Unilever's Lifebuoy in India: Implementing the Sustainability Plan

In early 2013, Samir Singh faced a challengein fact, a double challenge. When he was named Global Brand VP for Lifebuoy soap in early 2010, this iconic Unilever brand was suffering. Its global market share had fallen from 11.2% in 2005 to 9.7% in 2009. In India, its largest market, the situation was even worse: its 2009 share had dropped to 15.5% from 18.4% four years earlier. But just as Singh and his team managed to reverse the decline, his boss challenged them to double sales in five years.

As large as this task was, it was made even more demanding by another commitment Singh had madeto improve the health and hygiene of a billion people by 2015. This ambitious goal was part of the Unilever Sustainable Living Program (USLP), an initiative introduced by the company's newly appointed CEO, Paul Polman. Aiming to decouple Unilever's growth from its impact on earth, USLP challenged the company to halve the environmental footprint of its products, to source 100% of its agricultural raw materials sustainably, and to help improve the health and well-being of a billion people worldwide. Singh's challenge was to make Lifebuoy the standard-bearer of this last goal while simultaneously doubling sales and meeting ambitious profit objectives. It would be quite a test.

Unilever's History, Lifebuoy's Heritage

Despite an uneven performance in recent decades, by 2012 Unilever had reemerged as a very effective global competitor challenging companies like Procter & Gamble and Nestl for a share of the fast-moving consumer goods (FMCG) industry. (For financial results, see Exhibit 1.) But its business and management philosophies still had deep roots in the company's origins.

Lifebuoy's Origins: Born of a Company with a Conscience

Born in the north of England in 1851 at the height of the Industrial Revolution, William Hesketh Lever grew up in an era when Britain's squalid urban environments were a breeding ground for typhoid, cholera, and smallpox. In his early 20s, he left a thriving family grocery store to start his own business making soap, a product he felt could help ameliorate the wretched conditions.

In 1888, Lever built Port Sunlight as a model village for employees working at his nearby Sunlight soap factory. By today's values, Port Sunlight would be viewed as paternalistic, but at the time, it was celebrated as a benevolent offering of a generous employer. Lever expressed strong ideals for his fledgling Lever Brothers Ltd.: "I believe that nothing can be greater than a business, however small it may be, that is governed by conscience," he said. "And that nothing can be meaner or more petty than a business, however large, governed without honesty and withoutbrotherhood."

The philosophy gave rise to Lever's conviction that business success went hand-in-hand with ethical practices and a sense of social responsibility. He believed that if he took care of his workers, they would be more productive, and if he sold innovative products that benefited the public, the business would prosper. It was a philosophy he described as "doing well by doing good."

These values were evident at the birth of the company's iconic Lifebuoy soap in 1894. Lever held that Joseph Lister's discovery of antiseptic properties in carbolic acid offered a solution to the disease rampant in Britain's grimy urban centers. At a time when soap was still regarded as a luxury, he introduced Lifebuoy at a price the working class could afford. Within a year, he was exporting his "soap that could save lives" to the United States and much of the British Empire.

Managing Global Expansion: New Strategic and Organizational Challenges

In 1930, seeking sourcing economies for their common raw material of palm oil, Lever Brothers and Dutch margarine producer Margarine Unie merged to creating a new company called Unilever. As the company expanded abroad, it managed its offshore operations through a classic geographic organization in which strong, independent, national operating companies (referred to internally as Opcos) held prime responsibility. Opco country managers typically had the final decision on key issues, while business and product groups played support and advisory roles.

But as competitive forces demanded new technologies, distribution systems, and marketing skills, the need for more cross-market, product-based coordination became clear. Over the following four decades, Unilever struggled to retain the Opcos' historic local responsiveness while also capturing these regional- and global-scale efficiencies. In the process, it developed a complex multilayered organization structure that made flexible decision-making difficult. By the end of the 20th century, thecompanyhadcometoberegardedasaformidablebutslow-movinggiantintheFMCGindustry.

