Page 104 - DMGT509_RURAL MARKETING

Unit 5: Rural Consumer

Unilever Lever Ltd. Notes

The trigger point came when a local firm Nirma, through its new product formulation,
pricing and distribution challenged HLL’s detergent business. Nirma’s attack from below
made HLL realise its vulnerability as well as identify a new opportunity. Since then, HLL
has launched various initiatives to reach out to the rural consumer. It has changed its
product formulations and deliveries.
It has begun a number of initiatives in terms of widening distribution reach through
traditional as well as unconventional channels. HLL has also empowered rural women by
assisting them in obtaining financial assistance through its project shakti.
Everybody wants brands. And there are a lot more poor people in the world than rich people. To be
a global business and to have a global market share you have to participate in all segments.
—Keki Dadiseth, Erstwhile Chairman, HLL.
The basic objective of Project Shakti is to economically empower underprivileged rural women by
creating income-generating capabilities and providing a sustainable micro-enterprise opportunity in
addition to improving rural living standards through health and hygiene awareness.

—Sharat Dhall, Marketing Manager-Rural, HLL
NCAER projections indicated that the number of “middle income and above” households
was expected to grow to 111 million in rural India by 2007, compared to 59 million in
urban India. Gone were the days when a rural consumer had to go to a nearby town or city
to buy a branded product. The growing power of the rural consumer was forcing big
companies to flock to rural markets. At the same time, they also threw up major challenges
for marketers. Servicing rural markets involved ensuring availability of products through
a sound distribution network, overcoming prevalent attitudes and habits of rural customers
and creating brand awareness. Price-sensitivity was another key issue.

Rural income levels were largely dependent on the vagaries of monsoon, and demand
was not easy to predict. Thanks to TV, consumer awareness in rural areas had increased.
Rural expenditures on Fast Moving Consumer Goods (FMCG) were growing at an
impressive rate of 20-25%. Several companies were taking rural marketing seriously, one
of them being Hindustan Lever Ltd (HLL), Unilever’s Indian subsidiary.

In 2004, HLL was India’s largest FMCG company, with 30 power brands (Exhibit: I), turnover
of over 10,000 crores and 40,000 employees. HLL derived around 50% of its sales from
rural areas. HLL’s rural marketing initiatives began way back in 1988, when the company
had launched ‘Wheel’ for the rural and lower income urban consumer.
These efforts had intensified since the late 1990s when HLL like many other companies
faced flat growth in the urban markets. In early 2004, as it reviewed its past performance,
HLL realized that bulk of its future growth was likely to come from rural areas. The
challenge for HLL was to exploit this opportunity in a profitable manner.
Contd...

LOVELY PROFESSIONAL UNIVERSITY 99