Case study Cavinkare ltd.

Challenges in rural India

Presented by

GROUP NO.-03 INDU KUMARI MANORANJAN PAUL NALINAKSH TRIPATHI RANJIT KUMAR NAYAK SAURABH KUMAR SONI

Purpose of the case

To discuss how rural markets are getting receptive to new personal hygiene and lifestyle products as the winds of change blow.

To focus on key factors which made cavinkare score over the mncs in rural markets.

To debate whether cavinkare will be able to hold on to its leadership position in shampoo in parts of rural india, and what should do to build on the success.

introduction

HAS RURAL INDIA BECOME FASHIONABLE ?

IS THERE A DRAMATIC CHANGE IN PROGRESS?

ARE RURAL MARKET NEW GROWTH ENGINES?

Answer of all the questions

yes

Why?????BECAUSE……..NOW VILLAGERS WHO USE TO CRACK OPEN

PEANUT CANDIES, EAT THE NUT AND THROW AWAY THE SHELL ARE NOW DEMANDING CHOCOLATE CANDIES THAT WILL MELT IN THEIR MOUTHS, NOT IN THEIR HANDS.

VILLAGERS ARE USING COLGATE AND OTHER INTERNATIONAL BRAND OF TOOTHPASTE FOR ULTRA BRIGHT SHINE INSTEAD OF DAATUN AND COAL.

THEY ARE USING SHAMPOO INSTEAD OF MULTANI MITTI.

UPGRADATION IN TERMS OF THE FORM OF THE PRODUCT USED

HOUSEHOLDS ARE UPGRADING FROM TRADITIONAL MOSQUITO REPELLENTS SUCH AS GOBAR(COW-DUNG) TO COIL TO MAT.

THERE IS ALSO AN UPGRADATION FROM LOCAL OR UNBRANDED PRODUCTS TO NATIONAL BRANDS AND FROM Low PRICED BRANDS TO PREMIUM BRANDS.

problem of the case study

Low penetration level of shampoo in rural market in comparison with other beauty products.

It is not a problem only for cavinkare but also for other company.

About Cavinkare limited

In 1983 with a single product cavinkare started out as a small partnership firm chin 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)

Cont…….

The reason behind the name is, cavin means beauty in Tamil and ‘care’ is spelt as kare.

The name is also special one as the initials c and k of Mr. ranganathan

The company offers quality personal care(hair care, skin care, home care) and food products

Cont….

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.

CavinKare Group has crossed a turnover of 7000 million INR in 2008-2009

Cont….

The Company has employee strength of 1880, an all India network of 912 Stockists catering to about 25 lakh outlets nationally. CavinKare's astute professionalism, innovative products and consistent quality are results of its significant corporate practice.

Three major barriers to shampoo use in India

The perception that shampoo contain harsh chemicals that could damage hair.

High price. and the view that the shampoo is

more of a glamour product rather than a hygiene product.

Strategy to break first barrier

Innovation of herbal or botanical shampoo. nyle herbal, a herbal shampoo launched

by cavin kare.This product claim to use traditional Indian

herbs such as shikakai,soap nuts and amla as ingredients.

Nyle herbal is among the top five shampoo brands in the country and account for 10 per cent of the market share.

Strategy to break second barrier

innovation of

sachets

History of sachet

Cavinkare was the company responsible for the small sachet revolution in India.

It was an important insight for marketing to rural India, at the time.

When cavinkare entered the rural areas in south India, people used to wash their hair with soap.

Cont….

When it launched the ‘chik’ brand of shampoo they educated the people on how to use it through live ‘touch and feel’ demonstrations and also distributed free sachet at fairs

This strategy worked wonders in the rural areas of tamilnadu and Andhra Pradesh.

Cont……..

That’s why Mr. c.k. ranganathan was declared the marketing professional of the year in the India brand summit-2003.

The awards was given for leadership excellence and pioneer of sachet packing and mass marketing in rural areas.

Strategy to break third barrier

Marketers tried to add a utility value to shampoo by offering functional benefits.

Clinic plus-one of the first anti-dandruff brands.

Hll has also experimented with different versions of sunsilk for dry,normal and oily hair.

Procter and gamble’s,head $ shoulders menthol and pantene lively clean aiso offer functional benefits to users.

Different shampoo products of cavinkare

Chik

chik satin

nyle meera

Target audience

Girls and women of rural and semi urban population of India.

Marketing strategy

They associated with people of similer wavelength in thinking, who will definitely take care of quality first and foremost and besides, they have a strong system of quality monitoring.

As a part of their strategy, they lay down all the ground rules for manufacturing in maintaining their standards.

Cont…..

Outsourcing is one of the cardinal rule of cavinkare corporate strategy.

Direct media promotion have helped build knowledge of product categories and change long-entrenched living habits.

Cont….

by the help of effective communication they tried to understand the fears, aspiration and hopes of the rural consumers.

Cavinkares believes that its core competencies are research and development, brand building, and distribution management.

Distribution strategy

Instead of using the conventional distribution route, they have created a ‘sachet’ sales force that sells only sachet packets to small retailers including cigarette and paan shops.

Separate hawkers' channel is being created that has moves from neighborhood to neighborhood.

Cont….

The hawkers’ channels exist in all cities where they have a distribution network

Apart from unconventional method, the company hired professionals for sales and distribution and expanded its network beyond south India.

Competitive analysis

Major competitors-o Hindustan unilever limitedo Procter $ gambleo Daburo Himalaya health care

Cont…

Market share-o Chik shampoo with a 21.4% share is the

second largest selling shampoo in the rs. 1200 crore(rs.12 billion) shampoo market while its other brand nyle has a 4.6% share.

o Other like meera hair wash has national share of 23.4%

o But they are largest brand in rural u.p., Andhra Pradesh etc.

Overall shampoo market share

50%

19%

16%

15%

HUL CAVINKARE OTHERS P&G

IMPORTANT FACT

THE COMPANY HAS six major brands-fairever, chik, nyle, meera, indica and spinz.

While its shampoo brands(chik &nyle) contribute 50% to the company’s turnover.

The fairever cream contributes 30%.The balance is from spinz

(deodorant,perfume), indica, hairdye and other products.

milestone

Cavinkare pvt. Ltd. Won ability award for 5 consecutive years-

o Ability award-2007o Ability award-2006o Ability award-2005o Ability award-2004o Ability award-2003

conclusion

So the fact remains that the rural market in India has great potential which is just waiting to be tapped.

Ultimately, the ball lies in the court of cavinkare marketers.

It is all about how they approach the market, takes up the challenge of selling products and concepts through innovative media design and more importantly interactively.

Economic times (27/11/2009)

Cavinkare puts global biz on focus, mulls plants aboard-

o Moving away from an India-centric approach, the rs. 750-crore fmcg player has carved out a strategy to tap its international business potential.

o They are looking at sri lanka and the gulf as potential destination for their manufacturing unit.

o Meanwhile, it is on track to achieve its targeted turnover of rs. 1000 crore for the year ending march 2010.

THANK YOU