

Merits 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 redistributorship arrangement can be worked out. 34

(v)

Melas and Fairs

This is another low cost distribution channel available to the marketers. It is comparable with urban events like Wills Trophy, India International Trade Fair (IITF), Sajavat or Cnsumex in which audience participation varies from a few thousands to a few lakh people. These melas are ancient and part of Indian cultural heritage.

Most of the fairs are associated with either a religious event or a festival. Among the most famous melas in the mighty Kumbh Mela at Allahbad (Triveni Sangam), Pushkar mela Rajasthan, Kullu Dusshera mela in Himachal Pradesh, Sonepur mela in Bihar and Makar Vilakku in Kerala. People from all over the country gather to taste the wonders of India. According to the Indian Market research Bureau (IMRB) around 8000 melas are held in rural India every year year and annual sales at melas amount to Rs.3,500 crore. According to Rural Scan (Quarterly News letter by MICA (Mundra institute of Communications, Ahmedabad) there are on an average, 1000 melas held in a state annually. The average duration of a mela is anywhere from one to 45 days.

At a mela there can be as many as 854 stalls. Some 18.4 per cent of these are local stalls (belonging to a few hundred villages), 40.8 per cent are regional (they belong to a few districts ) and 40.8 per cent are national. An interesting statistic is that the share of manufactured goods at melas in around 42 per cent.

Like urban events these melas need little or no pre-publicity. They have come to occupy a firm position in the rural calendar of festivities. Most of the fairs are associated with a religious event or a festival. As with religious events, the dates of most fairs are determined by the Hindu calendar, not the Gregorian one. Most fairs are expressions of local need to celebrate. A villager, who has attended it since childhood looks forward to it month in advance. A majority of the melas are held during October-November and January-April. This coincides with the Kharif and Rabi harvests when the Farmer’s purchasing power is high. With both money and leisure at hand, he is inclined to indulge his family with a day out at 35

the mela. He also looks forward to updating himself on the latest farming practices and on consumer goods. Visitors to fairs are thus highly receptive to try out new products and also come with enough money to do so.

Besides these melas, rural markets have the practice of fixing specific days in a week as Market Days when exchange of goods and services are carried out. Also, every region consisting of several villages is generally served by one satellite town where people prefer to go to buy their durable commodities.

The problems faced by companies in Rural Distribution are as follows:1) Multiple tiers, Higher Cost and Administration Problems: The distribution chain in the rural context requires a large number of tiers as compared to the urban context. In the rural context, at the minimum level the chain needs the village shopkeeper, the wholesaler, etc., whereas at the top level involves the manufacturer’s own warehouses, office operations at selected centers. Such multiple tiers make channel management a major problem area.

2) Scope for Manufacturer’s own Outlets Limited: Greater Dependence on Dealers: Scope for manufacturer’s direct outlets such as depots or showrooms is limited in rural markets unlike in the urban context since it is expensive and unmanageable.

36

3) Non-Availability of Dealers: There is also a problem of availability of dealers. Suitable dealers are limited even if the firm is willing to start from scratch and try out rank newcomers; the choice of candidates is limited.

4) Poor Viability of Retail Outlets: Sales outlets suffer from poor viability in the rural market. Scattered nature of market and the multiplicity of tiers in the chain use up the additional funds the manufacturer is prepared to part with. Moreover the business volume is not adequate enough to sustain the profitability of all groups and the retail tier is the worst sufferer.

5) Inadequate Bank Facilities: Due to lack of bank and credit facilities distribution in rural markets is handicapped. Rural outlets need banking support for 3 important purposes; -In facilitating remittances to principals and to get fast replenishment of stocks. -In receiving supplies ‘through bank’ (retiring documents with the bank). -In facilitating securing credit from banks. It is estimated that there is only one bank branch for every 50 villages.

6) Inadequate Credit Facilities from Banks: Another constraint is the inadequacy of institutional credit. Rural outlets are unable to carry adequate stocks due to lack of credit facilities. The vicious circle of lack of credit facilities leading to inadequate stocking and loss of business, finally result in poor viability of outlets, getting perpetuated.

37

Hindustan Lever Limited.

Introduction. Hindustan Lever Limited (HLL) 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. HLL 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 HLL's 36,000 employees, including over 1,350 managers, is to "add vitality to life." HLL 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 HLL 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.

