HUL Project shakti Distribution Channel ppt


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  • CFA – Carrying and forwarding agentRS- Redistribution Stockist
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  • HUL Project shakti Distribution Channel ppt

    1. 1. • Unilever, the world's largest Fast Moving Consumer Goods (FMCG) company with a worldwide revenue of $55 billion • It's Indian subsidiary, the Hindustan Lever Limited (HLL) is the country's largest FMCG company with combined volumes of about 4 million tonnes and revenues $2.43 billion and 6.4 million retail outlets • HLL was an established brand in India, largely successful in urban regions
    2. 2. • Low Price Segment – Local Players • • • • Operating in small geographies Little investment in brand building Low selling price & High trade margin Nirma – Laundry business, Personal wash category • High Price Segment – National Brands • Colgate Palmolive - market leader in oral-care category • P&G - hair care, Fabric wash, Feminine hygiene categories • Godrej & TOMCO
    3. 3. HLL • Limitations : • Not appropriate for small markets • Ill equipped for modern trade CFA RS Wholesaler Retailer Consumer
    4. 4. • Top End of Diamond : • Represented modern trade encompassed self service stores and retail chains • Accounted for 10% of the overall FMCG market • Middle Part of Diamond • Largest part of the diamond • Profit-center-based sales teams to cultivate, penetrate and grow markets • Bottom End of Diamond • Direct distribution in rural markets • Accounted for 20% of HLL’s business
    5. 5. • Following HLL, some competitors were adopting Streamline Strategy, hence HLL focused on a complete new market which had Low Business Potential and was an Inaccessible Market. Market/Business Potential Low Business Potential High Business Potential Accessible Markets Indirect Coverage (25%) - A Direct Coverage (40%) - B Inaccessible Markets Project Shakti Streamline (35%) • A + B + C = 220 million population reach • Project Shakti = Rest 500 million -C
    6. 6. • Born in December 2000, in Nalgonda district of Andhra Pradesh • An ambitious venture by HLL to spur growth and penetration of its products in rural India while changing lives and boosting incomes. • • • • Sales and Distribution initiative – delivers growth Communication initiative – build brand Micro-enterprise initiative – creates livelihoods Social initiative – improve standard of living in rural India
    7. 7. • Business objective: • To extend HLL's reach into untapped markets and to develop its brands through local influencers. • To reach 100 million consumers by 2006 • Social objective: • To provide sustainable livelihood opportunities for underprivileged rural women. • To scale up the number of Shakti entrepreneurs from 12000 (2004) to 25000 (2006)
    8. 8. Political Government Co-operation Support of district administration Economic Low income group Micro credit SocioCultural - Social awareness programs Technological iShakti -Language Barriers -Women as salespersons was a new idea. -To cash on women as influencers Sachets, an innovative packaging solution
    9. 9. Weakness Strengths • Local knowledge of markets through SelfHelp Groups (SHGs) • Technology necessary to operationalize the model Opportunities • Ever increasing demand due to untapped rural market • Increasing self awareness for hygiene, beauty ,etc. which would lead to high turnover over long run • Create a channel for brand communication • Integrating business with social responsibility • Skepticism in the minds of local people • Untrained women entrepreneurs Threats • Time taken by the project to break even • Competitor’s entry into rural market following the same model
    10. 10. Analyze customer needs & wants • Lot size – The number of units the channel permits a user to Establishing Objectives & Constraints purchase • Waiting & delivery time – average time customers wait for receipt of goods • Objectives: • Spatial •convenienceHLL’s reach into untapped markets Identify channel to which marketing channel To extend – degree alternatives makes • easy for customer to purchase their product it To develop the brand through local influencers • Product•variety – Refers to the sales forces, distributors, dealers etc. have Different • Constraints: channels like assortment provided by the marketing unique strengths and weaknesses. areas channel • Rural market scattered over large Evaluate channel alternatives Channel alternatives differ in three • Service•• Low peradd on consumption delivery etc) backup – capita services (credit, ways – • Types of Intermediaries, rural intermediaries, Terms & • Connectivity from urban to No. ofareas • Economic Criteria Responsibilities of channel members • Control and HLL • Available alternatives forAdaptive Criteria • Profit center based sales and distribution model, Diamond Model, Project Shakti
