MARKETING

MANAEMENT
TOPIC- A CASE STUDY OF RURAL MANAGEMENT BY HINDUSTAN
UNILEVER LIMITED(HUL)

GROUP-2
SEC-K

Name Enrollment no. Seat no

Subham Ghosh 19BSPHH01C1243 77
Pritanshu Acharya 19BSPHH01C0835 79
Riya Dutta 19BSPHH01C0943 52
Soham Seet 19BSPHH01C1551 53
Anisha Nagrecha 19BSPHH01C0137 84
Rudra Narayan Mishra 19BSPHH01C1706 85
Nitisha Rajput 19BSPHH01C0740 80
 TABLE OF CONTENT
SL PAGE
NO. TOPIC NO
1 INTRODUCTION 1

2 PROMBLEMS IN RURAL MARKETING. 1

3 SUMMARY 2

4 COMPANY BACKGROUND 2

5 CASE 4

6 OUTLINE OF THE CASE 4

7 OUTCOME OF THE CASE 5

PROPOSED SOLUTIONS/CHANGES TO BE USED IN RURAL

8 MARKETING
5

9 SOLUTIONS TO THE PROBLEMS OF RURAL MARKETING IN INDIA 6

10 RECOMMENDATIONS 8

11 REFERENCES 8
INTRODUCTION

Unilever, A Dutch multinational holds 52% stake in Hindustan Unilever Limited. HUL today
stands the largest FMCG Company with more than 30 brands spanning across 20 categories.
According to the recent surveys, nine out of ten Indian households use HUL Products. The
company has constantly worked on its corporate responsibility culture and has taken lot of
initiatives to take care of local communities and improve quality of life in India.
The rural markets can be defined as an area of darkness to most of the entrepreneurs but they
are undergoing definite but silent revolution in terms of enhanced purchasing power, volume of
consumption of goods and services and consumption priorities. Around 70% of the Countries
consumers are in rural markets which contribute to more than half of the National income. It
includes half of India and if we consider growth rates in per capita Income, Rural and Urban
markets almost match each other.

PROMBLEMS IN RURAL MARKETING.

 Low per capita Income:

The per capita income in rural areas is very low as compared to the urban people. The demand
in rural markets depends on the agricultural situation, as they are depending on the monsoons.
So, the demand is not stable or regular. Therefore, the per-capita income is low in villages
compared with urban areas.

 Low levels of literacy:

The literacy Level is low as compared to urban areas. This leads to a problem of communication
in rural areas. Print media becomes ineffective and to an extent irrelevant, as its reach is poor.

 Problems in sales force management:

Sales force is generally hesitant to work in rural regions. The languages and dialects vary from
state to state, region to region, and probably from district to district. As messages have to be
delivered in the local language, it is quite difficult for sales force to communicate with the rural
consumers. Sales force finds it difficult to adjust to the rural environment and inadequate
facilities available in rural areas.

 Deprived people and deprived markets:

The number of people below the poverty line did not decreased in any appreciable manner.
Therefore poor people and consequently under developed markets characterize rural markets.
Majority of rural population is tradition bound, and they also face problems such as inconsistent
electrical power, scarce infrastructure and unreliable telephone system, and politico-business
associations that hinder development efforts.

 Major problem in rural marketing-Acute liquidity squeeze choking sales in rural

markets, says HUL

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HUL, the country’s biggest consumer products company, said the trade — especially wholesale
and smaller retailers — is facing an acute liquidity crunch, a key reason why rural markets
expanded at a lower rate than urban ones for the first time in seven years. HUL and other
consumer goods companies have provided credit support in some instances amid a liquidity
squeeze that has gripped parts of the financial markets.
The Indian fast-moving consumer goods (FMCG) market grew 7.3% in the September quarter,
compared with 16.2% in the year earlier, according to a Nielsen report released on Thursday.
Rural consumption, which accounts for about a third of the market and has been outpacing
urban sales growth, came under stress in the past three quarters. It grew at a seven-year low of
5%, sharply decelerating from 20% a year ago. In the past decade, sales of branded daily needs
in the nation of 1.3 billion people have increasingly relied on the rural hinterland, home to more
than 800 million, whose purchase behaviour is largely linked to farm output. Rural India
accounts for 36% of overall FMCG sales. Nielsen said small manufacturers have seen the biggest
drop in both distribution as well as sales. Such companies, which accounted for nearly a third of
sales in the hinterland, contracted 23%. Small player exits have increased by 33% and new
entrants in the market have fallen too due to strong inflationary pressures and increasing input
prices

