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CASE: MK617 Rural Marketing - 2013

PROJECT SHAKTI: It is all about empowerment

Project Shakti is a rural distribution initiative of Hindustan Unilever Limited (HUL) that targets

small villages populated by less than 5,000 individuals. It is a unique win-win initiative that

catalyses rural affluence even as it benefits business.

Project Shakti benefits business by significantly enhancing HUL's direct rural reach, and by

enabling HUL's brands to communicate effectively in media-dark regions. It also impacts society

by creating livelihood opportunities for under­privileged rural women. Project Shakti impacts

society in two ways- the Shakti Entrepreneur programme creates livelihood opportunities for

underprivileged rural women.

The Shakti Entrepreneur (SE) programme recognises that while micro-credit plays a key role in

alleviating poverty, its ability to do so depends on the availability of investment opportunities.

Shakti contributes by creating profitable micro-enterprise opportunities for rural women.

Armed with micro­credit, rural women become Shakti entrepreneurs: Direct-to-home

distributors in rural markets. This micro-enterprise offers low risks and high returns. The

products distributed are some of the country's most trusted brands of consumer goods, and

include a range of mass-market products especially relevant to rural consumers.

Moreover, HUL invests its resources in training the entrepreneurs, helping them become

confident, business-savvy professionals capable of running their own enterprise.The SE is also

called as 'Shakti Amma' — 'Shakti' means 'power/empowered' and 'Amma' means 'mother'

inTelugu the language spoken in Andhra Pradesh where Project Shakti was first piloted in 2000.

Project Shakti has proved to be a great success for HUL and for rural impoverished women in

India. The project started in a few pilot villages in Andhra Pradesh in 2000. In 2002 it expanded

to two states and by the end of 2004 had grown to over 13,000 Shakti women entrepreneurs in

12 states. Today there are about 45,000 Shakti Ammas across 15 states in India.

In 2010, HUL rolled out the Shaktiman initiative through Project Shakti. Through the

Shaktimaan initiative, men in the Shakti Amma families distribute HUL products to villages

adjoining the respective Shakti village. Through the Geographical Information System, villages

around the 'Shakti' families are tracked and based on this they are allotted five to six villages.

They go to these villages and sell HUL products. The Shaktimaan have also been given bicycles

to ensure smooth travelling between villages.

HUL now has over 26,000 Shaktimaans (through the Project Shakti network) across the country

now. The revenue earned by the Shaktimaan further augments the household income of the

'Shakti' family.

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Bicycle chief: Hindustan Unilever's initiative for a social cause

Baloo Bhegde, a resident of Bhegdewadi hamlet, 30 km west of Pune, knows what it is to

juggle jobs to make a livelihood. Born into a farmer family, the 43 year old worked at the

Rand Polyproducts' (a manufacturer of specialty polymer resins) factory near Pune, but

found it tough to make time to till his two acre farmland.

So, a year ago he quit his job and took to full-time farming, growing rice, wheat and

jowar. But after tending to his patch of land daily, he found he had hours to spare.

Financially, his family of five was not stretched since his wife, Vandana, earned an

income. As a Shakti Amma, a grassroots-level distributor for Hindustan Unilever, she

made Rs 1,800-2,000 a month.

HUL's Project Shakti, launched in 2001, employs women self-help groups to sell its

products. Now, as HUL makes a spirited push to expand and strengthen its reach in the

hinterland, it has roped Bhegde in, too. He is a Shaktimaan, roped in for the next big leap

the Anglo-Dutch multinational wants to make in India: distribute in villages with less than

2,000 people, which would be expensive to reach through its redistribution stockists.

Every day, Bhegde sets out on a bicycle provided by HUL to nearby hamlets to distribute

popular brands like Wheel, Lifebuoy, Dove, Pond's and Brooke Bond. The consumers he

caters to earlier had to travel to the nearest village where HUL had direct distribution. The

extended reach means the Bhegdes sell products worth up to Rs 25,000 a month - and keep

10 per cent.

The Shaktimaan model, says Ajay Khanna, an HUL veteran of over nine years and now a

consultant, is designed to offset steep distribution costs. In bigger villages, a van travelling

to, say, five villages a day and notching up sales of up to Rs 30,000 is able to cover the

cost of distribution. But, when sales are only Rs 10,000 even after covering 10 villages,

the economics breaks down. "It is a trade-off between cost of distribution and revenue,"

says Khanna. HUL has some 20,000 Shaktimaans signed up, in addition to 45,000-plus

Shakti Ammas.

HUL is looking to increase its rural reach three-fold: through a combination of distributors

and Project Shakti. About six million stores in the country sell its products, of which just

about a million are serviced by its own distributors or company salesmen (as of end-2009).

HUL wants to alter this ratio dramatically.

"We drew up a plan to increase our coverage to two million stores within 24 months. This

was our 'More Stores' agenda," says Hemant Bakshi, Executive Director, Sales and

Customer Development. Since 2010, HUL has added 718,000 stores. It wants another

300,000 by 2011-end.i

Through Project Shakti and Shaktimaan, HUL reaches over 100,000 villages across 15 states in India and

over 3 million households every month. HUL works closely with various NGOs, banks and both state and

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local government departments, who recognise the potential for economic growth by

encouraging women to become entrepreneurs.

On an average, a SE earns Rs. 700/- to Rs. 1,000/- a month, and since most of them live below

the poverty line, this earning is significant, often doubling the household income. With the roll

out of Shaktimaan initiative, Shakti families have an opportunity to further augment their

income. HUL is also evaluating various opportunities to further strengthen the income of Shakti

Ammas.

HUL has continuously endeavored to augment the income of its Shakti Ammas. In 2011, HUL

partnered with the State Bank of India to bring banking services to low-income people in small

Indian villages through the Shakti Ammas. The Shakti Ammas are already trusted by local

communities and make them a friendly and accessible way to promote access to banking in

rural communities and thus promote financial inclusion.ii

Discussion points:

1. In your analysis is this going to be a profitable business model for corporations like HUL?

2. What happens when a rival store opens in the vicinity of the village? How do the Shakti

Amma’s survive? (Should HUL be concerned upon this?)

3. Identify products and services that can be distributed using such channels?

4. Do think there is/are any drawback(s) in such an initiative?

i Subramaniam, A. (2011) BUSINESS TODAY, June 12. Available at:

http://businesstoday.intoday.in/story/shaktimaan-bhegde-hul-shakti-programme/1/15750.html ii Indian Management, June 2012.