Hindustan Unilever Limited (HUL) operates in around 10,000 villages in India. The number may look small considering India is a land of over 6 lakh villages, but it is important for a company, especially one with a portfolio as large as HUL, to identify the right markets and map products to markets, explained Ashish Rai, head, rural business and alliances. He was speaking at a rural marketing conference in Mumbai hosted by Marcus Evans on 8 August.
Overall strategy for rural marketing
Classifying the portfolio in the rural context as low penetration (Dove, Tresemme) and high penetration (Clinic Plus) brands, Rai explained the role of both.
“For high penetration brands we want to develop salience and for low penetration brands we want to develop consumption. There is a four to five-year lag between any category developing in urban versus in rural. For example, hair or fabric conditioners take off in the urban markets but it takes time for them to reach the rural markets. And when I say rural, I mean the bigger villages. But we know that the gap between taking off in urban and rural is becoming shorter. The plan for us as pioneers is to see if we can develop categories ahead of anybody else in the top villages," said Rai.
He cited current low penetration categories in rural such as hand wash, body lotion, face wash and fabric softener, and noted that these would eventually pick up, like they have in urban markets.
He listed the following points that help bridge the urban-to-rural gap:
- Market development: High intensity engagement to demonstrate tangible benefits - very clear proof of why a product will work.
- Benefit community: If opinion leaders talk positively it is then very likely that people will accept the brand. Need to ensure community gets involved.
- Combine with high impact activity for one day so nobody can miss it.
- Products may not sell from day one. Remind retailer that the brand is going to invest a lot in the village thereby keep him interested in stocking the products. Unless done at scale, one cannot expect sizeable change. Need to look at this as investments in advertising, as these categories cannot be developed overnight. They need a gestation period of two to three years.
The Shakti ammas
Rai listed brand availability and driving access to products thereby driving up consumption as the primary role of high penetration brands in smaller regions.
This, he said, is achieved by HUL's Shakti project. "We have 66,000 rural women involved in the project who distribute our products as micro distributors in and around their villages. These people work as our distributors in areas where our delivery vehicles cannot reach. These women, known as Shakti ammas, live in the villages and sell the products in the village and within a radius of 3 to 5 km. We have almost four million households and 25 crore people that we’ve reached through this channel. It is no more a CSR activity as it is almost part of our business and bringing in dividends and we are reaching those markets directly where our competitors reach through the wholesale route. And the advantage with going directly is that it allows you to drive scale and drive the width of the portfolio," he elaborated.
The Shakti ammas sell their stocks directly to the consumer or to the local retailers. HUL studies the markets and equips these women with the relevant products to sell in a particular region.
Rai explained,"Let's take Azamgarh for example. We identify the packs that sell in wholesale in Azamgarh and the small marginal outlets in the towns in and around Azamgarh. These packs are then marked as ‘must sell’ packs for Shakti ammas belonging to that region. It is very important for us that we don't give a Shakti amma a pack which has no traction in her respective geography."
Tips for new entrants
Rai listed the following as must do's for marketers eyeing rural India:
- Let access to brand drive marketing efforts
- Pick one geographical cluster at a time
- Get availability right
- Draw up a consumption model which can sustain in that geography