CavinKare – Making Lives Happier A Case Study on India’s own innovative conglomerate…

By:

Shreya Juneja, Nikita Garg, Shreya, Akshay Karwal & Geetika Virdi

Table of Contents

CavinKare – The initial steps from a Rs.15, 000 venture to a Rs.5 Crore Firm ............... 3

Ranganathan’s Story…inspiring entrepreneurship ............................................................................. 3

Chik Shampoo becoming No. 1 in South India .................................................................................. 4

Conquering the rural markets ............................................................................................................. 4

Introducing Meera Herbal Powder ..................................................................................................... 5

How beauty became synonymous with CavinKare ............................................................................ 5

Perfumes for the poor ......................................................................................................................... 5

CavinKare Values and Beliefs............................................................................................................ 5

Business strategies: Why it exist? .......................................................................................... 5

Corporate Strategy: ............................................................................................................................. 6

Promotional Strategy: ......................................................................................................................... 6

Rural Marketing ................................................................................................................................. 6

Competitive Strategies: ...................................................................................................................... 6

Other strategies: .................................................................................................................................. 6

Business model ........................................................................................................................ 7

Role of Information Technology ........................................................................................................ 8

Future focus ........................................................................................................................................ 8

Product range .......................................................................................................................... 8

Personal Care ...................................................................................................................................... 9

Food and Beverages ........................................................................................................................... 9

Dairy Products .................................................................................................................................. 10

Beverages ......................................................................................................................................... 11

Innovative aspects of CavinKare ......................................................................................... 11

Corporate Social Responsibility .......................................................................................... 13

Conclusion ............................................................................................................................. 15

CavinKare – The initial steps from a Rs.15, 000 venture to a Rs.5 Crore Firm

“Teamwork is the main reason for our success. We have good professionals who work really

hard. The second reason of our success is innovation. We have executed innovative ideas as

well.”1

- C K Ranganathan, Chairman & MD, CavinKare

Ranganathan’s Story…inspiring entrepreneurship

Ranganathan’s father, Mr. Chinni Krishnan was an agriculturalist by qualification and a

pharmacist by profession. Unlike his siblings, who grew up to be doctors and lawyers, he was

never interested in studies. He would never fare well and his father had always expected him to

end up into agriculture or business.

When in the fifth standard, he had a lot of pets -- more than 500 pigeons, a lot of fish and a large

variety of birds. He began earning his pocket money out of pet business. Perhaps, the

entrepreneurial spirit in him showed its first streak, then.

The concept behind sachets was his father’s brainchild. When the world purchased talcum

powders in large sealed containers, he sold them in smaller amounts, to make them affordable to

all strata of the society. Selling things in sachets was his motto as he said, 'this is going to be the

product of the future.' However, he could never market his idea well, he definitely inspired

Ranganathan.

Figure 1: CavinKare CMD CK Ranganathan2

Ranganathan gave up his family business since his ideas clashed with those of his brothers’ and

decided to start his own business with his mere savings of Rs.15,000. He had to start from

scratch. Give up on cycles, when he could travel by cars. Rented workplaces and sought after

loans.

After avoiding any direct competition with his family, he finally entered into the shampoo sector

and that is when Chik Shampoo was born. In the first month, they could sell 20,000 sachets and

from the second year, they started making profits. One of the bank managers wrote this over his

loan application: 'This person does not have any collateral to offer but there is something

interesting about this SSI unit. Unlike others, this company pays income tax!' 1 http://www.rediff.com/money/2007/mar/22bspec.htm

2 http://www.livemint.com/Companies/tJoVGVybcECI0CMTO01myM/CavinKare-risks-high-costs-with-

direct-distribution.html

Beyond this point, there was no turning back. It took him nine years for to overtake his brothers'

business.

The company has transformed from Personal care player to an FMCG conglomerate with interest

in Dairy, Foods, Snacks, and beverages business.3 C K Ranganathan has shown the world that it

is possible to beat the multinationals even in the most difficult market of fast moving consumer

goods.

Chik Shampoo becoming No. 1 in South India

When Chik entered the market, Velvette Shampoo was being marketed aggressively by Godrej.

