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Key Takeaway

Keep your pulse on where your customers are purchasing your products through regular market

surveys. Design your distribution strategy to allow for future evolution as the market changes.

Hindustan Unilever Limited (HUL)is Indias largest Fast Moving Consumer Goods

company, touching two out of three Indians with their large brand portfolio. HULs

products are household names across the country and span a host of categories

such as soaps, detergents, personal products, tea, coffee, ice cream, and culinary

products. Today, there are over 7.7 million retail outlets in India with an average

of 6.8 stores per thousand people the highest store density in the world.

To maintain their market leadership, HUL pursues innovative distribution

mechanisms to reach the millions of potential consumers in both urban areas and

small remote villages where there is no retail distribution network, no advertising

coverage, and poor roads and transport. HUL realized from the onset that its sales

and distribution network gave it an edge over the competition, but that rivals

would try to match it over time. To maintain their competitive advantage, HUL has

aggressively extended more deeply in India, moving from large to small towns,

and from urban to semi-urban areas.

The unorganized and scattered character of markets in India means sales and

distribution requires a different tactic from that of more developed economies.

LikeCoca-Cola, HUL knew it needed to tailor its approach for the different

markets.

Modern Trade

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Photo Credit: Hindustan Unilever

Modern trade, or retail chains, is characterized by standardized store formats, air-

conditioned ambiance, and a variety of goods and typically lower pricing. Global

retail chains such as Walmart and Carrefour fall under this category. In India,

modern trade comprises roughly 10% of all commercial transactions and isgrowing rapidly.

In the past, HULs sales forces were separated by geographies and product

categories. However, this organizational structure was ill equipped to manage

modern trade, as one regional team negotiating the terms of trade with an

individual franchisee of a national retail chain could never be as effective as HUL

entering a long-term comprehensive contract spanning all product categories and

outlets of the retail chain. Today, HUL has specific account managers dedicated to

large modern trade customers.

General trade

http://www.cgap.org/http://www.cgap.org/

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Photo Credit: CGAP

General trade consists of the thousands of independent retail and wholesale

outlets across the country. Often called mom and pop shops, each of these

stores is considered a distinct customer and has to be addressed individually. HUL

services these outlets through a network of 2,900 stockists. Goods are sent to a

local warehouse or carrying and forwarding agent (CFA), and are then stocked and

dispatched to specific retailers upon orders from the HUL stockists. The stockists

are responsible for servicing all the small retail outlets in a specific geographic

area. General trade makes up the majority of HULs sales.

Rural Markets

While general trade encompasses both urban and rural markets, serving

customers in more remote areas of India poses unique challenges. Rural markets

are scattered over large areas with low per capita consumption rates. While the

aggregate potential of rural markets is large, the potential of each of the 600+

dispersed markets is very low. As well, rural markets are not connected to urban

centers by air or rail, with road connectivity poor at best. Accessing these

markets, even when feasible, means additional logistics costs to HUL.

Despite the roadblocks, conquering the rural markets is a must for HUL. One out

of every eight people on this planet lives in an Indian village. In comparison to the

urban market, which consists of roughly 250 million people, the rural market is

775 million people across 638,000 villages. Within ten years, per household

consumption in rural India is forecasted to equal todays urban levels.

To penetrate the rural markets, HUL launched a unique four tier distribution

system. Markets were segmented based on their accessibility and business

potential.

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1. Direct Coverage: HUL appointed a common stockist to service all outlets

within a town and sell a limited selection of the brand portfolio. Towns

consisted of populations of under 50,000 people.

2. Indirect Coverage: HUL targeted retailers in accessible villages close to larger

urban markets. Retail stockists were assigned a permanent route to ensure

that all accessible villages in the vicinity were served at least once a fortnight.

3. Streamline: Streamline leveraged the rural wholesale channel to reach

markets inaccessible by road. Star Sellers were appointed among wholesalers

in a particular village. Star Sellers would purchase stock from a local

distributor and then distribute stock to retailers in smaller villages using local

means of transport (e.g. motorcycles, rickshaws).

4. Project Shakti: Project Shakti targeted the very small villages (

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around 200 million people in rural and urban

areas about the importance of adopting good

'health and hygiene'practices. The program

spread awareness about germs and their

adverse effects on health, and how proper

'health and hygiene'practices, such as bathing

and washing hands with soap could preventdiseases like diarrhea.