HLL'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. HLL's distribution network, comprising about 7,000 redistribution stockists, directly covers the entire urban population, and about 250 million rural consumers.

HLL believes that an organization’s worth is also in the service it renders to the community. HLL is focusing on health & hygiene education, women empowerment, and

38

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. HLL has also responded in case of national calamities / adversities and contributes through various welfare measures, most recent being the village built by HLL in earthquake affected Gujarat, and relief & rehabilitation after the Tsunami caused devastation in South India.

HLL STRATEGY.

The Rs 11,000 crore Hindustan lever (HLL) is formulating a new strategy to expand its presence in India’s Rural markets. HLL 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. HLL 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. HLL 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, HLL 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. HLL's vision is to take this programme to 100,000 villages impacting the lives of over a 100 million rural Indians.

39

HLL 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

How HLL entered India?

Over 100 years' link with India.

In the summer of 1888, visitors to the Kolkata harbour noticed crates full of Sunlight soap bars, embossed with the words "Made in England by Lever Brothers". With it, began an era of marketing branded Fast Moving Consumer Goods (FMCG) in India. HLL was started in 1895 with the launch of Lifebuoy in 1895 and other famous brands like Pears, Lux and Vim. Vanaspati was launched in 1918 and the famous Dalda brand came to the market in 1937. In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India Limited (1933) and United Traders Limited (1935). These three companies merged to form HLL in November 1956; HLL offered 10% of its equity to the Indian public, being the first among the foreign subsidiaries to do so. Unilever now holds 51.55% equity in the company. The rest of the shareholding is distributed among about 380,000 individual shareholders and financial institutions. The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903, the company had launched Red Label tea in the country. In 1912, Brooke Bond & Co. India Limited was formed. Brooke Bond joined the Unilever fold in 1984 through an international acquisition. The erstwhile Lipton's links with India were forged in 1898. Unilever acquired Lipton in 1972, and in 1977 Lipton Tea (India) Limited was incorporated.

40

Pond's (India) Limited had been present in India since 1947. It joined the Unilever fold through

an

international

acquisition

of

Chesebrough

Pond's

USA

in

1986.

Since the very early years, HLL has vigorously responded to the stimulus of economic growth. The growth process has been accompanied by judicious diversification, always in line with Indian opinions and aspirations. In one of the most visible and talked about events of India's corporate history, the erstwhile Tata Oil Mills Company (TOMCO) merged with HLL, effective from April 1, 1993. In 1995, HLL and yet another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme Lever Limited, to market Lakme's market-leading cosmetics and other appropriate products of both the companies. Subsequently in 1998, Lakme Limited sold its brands to HLL and divested its 50% stake in the joint venture to the company. HLL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994, Kimberly-Clark Lever Ltd, which markets Huggies Diapers and Kotex Sanitary Pads. HLL has also set up a subsidiary in Nepal, Nepal Lever Limited (NLL), and its factory represents the largest manufacturing investment in the Himalayan kingdom. The NLL factory manufactures HLL's products like Soaps, Detergents and Personal Products both for the domestic market and exports to India. The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on the Foods and Beverages front. In 1992, the erstwhile Brooke Bond acquired Kothari General Foods, with significant interests in Instant Coffee. In 1993, it acquired the Kissan business from the UB Group and the Dollops Icecream business from Cadbury India. As a measure of backward integration, Tea Estates and Doom Dooma, two plantation companies of Unilever, were merged with Brooke Bond. Then in July 1993, Brooke Bond India and Lipton India merged to form Brooke Bond Lipton India Limited (BBLIL), enabling greater focus and ensuring synergy in the traditional Beverages business. 1994 witnessed BBLIL launching the Wall's range of Frozen Desserts. By the end of the year, the company entered into a strategic alliance with the Kwality Icecream Group families and in 1995 the Milkfood 100% Icecream marketing and distribution rights too were acquired. Finally, BBLIL merged with HLL, with effect from January 1, 1996. The internal restructuring culminated in the merger of Pond's (India) Limited (PIL) with HLL in 1998. The two companies had significant overlaps in Personal Products, Specialty Chemicals and 41

Exports businesses, besides a common distribution system since 1993 for Personal Products. The two also had a common management pool and a technology base. In January 2000, in a historic step, the government decided to award 74 per cent equity in Modern Foods to HLL, thereby beginning the divestment of government equity in public sector undertakings (PSU) to private sector partners. HLL's entry into Bread is a strategic extension of the company's wheat business. In 2002, HLL acquired the government's remaining stake in Modern Foods. In 2003, HLL acquired the Cooked Shrimp and Pasteurised Crabmeat business of the Amalgam Group of Companies, a leader in value added Marine Products exports.

