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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 under-privileged 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 micro-credit, 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 ading 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. 1

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?

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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.

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