Acknowledgement

This project is an attempt to study rural India with help of live case study of Lifebuoy of
HLL in India.

For this we would like thank our Rural marketing faculty S. Maninder Singh who has
shown us right approach and way to make this project and without whose guidance this
project would have been difficult to complete. We are also grateful to our institute for
providing this opportunity and providing the required material whenever needed

Rural Marketing- Lifebuoy 1

Introduction- Upcoming of Rural Marketing in India

The rural India has a plethora of opportunities all waiting to be harnessed. Not
surprisingly, it has become the latest marketing buzzword for most of the FMCG majors.
Many of the FMCG companies are busy formulating their rural marketing strategy to
tap the chance .To name few companies showing deep interest in rural India are HLL,
Marico industries, Colgate – Palmolive and Britannia Industries.

Why Rural India?

70 % of India’s population lives in 627000 villages in rural areas. 90 % of the rural

population is concentrated in villages with a population of less than 2000, with
agriculture being the main business. This simply shows the great potentiality rural India
has to bring the much-needed volumes and help the FMCG companies to bank upon the
volume –driven growth. This brings a boon in disguise for the FMCG Company who has
already reached the plateau of their business curve in urban India.

As per the National Council for Applied Economic Research (NCAER) study, there are
as many 'middle income and above' households in the rural areas as there are in the
urban areas. There are almost twice as many 'lower middle income' households in rural
areas as in the urban areas. At the highest income level there are 2.3 million urban
households as against 1.6 million households in rural areas.

According to the NCAER projections, the number of middle and high-income

households in rural India is expected to grow from 80 million to 111 million by 2007. In
urban India, the same is expected to grow from 46 million to 59 million. Thus, the
absolute size of rural India is expected to be double that of urban India.

MARKETING STRATEGY:

In-depth knowledge of the village psyche, strong distribution channels and awareness
are the prerequisites for making a dent into the rural market.

Rural Marketing- Lifebuoy 2

The psyche: the price sensitivity of a consumer in a village is something the rural
marketers should be aware of. The strategy revolves around what attracts the rural
customers to a product. For e.g. packaging. The rural customers are generally the daily
wage earners and thus they don’t have the monthly incomes like their urban counterpart
has .So it makes sense, packaging in smaller units and lesser-priced packs to increase
their affordability. Colour that attracts them is also important. Convenience is the other
key word. Here Colgate is the apt example. First of all it made sachets as was required
by their income streams. Secondly –since many households don’t have proper bathroom
and only have a window similar things so it made sense to cap these sachets for
convenience of storage while use. Britannia with its Tiger brand of biscuits with its low
priced and conveniently packaged products became some of the success story in rural
marketing.

Distribution channel:

Study on buying behaviour of rural consumer indicates that the rural retailers influences
35% of purchase occasions. Therefore sheer product availability can affect decision of
brand choice, volumes and market share. Some of the FMCG giants like HLL took out
project streamline to significantly enhance the control on the rural supply chain through
a network of rural sub-stockists, who are based in the villages only. Apart from this to
acquire further edge in distribution HLL started Project Shakti in partnership with Self
Help groups of rural women.

Awareness:

Mass media is able to reach only to 57% of the rural population Creating awareness
then, means utilizing targeted, unconventional media including ambient media .For
generating awareness, events like fairs and festivals, Haats etc. are used as occasions for
brand communication. Cinema vans, shop-fronts, walls and wells are other media
vehicles that have been utilized to increase brand and pack visibility. Ideas like putting
stickers on the hand pumps, walls of the wells putting on tin plates on al the tree
surrounding the pond are some of the innovative media used by personal wash like Lux

Rural Marketing- Lifebuoy 3

and Lifebuoy and fabric wash items like Rin and Wheel. Idea was to advertise not only
at the point of purchase but also at the time of consumption.

Definitely there is lot of money in rural India. But there are hindrances at the same time
.The greatest hindrance is that the rural market is still evolving and there is no set format
to understand consumer behaviour .Lot of study is still to be conducted in order to
understand the rural consumer. Only FMCGs with deeper pockets, unwavering rural
commitment and staying power will be able to stay longer on this rural race.

