Mumbai: The Rs 11,000-crore Hindustan Lever (HLL) is formulating a new strategy to expand its presence in India’s rural markets. HLL is one among those companies in the country that derives huge revenues (over 50 per cent) from the rural areas.

But in the past one year, owing to the failure of the monsoon in many parts of the country, farmers have registered a substantial fall in incomes and consequently the purchasing power. For the company this has resulted in a flat growth of these markets.

Witnessing the flat sales growth in rural areas, HLL has shifted its rural markets strategy. Earlier each business division of the company dealt with the rural market on an individual basis; now the shift in strategy means the company will deal with rural markets as a single organisation to achieve greater penetration and sales.

This approach is expected to lead to better cohesion, greater push and deeper penetration, which would eventually lead to better sales. HLL officials say it is not enough that individual business divisions push their own strategies for the rural market; the company will have to work in unison in order to achieve a balanced growth.

HLL plans 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.

HLL is 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.

In 1998 HLL’s personal products unit initiated Project Bharat, the first and largest rural home-to-home operation to have ever been prepared by any company. The project covered 13 million rural households by the end of 1999.

During the course of operation, HLL had vans visiting villages across the country distributing sample packs comprising a low-unit-price pack each of shampoo, talcum powder, toothpaste and skin cream priced at Rs 15. This was to create awareness of the company’s product categories and of the affordability of the products.

The personal products unit subsequently rolled out a second phase of the sampling initiative to target villages with a population of over 2,000.

Along with Operation Bharat, HLL conceptualised Project Streamline to enhance its control on the rural supply chain through a network of rural sub-stockists based in these villages. This gave the company the required competitive edge, and extended its direct reach to 37 per cent of the country’s rural population.

The Indian rural market has a huge demand base and offers great opportunities to marketers. Two-thirds of Indian consumers live in rural areas and almost half of the national income is generated here.

As a rule the rural market is much more price elastic and involves more intensive personal selling efforts compared to urban marketing, and here HLL has been more than successful.