    11. 11. • Each channel alternative is evaluated against: • Economic criteria • Control Criteria • Adaptive Criteria • Profit center based model: • Was based on geographies and product categories • Not appropriate for small markets since potential business was small and assigning one stockist exclusively for each profit center was not economical. • Diamond Model: • A three layered channel consisting of: • Self service stores and retail stores : synergy across profit centers • For cultivation, penetration and growing new markets : Profit center based model was applied. • Direct distribution in rural market which focused on economies of scale
    12. 12. • Project Shakti Model (Shakti entrepreneur) • A direct distribution channel for rural market penetration • Shakti entrepreneurs directly sold to retailers as well as consumers • Initial reduction in profit margin but overall an increase in sales led to increase in profits • High control over the distribution channels. • Aimed at building consumers for life
    13. 13. HLL (Manufacturer) Shakti Entrepreneurs SHG • Advantages: • Access to untapped market Retailers Consumers • Integrated Multichannel System • Drawback: • Income Generated very small • No sense of belongingness • Advantages: • Responsibility was not shared among many • Income was not shared
    14. 14. • Channel Conflict : • Generated when one channel member’s action prevent another channel from achieving its goal • Types : • Horizontal Channel Conflict • Occurs between channel members at same level • Vertical Channel Conflict • Occurs between channel members at different level • Multichannel Conflict • Exists when the manufacturer has established multiple channels that cater to the same market • Occurs when member of one channel gets a lower price or works with low margin
    15. 15. Channel Conflict Cooperation • HLL sold its products to Shakti entrepreneurs at some discount relative to general trade. • Shakti entrepreneur can sell direct to the consumers • Entrepreneurs selling to a local outlet which in turn sells to consumers • This allowed Shakti entrepreneurs to earn more by retaining the retail margin • Have to sell at the price which can enable the outlet to earn a viable retail margin • Limited the amount that the Shakti entrepreneur can earn, which is nothing but Channel conflict • HLL can control the discount offered to them to manage channel conflict
    16. 16. SELECT • • • • • • • • • TRAIN MOTIVATE EVALUATE MODIFY Villages with a population of 2000 – 3000 are targeted. • To train the approach SHG’s Personnel from HLLShakti entrepreneur, RSP system was introduced. Incentive programmes for newly appointed the whole product life cycle. Thechannel strategy of the company meets entrepreneurs. No representative remains effective over panchayat/village head and Rewardingdatawould in income rural income group is very limited.sales visiting a identifies who evaluated cash asgrowth amma. specified the HUL Shakti amma’s on low suitable forShahti and improvement in no. of Customer them be on sales homes, irrespective of density mapping technology to designvillage & One shakti entrepreneur amount amma) is appointed for 1 its rural techniques. GPS and the (shakti sold. designed a Additional incentives onnetworks. villageschains and kms from her village brand popular in a region. supply that are 2 sales sales of specific • Population density helps in determining the no. of recruits, volume of product that supply chain needs to handle. • With seasonal migration a common occurrence in rural India, the ability to continue to map population density quickly is a key competitive advantage, and a critical factor in building a flexible supply chain.
    17. 17. • Branded social communication program targeted at the rural community • Program implemented by Ogilvy Outreach, the rural activation unit of advertising agency Ogilvy & Mather • Structure: • To communicate best practices in the area of personal health • Local woman appointed as Vani, trained and positioned as health and hygiene expert • Cover cluster of villages, organize school-contact programs, SHG meetings & other social occasions • Advantages: • Stable HLL brands cost 10-15 % of sales in promotion, while this program cost 3-5 % • Primary awareness about personal health would benefit HLL by growing the market for its products in long run
    18. 18. • Initiative to extend the benefits of information technology to rural India and to empower the rural community by creating access to information • Structure: • Dialogue-interactive software installed in the desktop • Registers user can log on to the site and get various information free of cost • Advantage: • Communication channel of HLL, which other media failed to reach Source:
    19. 19. • Low Pricing (LUPs) • Brand Recognition (also Shakti Vani - HLL popularity due to Project Shakti) • Distribution and Information Systems • Community Development – iShakti, NGOs and SHGs • Women Empowerment – Shakti Entrepreneur • Customer Service • Consumer for life
    20. 20. • • • • Delivers growth with its sales and distribution initiative Builds brands of HLL in the consumers’ mind Extends HLL’s reach into untapped markets Provides sustainable livelihood opportunities for underprivileged rural women • Improves standard of living in rural India
    21. 21. • •
    22. 22. Group - 1 Katib Ali A005 Siddhartha Biswal A012 Archisman Chaterjee A013 Kumar Rohan A042 Sameer Sehgal A047 Karan Shah A050 Ravneet Singh A052 Jinesh Vora A056