"Our partnership with Sphinx businessman countryside offers profitable business model while working i Shakti kiosks as well, and a low-cost delivery and customized products will result. At the top of the benefit through the promotion of the economic gains for consumers in rural areas. "
~ Mr. Nachiket More
Executive Director, Wholesale Banking Group
ICICI
"There is incredible potential in rural markets. Where the growth will come from."
~ badges D., Director of Hindustan Lever of new ventures and marketing services
Sankaramma, leader of the Kanaka Durga self-help local group (SHG) belongs to the village as Thimmapuram in Muddaner Mendel at Kadaba district of Andhra Pradesh. The village had 350 households with a population of 10.5 Sankaramma hectares of agricultural land is not enough for six members of his family due to severe drought in the region. She started work in April 03 with the newspaper Hindustan Unilever Limited and by 05, she had a regular monthly trading value of Rs.10,000 per month. Initially it sold door to door, but then began to customers visiting her home for the products. See Shakti project as a means to a bright future for their children. Project Shakti has to provide meals also enabled the middle of the day in elementary school in her village. Today, Sankaramma became a key figure in the development of her village.
Usha Sarvatai traveled, a mother of two, 32 km every day to work. The income of her husband, is not enough to have two children and parents of the old guardians. But long-distance and timing of the odd forced labor Usha to finish the job. Then I got a call from a government department. To attend the meeting, which was held by Project Shakti. Usha became Shakti Amma began the new project. In a short period of good relations he helped it put her with the villagers do good business. She says: "I am happy to meet the requirements of my family and the people give me a lot of respect today." It is now very keen to grow its business in the coming years.
The list does not end here. Hindustan Lever Ltd., a subsidiary of Unilever counting on thousands of women like Sankaramma and Usha Sarvatai to sell their products to consumers in rural areas could not reach before. By 05, about 13,000 poor woman sells the company's products in 50,000 villages in 12 Indian states and contributed 15% of the rural company's sales in those countries. Women typically earned between $ 16 and $ 22 a month, often doubling the family income, which was used for the education of their children. Overall, about 30% of the proceeds from Hindustan Lever came from rural markets in India
began in late 00, and Project Shakti enable Hindustan Lever to reach 80,000 of the 638,000 Indian villages. Hindustan Lever, director of new projects across proudly, "At the end of the day, we are in business, but if by deal we can do something positive, it's great model win-win situation." Hindustan Lever was not the only company to recognize the possibility of marketing a wide in rural areas in India. With market saturation in urban areas, business re-engineering and product companies have begun to target consumers in rural areas who are poor but are rich in expectations fueled by the media and other powers.
Unilever in India: money and growth
wasUnilever, the world's largest commodities rapid consumer movement (FMCG) company with global revenues of 55 billion $ in 05. It's Indian subsidiary, Hindustan Unilever Limited (Hol) was the largest FMCG in the country with combined volumes of about 4 million tons and revenues close to $ 2.43 billion for it. And include major brands Sphinx Lifebuoy, Lux, surfing Excel, Rennes, wheels, exhibition and beautiful, and the pool, Sunsilk, Clinic, Pepsodent, Close-up, Lakme Cosmetics, Brooke Bond, Kissan, Knorr-Annapurna, Quality Street etc. These were made on 40 factories across the country.
In 1931, Unilever set up its first Indian subsidiary, Hindustan VANASPATI manufacturing company. After it was founded Lever Brothers India Limited and the US Traders Ltd. in 1933 and 1935 respectively. In November 1956, these three companies have merged and form the Sphinx. Shares of Unilever in the Sphinx 51.55% in 05 and the remainder of the contribution distributed among about 380,000 individual shareholders and financial institutions. And the Battle of acquisitions came after that. In 1984, Brooke Bond Unilever joined the fold. Lipton has got in 1972 and ponds in 1986. The Sphinx was following diversification growth strategy is always in line with India's views and aspirations.
economic and political development in the 190s has shown a reversal in the Sphinx and the curve of growth for the group. Economic liberalization allowed to explore in every product sector and the chance of one company, without any restrictions on production capacity. On the other hand, allowed the lifting of restrictions alliances, mergers and acquisitions. In 1993, the Sphinx merged with Tata Oil Mills Company (TOMCO) in 1993. In 1995, the Sphinx formed a 50:50 joint venture with another Tata company, Lakme Cosmetics Limited.