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Highlights of HLL Marketing Strategy. There was an interview conducted with Mr. Shubramanyam Bhattacharya who is the Sales Team Manager of HLL Belapur Branch. He highlighted on the following points connected to rural markets where HLL serves. He said firstly that:Mission of HLL :- 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. HLL 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 HLL. 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. HLL 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.

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Product Mix of HLL. HLL 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. HLL 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.

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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. The new Lifebuoy is targeted at today's discerning housewife with a more inclusive "family health protection for my family and me" positioning. Lifebuoy has made a deliberate shift from the male, victorious concept of health to a warmer, more versatile, more responsible benefit of health for the entire family. At the upper end of the market, Lifebuoy offers specific health benefits through Lifebuoy Gold and Plus. Lifebuoy Gold (also called Care) helps protect against germs which cause skin blemishes, while Lifebuoy Plus offers protection against germs which cause body odour

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. Lux is 45

available in four different variants – Exotic flower petals and Jojoba Oil, Almond Oil and Milk Cream, Fruit Extracts and Honey in Milk Cream and Sandal Saffron in Milk Cream.

3)

Liril. For 28 years, freshness has been clearly identified with one name – Liril. Liril expressions have always set trends whether it is a bathing beauty in a waterfall or "Oof Yu Maa!" The energy and excitement levels associated with the brand have to be experienced to be believed with changing times. Presently, Liril Soft Aloe Vera & Lime, Liril Icy Cool and Liril Orange splash are making waves.

4)

Hamam. When it comes to soaps, Hamam is considered to be the most reliable option. Launched in 1934, Hamam has traditionally been a soap that takes care of your skin in a natural way. According to a research conducted By Indica Research in May 2003, 78% of Doctors in Tamil Nadu recommend

Hamam. Besides being a perfectly balanced soap, Hamam takes on a very modern and trendy look. Hamam's enhanced fragrance now provides a longer lasting freshness. The new attractive oval shaped Hamam comes in an attractive and modern packaging. The ingredients that are used in Hamam - Neem, Tulsi and Aloe Vera - by themselves have great therapeutic values. Hamam, the brand is very true to its tagline that says, "Everything in life is about balance".

5)

Breeze. Breeze Scent Magic is the soap which fulfills the aspirations of women of rural India. Breeze has offered them 'beauty at an affordable price', making them look and feel beautiful.

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Research and consumer visits have shown that the desire for great fragrance featured highest in the daily beauty regime of discount-soap users. Breeze explores this through the proposition of 'scent in a soap-Scent ka kamaal, ab sabun mein' and explicitly propagates the brand promise of the "Hameshaa kuchh extra". It delivers all this and still matches consumer's needs in terms of price and quantity offered, staying true to its word. Breeze has been enriched with 19 special scent oils, which ensure that one smells good for a long time through the day. Introduced in variants like Scent Magic, Scent Magic Lime, and Scent Magic Sandal, Breeze strives towards fulfilling the company's mission of being inventive in creating value.

6) Dove. Dove soap, which was launched by Unilever in 1957, has been available in India since 1995. It provides a refreshingly real alternative for women who recognize that beauty is not simply about how you look, it is about how you feel. The skin's natural pH is slightly acidic 5.5-6. Ordinary soaps tend to be alkaline, with pH higher than 9. Dove is formulated to be pH neutral (pH between 6.5 and 7.5) and to be mild on skin. This makes it suitable for all skin types for all seasons. While Dove soap bar is widely available across the country, Dove Body Wash is available in select outlets. Dove is not in much use in rural because it is very costly i.e. Rs.40 . But it is made available to rural consumers if demanded through Urban Channels.

