Case Study

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UNILEVER IN INDIA: HINDUSTAN LEVER’S PROJECT SHAKTI – MARKETING FMCG TO THE RURAL CONSUMER Team: Can Do! Members: Roman Ivasyshyn Antonina Volkotrub Danylo Hauk

CONTENTS
 Assumptions  Current

State & Goals  Solutions & Recommendations  Summary

REINDEERS & SLEIGH

At first, we sought to employ flying reindeers to distribute HLL goods to inaccessible villages with low business potential, but were not able to book them due to their tight schedules and decided to stick with a Shakti project.

ASSUMPTIONS

ASSUMPTIONS
Project Shakti operates in villages with 200 to 4.999 residents (509.416 potential villages)  Shakti entrepreneur purchases stocks from the nearest official distributor (with the discounts available to stockist (-5%) -2% additional percent ), transporting the goods with the locally available means of transportation  Extrapolation of revenue growth rate from projects other than Shakti is 2%  Total revenue in 2010 approximated at 154,8 bln Rs. (Calculated using growth rate 2% yearly for projects other than Shakti (80%TR) and adding 20% of TR, coming from Shakti)  In 2010 Revenue from Shakti project should account for 20% of HLL Total Revenue (31 bln. Rs) 

ASSUMPTIONS (CONTINUED)


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In 2004 average revenue per consumer per year is 30Rs (120.000 Rs target revenue per entrepreneur per year /4.000 (target number of consumers per entrepreneur in 2006 )) On average 1 Shakti entrepreneur covers 4.000 consumers in 3 to 8 villages (different years, different areas) Target average revenue per consumer per year in 2010 should be 123,88 Rs (Revenue from Shakti (31 bln. Rs) / target # of consumers(250.000.000 )) Yearly average organic growth of revenue from a consumer should be 27% (2004-2010) Yearly average growth of Shakti consumers is 25,8% (starting in 2004) 48 mln consumers in 2004 (estimated from the target growth trend of number of consumers) Revenue from Shakti in 2004 estimated at 1,4 bln Rs (approximated from trends of average consumption and growth of number of consumers)

CURRENT STATE & GOALS

CURRENT STATE & GOALS

Current state & goals
Revenue from Shakti (bln Rs.)

Consumers (mln) Entrepreneurs (k) Villages (k)

2004 1,4* 48* 12 50

2006 4,8* 100 25 100

2010 31* 250 100 400*

*Numbers brought up from assumptions

OBSTACLES





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Poor rural infrastructure( telecommunication and roads ) Problems with women rights in northern states of India Poor managerial and professional skills of most Shakti entrepreneurs Bad internal communication of project Shakti in HLL Business and social interest conflict in this project High human resources costs of the project (10%-15%)

Rs. 180,000,000,000.00 Rs. 160,000,000,000.00 Rs. 140,000,000,000.00 Rs. 120,000,000,000.00 Rs. 100,000,000,000.00 Rs. 80,000,000,000.00 Rs. 60,000,000,000.00 Rs. 40,000,000,000.00 Rs. 20,000,000,000.00 Rs. 0.00 2004

EXPECTED REVENUES

Revenue from Shakti TR without Shakti
TR

2005

2006

2007

2008

2009

2010

The red line represents expected total revenue , excluding expected revenue from project Shakti. This data was derived from TR in 2004. Expected growth rate was estimated at 2% yearly. (This trend was guesstimated from data extracted from the case ) . The orange line represents the Revenue that should come from the project Shakti. The numerical goal in 2010 was set from the percentage goal mentioned in the case (20% of TR should come from project Shakti). Starting with initial 1,4 bln Rs.(assumption) The target trend was estimated from target yearly growth trends of average consumption 27% and increase in number of consumers 25,8%. The blue line is the sum of red and orange lines.

SOLUTIONS & RECOMMENDATIONS

SOLUTIONS & RECOMMENDATIONS
Both intensive (growth of the revenue per consumer) and extensive (growth of the number of consumers out of the Shakti target areas) growth should be achieved.  New entrepreneurs appointed...
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