Unilever in India: Hindustan Levers Project Shakti

Marketing FMCG to the Rural Consumer

Executive Summary
HLL has enjoyed a competitive advantage as a sole provider of personal hygiene care
products before the liberalization of Indias economy. However, with the entry of foreign
MNC, HLL is suffering from stagnant growth and lower profit margin. Project Shakti was
created to address these issues. The high growth of Shakti has created managerial challenges
to the project management team. As Shakti grows, the current management structure has
become inefficient to make it profitable with minimum costs. Thus, restructuring
management measure is crucial to sustain Shakti in the long run and to provide HLL with
competitiveness.
Challenges of Project Shakti
Rural market is already giving HLL a competitive advantage. But competitors are also
tapping into the rural market with existing HLL direct channels. Thus to continue HLL
competitive edge, Project Shakti is essential. Until 2004, Shakti is contributing 3.5% (pg 6 &
17: 15 x 20 / 85) towards HLL total revenues and it still has potential to continue growing.
This is because personal hygiene awareness is in the increase. Shakti may be able to achieve
the founders dream of 15%-20% of total revenues, assuming that Shakti can increase the
usage rate of current consumer. However it will not achieve the market penetration of over
500 million rural population as this figure signifies that HLL will nearly monopolize the rural
market with 80% penetration rate. The greatest challenges that Shakti face are costs and
management control to make it profitable.
Managing Project Shakti in the long term
The Shakti system in the beginning of the project was good but not sufficient to handle the
growth it had obtained. Thus changes are needed to make it more cost effective and
profitable. As Shakti matures, there are a number of entrepreneurs who are more successful
than the others. HLLs RSP can organize a monthly gathering for all entrepreneurs in the
same district, encouraging interaction and communication among entrepreneurs. By doing so,

the experience and knowledge of the successful entrepreneurs will motivates others. This will
increase the efficiency of each entrepreneur (profit increase) and also decrease the amount of
time spent by RSP to visit individual entrepreneur, giving RSP more time to explore untapped
villages in the same district. Thus the current 500 RSP is sufficient to manage 25,000
entrepreneurs. Also, HLL should be focus only in states with SHG movement to increase its
cost effectiveness. HLL should also cultivate more successful entrepreneur from existing
entrepreneur as organic growth of these entrepreneur is faster and easier to give profit. As
HLL penetration to rural market is only a mere 16% (1 entrepreneur in 5 villages, pg 12), the
market potential and market size is big enough to give a fair share to every player, thus the
conflict between Shakti entrepreneurs and direct sales channel, if ever arise will be minimal.
Moreover, a control measure can be applied by limiting the number of entrepreneur in each
district thus minimizing conflict.
iShakti and Shakti Vani survivals for Shakti
iShakti and Shahti Vani are Shaktis initiatives created to provide rural India with access to
information and social communication. Although the setting up costs for those two programs
are quite high, Rs 150 million, funding is likely to be achievable because this cost occupies
about 3.6% of Shaktis revenues (150 / 3.5% x 120,000 (pg 2)) and therefore Shakti itself can
finance these programs. Funding is also possibly receivable by persuading other profits
centers to invest in the programs and by using the revenues of iShakti to finance Vani.
Furthermore, iShakti will have high potential revenues from selling MR to the internal
customers and to sell the channel to other interested, non-competitor parties, e.g: banks,
insurance companies, farm equipment etc. Vani itself does not generate revenues directly, but
it is a powerful tool to increase hygiene awareness in rural India, as a result indirectly
increase HLL sales at long term. In short, iShakti and Vani will be workable and scalable to
help Shakti success.
Social Impact and Role of Business
HLL should make a social impact on rural India. By involving in the improvement of rural
living conditions, HLL can and will continue to enjoy the competitive advantages as the main
company to participate in social development. The connection between business and
communities will develop lifetime customers for HLL. This involvement may not be the

typical role of business, but as long as it is profitable to HLL without compromising moral
and legal issues, it will be a good move for HLL to increase its reputation as a socially
responsible organization.
Conclusion
Project Shakti started to suffer from growing so big that the current structure needs to be
adjusted. Restructuring the managing measure of RSP to entrepreneurs, focusing Shakti in
selective districts and prioritizing efforts in existing entrepreneurs, Shakti will generate
higher revenues with minimal increase in costs. Shakti should continue as it is providing HLL
a distinct competitive edge and increase HLLs profits and growth. Moreover, Shakti helps to
position HLL as socially responsible organization.
----------------------------------------------------------------------------------------------------------------Questions for discussion:
1. How can project Shakti make a contribution to HLL's bottomline?
2. What are the critical challenges facing HLL in Making Shakti work?
3. If Shakti cannot become profitable, should HLL continue the program?
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Hindustan Levers Project SHAKTI Marketing FMCG to the Rural Consumer

FACTS OF THE CASE:

Intense competition from International as well as local players in 2000.

Necessary for HLL to penetrate the untapped rural with urban markets saturated.

Rural Markets were scattered over large areas and per capita consumption was low.

Shakti was promoted as a CSR activity.

Project Shakti was a unique sales channel due to the reasons apart from its scale and
deep rural reach was that it reached the final consumer rather than an outlet which
would then sell to consumers.

Shakti created a vast local, credible, one-to-one endorsers.

CHALLENGES:

Challenges:
Education level of indian women and cultural differences in
different regions
Not many microfinance companies are interested in rural areas
because of low income level of population.
Scaling involves high process costs
More human resource needed to train people to become
entrepreneurs and maintain them
Support needed from various sectors of government
Cultural issues like language and communication
Almost 10-15% of Shaktis revenues belonged to HR costs, a
major concern
Lack of confidence of entrepreneurs to invest because of past
failures
Not many SHGs to collaborate with

Advantages:
New markets can be tapped
Even without the direct retail outlet channel final customer can
be reached
A more personalized service
Preference to Entrepreneurs
o Credit was also given to regulars
o iShakti and Shakti Vani created a loyal customer
base and improved market penetration as
visibility of HLLs
products increased

o Discounts were given to consumers

o Creating a network , passing on part of profit to
another person who sells your goods at
another place

To expand into rural market while continuing its CSR activity.

To reduce costs on training and HR related activities.

To expand the Shakti program in more states.

To attract investments from the brand houses.

To increase confidence and motivation of the enterpreneurs.

S.W.O.T:
STRENGTHS

Shakti is scalable and sustainable due to socially beneficial aspect

Backing of huge Brand House

Government and NGO support

Difficult to imitate model for competitors and especially in a short time

WEAKNESSES

Rural markets were scattered over large areas and per capita consumption rates were

low.

Unequal acceptance of the role of women Entrepreneurs in different states.

Poor reach of electronic media and significantly lower literacy levels

OPPORTUNITIES

Recognition of the role of women by society.

Huge untapped rural market

Support from government.

THREATS

Scattered rural markets.

Competitors are aping the strategy.

High need for training of the entrepreneurs.

RECOMMENDATIONS:

Select entrepreneurs with some basic level of education.

Increase the product variety available with the entrepreneurs

Concentrate more on VANI as it acts as a advertising platform & can generate

revenues

Offer more discount to the entrepreneurs and rely on economies of scale.

Entrepreneurs from close proximity can form groups and HLL can sell products to

them at a cheaper rate. This would increase their margins.

Mobile has become quite popular and hence can be used to promote and market the

Shakti campaign. Also it can be used for Brand building exercise of HLL.

Presence of Governments National Channel- Doordarshan can used to promote and

create mass awareness about the Project SHAKTI.