Rural Marketing Strategies 1 HUL A PROJECT REPORT ONRURAL MARKETING STRATEGIES. CONTEXT:- HUL SUBMITTED TO With Combined Efforts of:- Kamakshi Bakshi Neha Yadav Bipin Khanna Ankan Goshal Sidhartha Maithy
Rural Marketing Strategies 2 HUL AcknowledgementAt the outset We would like to take the privilege to convey our gratitude to allthose who co-operated, supported, helped and suggested us as to how theproject could be completed. This project bears imprint of advices, from manypeople who were either directly or indirectly involved in it.We would also like to thank Mr. Mukesh Ranjan, Territory Sales Officer of HUL,for his time and valuable inputs in the course of my research.
Rural Marketing Strategies 3 HUL Table of ContentsTopic TOPICS Page No. No. 1. Introduction to Rural markets. 1 3. Current scenario of Rural Markets. 5 5. Introduction of Hindustan Lever 7 Limited. 6. Highlights of HUL Marketing Strategy. 8 7. Challenges faced by HUL. 9 8. Case on Wheel Strategies. 11 9. Relationship Marketing Case: HUL 1510. Conclusion. 1811. Recommendations. 1912. Bibliography. 20
Rural Marketing Strategies 4 HUL Introduction to rural markets.The rise of rural markets has been the most important phenomenon of the1990’s, providing volume growth to all leading companies. Manycorporates have been trying to get a grip on rural market. But challengesare many: how to make the product affordable, how to penetrate villageswith small populations, connectivity, communications, language barriers,spurious brands, etc.Marketers and manufacturers are increasingly aware of the burgeoningpurchasing power, vast size and demand base of the once neglectedIndian hinterland. Efforts are now on to understand the attitude of ruralconsumers, and to walk their walk and talk their talk. The marketing mixof many companies is now being tailored to rural tastes and lifestyles.
Rural Marketing Strategies 5 HUL Current Scenario of rural market.Rural market - A world of opportunityGONE are the days when a rural consumer went to a nearby city to buy“branded products and services". Time was when only a selecthousehold consumed branded goods, be it tea or jeans. There were dayswhen big companies flocked to rural markets to establish their brands.Today, rural markets are critical for every marketer - be it for a brandedshampoo or an automobile. Time was when marketers thought vancampaigns, cinema commercials and a few wall paintings would sufficeto entice rural folks under their folds. Thanks to television, today acustomer in a rural area is quite literate about myriad products that areon 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. Itmay also be in terms of packaging, communication or association with thebrand.The brand has to be made relevant by understanding local needs. Evenoffering the same product in different regions with different brand namescould be adopted as a strategy. At times it is difficult to pass on aninnovation over an existing product to the rural consumer unlike his urban
Rural Marketing Strategies 6 HULcounterpart - like increased calcium or herbal content or a germ-controlformula in toothpaste.According to Mr. Mukesh Ranjan, of HUL, the four factors whichinfluence demand in rural India are - Access, Attitude, Awareness andAffluence. HUL has successfully used this to influence the rural marketfor its shampoos in sachets. The sachet strategy has proved so successfulthat, according to an ORG - MARG survey, 95 per cent of total shampoosales in rural India is by sachets. The company had developed a directaccess to markets through wholesale channel and created awarenessthrough media, demonstration and on ground contact. This changed theattitude of the villagers.