Rural Marketing- Lifebuoy 4

Hindustan Lever Limited
Meeting Everyday Needs of People Everywhere
Hindustan Lever Limited (HLL) is India's largest fast moving consumer goods
company, with leadership in Home & Personal Care Products and Foods & Beverages.
HLL's brands, spread across 20 distinct consumer categories, touch the lives of two out
of three Indians. They endow the company with a scale of combined volumes of about 4
million tonnes and sales of Rs.10,000 crores.
The leading business magazine, Forbes Global, has rated Hindustan Lever as the best
consumer household products company. Far Eastern Economic Review has rated HLL as
India’s most respected company.
The vision that inspires HLL's 32,400 employees (40,000 including Group Companies),
including about 1,425 managers, is to “meet everyday needs of people everywhere - to
anticipate the aspirations of our consumers and customers and to respond creatively and
competitively with branded products and services which raise the quality of life.” This
objective is achieved through the brands that the company markets.
It is an ethos HLL shares with its parent company, Unilever, which holds 51.55% of the
equity. A Fortune 500 transnational, Unilever sells Foods and Home and Personal Care
brands through 300 subsidiary companies in about 100 countries worldwide with
products on sale in a further 50.
Business nature
HLL is India's largest marketer of Soaps, Detergents and Home Care products. It has the
country’s largest Personal Products business, leading in Shampoos, Skin Care Products,
Colour Cosmetics, and Deodorants. HLL is also the market leader in Tea, Processed
Coffee, branded Wheat Flour, Tomato Products, Ice cream, Soups, Jams and Squashes.
HLL is also one of the country's biggest exporters and has been recognised as a Golden
Super Star Trading House by the Government of India; it is a net foreign exchange
earner. HLL is India's largest exporter of branded fast moving consumer goods.
Products, Basmati Rice, Castor Oil and its Derivatives. It is India's largest exporter of
MarineProducts, and one of the largest global players in castor.

Rural Marketing- Lifebuoy 5

Market leading brands
HLL’s brands have become household names. The company’s strategy is to concentrate
its resources on 30 national power brands, and 10 other brands which are strong in
certain regions.
The top five brands together account for sales of over Rs.3000 crores. Each of these mega
brand has a potential scale of Rs.1000 crores in the foreseeable future. Some of the big
brands in Soaps and Detergents are Lifebuoy, Lux, Liril, Hamam, Breeze, Dove, (all
soaps), Surf Excel, Surf, Rin, Wheel (the number one detergent brand in India, and HLL's
largest), 501, Sunlight (all detergents). HLL also markets the Vim and Domex range of
Home Care Products.
In the Personal Products business, HLL's Hair Care franchises are Clinic, Sunsilk and
Lux shampoos; the company markets Nihar oil. In Oral Care, the portfolio comprises
Close-up and Pepsodent toothpastes and toothbrushes. In Skin Care, HLL markets Fair
& Lovely Skin Cream and Lotion, the largest selling Skin Care Product in India; a brand
developed in India, it is now exported to over 30 countries. It has been extended as an
Ayurvedic cream, an under-eye cream, a soap and a talc, in line with the strategy to take
brands across relevant categories. The other major Skin Care franchises are Pond’s,
Vaseline, Lakme and Pears. In Colour Cosmetics, HLL markets the Lakme and Elle-18
ranges. In Deodorants, the key brands are Rexona, Axe, Denim and Pond's, while the
Talc brands are Pond's, Liril, Fair & Lovely, Vaseline and Lifebuoy. Axe and Denim are
HLL’s franchises for Men’s toiletries. HLL has recently launched Lever Ayush
Ayurvedic Health & Personal Care Products.
HLL has started franchised Lakme Beauty Salons, offering standardised services, in line
with the strategy to add a service dimension to relevant brands.
HLL is one of the world’s largest packet Tea marketer. Its Tea brands – Taj Mahal, Red
Label, Taaza, A1, 3Roses - are among the top brands in the country; it also markets
Lipton Ice Tea.
HLL and Pepsi have formed an alliance to distribute a full range of tea and coffee and
softbeverages through vending machines; HLL already has a base of around 15000 such
machines.
This list is not a comprehensive list of brands of HLL.

