Instant Recall, CavinKare Style

8/4/2019 Instant Recall, CavinKare Style

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Lison Joseph

Posted: Wed, Mar 25 2009. 9:46 PM IST

Instant recall, CavinKarestyleSmall is still beautiful for the grandaddy of

shampoo sachets; how CavinKare is now trying to

stay ahead

On demand: Koyada Somalakshmi (left), a

retailer in Nellutla village, Jangaon, says

instead of asking for just shampoo or oil,

customers are increasingly asking for specific

products. Harikrishna Katragadda / Mint

Print

Jangaon, Warangal: Till a couple of years ago, Vajramma would buy kunkudukai

(reetha or soapnut) from the Jangaon market, 4km from her village of Nellutla,

powder it with other natural ingredients and use the concoction to wash her hair.

She is “between 62 and 65 years

old”, and not your typical customerfor hair care products. But now

Vajramma is a regular buyer of

“Chikcham” and “the other shampoo

with the picture of a girl with long

hair” on the sachet, for what even

she considers a paltry 50 paisa.

“Chikcham” is Vajramma’s way of

asking for Chik shampoo that

CavinKare Pvt. Ltd launched in

sachet form for the first time in India

in 1983. Meera, another shampoo

available in sachets, has the picture

of a girl with long hair and a primary

ingredient in the product is kunkudukai .

Why exactly did Vajramma switch to shampoo sachets? It became difficult to find

kunkudukai in the Jangaon market and after her work at home and in the fields, she

barely had the time to collect the necessary ingredients and prepare the mix to wash

her hair.

“These days, everybody has money and they just get a shampoo sachet for 50 paisa

that has kunkudukai in it,” she says. Vajramma shops at her local retailer Koyada

Somalakshmi’s, who owns a small grocery store in Nellutla, a village with apopulation of around 2,500, some 90km north-east of Hyderabad.

Also See Jangaon (Map)

Chennai-based CavinKare is counting on customers such as Vajramma, in nearly

600,000-odd villages across India, to sustain its growth even in the face of slowing

demand in urban markets that have been hit hardest by a downturn in the economy.

When it ventured into the rural markets, CavinKare established an extensive

distribution network and then used retailer incentives to push its products. With the

competition catching up, CavinKare shifted focus to product differentiation through

Article - livemint http://www.livemint.com/Articles/PrintArticle.aspx?artid=FD40D

06-10-20



research in addition to getting even more aggressive and innovative with retailer

incentives.

“Initially, women would just ask for a shampoo and I would sell those that give me

the maximum benefit (as a retailer),” says Somalakshmi. However, of late,

Somalakshmi is getting customers such as Vajramma who ask for the “blue

shampoo” (Clinic Plus) or “black shampoo” (Chik) or the shampoo with “the picture

of a girl with long hair” (Meera).

Half-rupee success

After CavinKare launched Chik in 1983 for as low as fifty paisa, the product went on

to become a phenomenal success in rural markets.

Working for the early boarders of the rural markets bandwagon such as CavinKare is

the growth in rural demand itself, thanks to the increasing levels of disposable

incomes in rural households.

A recent Rural Markets Association of India study showed that healthy farm

production, government-backed employment guarantee schemes and the farm loan

waiver last year translated into higher spending power in Indian villages.

“Demand for FMCG (fast moving consumer goods) has definitely seen someconstriction in urban markets, and there is also a shift from higher-priced products to

lower-priced products,” says Ramesh Srinivasan, head of consumer markets at

consultancy firm KPMG. “Demand in rural markets, however, has not been impacted

despite the slowdown.”

Getting the pricing point and the product packaging right, especially the concept of

sachets, did wonders for CavinKare in increasing its market share in the rural

markets, which account for half its revenue.

“We made a conscious decision to keep their (rural consumers) affordability in mind

rather than our margins and devised our marketing strategies without compromising

on quality,” said chairman and managing director C.K. Ranganathan.

CavinKare sells products across various divisions including hair care, skin care and

personal care. Across its hair care products segment that includes Chik, Meera and

Karthika, at least 65% of sales come from rural markets, says Ramesh Viswanathan,

executive director.

For the overall industry, 52% of shampoo sales happen in the rural markets.

Country-wide, nearly 75% of shampoo sales take place in the form of sachets.

