Hindustan Unilever [Rural
marketing]
Product Mix of HUL.
HUL is India's largest marketer of Soaps, Detergents and Home Care
products. It has the country’s largest Personal Products business, leading in
Shampoos, Skin Care Products, Colour Cosmetics and Deodorants. HUL is also the
market leader in Tea, Processed Coffee, branded Wheat Flour, Tomato Products,
and Ice cream, Soups, Jams and Squashes.
Home & Personal Care
• Personal Wash
• Fabric Wash
• Home Care
• Oral Care
• Skin Care
• Hair Care
• Deodorants & Talcs
• Colour Cosmetics
• 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
• 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 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 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 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.
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.
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.
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.
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 moisturizing 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 HUL'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 consumer have welcomed the solution, making
it the number one
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
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
technology-it 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 consumer to a
higher plane, reaffirming their faith in the brand, by giving them superior 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 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 Niacin amide 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 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
Skin care solutions from
Fair & Lovely.
2) Ponds.
Pond's has been synonymous
with skin care in India since1947.The impressive track record of Pond's began
when Thereon 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
countries - to deliver products that make a real difference to women's skin and
the way they live their lives.
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-commodities
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.
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.
3) Kissan.
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
in2001 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 278million 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 market
Pricing strategy of HUL.
Hindustan Lever has taken many initiatives over the decades to
create markets in the rural hinterlands. By marketing relevant products, at
affordable prices. HUL aims at providing rural consumer a price which is
acceptable and affordable by them. HUL adopts low unit pricing as it targets
rural consumer. It sells products mostly in the price range of 1Rs –10Rs. HUL
has adopted a strategy which offers rural consumer Volume point to Price point packages
mostly priced at Rs 10 as it is better connected to Rural consumer. The
strategic price point of HUL is Rs5 and Rs 10 and the price at these points are
not hiked even with an increase in price of products. If products have to come
up the order in the rural purchase hierarchy, they have to be affordable. If
rural India today accounts for about half of detergents sales, it is because HUL
has developed low-cost value-for-money branded products, like Wheel. The
company has also taken initiatives to create markets even for apparently
premium products, by offering them in pack sizes, like sachets, whose unit
prices are within the reach of rural consumers. Pricing helps in synchronizing
the expenditure of the Indian consumers with his daily stream of income. For
example, initiated in the 1980s, sachets (Rs.2, Re.1, or 50 paisa) today
constitute about55% of Hindustan Lever's shampoo sales. With media reach
gradually increasing, rural consumers today, where the media has its
footprints, share the same aspirations with their urban counterparts. HUL has
responded to the trend with low unit price packs of even other products as
follows;-
Lux at Rs.5,
Life buoy at Rs 2
Ponds cold cream at Rs 5
Promotion strategies of HUL.
HUL follows various media mix of conventional and Non-conventional
media for promotions of its products in the rural markets. Hindustan Lever has
taken initiatives to circumvent the limitation in communication channels, by
innovatively leveraging non-conventional media. Among them the most commonly
used forms of media by HUL are wall paintings, cinema vans, weekly markets
(haat), fairs and festivals etc. The various forms include following:-
1.
Advertisements through T.V. and Radio which provides a wider coverage of consumers.
2.
Wall painting that are used to capture the attention of the audience and
is an economic medium. It uses wall paintings for its products as Wheel, Lifebuoy
etc. The wall painting of Lifebuoy is displayed.
3.
Cinema theatre’s and vans as rural consumers 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
significant role in creating, for example, the detergents market in rural
India. In recent times, such demonstrations are being deployed by HUL to
illustrate how visible clean is not hygienic clean, and how using soap is
essential to prevent easily avoidable infections. Communication through fairs
and festivals are backed by direct consumer contact. 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.
Distribution strategies of HUL.
In rural India
particularly, availability determines volumes and market share, because the consumer
usually purchases what is available at the outlet, influenced very largely by the
retailer.
Hindustan Lever Limited has
a distribution network which is one of their key strengths that helps them
reach their products across the length and breadth of this vast country.
To meet the ever-changing
needs of the consumer, HUL have set up a distribution network that ensures
availability of all its products, in all outlets, at all times. This includes, maintaining
favorable trade relations, providing innovative incentives to retailers and organizing
demand generation activities among a host of other things.
Therefore,
over the decades, Hindustan Lever has progressively strengthened its distribution
reach in rural India, which today has about 33 lakh outlets. Direct rural distribution
in Hindustan Lever began with the coverage of villages adjacent to small towns.
The company's stockiest 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 motor able roads, and it
could cover about 25% of the rural population by 1995.