Rural Marketing- Lifebuoy 6

Financial Position of HLL

(updated 03-Dec-03)
Share Information Income Statement
03/12/2003 Latest Quarter - Sep 2003 (Rs Crore)
Recent Price (Rs) 178.9
Volume 930565 Sales 2467.49
Year To Date High (Rs) 200 Other Income 141.44
Year To Date Low (Rs) 135 Operating Profit 622.92
Face Value (Rs) 1 Interest 31.3
Market Capitalization (Rs Crore) 39379.47 Depreciation 29.61
Shares Outstanding (Lakhs) 22012 Net Profit 443.22
Market Lot 1 Profitability
Valuation Ratios Year End - Dec 2002
Year End - Dec 2002
Operating Profit Margin 21.77 %
Price/Earnings 22.42
Net Profit Margin 16.07 %
Price/Book 10.76
Balance Sheet & Cash Flow
Price/Sales 3.6 Year End - Dec 2002 (Rs Crore)
Dividend Yield (%) 3.07 Equity Capital 220.12
Per-Share Data Reserves & Surplus 3438.75
Year End - Dec 2002
Long Term Debt 50.6
Book Value (Rs) 16.62
Short Term Debt 7.7
Cash (Rs) 4.28
Cash 942.63
Dividend (Rs) 550 Management Effectiveness
Sales (Rs) 49.65 Year End - Dec 2002
Earnings (Rs) 7.98 Return on Assets 65.6 %
Income Statement Return on Equity 52.4 %
Year End - Dec 2002 (Rs Crore) Financial Strength
Sales 10928.36 Year End - Dec 2002

Other Income 454.86 Current Ratio 1.02

Operating Profit 2378.81 Total Debt/Equity 0.02
Interest 9.18
Depreciation 134.1
Net Profit 1755.68

Lifebuoy
When we talk about HLL the first name that comes to our mind is Lifebuoy.

Rural Marketing- Lifebuoy 7

It is the world’s largest selling soap and offers a stronger health benefit to the entire
family
Launched in the year 1895, Lifebuoy, for over a 100 years, has been synonymous with
health and value. The brick red soap, with its perfume and popular Lifebuoy jingle have
carried the Lifebuoy message of health across the length and breadth of the country,
making it the largest selling soap brand in the world.

In 2002 Lifebuoy was relaunced, marking a new turning point in its history. The new
mix includes a new formulation and a repositioning of the brand to make it more
relevant to both new and existing consumers.

Lifebuoy is no longer a carbolic soap with cresylic perfume. It is now a milled toilet
soap with a new health fragrance. The new formulation has an ingredient, Active-B,
which offers protection against germs, which can cause stomach infection, eye infection and
infections in cuts and bruises. The new health perfume has been selected after one of the most
extensive perfume hunts in the industry. The new milled formulation offers a significantly
superior bathing experience and skin feel. The new formulation, new health perfume and
superior skin feel, along with the popular red colour, have registered conclusive and
clear preference among existing and new users.

The new Lifebuoy is targeted at today’s discerning housewife with a more inclusive
“family health protection for my family and me” positioning. Lifebuoy has made a
deliberate shift from the male, victorious concept of health to a warmer, more versatile,
more responsible benefit of health for the entire family.

The new Lifebuoy range now includes Lifebuoy Active Red (125gm, 100 gm and 60 gm)
and Lifebuoy Active Orange (100gm). Lifebuoy Active Orange offers the consumer a
differentiated health perfume while offering the health benefit of Lifebuoy.

At the upper end of the market, Lifebuoy offers specific health benefits through
Lifebuoy International (Plus and Gold). Lifebuoy International Plus offers protection

Rural Marketing- Lifebuoy 8

against germs which cause body odour, while Lifebuoy International Gold helps protect
against germs which cause skin blemishes.

Repositioning of Lifebuoy

FMCG major Hindustan Lever Ltd (HLL) is to embark on a massive rural campaign
using the concept of hygiene as a platform to reposition its leading brand, Lifebuoy.

Lifebuoy is the single largest soap brand — with 20 lakh soaps sold every day and an
estimated value of Rs 500 crore (600 million users annually).

