Leadership Spotlight

Salt, Soap and Hindustan Lever Ltd.

Hindustan Lever Ltd., one of Unilever's largest subsidiaries, has been among the most effective consumer brand companies in reaching the poorest of the poor in India and other developing countries. It is India's largest exporter of branded consumer products and Forbes Global has named it the "best consumer households company worldwide." The company's experience marketing two of the most basic consumer staples—salt and soap—illustrates some of the innovative approaches necessary to sell successfully to the bottom of the pyramid.

In the mid-1990s, HLL's Popular Foods division recognized the growing potential for branded staples in India and launched its Annapurna Salt brand in a test market in Andhra Pradesh. Positioned as "pure salt," Annapurna's test had only limited success since consumers considered most salt to be pure. Additionally, Annapurna was up against a strong competitor, Tata Salt, which had already established the purity claim.

Two years later, however, the Indian government began a concerted effort to combat an insidious health problem called Iodine Deficiency Disorder, one of the world's leading causes of mental disorders, including retardation and lowered IQ. In India an estimated 70 million people were afflicted while another 200 million were at risk. Since virtually everyone, even the poor, eat salt regularly, iodized salt was widely recognized as the best means of providing sufficient iodine. In 1997, the Indian government banned the sale of non-iodized salt. The problem, however, was that standard methods of iodizing salt tended to be ineffective because the iodine leached out over time, especially in India's primitive storage and transportation conditions.

Hindustan Lever Research Center, one of Unilever's five major global research facilities, began investigating ways to keep the iodine content of salt intact in India's difficult conditions. Rather than chemically encapsulating iodine with a protective coating around both it and the salt particle, researchers developed a method of protecting the iodine at the molecular level which kept it intact until released in the very acidic environment of the human stomach.

With the technological problem solved, HLL turned its attention to the marketing of the reformulated Annapurna. The target audience among the poor included mothers between 25 and 40 years of age who are responsible for household cooking and making purchase decisions. The message was that the "stable iodine" in Annapurna salt "doesn't get lost" and would help keep their families healthy.

Although Tata Salt remains the dominant brand with 19% of the market, HLL is now a close second with 14%of the market and is the dominant brand in South India.

HLL used a somewhat similar strategy of finding and marketing a health benefit to increase its sales of soap in India. While AIDS and SARS have gotten much of the press ink in recent years, diarrhea, which ranks third among global killers, has gotten little attention. Ironically, while it is exceedingly difficult to prevent and cure respiratory infections and AIDS, most cases of diarrhea can be prevented simply by washing hands with soap. In India, which contributes 30% of all diarrhea deaths in the world, surveys indicate that even though 95% of Indian households own soap, only 30% use soap daily.

HLL had long advanced health claims for the century-old Lifebuoy brand soap in India. The soap as originally formulated had a strong carbolic smell associated with cleanliness. But the health advantage waned over time as competitors came up with their own health claims while adding a beautifying element to their sales pitch, most notably through more floral fragrances. To maintain its dominance of the soap market, HLL reformulated Lifebuoy, giving it a floral scent and switching from manufacturing a "hard" bar to milled soap. The change made a bar last longer and produce more lather. The company also added the antibacterial Triclosan to the formula, and found a price point that poor consumers could afford by adopting a different approach to pricing than the routine "cost plus" formula.

With its new formulation in hand, HLL had to figure out how to sell the product to its mostly rural customers. The company faced two hurdles. First, it had to change the behavior of its potential customers, who associated soap with the removal of visible dirt. If their hands didn't appear dirty, then there was no need to use soap. The potential presence of millions of invisible infectious organisms was not part of their hand washing calculus. The second hurdle was that most of the potential customers lived in villages without access to such mass media as radio and television.

The solution HLL hit upon was to hire two-person "facilitator" teams to go into village schools and initially teach youngsters between the ages of 5 and 13 about the problems that can be caused by invisible germs and how they can be largely eliminated by washing hands with soap. Parents and village elders are then approached with similar messages.

Based on initial data, HLL's soap sales are growing not only in areas in which the company initiated its team marketing approach but also in other parts of India. Managers are convinced that providing their soap to the poor achieves product differentiation and taps into an opportunity for growth through increased soap usage.