Unilever in India: Hindustan Lever’s Project Shakti
THURSDAY, MARCH 23, 2006
Unilever in India: Hindustan Lever’s Project Shakti
Marketing FMCG to the Rural Consumer
Marketing Management (MKG1010)
International University of Japan, Fall 2005
Nishino Kei
Pham Thi Thuy Ha
Suwannathat Sanpat
Tan Siew Siew
Zha Li
Executive Summary
HLL has enjoyed a competitive advantage as a sole provider of personal hygiene care products before the liberalization of India’s economy. However, with the entry of foreign MNC, HLL is suffering from stagnant growth and lower profit margin. Project Shakti was created to address these issues. The high growth of Shakti has created managerial challenges to the project management team. As Shakti grows, the current management structure has become inefficient to make it profitable with minimum costs. Thus, restructuring management measure is crucial to sustain Shakti in the long run and to provide HLL with competitiveness.
Challenges of Project Shakti
Rural market is already giving HLL a competitive advantage. But competitors are also tapping into the rural market with existing HLL direct channels. Thus to continue HLL competitive edge, Project Shakti is essential. Until 2004, Shakti is contributing 3.5% (pg 6 & 17: 15 x 20 / 85) towards HLL total revenues and it still has potential to continue growing. This is because personal hygiene awareness is in the increase. Shakti may be able to achieve the founder’s dream of 15%-20% of total revenues, assuming that Shakti can increase the usage rate of current consumer. However it will not achieve the market penetration of over 500 million rural population as this figure signifies that HLL will nearly monopolize the rural market with 80% penetration rate. The greatest challenges that Shakti face are costs and management control to make it profitable.
Managing Project Shakti in the long term
The Shakti system in the beginning of the project was good but not sufficient to handle the growth it had obtained. Thus changes are
Unilever in India: Hindustan Lever’s Project Shakti
Marketing FMCG to the Rural Consumer
Marketing Management (MKG1010)
International University of Japan, Fall 2005
Nishino Kei
Pham Thi Thuy Ha
Suwannathat Sanpat
Tan Siew Siew
Zha Li
Executive Summary
HLL has enjoyed a competitive advantage as a sole provider of personal hygiene care products before the liberalization of India’s economy. However, with the entry of foreign MNC, HLL is suffering from stagnant growth and lower profit margin. Project Shakti was created to address these issues. The high growth of Shakti has created managerial challenges to the project management team. As Shakti grows, the current management structure has become inefficient to make it profitable with minimum costs. Thus, restructuring management measure is crucial to sustain Shakti in the long run and to provide HLL with competitiveness.
Challenges of Project Shakti
Rural market is already giving HLL a competitive advantage. But competitors are also tapping into the rural market with existing HLL direct channels. Thus to continue HLL competitive edge, Project Shakti is essential. Until 2004, Shakti is contributing 3.5% (pg 6 & 17: 15 x 20 / 85) towards HLL total revenues and it still has potential to continue growing. This is because personal hygiene awareness is in the increase. Shakti may be able to achieve the founder’s dream of 15%-20% of total revenues, assuming that Shakti can increase the usage rate of current consumer. However it will not achieve the market penetration of over 500 million rural population as this figure signifies that HLL will nearly monopolize the rural market with 80% penetration rate. The greatest challenges that Shakti face are costs and management control to make it profitable.
Managing Project Shakti in the long term
The Shakti system in the beginning of the project was good but not sufficient to handle the growth it had obtained. Thus changes are