Case: Unilever in India: Project Shakti: Group-6

Case: Unilever in India: Project
Shakti
Group-6
Ayush Singla PGP10076
Keerti Priya PGP10086
M Vamsi Bhaskar PGP10090
Swarnajit Saha PGP10100
Anand Kaurav PGP08137
Introduction to Case
Unilever In India The sources of HLL’s competitive advantage
were:
● Unilever is one of the world’s largest 1. Well-established brands
FMCG companies, with a global turnover 2. Local manufacturing capacity and supply
of roughly US $55 bn in 2004. chain
● The Indian subsidiary had revenues of 3. Vast sales and distribution system
approximately 110 bn rupees in 2004
● Rather than few large chains, in India,
(roughly $2.43 bn).
there are thousands of independent and
● It had an aggregated market share of around
unorganized retail and wholesale outlets
40% to 45% ● By 2004, HLL directly serviced over a
● HLL’s growth in India is linked closely to million outlets across India through a
political developments in the country network of over 7,000 stockists.
● After the liberalization in 1991, it became
easy for Unilever to have its significant
presence in India
A Sales Organisation based on Product
Categories and Geography
● Goods produced in various factories across
the nation were sent to depots or Carrying HLL had 4 regional sales offices
1. Delhi (North
and Forwarding Agents (CFAs). CFAs are
2. Kolkata (East) Managed by Regional Manager (RM)
the third parties
3. Mumbai (West)
● One depot per state, and more in larger states 4. Chennai (South)
● In each town, a redistribution stockist was
appointed to service all the outlets in a town ● Each profit center had its own sales force across
● Bigger town = more than 1 RS these regions
● ● In each profit center, a General Sales Manager
Across its profit centres, HLL owned over
(GSM) headed sales for the country
100 brands. Many brands have various SKUs ● Reporting to him were the 4 Regional Sales
● For this reason, each profit center had its Managers (RSMs) for each profit centres
own sales force and stockists. ● Each RSM had a team of 4 to 6 Area Sales
Managers (ASMs).
Q-1 What are the key features of Shakti? What are its positive aspects and
what are its drawbacks?
Key features of Shakti-
● Extend HLL’s reach into untapped markets and to develop its brands through local
influencers
● social objective was to provide sustainable livelihood opportunities for underprivileged
rural women
● HLL partnered with self-help groups or NGOs in a particular village where women got
together and formed a group and pooled their resources.
● HLL partner with recipients of micro-credit by offering them opportunities for micro-
enterprise. Promoting micro-enterprise was not only great for business but also had deep
social impact
● HLL partnered with three federations of SHGs, known as MACTS.These federations
would purchase products from HLL and then sell them to their constituent SHGs, which
would then sell them to outlets in their villages
Advantages to this model-
● Create and dominate new market for its products

● Expected high future revenue and sales from these new markets
● Creating women micro-entrepreneurs
● The incomes generated, while low if shared by a large group were significant if
earned by an individual
drawbacks:
● Huge investment in training the women entrepreneurs in villages

● Problems in scaling up become a successful project
● Low income generated for Shakti Entrepreneurs
● Viability of iShakti due to lack of electricity supply in villages
Q-2 What was the motivation for the Shakti initiative? Was it a CSR initiative?
Motivation for the Shakti initiative-

● Rural markets would be the big differentiator amongst competing FMCG companies because
while growth rates in urban markets would soon slow down due to significant growing
competition, rural markets and wealth remained mostly unexplored
● Price wars between HUL and P&G
● Rural markets present their own sets of problems, which includes poor infrastructure,
dispersed settlements, lack of education and no medium for communication.Thus HLL came
up with project Shakti to tackle these problems
● Existing stockist structure was ineffective in rural population where the population was
dispersed and per capita income of per person is 44 % of that in urban
● Extending the reach of HLL into untapped markets and develop the brand through locally
appointed women who worked as influencers
● Promoting rural micro-enterprise made a business sense and also had deep social impact
Shakti was not a CSR activity for HLL-
● Deliberate attempt by HLL to create and dominate new markets for its products
● Shakti financially empowered and provided livelihood opportunities to women in
rural India and helped Shakti Entrepreneurs,gaining soft skills in areas like
negotiating and effective communication.But its main motivation was business
which had social benefits
● HLL aimed to make it a sustainable competitive advantage against the competition ,
to maintain the HLL’s market leader position
● a result of achieving financial independence, Shakti Ammas across different
intervention areas (different states) reported more participation and opinion in
household decision making and boosted their sense of self-confidence and self-
respect
Q-3 How can Shakti make a contribution to HLL’s bottom line?
HLL is operating in wide range of product categories across broad spectrum of price points in each category. It
is about time when its sales and distribution system which had protected it from competitors would be soon
replicated by its rivals and to maintain its edge, the company had to increase its reach beyond the urban
markets.
Thus, Shakti was launched to capture the bottom line of the economic pyramid.
● There are above 600,000 villages across India.
● Unilever’s reach is upto 100,000 villages.
● Shakti can tap a large chunk of the untapped 500 million population.
● Direct distribution to rural market. MACTS- partners to SHGs, would purchase the products from
Unilever and the sell it to SGH entrepreneur, who then can sell it directly to the consumers or through
retailers.
● Many incentive mechanisms to the entrepreneurs to motivate them. Tie ups with some local banks to
help the entrepreneurs to late repay loans.
This project was also bolstered with the introduction of Shakti Vani and iShakti.
● Shakti Vani- encouraging health consciousness
● iShakti- Empower people with information
Q-4 What is the Economic Value created by Shakti? What
is the social value?
Economic Value Created by Shakti-
● 10% of HLL’s rural Turnover