7) Rexona. Rexona is one of India's pioneer brands in family soaps. Launched in 1947, it was positioned as a natural skin care soap to give silky, glowing skin. Since then the product has been constantly improved to keep up with the expectations of the consumers. Rexona is much in demand in rural markets of Southern India.In 1989 coconut was introduced in Rexona for the first time to strengthen the overall skincare appeal of the brand. Rexona has now been relaunched with cucumber extracts, in addition to coconut oil and moisturising

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milk cream. Its creamy lather purifies the skin, leaving it clear and flawless. It has also been enhanced with a perfume that lingers well after a bath. 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 HLL's largest), 501, Sunlight .

1)

Wheel.

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

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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

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. Surf Excel quick wash is powered with a path-breaking technologyit reduces water consumption and time taken for rinsing by 50%. It is a significant benefit, given the acute water scarcity in most of India. Surf Excel is available in 3 variants: Surf Excel Blue, Surf Excel Quick Wash and Surf Excel Automatic. So whatever be the need, Surf Excel hai na.

3)

Rin. Every Indian woman will tell you how her clothes dazzle with the power of Rin. The lightning flash mnemonic with the famous baseline 'Whiteness Strikes with Rin' is remembered till date. The dazzling flash of light has become a synonym

with the brand, ever since this iconic brand was launched in 1969. With the launch of 'Rin Advanced', the brand has elevated its relationship with its consumers to a higher plane, reaffirming their faith in the brand, by giving them superior 49

cleaning, incomparable white clothes and self-confidence which comes only from wearing spotless clean clothes! Rin has sub-brands like Rin Shakti and Rin Advanced.

4)

Sunlight.

Sunlight is a brand of HLL mostly popular in rural areas mainly Kerala and the states near coast lines. It is an Oil based laundry soap. It is available in form of Powder.

5) Vim. HLL also markets Vim Bar. Vim is a ‘bartan bar’ used to wash utensils. It is there in markets since 15 years.

6) Okay. Okay is also a brand of HLL. It is a low price product mainly used by rural consumers. It is available in the form of OKAY Powder and OKAY Bar. 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 50

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. 3) Pepsodent. Pepsodent, launched in 1993, was the first toothpaste with a unique anti-bacterial agent to address the consumer need of checking germs even hours after brushing. Pepsodent packs included a Germ Indicator in February-May 2002, which allowed consumers to see the efficacy in fighting germs for themselves. As a follow-up, in October 2002, Pepsodent offered Dental Insurance to all its consumers to demonstrate the confidence the company has in the technical superiority of the product. Pepsodent connects directly with kids and their parents. Pepsodent has always worked in the direction of an overall awareness of dental health. The relaunch campaign in October 2003 widened the context to "sweet and sticky" food and leveraged the truth that children do not rinse their mouths every time they eat, demonstrating that this makes their 51

teeth vulnerable to germ attack. Pepsodent's most recent campaign aims at educating consumers on the need for germ protection through the night. Pepsodent also includes a range of toothbrushes 4) Close up. Close-up is the original youth brand in India – the first brand targeting youth in the oral care market. Ever since its launch in 1975, Close-up has broken every rule in the book on how toothpastes should behave! Close-up was the first gel toothpaste to be launched in India and has led the gel toothpaste segment ever since. In 2004, Close-up was relaunched with a bang. And this time it was packed with the power of Vitamin Fluoride System – a powerful mix of Vitamins, Fluoride, Mouthwash and Micro

whiteners,

the

perfect

combination

of

ingredients for fresher breath and stronger, whiter teeth. Close-up is now the first Gel toothpaste with Fluoride in the Indian Market! Close-up also includes toothbrushes 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. Fair & Lovely is formulated with optimum levels of UV sunscreens and Niacinamide that is known to control dispersion of melanin in the skin. It is a patented and proprietary formulation, which has been in the market for 25 years. The UV components of the formulation are scientifically chosen and used at optimum levels to provide wide spectrum protection against UV rays of the sun. Specifically, this patented formulation offers a high

52

UVA protection, which is more relevant to Asian skin than plain SPF protection creams sold in the West. All the active ingredients in the Fair & Lovely formulation function synergistically to lighten skin colour through a process that is natural, reversible and totally safe. The brand today offers a substantive range of products, including Ayurvedic Fair & Lovely Fairness cream, Fair & Lovely Anti-Marks cream, Fair & Lovely Oil control Fairness Gel, Fair & Lovely for Deep Skin and Fair & Lovely Fairness Soap. The latest has been the Perfect Radiance, a complete range of 12 premium skincare solutions from Fair & Lovely. 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. From one man in a tiny home-made laboratory, to today's state of the art R&D facilities led from Bangkok, Mumbai, New York and Tokyo, the Pond's promise has remained the same across 58 countries - to deliver products that make a real difference to women's skin and the way they live their lives.