SUMMARY
HUL contributed to the rural development by running various projects on rural development,
community welfare, education, health, sustainable development etc. When HUL first entered
the rural markets, it faced a number of problems. Due to lower literacy rate it became difficult
to reach out to them and communicate and spread awareness about their products. Apart from
the traditional beliefs of the people the lower level of spending power was also a major
concern. The Rural markets usually prefer simple and easy to use products. They prefer
convenient and cost-effective packaging.

COMPANY BACKGROUND
Hindustan Unilever Limited (HUL) is a British-Dutch manufacturing company headquartered in
Mumbai, India. Its products include food, beverages, cleaning agents, personal care products,
water purifiers and consumer goods. HUL was established in 1933 as Lever Brothers and
following merger of constituent groups in 1956 was renamed as Hindustan Lever Limited. The
company was renamed in June 2007 as "Hindustan Unilever Limited".

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EVALAUTION OF THE CASE

CASE
HUL designed a new and a simple model which helped them to have a first mover advantage
and reach the smallest of small village and the remote towns in India, which will help them
in having a edge over other companies which has still not reached these places. It would also
help HUL devised positioning ad penetration strategy by asking local to operate as direct to
home or door to door. They employed a team of women sales team. The main aim behind
this scheme was commission-based income generation scheme targeted to all women. The
task which was easier to say than to be done. The most difficult part which HUL had to face
was to convince the local female members of the committee, called Shakti Amma’s. Their
work was not just only to create awareness about the products but also convince and sell
them in their communities.
The people were not ready to use the products which HUL has introduced to them. So, they
have to give them the products for free of cost for their first-time use. Due to the absence of
television, they also used various means of advertisement like radio which was the only
possible way.
As HUL was entering into rural India, they had to deal with people who lacked proper
education. So, they educate people to start using their products and what were the benefits
that they were going to get. HUL also worked with banks regarding the issue of money to
woman’s for taking up small amounts of loans to generate income. Thus, HUL helped these
women for a sustainable living. In today’s date they have a a large family of around 30000
employees. The ladies employees under who were working under the rural marketing
department of HUL were supported and accompanied by the managers who moved with
them door to door, provide free courses on hygiene which helped them to sell their products
in a much convinced and better way.
Today HUL has stands among the largest FMCG among all its competitor with more than 35
brands and over 700000 villages.

OUTLINE OF THE CASE

Hindustan Unilever Ltd (HUL) is one of the largest FMCG in the world with more than 35
brands It has reached over 70000 villages. They have employed around 30000 people. HUL
designed a new and simple model which helped them reach remote towns and villages in
India and boost sales at the same time. They formed a sales team consisting of women on
the basis of commission-based income generation scheme. In addition to creating awareness
of their products they had to convince and sell them in their communities. To increase
product consumption and sales, HUL offered its products free of cost to people for their first-
time use.
They used various means of advertisement especially radio as majority of rural population
had them. They educated people regarding the benefits of using their product. It also helped
women for a sustainable living by giving those loans. Lady employees of the rural marketing
department received assistance from managers who educated those regarding sales and
personal hygiene. Hence, they were able to sell their products in a much convinced and
better way.

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OUTCOME OF THE CASE
The main aim was to enter the rural market that HUL was successful. They were successful in
building a team of ladies to sell the product. But, the most difficult part was to convince
people to buy the products which was the most difficult part. The ladies who were the sales
person were able to get a source of income for which they were micro-financed by bank. But
due to the rural area playing into the picture they have had a difficult time in convincing the
people and the price point was one of the major factor which played a vital role.

PROPOSED SOLUTIONS/CHANGES TO BE USED IN RURAL MARKETING

 Creating new strategies for advertising.

