Innovation in Products and Distribution: Hindustan Univeler Case Study

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Furthering reports concerning the Executive MBA´s trip to India, Unilever´s successful and interesting case, known as Hindustan Unilever, is worthy of mention.

For starters, findings resultant from travel observations place prime emphasis in the hardship encountered by attempts to homogenize the Indian population, in terms of markets or segments. This is an extremely multi-faced populace in terms of culture and consumer habits, in addition to the many differences pertaining to income levels. Given this context, Hindustan Unilever works in India under the concept of “doing well by doing good”, respecting the needs, values and habits of the people of India. One of these values concerns getting a job well done so that the consumer feels well with the nutrition, hygiene and personal care products sold by the company.

According to our “in loco” visit to the company and conversations held with executives, Hindustan Unilever´s success depends on the sound addressing of the average class Indian woman. Although one must market a low priced product, it must however be one of quality. This, the company has been able to develop by means of innovation in products and processes, as well as by employing new technologies.

The company also had to adapt it´s brands and products locally, selling assorted brand names at different regions such as, for instance, the Hamam deodorant in Tamil Nadu and Rexona in Andhra Pradesh. On the other hand, products such as teas are sold under the same brand name but with different flavours according to local taste, thus enhancing the relevance of the R&D area and of intense and regular market research, so as to acquire an understanding of consumer opinions.
However, of true interest was the innovation in the distribution model adopted by the company. To expand it´s markets, Hindustan faced the challenge of reaching out to millions of potential consumers at small and remote villages lacking adequate distribution, advertising coverage and quality infra-structure. To overcome this impairment, in 2000, the company launched the Shatki Project, partnering with NGO´s, Banks and government.

In this project, women involved in self-support groups in India were invited to sell Hindustan products - mostly soaps and shampoos – at towns and villages. The company offers training in Sales and commercial knowledge to support the entrepreneural activity.

After the initial investment in stock, many entrepreneurs earn a monthly profit of 700 to 1000 rupias (15 to 22 dollars), more than their husbands earned in the fields. By the end of 2004, over 13.000 women sold to 70 million consumers at 12 states. At the end of 2006, 30.000 shatkis addressed 100.000 villages at 15 states, recovering these ladie´s self esteem and a role in society and to the company, an increasing success in sales in the rural areas of India!

For further information, kindly refer to :
http://www.unilever.com/sustainability/casestudies/economic-development/creating-rural-entrepreneurs.aspx.

Prof. Renata G. Spers, Teacher and Assisting Coordenator of Projects at FIA – Profuturo and International MBA. Participated in January/2010 of study trips to India and South Africa by joining the International Executive MBA group. (renatag@fia.com.br).