Rural Marketing Strategies 7 HUL Hindustan Unilever Limited.Introduction.Hindustan Unilever Limited (HUL) is Indias largest Fast MovingConsumer Goods company, touching the lives of two out of three Indianswith over 20 distinct categories in Home & Personal Care Products andFoods & Beverages. They endow the company with a scale of combinedvolumes of about 4 million tonnes and sales of Rs.10,000 crores.HUL is also one of the countrys largest exporters; it has been recognisedas a Golden Super Star Trading House by the Government of IndiaHULs brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair &Lovely, Ponds, Sunsilk, Clinic Plus, Pepsodent, Close-up, Lakme, BrookeBond, Kissan, Knorr-Annapurna, Kwality Walls – are household namesacross the country and span many categories - soaps, detergents, personalproducts, tea, coffee, branded staples, ice cream and culinary products.They are manufactured in close to 80 factories. The operations involveover 2,000 suppliers and associates.HULs distribution network, comprising about 7,000 redistributionstockists, directly covers the entire urban population, and about 250million rural consumers. HUL believes that an organization’s worth isalso in the service it renders to the community. HUL is focusing on health& hygiene education, women empowerment, and water management. It is
Rural Marketing Strategies 8 HULalso involved in education and rehabilitation of special or underprivilegedchildren, care for the destitute and HIV-positive, and rural development.HUL has also responded in case of national calamities / adversities andcontributes through various welfare measures, most recent being thevillage built by HUL in earthquake affected Gujarat, and relief &rehabilitation after the Tsunami causeddevastation in South India. HUL STRATEGY.The Rs 11,000 crore Hindustan lever (HUL) is formulating a new strategyto expand its presence in India’s Rural markets. HUL is one among thosecompanies in the country that derives huge revenues (over 50%) from therural areas. But in the past one-year, owing to the failure of the monsoonin many parts of the country farmers have registered a substantial fall inincomes and consequently the purchasing power. For the company thishas resulted in a flat growth of these markets. Witnessing the flat salesgrowth in rural areas. HUL has shifted its rural markets strategy. Earliereach business division of the company dealt with the rural market on anindividual basis; now the shift in strategy means the company will dealwith rural markets as a single organization to achieve greater penetrationand sales. This approach is expected to lead to better cohesion, greaterpush and deeper penetration which would eventually lead to better sales.HUL officials say it is not enough that individual business divisions pushtheir own strategies for rural market; the company will have to work inunison in order to achieve a balanced growth. Over the last three years thecompany has embarked on an ambitious programme, Shakti. ThroughShakti, HUL is creating micro-enterprise opportunities for rural women,thereby improving their livelihood and the standard of living in ruralcommunities. Shakti also includes health and hygiene education through
Rural Marketing Strategies 9 HULthe Shakti Vani Programme, and creating access to relevant informationthrough the i-Shakti community portal. The programme now covers about50,000 villages in 12 states. HULs vision is to take this programme to100,000 villages impacting the lives of over a 100 million rural Indians..Challenges faced by HUL in rural markets are:-1) Dispersed MarketsRural areas are scattered and it is next to impossible to ensure theavailability of a brand all over the country. Seven Indian states account for76% of the countrys rural retail outlets, the total number of which isplaced at around 3.7 million. HUL reaches their product in this dispersedmarkets. Their coverage is around 85%- 90% in rural areas. District fairsare periodic and occasional in nature. HUL prefer such occasions as theyallow greater visibility and capture the attention of the target audience forlarger spans of time. The fairs at Pushkar, Ujjain, Kota and Bulandshesherare major sources of attention for the rural buyer but aren’t concentratedunlike urban markets. Advertising in such a highly heterogeneous market,which is widely spread, is very expensive.2) No ReachibilityIndias 6,27,000 villages are spread with 128 million households, the ruralpopulation is nearly three times the urban. 700 million Indians may live inrural areas, finding them is not easy. Many rural areas are not connectedby rail transport. At least 50 % of rural roads are poorly surfaced, manyare totally destroyed or severly damaged by the monsoon and remainunserviceable, leaving interior villages isolated. Thus HUL facesdifficulty in reaching their products to potential rural consumers.
Rural Marketing Strategies 10 HUL3) Infrastructure in rural areasThe use of bullock carts look inevitable for many years into the future . Ofthe 15 million carts in the country , 12 million are estimated to be in ruralareas ,transporting about 6 million tones of freight per year. Camel cartsoperate in Rajasthan and Gujrat in both urban and rural sectors. InHaryana, Punjab and Western Up, buffaloes also are used for carts. Thesemake the HUL’s product available in rural markets but very slowly as itconsumes time.4) Prevalence of spurious brands and seasonal demand.For HUL’s product there are a multitude of local variants, which arecheaper, and, therefore, more desirable to villagers. Rural consumers arecautious in buying and decisions are slow. They like to give a product atrial and only after getting personal satisfaction do they buy it again.Rural markets there is seasonal demands of products as there are cropsgrown twice a year and people earn during this time and would like tobuy the products. The demand for HUL’s products during this period isnot high as rural consumers would not like to buy and store soaps anddetergent instead they would prefer consumer durables.
