Unilever in India Hindustan Lever's Project Shakti Summary
Unilever in India – Hindustan Lever’s project Shakti – Marketing FMCG to the rural consumer
Summary
Hindustan Lever (HLL) formed in 1956 is an Indian subsidiary of Unilever Limited (world’s largest FMCG Company). It was a market leader with a share of 40-45%. HLL’s growth has been related to the political development of the country. The heavily regulated Indian economy between 1947- 1980’s was characterised by License Raj which imposed restrictions on investments by the private players. In 1990 the liberalised Indian economy attracted MNCs which removed the entry barriers that shielded HLL hence it faced competition from local as well as international barriers in every category.
In the growing economy, amidst floating challenges from the rival firms like P&G, Colgate-Palmolive, HLL sought market leadership by launching new products and coursing into several strategies such as price reduction, sales system based channels, capturing chain efficiency, product innovation and pruning down the brand portfolio to ‘power brands’ (with selective brands). These were the short term measures but for long run the managers realized that they had to create new markets and dominate them. It designed the sales and distribution system on the basis of geographies and product categories but in order to tap the small markets with potential business the conventional model was not appropriate. In the wake of changing market conditions and retailing revolution in large towns HLL re-designed its sales and distribution system along the Diamond Model wherein, the top end represented modern trade including self-service stores and retail chains; the middle and the largest part comprised of profit centre based sales teams and the bottom end of the diamond represented direct distribution in the rural markets. Based on business potential and accessibility following approaches were made for capturing the rural markets – Direct Coverage, Indirect Coverage, Streamline, Shakti project.
HUL
Summary
Hindustan Lever (HLL) formed in 1956 is an Indian subsidiary of Unilever Limited (world’s largest FMCG Company). It was a market leader with a share of 40-45%. HLL’s growth has been related to the political development of the country. The heavily regulated Indian economy between 1947- 1980’s was characterised by License Raj which imposed restrictions on investments by the private players. In 1990 the liberalised Indian economy attracted MNCs which removed the entry barriers that shielded HLL hence it faced competition from local as well as international barriers in every category.
In the growing economy, amidst floating challenges from the rival firms like P&G, Colgate-Palmolive, HLL sought market leadership by launching new products and coursing into several strategies such as price reduction, sales system based channels, capturing chain efficiency, product innovation and pruning down the brand portfolio to ‘power brands’ (with selective brands). These were the short term measures but for long run the managers realized that they had to create new markets and dominate them. It designed the sales and distribution system on the basis of geographies and product categories but in order to tap the small markets with potential business the conventional model was not appropriate. In the wake of changing market conditions and retailing revolution in large towns HLL re-designed its sales and distribution system along the Diamond Model wherein, the top end represented modern trade including self-service stores and retail chains; the middle and the largest part comprised of profit centre based sales teams and the bottom end of the diamond represented direct distribution in the rural markets. Based on business potential and accessibility following approaches were made for capturing the rural markets – Direct Coverage, Indirect Coverage, Streamline, Shakti project.
HUL