But Ranganathan’s team came up with a scheme of exchanging five sachets of any shampoo for

a free Chik Shampoo sachet. Later the scheme was altered for free Chik sachet for 5 Chik

sachets. The sales went up from Rs 35,000 to Rs 12 lakh a month.

Figure 2: Chik Shampoo4

When they introduced jasmine and Rose fragrances, their sales went up to Rs 30 lakh per month

and with actor Amala as their brand ambassador, their sales rose to Rs 1 crore a month!

Conquering the rural markets

Multinational companies sold products in big bottles and not in sachets and they sold only from

fancy stores. They did not look at the small kirana stores, nor did they look at the rural market.

Chik Shampoo extended towards rural areas of South India where people hardly used shampoo.

They showed them how to use it. They did live demonstrations on a young boy and asked those

assembled to feel and smell his hair.

They planned Chik Shampoo-sponsored shows of Rajniknath's films and showed their

advertisements followed by live demonstrations. They also distributed free sachets among the

audience after those shows. This worked wonders in rural Tamil Nadu and Andhra Pradesh.

After every show, shampoo sales went up four times.

3 http://en.wikipedia.org/wiki/CavinKare

4 http://www.cavinkare.com/personal_care_chik.html

Introducing Meera Herbal Powder

Inspired by Shaw Wallace, a demand for herbal products was felt. In the third month itself, Chik

Shampoo topped the market of herbal product. In six months, they had 95 per cent market share,

while Shaw Wallace had only 4-5 %.

How beauty became synonymous with CavinKare

As they planned to expand to new products, they thought the name Beauty Cosmetics would be

restrictive. In 1998, they ran a contest among their employees for a name and one of them

suggested CavinKare; with C and K spelt in capitals. Cavin in Tamil means beauty and grace.

Also C and K were his father’s initials. So the name instantly clicked.

Perfumes for the poor

Good perfumes came at a huge price -- they were beyond the means of ordinary people. Going

by his father’s ideology, Ranganathan came out with a Rs 10 pack of Spinz deo. It was an

extremely successful step.5

CavinKare Values and Beliefs

Vision: "We shall achieve growth by continuously offering unique products and services that

would give customers utmost satisfaction and thereby be a role model."6

Figure 3: CavinKare values & beliefs

Business strategies: Why it exist?

Target audience: Girls and women of rural and semi-urban population of India.

5 http://www.rediff.com/money/2007/mar/22bspec.htm

6 http://www.cavinkare.com/Vision.html

Ethical Behavoiur

Innovation

Ownership Stakeholder's

Delight

Excellence

Corporate Strategy:

Cavinkare maintains high standard of quality using three cardinal rules:

1. Cavinkare will never venture into marketing and will only focus on brand building, R&D

and distribution management. Outsourcing (third party manufactures) is one of the major

corporate strategies of Cavinkare. It helped the company to keep the costs low and

allowed it to focus on marketing and distribution.

2. Cavinkare will never distribute products of other manufacturers.

3. It will not let its products distributed by other people.7

Marketing Strategy:

It promotes through direct media to create brand value. Conventional media outlets such as TV

and radio still make up a large chunk of the company`s investment. It is also focusing on various

other platforms inclosing social networks.8

Promotional Strategy:

Mobile Parlors provide direct interaction with the customer by distribution of free samples of

Chik shampoo. Also, various hairstylists use it on volunteers to provide a complete brand

experience.

Cavinkare has also associated itself to various social issues such as education and empowerment

of disabled.9

Rural Marketing

Cavinkare is widely known for bringing revolution in India with the concept of small sachet.

Before the introduction of Chik shampoo, people in South India used to wash their hair with

soap. To create awareness among the customers, the company educated people on how to use the

shampoo and distributed free sachets. This was one of the most successful strategies followed by

the company and created huge customer base in Tamil Nadu and Andhra Pradesh.9

Competitive Strategies:

After introducing shampoo sachets, for instance, CavinKare took on HUL's most profitable

brand, the 'fairness cream' Fair & Lovely by launching Fairever in 1998. To get a competitive

edge, Ranganathan included milk and saffron among Fairever's ingredients - both are

traditionally associated with fairness in south India.

