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Chic- Shampoo Sachet
Dr Amit Rangnekar
Dec 2007
Dr Amit Rangnekar
amitrangnekar@gmail.co
Case Objectives
• To understand Indian rural dynamics and
Indian rural consumer b...
Dr Amit Rangnekar
amitrangnekar@gmail.co
The concept of sachets
• C K Ranganathan, CMD, CavinKare, has shown the
world it ...
Dr Amit Rangnekar
amitrangnekar@gmail.co
How Chik Shampoo was born
• The family launched Velvette shampoo sachet
successfu...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Snippet
• “Took me 3 years to get my first loan as banks
asked for collateral, I ...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Shampoo Rural Market
• CavinKare- pioneering attempt to offer shampoos in
small p...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Indian Shampoo Market 1980s
Price
Quality
High
Low
Good
Chik
Poor
Local Players
M...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Chik Targeting
CosttoConsumer
Availability of Product
High
Low High
Chik
The righ...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Target audience
• Lower middle-class/
• semi-rural (Sec B2,C,D)
• MHHI Rs 1,500–3...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Accessibility & Affordability
• The success of the sachet changed the structure o...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Dr Amit Rangnekar
amitrangnekar@gmail.co
Chik Launch
• 1983- Chik shampoo launched by CavinKare
• Initial launch in 10 ml ...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Promotion
• Ad strategy based on the powerful appeal of
cinema among common masse...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Trials
• Shampoos getting encouraging trials from rural
consumers, but extremely ...
Dr Amit Rangnekar
amitrangnekar@gmail.co
‘Champi’ on schoolboys
Dr Amit Rangnekar
amitrangnekar@gmail.co
Impact
• “We also encouraged trial through a consumer
scheme, where anyone could ...
Dr Amit Rangnekar
amitrangnekar@gmail.co
School Demo
Dr Amit Rangnekar
amitrangnekar@gmail.co
1990s
• Chic, quite popular in the southern markets
• Shampoo market growing at a...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Taking on the MNCs
• “MNCs sold products in bottles, not in sachets and
sold only...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Consumers
start
demanding
Chik
Dr Amit Rangnekar
amitrangnekar@gmail.co
National footprint
• 1993- Chik shampoo mulled a national presence
• “Then, the I...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Rural Dynamics
• Most villages in India are of very small size
• 70% villages hav...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Mid 1990s
• The shampoo market surged by 25%
• Small packs contributed 40% of tot...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Key factors in rural purchase
• Packaging & branding made prominent to enable
qui...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Shampoo Economics
• “Years back on a market visit, a rural consumer
recalled he h...
Dr Amit Rangnekar
amitrangnekar@gmail.co
The 50-paise shampoo sachet
• “We worked backwards, developming the formula
& pac...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Rural Chik
• “Chik’s value proposition helped us become No.1 in
many states in ru...
Dr Amit Rangnekar
amitrangnekar@gmail.co
The Chik Promise
• A year round tropical climate makes it difficult to
maintain h...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Dr Amit Rangnekar
amitrangnekar@gmail.co
Dr Amit Rangnekar
amitrangnekar@gmail.co
Dr Amit Rangnekar
amitrangnekar@gmail.co
Current status
• “In the last 2-3 years, our market share has come
down though we...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Range
• Chik penetrated the Indian market
with a wide range, 4 refreshing
fragran...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Other successes
• We focused only on Chik for 7 years
• Meera Herbal powder-95% s...
Dr Amit Rangnekar
amitrangnekar@gmail.co
• 2006-2007- CavinKare 500 crores
• 576 employees
• All India network of 1300 Sto...
Dr Amit Rangnekar
amitrangnekar@gmail.co
Reasons behind CavinKare’s success
• “Teamwork is the main reason for our
success...