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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. To de-commoditise the tea category, Brooke Bond is focusing its efforts on building four powerful sub-brands, namely, Brooke Bond Taj Mahal, Brooke Bond Red Label, Brooke Bond Taaza & Brooke Bond 3 Roses. The range offers a full variety of propositions as well as price points to appeal to various sections. The tea is very popular in rural markets.

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. Bru coffee is very famous in rural markets of south. The Bru franchise also includes the Bru Roast & Ground, India's most popular Roast & Ground Coffee brand, and Bru Malabar Roast & Ground which is available in select geographies.

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3) Kissan. Acquired by Hindustan Lever Limited in 1994, the Kissan category consists of 'deliciously wholesome products for kids to grow up.' The Kissan range consists of ketchup and other sauces, jams, squashes and ready-to-drink products. For mothers and children, Kissan is today one of the most trusted brands in the country. Kissan products also sell in rural markets. Kissan continues to be a pioneer in the categories that it operates in.

4) Knorr Annapurna Salt. Knorr Annapurna Salt, first introduced in 1997, was relaunched in 2001 with a breakthrough technology, patented in India and several other countries. This technology helps encapsulate iodine with salt. It thereby prevents the loss of iodine from salt, either during its storage and transportation or cooking. Iodine deficiency is a serious health issue in India. About 278 million people are at risk of iodine deficiency disorders. Iodine deficiency not only leads to goiter, but also has an impact on the mental development of growing children. The International Council for Control of Iodine Deficiency Disorders (ICCIDD) has endorsed Knorr Annapurna Salt. Knorr Annapurna has also taken initiatives to educate consumers about the benefits of iodine and its effect on the mental development of growing children. In 2001, it was fortified with iron and vitamins. The benefit is very relevant because over 60% of women and children are iron deficient. The brand is doing well in Rural markets.

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Pricing strategy of HLL. Hindustan Lever has taken many initiatives over the decades to create markets in the rural hinterlands. By marketing relevant products, at affordable prices. HLL aims at providing rural consumer a price which is acceptable and affordable by them. HLL adopts low unit pricing as it targets rural consumer. It sells products mostly in the price range of 1Rs – 10Rs. HLL 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 HLL 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 HLL 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. HLL 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.

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Promotion strategies of HLL. HLL 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 nonconventional media. Among them the most commonly used forms of media by HLL 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 HLL 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.

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For Eg: in 1998-99, Hindustan Lever implemented a major direct consumer contact, called Project Bharat, which covered 2.2 crore homes. Each home was given a box, at a special price of Rs.15, comprising a low unit price pack of shampoo, talcum powder, toothpaste and skin cream, along with educational leaflets and audio-visual demonstrations. The project has helped eliminate barriers to trial, and has strengthened salience of both particular categories and brands.

In 2002, Hindustan Lever has launched a similar large-scale direct contact, called Lifebuoy Swasthya Chetana, which already covers 70 million people in 18,000 villages of 8 states. The project is intended at generating awareness about health and hygiene practices and specifically how a simple habit of washing hands is essential to maintaining good health. The initiative involves interaction with students and senior citizens who act as change agents or opinion leaders that influence rural consumer. The programme has as of now covered about 15000 villages in 8 states - Uttar Pradesh, Bihar, Jharkhand, West Bengal, Orissa, Madhya Pradesh, Chattisgarh and Maharashtra; it has already touched about 70 million people, imparting hygiene education to over 25 million children.

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Distribution strategies of HLL. 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, HLL 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 HLL's Distribution Network :The first phase of the HLL 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, 59

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. 60

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.

HLL 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, HLL'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, HLL 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 HLL’s growth by ensuring that the right product is available at the right place in right quantities, in the most costeffective manner. For this, stockists have been connected with the company through an 61

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 HLL stockists have sold to almost a million outlets across the country. RS Net is part of Project Leap, HLL'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 HLL 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. HLL 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.

HLL, 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

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awareness

programmes

on

vans.

