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8/7/2019 43471778 a Project Report on Hul
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Rural Marketing Strategies
HUL
- 1 -
A PROJECT REPORT ON
RURAL MARKETING STRATEGIES.
CONTEXT:- HUL
SUBMITTED TO
With Combined Efforts of:-
Kamakshi Bakshi
Neha Yadav
Bipin Khanna
Ankan Goshal
Sidhartha Maithy
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Acknowledgement
Atthe outsetWe would liketo taketheprivilegeto convey our gratitudeto all
those who co-operated, supported, helped and suggested us as to how the
project could be completed. Thisproject bears imprint of advices, from many
people who wereeither directly or indirectlyinvolvedinit.
We would also liketo thank Mr. Mukesh Ranjan, Territory Sales Officer of HUL,
for histime and valuableinputsinthe course of my research.
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Table of Contents
Topic
No.TOPICS Page No.
1. Introduction to Rural markets. 13. Current scenario of Rural Markets. 5
5. Introduction of Hindustan Lever
Limited.
7
6. Highlights of HUL Marketing Strategy. 8
7. Challenges faced by HUL. 9
8. Case on Wheel Strategies. 11
9. Relationship Marketing Case: HUL 15
10. Conclusion. 1811. Recommendations. 19
12. Bibliography. 20
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Introductionto rural markets.
The rise of rural markets has been the most important phenomenon of the
1990s, providing volume growth to all leading companies. Many
corporates have been trying to get agrip on rural market. But challenges
are many:how to make the product affordable, how to penetratevillages
with small populations, connectivity, communications, language barriers,
spurious brands, etc.
Marketers and manufacturers are increasinglyaware of the burgeoningpurchasing power, vast sizeand demand base of the once neglected
Indian hinterland. Efforts are now on to understand theattitude of rural
consumers, and to walk their walkand talk their talk. The marketing mix
of many companies is now being tailored to rural tastes and lifestyles.
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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 onlya 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 forevery marketer - be it fora branded
shampoo oran 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, todaya
customer in a ruralarea is quiteliterateabout myriad products that are
on offer in the market place.
There is a need to differentiate the brand according to regional disparities.
The differentiation may not necessarily be in terms of product content. It
mayalso be in terms of packaging, communication orassociation with the
brand.
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 overan existing product to the rural consumer unlikehis urban
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counterpart - like increased calcium orherbal content oragerm-control
formula in toothpaste.
According to Mr. Mukesh Ranjan, of HUL, the four factors which
influence demand in rural Indiaare - Access, Attitude, Awareness and
Affluence. HUL has successfully used this to influence the rural market
for its shampoos in sachets. The sachet strategyhas 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 thevillagers.
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Hindustan Unilever Limited.
Introduction.
Hindustan Unilever Limited (HUL) is India's largest Fast Moving
Consumer Goods company, touching thelives of two out of three Indians
with over 20 distinct categories in Home & Personal CareProducts and
Foods & Beverages. Theyendow the company witha scale of combined
volumes ofabout 4 million tonnes and sales of Rs.10,000 crores.
HUL is also one of the country's largest exporters; it has been recognised
as a Golden Super Star Trading House by the Government of India
HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair &
Lovely, Pond's, Sunsilk, Clinic Plus, Pepsodent, Close-up, Lakme,
Brooke Bond, Kissan, Knorr-Annapurna, Kwality Wall's arehousehold
names across the countryand span many categories - soa ps, detergents,
personal products, tea, coffee, branded staples, ice cream and culinary
products. Theyare manufactured in close to 80 factories. The operations
involve over 2,000 suppliers and associates.
HUL's distribution network, comprising a bout 7,000 redistribution
stockists, directly covers the entire urban population, and a bout 250million rural consumers. HUL believes that an organizations worth is
also in the service it renders to the community. HUL is focusing on health
& hygieneeducation, women empowerment, and water management. It is
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also involved in education and rehabilitation of special or underprivileged
children, care for the destituteand HIV-positive, and rural development.