100-Year-Old Lifebuoy Enters 21st-Century India

In 1995, as Lifebuoy celebrated its 100th-year anniversary on the Indian market, the familiar red, carbolic soap brick was the country's leading health soap. But its age was beginning to show.

Marketplace Upheavals: Threat or Opportunity?

In 2000, after a decade of rapid growth, the Indian economy stalled and its FMCG market ground to a halt. In 2001, total demand in the personal soap market declined 9.3%.1Aggressive new local competitors began offering attractive beauty soaps, particularly in the lower-priced segment where Lifebuoy had long been dominant. The result was that Lifebuoy became seen as a cheap old- fashioned soap, and its market share fell from 15.4% in 1997 to 12.1% in 2001.2Alarmingly, its sales value declined by more than 20% in a single year between 2000 and 2001.3

Since most of this decline occurred in rural areasmarkets accounting for nearly 70% of Lifebuoy salesexecutives at Hindustan Unilever (HUL) decided to focus rebuilding efforts on the more than 50% of India's population that lived in its 635,000 villages. It was a bold move since the residents of these rural communities, with an average population of 1,000, were largely illiterate. Furthermore, they had limited access to schools, telephones, electricity, or media.

Critics claimed it made little sense to try boosting share in locations where HUL soap brands (Lux, Dove, etc.) already had a market share of almost 60%. But the Lifebuoy team had data showing that soap was used on only 20% of rural bathing occasions.4Also, current distribution reached only 46% of rural residents.5Far from being saturated, they believed the growth potential washuge.

One innovative response was to recruit women as local distributors in these remote communities, appointing them as Shakti Ammas("strength mothers"). The company offered them training, microcredit, and products in small pack sizes affordable to people on low incomes. These Shakti women entrepreneurs could earn Rs. 1,000 a month or more, often doubling their household income.

But better distribution could not solve Lifebuoy's core problem, and in 2001 management decided to relaunch the 107-year-old brand. In a break from tradition, they replaced the chunky carbolic brick soap with a shaped, milled toilet bar that promised a "contemporary health fragrance" and "better germ protection." (See Exhibit 2.) Supported by extensive advertising, Lifebuoy was repositioned from a male-oriented personal hygiene bar to a family health soap. Advertising and promotion were aimed at women, and the new package featured a family on the wrapper. But price remained largely unchanged at an economical nine Indian rupees (Rs. 9)about $0.18for a 125-gram bar.6

Rural Outreach through Swasthya Chetna

The company also launched a rural outreach program called Swasthya Chetna(SC) that translated as "Health Awakening." In addition to reaching new markets, SC aimed to reduce a major public health problem. According to the World Health Organization (WHO), diarrhea killed 2.2 million people every year. In India, it took the lives of 600,000 children under age five annually. Yet WHO claimed that by washing hands properly, half of the deaths could be avoided, making handwashing the single most cost-effective health intervention available to developing countries.

Launched in May 2002, SC's objective was to contact remote, media-inaccessible communities, and grow Lifebuoy's sales through education. With a primary target of schoolchildren, teams of trained "health development facilitators" each visited 72 villages quarterly, delivering their scripted health and hygiene messages through a variety of illustrated stories, visual aids, and quizzes with prizes.

Their most powerful tool was the "Glo-Germ" demonstration in which children rubbed white UV powder on their hands before being told to wash them clean with only water. When they then held their hands under an ultraviolet light, the powder glowed, showing how germs remained even when hands looked clean. A follow-up Glo-Germ inspection of hands washed with soap verified that all dirt and germs were removed, illustrating the central message that "visibly clean is not reallyclean."

The Turnaround: Some Wins, Some Worries

The impact of these initiatives was mixed. On the sales front, Lifebuoy's revenues grew by 20% in 2003-2004, and the following year, by an additional 10%.7By 2005, the brand had an 18.4% share in the $880 million Indian personal soap market, and was again the brand leader. However, because no price increase accompanied its relaunch, profit margins continued to decline.