HLL has identified 8-9 key States for commencing its rural contact programme wherein
the concept of hygiene will be highlighted. The relaunch of the 107-year-old Lifebuoy
has been done in a bid to drive growth in a sluggish soap market.

It is expected to propel the growth to double-digit levels during 2002. Lifebuoy has been
declining by 15-20 per cent in volume terms until HLL launched Lifebuoy Active during
the second half of 2001.

The new Lifebuoy is a completely new product with a new fornulation, fragrance, lather
profile and a shift in positioning from being a male soap to a family soap.

The carbolic segment, under which Lifebuoy fell, shrunk in the process giving way to an
explosive growth in the discount segment in which HLL's Breeze is positioned.

Seventy per cent of the Lifebuoy sales were from rural India.

Rural consumers' query `why do I need Lifebuoy when all soaps clean' was indicative of
the decline of the brand, prompting HLL to launch Lifebuoy Active and Lifebuoy Extra
Strong in mid 2001. "These launches led to a marginal turnaround, but 2002 is the year of
growth.

Lifebuoy is no longer a carbolic soap with cresylic perfume, it is a toilet soap with a
different `health' fragrance. With this launch, the carbolic segment has been wiped out

Rural Marketing- Lifebuoy 9

as Lifebuoy accounted for 95 per cent of this segment previously. In the process of
change, HLL challenged everything that Lifebuoy stood for - perfume, formulation, size
and shape. "Every element of communication was changed

"The first phase of communication was to tell consumers that Lifebuoy has changed.
From an earlier focus on men, the focus has shifted to family with the message that
Lifebuoy is for effective protection from germs that cause health problems.

The new range includes Lifebuoy Active Red, Lifebuoy Active Orange, Lifebuoy
International Plus and Lifebuoy International Gold.

In 2001, HLL's soaps and detergents turnover was at Rs 4,295 crore, accounting for 39
per cent of its total net turnover of Rs 10,972 crore.

Hindustan Lever Ltd (HLL) is attempting to give a new lease of life to its 107-year-old
heritage brand by extending it to talcum powder and also testing a herbal variant of this
power brand. While the upper-end consumers would use deodorants, a Lifebuoy
powder could work for consumers in the lower strata who are already familiar with the
soap."

Project Shakti

Rural Marketing- Lifebuoy 10

Empowering womenfolk through a wired network for linkage activities or connecting
the rural with urban world is the new mantra adopted by many FMCGs to sell their
products as well as improve the lot of rural women. Indeed, a win-win partnership for
both womenfolk and the company.
This has been made possible due to the initiatives taken up by Hindustan Lever Ltd
(HLL) for an exclusive project called Shakti through which women in a remote village
can access happenings around the world.
As part of this commitment, HLL is leveraging on Self-Help Groups (SHGs) as they
become direct-to-home (DTH) dealers in line with other micro credit models

To be implemented initially as a pilot project in the Nalgonda district of Andhra

Pradesh, Shakti is expected to spread its roots across all the districts of Andhra Pradesh.
It will be integrated with its Project Shakti programme, which is a linkage of women
SHGs with private sector companies.
There are about 300 Shakti dealers in the state with about 40 dealers in Nalgonda.
Working on a cluster approach, the Shakti programme operates through Shakti dealers
who market HLL products and use their services for stocking their produce.
Besides health education, there is also an option of ‘e-learning’ to prepare home foods
like pickles and curry powders among other things. i-Shakti will also help women to
know about crop protection, weather forecasting, soil conditions, cropping patterns in
different weather besides integrated pest management practices.
The whole operation is primarily through SHGs who act as direct dealers in the rural
markets of HLL. The Project Shakti programme is facilitated by the District Rural
Development Agency (DRDA) of Nalgonda district.

From the time HLL's new distribution model, named Project Shakti, was piloted in
Nalgonda district in 2001, it has been scaled up and extended to over 5,000 villages in 52
districts in AP, Karnataka, Gujarat and Madhya Pradesh with around 1,000 women

Rural Marketing- Lifebuoy 11

entrepreneurs in its fold. The vision is ambitious: to create by 2010 about 11,000 Shakti
entrepreneurs covering one lakh villages and touching the lives of 100 million rural
consumers.

