interoffice memorandum to: | Douglas baillie, ceo and managing director of hindustan unilever limited | from: | andrew Loman | subject: | decision on product launching | date: | October 18, 2012 | | |
This is to propose that the company should launch Balashakti because it can leverage the iShakti infrastructure that had been in existence for one year. This is a good opportunity for the company to address its mission of corporate social responsibility and service the need of children in rural areas.
This product will be successful in the market because there are 720 million people in India that lives in rural areas, which is 60% of India’s population. Furthermore, this program will be intended to young children aged 5-12, which approximately 15.4% of population in India. From these statistics, we can assume that the target market for Balashakti software is approximately 110 million people. The demand would be high for this software since it is very beneficial to educate children in rural areas. The education system with iShakti will be beneficial for children especially on health issues. Moreover, it also educated children on many areas such as nutrition, personal sanitation, first aid, emergencies, and other school subjects. This strategy will be in accordance with the company’s mission statement, which is to service the need of children in rural areas. The initial investment would be Rp 200,000 in the beginning of the project. Average users per terminal are 100 and we already have 17 iShakti terminals to date. The monthly growth rate could be from 1% to 10% for the number of iShakti terminals. My projection in 10 years, the iShakti terminals will grow to approximately 240 terminals, which can provide the service for 24,000 users. The cost per dealer was Rp 3,500 and it will increase by 5% per month. HLL also estimated to pay Rp 3,000 for four months after initial launch. In this introduction period lasted about 8 months at Rp 8,000 per month. If we approximate the cost for the first year, it would be approximately Rp 77,675 for the dealers and introduction. Moreover, it will be approximately Rp 50 ($ 200) of cost per users if we can manage to attract 1,700 users in our first month. The BOP consumers’ annual income on average is below than $ 3,260 with 1.2 % for education or we can approximate below $ 40. We need to price our software around $ 100 to gain profit.
This will be our major constraint because a lot of our consumers cannot afford to pay the fee. One way to solve this problem