HUL has also responded in case of national calamities / adversities and
contributes through various welfare measures, most recent being thevillage built by HUL in earthquake affected Gujarat, and relief &
rehabilitation after the Tsunami caused
devastation in South India.
HUL STRATEGY.
The Rs 11,000 crore Hindustan lever (HUL) is formulatinga new strategyto expand its presence in Indias Rural markets. HUL is oneamong those
companies in the country that derives huge revenues (over 50%) from the
ruralareas. 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 ruralareas. HUL has shifted its rural markets strategy. Earlier
each business division of the company dealt with the rural market on an
individual basis; now the shift in strategy means the company will deal
with rural markets as a single organization to achievegreater penetration
and sales. This approach is expected to lead to better cohesion, greater
pushand deeper penetration which would eventually lead to better sales.
HUL officials say it is not enough that individual business divisions push
their own strategies for rural market; the company willhave to work in
unison in order to achievea balanced growth. Over thelast threeyears the
company has embarked on an ambitious programme, Shakti. Through
Shakti, HUL is creating micro-enterprise opportunities for rural women,
thereby improving their livelihood and the standard of living in rural
communities. Shakti also includes healthand hygieneeducation through
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the Shakti Vani Programme, and creatingaccess to relevant information
through the i-Shakti community portal. The programme now covers about
50,000 villages in 12 states. HUL's vision is to take this programme to
100,000 villages impacting thelives of overa 100 million rural Indians..
Challenges faced by HUL in rural markets are:-
1) Dispersed Markets
Rural areas are scattered and it is next to impossible to ensure the
availability ofa brand all over the country. Seven Indian states account
for 76% of the country's rural retail outlets, the total number of which isplaced at around 3.7 million. HUL reaches their product in this dispersed
markets. Their coverage is around 85%- 90% in ruralareas. District fairs
are periodic and occasional in nature. HUL prefer such occasions as they
allow greatervisibilityand capture theattention of the target audience for
larger spans of time. The fairs at Pushkar, Ujjain, Kotaand Bulandshesher
are major sources ofattention for the rural buyer but arent concentrated
unlike urban markets. Advertising in suchahighlyheterogeneous market,which is widely spread, is veryexpensive.
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 maylive in
ruralareas, finding them is not easy. Many ruralareas 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 remainunserviceable, leaving interior villages isolated. Thus HUL faces
difficulty in reaching their products to potential rural consumers.
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3) Infrastructure in rural areas
The use of bullock carts look inevitable for manyyears into the future . Of
the 15 million carts in the country , 12 million areestimated to be in rural
areas ,transportingabout 6 million tones of freight peryear. Camel cartsoperate 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 HULs product available in rural markets but very slowlyas it
consumes time.
4) Prevalence of spurious brands and seasonal demand.
For HULs product therearea multitude of'localvariants', whichare
cheaper, and, therefore, more desirable to villagers. Rural consumers are
cautious in buyingand decisions are slow. Theylike to givea product a
trialand onlyaftergetting personal satisfaction do they buy it again.
Rural markets there is seasonal demands of products as thereare crops
grown twiceayearand peopleearn during this timeand would like to
buy the products. The demand for HULs products during this period is
not highas rural consumers would not like to buyand store soaps and
detergent instead they would prefer consumer durables.
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`
WHEELs STRATEGIES
WHEEL in rural markets
Wheel was launched as an Economy segment brand by HUL. It was
launched in 1987. It belongs to Fabric wash Segment of HUL.
Wheel includes under it the following brands:-
1. Wheel Green bar
2. Wheel Active(Blue) bar
3.Wheel Green Powder
4.Wheel Active(Blue) Powder
Brand:- WHEEL, Logo is in shape ofa wheel of cart i.e CHAKRA
Positioning of Wheel :- 'Best clean withless effort' .