Last-mile travel

When it entered the rural market, CavinKare diligently established a wide network of

distributors to reach out to as many villages as possible. According to Vishwanathan,

putting in place “multiple distribution systems to ensure (the) product travels that

last mile” was critical to gain traction in the rural market.

Once the last-mile reach was ensured, the next priority was to create adequate

visibility for its products.

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.

“CavinKare products usually have


06-10-20



Optimistic frame: Gattu Venkateshwarlu, who

has been distributing CavinKare products in

Jangaon, Andhra Pradesh, since 1993, says

sales have been growing and his agency is yet

to see a slowdown. Harikrishna Katragadda /

Mint

1-2% higher margin for the

distributor than similar products from

competitors. There are other

incentive schemes also available,”

says Gattu Venkateshwarlu, owner of

Sri Sai Ram Agencies, a CavinKare

distributor in Jangaon village in

Warangal district of Andhra Pradesh.

Venkateshwarlu, who started

distributing CavinKare products in

1993-94, says that during the initial

years, wholesalers would pick up

CavinKare products worth around

Rs2,000 every month. That figure

currently stands at around Rs3 lakh

for Venkateshwarlu. “The sales have been growing continuously till date. We are yet

to see any slowdown.”

Wholesalers pick up products from Venkateshwarlu and, in turn, sell them to at least

25 retailers who reach a minimum of 20 villages in just one corner of Warangaldistrict alone. There are 23 districts in Andhra Pradesh.

To ensure better visibi lity for products, CavinKare enticed retailers with display

incentives, over and above all other benefits.

Product visibility

“Company (CavinKare) offers Rs100-200 (a month) to retailers just for displaying the

products prominently in store racks to ensure product visibility to potential

consumers,” says Venkateshwarlu.

To stay ahead in the competitive incentives game, CavinKare introduced the 8+1 and

12+1 schemes, where free bonus packs are given to retailers who buy a certain

quantity of CavinKare products.

To top it off, “There is a concept called ‘quantity purchased and sold’, wherein those

who procure more and sell more are given commensurate rewards,” says S. Jayaker,

who owns Niranjana Agencies, a wholesaler of household and consumer care

products in Jangaon.

As part of such a rewards scheme, Jayaker won a cycle last month by redeeming

points he earned by procuring and selling CavinKare products. Needless to mention,

Jayaker is happy to push CavinKare products.

The push strategy of offering competitive incentives to retailers helped CavinKare

scale up its rural market share, but knowing that the competition will catch upsooner or later, the firm started working on creating brand awareness so that

consumers would specifically ask for a CavinKare product and not just any shampoo

or oil.

Activities such as free distribution of shampoo sachets at festival venues were started

to raise awareness about CavinKare products. This has seen demand for CavinKare

products going up, evidenced by the increasing market share of the firm, says Vineet

Trakroo, vice-president (marketing) at CavinKare.

Raising market share


06-10-20



Along with creating brand awareness, CavinKare invested in product differentiation to

stay ahead of the competition.

Through a study by its markets research team, CavinKare learnt that a natural

ingredient called kunkudukai was widely used by women in rural Andhra Pradesh, as

well as in other parts of the country, to wash hair.

Taking its cue from the study, CavinKare introduced Meera (six years ago), and

Karthika (two years ago) shampoos in 50 paisa, Re1 and Rs2 sachets.

The brands were an instant hit and helped the company increase its sales and market

share significantly in Andhra Pradesh market, says Trakroo.

Karthika shampoo now occupies the third position brand-wise in Andhra Pradesh, the

first two being Chik and Hindustan Unilever Ltd’s Clinic Plus.

In a span of two years, the Karthika brand has managed to get a market share of 7%

in Andhra Pradesh while Meera, which was introduced around seven years ago, has a

market share of 15% in the state.

Consumer market analysts warn that demand in rural markets can be prone to

cyclical swings, depending on the monsoon that waters much of the country’s crops.

“If there is a bad monsoon and agricultural income takes a hit, then demand in the

countryside could shrink as well,” said Srinivasan of KPMG.

In fact, in the quarter ended 31 December, despite a good monsoon, the nation’s

agricultural output fell by 2.2 %, a factor that could have implications for disposable

income in the villages.

Armed with the experience of being in the rural market since the 1980s, CavinKare

chairman Ranganathan, however, isn’t worried. He has seen only growth and expects

to see more of the same in rural markets—slowdown or no slowdown.

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Instant Recall, CavinKare Style