Project Shakti - Group 10_IB_Sec E.pptx

8/14/2019 Project Shakti - Group 10_IB_Sec E.pptx

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UNILEVERININDIA: PROJECTSHAKTI


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AGENDA

Project Shakti

Introduction

Current State

Strategy in Emerging Markets

Problem Diagnosis

Recommendations


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PROJECTSHAKTI

Incentive schemes like cash rewards for visiting a specifiednumber of homes irrespective of the amount sold, additionalincentives on sales of specific brand were introduced for theShakti entrepreneurs

A limited range of products were sold through the project Shaktito reduce the complexity of multiple SKUs

Smaller SKUs and innovative package called Sachets were themain selling items

Shakti entrepreneurs provided personalized services, door todoor delivery and quality assured products to the consumers


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PROJECTSHAKTI

Shakti Vaniwas appointed out of local women as a part ofsocial communication program who dealt with issues ofrelating to personal and community health and hygiene aswell as brand awareness programs

iShaktia information technology enabled rural communityportal was introduced along with a desktop computer anddial-up internet connection in the house of the Shakti

entrepreneur to provide access to information

The users were not charged for accessing information orusing the query facility from the portal


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CURRENTSTATE

12151Shakti women covering 50405 villages across 310

districts in 12 states

46 brands with 150 SKUs, four of which contributed to50% of the sales

Innovative packaging in the for of LUP (Low unit price)packs that boosted penetration

Initial Investment: Rs.10000/month, for a regular incomeof Rs.700/month

Margin5% + 2% + 1% cash discount


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STRATEGYBYEMERGINGGIANTS

Exploit understanding of product markets

Build on familiarity with resource markets

Treat institutional voids as business opportunities

HLL has kept multinational rivals at bay by adapting to the

special characteristics of customers and business

ecosystems at home by implementing the following

strategy:


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EXPLOITUNDERSTANDINGOF

PRODUCTMARKETS

HLL understood that the bulk of the sales came from

few key brands. Hence only 150 SKUs were introduced

in the rural market.

They introduced low unit price packs (LUPs) to target

the low income customers which were in majority.

Since the Shakti entrepreneurs were women, product

categories for which women were the key decision

makers were only introduced.

Price discounts were offered to consumers by Shakti

entrepreneurs , so that they are preferred over the

retailers.


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BUILDONFAMILIARITYWITH

RESOURCEMARKETS

HLL targeted underprivileged rural women to be

Shakti entrepreneurs since they would be more

committed and would be the key influencers.

They used the already established SHGs to create a

network of Shakti entrepreneurs.

In order to establish itself faster, HLL partnered with

MART, a consulting firm that specialized in developing

and implementing rural market initiatives.


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TREAT INSTITUTIONALVOIDSAS

BUSINESSOPPORTUNITIES

Rural market was largely inaccessible and fragmented, sinceall the existing distribution models didnt reach the ruralmarket. So they came up with a channel based distributionapproach to tap the untapped rural markets.

Lack of infrastructure to reach rural markets in a costeffective manner Utilized the existing SHGs to encouragemicro enterprises.

Absence of source of finance Partnered with micro credit

institutions.

Lack of information channels Creation of iShakti portal forinformation disseminations.

Lack of awareness among rural consumers Came up withRSPs and Vani.


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WHYLOCAL+ BOTTOM

Heads HLL Shakti

Revenue 2324.2 23.242

Cost of Goods sold 1181.9 11.819

Gross Profit 1142.3 11.423

SG & Expense 635.3 6.353Cash Discount 0.23242

Cost of Vani & iShakti 1.1621

Overhead expense 21.8 3.4863

Total SG Expense 657.1 11.23382

Income before tax 485.2 0.18918

Savings from Shakti Vani 2.3242

Net Income before Tax 485.2 2.51338

Tax 96.6 0.5003968

Net Profit 388.6 2.0129832


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ECONOMIC& SOCIALVALUE

Economic Value

Rs. 9.058 million for HLL

Monthly income of Rs. 700 for 12,000 women

Total annual income generated Rs. 100.8 million

The income tax contribution for Government of India is Rs.2.25 million

Social Value

Empowering underprivileged women of rural India.