It launched Indica 10, a hair dye which can be washed off within 10 minutes of applying it. Rival

hair dye brands require at least 30 to 45 minutes for effect.10

Other strategies:

7http://books.google.co.in/books?id=U4_mXbVC4bwC&pg=PA152&lpg=PA152&dq=cavinkare+cardinal+rule

s&source=bl&ots=PHxv1Z9HJq&sig=E5KdgX0Du6o5Q5f0Kba7gcg3cYI&hl=en&sa=X&ei=Ap_uUqyWJo6yrAe

4vIDADA&ved=0CC8Q6AEwAQ#v=onepage&q=cavinkare%20cardinal%20rules&f=false 8http://www.slideshare.net/ZiaAhmad/rural-marketing-by-cavinkare-pvt-ltd

9 http://www.slideshare.net/Rushabh93/cavin-kare-and-chik-shampoo-rural-marketing#

10 http://www.cio.in/article/cavinkare-chases-big-business-it

1. Chik shampoo sponsored shows of Rajnikanth`s movies. After every show, the sales went

up to three to four times.

2. Started giving one free sachet in lieu of five sachets.

3. Sold the sachets at 50 paisa when other shampoos were selling at Rs. 2. Soon Chik

shampoo got popular in the market. The sales went up from Rs. 35000 to Rs. 12 lac in

one month.11

Business model12

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http://businesstoday.intoday.in/story/cavinkare-working-towards-a-global-presence/1/19204.html 12

http://www.icmrindia.org/casestudies/catalogue/Marketing/Cavinkare-Marketing.htm

Classify the products broadly: Shampoos,

fairness creams, deodorants and talc powder,

pickles and snacks, hair color, beverages, dairy,

and beauty salons.

Set up different sales division, divided on the basis of customer type. For instance, different types of retail format including convenient stores, kiranas, chemists, bakeries, and juice parlors.

Assign head to each business

Manage the supply chain: Products in the personal care space have a long shelf life. Therefore, the company uses carrying and forwarding agents, like any other FMCG. But for other businesses, especially the food segment, it carries out operations with fewer intermediaries.

Role of Information Technology

IT has been the backbone of the company for more than a decade. CavinKare was one of the

early adopters of ERP, and had it at a time when none of its competitors did. It has set up an ERP

across the entire business chain which runs very efficiently.

Currently, it is in the process of automating transactions that distributors carry out with the

retailers using IT.

Future focus

The 'creators' were asked to come up with innovations that targeted the high end of the market.

"We want 60 per cent of our revenues to come from the premium segment," says Ranganathan.

Product range

Starting their journey with Chik Shampoo, a landmark innovation that democratized the use of

shampoos among the masses in India, CavinKare has become a legendary player in the Personal

Care space. The Personal Care brand portfolio consists of Shampoos (Chik, Meera, and Nyle),

Hairwash Powders (Meera & Karthika), Coconut Oil (Meera), Fairness Creams (Fairever),

Deodorant and Talc (Spinz), Hair Colours (Indica Herbal Hair Colour, Indica 10 Minutes Herbal

Hair Colour, Nyle Henna & Raaga Professional).

Over the years, CavinKare has successfully transformed itself from a pure Personal Care player

to a FMCG conglomerate with interests in Dairy, Snacks, Food and the Beverages businesses. In

the Dairy business, Cavin’s is the mother brand which offers milk and milk based products such

as milkshakes, ghee, curd, UHT and pasteurized milk. In the snacks business, Garden is the

mother brand offering an entire gamut of salted snacks including namkeens and western snack

offerings. In the foods business, they have a presence across various price points in the pickle

segment, with Ruchi in the premium range and Chinni’s in the mass-premium range. Other

products include Chinni’s Vermicelli, Chinni’s Energy Peanut Snack and Ruchi Magic Culinary

pastes. In the beverages business, they are present in non-carbonated fruit drinks with Maa as

the flagship brand. Maa is available in several flavours including guava, apple and mango.13

13

http://www.cavinkare.com/Corporate.html

Figure 4: You name it, they have it!14

Personal Care

The personal care brand portfolio of CavinKare spans shampoos (Chik, Meera, and Nyle), hair

wash powders (Meera and Karthika), coconut oil (Meera), fairness creams (Fairever), deodorant

and talc (Spinz), hair colors (Indica, Nyle Henna).15

.

Food and Beverages

Over the years, CavinKare has successfully transformed itself from a personal care player to a

FMCG conglomerate by entering the food and beverages sectors as well.