The evolution of HUL's
Distribution Network:-
The first phase of the HUL
distribution network had wholesalers placing bulk orders directly with the
company. Large retailers also placed direct orders, which comprised almost 30
per cent of the total orders collected. The company salesman grouped all these orders
and placed intent 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,
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 Stockiest" (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. The
role performed by the Redistribution Stockiest has also undergone changes over
the years. Financing stocks, providing manpower, providing service to
retailers, implementing promotional activities, extending indirect coverage,
reporting sales and stock data, screening for transit damages are some of the
functions performed by the RS today. HUL has grown manifold over the years. In
the process, the number of factories and the number of SKUs too have increased.
In order to rationalize the logistics and planning task, an innovative step has
been the formation of the Mother Depot and Just in Time System (MD-JIT).
Certain C&FAs were selected across the country to act as mother depots.
Each of them has a minimum number of JIT depots attached for stock
requirements. All brands and packs required for the set of markets which the MD
and JITs service in a given area are sent to the mother depot by all
manufacturing units. The JITs draw their requirements from the MD on a weekly
or bi-weekly basis. At present, HUL's products, manufactured across the
country, are distributed through a network of about 7,000 redistribution stockiest
covering about one million retail outlets. The distribution network directly
covers the entire rural population.
In addition to the ongoing
commitment to the traditional grocery trade, HUL is building a special
relationship with the small but fast emerging modern trade. Our scale enables
us to provide superior customer service including daily servicing, improving
their range availability whilst reducing inventories. We are using the
opportunity of interfacing more directly with our consumers in this retail
environment through specially designed communication and promotions. This is
building traffic into the stores while yielding high growth for our business. An
IT-powered system has been implemented to supply stocks to redistribution stockiest
on a continuous replenishment basis. The objective is to catalyse HUL’s growth
by ensuring that the right product is available at the right place in right
quantities, in the most cost-effective manner. For this, stockiest have been
connected with the company through an Internet-based network, called RS Net,
for online interaction on orders, dispatches, information sharing and
monitoring. RS Net covers about 80% of the company's turnover. Today, the sales
system gets to know every day what HUL stockiest have sold to almost a million
outlets across the country. RS Net is part of Project Leap, HUL's end-to-end
supply chain, which also includes a back-end system connecting suppliers, all
company sites and stretching right up to stockiest. RS Net has come as a force
multiplier for HUL Way, the company's action-plan tomaximise 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 stockiest to retailers and
market activation. HUL Way has also led to implementing best practices in
customer management and common norms and processes across the company. Powered
by the IT tools it has further improved customer service, while ensuring
superior availability and impactful visibility at retail points. HUL, has been
at the forefront of experimenting with innovative methods to reach the rural consumer.
1) Indirect coverage
Under the Indirect Coverage
(IDC) method, company vans were replaced by vans
belonging to Redistribution Stockiest, which serviced a select group of neighboring
markets.
belonging to Redistribution Stockiest, which serviced a select group of neighboring
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 Stockiest to cover all
these markets due to high costs involved. Yet, these markets are important since
growth opportunities are high. Operation Harvest endeavored to supplement the role of conventional media in rural India and, in the process, forge relationships and loyalty with rural consumers. Operation Harvest also involved conducting of product awareness programmes on vans.
markets is weak. It was also not always feasible for the Redistribution Stockiest to cover all
these markets due to high costs involved. Yet, these markets are important since
growth opportunities are high. Operation Harvest endeavored to supplement the role of conventional media in rural India and, in the process, forge relationships and loyalty with rural consumers. Operation Harvest also involved conducting of product awareness programmes on vans.
3) Cinema van operations
These are typically funded by the Redistribution Stockiest. Cinema
Van Operations have films and audio cassettes with song and dance sequences
from popular films, also comprising advertisements of HUL products.
4) Single Distribution Channel
For rural India, HUL has established a single distribution channel
by consolidating
categories. In a significant move, with long-term benefits, HUL has mounted an initiative,
Project Streamline, to further increase its rural reach with the help of rural sub-stockiest. It
has already appointed 6000 such sub-stockiest. As a result, the distribution network directly
covers about 50,000 villages, reaching about 250 million consumers.
categories. In a significant move, with long-term benefits, HUL has mounted an initiative,
Project Streamline, to further increase its rural reach with the help of rural sub-stockiest. It
has already appointed 6000 such sub-stockiest. As a result, the distribution network directly
covers about 50,000 villages, reaching about 250 million consumers.