The social impact of the SC rural outreach program was also initially impressive. By mid-decade, it had reached more than 120 million people in 50,600 villages. Immediate post-visit awareness of germs grew by 30%, and short-term soap use increased among 79% of parents and 93% of children.8But no sustained change in handwashing habits was found, and while Lifebuoy's brand recognition increased,salesroseonlymodestly.Asaresult,theprogram'scostsignificantlyexceededitsreturns.

Late-Decade Reversals: New Market Challenges

Any glimmer of a turnaround was extinguished when a combination of strategic miscalculations and market forces resulted in Lifebuoy's renewed decline in the second half of the decade.

Serial Missteps: Repositioning and Relaunch Failures

Buoyed by the sales boost following the 2002 relaunch, management decided to reposition the brand again in 2005. A "Life without Fear" campaign was built around the theme that mothers need not worry about sending their children outside to get dirty. But while the TV ads were emotionally engaging, they failed to communicate product advantages or to motivate consumers to buy. From 2005 to 2007, Lifebuoy's germ-protection attribute scores dropped from 59.5 to 50.5, and market share declined from 18.4% to 17.6%.9Meanwhile, the category was assaulted by mounting competition and steep cost increases, particularly a 50% rise in vegetable oil prices.

The crisis led to yet another relaunch, this time based on data rather than emotions. In 2007, HUL sponsored a clinical trial that collected evidence of the effect of handwashing on disease. A scientific study involving 2,000 Mumbai families showed that children who practiced handwashing had 26% fewer days of school absence, due to 25% fewer diarrhea events, 15% fewer cases of respiratory infection, and 46% fewer eye infections.10

Excited by these findings, the HUL team used them to support a product relaunch. But it proved difficult to communicate research results connecting soap usage to school attendance. It was simply too big a conceptual leap for people who were unaware of the basic concept of germs, let alone the link between germs and disease. So Lifebuoy's market share kept fallingto 15.5% by 2009.

Rejuvenating Lifebuoy Liquid

At about this time, a worldwide swine flu pandemic broke out, ultimately resulting in the death of more than 18,000 people in South Asia and Africa. When public health officials began stressing the importance of handwashing, it triggered a widespread switch from beauty bars to health soaps. Moreover, the Lifebuoy team discovered that when consumers were assured of germ protection, they became price insensitive. It was an important insight that the team planned to exploit.

Serendipitously, at this time, the Indian-based R&D team responsible for Lifebuoy was working on a new liquid soap formulation. (In Unilever's network of R&D centers, the Bangalore center had global responsibilities for Lifebuoy.) As a late entrant to the fast-growing liquid handwash segment, Lifebuoy Liquid Handwash had met with only moderate success. Responding to research showing that the average time spent washing hands was far less than the recommended 20 to 30 seconds, the R&D team developed a new formulation able to get hands germ free in 10seconds.

The innovation instantly caught the attention of Lifebuoy's marketing team, and in 2010, Lifebuoy Liquid Handwash was relaunched with a campaign highlighting its germ-killing capability. The product was an immediate success, not only for its formulation but also its futuristic package that became a symbol identifying homes in which it was displayed as "modern households." However, management knew that overtaking liquid handwash pioneer Dettol would be quite a challenge.

An Emerging Competitor: Dettol's Challenge

Launched in India in 1933 as an antiseptic liquid, Dettol had remained focused on its first-aid segment for half a century. But as growth stalled in the early 1980s, management extended the brand into soap, a market 50 times larger than its original mature segment. Exploiting Dettol's antiseptic heritage and an instantly identifiable smell associated with hospitals, the new soap was positioned as providing protection from germs. Its advertising slogan "Be 100% Sure" reinforced the message.

