Innovative Rural Marketing at Bottom of Pyramid by HUL
Posted in Marketing & Strategy Articles, Total Reads: 1909
, Published on 01 December 2014
HUL is a marketing focused company with a wide network and a diverse product portfolio which is deep as well as broad. FMCG Industry is as interesting as it is complex.
In an industry driven by volumes but sustained on margins where a small local player like Balaji chips can make the MNC giant like Frito-Lays huff and puff it is imperative to device new and innovative ways to open up new markets and create new consumers of your products. In india it is more or less a direct fight between two industry giants – HUL & P&G. Both are US based companies with similar strengths but varied brand perception.
HUL is the market leader in most of the product categories while P&G is not far behind and can be seen snapping at the heels of the market leader with close differences in market share. Now, in this situation what can the marketing executives at the helm of affairs in the HUL corporate office can think of to increase the current market share while maintaining the margins per unit. Lets Ponder over it. FMCG is an industry not built on product innovation like pharmaceuticals or user experience like the Tech. Industry. This is an industry where your product has to gain shelf space at the grocer where most of the people in a community go to replenish their daily needs. The regular grocers and the provision stores (Mom & Pop variety) are already accounted for and do not have much potential left in terms of increasing the current customer base. India is still predominantly agriculture driven economy and as a country 70% of its citizens dwell in the rural hinterland. It was a political slogan of Mayawati during 90’s state elections in UP that “The people who have more strength in numbers should have more say in their governance”. Well, this slogan was more directed towards caste system but is apt for the Bottom of Pyramid approach introduced by management guru CK Prahalad.
In India every child dwelling in the “Bharat” knows that strength lies in numbers whether it is an exam or a fight you should score more. There is a constant refrain to “Score more to win”. HUL quite interestingly is trying to push the envelope of consumerism by wearing the garb of social crusader. There is a theory in Economics (by Engel) which tells that the poor spend highest percentage of their income on food and that too on a daily basis while for the rich the ratio spent on food is minimum to their total income.
Chik Shampoo has quite brilliantly showed the power of sachet and how can a company build great margins on the back of Bottom of the Pyramid consumers who cannot afford your standard pack of product. So, I see this strategy of HUL to appoint Shakti Amma’s in the super remote areas of india as their retailers cum brand ambassadors about:
-More Margins per Volume through Smaller packs (sachets)
-Creating Communities which will swear by the HUL brand as it has provided the basis for their economic & social upliftment.
-When the community will earn more they will buy more. So, HUL will sell more.
-Great PR and Media Coverage as a Company who cares
-Super efficient way to link the three basic needs- Communication (telecom), Savings (banking) and Goods for daily Sustenance (HUL).
-Shakti Amma stores will be the one- stop- shop for the community for most of their needs.
-"Shaktimaan" - Rural Men mostly husband of Shakti Ammas (HUL kiosk store owner) riding bicyles and distributing HUL products to small retailers in the nearby villages which cannot be accessed by a traditional channel due to cost disadvantages.
- Super efficient way to link the three basic needs- Communication (telecom), Money (Savings; banking) and Goods for daily Sustenance (HUL;Trade).
HUL is in talks with Telecom companies to sell their vouchers through the kiosks and with banks to make “shaktiammas” as the banks last mile representative for account opening. A perfect example of Women Empowerment and CSR while doing business in disguise.
This article has been authored by Rohit Misra from IMDR Pune