In the foods business, CavinKare has two brands of pickles – Ruchi in the premium range and

Chinni's in the economic range. Garden is the mother brand that offers an entire gamut of salted

snacks and western food offerings.

In the beverages business, Maa is the flagship brand and is available in several flavors including

guava, apple and mango. CavinKare also forayed into the dairy industry with Cavin's, a range of

milk and milk based products such as milkshakes, ghee (clarified butter), curd and pasteurized

milk.16

14

http://www.cavinkare.com/ 15

http://www.cavinkare.com/personal_care.html

16 http://www.cavinkareglobal.com/aboutus.aspx

Garden is a range of snacks and sweets available in authentic Indian flavours. Garden's range of

sweets includes Indian delicacies such as Soan Papdi, Gulab Jamun and Rasgulla among other

exotic specialties.17

Dairy Products

Cavin's is a range of dairy products such as milk, milkshakes and ghee. Cavin's offers freshly

procured milk which is then Ultra High Temperature (UHT) treated to eliminate bacteria. Cavin's

milk products include toned, double toned and diet milk.

Cavin's Milkshake comes in four different flavours - Strawberry, Banana, Vanilla and Chocolate.

The milkshakes contain healthy whey proteins that aid in building muscles which help children

stay strong and fit. Cavin's Ghee is made from cream sourced from the freshest milk and contains

vitamins A, D, E and K.

Cavin's Milk is available in 200 ml and 500 ml packs. 17

http://www.cavinkareglobal.com/snacks.aspx

Cavin's Ghee is available in pet bottles of 1 litre, 500 ml, 200 ml and 100ml.

Beverages

Maa is a brand of fruit-based beverages that are hygienically manufactured and packaged to

retain the flavour and richness of real fruits. Maa is available in Mango, Apple and Guava

flavours.

With Maa Mango Drink, India's favourite summer fruit can now be enjoyed anytime, anywhere.

Prepared from exotic mangoes, the beverage has an authentic flavour.

Maa Apple drink is made from only the finest apples and is a great thirst quencher. Experience

the refreshing taste of juicy apples in every sip.

Maa Apple Drink is available in PET bottle of 250ml and 500ml quantities.

Maa Mango Drink is available in PET bottles of 250ml, 500ml and 1000ml quantities

Innovative aspects of CavinKare

1. IT enabled Company - CavinKare currently runs over three million outlets through 6000

stockists located across India. With such large distribution network gathering sales and

production data becomes a difficult task. But CavinKare started using SAP, an enterprise

resource planning (ERP) software, to manage business operations and customer relations

very early in its business when none of its competitors had adopted ERP.

They have ERP for their entire business chain and run it very efficiently for automating

inventory management, input/output plan settings, automated transactions, and consumer

feedback. They are also working on automating the process of transactions between

distributors and retailers. 18

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2. Trends in Vogue - Trends In Vogue Private Limited, a CavinKare initiative came into

being in July, 2002, with the sole purpose of offering customers with the best grooming

solutions. The need amongst customers for exclusive salons that can offer world class

styling for the whole family, culminated in the birth of Trends In Vogue. It operates two

successful salon chains – Limelite and Green Trends

3. Innovative marketing strategies.

Targeting rural and small town consumers

Not a manufacturer- rather outsourced to small producers

CavinKare is primarily marketing and brand managing company. It outsources products from

third party manufacturing units (TPUs) and markets these products

Main agenda: Brand building, R&D and Distribution Management

Brought ‘sachet’ culture in the market

CavinKare was the first in the market of fast moving consumer’s goods to use the concept of

sachets for selling its cosmetic products like talcum powder in 100gm, 50gm and 25gm

sachets.