3) Cinema van operations These are typically funded by the Redistribution Stockists. Cinema Van Operations have films and audio cassettes with song and dance sequences from popular films, also comprising advertisements of HLL products.

4) Single Distribution Channel For rural India, HLL has established a single distribution channel by consolidating categories. In a significant move, with long-term benefits, HLL 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.

5)

Operation Streamline

Distribution Model

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Information Flow In 1998, Hindustan Lever launched Project Streamline to further extend its distribution reach and stabilize the distribution system in villages upto the population of 2000people. . The pivot of Streamline is the Rural Distributor (RD), who has 15-20 rural sub-stockists attached to him. Each of these sub-stockists is located in a rural market. The sub-stockists then performs the role of driving distribution in neighboring villages using unconventional means of transport such as tractor, bullock cart, etc and transport

suitable to

interconnecting roads, like cycles & scooters . The sub stockist is known as the Star seller for that area. The star seller reaches the product to consumers in his area and collects the money from them as stocks are purchased by him on credit from the distributor. Hindustan Lever is thus trying to circumvent the barrier of motorable roads. As a result, the distribution network, as of now, directly covers about 50,000 villages, reaching about 250 million consumers. The company simultaneously uses the wholesale channel, suitably incentivising them to distribute company products. The Streamline system has extended direct HLL reach in rural markets to about 37% of India's rural population from 25% in 1995 and the number of HLL brands and SKUs stocked by village retailers has gone up significantly. HLL has in the recent past established a common distribution system in rural areas for all its products. Given the number of brands and their packs the rural retailer usually requires, one HLL representative can take all the products from the company portfolio that he needs. This common distribution system is now fully operational, under one Regional Sales Manager exclusively dedicated to rural markets of each region of the country.

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Project Shakti Hindustan Lever is implementing Project Shakti since 2001, whereby SHGs are being offered the option of distributing relevant products of the company as a sustainable incomegenerating activity. The model hinges on a powerful win-win relationship; the SHG engages in an activity which brings sustainable income, while Hindustan Lever gets an interface to interact and transact with the rural consumer. Distribution acquired a further edge with Project Shakti, HLL's partnership with Self Help Groups of rural women. The project, started in 2001, already covers over 5000 villages in 52 districts of Andhra Pradesh, Karnataka Madhya Pradesh and Gujarat, and is being progressively extended. The vision is to reach over 100,000 villages, thereby touching about 100 million consumers. The SHGs have chosen to adopt distribution of HLL's products as a business venture, armed with training from HLL and support from government agencies concerned and NGOs. A typical Shakti entrepreneur conducts business of around Rs.15000 per month, which gives her an income in excess of Rs.1000 per month on a sustainable basis. As most of these women are from below the poverty line, and live in extremely small villages (less than 2000 population), this earning is very significant, and is almost double of their past household income. For HLL, the project is bringing new villages under direct distribution coverage. Plans are being drawn up to cover more states, and provide products/services in agriculture, health, insurance and education. This will both catalyse holistic rural development and also help the SHGs generate even more income. This model creates a symbiotic partnership between HLL and its consumers, some of whom will also draw on the company for their livelihood, and helps build a self-sustaining virtuous cycle of growth. Project Shakti is now operational in 12 states across the country. Currently over 13,500 women entrepreneurs cover

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around 60,000 villages earning an average income of Rs 700 – 1000 per month doubling their household income. By the end of 2005 there would be around 20,000 shakti entrepreneurs reaching out to around 100,000 villages. The Project Shakti now contributes a little more than Rs 100 crore to the Lever topline, and is yet to break even. By the next year-end, HLL believes Shakti's contribution could double and the project could achieve cash break-even. Project Shakti Initiative in rural markets .

Challenges faced by HLL 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. HLL reaches their product in this dispersed markets. Their coverage is around 85%- 90% in rural areas. District fairs are periodic and occasional in nature. HLL

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

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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 HLL 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 HLL’s product available in rural markets but very slowly as it consumes time. 4) Prevalence of spurious brands and seasonal demand. For HLL’s product there are a multitude of 'local variants', which are cheaper, and, therefore, more desirable to villagers. Rural consumers are cautious in buying and decisions are slow. They like to give a product a trial and only after getting personal satisfaction do they buy it again. Rural markets there is seasonal demands of products as there are crops grown twice a year and people earn during this time and would like to buy the products. The demand for HLL’s products during this period is not high as rural consumers would not like to buy and store soaps and detergent instead they would prefer consumer durables.