It Cleans Effectively withlessereffort and lesser physicalexertion. Wheel
makes alaborious chorelike washinglight and easy.
Difference :- Tough on Dirt and soft on Hand.
Wheel does not burn hands orharm clothes like some other detergents,
which contain a high percentage of soda. It has Active Radiant which
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makes it different from others. The consumers seeka solution to heavy
dutylaundry, like bed sheets and curtains.
Developing on this insight, wheel sought to eliminate the trouble of tough
dirt orheavy-duty laundry. Mass market consumers have welcomed thesolution, making it the number one.
Effectiveness:- Wheel is effectiveas 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 theyare;-
1. Buy Wheel and get Consumer offers as Get things free with the
product. Wheel offers to give ornaments, Gold, Scholarships for study,
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Household Utensils , White goods free with the product. It also give
chance to Get a new flat foryourself.
2. Wheelalso follows a strategy to promote its products bygivingan offer
to Buy 3 and get 1 free. This ensures the customer to buy more. Thisforces consumer to decideand store the product for one month.
3. Wheel undergoes Rural Based Activities to promote its products.
Wheel offers demonstrations to people a bout How to use it? Near the
Wells and Bathing Ghaats.
Wheel also sponsors Film Shows in villages known asChitrahar to
advertise its products. The next is it also adopts Sampling operations in
villages of offering free samples to the consumers.Pricing:- Wheel is priced at Rs 20 per Kg now. Previously , HUL priced
the bluevariant of Wheelat Rs 22 per kg, just above thegreen variant
priced at Rs 18 per kg.
Wheel is now availableeven 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 ruralareas 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 oneas 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 Riverand wash clothes. One pack cleans about 25
clothes. There is no additive required, it provides instant latherand 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 Southand Western
India they prefer Wheel because there is Hard water.
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Wheel Jug Mug
Wheel Jug Mug was launched in the discount bars segment, by Hindustan
Lever Ltd (HUL) attempting to wade off competition that has emerged in
this price category in 2001. It is a dishwash bar in the discount segment.PRICING:- Wheel Jug Mug was launched at alow price point of Rs 10
fora 400 gm bar. There was a competitive pricing strategy so faras the
discount dishwash bars segment is concerned.
The strategic intent is to dominate the discount segment with Wheel Jug
Mug. The mix has the potential of becoming the branded market leader in
the dishwash category in smaller urban towns and rural India, said MrSanjay Behl, marketing manager, HUL.
The targeted consumer falls in the income level of under Rs 4,000 per
month salary, and thus price is integral to the brand strategy.
The launch of Wheel Jug Mug offered an acceptable consumer price-
valueequation 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 offers superior performancevis-a-vis the consumers 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 superiorat an acceptable cost vis-a-vis their practice forany
conversion to happen.
PROMOTIONS :-Incentivizing the trade channel by offering better
margins, market activation, visibility, consumer offers and such other
novel concepts areall part of the trade channel promotions
The company processed for defining new mediavehicles to promote the
product in rural markets, where the only channel which is high on
visibility is Doordarshan.
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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 habitrevolves around using cheap detergent powders for washing dishes.
HUL is working on maximizing consumervalue in every market segment
and this will be offered, as is appropriate, through the integrated brand
Wheel.
Relationship Marketing: The case of HUL.
Hindustan Leverhad launched in 1999 its relationship marketingexercise
said to be the first of its kind in Rural India by a ma jor FMCG
corporation. It is different from conventional campaign through media
hoardings, sponsored events, etc It involves building relationships with
the consumers in rural areas through education programmes, home-to-
home contacts and cinema shows.
Aim:
The aim is to build sales for its personal care brands including that of
Pepsodent, its mass market toothpaste. In the toothpaste market the main
competition was between HUL and Colgate. According to the figures of
July 1999, Colgatehad a 50 % share of the market (including all price
ranges ) down from 60 %. HUL had an overall share of 40 %. Pepsodent
was the fastest growing brand in its slot withannualgrowth rate of 22 %.
