Project Shakti - Group 10_IB_Sec E.pptx
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Transcript of Project Shakti - Group 10_IB_Sec E.pptx
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UNILEVERININDIA: PROJECTSHAKTI
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AGENDA
Project Shakti
Introduction
Current State
Strategy in Emerging Markets
Problem Diagnosis
Recommendations
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PROJECTSHAKTI
Incentive schemes like cash rewards for visiting a specifiednumber of homes irrespective of the amount sold, additionalincentives on sales of specific brand were introduced for theShakti entrepreneurs
A limited range of products were sold through the project Shaktito reduce the complexity of multiple SKUs
Smaller SKUs and innovative package called Sachets were themain selling items
Shakti entrepreneurs provided personalized services, door todoor delivery and quality assured products to the consumers
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PROJECTSHAKTI
Shakti Vaniwas appointed out of local women as a part ofsocial communication program who dealt with issues ofrelating to personal and community health and hygiene aswell as brand awareness programs
iShaktia information technology enabled rural communityportal was introduced along with a desktop computer anddial-up internet connection in the house of the Shakti
entrepreneur to provide access to information
The users were not charged for accessing information orusing the query facility from the portal
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CURRENTSTATE
12151Shakti women covering 50405 villages across 310
districts in 12 states
46 brands with 150 SKUs, four of which contributed to50% of the sales
Innovative packaging in the for of LUP (Low unit price)packs that boosted penetration
Initial Investment: Rs.10000/month, for a regular incomeof Rs.700/month
Margin5% + 2% + 1% cash discount
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STRATEGYBYEMERGINGGIANTS
Exploit understanding of product markets
Build on familiarity with resource markets
Treat institutional voids as business opportunities
HLL has kept multinational rivals at bay by adapting to the
special characteristics of customers and business
ecosystems at home by implementing the following
strategy:
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EXPLOITUNDERSTANDINGOF
PRODUCTMARKETS
HLL understood that the bulk of the sales came from
few key brands. Hence only 150 SKUs were introduced
in the rural market.
They introduced low unit price packs (LUPs) to target
the low income customers which were in majority.
Since the Shakti entrepreneurs were women, product
categories for which women were the key decision
makers were only introduced.
Price discounts were offered to consumers by Shakti
entrepreneurs , so that they are preferred over the
retailers.
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BUILDONFAMILIARITYWITH
RESOURCEMARKETS
HLL targeted underprivileged rural women to be
Shakti entrepreneurs since they would be more
committed and would be the key influencers.
They used the already established SHGs to create a
network of Shakti entrepreneurs.
In order to establish itself faster, HLL partnered with
MART, a consulting firm that specialized in developing
and implementing rural market initiatives.
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TREAT INSTITUTIONALVOIDSAS
BUSINESSOPPORTUNITIES
Rural market was largely inaccessible and fragmented, sinceall the existing distribution models didnt reach the ruralmarket. So they came up with a channel based distributionapproach to tap the untapped rural markets.
Lack of infrastructure to reach rural markets in a costeffective manner Utilized the existing SHGs to encouragemicro enterprises.
Absence of source of finance Partnered with micro credit
institutions.
Lack of information channels Creation of iShakti portal forinformation disseminations.
Lack of awareness among rural consumers Came up withRSPs and Vani.
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WHYLOCAL+ BOTTOM
Heads HLL Shakti
Revenue 2324.2 23.242
Cost of Goods sold 1181.9 11.819
Gross Profit 1142.3 11.423
SG & Expense 635.3 6.353Cash Discount 0.23242
Cost of Vani & iShakti 1.1621
Overhead expense 21.8 3.4863
Total SG Expense 657.1 11.23382
Income before tax 485.2 0.18918
Savings from Shakti Vani 2.3242
Net Income before Tax 485.2 2.51338
Tax 96.6 0.5003968
Net Profit 388.6 2.0129832
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ECONOMIC& SOCIALVALUE
Economic Value
Rs. 9.058 million for HLL
Monthly income of Rs. 700 for 12,000 women
Total annual income generated Rs. 100.8 million
The income tax contribution for Government of India is Rs.2.25 million
Social Value
Empowering underprivileged women of rural India.