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QUESTIONAIRRE 1.

What attracted HLL to rural areas?

Ans:-

The

potential

of

the

Rural

economy

attracted

HLL

to

enter

rural

markets. The vast size of population and growing scope for these markets attracted HLL.

2.

Which products of HLL have gone Rural?

Ans:- The list of products of HLL 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:- HLL 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 HLL’s Distribution strategy for Rural markets?

Ans:- HLL has a created a wide Distribution Network in rural markets which has been briefly explained under the Highlights. 68

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 HLL?

Ans:- The major problems faced in rural areas by HLL 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 HLL’s competitors in rural markets? Ans:- As such there is no particular MNC who is in competition with HLL 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 HLL 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. HLL to offer serious products has to work more on Emotional platforms for the things rural consumer get related to they accept the products easily.

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12. What is the contribution of rural markets to HLL’s turnover? Ans:- The contribution or rural markets in turnover is 30% of the HLL’s turnover and generates around 50 % of revenues.

13. Among the products\brands which HLL are selling in rural areas, which are the most popular there? Ans:- The some of the most popular brands of HLL 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 HLL undertaken in rural areas in recent times? Ans:- HLL 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 HLL to Rural development in India? The contribution of HLL 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. HLL focused on health & hygiene, education, women empowerment, and water management in rural areas. HLL has also responded in case of national calamities / adversities and contributes through various welfare measures, most recent being the village built by HLL in earthquake affected Gujarat, and relief & rehabilitation after the Tsunami caused devastation in South India.

Thanking you.

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WHEEL’s STRATEGIES

WHEEL in rural markets

Wheel was launched as an Economy segment brand by HLL. It was launched in 1987. It belongs to Fabric wash Segment of HLL. 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. 71

Developing on this insight, wheel sought to eliminate the trouble of tough dirt or heavyduty 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’.

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.

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3. Wheel undergoes Rural Based Activities to promote its products. Wheel offers demonstrations to people about How to use it? Near the Wells and Bathing Ghaats. Wheel also sponsors Film Shows in villages known as’Chitrahar’ to advertise its products. The next is it also adopts Sampling operations in villages of offering free samples to the consumers.

Pricing:- Wheel is priced at Rs 20 per Kg now. Previously , HLL 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 (HLL) 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.

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“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, HLL. The targeted consumer falls in the income level of under Rs 4,000 per month salary, and thus price is integral to the brand strategy.

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

HLL 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 HLL. 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 HLL and Colgate. According to the figures of July 1999, Colgate had a 50 % share of the market (including all price ranges ) down from 60 %. HLL 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: HLL 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. HLL’s door-to-door campaign in

rural areas, concentrates on educating the consumer by holding free dental camps. It also

75

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. HLL

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.

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SMARTER THAN ONE IMAGINES Urban markets are getting increasingly saturated- this is the new marketing reality. And in the beat with 200 million strong rural markets. There are more than 7 out of 10 rural households possess watches. One in 50 has a color television set. Seven out of every 100 households have an electric iron. Between 60 and 70 per cent of soap cases, casual and Polyvinyl Chloride foot wear, tooth powder and cooking oil are sold in the rural market. And this may, today accounts for over 70 per cent of the sales of tables, portable radios, bicycles and cigarettes. While that underlines the rural market’s unfulfilled potential, marketing to the rural consumer is a delicate balancing act between the familiar and unfamiliar. Rural marketing is every bit as sophisticated as urban marketing. Also as much rustic as urban marketing cannot be.

Segmentation: Marketers have used almost every trick in the book to slice up the urban consumer pie. From demographics, usage patterns to gender. When it came to the rural consumer base, however ‘rural consumer’ was held to be a good enough descriptor. Those who actually market products in rural India, However, have a different story to tell. “The original purpose of segment-specific targeting was a purely economic one” says Pradeep Lokhande, director, rural relations, Hindustan Lever Ltd. (HLL). In fact, in some cases, segment-specific marketing is even more important in rural areas than in urban. This is because of the heterogeneity. Cavinkare also practices economic segmentation, with different products to suit different budgets (the price-points game). Psychographic and pack size variation (of the product portfolio) together comprise its two pronged strategy.

