Published on March 20, 2014
Hindustan Lever’s Project Shakti By A.Arputha Selvaraj APMP IIM Calcutta
Introduction • Hindustan Unilever Limited (HUL) to tap this market conceived of Project Shakti. • This project was started in 2001 with the aim of increasing the company’s rural distribution reach as well as providing rural women with income- generating opportunities. • This is a case where the social goals are helping achieve business goals. • 4,00,000 VILLAGES
States covered by Project shakti
HOW IT WORKS? • Villages with a population of about 2000-3000 are selected. • Personnel from HUL approach SHGs. • Selection of the Shakti Amma. • HUL vouches for Shakti Ammas with banks from credit. • One Shakti entrepreneur is appointed for one village & villages that are about 2 kilometres apart from her village. • The Shakti dealer places initial orders worth Rs.15000(principal customer of HUL • The Shakti dealer organizes a “Shakti Day” in the village(display of products & free gifts)
• The recruitment of a Shakti Entrepreneur or Shakti Amma (SA) begins with the executives of HUL identifying the uncovered village. • The representative of the company meets the panchayat and the village head and identify the woman who they believe will be suitable as a SA. • After training she is asked to put up Rs 20,000 as investment which is used to buy products for selling. The products are then sold door-to-door or through petty shops at home. • On an average a Shakti Amma makes a 10% margin on the products she sells.
PRICING AND PACKAGING • Rural consumers are price sensitive • Sachets and small packs of premium products. • Price doesn’t exceed Rs.5 per sachet. • 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, • Brooke Bond Taaza tea at Rs.5.
SOME OF THE PRODUCTS SOLD THROUGH PROJECT SHAKTI AT RS.2 AT RS.5 AT RS.1.50 AT RS.6 AT RS.5 AT RS.5 AT RS.5 AT RS.5
Distribution It is the combination of the 3 ways: • Door to door selling (11% margin on sales) • Sells from own home (11% margin on sales) • Retailers (3% margin) • averages sales : • Rs. 10,000 - Rs. 15,000/month, • profit - Rs.1,000 per month
HLL’s approach to rural distributionAccessibility Streamline Turnover per market Indirect Coverage Direct Coverage
Direct coverage Factory Depot Stockiest / Distributor Trade
Indirect Coverage Village 1 Village 2 Village 3 Village 4 Village 5 Stockist
Streamline Star seller Star seller Distributor Star seller
The role of micro-finance The self-help group • Grameen Bank: mutual thrift societies of village women • A rapidly spreading movement: 6 million groups in India • 70% of rural households in AP A micro-finance revolution • 8 million families have received micro-credit • 76% of micro-credit recipients have crossed the poverty line • 95% of micro-credit recipients are women • Effectiveness depends on opportunities for micro- enterprise
Future plans • Project Shakti plans to extend to the states of West Bengal, Punjab and Rajasthan. • Partnership with other non-competitor companies to sell their products through the Shakti network. • Nippo, TVS Motor for mopeds, insurance companies for LIC policies.
Issues • Low margins . • Difficulty in acquiring finance • transportation • Low disposable income (dependence on monsoon)
Profile of Indian rural Economy Sector % Agriculture 78.0 Manufacturing 7.1 Service 5.8 Trade 4.4 Others 4.3
Why all these program To take people aware To increase the consumption. To increase the income. To increase behavior in – Awareness & living standard Lifestyle Self consciousness.
WHYSHAKTI??? • It was soon felt that HUL's sales and distribution system which had protected it from competitors would be soon replicated by its rivals and to maintain its edge, the company had to increase its reach beyond the urban markets • Carrying and forwarding agents(CFA) • more than 70% of India's population lived in villages and made a big market for the FMCG industry
BENEFITS • Earnings about 7%, after 3% goes towards principal and interest • Improves her per-capita income by about 50% to 100% • 100,000 entrepreneurs by 2010
• With lack of TV or Radio medium • Promotion through demonstration of HUL products at the Haat Bazaar. • Star sellers made up for this lack of audio- visual brand advertising.
• Differential pricing for rural costumers purchasing from SHG • Two different channels of same company competing on PRICE. • Undermining local retailers • Negligence of flooding of counterfeit products into market place
PROGRAMMES UNDERTAKENPROGRAMMES UNDERTAKEN • SHAKTI VANI • SHAKTI ENTREPRENEUR • iSHAKTI COMMUNITY PORTAL
Shakti Vani• Social communication anchored on brands – health and hygiene – women’s empowerment • Village women are recruited as Vanis and trained to communicate • Vani audience: key opinion leaders, schools, SHG meetings, other village gatherings • Specially designed communication material – easy-to-carry kit: flip-charts, leave-behind posters, banners – content developed after in-depth understanding of local context
Hand-wash demo in schools
Shakti Activities Free Health Camps in Shakti Village
Free Dental Camps in Shakti Villages
i - Shakti • In 2010, they started “i-Shakti” an IT-enabled community portal across the state of Andhra Pradesh. i-Shakti is designed to give rural people access to information via a network of village “kiosks” containing internet linked computers run by entrepreneurs. • Villagers can access free content, developed in their local language, or email questions on a wide range of topics, including Unilever products, health and hygiene, agriculture, education, finance and employment. • The aim is to have 3000 i-Shakti kiosks on stream by the end of 2010 covering 9500 villages and 18m people.
iShakti Contd…… • Rural community portal that creates access to information • Villagers can register as users and surf content areas: – Agriculture, health, veterinary services, education, employment opportunities, education, personal grooming, entertainment, games • All content backed by local language voice-over • On all content areas, users can pose queries • 1,000 kiosks in AP, partnership with government
Appearance of ishakti kiosks
SHAKTI ENTREPRENEUR PROGRAMMESHAKTI ENTREPRENEUR PROGRAMME • It helps women in rural India set up small businesses as direct-to-consumer retailers. • The scheme equips women with business skills and a way out of poverty as well as creating a crucial new distribution channel for Unilever products in the large and fast-growing global market of low-spending consumers. • By 2010 the Shakti network aims to have reached 600 million consumers.
Objective • The Shakti entrepreneur program creates livelihood opportunities for underprivileged rural women. • The Shakti Vani program works to improve the quality of life in rural India, by spreading awareness of best practices in health and hygiene. • They are also studying the consumption habits of the rural people.
Other Activities • To improve the business skills of the SHG women, extensive training programmes are being held. • Workshops have already covered a large number of Shakti Entrepreneurs in Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Uttar Pradesh, Tamilnadu, Chattisgarh and Orissa. • As part of their training programme, all HUL Management Trainees spend about 4 weeks on Project Shakti in rural areas
• The factories that HUL continued establishing in less-developed regions of the country have been engaged in developing rural market in adjacent villages. • These factory-centered activities mainly focus on training farmers, animal husbandry, generating alternative income, health & hygiene and infrastructure development.
Participated States • Andhra Pradesh • Karnataka • Gujarat • Chattisgarh • Maharashtra • Orissa • Punjab • Rajasthan • Tamilnadu • Uttar Pradesh • West Bengal • Bihar • Haryana • Jharkhand
Vision 2010 100,000 Entrepreneurs 500,000 villages 600million Consumers Shakti shall reach every home in every village, create sustainable livelihood opportunities, and enhance the quality of life in rural India Now SHAKTI has been extended 80,000 villages in 15 states with 45,000 women entrepreneurs & generating Rs.700-1000 per month to each women.
CONCLUSION • Project Shakti is enabling families to live with dignity and in better health & hygiene, education of the children and an overall betterment in living standards. • it creates a win-win partnership between HUL and the rural consumers for mutual benefit and growth.
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