Strategic Innovation: Hindustan Lever Ltd.

The results seem compelling. Awareness of Breeze, a low-cost soap with more of a beauty pitch, increased from 22% to 30% over the six months that the performances were running. Awareness of Rin Shakti, a moderately priced detergent bar and powder brand, increased from 28% to 36%, a company spokesman says. And in all five states, sales of Surf Excel, a premium washing detergent, shot up in the first half of 2000 compared with 1999, while sales of Rin shot up in four states.

More than that, Hindustan Lever may actually be improving health conditions. "It's not enough for the company to look at market-share increase," says Anand Kripalu, 42, the company's head of detergents and a creative thinker behind many of the company's rural-outreach strategies. "We want to spread the message of hygiene and really use the Lifebuoy brand to deliver that benefit to consumers. This isn't just good for us as a brand; it's good for the country."

Reinvention III: Change How You Develop Products

Most big companies assume that developing products for poor consumers requires less strategic flexibility, less marketing inspiration, and less expensive R&D than developing products for rich consumers. Hindustan Lever has learned that, in fact, the opposite is true. It takes a genuinely creative company that is filled with highly imaginative product developers to reach the poorest of the poor.

Consider Indian women and their hair. India is home to 16% of the world's population but also home to 28% of the world's hair, thanks to the long tresses that Indian women maintain throughout their life. In a culture in which many poor women still avoid any appearance of self-indulgence, hair grooming is often their one luxury. Even women with faded saris and little jewelry rarely leave home with a hair out of place.

Which means that women look for unexpected opportunities to care for their hair. This insight led to two product-development strategies. One reinforced a prevailing consumer habit, that of using soap for hair and body wash. Just over half of consumers, especially low-income consumers, use soap to wash both their hair and their body every day, Lever's research shows. Rather than fight it, marketers decided to create an opportunity. Two years ago, Hindustan Lever marketers thought of testing a prototype hair soap. But that development still didn't acknowledge the fact that consumers use one soap because it's more convenient and because it costs less.

And so came the idea for a low-cost soap that cleans the body and the hair. Product developers spent a year in the lab before finding the right formula. Marketers had already built a strong beauty brand in Breeze, a discount soap. Now marketers could build the Breeze brand even further. The new soap is called Breeze 2-in-1, and distribution is targeted at smaller towns and rural areas. "It's an example of product marketers piecing together insights from the field and stretching their imaginations," says Mukul Deoras, 38, head of the personal-wash business.

It's also an example of how Lever gets consumers to buy higher-quality products, or how it gets them to buy "up the value chain," as company executives say. Deoras acknowledges that this brand may cannibalize users of Lever's other discount soaps and shampoos. But, he says, "even if there's cannibalization, it's okay. Consumers are buying a value-added product, which is likely to increase loyalty."

The other strategy targeted women who weren't even willing to try shampoo, because they thought that it was too harsh. Marketers decided to tackle the harshness issue head on. An ad campaign showed a straw broom (what happens to hair with soap) alongside soft tresses (the benefits of shampoo). Coupled with this campaign, the company developed a sachet of Lux shampoo. It capitalized on the Lux-soap brand, and it cost less than any other sachet: just 50 paise compared with two rupees. The visual cues and sachet size were so powerful that in the test state of Andhra Pradesh, volume sales of shampoo jumped by 50% in just three months.

It promises to pay off with more premium products too. A woman named K.M. Bhagilakshmi used to use soap-nut powder, a local crop near her town of Dabospet in the state of Karnataka. "But the dandruff would still be there," she says. After seeing advertisements for Clinic All Clear, Lever's premium antidandruff shampoo, on the vernacular cable channel, she bought a sachet for 2.50 rupees. Now she and her husband buy a sachet (7 milliliters) once a week.

This combination of consumer insight, advertising, and product development is part of Hindustan Lever's recipe for success in habit building. One-third of India's 60.6 million pounds of shampoo sales in 2000 came from sachets in rural India. Lever claims 70% of those rural sales. And already half of its $1.02 billion sales in soaps and detergents come from rural markets. The potential to build an even larger market with more regular consumers is mind-boggling -- if companies are prepared to do the hard R&D work that is required to deliver on that potential.