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
income-generating 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, HUL's partnership with Self Help Groups of
rural women. The project, started in 2001, already covers over 5000villages 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, there by touching
about 100 million consumers. The SHGs have chosen to adopt distribution of HUL's
products as a business venture, armed with training from HUL 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.1000per
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 HUL, 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 HUL 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 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
top line, and is yet to break even. By the next year-end, HUL believes Shakti's
contribution could double and the project could achieve cash break-even.
Project
Shakti Initiative in rural markets.
ITC
Product strategy
ITC had launched nearly all the products range off Non tobacco
Products; they are very aggressive in their distribution of such products. The
existing network of ITC’s Cigarettes distribution is being used extensively for
the sales all products of ITC Food division. They are trying to capitalized the
market by associating the products with the ITC brand.
ITC in FMCG
Cigarettes
ITC is the market leader in cigarettes in India. With its wide
range of invaluable brands, it has a leadership position in every segment of
the market. It's highly popular portfolio of brands includes Insignia,
India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors,
Capstan, Berkeley, Bristol and Flake. The Company has been able
to build on its leadership position because of its single minded focus on value
creation for the consumer through significant investments in product design,
innovation, manufacturing technology, quality, marketing and distribution.
All initiatives are therefore worked upon with the intent to fortify market standing in the
long term. This in turns aids in designing products which are contemporary and relevant
to the changing attitudes and evolving socio economic profile of the country. This
strategic focus on the consumer has paid ITC handsome dividends
All initiatives are therefore worked upon with the intent to fortify market standing in the
long term. This in turns aids in designing products which are contemporary and relevant
to the changing attitudes and evolving socio economic profile of the country. This
strategic focus on the consumer has paid ITC handsome dividends
Foods
ITC made its entry into the branded &packaged Foods business
in August 2001 with the launch of the Kitchens of India brand. A more
broad-based entry has been made since June 2002 with brand launches in the
Confectionery, Staples and Snack Foods segments. The Foods business is today
represented in 4 categories in the market. These are
·
Ready To Eat Foods
·
Staples
·
Confectionery
·
Snack foods
In order to assure
consumers of the highest standards of food safety and hygiene, ITC is engaged in
assisting outsourced manufacturers in implementing world-class hygiene
standards through HACCP certification. The unwavering commitment to
internationally benchmarked quality standards enabled ITC to rapidly gain
market standing in all its 6brands:
* Kitchens of India
* Aashirvaad
* Sun feast
* mint-o
* Candyman
* Bingo!
* Aashirvaad
* Sun feast
* mint-o
* Candyman
* Bingo!
Lifestyle
Retailing
ITC’s Lifestyle Retailing Business Division has established a
nationwide retailing presence through its Wills Lifestyle chain of exclusive
specialty stores. Wills Lifestyle, the fashion destination, offers a tempting
choice of Wills Classic work wear, Wills Sport relaxed wear, Wills Club life
evening wear, fashion accessories and Essenza Di Wills – an exclusive range of
fine fragrances and bath & body care products and Fiama Di Wills – a range
of premium shampoos and shower gels. Wills Lifestyle has also introduced Wills
Signature designer wear, designed by the leading designers of the country.
Wills Classic work wear was
launched in November 2002, providing the premium consumer a distinct
product offering and a unique brand positioning. ITC forayed into the
youth fashion segment with the launch of John Players in December
2002 and John Players is committed to be the No. 1 fashion brand for
the youth.
Education
& Stationary products
ITC made its entry into the stationery business in 2002 with its
premium range of notebooks, followed in the year 2003 with the more popular
range to augment its offering. ITC's stationery Brands are marketed as
"Classmate" and "Paper raft", with Classmate addressing the
needs of school goers and Paper raft targeted towards college students and
executives.
Agarbattis
As part of ITC's business strategy of creating multiple drivers of
growth in the FMCG sector, the Company commenced marketing Agarbattis (incense
sticks) sourced from small-scale and cottage units in 2003.
Hotels
ITC entered the hotels business in 1975 with the acquisition of a
hotel in Chennai, which was then rechristened ITC Chola. Since then the
ITC-Welcome group brand has become synonymous with Indian hospitality. With
over 90 hotels in 77 destinations.
Packaging
ITC's Packaging &Printing Business is the country's largest
convertor of paper board into packaging. It converts over 50,000 tones of paper
and paperboard per annum into a variety of value-added packaging solutions for
the food &beverage, personal products, cigarette, liquor, cellular phone
and IT packaging industries. It has also entered the Flexibles and Corrugated
Cartons business.
Agri Business
e- Choupal
The unique e-Choupal model creates a significant two-way
multi-dimensional channel which can efficiently carry products and services
into and out of rural India, while recovering the associated costs through
agri-sourcing led efficiencies. This initiative now comprises about 6500
installations covering nearly 40,000 villages and serving over 4million
farmers.
