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Unilever reaches Asia's rural consumers

News, 16 December 2016
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ASIA: Even though there is a global market of 3.4bn rural consumers, many companies fail to reach them because of difficulties with logistics and other issues, yet Unilever stands out as an innovator in this field, a leading academic has said.

Professor Vijay Mahajan holds the John P. Harbin Centennial Chair in Business at McCombs School of Business at the University of Texas at Austin, and he has written a new book, entitled Rise of Rural Consumers in Developing Countries.

He explained in an article for the Harvard Business Review that his research involved 10 countries with the largest rural populations, seven of which were in Asia, and that he also visited Thailand, Myanmar and Bhutan.

Whereas many companies are deterred from even considering rural markets in developing countries, Mahajan asserted that Unilever, the FMCG multinational, has pioneered a number of innovations, particularly in Asia.

By way of example, he pointed to its Shakti initiative, whereby Hindustan Unilever (HUL) trained local women as rural sales agents who then sold Unilever products door-to-door in their communities.

By 2015, 70,000 sales agents were serving 165,000 communities and HUL had even supplied them with smartphone apps to help them manage their inventory and other business matters.

According to Mahajan, Unilever took the concept to a new level in Pakistan where hundreds of village women were trained as home-based beauticians.

These Guddi Bajis, or "good sisters", learned to apply makeup and provide other beauty services while selling Unilever products to their customers. In effect, they became brand ambassadors while also providing the women with income when they had few other opportunities available.

Returning to India, Mahajan highlighted another Hindustan Unilever marketing innovation that built on the understanding that many mobile phone users in the country try to save money by conserving talk time.

HUL wanted to promote its Active Wheel detergent in some of India's poorest and most rural areas and so its campaign allowed consumers to call a number that cut off after two rings, costing them nothing.

Consumers then received an automatic free call back, which included comic dialogue from Bollywood star Salman Khan plus ads for Active Wheel. According to the company, sales tripled in the region after it received 16m calls.

Unilever has been active in Southeast Asia too, and Mahajan explained how the company doubled its rural coverage in the Philippines while also reducing its distribution costs.

Recognising that about 95% of the country's retail stores are mom-and-pop operations known as sari-sari stores, Unilever recruited a number of larger stores to double up as sub-distributors, so making it easier for the smaller operators to stock up on Unilever brands.

These larger stores also served as venues for activations, known as fiestas, which combine product demonstrations and giveaways with games and entertainment, Mahajan added.

He said Unilever organises about 500 of these fiestas a year and sales of highlighted brands typically climb 30-80% during fiesta weeks.

Data sourced from Harvard Business Review; additional content by Warc staff

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