Unilever in

India: Hindustan Levers Project

Shakti- Marketing FMCG to the rural
consumers

Submitted by:
Group No: 9
Aparna Johari - Roll No: PGP/17/197
S. Akshaya - Roll No: PGP/17/233
Nishtha Jain- Roll No: PGP/17/221
Sunando Das- Roll No: PGP/17/245
Himanshu Singh- Roll No: PGP/17/209

1. What are the key features of Shakti? What are its positive aspects and what are its
drawbacks?
Key Features of Shakti:
Sales and Distribution that delivers growth

Communication initiative for brand building

Micro-enterprise initiative for creating livelihood

Social initiative for improving the standard of living and catalyzing affluence in
rural India

Contributes both to HLL and to the community it is a part of

Unique sales channel reach to final customers rather than an outlet which would
then sell to consumers

Positive aspects:
Individual as entrepreneur responsibility was not shared by many

Incomes generated were significant to these entrepreneurs as it was not shared by a

group

Providing opportunities for underprivileged women

Credible, one-to-one endorsers

Improved supply-chain efficiency, exit from non-core businesses

Drawbacks:
The amount that the Shakti entrepreneur could make was limited as she sold at local
outlets, and had to sell at a price that would enable the outlet to earn a decent retail
margin when they in turn sold to the customer

These women were first timers to any kind of independent economic activity and did
not have a clear idea as to what was expected of them

Difficult to get the brand managers to invest in Project Shakti

Cost incurred on human resources were ballooning with scale

Formal training programs for skill development Difficulty in getting the women to
a central classroom location for the training programs

2. What was the motivation for the Shakti initiative? Was it a CSR initiative?
Project Shakti was a rural marketing initiative of Hindustan Lever Limited (HLL). It
identified rural India as a key source of growth and competitive advantage in the future.
The motivation behind this initiative was that it would provide access to rural markets
which would be a big differentiator among competing FMCG companies. This was
because growth rates in urban markets would slow down as competition heated up and
the number of competitors continued to grow while rural markets and their wealth
remained largely untapped.

It was a sales and distribution initiative that delivered growth, a communication initiative
that built brands, a micro-enterprise initiative that created livelihoods, a social initiative
that improved the standard of life and catalyzed affluence in rural India.
Shakti was not a CSR initiative. The sponsoring agency would offer micro-credit to one
or more members of the self-help groups in rural India and HLL would partner with these
recipients by offering them opportunities for micro-enterprise. Even iShakti which was a
new Project Shakti initiative had its cost coming upto 3-5% of sales of Project Shakti.
3. How can Shakti make a contribution to HLL's bottom line?
HLL total turnover= Rs. 110 billion
Direct rural business in bottom end market= 20% of HLL turnover= 22 billion
Also, direct coverage of rural business=40% of total rural business
So, total rural business= 22/0.4=55 billion
Shakti contribution in HLL rural turnover =15 % of total rural business
=8.25 billion
Currently, Shakti is contributing 7.5 % to HLL total revenue. (8.25/110*100)
Cost incurred on Shakti= overhead costs+ costs for Vani and iShakti programs
=15% of 8.25+ 5% of 8.25=1.65 billion
Profit= 8.25-1.65 billion=6.6 billion
Thus, HLL is making profit and thus its contribution to revenue will increase as it is
scaled-up.
A large portion of sales came from smaller SKUs and particularly from Sachets, an
innovative packaging solution targeted at low income consumers. Shakti proved to be
beneficial in reaching out to the needs of low income consumers in the rural areas
through the introduction of Low Unit Price Pack or LUP. Products which had suffered a
low penetration among lower income groups were now affordable to the consumers.
Growth of Shakti turnover was a result of the expansion into new markets and
appointment of new entrepreneurs along with the growth of the existing entrepreneurs.
This is evident from the fact that Project Shakti Turnover in 2004 was 4.5 times the
turnover in 2003. This implies that Project Shakti was growing at a steady rate.