● It added to the reach of HLL to the rural market which was largely untapped before
● Ease of switching – through Low Unit Price Packs (LUPs)
● Income of 500-700 INR for about 12000 women
● Promoted micro-finance with investment opportunity
● It made rural women self sustained
Social Value created by Shakti
● New life for rural women, it empowered the women which is the most marginal part of the
rural society through which it helps to improve the living standard and catalyzes affluences
in rural India.
● Learn while you earn, it also enabled villagers to enhance their knowledge about personal
hygiene and other basic values through Shakti vani
● It also provided a platform through iShakti to the villagers so that they can able to know
about the knowledge regarding farming, e-governance etc
● The connection between business and communities will develop lifetime customers for
HLL. This involvement may not be the typical role of business, but as long as it is profitable
to HLL without compromising moral and legal issues, it will be a good move for HLL to
increase its reputation as a socially responsible organization
● It was seen as an effective measure of corporate social responsibility
● HUL through this project was able to manage its CSR goals by empowering people to come
out of poverty.
Q-5 What are the critical challenges facing HLL in making
Shakti work? What should Shakti’s managers do?
Challenges- The Women had never undertaken Challenge- The initial first months were
any independent economic activity, had no idea the toughest to operate-
what they were expected to do-
Steps taken-
Steps taken-
1) Reward them in cash for visiting a
specified number of homes
1) The RSP system was introduced, Rural
irrespective of the amount sold
Sales Promoter were hired to coach Shakti
2) Offering additional incentives on
entrepreneurs and help them create and sale of specific brands especially
grow viable business popular in the region
2) To keep the selling costs low, HUL can 3) First Loan payments can be
outsource the administration of RSP’s to a delayed
third party
Challenge- The income of the consumers is low Challenge- Complexity of multiple SKU’s
Step taken- Steps Taken-

● Introduced low unit price packs, the ● HLL had decided to sell a limited range
development of the sachet revolutionized of its products through the Direct,
the FMCG industry Streamline, and IDC initiatives
a) Products become affordable to these ● Selecting a minimum number of SKU’s
consumers which contribute maximum revenues to
b) Step helped HLL to target a large the company
mass of consumers
c) HLL was selling sachets of
shampoo, hair oil, detergent, skin
cream, tea, toothpaste, and soap
Challenge- - A number of NGOs and governmental agencies were hesitant to support the
project, viewing it as a potentially exploitative attempt of a large multinational.
Steps taken-
● Implementation partner in the Marketing and Research Team (MART), a rural consulting
firm
● Specialized in developing and implementing rural marketing initiatives for social as well as
business organizations
● convince governmental and other agencies of the benefits of partnering with Project
Shakti and supporting it
○ Appointing more entrepreneurs in every rural areas
Internal Challenge
Challenge- Convince the brand manager to invest in the project-
Steps to be Taken-
1) Showing them the Success of the project

a) Shakti had access to a network of over 12,000 local influencers in areas with
very low media reach
2) Showing them the Social benefits the project has done to the rural people
a) Like improving social status of women
b) Access to hygiene products
3) Showing them the potential of rural markets- Huge potential in market, 500 million
people to be targeted in 500000 villages
Q-6 If Shakti cannot become profitable, should HLL continue the
program? Why?
They should continue with the project.
● This has to be looked at from the long-term perspective.

● 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 selected geographies (districts) and focusing efforts on
the existing entrepreneurs should help.
● Also, the positioning, as a socially responsible organization will also hold
Unilever in good stead always.
Thank you

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Case: Unilever in India: Project

● Create and dominate new market for its products

● Huge investment in training the women entrepreneurs in villages

Motivation for the Shakti initiative-

Economic Value Created by Shakti-

● 10% of HLL’s rural Turnover

Step taken- Steps Taken-

1) Showing them the Success of the project

● This has to be looked at from the long-term perspective.

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