The company has also made a series of mergers and acquisitions and alliances in the food and beverage sector operations. Some of these gain Kothari Foods year (1992), Kisan (1993), business Dollops ice cream from Cadbury India (1993), modern foods (02), shrimp cooked and business Pasteurised Crabmeat amalgam group of companies (03).
with 12.2% of the world's population living in the villages of India, it was a market for consumer goods in rural areas of the country's enormous potential. The Indian consumer goods sector the fourth largest sector in the economy with a market size of $ 13.1 billion. It was expected to grow by more than 60% by 2010. In 05-06, India accounted for urban 66% of the total consumption of consumer goods, and rural areas in India, which represents 34% of the remaining sector. However, rural areas in India, consumption accounted for more than 40% in the major categories of consumer goods such as personal care, fabric care, and hot drinks. Companies bidding consumer goods such as HLL, first NIRMA ITC joined the foray to benefit from the huge potential.
In the 190s, a local Indian company, the first NIRMA Ltd. which provides detergents for the rural poor at the lowest cost. The company has created a working system with a new product formulation of low-cost manufacturing, distribution channel and wide, special packaging and value pricing. A decade later, he became the first NIRMA one of the biggest brands detergent makers, with a market share of 38% and 121% return on capital employed.
In 02, the center has established a network of kiosks on the Internet, e-choupals, to help farmers in their purchases. Initiative with soybean farmers in Madhya Pradesh began and then expanded to cotton, tobacco, shrimp etc. ranging from six e-choupals in June 00, and rural on the Internet for the International Trade Centre and the initiative has linked the 00 Indian villages with about 10 choupals e-mail by 02. Create its per-choupal involves an investment of Rs 1.3 lakh .kant goals from behind the e-choupals to allow purchases one place and point of purchase, allowing farmers to sell their products directly to the ITC on the basis of updated current prices prevailing in the market. This eliminating middlemen and thus helped ITC to cut costs.
In 07, about 34% of product sales FMCG came from rural areas. The number of households using consumer products in rural areas in India rose from 13.6 billion rupees in 04 to 14.3 billion rupees in 07. This growth has been achieved in the average growth of 1.8% year-on-year in the number of households that use at least one product commoditization. However, the growth in the level of penetration of the Consumer Products does not fully himself. According to one study by the market IMRB research company, the monthly consumption of detergent soap and toilet stagnant remained largely with the penetration 92%, but that of shampoo liquid has grown from 68% in 04 to 83% in 07. These figures are revealed shift toward higher-value products among the rural market, from toothpowder to toothpaste or from unbranded to branded products. According to the director of the project a large international IMRB, Manoj K Menon, "one of the most important changes, including the growing preference towards branded products. For example, in the food and beverage sector, it has gone penetration Atta described up on an annual basis in the year by 8 percent, salt, described by 3 per cent and decreased penetration Atta unbranded 1 per cent, and salt by 3 per cent. "
this effort HLL Marketing: Go to the rural market
competitive advantageSphinx was born out of three Resources. First, it's powerful brands and well-established second manufacturing capacity and a series of local supply, and the third sales and distribution of a wide system. And soon saw that the Sphinx sales and distribution system, which protect them from competitors will be repeated soon from its competitors and maintain its edge, the company had to increase its deployment outside of urban markets. So far it included the Sphinx operations of more than 00 suppliers and associates. Distribution network consisted of 4,000 agents, which covers 6.3 million retail outlets accessible to the entire population in urban areas, and about 250 million consumers in rural areas.
