Ahmedabad: The fast-moving consumer goods (FMCG) segment in India is going rural with a vengeance.

The lead is being taken by the country's largest FMCG company, Hindustan Lever (HLL). The Rs 11,000-crore behemoth has indicated that it is enhancing its rural penetration, despite the higher costs this would entail.

Says HLL chairman M S Banga: ''This exercise may not pay in the immediate future, but will definitely give long-term dividends. Incidentally, over 50 per cent of the sales of HLL's fabric wash, personal wash and beverages are in rural areas. And we see a future in going rural in a major way.''

The improved agricultural growth is expected to boost rural demand, though not at too sizzling a rate. Moreover, the price drop in personal products, after the recent excise duty reductions, is also expected to drive consumption. ''Better agricultural yields will give farmers more spending power, making the rural markets bullish,'' says an analyst.

As a result, HLL has planned a rural marketing programme that is expected to result in a marked growth in the consumption of the company's products in the rural market. HLL will adopt a three-pronged marketing strategy - new price points, sizes and awareness campaigns - for its detergents and soaps segment to augment rural growth.

Deep penetration
The goal is to reach 2,35,000 villages, up from the current 85,000; 75 per cent of the population, up from 43 per cent today; and a message reach of 65 per cent, up from the current television reach of 33 per cent. The company is expressly aiming at reaching villages with populations less than 2,000. The rural penetration exercise is going to be complemented by a 15-per cent hike in advertisement expenditure.

Say company sources: ''We have found ways and means to trigger growth in rural areas. For instance, cutting across categories, we have conceived products that are relevant to rural needs. A unique example is HLL's Lifebuoy soap. In rural India, health is of paramount importance, because indisposition is very directly related to loss of income. Lifebuoy, whose core equity has been health through vigorous cleansing, has, for decades now, been synonymous with soap in rural India. At the same time, we are making the products affordable.''

In fact, HLL is now creating a market even for apparently premium products by offering them in small-pack sizes, like sachets, whose unit prices are within the reach of rural consumers. Initiated in the 1980s, sachets today constitute 70 per cent of HLL's shampoo sales.

The sources add: ''We have managed to create a market for products like premium stain-removing detergents (Surf Excel), beauty soaps (Lux), talcum powder (Pond's), toothpaste (Pepsodent) and skin cream (Fair & Lovely) by offering them in low unit price packs.''

HLL is also going to non-conventional media to spread the word about its rural presence. The sources add that media like wall paintings, cinema vans, weekly markets (haats), fairs and festivals will be increasingly used. ''Communication through fairs and festivals is going to be backed by direct consumer contact,'' says Banga.

Rural involvement
HLL has launched a direct contact programme called Lifebuoy Swasthya Chetana. This project aims at covering about 5-crore people in 15,000 villages in 10 states. ''The project intends to generate awareness about good health and hygienic practices, and specifically, how the simple habit of washing hands with soap is essential to maintaining good health. The initiative will involve interaction with students and senior citizens, who are expected to act as change agents,'' say HLL marketing personnel.

But generating awareness will pay dividends only when steps are taken to ensure constant availability of products. Accordingly, HLL is focusing on its retail network as well. ''We have progressively strengthened our distribution reach in rural India, which today has about 33 lakh outlets,'' HLL marketing officials say.

In 1998, they add, ''we launched Project Streamline to further extend our distribution reach. With this project, we now directly cover about 46 per cent of the rural population. In the coming years, we will further strengthen our distribution through mutually beneficial alliances with rural self-help groups (SHGs).''

Besides, HLL has also begun a pilot project called Project Shakti, whereby SHGs are being offered the option of distributing relevant products of the company as a sustainable income-generating activity.

HLL's decision to focus on niche marketing also seems to be showing results. The company had recently decided to focus on 30 power brands out of its portfolio of more than 110 brands. Explaining the move, Banga says: ''Today, focus is crucial and niche marketing is the order of the day. You cannot fight every battle - you have to identify the strengths and persist with them.''

And that is precisely what HLL seems to be doing.