Competitive Advantage of HLL 1. Strong well-established brands 2. Local manufacturing capacity and supply chain 3. Vast sales and distribution system Challenges in sustaining the competitive advantage 1. The unorganized and scatter character of the Indian market HLL Sales Organization based on Product Categories and Geography Flow of goods Goods produced in factoryDepot(Carry Forward Agent) Redistrbution stockiest(RS)outlets * More than one stockiest can be there in a large town * Stockist sell to retailers and wholesellers
Structure * HLL has four regional offices in Delhi(North),Kolkata(East),Mumbai(West),Chennai(South) * The regional offices are managed by a regional manager * Each profit centre has sales force in each region * Each profit center has the following hierarchy: 1. General Sales Manager(GSM) 2. Regional Sales Manager(RSM) 3. Area Sales Manager(ASM) 4. Sales Officer and Territory sales-in-charge(SO & TSI) * Sales officer managed 6 to 7 TSI. Each TSI managed 6 to 7 stockists.
Shortcomings of the structure * Inappropriate for the small market. Population and potential business small did not justify the existence of stockist for each profit center. * Difference in scale of the contract that the ASM of HLL would make with the franchisee of a retail outlet and HLL would make with the retail chain throughout India. Called for a more evolved structure HLL redesigned its Sales And Distribution System, internally called it the Diamond Structure Features of the Diamond Structure top end of the diamond represented modern trade encompassed self-service stores and retail chains, and accounted for about 10% of the overall FMCG market. * middle and largest part of the diamond, profit-center-based sales teams continued to cultivate, penetrate, and grow markets. * The bottom end of the diamond represented direct distribution in rural markets and accounted for about 20% of HLL’s business Rural Distribution Model Challenges * The first was size: rural markets were scattered over large areas, and per capita consumption rates were low. The second was reach—rural markets were not connected to urban centers by air or rail, and road connectivity was poor. Criteria for HLL Distribution Model * Accessibility * Viability Different Models of HUL Distribution System * Direct Coverage(High business potential, Accessible market): the rural team appointed a common stockist to service all outlets within the town * Indirect Coverage(Low business potential, accessible market): it targeted retailers in accessible villages close to urban market. Streamline(High business potential, Inaccessible): the Streamline initiative targeted inaccessible markets. HLL appointed rural distributors (RDs) who in turn appointed Star Sellers among the wholesalers in neighboring villages. The terms of trade between the RD and a Star Seller were such as to enable the Star Seller to distribute Unilever products in a number of neighboring, satellite markets. * Shakti(Low business potential, Inaccessible) Shakti Vani: The Communicator Purpose To increase awareness of health and hygiene practices and thereby increase sale of soaps and toothpaste in rural India. Features * the Shakti Vani program was a branded social communication program targeted at the rural community. * A local woman was appointed as a Vani,8 trained and positioned as an expert on matters relating to personal and community health and hygiene. Scope and limitation * The Vani experiment was piloted in some districts in Andhra Pradesh, and two other states. * Two Vani programs were run in 2004.
These programs covered 10,000 villages each. * One of these programs was funded by a “brand,” while the other was funded by Shakti. * Finally the program ran out of budget. iShakti:The Portal Purpose * The objective of this portal was to empower the rural community by creating access to information. Features * The desktop was equipped with dialogue-interactive software developed by the Unilever research team in London. * Residents of the village could walk in, register, and get a small identity card with their photo, log-in identification, and password on it. Registered users could log on to the site and access information in content areas including education, career opportunities, agriculture, health, grooming, legal procedures, e governance, and entertainment. * Under each content head, users also had the option of posting any question that the available information did not answer. Challenges * Internal * Cost of the project * Relative technological environment among the states Challenges faced by Project Shakti * Ballooning of human resource cost * Cooperation of the states * Cultural issues * Social Structure