The SHG consist of 10-15 people. So a close relation of trust andbonding grows among them which contribute to the social capital.

Also Shakti project contributes to the health, education and hygiene ofthe villages which creates high value for the rural society.

Created social equilibrium and harmony by serving the low incomegroup and providing them affordable products in the form of sachets.


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PROBLEMDIAGNOSIS

Getting Shakti women on board was not as difficult asmaking them stay and grow

Initiatives like giving trade discounts, credits, gettingreferrals were pursued only by top-end entrepreneurs

Overheads were increasing, constituting about 10-15%of revenues. Number of entreprenuers had to bedoubled without doubling the no. of those who managethem.

Some areas where women were unable to operate dueto social biases had to be reached

Traditional methods of communication did not reachmost of the rural areas and different communicationefforts had to be made


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PROBLEMIDENTIFICATION

Scaling Up:

To increase reach to 1 lakh villages by 2006 and 1 lakhentrepreneurs by 2010, aiming for a 15-20% of HLLs revenues,without increasing costs

Brand-building:

Brand-managers had to be convinced to invest in Project Shakti.

HLL brands had to be built in the newly acquired markets. ShaktiVani had to be used to the fullest without compromising its social

objective of creating awareness.

Training

Shakti women had to be kept motivated to achieve growth. Someof them gave up very soon, or did not understand the business,and were barely literate


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ACTIONPLAN: SCALINGUP

Model 1: Incentivizing Shakti women througha multi-level model

The Shakti entrepreneurs will receive a certain percentage ofthe sales made by them as well as incremental percentage onsales made by those entrepreneurs who have been broughtinto the business by them.

These levels could be formalized, and higher theentrepreneurship moves, more the incentives and benefits

X

Y

A B

D

Z

C

Consider that X is a Shakti entrepreneur who brings in two more

entrepreneurs Y and Z who in turn introduce A, B and C. B

introduces D into the network.

Additional margin would be 1 percent for every entrepreneur

directly introduced by X and (1/n) percent [where n = tier at which

the new entrepreneur is introduced] of sales for entrepreneurs

indirectly introduced into the network.


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Each Shakti entrepreneur who introduces a new entrepreneur hasto train her as well as help the new member to get credit.

The new entrepreneurs could be relatives or friends of existingentrepreneurs preferably in new villages

RSPs could focus on providing training only to the Shaktientrepreneurs at the top of the network who in turn would pass iton to those beneath them

Benefits

The network could grow on its own as there is incentive foreach Shakti entrepreneurs to expand the network and honethe new entrepreneurs in the network

The onus of training and arranging credit will lie on existingmembers

The entrepreneurs will help those below them as additionalincome is linked to those beneath them



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Model 2: Partnering for New Products

Partner with another company that sells othernon-competing

goods along with HULsproducts.

Eg: Mobile SIM cards and top-ups, stationery items likenotebooks, pens and pencils

Benefits

Business will grow as the product portfolio increases

Higher income to the women will make the entrepreneurshipmore viable and attractive

New products are made available which will better meet theneeds of the rural consumers



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ACTIONPLAN: TRAINING

To overcome the difficulty of gathering all the womenand ineffectiveness of classroom training, videos can beshown through the iShakti portals. These videos shouldbe designed keeping in mind the local audience of eachregion.

These can showcase the various methods of approachingconsumers and retailers, other Shakti women in action,usage and benefits of the productsetc.

Entrepreneurs of 1-2 districts, about 50 in number can

be brought together for a day-long meet whereexperiences are shared. Senior women can address thegathering to inspire them. Other insights specific to aregion as well as general ones will come out. Theexercise will also result in a strong sense of belonging.


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ACTIONPLAN: BRANDBUILDING

Brand-managers should be made aware of theProject Shaktis trajectory. In the districts whereit has been implemented, 15% of revenues isfrom Project Shakti

Use Shakti Vani and iShakti to the fullest

Campaigns can be made to create awareness likewashing of hands, using iodized salt, toothpasteetc.

Vani should be carried out by collaborating withlocal NGOs


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THANKYOU

Documents

Project Shakti - Group 10_IB_Sec E.pptx