Leaf Tobacco
ITC is the largest buyer, processor and exporter of leaf tobaccos
in India - creating a global benchmark as the single largest integrated source
of quality tobaccos. Serving customers in 50 countries across more than 70
destinations, ITC co-creates and delivers value at every stage of the leaf
tobacco value chain.
Information Technology
ITC InfoTech offers IT services and solutions across five key
industry verticals: Banking, Financial Services & Insurance (BFSI),
Consumer Packaged Goods (CPG) & Retail, Manufacturing & Engineering
Services, Travel, Hospitality & Transportation and Media&
Entertainment.
ITC InfoTech, a global IT services company, is today one of
India’s fastest growing IT services and solutions providers.
Pricing strategy:
The pricing of the ITC food division depends upon the Customers’
demand schedule, the cost function and the competitors’ price. The pricing of
the company is such that it caters to the need of all income groups of people
but special provision has been kept for Low and middle income group, and their
pricing are competitive with respect to other players like Britannia, Parle and
Brisk farm.
The company follows the Going rate pricing that is the price of
the product depends upon the competitors price. The firm chooses pricing more
or less the same as Market leader.
Promotional activities
A particular budget is allocated for the promotion of the
products, the local promotion scheme is decided by the Area Sales Manager, it
give its suggestion to the District office and that is forwarded to the Head
Quarter in Kolkata.
In another promotional scheme for Biscuits a particular number of
cases is given freely to the distributors according to the amount of sale they
make, this was a drop down promotion i.e. of the number of
free cases that a particular distributors gets, off them a certain part is
reserved for the retailers and customer if they buy a certain level of biscuit
quantity.
Distribution
Buoyed by a strong distribution network ITC is likely to retain
its market share in the cigarettes business; the ban on advertisements is
likely to work in favour of ITC thanks to the recall factor.
The company's reliable distribution network also ensures superior
inventory turnover than its peers.
Future
Today, the Aashirvaad brand stands for atta and salt and is
expected to add suji, spices and rice in the staples segment. In the
ready-to-eat segment, Aashirvaad has been expanding the range and the latest
offering includes its combo packs of rice and gravies. Besides, an all-purpose
curry paste has also been included in the range. To make a success of any foods
business, apart from understanding the palate, it would be procurement and
sourcing which have to deliver on two fronts: mainly that of quality and
efficiency.
As for its ready to eat category Kitchens of India (KOI), the
company’s strategy is to expand the KOI product portfolio. In this category,
the company plans to introduce new products to meet the evolving needs of
consumers. This premium brand is targeted at tourists, consumers who order at
home, NRIs and women in the age group 25 plus.
Initiatives
taken –
Let’s put India first
ITC is committed to a national agenda of raising agricultural
productivity and making the rural economy more socially inclusive. ITC believes
that the urgency and scale of these tasks make market linked solutions and
innovations more effective and sustainable than capital intensive approaches.
Social
& farm Forestry
ITC has helped to bring nearly 13,000 hectares of wasteland under
social forestry benefiting more than 16,000 poor households in 466 villages.
ITC’s social forestry programme simultaneously addresses the livelihood
problems of marginal farmers and the ecological imperative of regenerating
biomass and nurturing depleted soils.
Watershed
Development
ITC’s watershed initiatives have led to an improvement in soil and
moisture regimes –there is more land under irrigation, water tables have risen
and farmers can harvest more than one crop, making it possible to live off the
land round the year.
Agricultural
Development
ITC offers facilitation to farmers to form agri-business
societies, pool knowledge and resources, improve productivity and quality, and
reach out beyond local markets to sell at better margins.
Women
Empowerment
The confidence and skills generated among women by forming credit
groups and managing businesses become assets to their communities
Livestock
Development
The milk marketing co-operatives represent exemplary change in
rural enterprise, away from dependence on agriculture and local markets
Primary
Education
School going becomes an empowering process for the child and the
community. The awareness of entitlements like education and health grows, along
with a sense of the community’s responsibility.
ITC‘s e Choupal
The Big Picture:
ITC's Agri Business
Division, one of India's largest exporters of agricultural commodities, has
conceived e-Choupal as a more efficient supply chain aimed at delivering value
to its customers around the world on a sustainable basis.
The e-Choupal model has
been specifically designed to tackle the challenges posed by the unique
features of Indian agriculture, characterised by fragmented farms, weak
infrastructure and the involvement of numerous intermediaries, among others.