Product Strategy: One way to handle the diversity is to diversify the offer basket. “Brand variants and line extensions play a very important role,” feels Lokhande, “but they must be selected and used judiciously”. The danger is that an extension can backfire if not managed well, particularly if the original variant of the brand has a strong image. Nobody wants a cheap or stripped down version of the real thing (if it is perceived to be such), though 77

people are pleased to have products and propositions tailor-made for them (which could be the same thing, handled with more sensitivity). The trick is to avoid making any one set of customers feel any less worthy than the other. Take HLL’s Lifebuoy for example, a low-priced carbolic soap that is often the first bath soap adopted by a rural consumer. HLL doesn’t sell it as cheap soap, but as a hygienic brand. Many companies are modifying their products and packaging to suit rural tastes. Texla television sets with sombre urban shades of grey and black did not attract the farmers. A new range in bright red and yellow was grabbed by the farmers. One company succeeded in targeting the same product at different markets simply by changing the packing. In Muslim-dominated villages of Uttar Pradesh, the company’s hair oil is sold in green packs. In Orissa, the same packs come in purple colour that is considered auspicious in the state. Another effective corporate strategy has been to sell products in smaller packs to suit small rural pockets. Hindustan Lever found that retailers in villages were cutting its large 100-gm soap into smaller pieces to sell. So it introduced small 75 gm soap. Now it has planned to sell Wheel detergent powder in sachets on the lines of Godrej’s Rupee one shampoo sachet which has been a runaway success.

Promotion: Promotional strategies have to create excitements so that villagers remember the products and their virtues. Geoffrey Manners participates in village meals where its salesman, dressed in white aprons to resemble doctors, extol the virtues of Anacin. Philips dresses up people to look like its bulbs and batteries and parades them through the villages. Brooke Bond adopts tea stalls which tempt villagers to sample its product by offering free cups of tea. Usha runs sewing schools in villages which offer short term tailoring courses for women. While targeting rural students, HLL uses promotional gifts to convey its concern for their general health and well- being. “We made students feel attached to the brand by distributing height charts along with the soap”, says Lokhande, “One must add some tangible value to a product to increase loyalty”. Marketers must also consider geographical variations. For instance, Lokhande once used a calendar featuring Lord Ganesha in Maharashtra, where the image is familiar. But a similar approach may not work in Punjab. “The promotion has to be specific to the population at large in a region”, says Lokhande. 78

The best of marketers, however, have graduated to formulating strategies based on knowledge of consumer psychographics, eventhough the intricacies involved can be quite baffling “Our brands do well in the South because they have names that are very regionspecific”, says B. Nandakumar, President, Marketing and Sales, Cavinkare Ltd. Each brand has special meaning in the minds of the target audience, in the context of the local culture, and the company is tuned into the psychological associations and attitude- triggers related to the name. Meera and Chik, for example, are its rural hot- sellers (while Nyle is for urban areas).

Distribution: The antiquated marketing methods of the past, when companies used to have a few big stockists and catered to expanding markets by increasing their number might have worked in an urban setting. It makes no sense to have a stockist in a village with a population of less than 5000 at regular intervals to restock small shops with its primary products. The strategy is called Operation Harvest. Colgate Palmolive has supply vans which offer free samples and screen video films on oral hygiene. These are supplemented by bicycle vendors who go to remote villages where vans cannot reach.

Reinventing the Wheel: It all goes to prove that basics of marketing remain constant. Says Nandakumar, “The core values of a brand must strike the consumer, which means understanding the psyche of the target audience”. Therefore, there is no need to reinvent the wheel for rural India.

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CONCLUSION Rural Market is Gold Mine which is paved with Thorns but HLL 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. HLL 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 HLL 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, sociocultural milieu, or the infrastructure. The spread and heterogeneity further complicate matters. One can conclude that Marketing in the urban and the rural areas is different as product may vary in rural & urban area and the marketing strategies to market the product is also different mainly the packaging and distribution strategy in rural area is designed keeping in mind the rural consumer. It is therefore apt to do a thorough groundwork before jumping headlong into the rural markets.

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RECOMMENDATIONS

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

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

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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.hll.com

5.

www.indiantelevision.com

6.

www.domain-b.com

7.

www.blonnet.com

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