Chick shampoo case study


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Chick Shampoo - Case study

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Chick shampoo case study

  1. 1. Guess?Guess?
  2. 2. FMCG FMCG refers to Consumer non-durable goods required for daily or frequent use. Typically a consumer buys the goods atleast once a month.
  3. 3. CavinKare Pvt. Ltd (CKPL)
  5. 5. RanGe Chik penetrated the Indian market with a wide range, 4 refreshing fragrances, sensitive pricing and right sizing Chik (Black, Jasmine, Egg, Cool) Sachet packing and pricing at Re.1 and 50p Bottles sized-60 ml, 120 ml, 250 ml & 500ml Anti Dandruff Shampoo, containing climbazole and lemon extracts for dandruff and itching (not much popular)
  6. 6. TaRGeT audienCe Class -Lower , Middle. Area- Rural, Semi-urban. MHHI Rs 1,500–3,000. Gender - Females. Age group of 16-plus.
  7. 7. Case ObjeCTives To understand Indian rural dynamics and Indian rural consumer behaviour To provide a backdrop of the Indian Shampoo Market in the rural context To highlight the successful strategies that Chik Shampoo employed in the rural market
  8. 8. The COnCepT OF saCheTs C K Ranganathan, CMD, CavinKare, has shown the world it is possible to beat MNCs even in FMCGs “My father introduced the sachet concept as he felt liquid can be packed well in sachets.When talcum powder was sold in tin containers, he sold it in 20/50/100 gm packs.When Epsom salt came in 100 gm packs, he sold it in 5 gm sachets ” “Whatever I make, I want the coolies and rickshaw pullers to use. I want to make my products affordable to them, he used to say” “Sachets are going to be the product of the future, he said. But my father was a great innovator, but a poor marketer” .  The family launchedVelvette shampoo sachet successfully in the South in the late 1970s
  9. 9. How CHik SHampoo waS born 1982- Ranganathan joined, but separated over differences with family members Name and identity changes in the last 18 years: from Chik India pvt ltd to Beauty Cosmetics in 1990 and finally to Cavinkare in 1998 Chik began with only 20,000 sachets, but made profits from the second year 1989- Office in Chennai, manufacturing in Cuddalore
  10. 10. SHampoo rural market CavinKare- pioneering attempt to offer shampoos in small pillow packs Market flooded with 70-odd small shampoo labels with little differentiation Velvette (family business), synonymous with‘sachet shampoo’, aggressively marketed by Godrej Consumers would ask for aVelvette but walk away happily with whatever label the retailer gave them Many never knew the difference, for others it did not matter
  11. 11. aCCeSSibility & affordability The success of the sachet changed the structure of the shampoo industry New layers of consumers, mainly from rural pockets, could now afford shampoos The‘upper class’ tag attached to shampoos fast faded away Extremely cut-throat market emerged
  12. 12. CHik launCH 1983- Chik shampoo launched by CavinKare Initial launch in 10 ml pack in sachet form Market cluttered with low-cost shampoos “But there was a clear opportunity for a good quality shampoo with appealing perfume at a price to delight the consumer” Chik endeavoured to provide to the masses a significantly superior product than those available at similar price points Chik shampoo used French perfume to differentiate itself on the plank of superior fragrance
  13. 13. promotion Cavin Kare decided to give away one sachet of Chik Shampoo free for 5 empty sachets of any shampoo brand and further extending this strategy in the next stage it restricted the free shampoo exchange only for empty sachets of Chik. Ad strategy based on the powerful appeal of cinema among common masses.Annual ad spends about Rs 2 lakh Radio used as the sole mass advertising medium. Innovative radio ads based on popular cinema dialogues, unlike plain radio jingles of competitors. “Cinema is the most cherished means of family entertainment and cine stars have cult following in the south.Therefore, the communication strategy was to leverage popular cinema dialogues to drive home the message” Popular southern cine stars endorsed Chik-Amala, Khushboo, Manorama and Charlie
  14. 14. trialS Shampoos getting encouraging trials from rural consumers, but extremely low penetration levels Many people had no clue how to use a shampoo To encourage trials, CavinKare’s team travelled extensively in rural pockets Trials on schoolboys to demonstrate how to lather and wash, comb hair and show the difference “We were as thrilled & excited as the volunteers during the demonstrations.This exercise had asignificant impact in breaking ice & made people comfortable with the concept”
  15. 15. ‘CHampi’ on SCHoolboyS
  16. 16. SaleS impaCtS Chik becomes popular in the southern markets i.e it was placed No.1 brand in south india. Shampoo market growing at a healthy 15% Price cut strategy maintain its position in the market.Sales rose from Rs 35,000 to Rs 12 lakh a month. “For the 1st time, floral fragrances (rose, jasmine) were offered in shampoos. our sales went up to Rs 30 lakh (Rs 3 million) per month and with actor Amala as our model, our sales rose to Rs 1 crore (Rs 10 million) a month! Each idea of ours was rewarded by our customers.”
