Chic- Shampoo Sachet

Dr Amit Rangnekar
Dec 2007

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

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 saltcame in 100 gm
packs,hesold it in 5 gm sachets
Whatever I make, I want the coolies and rickshaw
pullers to use. I want to makemy products affordable to
them, he used to say
Sachetsare going to be the product of the future, he
said. Butmy fatherwas a great innovator, but a poor
marketer
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 fromthe second year
1989- Office in Chennai, manufacturing in Cuddalore
Beauty Cosmetics name was restrictive
1998- in-house contest suggestedCavinKare
Cavin inTamil means beauty and grace, and C and K
(father's initials) spelt in capitals
Dr Amit Rangnekar
amitrangnekar@gmail.co

Snippet
Took me 3 yearsto getmy firstloan as banks
askedfor collateral, I had none. One bank gave
me a 25,000 loan, which we rotated &upgradedto
4 lakh & then 15 lakh. The bank managerwrote 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!

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
Dr Amit Rangnekar
amitrangnekar@gmail.co

Indian Shampoo Market 1980s

High

MNC Brands
Price

Shampoo Bottles

Local Players

Chik

Need
Gap

Low
Poor

Quality
Dr Amit Rangnekar
amitrangnekar@gmail.co

Good

Chik Targeting

Cost to Consumer

High

Chik

Low

Availability of Product
Dr Amit Rangnekar
amitrangnekar@gmail.co

The right
distribution
strategy must
make the brand
available to the
rural consumer
at a cost he is
Willing to pay
High

Target audience

Lower middle-class/
semi-rural (Sec B2,C,D)
MHHI Rs 1,5003,000
Females
Age group of 16-plus

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

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 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
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
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, CavinKares 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

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 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 startedgiving
1 free Chik Shampoo sachetin lieu of5Chik
Shampoo sachets only. Soon, consumers started
asking for Chik sachets only
Sales rose from Rs 35,000to Rs 10 lakh a month

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 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 roseto 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
Dr Amit Rangnekar
amitrangnekar@gmail.co

Taking on the MNCs

MNCs sold products in bottles, not in sachets and
sold only from fancy stores. Theydid not look at the
small kirana stores, nor at the rural market
We went to rural areas in South India where people
hardly usedshampoo. We showed them how to use it
by doing live demonstration ona young boy.
Weasked people to feel & smell his hair
Chik sponsored shows of Rajniknath's films. We
showed our ads in between,followed bylive
demonstrations.We distributedfree sachets among
the audience after every show, which worked
wonders in rural TN & AP. Aftereveryshow,our
shampoo sales went up3-4 times
Dr Amit Rangnekar
amitrangnekar@gmail.co

Consumers
start
demanding
Chik

Dr Amit Rangnekar
amitrangnekar@gmail.co

National footprint
Population size

Villages

< 1000

459465

70

1000-5000

58029

>5000

143248

21

1993- Chik shampoo mulled a national presence

Then, the Indian rural market only outgrew the
urban market, now it grows at double thepace
Chiks 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
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
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 HLLs Clinic
Plus

Dr Amit Rangnekar
amitrangnekar@gmail.co

Key factors in rural purchase

Factors influencing purchase of
shampoos in rural markets

% of respondents

Looking at the wrapper

60

Retailer recommends

25

Looking at the price

Logo identification

Doesnt bother to check

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
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 couldnt 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
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

Dr Amit Rangnekar
amitrangnekar@gmail.co

Rural Chik
Chiks 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

MP

55392

22

Bihar

45113

32

AP

28123

39

TN

16870

46

Orissa

55352
19
amitrangnekar@gmail.co

Dr Amit Rangnekar

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
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 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.
andthe number one in many other states as well

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 extractsfor dandruff and itching

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 usedfor fair complexion
Indica Hair dye- Baalon ko de dil ki umar
Ruchi Pickle sachets (2004)- No.1, 5000 tpa pickles
Chinnis Masala range

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

Dr Amit Rangnekar
amitrangnekar@gmail.co

Reasons behind CavinKares success

Teamwork is the main reason for our
success. We have good professionals
whowork really hard. The second reason of
our success is innovation and thirdly we
have executed innovative ideas well

Dr Amit Rangnekar
amitrangnekar@gmail.co