usually sent goods produced in each of the 40 factories Sphinx in a warehouse with the help of a book agent and freight (CFA). The company had a warehouse in every state in the country. The CFA third party and got stock service charge and delivery of products. In every city, there was the treasurer of the redistribution (RS), who took goods from the CFA and sell them to retail outlets. By the late 190s, the Sphinx management realized that some of the problems with the current sales model. First, the model is not viable for small towns with a small population and small business. Sphinx and found it expensive to appoint the treasurer and one exclusively for each city. Second, the retail revolution in the country to change the pattern of customers shopping. The establishment of self-service stores large retail. In response to these problems, the redesign of the Sphinx sales and distribution channels, and it was known that the new system as the 'diamond model in the company. At the top end of the diamond, there was a self-service retail stores, which constitute 10% of the total consumer goods market. Midfield fattest part of the diamond sales team representing nonprofit based center. At the bottom of the pyramid, marketing and distribution in rural areas, which represent 20% of the business.
almost three-quarters of the total 1.2 billion Indian population resides in rural areas, and most of them were from very low per capita income (about 44% of the urban counterpart in India). The urban market has reached a saturation point, and thus change the focus on rural areas in India. Compared with 5161 only cities in India there are 6,38,365 villages in India [Exhibit I]. Moreover, more than 70% of India's population living in villages and made a big market for the manufacture of consumer goods due to increased income and disposal and the level of consciousness.
show the I
distribution of villages in India
Source: Cash Ranjan, Dalip Sehgal and others. Al-Qaeda "global poverty: business approaches and solutions"., Http://www.hbs.edu/socialenterprise/pdf/3-Rangan&Rajan-Presentation.pdf
when HLL's turned in regions in rural India, it has faced many problems. In contrast with the low per capita income comparable to citizens in urban areas, there were some areas with enough money, but the level of awareness is very low consumption. Second, the demand FMCG countryside depends on the agricultural situation, which again depends on the monsoon. He also transferred a major obstacle. Many of the rural areas is connected by means of rail transport. Roads were unserviceable Kasha during the monsoon and interior villages get isolated. Besides transportation, there is a problem of distribution facilities and communications such as telephone, fax and the Internet. Moreover, live in rural areas are still governed by race, traditions and people do not just get used to the new practices. For example, even the rich and the educated class of farmers do not wear jeans or branded shoes. The purchase decisions in slow villages and delay. They wanted to give the prosecution and buy only after I was convinced. Finally, look at the poor illiterate villagers are more important than formal education and experience they estimated sales people who can provide practical solutions to their problems.
HLL approached the rural market with two criteria - access and portability [Exhibit II]. It was about 40% of the rural market can be accessed high commercial potential. To serve this segment, HLL was appointed co-treasurer who was responsible for all the ports and all the work in certain of his hometown. 25% of the market with the possibility of access to low labor, and the appointment of HLL's stokist retail, which was in charge of access to all the villages once at least two weeks and send the stock into these markets. This allows HLL to influence the retail stocks and the quantities sold through dealers credit and trade discounts extended. HLL launched this coverage indirect (IDC) in the 1960s.
to meet the market's needs can not be accessed with high potential HLL began work simplification initiative in 1997. HLL appointed distributors in rural areas and sellers Star. Seller star buy goods from distributors in rural areas and distributed to retailers in small villages using the local transport medium. In this way it came about 35% of the rural market can not be accessed under the control of HLL. But the market is still untapped - left the potential commercial market can not be accessed but low abroad. The estimated size of this untapped market to be about 500,000 villages with a population of more than 500 million people. At this stage, it has designed Shakti project.