One major challenge in tapping the rural market is how to reach consumers in remote areas
with limited electricity and little access to mass media.
Hindustan Unilever limited (HUL) has been using mobile technology to create audio
entertainment for rural areas, adapting a common practice among frugal cellphone users –
the missed call. To conserve talk time, mobile phone users can dial a number, then hang up
before they are charged, although the other person can see who called. It’s a way of letting
someone know you want to reach them. In 2011, HUL exploited the practice in a pilot
promotion for its Active Wheel detergent in some regions of India’s poorest and most rural
areas. People were asked to call a number that cut off after two rings, so it cost them
nothing. An automatic free callback was provided some comic dialogue from Bollywood star
Salman Khan and ads for Wheel. In four months, HUL got 16 million calls and Wheel sales
tripled in that region.
HUL expanded the concept to offer an 18-minute blocks of audio entertainment interspersed
with ads for Unilever brands. The cost was less than 2 cents per impression. By 2015, it had
grown to 35 million subscribers and was adding 25,000 subscriber a day. Unilever was
planning to create a version in Pakistan, Bangladesh and some African countries.

 Design products and set price for rural consumers

Few Years ago, HUL pioneered the use of low-cost, single-use packets and made its products
affordable for lower-income customers who often shop daily for necessities. Now these
packets are ubiquitous in developing countries and around the world. HUL itself sells 27
billion sachets every year.

 Help managers adopt rural mindset

Underlying HUL’s success in rural India is a program that requires managers to spend at least
a month during their first year living in a village. They can see how rural consumers live, and
get a firsthand perspective on their needs and aspirations. That personal experience will give
them insights that they could never gain from reading reports or conventional market visits.
Several HUL executives said they credited their success in part to that program.
HUL came up with various strategies which helped them penetrate into the rural markets
better. The Rural consumers are price sensitive and expect value for Money hence they

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introduced more affordable products such as Lifebuoy, Wheel, and Lux etc. They also
introduced the concept of value engineering which involved replacing expensive raw
materials with cheaper ones without sacrificing the functionality and quality. They also
made available soaps in 25grams packs in rural regions. They also used various distribution
strategies such as, they were in direct contact with the local retailers and local vendors. They
also used vans to deliver its products to local vendors and local retailers in rural areas which
drastically improved its reach. Their Promotional strategies were included with positive word
of mouth through the local reference groups which was considered a very key success. They
also used traditional art forms such as puppet shows and street plays to create an awareness
through village panchayat.

HUL has always been at the forefront of experimenting with innovative methods to reach
rural customers. In 1998, HUL Conceptualized “Project Streamline” to enhance its control
over the rural distribution.

SOLUTIONS TO THE PROBLEMS OF RURAL MARKETING IN INDIA

 The rural population should be developed in all aspects of strategies and must be
designed by the central government, respective state governments, local bodies and
NGOs for the upliftment of the same.

 Adequate infrastructural facilities such as roads, bridges, ware houses, marketing

yards, information centers etc., must be provided by in collaboration with public and
private partnership.

 Communication networks like postal, telegraph, telecommunication, television,

cinema, etc., need to be strengthened in the rural parts of India. It can be done with
the help of the technology and customized services designed to satisfied the
communication requirements of the rural masses.

 Banking and financial system needs to be redesigned and reinforced as per the
requirements of the rural societies. Private banking system, co-operative credit
societies and other financial institutions should extend their operations to the rural
regions and should provide all possible services.

 A program should be initiated so as to connect all rural areas with the highways,
urban and semi urban centers throughout the country. A broad understanding has to
be developed on cultural patterns, climatic and geographical conditions pattern of
living traditions, customs, values, and beliefs of the peoples with the help of research
centers in that respective rural regions.

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 Training Programs must be designed to impart the knowledge in vocational and
nonagricultural sectors to the rural populous so that the dependency on agriculture
can be reduced and the rural entrepreneurial activity and industries can be
strengthened further. This measure will definitely increase the average and per capita
income of the rural households in India.

 Both central and state governments should provide a platform through which the
rural entrepreneurs can join together in an given area to combat the problems of low
production this would include standardizing their products, common marketing and
sharing of revenues in proportion to the contribution by each member.