How it works

Typically, a woman from a SHG selected as a Shakti entrepreneur receives stocks at her
doorstep from the HLL rural distributor and sells direct to consumers as well as to
retailers in the village.

Each Shakti entrepreneur services 6-10 villages in the population strata of 1,000-2,000
people

A Shakti entrepreneur sets off with 4-5 chief brands from the HLL portfolio -
Lifebuoy, Wheel, Pepsodent, Annapurna salt and Clinic Plus. "These are the core
brands, they we layer it with whatever else is in demand like talcum powder or
Vaseline during winters. These brands apart, other brands which find favour with a
rural audience are: Lux, Ponds, Nihar and 3 Roses tea. Typically, unit packs are small.
All the brands are national and HLL is cool to the idea of creating a rural-specific
brand as it will only dissipate the advertising media effort for the brands. To get
started the Shakti woman borrows from her SHG and the company itself chooses only
one person. With training and hand-holding by the company for the first three months,
she begins her door-to-door journey selling her wares.

The future of Shakti

Having perfected the model in Nalgonda, in 2003 HLL plans to extend Shakti to a 100
districts in Madhya Pradesh, Gujarat and UP. There are other plans brewing. One is to
allow other companies which do not compete with HLL to get onto the Shakti network
to sell their products. The most powerful aspect about this model, is that it creates a
win-win partnership between HLL and its consumers, some of whom will also draw on
the organisation for their livelihood, and it builds a self-sutaining virtuous cycle of
growth for all.

Rural Marketing- Lifebuoy 12

The next stage of Project Shakti is even more ambitious. HLL is now in the process of
piloting `I-Shakti', an IT-based rural information service that will provide solutions to
key rural needs in the areas of agriculture, education, vocational training, health and
hygiene. The project will be piloted in Nalgonda district again. Based on a palm pilot.
Women in the rural areas are the catalyst of change and that is why its whole
programme keeps women in focus. It’s the rural women who give Shakti its strength.

THERE are about 4.36 lakh women self-help groups in Andhra Pradesh covering nearly
58.29 lakh poor women. AP alone has about half of the SHGs organised in the country.

PROMOTION

Rural Marketing- Lifebuoy 13

Media's strategy for Lifebuoy soap's re-launch:

Lifebuoy contributed 30 per cent to the Hindustan Lever detergent business turnover
and hadn't undergone a major restructuring and repositioning in 107 years. However,
the sales were declining as the consumers were moving away from the carbolic based
soaps to beauty soaps - perceived to be superior; with better fragrance and lather;
aspirational image.

The agency devised a strategy to ensure that it advocated family health rather than
personal hygiene. There were large chunks of the users who were in "unreachable
areas" - rural markets. Through TV and print campaigns, the agency team focused
attention on the family health themes, conducted consumer education exercise using
"Germ tests" through multimedia; and established the brand's credentials as an
authority in a credible manner. The agency also explored the communication options
during important days such as World Health Day. For rural markets, it created the
Lifebuoy Swashthya Chetana project wherein 450 teams of health officers tapped 8000
villages in 11 states. Nearly 40 million people in rural areas were covered. The brand
registered a 30 per cent increase in volumes and the share of contribution to HLL's
detergent division turnover increased to 55 per cent.

HLL was also offering cross company product mixes - a 200 gm Bru packet comes with
one Cadbury's Dairy Milk; Red Label tea packet comes with Cadbury's Five Star
depending on the size; 100 gm Lifebuoy comes with a small Amrutanjan.

HLL used Mahakumbh mela as an opportunity to change hand-washing and bathing

habits in rural India. "The Mahakumbh” at Allahabad is the biggest mela in India and,
with its focus on `cleansing' is a good fit for the `Lifebuoy for health' message of the
brand". innovative communication tools were used at the mela to communicate the
importance of health and hygiene. " The company 14 stalls at various points in the mela
grounds. Some hand-carts have also been deployed for increasing access. The numbers
of both was increased based on response. ``The activity aims to build awareness in the
target audience about hygiene and health through product demonstrations".

Rural Marketing- Lifebuoy 14

People in Mela were asked to put there hands below some special camera where the7y
could see the germs on their hands and were asked to wash their hands with lifebuoy
and then see the difference. These type ofpromotional activities worked in these melas.

