Unilever in India: Hindustan Lever’s

Project Shakti- Marketing FMCG to

the Rural Consumer
Group
Ishtmeet Singh
Aman Dua
Isha Dahiya
Anshul Goel
Ankit Gupta
 What are the key features of Shakti? What are
its positive aspects and what are its drawbacks
• .The model of shakti built on the features that best suit the rural folks. So the project shakti
featured to win a big pie of the rural market and also wanted to create a deep social
impact.HUL partnered with recipients of the micro-credits by offering the village women to
be micro-entrepreneurs.
• HUL tied up with MACTS to sell its products, which subsequently would sell it into the SHGs.
A member of each SHG was appointed entrepreneur by the SGH members.
• The entrepreneurs sold the products to the local outlets at a price that enabled the retailer to
win a margin when sold to consumers. HUL sold its products at a discount to the
entrepreneurs in such a price that it can avoid the channel conflict.
• To help the entrepreneurs to create and grow businesses , HUL hired RSP to coach the
women.
• Sensing the low sales volumes in initial months HUL pressed into service the incentive
mechanism for newly appointed entrepreneurs, rewarding them in cash for visiting a cluster
of homes independent of the amount sold attached with it the additional offering of
incentives on selling some particular brands.
• In addition it also collaborated with local banks to ensure that the first installment towards
loans be paid after a few months of set up.
 Positive aspects
• A great opportunity to capture the rural market.
• To increase sales
• To net up profit
• A communication initiative to create a brand name
synonymous with rural population
• A sales and distribution initiative to place it at a higher
trajectory of growth
• A social platform to build up economic prospects in
rural India and improve the standard of life
• I-shakti portal to make people information packed
• Shakti Vani to make people more health conscious
 Social
impact

Growth
initiative

Project Shakti
Drawbacks- .
• It much depends on SHG. So the places where SHGs are not
prominent it has not hammered out any kind of fit
mechanisms that can work well.
• As its target entrepreneurs are women, it is less likely that
women can work as efficiently as the men as in India there are
so many social taboos are involved.
• Selecting an entrepreneur can be sometimes conflicting in
nature in SHGs.
• The discounts that are offered to the entrepreneurs can be
channel conflicts.
• The price that is asked for from retailers are not of a great
margin, so the margins that entrepreneurs receive is limited.
• Being a diverse country India has cultural obstacles and
language barriers to name a few. And dialects also differ from
region to region
 What was the motivation for the Shakti
initiative? Was it a CSR activity?

• To counter competition and find a new segment of

consumers to make sure that instead of their brands
becoming saturated in the Indian Market, HUL sought to
reach to rural areas by the means of Project Shakti
• There are 638,365 Indian villages but their reach is to only a
meager amount of 100000 villages. So still more than 500
million people are yet to be brought under its consumer
segments.
• HUL was also motivated to improve the lives of the people
in the rural areas
• The definition of CSR has changed over time and with the
new companies act and Schedule 7, we believe that it can
be classified as a CSR Activity
Motivation Behind Project Shakti

understanding market ways to explore thecse path to build on

Institutional voids
structures markets available resources
How can Shakti make a contribution to HLL’s bottom
line? Make an economic case.What is the Economic
Value created by Shakti? What is the social value?
urban markets
10% of the total
FMCG market
Semi-urban and well
accessible rural areas

largest part

inaccessible rural areas consisting of

20% sales
• Shakti was launched to capture the lower rungs of this
economic pyramid.
• There are above 600,000 villages across india.
• But HUL’s reach is upto 100,000 villages.
• So the way Shakti was formulated it can tap a large
chunk of the untapped 500 million population.
• So in this project HUL will be involved in direct
distribution to rural market.
• The partnered Federations of SHGs, known as MACTS
will purchase the products from HUL and the sell it to
SGH entrepreneur, who then can sell it directly to the
consumers or through retailers.
• There are many incentive mechanisms to the
entrepreneurs to motivate them. HUL also tied up with
some local banks to help the entrepreneurs to late
repay loans.
• Economic Value –
• Number of villages- 638,365. Total population
-700 million
• Tapped village market- 100,000 Total
Population- 220 million
• Untapped village market- 538,365 Total
population- 480 million
• In 2003 total turnover - 2231.232(figures in
USD)
• In 2004 total turnover- 10040.54(for details
see the excel sheet)
• So the growth of revenue post Shakti is shown
below:
 Growth
12000

10000 10040.54

8000
Revenue

6000
Revenue(USD)

4000

2349.1 2324.2
2000 2151.6

0
2001 2002 2003 2004
 Health
conscious

micro-- Self-e
entrepreneurs mployed

Shakti

information
Social capital
packed

standard of
life
 What are the critical challenges facing HUL in making Shakti
work? What should Shakti’s managers do?

• Arrange government permission and secure the permission of the distriict administration
• Regular interaction with HUL's sales force to identify potential markets and roll out projesct
shakti
• Appoint the right women as entrepreneur
• Apponint the right women as entrepreneuIdentify and seal partnesrships with NGOs
• Apponint the right Locate SHGs and convince them about the reliable souce of earnings from
Shakti women as entrepreneur
• Project Shakti was viewed as just a business move by a large company
• Balooning up costs for human resources,
• Rising costs in managing Shakti Vani and iShakti
• Internal challenges like brand building efforts and costs
• Linguistic challenges
• Cultural aspects- Unlike A.P woemen are not so independent in other states
• Boosting the confidence level of the entrepreneurs
• Managers should strive to keep the entrepreneurs
motivated to be engaged in the project.
• For this they should give formal training to develop
skills and manage the viable business. Shakti Vani
should be kept intact and thus can connect it to the
people there.
• They can introduce some promotional products during
gathering and gift for some special cases.
• With this the internal challenges to be rooted out and
convince the brand managers to invest in establishing
the HUL brands.
• Out of more than 30 products, four products taking a
share of 50%.
• So managers should stress upon these products to
penetrate rural markets more.
If Shakti cannot become profitable, should
HUL continue the program? Why?
• They should continue with the project.
• This is the project that gives them a very first mover advantage and
can reap much benefit in years to come.
• They have already received good results out of it and Shakti had
contributed 1% to 3% in its total revenues in one or two years.
• So still they can reach as much as an additional 250 million
consumers by 2010.
• So focusing on the selective districts and prioritizing efforts on the
existing entrepreneurs can propel HUL much ahead than its
competitors.
• Moreover project Shakti has already established it as socially
responsible organization and it has already having co-operation
from some Government like A.P and people are also increasingly
known to the HUL products.