 Interventions by government agencies is necessary to do the market research and

disseminate the findings to the rural marketers at an earliest so that they can be
benefited with the competitive advantage. Hence marketing planning must be done
on scientific and statistical basis.

 Rural entrepreneurs must be trained in the usage of computer and information

technology. Customer data base must be maintained to build healthy business
relations with the help of electronic and social media platforms or other media.

 Local business clients, markets, customers and consumers must also be identified.
This will help reduction in the cost of logistics, transportation and price of the
products.

The main obstacles that the marketers face in the rural marketing is consumption
habits and infrastructure as mentioned by the Coca Cola spokeswoman-. The
situation is no different in the case of Hindustan Unilever Ltd. Of the utmost
important P from the 4P’s for a consumer is Price. This stands true for a consumer
who is residing in an urban area as well as rural area.
The problems that HUL was facing as mentioned above were low per capita income,
illiteracy, poor sales force and infrastructure. Before entering into a rural market, a
marketer needs to do a well-defined and an elaborated Segmentation, Targeting and
Positioning. It is of utmost importance to know who your customer is and what they
need, and after proving them what they need- how to maintain the brand loyalty.

The strategies HUL used proved to be effective and beneficial for them- a few of
them have been discussed earlier. The reason for their success was that the products
were sold by a person who was one of them or a theme that they could relate to and
that made an impact. Another factor that played in favor of HUL was the pricing
strategy of its products such as ‘Wheel’.
Having been spent most of their lives rural areas the Baby Boomers share their
experiences about the rural marketing. Living in a small community meant strong

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 communication among the members of the community. A marketer can use this as
an opportunity to marketing its product via Word of Mouth as people in rural areas
rely on that. This close knit community was also the backbone of the Shakti
Campaign.

HUL was one of the companies that first introduced single use sachets to suit its
targeted segment of the customers to meet their needs within the affordable price
range.
India is a developing country and is experiencing a lot of changes in infrastructure,
social as well as technologically. As the urban areas are getting updated
technologically, rural areas are no behind. The development of the infrastructure
such as proper roadways, telecommunication towers, 24x7 supply of electricity have
ensured that people in rural areas are up to date with the technology as well.
A well-structured CSR activity planning helps in the development of the society,
encourages new start up ideas and help them grow or inculcate some strategy that
has been developed after observing the people in the society.

RECOMMENDATIONS

 Low Pricing – This is a widely used strategy used by firms to enter into the rural
sector which is a highly price sensitive market. By keeping the unit packings relatively
small, prices can be kept low for the products. However, this strategy may not be
applicable to all kinds of products, but wherever it can be used, market expansion
will be a direct result.

 Hiring local Workforce – Employing local people of the rural areas will reduce the
communication barrier where otherwise most sales people are reluctant to work as it
will ensure that accurate communication of product description is carried out. This
strategy will also provide the firm with cheaper labor force.

 Modifying Product Design – Keeping the rural lifestyle in view, which differs from that
of an urban lifestyle, the firm can come up with new ways of designing their products
specially meant for rural areas.

 Durable Products – The durability of a product is an important factor in the minds of

the rural people when purchasing a product. The product should be sturdy enough to
withstand rough handling and storage.

 Simple packaging – Avoiding sophisticated packing will not only help bring down the
costs of production but also result in easy usage.

 Employing Co-operative societies as Distribution Centres – The role of feeder

markets/mandi towns shanties/haat/jathras/melas etc play an extremely important
role in the distribution of products as they have greater accessibility to deeper rural
area than the traditional distribution centres.

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 REFERENCES

https://hbr.org/2016/12/how-unilever-reaches-rural-consumers-in-emerging-markets

https://www.academia.edu/9085098/Rural_Marketing_A_Case_Study_on_Hindustan_Unilev
er_Limited_Author

https://m.economictimes.com/news/economy/indicators/acute-liquidity-squeeze-choking-
sales-in-rural-markets-says-hul/amp_articleshow/71641066.cms

https://www.researchgate.net/publication/333131633_An_emerging_Indian_rural_market_Challeng
es_and_opportunities

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