Cinema van operations

These are typically funded by the Redistribution Stockists. Cinema Van Operations
have films and audio cassettes with song and dance sequences from popular films,
also comprising advertisements of HLL products.

Operation Harvest

The reach of conventional media and, therefore, awareness of different products in

rural markets is weak. It was also not always feasible for the Redistribution Stockist
to cover all these markets due to high costs involved. Yet, these markets are important
since growth opportunities are high.

Operation Harvest endeavoured to supplement the role of conventional media in

rural India and, in the process, forge relationships and loyalty with rural consumers.
Operation Harvest also involved conducting of product awareness programmes on
vans.

Project Shakti is working for HLL to be a great promotional Project and work in both
terms that is Promotion as well as Distribution with socal welfare as it gives
employment to rual women and increase their income.

Hindustan Lever Limited's Lifebuoy, recently

announced the launch of Lifebuoy Swasthya Chetna,

Rural Marketing- Lifebuoy 15

the first single largest rural health and hygiene educational program. Lifebuoy will make
multiple repeat contacts in nearly 15,000 villages in 8 states across rural India. The
campaign aims to educate children and the community about the threat of unseen germs
and basic hygiene practices. Lifebuoy has already successfully conducted pilot studies in
Madhya Pradesh, Chattisgarh, Uttar Pradesh, West Bengal, Orissa and Bihar. This
campaign teaches people about maintaining good health through practice of basic
hygienic habits including the handwash habit.

Lifebuoy is among HLL's power brands, which the company is focusing on, selected on
the basis of their absolute size, brand strength, brand relevance, competitive advantage
and potential for growth. The new Lifebuoy range now includes Lifebuoy Active Red
(125 gm, 100 gm, and 60 gm) and Lifebuoy Active Orange (100 gm). Lifebuoy Active
Orange offers the consumer a differentiated health perfume while offering the health
benefit of Lifebuoy. At the upper end of the market, Lifebuoy offers specific health
benefits through Lifebuoy International (Plus and Gold). Lifebuoy International Plus
offers protection against germs which cause body odour, while Lifebuoy International
Gold helps protect against germs which cause skin blemishes.

PRICE

Rural Marketing- Lifebuoy 16

Hindustan Lever Ltd (HLL) currently on a price discount include 150 gm Lifebuoy
Gold (Rs 3 off),

TRYING to match prices with the smaller players, large FMCG companies have been on
a price-cutting spree. Of late, Hindustan Lever have announced `new' prices for their
various brands to beat sluggish sales, combined with the introduction of lower-sized
packs to get volumes.

HLL is also expected to follow suit with its Surf sachets with the obvious purpose of
gaining volumes at the lower end of the market.

HLL managers describe the exercise as that of dropping price barriers to induce growth
for their brands rather than trying to beat the smaller players with their pricing. More
than benchmarking competition, dropping prices is all about triggering growth and this
has always been an integral part of their strategy. Straddling almost every price segment
with its SKUs, HLL has also been trying to upgrade its consumers, even at the cost of
cannibalising its own brands.

Besides, freebies and promotions have finally been replaced by direct price reductions to
lure consumers. Observes Sujoy Mishra, an analyst at Kotak Securities, "Promotions
have shifted to the trade while freebies have been replaced by price cuts." Considering
almost every FMCG brand was doling out a freebie, it was time for FMCG players to
differentiate themselves. Observes A. Sundarajan, Managing Director of market research
firm, Market Search, "The round of freebies has already been played out by the FMCG
companies. They are now coming back to their core brands at a lower price."

In spite of the slowdown in rural demand, FMCG companies continue to focus on the
rural markets in the hope of salvaging their sales turnover. Majors such as HLL have
deliberately introduced small pack sizes. Lifebuoy, HLL's largest selling soap brand,
recently introduced a Rs 2 SKU of 18 gm targeted at the rural market in the Bimaru
States.

PLACE

Rural Marketing- Lifebuoy 17

70% of India's population resides in villages. Penetrating the rural markets is,
therefore, one of the key challenges for any marketer. While rural markets present a
great opportunity to companies, they also impose major challenges.

At HLL, they have been at the forefront of experimenting with innovative methods to
reach the rural consumer.