Rather than struggling to claim a share of the mass market that Lifebuoy had long dominated, this new soap brand was launched at almost twice the price of its established competitor and soon grew to become Dettol's main product line. But by 2000, its market share was stagnating. To expand beyond its established use as "a soap for special bathing occasions," product variations were introduceda white soap in 2004, and a menthol soap in 2006. However, in 2007, Lifebuoy's new rival sent a strong signal when it vacated its traditional mid-price segment by offering a small 35- gram pack for Rs. 6 (about $0.12)clearly positioned against Lifebuoy's 42-gram pack at Rs.5.

It was an unusual move for Dettol, which had always nurtured its brand equity, rarely engaging in price or promotional competition. As a result, the brand had always been very profitable, and despite a 5.2% market share that was less than one-third of Lifebuoy's, it could match the leading brand's advertising spending. Also, unlike local competitors, Dettol was backed by Reckitt Benckiser, its German-based parent, whose brands such as Lysol, Calgon, Woolite, and Clearasil generated sales of $6 billion in 180 countries. Together, these elements suggested that the fast-growing liquid handwash segment would be the arena where the two brands would soon gohead-to-head.

New CEO, New Directions

In January 2009, a new CEO took charge of Unilever. The strategic and organizational changes he introduced had an immediate impact companywideincluding for Lifebuoy in India.

Shaking the Tree: Instilling Discipline, Infusing Energy

When Unilever's board appointed Paul Polman as the first outside CEO in the company's history, it signaled a major shakeup in its underperforming culture. The 52-year-old Dutchman was not just an outsider, he had spent 27 years at archrival Procter & Gamble, reaching that company's most senior executive levels before joining Nestl as itsCFO.

Assuming his new Unilever role during a global recession, Polman's actions confirmed his belief in the motto "never waste a crisis." In his first week, he announced that he would no longer provide earnings guidance or publish quarterly reports. When the share price fell almost 10%, he attributed the decline to the departure of hedge funds, a group that he felt "would sell their own grandmothers if they thought they could make a profit."11When analysts queried him about the stock price drop, he responded: "We need to know why we are here. The answer is, for consumers not shareholders. If we are in sync with consumer needs and the environment in which we operate, and take responsibility for society as well as our employees, then the shareholder will also berewarded."12

To shake up a culture that was "internally focused and self-serving after years of restructuring,"13Polman froze all salaries and cut overseas travel. Then, to implement his belief that "execution is strategy in our business," he installed 30-day action plans to increase the company's speed to market and consumer-led innovation. And, to instill discipline, he insisted all managers be held accountable.

Polman claimed that he was not just driving for short-term effect, but was positioning Unilever for long-term growth: "It is easy for me to get tremendous results very short term, get that translated into compensation and be off sailing in the Bahamas. But the goal for this company . . . is to follow a four or five year process. We need to change the strategy and the structure as well as the culture."14

Redefining the Strategy: Committing to Sustainability

In keeping with these beliefs, the new CEO announced an ambitious goal of doubling Unilever's sales volume. But he also acknowledged that "growth at any cost is not viable," and committed to achieving this goal while decoupling growth from the company's environmental impact. To translate his bold vision into specific objectives, in October 2010 the company unveiled the Unilever Sustainable Living Plan(USLP).

USLP had three goals: to halve the environmental footprint of making and using its products, to source 100% of its agricultural raw materials sustainably, and to help a billion people improve their health and well-being. Polman emphasized that USLP was no mere corporate social responsibility program, but was totally aligned with its commercial interests. It was Unilever's core strategy built on its long-held mission to "do well by doinggood."

As the broad goals were broken into 50 measurable objectives, management found that Unilever's own operations accounted for only 6%-7% of its environmental footprint. So the company committed to taking responsibility for its entire value chain, and over the full product life cycle. For example, it began working with tea and palm oil suppliers (responsible for a quarter of Unilever's footprint) to help them meet USLP's 100% sustainable sourcing commitment. Meanwhile, on the consumption end, product development and marketing programs began working to reduce the two-thirds of their footprint generated by consumers' use of Unilever products, and to increase their positive social impact. (See Exhibit3.)