  17. 17. Cont……. CavinKare dominates the rural pockets with Chik . Chik Shampoo was declared the winner of the best performing brand in 2003 by AAAI, amongst the top ten brands in household availability.
  18. 18. Taking on The MnCs “MNCs sold products in bottles, not in sachets and sold only from fancy stores.They did not look atthe small kirana stores, nor at the rural market” “We went to rural areas in South India where people hardly used shampoo.We showed them how to use it by doing live demonstration on a young boy.We asked people to feel & smell his hair” “Chik sponsored shows of Rajniknath's films.We showed our ads in between, followed by live demonstrations.We distributed free sachets among the audience after every show, which worked wonders in ruralTN &AP.After every show, our shampoo sales went up 3-4 times”
  19. 19. naTional fooTprinT 1993- Chik shampoo mulled a national presence “Then, the Indian rural market only outgrew the urban market, now it grows at double the pace” “Chik’s objective was to expand the market, and get new consumers in the category” Focus- largely rural, value-conscious sections in urban areas were also attracted Distribution in rural areas is driven through innovative trade schemes & consumer offerings . 70 %Villages Population size
  20. 20. rural DynaMiCs Most villages in India are of very small size 70% villages have population < 1,000 With low accessibility and undeveloped local markets, how do you market your products to these villages? Opportunity-The 47,000 haats & 25,000melas organised in such villages Average daily business in these haats was Rs 2 lakh CavinKare created availability in smaller villages through the wholesale network “The right marketing strategy for the rural market is to balance the conflicting dimensions of‘availability’ on the one hand and ‘affordability’ on the other”
  21. 21. MiD 1990s The shampoo market surged by 25% Small packs contributed 40% of total shampoo volumes Rural markets grew much faster than urban markets and continue till date The key challenge was to reach rural markets Packaging became critical for rural marketing 1999- Chik, second largest shampoo brand in India-(also in rural markets)- next only to HLL’s Clinic Plus
  22. 22. key faCTors in rural purChase Packaging & branding made prominent to enable quick identification by the rural consumer” Chik- Mnemonic & pack changed to bring in design & colour elements, enable‘on shelf’ differentiation and aided recall 9 Doesn’t bother to check 2 Logo identification 4 Looking at the price 25 Retailer recommends 60 Looking at the wrapper - % of respondents Factors influencing purchase of shampoos in rural markets
  23. 23. shaMpoo eConoMiCs “Years back on a market visit, a rural consumer recalled he had used soap to wash his hair for ages, and that he had no visible damage to his hair.Though the hair felt rough, he was fine with that. So why should he start paying for shampoos?” “There were 5 adults per household in rural India, & @ Rs2 per sachet & 4 washes per month meant Rs.40 for hair wash alone.They couldn’t spend such money on hair wash every month. If the cost of hair wash could be cut to Rs2 per person per month they would try a shampoo.This meant he wanted something as marginal as a 50- paise shampoo pack. The initial thought of offering a 50-paise shampoo sounded ridiculous”
  24. 24. The 50-paise shaMpoo saCheT “We worked backwards, developing the formula & packaging took us a few years.We launched Chik shampoo sachet @ 50 paise in September 1999, the first ever such price point” The result- rural shampoos grew at twice that of the urban sector Price point helped penetrate deep rural pockets Chik market share flared from 5.6%(1999) to23%(2004) 2005- Chik was a Rs 100 crore brand on MRP value No.1 Indian rural shampoo, 65% rural market sales
  25. 25. rural Chik •“Chik’s value proposition helped us become No.1 in many states in rural India. Recruiting customers is the key issue as the rural consumer is rational & value conscious. To be successful, the marketing mix must deliver superior value to the rural consumer at a price point he is comfortable with” RANK MS % (Volume) STATES (Rural hold of chik ) 2 19 Orissa 1 46 TN 1 39 AP 1 32 Bihar 2 22 MP 1 67 UP