The SHG consist of 10-15 people. So a close relation of trust andbonding grows among them which contribute to the social capital.
Also Shakti project contributes to the health, education and hygiene ofthe villages which creates high value for the rural society.
Created social equilibrium and harmony by serving the low incomegroup and providing them affordable products in the form of sachets.
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PROBLEMDIAGNOSIS
Getting Shakti women on board was not as difficult asmaking them stay and grow
Initiatives like giving trade discounts, credits, gettingreferrals were pursued only by top-end entrepreneurs
Overheads were increasing, constituting about 10-15%of revenues. Number of entreprenuers had to bedoubled without doubling the no. of those who managethem.
Some areas where women were unable to operate dueto social biases had to be reached
Traditional methods of communication did not reachmost of the rural areas and different communicationefforts had to be made
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PROBLEMIDENTIFICATION
Scaling Up:
To increase reach to 1 lakh villages by 2006 and 1 lakhentrepreneurs by 2010, aiming for a 15-20% of HLLs revenues,without increasing costs
Brand-building:
Brand-managers had to be convinced to invest in Project Shakti.
HLL brands had to be built in the newly acquired markets. ShaktiVani had to be used to the fullest without compromising its social
objective of creating awareness.
Training
Shakti women had to be kept motivated to achieve growth. Someof them gave up very soon, or did not understand the business,and were barely literate
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ACTIONPLAN: SCALINGUP
Model 1: Incentivizing Shakti women througha multi-level model
The Shakti entrepreneurs will receive a certain percentage ofthe sales made by them as well as incremental percentage onsales made by those entrepreneurs who have been broughtinto the business by them.
These levels could be formalized, and higher theentrepreneurship moves, more the incentives and benefits
X
Y
A B
D
Z
C
Consider that X is a Shakti entrepreneur who brings in two more
entrepreneurs Y and Z who in turn introduce A, B and C. B
introduces D into the network.
Additional margin would be 1 percent for every entrepreneur
directly introduced by X and (1/n) percent [where n = tier at which
the new entrepreneur is introduced] of sales for entrepreneurs
indirectly introduced into the network.
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Each Shakti entrepreneur who introduces a new entrepreneur hasto train her as well as help the new member to get credit.
The new entrepreneurs could be relatives or friends of existingentrepreneurs preferably in new villages
RSPs could focus on providing training only to the Shaktientrepreneurs at the top of the network who in turn would pass iton to those beneath them
Benefits
The network could grow on its own as there is incentive foreach Shakti entrepreneurs to expand the network and honethe new entrepreneurs in the network
The onus of training and arranging credit will lie on existingmembers
The entrepreneurs will help those below them as additionalincome is linked to those beneath them
ACTIONPLAN: SCALINGUP
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Model 2: Partnering for New Products
Partner with another company that sells othernon-competing
goods along with HULsproducts.
Eg: Mobile SIM cards and top-ups, stationery items likenotebooks, pens and pencils
Benefits
Business will grow as the product portfolio increases
Higher income to the women will make the entrepreneurshipmore viable and attractive
New products are made available which will better meet theneeds of the rural consumers
ACTIONPLAN: SCALINGUP
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ACTIONPLAN: TRAINING
To overcome the difficulty of gathering all the womenand ineffectiveness of classroom training, videos can beshown through the iShakti portals. These videos shouldbe designed keeping in mind the local audience of eachregion.
These can showcase the various methods of approachingconsumers and retailers, other Shakti women in action,usage and benefits of the productsetc.
Entrepreneurs of 1-2 districts, about 50 in number can
be brought together for a day-long meet whereexperiences are shared. Senior women can address thegathering to inspire them. Other insights specific to aregion as well as general ones will come out. Theexercise will also result in a strong sense of belonging.
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ACTIONPLAN: BRANDBUILDING
Brand-managers should be made aware of theProject Shaktis trajectory. In the districts whereit has been implemented, 15% of revenues isfrom Project Shakti
Use Shakti Vani and iShakti to the fullest
Campaigns can be made to create awareness likewashing of hands, using iodized salt, toothpasteetc.
Vani should be carried out by collaborating withlocal NGOs
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THANKYOU