 Single Distribution Channel

For rural India, HLL has established a single distribution channel by consolidating
categories. In a significant move, with long-term benefits, HLL has mounted an
initiative, Project Streamline, to further increase its rural reach with the help of
rural sub-stockists. It has already appointed 6000 such sub-stockists. As a result,
the distribution network directly covers about 50,000 villages, reaching about 250
million consumers.

Distribution will acquire a further edge with Project Shakti, HLL's partnership
with Self Help Groups of rural women. The project, started in 2001, already covers
over 5000 villages in 52 districts of Andhra Pradesh, Karnataka Madhya Pradesh and
Gujarat, and is being progressively extended. The vision is to reach over 100,000
villages, thereby touching about 100 million consumers. The SHGs have chosen to
adopt distribution of HLL's products as a business venture, armed with training
from HLL and support from government agencies concerned and NGOs. A typical
Shakti entrepreneur conducts business of around Rs.15000 per month, which gives
her an income in excess of Rs.1000 per month on a sustainable basis. As most of
these women are from below the poverty line, and live in extremely small villages
(less than 2000 population), this earning is very significant, and is almost double
of their past household income. For HLL, the project is bringing new villages
under direct distribution coverage. Plans are being drawn up to cover more states,
and provide products/services in agriculture, health, insurance and education.
This will both catalyse holistic rural development and also help the SHGs

Rural Marketing- Lifebuoy 18

 generate even more income. This model creates a symbiotic partnership between
HLL and its consumers, some of whom will also draw on the company for their
livelihood, and helps build a self-sustaining virtuous cycle of growth.

The marketplace in India is as varied in its diversity as it is complex in its nature.

Urban Cities/Towns 3768

Population 258 million
Rural Villages 627000
Population 698million
Outlets 3768

Urban India

Population Strata Number of Towns % of Population

>1 Lakh 309 64.9

50000 - 1 Lakh 358 11
20000 – 50000 968 13.3
10 - 20000 183 7.9
5 – 10000 757 2.6
> 5000 192 0.3

Rural India

Population Strata Number of Towns % of Population

> 10,000 1,831 0.3

5 - 10,000 7,145 1.3
2 - 5,000 46,754 8.4
1 - 2,000 94,658 16.9
500 - 1,000 136,232 24.7
< 500 340,380 48.7

Rural Marketing- Lifebuoy 19

Hindustan Lever Limited’s (HLL) RS Net initiative, which aims at connecting
Redistribution Stockists (RSs) through an internet based system, now covers stockists
of the Home & Personal Care business and Foods & Beverages in close to 1200 towns
and cities. Together they account for about 80% of the company's turnover.

RS Net is one of the largest B2B e-commerce initiatives ever undertaken in India. It
provides linkages with the RSs’ own transaction systems, enables monitoring of
stocks and secondary sales and optimises RS’s orders and inventories on a daily basis.
Information on secondary sales from Gandhidham to Guwahati is now available on RS
Net every day.

Launched in 2001, RS Net is part of Project Leap, HLL’s end-to-end supply chain
initiative. Project Leap begins with the supplier runs through the factories and depots
and reaches up to the RSs. The objective is to catalyze HLL’s growth by ensuring that
the right product is available at the right place in the right quantities and at the right
time. Leap also aims at reducing inventories and improving efficiencies right through
the extended supply chain.

RS Net has come as a force multiplier for HLL Way, the company's action-plan to not
only maximise the number of outlets reached but also to achieve leadership in every
outlet. RS Net has enabled stockists to place orders on a Continuous Replenishment
System. This in turn has unshackled the field force to solely focus on secondary sales
from the stockists to retailers and market activation. It has also enabled RSs to provide
improved service to retail outlets. Simultaneously, HLL is servicing the rural market,
key urban outlets, and the modern trade as a single concern.

HLL Way has also led to implementing best practices in customer management and
common norms and processes across the company. Powered by the IT tools it has

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further improved customer service, while ensuring superior availability and impactful
visibility at retail points.

 Indirect coverage

Under the Indirect Coverage (IDC) method, company vans were replaced by vans
belonging to Redistribution Stockists, which serviced a select group of
neighbouring markets.

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