According to HLL, LSC was not a philanthropic activity, but a marketing program with a

social benefit. HLL sought to grow the Lifebuoy brand in India by attracting those consumers

who never used soap. In the process, the company sought to bring about a behavioral

change by convincing people to use soaps more frequently, thus creating more users for its

brand. This program was also seen as a successful case for public-private partnership.

Issues:

Understand the rationale behind the Lifebuoy Swasthya Chetna initiative by Hindustan

Lever Limited (HLL) in India.

Understand the issues related to brand management and repositioning in the personal

wash soap segment in the fast moving consumer goods (FMCG) industry in India.

Appreciate the role of public-private partnerships as a win-win situation for private

entities, governments, and individual consumers.

Contents:

Page No.

Introduction 1

Background Note 2Lifebuoy and Health 3

Initiating a Behavior Change 5

A Multi-Phase Interactive Program 6

Impact of the Program 9

The Accolades 10

Some Criticisms 10

Other Initiatives for Lifebuoy 11

Outlook 12

Exhibits 14

Keywords:

Lifebuoy's Swasthya Chetna, Hindustan Lever Limited (HLL), Unilever, Fast moving

consumer goods (FMCG) major, Personal Soap Wash, Rural Social Marketing Strategy,

Advertising Campaign , Sales Promotion, Marketing Mix, Brand Management, Repositioning ,

Behavioral change, Corporate Social Responsibility, Media Channels, Global Public-Private

Partnership for Handwashing with soap (GPPP-HW)

Lifebuoy Leaves its Stamp on India Contd...

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ng%20Campaign-Excerpts.htm#Background_Notehttp://www.icmrindia.org/casestudies/catalogue/Marketing/Lifebuoy%20Swasthya%20Chetna-Unilever%20Social%20Marketing%20Campaign.htm

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Lifebuoy was initially launched in India in 1895,

within one year of its launch in the UK. It was

the flagship soap brand of Unilever (Refer to

Exhibit V for Lifebuoy's logo). In the 1930s,

Unilever started the Clean hands help guard

health campaign in the US to encourage

consumers to make their hands germ-free byusing Lifebuoy...

Initiating a Behavior Change

It is estimated that across the world, diarrhea results in the death of about 3 million children

each year. In India, around 600,000 children die every year on account of diarrhea. Diseases

like diarrhea also lead to loss of workdays that directly affect labor productivity in rural

India...

A Multi-Phase Interactive Program

Initially, the objective of trying to change the

behavior and attitudes of rural consumers

proved to be a tough challenge...

Impact Of The Program

In 2003-04, the sales of Lifebuoy grew by 20

percent. According to Unilever, the sales of

Lifebuoy were showing directly attributable

growth as sales from the eight states where

the program operated was particularly strong...

Excerpts Contd...

The Accolades

On the whole, the program received positive

coverage by the national as well as

international media. The Financial Times

reported, New distribution channels have been

developed for the (LSC) program, with

representatives that are part salespeople, part

health workers sent to villages to teach

schoolchildren the importance of hand washing

with soap...

Some Criticisms

In early 2001, HLL initiated a handwashing

program in Kerala as part of the GPPP-HW. But

its initiative in Kerala faced protests from some

anti-globalization activists...

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Other Initiatives for Lifebuoy

The handwashing campaign was extended to urban areas in August 2003 with the Healthy

Hindustan campaign. For this, HLL partnered with McDonald's Western India across cities

like Mumbai, Pune, Ahmedabad, and Vadodara to educate children about the benefits of

handwashing with soap...

Outlook

By 2005, LSC was regarded as India's single largest health and hygiene education program.

Changing the behavior of people, particularly in the rural areas was a big challenge for LSC,

as these behaviors were deeply rooted...

Exhibits

Exhibit I: Lifebuoy Swasthya Chetna Postal

Cover

Exhibit II: Lifebuoy Swasthya Chetna LogoExhibit III: A Brief Note on Unilever

Exhibit IV: List of HLL's Brands

Exhibit V: Lifebuoy logo

Exhibit VI: Pack-Shots of Lifebuoy Soaps

Exhibit VII: A Public-Private Partnership for

Handwashing

Exhibit VIII: Campaigning for Health & Hygiene

Exhibit IX: Glo-germ Demonstrations

Exhibit X: Wall Painting of Lifebuoy