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Name – Ria Rungta

Roll no. – 2017123102


Sec – ABC1
Subject- Adaptive Market Leadership

Case: Cavinkare Private Limited: Serving low income consumers.


Cavinkare has emerged as an important player in the Indian FMCG Market. This case deals with
the strategies adopted by the company to serve rural markets in India. It has not only survived cut-
throat competition from multinational players but also have had a sustainable high growth over the
years. This case deals with the challenges faced to put in place a strategy to make Cavinkare a
billion dollar entity in reality.
Cavinkare started out with a single product as a small partnership firm Chik India by Mr. C.K.
Ranganathan. Chik India was renamed as Beauty Cosmetics in 1990. In 1998, the company was
renamed as Cavinkare Pvt. Ltd. (CKPL). The company offers quality personal care, food products,
dairy and snacks.
Identification of customer needs-
Early 1980, Cavinkare identified that rural population of India represented a vast untapped market.
Rural markets contributed to almost 60% to India’s GDP. Most of the companies were ignoring
these markets and rural penetration level for hair products was considerably low as compared to
urban markets. There was a need for superior quality shampoo with affordable price. The targeted
customers had lower income, 1000-1500 per month. It launched Chik shampoo in sachets. In 1984,
sales increased from 0.5 million to 3.8 million in one year and the company raised 35 million in
1990.
The second need gap identified was the need of an herbal shampoo. The perception that shampoo
contain harsh chemicals that could damage hair had to be changed. Also, the shampoo was high in
price which led to affordability issues and the view that shampoo was more of a glamour product
rather than a hygiene product led to non-acceptance of the product in the market. In 1993, it rolled
out Nyle shampoo and positioned it as the safest shampoo to use. By 2001, Nyle was among the
top five shampoo brands.
Marketing communication –
The company educated the consumer to make them try out the shampoo. They associated with
people of similar wavelength in thinking, who will definitely take care of quality first and besides,
they have a strong system of quality monitoring. They relied heavily on radio and made use of
popular South India stars for radio advertisements. They also realized that the consumers did not
know how to use shampoo. So, they started aggressive road shows to educate villagers how to
lather, wash and comb hair. It distributed free samples went for large scale door-to-door sampling.
Packaging innovation: Sachets and low unit packs
Sachet shampoo was introduced in 1976 for velvette by Chinni Krishna. Ranganathan popularized
it through sales of Chik shampoo. In rural area, people used soap to clean their hair. 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
Name – Ria Rungta
Roll no. – 2017123102
Sec – ABC1
Subject- Adaptive Market Leadership

the rural areas of Tamil Nadu and Andhra Pradesh. Sachets had high acceptance and helped in the
risk of trial. It also introduced innovative packaging- single use perfume, easy trail of new
products.
Thats 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
Delivering customer value through affordable products-
Cavinkare focused on volumes and scale of economy resulting in lower costs of production. It
introduced quality perfume at an affordable price, launched Spinz in the year 1997. The product
was introduced in bottles as well as small packs called “Dab-on”.
Cost Advantage-
 Reduced structure of cost
 Outsourced the manufacturing operation.
 Decreased overhead cost.
 Nimble and agile organization.
 Outsourcing helped to focus on marketing and distribution.
 Supported by its world class R&D structure.
Distribution Access-
 Difficult to gain distribution access in rural areas (far off places, no solid roads, scattered
population)
 Targeted Haats and Melas
 Served 4000 customers
 47000 haats and 25000 melas in a year
 Sales was Rs. 0.2 millions in haats and Rs. 1.43 million in melas.
The Journey –
 Succesfully competing with big companies
 In 2001, Chik & Nyle became leading brands (Rs. 85 millions)
 In 2003, turnover of 2640 million and estimated to be 52 billion by 2012
 Two way strategy – Increase market share of its current products and Diversify into new
business.
Conclusion –
Cavinkare believes that its core competencies are research and development, brand building, and
distribution management. Cavinkare aims to be the preferred choice for customers at home and in
every market, leading with conviction and innovation.

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