Reshaping the Organization: New Roles, New Players

In parallel, Polman continued to implement "One Unilever," an in-process program aimed at streamlining its complex, multilevel matrix by assigning responsibility to three regional heads and three global category presidents. This reorganization had already shifted the power balance from country-based Opco chairmen (who reported to the regional heads) to global brand leaders (who reported to the category presidents). Opcos were still accountable for the profitability of their local operations, but were now responsible for implementing strategies developed by global brand teams.

Building on "One Unilever," Polman made the regional head for Asia his Chief Operating Officer (COO), giving him responsibility for all regions. Simultaneously, the new CEO expanded the three category divisions to fourpersonal care, home care, food, and refreshmentand, in a signal that reinforced the earlier power shift, had all of them report directly to himself. (See Exhibit 4.)

With strategy in the hands of global brand leaders, Polman wanted to ensure that Unilever was still responsive to local consumer needs, particularly in emerging markets that now accounted for half the company's turnover. As a result, global brand management resources and responsibilities were now distributed worldwide, including in the developing world. For example, Lifebuoy's Global Brand Vice President was located in Singapore, and his global brand teams responsible for bar soaps, liquids, and social mission were based in Mumbai, Singapore, and Nairobi,respectively.

Through all this, Polman insisted that USLP targets be embedded in all key business decisions. "This is at the core of our business strategy," he said. "It's not a separate CSR agenda. We believe that responsible companies that make contributions to society a central part of their business model will be successful." So while most managers' incentive compensation was still tied primarily to financial objectives, USLP targets were monitored and independently audited by PricewaterhouseCoopers (PwC) and were reported in detail through the company's management reportingsystem.

Lifebuoy Rebooted: New Players, New Priorities

As part of the restructuring, Samir Singh was appointed as Lifebuoy's Global Brand VP with a mandate to revitalize this iconic brand that had now retreated to a few developing countries and was struggling in several of them, including India. Singh, a 12-year company veteran with extensive brand management experience, soon built a team and defined a strategy to drive Lifebuoy'srenewal.

Defining a Global Strategy: Reclaiming the Heritage

The new global team's first priority was to complete what Singh called "an archaeological review" of Lifebuoy's past successes and problems. Concluding that the core of the problems lay in Lifebuoy's history of continual reinvention, repositioning, and relaunch, Singh decided to return the brand to its rootsoffering protection from diseases spread by germs. The first element of the strategy was to educate consumers on the consequences of germs by assuring mothers that Lifebuoy provided their families superior protection from 10 infections from flu to diarrhea. (See Exhibit 5.)

Next, marketing efforts focused on "hot spots"times of the year such as monsoon season, school re-entry, or crowded religious festivals when infection risk was high. Tailored messages reassured mothers that Lifebuoy could help protect their family at these times of high anxiety. The advertising and promotional activities were customized to each country's specific calendar of hot-spot events as well as its competitive situation and stage of hygiene development.

Finally, these activities were supported by a program of product development that resulted in innovations such as Clinicare 10, a premium product claiming germ protection 10 times better than any other soap, and Lifebuoy Color Changing Handwash aimed at encouraging children to wash their hands for a full 10 seconds, at which time the soap changedcolor.

The approach proved successful, and from 2009 to 2012, Lifebuoy's global sales increased by 17% per annum (p.a.), and gross profit by 22% p.a. Indeed, Singh's boss became so confident that his five- year plan forecast that Lifebuoy's global sales would surge from 408 million in 2010 to become a 1 billion brand by 2015. But Polman's rollout of USLP presented an even more difficult goal. With all Unilever brands expected to contribute to the USLP objectives, Singh volunteered Lifebuoy to assume the main role in fulfilling the global health and hygiene target. And because India was Lifebuoy's largest market, the Indian team would need to make a significant contribution.

