tea didn't help. Nor had he expected it to. Vivek Dani, the Chairman
and Managing Director of India White Limited, one of the country's
largest fast moving consumer goods companies, couldn't still put
his finger on why the four-year-old back-to-basics strategy of getting
more consumers to try his company's products and following that
up with a channel onslaught to increase their availability hadn't
Sipping milk-less lemon tea (yes one of his
own brands), on a bright Sunday afternoon at his south-Mumbai penthouse,
Dani mulled over the statistics, once his most potent weapon in
persuading the board to give its go-ahead to Operation Hinterland,
the name his core team had conjured up for a massive sampling exercise
across rural India.
The rationale was straightforward: 70 per cent
of India's population lived in villages, around 6 lakh of them;
and 85 per cent of this rural population lived in villages with
a population less than 2,000. Even with 50 per cent of its sales
coming from rural areas, there was still a huge base of potential
consumers out there that had never used any of India White's products.
Consumers in these smaller-than-small villages
were using either natural substitutes (neem twigs instead of toothpaste
and toothbrushes) or at best, cheap local-made products. Getting
these non-users to try, and then become regular users of the company's
products had seemed like a great idea.
Dani remembered how hard Ashok Khanna, the
company's then marketing director, now on a prestigious assignment
with India White's parent in Europe, had argued to get the project
''If we can address issues of awareness and
availability and back it up with overcoming prevalent attitudes,
primarily through introducing the consumer to our products, via
free sampling, we can capture virtually the entire shift in consumption
from unbranded/natural alternatives.''
Every word had seemed plausible. Dani had just
taken over as chairman and managing director from his illustrious
predecessor, inheriting an enviable 20 per cent plus top-line growth,
quarter-on-quarter. And like any new CEO, he had wanted the company's
future path to bear his own, unique, successful signature.
Khanna's recipe looked perfect, and it helped
that agricultural growth and income was on the upside, for the eighth
year on a row.
What followed had been a marketing man's dream
come true. India White had literally painted the hinterland red.
Every manager, down to the lowliest management
trainee, had gone out with the sales force, and the company had
managed to round up a huge army of gram sevaks, distributing free
samples of soaps, toothpowder, toothpaste, detergents, and tea.
Not content with just distributing the product, this batallion of
frontline pros had also sold the benefits of the products they were
trying to sell to rural consumers.
Dani remembered how on several occasions he
had himself rolled-up his sleeves and scoured dusty rural roads
in as many as six states, accompanied by India White's head of finance
He also remembered how Raman had irritated
him with repeated questions concerning the returns on the tens of
crores the company was investing in the promotion.
A year into Operation Hinterland, the results
on penetration, product usage, and top-of-mind awareness in the
targeted villages, had given Dani enough reasons to cheer.
The company's performance had improved 100
per cent on all counts. The top-line had looked healthier, growing
at over 25 per cent.
Raman had warned Dani that dividends would
have to be pruned as a result of the huge investments in Operation
Hinterland that hadn't really started paying off. ''We'll sell the
story of how we're investing for future profits, and we already
have growth to show.'' Dani remembered how he had silenced Raman
with that one remark.
Khanna, of course, had become a star. At a
bash thrown in late 1999 to celebrate the success of the project
Dani had announced a much-sought-after European assignment, for
Then, in 2000, things had started going wrong.
The year had started normally, but by June, it had been evident
that the urban markets were in recessionary mode.
Dani had quietly congratulated himself for
having invested in rural markets-for these had held out the promise
of growth. By end-year, though, it had become clear that the promise
wouldn't be delivered on.
India White's growth rate had more than halved
to 10 per cent. And a cursory analysis of the numbers had shown
that Project Hinterland hadn't done what it was expected to: urban
demand had remained low, and rural demand, which Khanna had been
so sure would kick-in and grow India White's turnover, hadn't.
The following year, 2001, had been worse. The
rural markets, which had at least held their own in 2000, went on
a downward spiral. Growth had dropped to single-digit levels, and
while Raman had managed to squeeze out consistent improvements in
profits through aggressive cost cutting and process-improvement
techniques, Dani had realised that they would need more than that.
Most importantly, the markets targeted by Operation
Hinterland had simply refused to react to India White's overtures.
In contrast, the company actually managed to
increase its marketshare across categories in shrinking urban markets-a
fact that had prompted Khanna's replacement, Ashish Kumar to come
to Dani recently with a Project Hinterland-like sampling campaign
targeting the urban market.
By the time Dani finished his third cup of
tea and four years worth of rumination, it was late evening, and
he could see the beautiful orange-red aura of the setting sun all
over the Arabian Sea.
He had made up his mind on a course of action:
One, he would speak to Khanna, now somewhere in Belgium, and grill
him on the finer aspects of Operation Hinterland-something he should
have done in those heady days of the late nineties, but hadn't.
Two, he would listen to what Ashish Kumar had
to say on a new sampling exercise in urban markets. And three, he
would never again miss the routine Sunday-evening walk because of