"We need to apply top-class science and technology in order to solve simple problems for a reduced cost to the consumer," says Dr. V.M. Naik, 53, deputy head of Hindustan Lever's Research Laboratory in Bangalore. Naik, who spends about 70% of his time in the lab, is not just refining high-end shampoos. He is the primary scientist behind recent mass-market products such as low-cost ice creams and low-cost soaps. "Technology that liberated consumers before can be a constraint for new innovation," says Naik. "New products require new principles."

"Who Says Rural Is Not Rich?"

More than one-third of India's rural residents live below the poverty line, but that's down from more than half two decades ago. The look and feel of rural India is quickly changing. Thavarekere, a village in Karnataka, has a bike-repair shop and one retail store. But it also has a red-and-yellow sign that is painted on a stone ledge along the road: "Samsung, Onida, Sharp televisions. On sale." The ad mentions a store in a nearby village.

Venky Venkatesh, Hindustan Lever's intrepid southern-sales manager, is smug: "Who says rural is not rich?" It's vindication for him to find such a brand-conscious village. And he knows that if the residents can afford a bike, let alone a TV, then they can afford Lever products. "You build brands by offering choices and benefits. It lets consumers know that you're investing in them."

The fact that TV sets exist in a village where women collect water from a borewell, a deeply drilled well, may seem a contradiction. But it's how rural India has developed. Near the village borewell, the weedy ground is littered with consumer decisions that Venkatesh considers to be crucial. There are blue and green wrappers of brands and not-so-brands that women use to do their housework.

Shakuntala Lakshminarsimhamurthy squats outside her house with two buckets of bright purples in suds. She takes a sari out of a bucket and beats it against a stone slab to push out the dirt. Venkatesh's local rep visits her and can tell that she's fairly well-off. She's able to soak her clothes, which means that she bought a detergent powder, a more premium product than the detergent bars poorer families typically use. And there's a television antenna rising up from her house.

She uses Rin Shakti, a moderately priced Lever brand. Before she saw ads for Lever products, it didn't matter to her what brands her husband, who commutes to the Railway Police Force office near Bangalore, bought at the market. "Now," she says after noticing the difference on her hands and her clothes, "it matters."

Rekha Balu is a Fast Company senior writer. She grew up using soaps made by Hindustan Lever. Learn more about Hindustan Lever on the Web (www.hll.com).

Sidebar: The Strategy and Marketing Agenda

Who: Keki Dadiseth
What: Selling to rural consumers
Why: To tap into high-growth markets that rivals aren't prepared to enter

Keki Dadiseth, 55, rose quickly through the ranks of Hindustan Lever and then went on to Unilever headquarters, where he is in charge of home- and personal-care products worldwide. Here is his agenda for how strategists can address rural consumers.

Do the math -- and then make the commitment. "Even though developing markets use small quantities per capita, their huge population means a huge amount of fabric-washing products, shampoo, and so on. And even if you make modest profit levels on that, the gross profit can be much more than in the traditional markets."

Define markets broadly. "Is your goal to get 50% of the shampoo market, or to increase consumption so that 50% of all 'hair washes' are done with your shampoo? In India, Lever has a 70% share of the shampoo market. But we look at total hair washes as our market."

Look at assets, not income. "It may seem as if rural residents have little money to spare on your products. But a farmer's food is largely free, which means that he has more money to spare than an urban resident who might spend 50% of his income on food."

Affordable products aren't always inexpensive to develop. "Most companies tend to take an existing technology and apply it in a diluted fashion as they go down the income groups. We turn that logic on its head. For instance, when we worked with salt, we used atomic-measuring technology to calibrate how iodine passes through the body so that we can offer the highest level of iodine delivery in the market. About 75% of the iodine in salt is wasted. You can either put back that 75% and double the cost of salt, or you can find a technology that allows consumers to get the required iodine in their salt without the costly process of adding it back."