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  1. 1. Chic- Shampoo Sachet Dr Amit Rangnekar Dec 2007
  2. 2. Dr Amit Rangnekar amitrangnekar@gmail.co 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
  3. 3. Dr Amit Rangnekar amitrangnekar@gmail.co The concept of sachets • C K Ranganathan, CMD, CavinKare, has shown the world it is possible to beat MNCs even in FMCGs • Born in Cuddalore in TN, started a business with Rs 15,000, now worth Rs 500 crore (Rs 5 billion) • “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”
  4. 4. Dr Amit Rangnekar amitrangnekar@gmail.co How Chik Shampoo was born • The family launched Velvette shampoo sachet successfully in the South in the late 1970s • 1982- Ranganathan joined, but separated over differences with family members • Started Beauty Cosmetics, with Chik Shampoo named after his father, Chinni Krishnan • Chik began with only 20,000 sachets, but made profits from the second year • 1989- Office in Chennai, manufacturing in Cuddalore • Beauty Cosmetics name was restrictive • 1998- in-house contest suggested CavinKare • Cavin in Tamil means beauty and grace, and C and K (father's initials) spelt in capitals
  5. 5. Dr Amit Rangnekar amitrangnekar@gmail.co Snippet • “Took me 3 years to get my first loan as banks asked for collateral, I had none. One bank gave me a 25,000 loan, which we rotated & upgraded to 4 lakh & then 15 lakh. The bank manager wrote on my loan application that this person has no collateral, but something interesting about this SSI unit is that unlike others, this company pays income tax!”
  6. 6. Dr Amit Rangnekar amitrangnekar@gmail.co 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 a Velvette but walk away happily with whatever label the retailer gave them • Many never knew the difference, for others it did not matter
  7. 7. Dr Amit Rangnekar amitrangnekar@gmail.co Indian Shampoo Market 1980s Price Quality High Low Good Chik Poor Local Players MNC Brands Shampoo Bottles Need Gap
  8. 8. Dr Amit Rangnekar amitrangnekar@gmail.co Chik Targeting CosttoConsumer Availability of Product High Low High Chik The right distribution strategy must make the brand available to the rural consumer at a cost he is Willing to pay
  9. 9. Dr Amit Rangnekar amitrangnekar@gmail.co Target audience • Lower middle-class/ • semi-rural (Sec B2,C,D) • MHHI Rs 1,500–3,000 • Females • Age group of 16-plus
  10. 10. Dr Amit Rangnekar amitrangnekar@gmail.co 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 • Significant trade influence on what the consumer bought
  11. 11. Dr Amit Rangnekar amitrangnekar@gmail.co
  12. 12. Dr Amit Rangnekar amitrangnekar@gmail.co Chik Launch • 1983- Chik shampoo launched by CavinKare • Initial launch in 10 ml pack • Later launched 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. Dr Amit Rangnekar amitrangnekar@gmail.co Promotion • Ad strategy based on the powerful appeal of cinema among common masses • 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 • Radio used as the sole mass advertising medium • Annual ad spends about Rs 2 lakh
  14. 14. Dr Amit Rangnekar amitrangnekar@gmail.co 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 a significant impact in breaking ice & made people comfortable with the concept”
  15. 15. Dr Amit Rangnekar amitrangnekar@gmail.co ‘Champi’ on schoolboys
  16. 16. Dr Amit Rangnekar amitrangnekar@gmail.co Impact • “We also encouraged trial through a consumer scheme, where anyone could take any 4 empty shampoo sachets to a retailer and take home a Chik sachet free. Though more risky, this scheme paid off and more and more people began asking for Chik at their local retail outlet” • “Later, we altered the scheme- we started giving 1 free Chik Shampoo sachet in lieu of 5 Chik Shampoo sachets only. Soon, consumers started asking for Chik sachets only • Sales rose from Rs 35,000 to Rs 10 lakh a month
  17. 17. Dr Amit Rangnekar amitrangnekar@gmail.co School Demo