Integrating the Social Mission: Beyond Pilots to Performance

When Singh was appointed Lifebuoy's Global Brand VP, Dr. Myriam Sidibe joined his team as Global Brand Director, Social Mission. A world expert on the public health impact of handwashing, Sidibe had been recruited to the corporate office in 2006 as Lifebuoy's Global Partnership Manager. In that role, she had become the champion of handwash behavior-change programs, initiating numerous activities, including the Mumbai clinical trial that led to India's 2008 productrelaunch.

In their discussions, Singh suggested that while Sidibe's campaigning had inspired many new initiatives, the high cost of her "pristine" forms of handwash programs had slowed implementation and limited transferability. Stressing his belief that Lifebuoy's social mission must be fully aligned with its commercial interests, he challenged her to take her behavior-change initiatives beyond clinical studies, conferences, and pilots and focus on leveraging her exciting research results into commercially viable programs that would open up new market segments for thebrand. On her part, Sidibe urged Singh to make the goal of reaching a billion people with handwashing programs a strategic priority. She explained that when she was in her corporate partnership role, she had publicly committed Lifebuoy to this target in support of the United Nations Millennium Development Goals, aligning her pledge with the UN goals' 2015 target date.

Others were concerned, however. They told Singh that the 1 billion USLP goal had been set for Unilever's entire product line, not just Lifebuoy. And they pointed out that USLP targets had a 2020 time horizon, not a 2015 target. But Singh decided to embrace Sidibe's commitment: "I'd rather set a goal of a billion for 2015 and 'fail' by only reaching 650 million than take on a safe 100 million target for 2020 and over-deliver with 200 million," he said. "Only bold stretching goals generate passion."

It was a brave decision. Singh knew that USLP targets were closely monitored by PwC, and that results were not only tracked by top management but were also highlighted in Unilever's annual report as well as in its widely circulated annual USLP report. Both documents provided information and presented data that was explicit and detailedcelebrating achievements, identifying shortfalls, and outlining proposed adjustments and correctiveaction.

Selling the Strategy: Engaging OperatingCompanies

In late 2010, Singh convened a workshop in Jakarta to which he invited brand directors from all Opcos with large Lifebuoy sales to identify the most effective ways to meet the brand's USLP target. In open sessions, they shared models, compared costs, quantified benefits, and identified what worked. In the end, two programs attracted the most interest: an Indonesian partnership program built on "training the trainer," and an Indian multibrand rural outreach initiative. With credibility that he had built through the sales and profit turnaround, Singh was now ready to ask the Opcos to invest in theseprojects.

In early 2011, with the endorsement of the Cleansing Category SVP (Singh's boss) and Unilever's Chief Operating Officer (the Opco chairmen's boss), Singh took his USLP business case to a meeting of Opco chairmen. Conceding that previous handwashing behavior-change programs had struggled, he assured them that these two models were worth investing in. Without disrupting existing programs, he suggested that they take them on as pilots, funding them by reinvesting some of the enhanced profits generated by the brand's recentturnaround.

Because India accounted for almost half of Lifebuoy's global sales, Singh was gratified that HUL's chairman became a strong supporter of his proposal. Although subsequent discussions within the Indian Opco revealed pockets of skepticism and even some resistance, he was confident that the support of Unilever's top man in the country would allow his global brand team to implement their agenda. And HUL's local Lifebuoy team would need that help: they had been allocated 450 million of the 1 billion USLP behavior-change target.

Implementation in India: Reviewing the Options

When Singh offered to help the Indian team implement the two Jakarta models, Sudir Sitapati, HUL's Category Manager for Lifebuoy in India, told him he had a third model to consider.

The First Option: The KKD Rural Outreach Initiative

One of the models endorsed in Jakarta was based on a rural program first launched in India in 2010. It emerged as a replacement for the SC "Health Awakening" program that had petered out due to its unacceptable payback of almost 10 years compared to the Unilever norm of one to three years to recoup marketing expenses. The innovative Khushiyon Ki Doli(KKD)or "Caravan of Happiness" was a collaborative, multibrand, rural outreach effort in which brand managers for Surf detergent, Close Up toothpaste, Sunsilk shampoo, Vim dishwashing liquid, and Lifebuoy soap pooled resources to creating a direct contact program to reach remote rural villages with all their products.