The Value Chain - Farm to Factory Gate:
'e-Choupal' also
unshackles the potential of Indian farmer who has been trapped in a vicious
cycle of low risk taking ability > low investment > low productivity >
weak market orientation > low value addition > low margin > low risk
taking ability. This made him and Indian agribusiness sector globally
uncompetitive, despite rich & abundant natural resources.
Such a market-led business
model can enhance the competitiveness of Indian agriculture and trigger a
virtuous cycle of higher productivity, higher incomes, enlarged capacity for
farmer risk management, larger investments and higher quality and productivity.
Further, a growth in rural
incomes will also unleash the latent demand for industrial goods so necessary
for the continued growth of the Indian economy. This will create another
virtuous cycle propelling the economy into a higher growth trajectory.
The Model in Action:
Appreciating the
imperative of intermediaries in the Indian context, 'e-Choupal' leverages
Information Technology to virtually cluster all the value chain participants,
delivering the same benefits as vertical integration does in mature
agricultural economies like the USA.
'e-Choupal' makes use of
the physical transmission capabilities of current intermediaries - aggregation,
logistics, counter-party risk and bridge financing -while disinter mediating
them from the chain of information flow and market signals.
With a judicious blend of
click & mortar capabilities, village internet kiosks managed by farmers -
called sanchalaks - themselves, enable the agricultural
community access ready information in their local language on the weather &
market prices, disseminate knowledge on scientific farm practices & risk
management, facilitate the sale of farm inputs (now with embedded knowledge)
and purchase farm produce from the farmers' doorsteps (decision making is now
information based).
Real-time information and
customised knowledge provided by 'e-Choupal' enhance the ability of farmers to
take decisions and align their farm output with market demand and secure
quality & productivity. The aggregation of the demand for farm inputs from
individual farmers gives them access to high quality inputs from established
and reputed manufacturers at fair prices. As a direct marketing channel,
virtually linked to the 'mandi' system for price discovery, 'e-Choupal'
eliminates wasteful intermediation and multiple handling. Thereby it
significantly reduces transaction costs.
'e-Choupal' ensures
world-class quality in delivering all these goods & services through
several product / service specific partnerships with the leaders in the
respective fields, in addition to ITC's own expertise.
While the farmers benefit
through enhanced farm productivity and higher farm gate prices, ITC benefits
from the lower net cost of procurement (despite offering better prices to the
farmer) having eliminated costs in the supply chain that do not add value.
The Status of Execution:
Launched in June 2000,
'e-Choupal', has already become the largest initiative among all Internet-based
interventions in rural India. 'e-Choupal' services today reach out to over 4
million farmers growing a range of crops - soyabean, coffee, wheat, rice,
pulses and shrimp - in over 40,000 villages through 6500 kiosks across ten
states (Madhya Pradesh, Haryana, Uttarakhand, Karnataka, Andhra Pradesh, Uttar
Pradesh, Rajasthan, Maharashtra, Kerela and Tamil Nadu).
The problems encountered
while setting up and managing these 'e-Choupals' are primarily of
infrastructural inadequacies, including power supply, telecom connectivity and
bandwidth, apart from the challenge of imparting skills to the first time
internet users in remote and inaccessible areas of rural India.
Several alternative and
innovative solutions - some of them expensive - are being deployed to overcome
these challenges e.g. Power back-up through batteries charged by Solar panels,
upgrading BSNL exchanges with RNS kits, installation of VSAT equipment, Mobile
Choupals, local caching of static content on website to stream in the dynamic
content more efficiently, 24x7 helpdesk etc.
Going forward, the roadmap
includes plans to integrate bulk storage, handling & transportation
facilities to improve logistics efficiencies.
As India's 'kissan'
Company, ITC has taken care to involve farmers in the designing and management
of the entire 'e-Choupal' initiative. The active participation of farmers in
this rural initiative has created a sense of ownership in the project among the
farmers. They see the 'e-Choupal' as the new age cooperative for all practical
purposes.
This enthusiastic response
from farmers has encouraged ITC to plan for the extension of the 'e-Choupal' initiative
to altogether 15 states across India over the next few years. On the anvil are
plans to channelise other services related to micro-credit, health and
education through the same 'e-Choupal' infrastructure.
Another path-breaking
initiative - the 'Choupal
Pradarshan Khet', brings the benefits of agricultural best
practices to small and marginal farmers. Backed by intensive research and
knowledge, this initiative provides Agri-extension services which are
qualitatively superior and involves pro-active handholding of farmers to ensure
productivity gains. The services are customised to meet local conditions,
ensure timely availability of farm inputs including credit, and provide a
cluster of farmer schools for capturing indigenous knowledge. This initiative,
which has covered over 70,000 hectares, has a multiplier impact and reaches out
to over 1.6 million farmers.