  18. 18. Dr Amit Rangnekar amitrangnekar@gmail.co 1990s • Chic, quite popular in the southern markets • Shampoo market growing at a healthy 15% • “For the 1st time, floral fragrances (rose, jasmine) were offered in shampoos. Consumer insights in the Southern markets conveyed that women keep flowers in the hair for fragrance. The concept was a hit, and sales jumped three times from Rs 10 lakhs to Rs 30 lakhs a month” • “When Amala endorsed, sales rose to Rs 1 crore a month! Each idea was rewarded by our customers” • Chic continued to use popular cinema celebrities and extended endorsements to TV in 1992 • In 1992, we became the numero uno in South India
  19. 19. Dr Amit Rangnekar amitrangnekar@gmail.co Taking on the MNCs • “MNCs sold products in bottles, not in sachets and sold only from fancy stores. They did not look at the 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 rural TN & AP. After every show, our shampoo sales went up 3-4 times”
  20. 20. Dr Amit Rangnekar amitrangnekar@gmail.co Consumers start demanding Chik
  21. 21. Dr Amit Rangnekar amitrangnekar@gmail.co 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 Population size Villages % < 1000 459465 70 1000-5000 58029 9 >5000 143248 21
  22. 22. Dr Amit Rangnekar amitrangnekar@gmail.co 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 & 25,000 melas 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”
  23. 23. Dr Amit Rangnekar amitrangnekar@gmail.co 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
  24. 24. Dr Amit Rangnekar amitrangnekar@gmail.co 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 ‘onshelf’ differentiation and aided recall Factors influencing purchase of shampoos in rural markets % of respondents Looking at the wrapper 60 Retailer recommends 25 Looking at the price 4 Logo identification 2 Doesn’t bother to check 9
  25. 25. Dr Amit Rangnekar amitrangnekar@gmail.co 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 Rs40 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”
  26. 26. Dr Amit Rangnekar amitrangnekar@gmail.co The 50-paise shampoo sachet • “We worked backwards, developming 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) to 23%(2004) • 2005- Chik was a Rs 100 crore brand on MRP value • No.1 Indian rural shampoo, 65% rural market sales
  27. 27. Dr Amit Rangnekar amitrangnekar@gmail.co 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” Rural Hold of Chik States No. of Villages MS % (Volume) Rank UP 107440 67 1 MP 55392 22 2 Bihar 45113 32 1 AP 28123 39 1 TN 16870 46 1 Orissa 55352 19 2
  28. 28. Dr Amit Rangnekar amitrangnekar@gmail.co 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 Gaya” popular phrase amongst both girls and women today  
  29. 29. Dr Amit Rangnekar amitrangnekar@gmail.co
  30. 30. Dr Amit Rangnekar amitrangnekar@gmail.co
  31. 31. Dr Amit Rangnekar amitrangnekar@gmail.co
  32. 32. Dr Amit Rangnekar amitrangnekar@gmail.co 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”
  33. 33. Dr Amit Rangnekar amitrangnekar@gmail.co Range • Chik penetrated the Indian market with a wide range, 4 refreshing fragrances, sensistive pricing and right sizing • Chik Black • Chik Jasmine • Chik Egg • Chik 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                                                                                 
  34. 34. Dr Amit Rangnekar amitrangnekar@gmail.co Other successes • We focused only on Chik for 7 years • Meera Herbal powder-95% share • Spinz perfumes @ Rs 10, a runaway hit • Nyle- Herbal Shampoo- Transparent packaging • Fairever fairness cream (1997)- 2nd largest player, with saffron, traditionally used for fair complexion • Indica Hair dye- ”Baalon ko de dil ki  umar” • Ruchi Pickle sachets (2004)- No.1, 5000 tpa pickles • Chinni’s Masala range
  35. 35. Dr Amit Rangnekar amitrangnekar@gmail.co • 2006-2007- CavinKare 500 crores • 576 employees • All India network of 1300 Stockists catering to about 25 lakh outlets nationally • Manufacturing plant at Haridwar (Uttaranchal) • Third Party manufacturing at Pondicherry, Noida, Assam and Faridabad • Exports- Nepal, Srilanka, Malaysia, Singapore, Bangladesh, US and the GCC region • Target- 1500 crore company by 2010
  36. 36. Dr Amit Rangnekar amitrangnekar@gmail.co 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”
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