BR Research: What kind of strengths do you see Unilever leveraging in the medium- and long-term to sustain its current direction of growth?
Ehsan Malik: We doubled our size between 2005 and 2009. That growth would eventually have flattened out but before that could happen; we conducted a deep analysis of the gaps in our portfolio. We identified gaps to the tune of four million Euros. They were on various points in the socio-economic pyramid. Cutting a long story short, we introduced nine additional brands and six new formats within existing brands. Dove came in, Lipton introduced the green tea format, and several other changes of this nature happened. All of this has given us upward movements and we've set the pace for the next three to four years.
BRR: How has the Company's supply chain evolved to keep pace with the growth in sales?
EM: Unilever Pakistan has been here since the Independence of Pakistan and many of our products have been around since an even earlier time. However many changes have emerged in the Company over these years. Initially we had been entirely dependent on wholesalers but we now have very strong and direct ties with retailers. Today we reach more than 250,000 outlets throughout the country, of which 150,000 outlets have been identified for boosting the visibility of our products. In short, the outsourced model is working on our behest instead of being routed through wholesalers.
We maintain close relations with 300 distributors through our territory managers that sit at the offices of our distributors. Every distributor has a dedicated team for merchandising, warehousing and selling our products. Every merchandiser and salesman has hand held terminals that monitor their work and performance live. So as a salesman pitches to each retailer, about 60 percent of the data received from that prospect reaches us in real time, ensuring that the territory managers are on top of sales prospects in relation to their respective targets.
By integrating all the information that is at our disposal, we can leverage our knowledge to sell the right products at the right place and train our salesman according to the outlets they are assigned to. A salesman trained to sell to a small shop will have been trained for a different set of skills than another going to Naheed Superstore. We've even helped Unilever in South Africa to set up their distribution network along the lines of our network, and our software for the hand-held terminals which was developed indigenously is being used in several African countries.
BRR: Tell us about marketing initiatives in rural areas and also about how these may benefit those communities?
EM: The Guddi Baji Initiative was launched to help Unilever Pakistan increase its penetration of rural markets while also enhancing the livelihood of women in small villages and fringe towns. Under the initiative we provide certified trainings for beauticians to the women who act as our brand ambassadors in these areas. In the villages, where there is no access to beauty salons, these women are much sought after by other women of the community. So the brand ambassadors are enabled as entrepreneurs while they also educate their communities and market our products to them.
These women have reported a 95 percent increase in self-esteem; they have become local celebrities based on their work on festive events, and some have even gone on to open their own parlours as a source of livelihood. By the end of the year, we will have 900 women graduating from this programme. Our target for 2017 is 7,000 women in 7,000 villages. Guddi Baji will be offering services and also selling our products. So we gain while a spillover effects allows for community development, and the local shopkeepers will also benefit from augmented sales.
Then there is Rehbar which came before Guddi Baji. There are about 200 Rehbars, each of whom travels 60 kilometers daily. They gain a steady income and livelihood from enhancing our supply chain, while we reach areas where there are few or no retail outlets. The insights and knowledge that we gain from their personal relations and networks create a synergy in the transportation network. They are employed by the distributor, and the advantage is then the reduction of proliferation of counterfeit products. The consumer is not a fool, and this initiative benefits them. Again, these operate in deep-rural areas, primarily in Punjab.
BRR: How are you coping with the deteriorating law & order and security situation in several deep rural areas of Punjab, Balochistan and Sindh?
EM: Primarily, the Rehbars that I spoke about are from that same community. They are local people that are well-connected. They know about the risks and rewards entailed, and they make decisions accordingly. Right now our focus is on the safer areas. But as conditions allow, we will continue to expand. Today, Rehbars and Guddi Bajis are a significant part of our supply chain and their contribution is material. And we are looking for scalability measures such as partnerships with micro-finance institutions to enhance their abilities. They can also add top-up services for telecommunications aside from delivering our services so-as-to expand the income sources and sustainability of the project.
BRR: How do you deal with cluster in advertising space?
EM: We are actually the largest advertiser in Pakistan. We even outstrip the telecommunications providers. This is not just limited to the FMCG industry; we are the largest advertiser in all of Pakistan. Clutter is obviously an issue, but the science to measure reach and effectiveness of campaigns is developing. The Pakistan Advertisers Society has taken several initiatives for TV and digital media measurements.
We also have the additional challenge of ensuring that our own brands don't cluster each other out. We don't want that kind of cannibalization or confusion being created. With 38 brands, the clutter within ourselves is fairly high and we are trying to resolve this. But based on the information we have, we advertise intelligently.