KKD involved teams visiting villages and hosting meetings at which all sponsoring products were presented. Lifebuoy's KKD component was a scaled-back version of its SC routine, retaining the "Glo-Germ" demonstration but focusing on housewives rather than children. Supported by videos, games, and prizes, the presentations were received enthusiastically by residents of these media-dark villages. Later, promoters went door-to-door with coupons and offers, while other team members ensured prominent product placement at village shops.

The Second Option: The MP Partnership Initiative

The second program endorsed in Jakarta was the Indonesian partnership program, a clinically proven 21-day intervention built on the Unilever Handwashing Program that Sidibe and her co- developers had published as "Five Levers for Change." (See Exhibit 6.) Lifebuoy Indonesia had integrated this scientifically based behavior model into a national schools program in partnership with the Indonesian government and some NGOs. The program trained teachers and provided them with tools to deliver the behavior change in their schools. It then leveraged that impact by requiring each teacher to cascade the program to three other schools.

With the endorsement of HUL's chairman, Singh had convinced Sitapati to sign an agreement with UNICEF to bring a similar handwashing program to Madhya Pradesh (MP), an extremely poor Indian state with a literacy rate of 80% for males and 60% for females.15Under the agreement, HUL would create the materials, deliver the training, provide the soap, and manage the evaluation process; the MP government would provide school access and support; and UNICEF would print activity kits and link the partners. As a condition of its support, however, the MP government insisted that the training and materials could not be branded with Lifebuoy'sname.

This pilot program would adapt Indonesia's proven "School of Five" materials for the 900,000 children initially targeted in 5,700 government schools. Implementation would conform with the "five non-negotiables" of Sidibe's change program: the four key phases of behavior change awareness, commitment, reinforcement, and rewardall applied over a 21-day program, the fifth keyelement.

The Third Option: The Urban Schools Liquids Initiative

While Sitapati was ready to consider expanding these two programs in 2013, he also wanted to offer a third option. He felt that Lifebuoy Liquid Handwash had the potential to change behavior while also boosting revenue and profits. Arguing that liquid soap had a higher usage rate, and potentially a much higher margin, in 2011 he had launched a new urban schools liquids initiative.

Like KKD, this program was designed primarily as a marketing initiative, but differed from KKD on several dimensions: it was focused solely on Lifebuoy, not on multiple products; it was aimed at urban markets rather than rural locations; it targeted children not housewives; and most critically, its objective was to increase the use of Lifebuoy Liquid Handwash rather than Lifebuoy soap bars.

To implement the program, Indonesia's "School of Five" educational program was adapted for urban schools by employing interactive games, songs, dances, and the classic Glo-Germ demon- stration. Because children found the use of a pump more fun, they washed their hands more frequently. And as School of Five research had shown, they took the lessons home and influenced the handwashing behavior of the whole household.

The Decision: Singh's Balancing Act

In early 2013, Singh was pleased that Lifebuoy's three-year 17% average annual growth rate not only made it Unilever's fastest-growing brand, but also outpaced Dettol's growth for the first time. But he worried that its handwash program had only reached 119 million people globally. If Lifebuoy was to achieve its 1 billion USLP target, India would have to step up to the challenge.

Lifebuoy India's Achievementsand Shortfalls

Lifebuoy's excellent global performance had been greatly helped by strong growth in India, its largest market. (See Exhibit 7.) But despite strong recovery in sales and profitability, handwashing behavior-change programs in India had reached just 17 million people in 2012, taking its total to 47 million since 2010. While impressive, the performance was well below the trajectory necessary to achieve the country's allocated behavior-change target of 450 million by 2015.