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Focus:
The objective in ruralareas is to tap first time users. Statistics includelow
usage patterns. In China, a bout 90% of the people use toothpaste
compared to 47% in India. About 27% use toothpowderand only 20 %
had visited a dentist. Even in the urban areas, where consumers have used
toothpaste right from childhood, the overwhelming majority uses
toothpaste only once in the morning whereas teeth required brushing most
at bed time.
Strategy:
1. Product: HUL introduced a 15 gm Pepsodent pack to target the first
time user. Also its up market brand Close up was introduced at retail
outlets in suburban and ruralareas witha price tag of Rs. 3.50.
2. Campaign: The Operation Bharat Programme. HULs door-to-door
campaign in rural areas, concentrates on educating the consumer by
holding free dental camps. It also had dental education programme in
association with New York University. In India, thereare 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 comparativelylower SECs) in July
1999. In two years since 1996, some 12 lakh students have been covered
by such check-ups. There is Rural HygieneProgramme, a counterpart to
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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 farand target for that year was 12 million. The project
essentially involves selling a discounted personal care kit containing
mini-packs of shampoo, toothpaste, talcum powderand face cream. The
kit is sold at Rs. 15. Sold separately, the products would together cost
the consumer Rs. 27.
4. Cinema: Afterhome-to-home contact and sales in villages during the
day. HUL concentrates on cinema time in theevenings. Thereare still
villages which do not have TV. Cinema shows are quite popular there.
Effects:
The strategy has highly encouraging results. The market has become
awareand responsive for personal care products. Fairand Lovely cream
was test launched in Maharashtra for a target audience. About a year
before thelaunch the use of the cream was less than 1 % of zero in many
illages. It shot up to 20% in oneyear. In the same market shampoo use
was about 6% and went up to 18% even if used oncea week.
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CONCLUSION
Rural Market is Gold Mine which is paved with Thorns but HUL has
rightly tapped it. However there is a long way to go to capture all the
rural markets. In Rural markets company face various problems like
Underdeveloped People and Underdeveloped Markets, Lack of Proper
Physical Communication Facilities, Many Languages and Dialects,
Dispersed Market , Low Per Capita Income, Low Levels of Literacy ,
Different way of thinking of Rural Consumer, etc. HUL was the first
FMCG to tap rural markets and has generated huge revenues from rural
markets.
There were many other companies which entered rural markets and was
successful and gave competition to HUL some of them are Cavinkare
which launched Chik Shampoo for rural markets, ITC, Colgate, Nirma etc.
The key lies in understanding why, what and how of the rural consumer.
It would be a blunder to assume and apply the same principles as of
urban marketing. Rural marketing is completely different ball game talkabout its consumer tastes, competition, demographics, communication
media, socio-cultural milieu, or the infrastructure. The spread and
heterogeneity further complicate matters. One can conclude that
Marketing in the urban and the rural areas is different as product may
vary in rural & urban area and the marketing strategies to market the
product is also different mainly the packaging and distribution strategy in
rural area is designed keeping in mind the rural consumer. It is thereforeapt to do a thorough groundwork before jumping headlong into the rural
markets.
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RECOMMENDATIONS
HUL, a major FMCG to enter rural markets, but not the only one now.
There are many companies which entered rural markets. HUL needs to
be competitive and keep on updating its strategy to have a foothold in
the Rural markets.
For India to maintain and improve economic growth it is imperative to
improve rural markets. Even today there is imbalance in rural
development. Government and Marketers have to undertake measures
to improve the Rural markets.
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BIBLIOGRAPHY
1. Rural & Agricultural Marketing book Ramkishen.Y
2. Rural Marketing C.S.G. Krishnamacharyulu and Lalitha
Ramakrishna.
3. Marketing Management (10th
Edition) Philip Kotler
4. Marketing Management (13th
Edition) Philip Kotler