The second exhibition
HLL rural market approach
High Possible Business
markets equipped with low business coverage indirect (25%) live coverage (40%)
markets do not accessible space for Shakti simplify (35%)
source: V. Castore Ranjan Rohithari Rajan, "Unilever in India: Hindustan Lever Shakti project - marketing of consumer goods to the countryside", Http: //www.caseplace. org /d.asp?d=244 - 27K
Shakti project
HLL quickly realized that although she had enjoyed the largest in the rural market penetration compared with its competitors, such as the first NIRMA and ITC, and limited direct presence to only 16%. The FMCG giant desperate to increase this share. Sphinx saw her dreams come true in the Indian rural market vast. The company is already working in rural development through the launch of an integrated rural development program in 1976 in Etah district of Uttar Pradesh. This was the program along with the Sphinx dairy operations included 500 villages in Aatah. Later, the company has provided similar programs in neighboring villages. These activities are mainly aimed at the training of farmers, animal husbandry, and the generation of alternative health and hygiene income and infrastructure development. The main issue in rural development to create income-generating opportunities for the poor villagers. Such initiatives, are associated with the core business of the company, and became a successful and sustainable, and proven to be mutually beneficial for both of ants rural clients company. However, there is still much to be done. Shakti project has been designed.
Following the pioneering work carried out by the Grameen Bank in Bangladesh, Her Help Groups (SHG) Rural Women was formed by several institutions, NGOs and governmental organizations in villages across India and bodies. It contributed to this group of usually 15 members of a small amount of money in a common fund and then small loans offered to a member of the group to invest in economic activity and usually approved. Partnership with these self-help groups, began HLL Shakti project in Nalgonda of Andhra Pradesh in 50 villages in 00. The social side of the Shakti project, which aims to create income generation for rural women poor capabilities, by providing a small chance of sustainable companies, and to improve levels of rural livelihoods through awareness of health and hygiene. Most of the women self-help groups, the project is seen as a suggestion Shakti strong business and is eager participants in it. There after it was extended in other states with a total force of 40,000 Shakti entrepreneurs.
HLL offers a wide range of products to self-help groups, which were suited to customers in rural areas. Invested significant resources in the Sphinx who work with women in the field and providing them with training to work and support the head. Sphinx has provided the necessary training for these groups on the basics of project management, and that women need to manage their projects. For women self-help groups, and this translates into a much-needed, sustainable income to contribute to the improvement of life and prosperity. Armed with micro-credit, women become distributors of self-help groups directly to the house in the rural markets [Exhibit III].
The third exhibition
market structure Rich HLL in India
Source: Cash Ranjan, Dalip Sehgal and others. . Al-Qaeda "global poverty: business approaches and solutions", Http://www.hbs.edu/socialenterprise/pdf/3-Rangan&Rajan-Presentation.pdf
Shakti: How it works
in general, has been selected a member of the self-help groups as one of the pioneers Shakti, referred also contributed to "Shakti Amma" received from the countryside HLL distributor. After being trained by the company, and man Shakti business then those goods are sold directly to consumers and retailers in the village. Every businessman Shakti usually served 6-10 villages in the layers of the population of 1,000-2,000 people with 4-5 major brands of HLL - Lifebuoy, wheels, Pepsodent, Annapurna salt and Clinic Plus. Apart from these, and includes other brands Lux, Ponds, Nihar and 3 tea roses. Given business Shakti HLL products on the `cash and carry basis. "However, local self-help groups or banks provided them with small loans where necessary. According to Dalip Sehgal, Executive Director of new projects and services marketing, HLL Shakti project is added up to 15% of HLL sales in rural areas in Andhra Pradesh . he also stressed that, given the aging of the country and underdevelopment of its women, the Shakti project like endeavor put everyone in a win-win situation.
I- Shakti : cross the border
encouraged by the goodwill and the success of the Shakti project, in August 03, launched the service HLL online rural Information, called I- Shakti, in Andhra Pradesh, in collaboration with the Rajiv Internet Pradesh village government of Andhra program for. the I- Shakti rural-based information service on information technology to provide vital information to the rural population in areas such as agriculture, education, vocational training, health and hygiene, such as [Exhibit IV]. the aim of the model I- Shakti to give the request need-driven information and services existing in the villages. It has been running
kiosk i Shakti by Her Shakti.
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