Rural Marketing Assignment 1 Fair & Lovely VANI

12/21/2010

Presented by:

Mangesh Gulkotwar (33205)

Keyur Munot (33217)

Sahil Arora (33238)

Aniket Gage (33249)

Table of Contents Understanding the Rural Market: ........................................................................................................... 2

Understanding the Cosmetics Market .................................................................................................... 3

Marketing Strategy: ................................................................................................................................ 4

The 4 A Approach: ............................................................................................................................... 4

Acceptability: .................................................................................................................................. 4

Availability: ...................................................................................................................................... 4

Awareness: ...................................................................................................................................... 4

Affordability: ................................................................................................................................... 5

The Outcome: ......................................................................................................................................... 6

Understanding the Rural Market: Some facts about Indian Rural markets are as following:

India has 70% of the total population in the rural areas

The rural market is not fully developed and it has very low literacy rate

But it has very good potential keeping in mind the number of people residing

there

The income level and the distribution of income is becoming equal and balanced. So the

people in the rural areas have the same opportunity of growth as the people of urban areas

have. Good support from the private as well as the government agencies is provided for the

development of the rural area people. Institutions like: IFCI, SIDBI, ICICI etc. These

introduced many schemes which are resulting into the development of rural area people.

The rural market may be alluring but it is not without its problems:

• The income level is still not matching to the urban market

• The knowledge and education level is low

• Less chances available for growth; still here people prefer to go outside to the urban

areas for the job and other things

• The infrastructure is not so much available

• Traditional way of thinking

• Seasonal consumption linked to harvests and festivals and special occasions

• Acute dependence on the vagaries of the monsoon

• Inaccessibility to conventional advertising media

Rural market is an extremely price sensitive so a small drop or rise in price can majorly affect

the buying pattern of the rural market. It has also been seen that the people in rural area are

not brand loyal so the consumption of all products is the function of their availability so in

such case the distribution of the product plays a major part in its consumption. Also most of

the people in the rural areas are fascinated by city life and therefore demand the items which

are largely in demand in the city so because of this if the products are available in reasonable

rates for the rural consumers the demand of those products will never die in the rural market.

Understanding the Cosmetics Market

Cosmetics market is divided into two types colour cosmetics and toiletries. Basically the

cosmetics which are used for eyes, lips, nails, and face come under the category of colour

cosmetics. And the ones which are used skincare, oral care, hair care and grooming come

under the category of toiletries.

Some of the other players in the market are basically Himalaya, Oriflame, Revlon, Emami,

Colorbar, Lotus, but most of these products are competition to fair and lovely only in the

cities because they don’t have the same distribution channel possessed by HUL. Though the

cosmetics market is the fastest growing market it is highly fragmented because of the

competition, but the fragmentation is more towards the urban areas because major

consumption of all beauty products is in the cities (ie-70%). Sales in the rural areas are

limited and it only includes necessities like cream, soap, and talcum powder. The rural

market accounts for half the total market for TV sets, fans, pressure cookers, bicycles,

washing soap, blades, tea, salt and toothpowder, What is more, the rural market for FMCG

products is growing much faster than the urban counterpart.

FAL Vani operates under the aegis of Hindustan Unilever’s Project Shakti, a network spread

across 18,624 villages in the states of Tamil Nadu, Andhra Pradesh, Maharashtra, Uttar

Pradesh, Bihar and West Bengal. FAL Vani is engineered to empower rural women in

earning a livelihood, while improving the distribution and reach of FAL.

HUL knows that being fair is the basic necessity of Indian women because they believe that

they will be better accepted if they are fair. Hence, cosmetics are equated with daily face

fairness cream and talcum powder.

Fair and lovely (FAL) is the largest selling skin whitening cream in the world. It enjoys a

very healthy 83% market share, majority from tier II/III cities and rural pockets. Claiming to

possess a customer base of 27 million Indian customers, on its website the company calls its

product ‘the miracle worker’ which is ‘proven to deliver one to three shades of change’. It

majorly pries on the snow white syndrome that is all of its users want to be fair and beautiful

and they all think that if they because fair they will be accepted in the society. Target group

for FAL has always been women who are aged around 18-35. FAL is mostly available in all

general stores and Kiranawalas mostly in small sizes which are affordable and thus facilitate

the purchase of the low income group.

Marketing Strategy:

The 4 A’s Approach:

Acceptability:

Fair and Lovely is a toiletries product aimed as a fairness cream for the mass market. The fact

that it has an aspirational value attached to it due to the fairness promise makes it a desirable

product for women. Also, the ease and convenience of use of fair and lovely is an advantage

it carried over its other competitors which may have been all the homemade remedies that are

prominent across India and other brands.

Availability:

HUL has set up a strong distribution network in rural India to ensure availability of the

product in all the markets. The distribution network of HUL has been set up over the years in

a phased manner. While phase 1 was all about company representative receiving orders

directly and grouping them, the focus of the second phase (40s) was to identify registered

wholesalers. This increased the distribution reach of the company. Phase 3 was characterized

by the emergence of the Redistribution Stockiest (RS). The RS carried out the functions of

demand simulation, bulk order taking and transshipment amongst others. Lately the system of

Carrying and Forwarding agents has arisen to ensure that stock outs do not take place.

Awareness:

Fair and Lovely is a well known brand primarily due to its advertisements in television.

While this helps in recognition in the urban market, in the rural market where the penetration

of the television media is lower the awareness to the product becomes limited

Television Reach

HUL under project Shakti organizes Shakti Vani, a rural outreach programme to promote its

product. A village is selected by HUL for the programme where OgilvyAction conducts the

programme.

A programme is organized especially for women in villages where there are a few techniques

used to improve both the awareness about the product as well as about personal hygiene,

women liberation etc. Since the program is especially for women the attendance is pretty

good. A trained employee is identified as Vani didi who does the talking. She would teach the

women how to apply fair and lovely in the right manner and then maybe ask them to play a

game wherein the woman who applies fair and lovely first in the correct manner wins.

Similar exercises are done to engineer trial and repurchase to the product.

Affordability:

It aims at low to moderate pricing. HUL have also come up with different mall sized SKUs to

attract the rural market. Of late a trend has been observed where due to the reach of the media

and advertising, the rural consumer is aware of the products primarily considered to be for the

0

10

20

30

40

50

60

70

Urban Rural

1993

2002

26%

49%

66%

urban markets. A low pricing strategy helps in fair and lovely being tried by the consumers

who predominantly use homemade remedies or a few other brands.

Packaging: Fair and lovely has been packaged into smaller SKU’s for the rural segment to

achieve a two-fold aim. On one side the smaller SKU is priced lower so as to attract the

customers into trying the product and on the other hand the smaller SKU facilitates easier and

convenient use of the product for the existing customer base.

Another important thing that the HUL has managed to do is to keep the retailer margin

sufficient enough even on the smaller SKU’s to warrant stock keeping of fair and lovely. The

shopkeepers are offered a margin as high as 50 paise per a 6 rupee sachet of fair and lovely.

The Outcome:

• 40% surge in FAL sales since FAL Vani kicked off

• Shopkeepers get a 50 paise margin on Rs.6 pack of FAL so they prefer stocking FAL

• Earlier, people used to use creams only on special occasions like marriage but now

they have started using it more regularly

• Each Vani covers atleast 100 people/day and enjoys her work as it is good experience

and is a source of earning.

The Fair and Lovely Vani has been a successful initiative by the HUL and an innovative rural

marketing technique to reach and tap various pockets of the country.