Rural Marketing Strategies 11 HUL ` WHEEL’s STRATEGIES WHEEL in rural marketsWheel was launched as an Economy segment brand by HUL. It waslaunched in 1987. It belongs to Fabric wash Segment of HUL.Wheel includes under it the following brands:-1. Wheel Green bar2. Wheel Active(Blue) bar3.Wheel Green Powder4.Wheel Active(Blue) PowderBrand:- WHEEL, Logo is in shape of a wheel of cart i.e CHAKRAPositioning of Wheel :- Best clean with less effort .It Cleans Effectively with lesser effort and lesser physical exertion. Wheelmakes a laborious chore like washing light and easy.Difference :- ‘Tough on Dirt and soft on Hand.’Wheel does not burn hands or harm clothes like some other detergents,which contain a high percentage of soda. It has Active Radiant which
Rural Marketing Strategies 12 HULmakes it different from others. The consumers seek a solution to heavyduty laundry, like bed sheets and curtains.Developing on this insight, wheel sought to eliminate the trouble of toughdirt or heavy-duty laundry. Mass market consumers have welcomed thesolution, making it the number one.Effectiveness:- Wheel is effective as an Aspirational part at a low costfor rural consumer.Communicated by:- The stars of rural India promoted this brand throughAdvertisements. Firstly it was advertised by a Hero who worked in theserial 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 andfunctions to rural consumer.Promotions:- Wheel aims at fulfilling the aspiration of this segment ofpopulation.Wheel follow certain promotion strategies they are;-1. Buy Wheel and get Consumer offers as Get things free with theproduct. Wheel offers to give ornaments, Gold, Scholarships for study,
Rural Marketing Strategies 13 HULHousehold Utensils , White goods free with the product. It also givechance to Get a new flat for yourself.2. Wheel also follows a strategy to promote its products by giving an offerto Buy 3 and get 1 free. This ensures the customer to buy more. Thisforces consumer to decide and store the product for one month.3. Wheel undergoes Rural Based Activities to promote its products.Wheel offers demonstrations to people about How to use it? Near theWells and Bathing Ghaats.Wheel also sponsors Film Shows in villages known as’Chitrahar’ toadvertise its products. The next is it also adopts Sampling operations invillages of offering free samples to the consumers.Pricing:- Wheel is priced at Rs 20 per Kg now. Previously , HUL pricedthe blue variant of Wheel at Rs 22 per kg, just above the green variantpriced at Rs 18 per kg.Wheel is now available even in smaller packs ranging between 1Rs – 5Rs.The powder is available in packs of 1Rs, 2Rs, and 5Rs and Bar isavailable for both 5Rs and 2Rs.Expectation of rural areas:-Rural consumer needs smaller packs ofproducts as there is No Storage space in rural areas as in Urban and theirDisposable Income is also low. The Shopkeeper in rural areas providedisposable packs by cutting the bigger pack into smaller one as needed bythe consumer.Eg;:- The 2 Rs pack of Wheel powder is used by the rural consumer totake it with them to the River and wash clothes. One pack cleans about 25clothes. There is no additive required, it provides instant lather and is asensory Quo for Cleanlinees.The Rural markets where there is Hard water that affects lather, theyprefer to use Wheel rather than an Oily Soap. Eg- In South and WesternIndia they prefer Wheel because there is Hard water.
Rural Marketing Strategies 14 HUL Wheel Jug MugWheel Jug Mug was launched in the discount bars segment, by HindustanLever Ltd (HUL) attempting to wade off competition that has emerged inthis price category in 2001. It is a dishwash bar in the discount segment.PRICING:- Wheel Jug Mug was launched at a low price point of Rs 10for a 400 gm bar. There was a competitive pricing strategy so far as thediscount dishwash bars segment is concerned.“The strategic intent is to dominate the discount segment with Wheel JugMug. The mix has the potential of becoming the branded market leader inthe 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 permonth salary, and thus price is integral to the brand strategy.The launch of Wheel Jug Mug offered an acceptable consumer price-value equation which is a bigger trigger to conversion in low per capitaincome markets. “Wheel Jug Mug increased penetration through itscompetitive price-value equation via-a-vis other available products(brands/ proxy products) at that range.It offer’s superior performance vis-a-vis the consumer’s current habit ofdosing detergent powder with ash to wash dishes. There are stronglyentrenched barriers to conversion amongst ash/ mud users, the mix hadperformed superior at an acceptable cost vis-a-vis their practice for anyconversion to happen.PROMOTIONS :-Incentivizing the trade channel by offering bettermargins, market activation, visibility, consumer offers and such othernovel concepts are all part of the trade channel promotionsThe company processed for defining new media vehicles to promote theproduct in rural markets, where the only channel which is high onvisibility is Doordarshan.