Singh knew that Sitapati also had to meet HUL financial objectives, and accepted that most of his advertising and promotion (A&P) budget would be allocated to media expenditure, typically with a payback of one to three years. Nonetheless, since 2010 Sitapati had boosted the share of A&P budget that he allotted to behavior-change programs from zero to 5%. Singh felt that such programs offered a great opportunity to reach the 40% of the population in media-dark locations unreachable by traditional broadcast or print media. For this reason, he hoped that Sitapati would at least double the behavior-change A&P percentage.But because the payback on these programs was three or four times that of traditional marketing outlays, it was a tough sell. (See Exhibit8.)

Evaluating Progress, Focusing Investments:

As the team discussed the three behavior-change options, different perspectives emerged:

In its first two years, KKDhad reached 25 million people in 70,000 villages, with research showing that soap consumption increased by 8% following a KKD visit. In rural Utter Pradesh, after two years of KKD visits, Lifebuoy's market share increased from 13.9% to 15.6%. While the cost per contact had fallen to Rs. 6 (about $0.10), Sitapati was concerned that as KKD moved to smaller, more remote villages, such visits were now becoming decreasingly costeffective.

Singh's global team was more concerned that brief KKD Lifebuoy demonstrations to housewives were not resulting in sustainable behavior change that would satisfy the PwC auditors. To ensure that KKD estimates counted towards India's 450 million target, Sidibe's team was helping add a school component to KKD visits and the "five non-negotiables" into its presentations. But as Sitapati noted, such efforts further slowed KKD's delivery and increased itscost.

In 2013, for Rs. 54.5 million (about $780,000), KKD could bring its handwashing message to 8.5 million people. But it would take Lifebuoy India 8.6 years to break even on the investment. Sitapati had marketing investments that would yield much higher returns much faster.

Although Sitapati knew that the MP Partnershipwould be time consuming, with a long payback period, he was willing to consider it as a pilot. But he was troubled that it would reach only 900,000 children. He also worried about relying on external funding, and was unhappy about delivering it as an unbranded program. Finally, he felt that 13.5 years was just far too long a payback period.

The global brand team was more excited. Because studies proved that training made children effective change agents who could influence family behavior, they estimated that 900,000 kids could change the behavior of 4.5 million people. Moreover, the team believed that a successful pilot could lead to the program's adoption by all 47 MP districts, and eventually by other Indian states. The huge potential impact of rolling out this program across India had led Singh to initiate negotiations with a potential new funding partner that could significantly leverage this important initiative.

The Urban Schools Liquidsprogram targeted 25 cities with a population of 1 million or more where liquid soap had achieved 7% to 10% penetration, and where Sitapati hoped to build brand preference for Lifebuoy. Although India's total liquid handwash market was only about $65 million5% of the total personal soap marketit was growing at up to 40% annually.

While Singh accepted that education was also valuable to urban populations, he was concerned that liquids were too expensive for the poor rural mass market that was the target ofbehavior change, and worried that the initiative would distract the organization's attention. But knowing that the brand had to be profitable in order to support its ambitious handwash programs, he had agreed to support the urban schools initiative if implemented, and his team had offered to help integrate "the five non-negotiables" into thedesign.

Although the program was expected to reach only 1.5 million people, Sitapati believed the higher margins of liquid handwash would translate into a payback period of 3.5 yearsnot as good as alternative marketing investments, but the most attractive of the behavior-change options.

It was a complex decision with important implications both locally and globally. In India, Sitapati would have to decide which, if any, of these three behavior-change projects he should include in his Indian budget; in Singapore, Singh had to decide whether to intervene in the decision, and if so, how; and in London, Polman would be considering whether this tension reflected the shift in strategic process he had envisioned when he introduced his USLP goals.

The Question:

Why would Sitapati have benefited Lifebuoy if he had opted for the KKD program? Why KKD (Brief explanation required)?KKD may be a better option than MP and Urban Liquids? Singh and Polman's Role and Actions? What is the overall conclusion of the case? What are the pros and cons of going with KKD?