4. Innovative awards to initiate innovation in FMCG market

CavinKare ABILITY Awards- CavinKare ABILITY Awards were instituted in 2003

to honour achievers with disabilities who have soared beyond conventional barriers to

realise their chosen dreams. They are national awards recognising exemplary services

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http://www.cio.in/article/cavinkare-chases-big-business-it

“What rich can enjoy, poor should afford” –Chinni Krishnan

as well as accomplishments of the achievers. Giving these awards, the Foundation

believes, leads to awareness-building on the capabilities of persons with disabilities.20

Figure 5: CavinKare Ability Award

Chinnikrishnan Innovation Awards

Figure 6: Chinni Krishnan Innovation Award

Dreamer, innovator, idea-tor, entrepreneur: just some of the words that can describe the late Shri

R. Chinnikrishnan, the man who pioneered the sachet revolution. His ideas were based on the

simple philosophy, "what the rich man can enjoy, the poor man should be able to afford." Today

his innovations are seen in every shop, in the form of sachets. They stand testimony to the fact

that his dream has seen fruition. In memory of the Late Shri Chinnikrishnan, CavinKare is

seeking out the next generation of innovators. CavinKare has established an award to encourage

young entrepreneurs who are running small and tiny scale industries.

"The Chinnikrishnan Innovation Awards" focuses on the overall value of the innovation in terms

of its uniqueness, its benefits to people and its ability to be scalable. 21

Corporate Social Responsibility

20

http://www.abilityfoundation.org/cka_awards.html 21

http://www.cavinkare.com/cavinChinniKrishnanInnvationawards.html

CavinKare Chairman CK Ranganathan always believed that 'disability is never a handicap and

people need to change their attitude to provide opportunities to the physically challenged people

to prove themselves'.

Taking that approach forward CavinKare has shown an interest in supporting organizations

working on social issues. The company has sought to associate itself to social issues of

education, empowering the disabled, imparting practical knowledge for business and

acknowledge the requirement of environment protection.

As part of Corporate Social Responsibility initiatives:

1. CavinKare has associated itself with Ability Foundation, an NGO working towards

betterment, empowerment and rights of disabled community, to institute CavinKare

Ability awards, to recognize and reward the achievements of differently abled people.

Figure 7: Music Director A.R.Rahman receives a memento from CavinKare CMD C.K.Ranganathan at the

CavinKare Ability Awards jury meet in 200922

2. CavinKare also presents the Chinnikrishnan Innovation Awards to encourage young

businessmen running small and tiny scale industries. This award is named after the Late

Shri R Chinnikrishnan, CK Ranganathan’s father, who introduced the concept of sachet

in India.

3. CavinKare has associated itself with Rotary club of Madras East to present Dr. M S

Swaminathan Award for Environment Protection which is named after Professor

Swaminathan, an internationally acclaimed agriculture scientist. This award is composed

to honor companies or eminent persons who have contributed to the society to improve

living conditions and public health while protecting the environment and natural

resources.

4. CavinKare has been lively active when it comes to activities in education sector.

CavinKare's 'Project give life' endeavors to provide educational support to deserving

children. Study aids, breakfast are some of the things that the project encompasses.

5. The CK School of Practical Knowledge on the other hand imparts practical business

oriented education alongside the regular curriculum. CK believes that the school should

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continuously churn out students who will develop business acumen, alongside their

regular Physics, Chemistry, and Mathematics. The objective of this initiative is to apprise

students of small business operations and create in them business instincts with emphasis

on real life situations.

6. CavinKare also runs the CK College of Engineering and Technology which is situated in

Cuddalore with an aim to impart professional education especially to the people in the

coastal regions of Tamil Nadu. The college offers industry relevant courses in

Engineering and Business Management studies with an aim to develop industry ready

professionals who will contribute to creating a better society.

7. Apart from the above, CavinKare also conducts ‘Annadanam’; blood donation camps and

also sponsors green revolution projects.

Conclusion

The common thread connecting various businesses is the company culture of bringing out new

products which are significantly winning or are highly differentiated as opposed to the

competition.

CavinKare has a strong distribution footprint pan India, reaching more than 3 million outlets

through more than 6000 stock holders. Leveraging its strong distribution network, CavinKare has

entered into strategic partnerships with Coty for Adidas and Jovan brands and Hawpar

International for Tiger Balm. CavinKare has replicated the success at home and in foreign lands

as well.23

CavinKare has been extremely innovative with its concept of sachets. The company could be

successful because of its root aim of reaching out to the rich and the poor alike. Identifying target

customers is a very important measure and CavinKare made sure it never failed at that.

Although the company has been growing over the past few years, it has been losing its grip on

the market. What it requires is better marketing strategies and customizing its products as per the

requirements of various Indian states.

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http://www.cavinkare.com/Corporate.html