CavinKare Assignment

Adaptive Market Leadership
Assignment I
CavinKare Private Limited: Serving Low Income Consumers
Submitted To: - Submitted By:-

Prof. Subodh Tagare Kushagra Rastogi
201601327
Sec - CD
CavinKare at Inception
In 1983 with a single product, CavinKare started out as a small partnership firm Chik India by
Mr. C.K. Ranganathan. Chik India, which was renamed as Beauty Cosmetics in 1990.In 1998
the Company was renamed as CavinKare Pvt. Ltd (CKPL).The reason behind the name is,
Cavin means beauty in Tamil and care is spelt as Kare.
C K Ranganathan, Chairman and Managing Director of CavinKare, has shown the world it
is possible to beat the multinationals even in the most difficult market of fast moving consumer
goods. A journey of their business started with only with Rs.15, 000 is now worth Rs.500
crore. He learnt the first entrepreneurial lessons from his father, Chinni Krishnan, who
started a small-scale pharmaceutical packaging unit, before moving on to manufacture
pharmaceutical products and cosmetics. His entrepreneurial zeal and single-minded commitment
to business helped him in his pursuit.
Rural markets- A world of opportunities

The rural population in India represented a vast untapped market & accounted for
74.27% of the population of India and contributed 60% to Indias GDP. The market
size also justified by Exhibit 3 and 4 in terms of no. of households based on income
categories. The multi-national companies did not look at the rural markets and hence
CavinKare had the opportunity to tap the market.
Introduction of Chik Shampoo
Chik Shampoo introduced in 1983 and targeting at lower middle class and semi-rural
population with monthly income of Rs.1500-3000. By tapping the rural markets which
we have shown that had a huge potential, this product made a huge success there. And also
due to lack of presence of multi-national companies, they got an advantage in the
market.
The origin of the concept of sachets
His father had come out with the sachet concept when he introduced Velvette shampoo
in sachets in 1976 and from there Chik single serve sachets evolved which is in a form
of low unit packs and gave boost to shampoo consumption in India and hence
Ranganathan was often referred as the moving force behind the sachet revolution.
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Evolution of CavinKare
The Company, which primarily relied on contract manufacturing for many years has now set up
its own world class plant at Haridwar to cater to the demand of both domestic and international
market. The Company has employee strength of 576, an all India network of 1300 Stockiest
catering to about 25 lakh outlets nationally. CavinKare has touched a turnover of over 5000
million INR in 2006-2007. CavinKare evolved from single product i.e. Chik Shampoo to
having several products portfolio from hair care to personal care products.
Evolution of Chik Shampoo

Ranganathan named it Chik Shampoo after his father. The product launched in 1983
and did not succeed immediately due to presence of 100 brands of shampoo and had
very low awareness among consumers but because of sachets revolution they had making
profits and by execution of various communication strategies they were able to increase
awareness about their product and hence Chik shampoo considered to be the success of
CavinKare in India. As according to Exhibit 13 Chik market share have goes on
increasing from 1% in 1984 to 25% in 2002.
Evolution of various Product range
Being continued with Chik Shampoo for seven years they introduced Meera Herbal
Powder which is evolved due to he felt that there was a demand for herbal products and
required a good product. And Meera Herbal powder topped the market in first of its
three months and had 95 per cent market share in six months only. As planned to expand
to new products they got into beauty cosmetics products as well. They also had
perfumes for poor which cater to those who cannot afford (high priced) perfumes. He
decided to come out with a Rs.10 pack Spinz. He was successful in that too.
Choices and Actions helped CavinKare to succeed
Communication Strategies: -
When CavinKare entered into market the main challenge for Chik shampoo was
lack of awareness among rural consumers and their habit of using ordinary
soaps to wash their hairs instead of using shampoos products.
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Cavin Kare discovered that soap usage was the biggest barrier and people did
not see the need for using Shampoo. Company tried to convey the message to the
consumer that soap usage was bad for the hair and when a product exists
specifically for hair it should be used.
So they had to create such communication plan which connect to consumers
as well as create brand awareness. So initially they had radio advertisements
with use of popular movie dialogues which supports the brand and also roped
into various popular movie stars from South India.
They also did live demonstration of shampoo usage and product benefit.
They started road shows, wall-paintings, and video-on-wheels as their
advertising campaigns.
They distributed free samples and went for door to door sampling only to
increase awareness.
They also launched consumer promotion scheme to create the consumer pull and
induce trials.
These activities helps them to increase their sales from Rs.0.5 million to Rs.3.8
million in one year.
Distribution Strategies:-
The company faced hurdles in its drive for expansion at the national level and
challenge was to establish a nationwide distribution network. And as they
primarily targeted at rural markets where retail density was extremely low.
And to gain distribution access they had to develop channel in an innovative
manner.
So to design channel they started to approached the periodic markets like haats
and melas which served about 4000 rural consumers over 10-15 villages.
Then they found out that 58% of rural consumers preferred to purchase from
that markets because of better pricing, quality and product available there.
Because of which CavinKare distribution system manage to reached out 0.75
million outlets which is at par with major competitors.
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Innovation Strategies:-
Others challenges apart from distribution access they were facing was that the
large adoption of shampoo by consumers.
In 1999 they came up with Pricing Innovation which had a big impact on the
consumption of shampoo product in rural areas
In research they found out that on an average a rural family had to invest Rs.40 for
hair wash alone which was unaffordable to them.
So they formulated the product at low cost with same quality and efficacy which
was a launch of 4-ml sachet of Chik shampoo at 50 paise.
This move helped them to increase their market share from 5.61% in 1999 to
23% in 2003 which consequently increases the shampoo consumption overall.
Other innovations was product based (Product Innovation) like as shampoo
bottle which had same cost as their 4-ml sachet, introducing floral fragrances in
shampoo etc.
They also launched perfumes in small packs for one week usage or even they
launched a single use perfumes.
They have also innovative in their work culture where they allowed employees
to come up with new idea and got a budget to pursue it.
All these strategies helps them to earned revenue of Rs.1.11 million and manage to entered in
list of top 100 consumer brands in India. And as a result their herbal shampoo, hair wash powder,
deodorant, fairness creams etc. were the market leaders in respected categories.
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Adaptive Market Leadership

CavinKare Private Limited: Serving Low Income Consumers

Submitted To: - Submitted By:-

Rural markets- A world of opportunities

Evolution of Chik Shampoo

Choices and Actions helped CavinKare to succeed

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