Project Shakti broke even in 2004. Sales through Project Shakti contribute 15% of HLLs
rural sales where it operated in the districts in 2004. The rural sales contribute to 50% of
the total revenue of the HLL and the importance of the tapping into the Inaccessible
Markets having low business potential becomes important in this context. There is a huge
potential of growth of Shakti Programme. From the current figures of 12,000
entrepreneurs across 12 states and 50,000 villages, the Shakti Project must double its
reach to 100,000 villages by the end of 2006. For Shakti to account for 15 20 % of the
company revenues, it should be able to reach 250 million additional consumers through
10000 entrepreneurs by 2010.
4. What is the Economic Value created by Shakti? What is the social value?
Shakti increased the monthly income of rural families from Rs. 1,000 to Rs. 15,000.
Also, to address the needs of the consumers HLL introduced low unit price packs or
LPUs. LPUs were small, low priced SKUs of the brands. The consumers can now afford
the products in smaller units.
The social objective was to provide sustainable growth and livelihood opportunities for
underprivileged women. Also, in rural India, entrepreneurs face difficulties in funding
their business. They also face investment opportunities. HLL provided a medium to fund
these micro enterprises which had a deep social impact.
They introduced a project iShakti where people of the villagers could access the
information related to education, career opportunities, agriculture, health, through
desktop computer.
They also initiated a project Shakti Vani which communicated villagers the best
practices in society related to community hygiene and organizing school contact
programs.
5. What are the critical challenges facing HLL in making Shakti work? What should
Shakti's managers do?
HLL is facing number of challenges in making Shakti work:
1. Branding in rural areas which are media-dark region
There was internal challenge for HLL to convince brand managers to invest in
Shakti. Though it had a network of more than 12,000 local influencers. The brand
managers had no idea about their expanse in market.
2. Costs incurred
The costs incurred on human resources (10%-15% of revenues) increased with
scale-up of Shakti. Currently, it had 500 RSPs for 12,000 entrepreneurs. So, Shakti
has to find some way of doubling the number of entrepreneurs without significant
increase in number of people.
3. Varying social, political and economic environment in different states

Out of 12 states in which Shakti operated, state governments of only 5 states

cooperated closely. Also, not every state had Self Help Groups to partner with. They
had varied levels of prosperity and infrastructural facilities which affected the
viability of Shakti enterprises and accessibility of villages respectively.
4. Cultural issues
Status of women: At some places, society allowed women to be independent but in
some districts, it was imposible for women to go out of their homes and sell products
to other homes or mail retailers.
Language barrier: The same field force found it difficult to work across different
states that had different local languages
5. Lack of confidence among women
Many of the rural women have never handled any economic activity independently.
So, they easily get demotivated by a few rejections in the first few calls and have a
tendency to drop the business.
6. Competition with existing local retailers in rural areas
The consumers who were buying goods from local retailers for a long time will be
reluctant to buy from Shakti entrepreneurs in the beginning.
Recommendations for managers:
1.

For branding the project, the brand managers can utilize the position of the rural
sales promoters who influence the Shakti entrepreneurs and help them create viable
business.
The statistics of present network must be taken from RSPs to know the current
market of HLL in these rural areas.

2. Also, RSP team should have one person belonging to the same region where the sales
are being promoted to narrow down the cultural and linguistic problems.
3.

The women can be given assistance about the economic activity. They should be
taught strategies to sale a product. Example- Network creation must be stressed
among women for better results.

3. Also, An association can be formed consisting of women entrepreneurs of 10-12

nearby villages. They can share their experiences and solutions they sought for
different problems.
6. If Shakti cannot become profitable, should HLL continue the program? Why?
HLL started Project Shakti with two objectives:
Business objectives: To extend HLLs reach into untapped markets and to develop
its brands through local influencers.
Social Objective: To provide sustainable livelihood for underprivileged rural
women.

Even if Shakti is not profitable, it is serving its larger purpose of improving the
standard of living in rural areas, empowerment of women, creating awareness about
hygiene, extending benefits of information technology to rural area. Thus, it is
fulfilling its social objective.
In all other markets where HLL tapped into, it is facing challenges due to presence
of competitors and its sales and profits have decreased.
In the districts under Project Shakti, there are no competitors. Also, it has first mover
advantage in this market.
Shakti is already contributing 15 % of turnover in the districts in which it is
opersating. With expansion of the project, the revenue generated will increase in
future. In this segment, HLL has:
Potential market : 500 million population in 5 lakh villages
Tapped market: 12,000 entrepreneurs in 50,000 villages
Target market: 100 million consumers (25,000 entrepreneurs) till 2006
Additional 250 million customers through 100,000 entrepreneurs by 2010
So, HLL should continue with Project Shakti.