  26. 26. The Chik proMise A year round tropical climate makes it difficult to maintain hair softness and shine Tangled hair- Common complaint in girls & women Softness & manageability- key issues in the maintenance and nourishment of hair Unique formula –Active Double Conditioners “The iconic Chik Girl in every ad treated her hair with the shampoo and demonstrated with utmost ease and confidence, her ability to untangle her hair with just a single motion of running her fingers through her hair” Tagline- “Yun Kiya Ho Gayal” popular phrase amongst both girls and women today
  27. 27. Current status “In the last 2-3 years, our market share has come down though we are growing. It is mainly due to the anti-dandruff shampoos in the market which from 0% have taken over 25% of the market.We do not have an anti-dandruff shampoo yet” “Ordinary shampoos constitute only 75% of the market, of which we hold 20% market share. But we are the largest brand in rural UP,AP, etc. and the number one in many other states as well”
  28. 28. strateGY aDOPteD The company marketing Chik shampoos came up with a wide variety of changes to target the rural markets. Some of the changes that the company adopted are: Changing the Packaging of the product by introducing sachets instead of conventional bottles. Slashing the price of the product to 50-paise per sachet so that rural consumers could afford it. Adopting innovative ways of promotion by using radio advertising in the form of jingles and cinema dialogues that would appeal the rural consumers.
  29. 29. COnt…….. A wide variety of perfumed shampoos were available so as to give more option to the rural consumers. The village Haats and Melas were used as an efficient way of the rural distribution channels. The packaging looks of the products were modified and they were made to look more attractive to the rural consumers. Thus it can be seen that to market Chik Shampoo, the company made significant changes in the 4 P’s of the marketing mix so as to ensure that their product successfully penetrated the rural markets.  
  30. 30. twO-PrOnGeD strateGY  CavinKare adopted a two-pronged strategy of getting retailers to push its products such as shampoos by offering them competitive incentive schemes, besides free distribution of shampoo sachets and product demonstrations in public to ensure at least rudimentary brand recall among rural customers such as Vajramma.  To ensure better visibility for products, CavinKare encouraged retailers with display incentives, over and above all other benefits.
  31. 31. PresentlY CavinKare Group has crossed a turnover of 8819 million INR in 2009-2010.The Company has employee strength of 1520, an all India network of 1300 Stockists catering to about 25 lakh outlets nationally. CavinKare, well-known manufacturer of hair care, skin care and personal care products, is targeting to achieve turnover of Rs 5,200 crore by 2012, out of which it expects to earn a contribution of Rs 1,000 crore from its dairy division alone. It markets its products in India, Nepal, Sri Lanka, Malaysia, Singapore, Bangladesh, the United States, and the GCC region
  32. 32. reasOns behinD CavinKare’s suCCess “ Teamwork is the main reason for our success.We have good professionals who work really hard.The second reason of our success is innovation and thirdly we have executed innovative ideas well”.
  33. 33. COnClusiOn Rural market in India has great potential which is just waiting to be tapped. Ultimately the ball lies in the court of potential marketer, (cavinkare already proved it), even they having prosperous chances to increase their market share in rural India. It's all in the hand of marketers, about how they going to approaches the market, takes up the challenge of selling products and concepts through innovative media design and more importantly interactivity.