Rural Marketing Strategies 15 HULWheel is promoted through a good communication strategy, marketactivation to distribution, live product demonstrations, etc.The marketing strategy is to exploit the full potential of the Wheelequity into logical dish wash extension — given that consumer habitrevolves around using cheap detergent powders for washing dishes.HUL is working on maximizing consumer value in every market segmentand this will be offered, as is appropriate, through the integrated brandWheel. Relationship Marketing: The case of HUL.Hindustan Lever had launched in 1999 its relationship marketing exercisesaid to be the first of its kind in Rural India by a major FMCGcorporation. It is different from conventional campaign through mediahoardings, sponsored events, etc… It involves building relationships withthe 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 ofPepsodent, its mass market toothpaste. In the toothpaste market the maincompetition was between HUL and Colgate. According to the figures ofJuly 1999, Colgate had a 50 % share of the market (including all priceranges ) down from 60 %. HUL had an overall share of 40 %. Pepsodentwas the fastest growing brand in its slot with annual growth rate of 22 %.
Rural Marketing Strategies 16 HULFocus:The objective in rural areas is to tap first time users. Statistics include lowusage patterns. In China, about 90% of the people use toothpastecompared to 47% in India. About 27% use toothpowder and only 20 %had visited a dentist. Even in the urban areas, where consumers have usedtoothpaste right from childhood, the overwhelming majority usestoothpaste only once in the morning whereas teeth required brushing mostat bed time.Strategy:1. Product: HUL introduced a 15 gm Pepsodent pack to target the firsttime user. Also its up market brand Close up was introduced at retailoutlets in suburban and rural areas with a price tag of Rs. 3.50.2. Campaign: The Operation Bharat Programme. HUL’s door-to-doorcampaign in rural areas, concentrates on educating the consumer byholding free dental camps. It also had dental education programme inassociation with New York University. In India, there are scholarshipsfor students in dental colleges for collaborating in research at suchcenters.In Mysore, for instance, a dental check-up camp was conducted at allschools ( where the students belong to comparatively lower SECs) in July1999. In two years since 1996, some 12 lakh students have been coveredby such check-ups. There is Rural Hygiene Programme, a counterpart to
Rural Marketing Strategies 17 HULthe urban one. It has a target of reaching 20 crore people in 3,50,000Villages.3. Door-to-Door Sales: About 10 million homes in rural India havebeen touched so far and target for that year was 12 million. The projectessentially involves selling a discounted personal care kit containingmini-packs of shampoo, toothpaste, talcum powder and face cream. Thekit is sold at Rs. 15. Sold separately, the products would together costthe consumer Rs. 27.4. Cinema: After home-to-home contact and sales in villages during theday. HUL concentrates on cinema time in the evenings. There are stillvillages which do not have TV. Cinema shows are quite popular there.Effects:The strategy has highly encouraging results. The market has becomeaware and responsive for personal care products. Fair and Lovely creamwas test launched in Maharashtra for a target audience. About a yearbefore the launch the use of the cream was less than 1 % of zero in manyillages. It shot up to 20% in one year. In the same market shampoo usewas about 6% and went up to 18% even if used once a week.
Rural Marketing Strategies 18 HUL CONCLUSIONRural Market is Gold Mine which is paved with Thorns but HUL hasrightly tapped it. However there is a long way to go to capture all therural markets. In Rural markets company face various problems likeUnderdeveloped People and Underdeveloped Markets, Lack of ProperPhysical 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 firstFMCG to tap rural markets and has generated huge revenues from ruralmarkets.There were many other companies which entered rural markets and wassuccessful and gave competition to HUL some of them are Cavinkarewhich 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 ofurban marketing. Rural marketing is completely different ball game – talkabout its consumer tastes, competition, demographics, communicationmedia, socio-cultural milieu, or the infrastructure. The spread andheterogeneity further complicate matters. One can conclude thatMarketing in the urban and the rural areas is different as product mayvary in rural & urban area and the marketing strategies to market theproduct is also different mainly the packaging and distribution strategy inrural area is designed keeping in mind the rural consumer. It is thereforeapt to do a thorough groundwork before jumping headlong into the ruralmarkets.
Rural Marketing Strategies 19 HUL RECOMMENDATIONSHUL, a major FMCG to enter rural markets, but not the only one now.There are many companies which entered rural markets. HUL needs tobe competitive and keep on updating its strategy to have a foothold inthe Rural markets.For India to maintain and improve economic growth it is imperative toimprove rural markets. Even today there is imbalance in ruraldevelopment. Government and Marketers have to undertake measuresto improve the Rural markets.
Rural Marketing Strategies 20 HUL BIBLIOGRAPHY1. Rural & Agricultural Marketing book– Ramkishen.Y2. Rural Marketing – C.S.G. Krishnamacharyulu and Lalitha Ramakrishna.3. Marketing Management (10th Edition) – Philip Kotler4. Marketing Management (13th Edition) – Philip Kotler