PGDM CORE (2018-2020)

Adaptive Market Leadership

Individual Assignment on CavinKare

By:
Kanika Swarup
Section: AB1
Roll No- 201812075

Course Instructor
Prof. Subodh Tagare

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Introduction
CavinKare Pvt., Ltd. manufactures and markets personal care and food products. Its personal
care products include ethnic care, skin care, and home care products, as well as hair care
products, including coconut oil; and food products include pickles, vermicelli, and peanut
candies. It markets its products in India, Nepal, Sri Lanka, Malaysia, Singapore, Bangladesh,
the United States, and the GCC region. It was formerly known as Chik India Ltd. and changed
its name in 1998. The company was founded in 1983 and is based in Chennai, India with a
plant in Haridwar, India.In CavinKare, Innovation led transformation from a pure Personal
Care player to a FMCG conglomerate with Dairy, Snacks, Food, Beverages and Professional
Care business.

Product Portfolio

Personal Care :Hair ,Skin and Home

Shampoo : Chik,Nyle,Meera,Karthika

Hair Wash Powder : Meera,Karthika

Hair Dye : Indica

Hair oil : Meera , Nyle

Cream/Lotion : Fairever, FE Mantra , Nyle

Talc,Deo : Spinz

Toilet Bowl Cleaner : Tex

Mosquito Coil : Dishoom

Foods

Pickles : Chinni’s,Ruchi

Spices Chinni’s

Vermicelli Chinni’s

Sweets Ruchi

Dry Fruits

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Snack Bar Chinni’s

Evolution of CavinKare
CavinKare was founded by C K Ranganathan in 1983, with a modest capital investment of
Rs 15,000 and with a single product. The company was called Chik India Pvt. Ltd., and its
product was Chik shampoo. The company targeted the local market and within a few years
emerged as a leading regional player in the shampoo market in South India. CavinKare's
strategy of outsourcing manufacturing activities was a major reason for its success. It helped
the company to keep the costs low and allowed it to focus on marketing and distribution

In 1990, CavinKare changed its name to Beauty Cosmetics, in line with its decision to establish
itself as a national player. The company hired professionals in various business areas such as
R&D, sales and distribution and expanded its network beyond South India. In 1993, the
company entered the non-cosmetic segment, by founding Packaging India, a wholly owned
subsidiary, to manufacture polymer and packaging material for in-house consumption and for
sale. Between 1991 and 1998, CavinKare launched five product brands - Meera Herbal Wash
Powder (1992), Nyle Shampoo (1993), Spinz Perfume (1997), Fairever Fairness Cream (1998)
and Indica Hair Dye (1998). In 1998, the company adopted its present name, CavinKare Pvt.
Ltd., to signify its change from a single-product company to a broader FMCG company,
encompassing various market segments such as hair, skin and personal care.

In November 2003, the Chennai-based CavinKare Pvt Ltd. (CavinKare), the Rs 2.64 billion
(bn) hair, skin and personal care company, announced the acquisition of the Andhra Pradesh
based Ruchi Agro Foods' pickle brand, 'Ruchi,' for Rs 150 million (mn).The brand was
expected to give CavinKare a firm footing in the food market in the region.

Success Story of CavinKare

The core purpose of top management was to contribute to the business objectives by developing
innovative, cost effective and superior products and processes. The hallmarks of Ranganathan’s
successful entrepreneurial journey has been his quick decision making skills. Ranganathan
worked hard and smart, making the right choices all the time, quickly reversing decisions that
were not yielding results, learning all the while, and playing to his strengths.

When he launched Chik shampoo in 1983, he introduced a premium egg variant that was priced
at 90 paise per sachet, 15 paise more than Velvette shampoo.

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 Good and innovative ideas: Ranganathan toyed with various business ideas, but
finally decided to compete with his brothers and manufacture shampoo. The idea to
launch a 50p Chik sachet, in a market full of Re 1 sachets, was pure gut feel.
The early adoption was driven not just by the sheer affordability, but the fact that many
Indian women washed their hair once a week — and a single-dose low cost product
was perfect fit for it.

 Luck favours the brave and is a genuine business reality: There was also a liberal
dose of luck involved. All said and done, making a dent in Velvet’s dominance was no
easy task. In fact, Velvet was doing so well it had become the generic name for ‘sachet
shampoo’.Ranganathan then thought up a scheme — buyers could exchange five empty
shampoo sachets and get one Chik sachet free

 Low Cost Philosophy: The company outsourced all of its manufacturing, until 2006 to
keep its costs low. It also entered no-credit deals with distributors. The idea is that a
whole different mind-set is needed to serve the rural market. In a specialised rural
system, everything is geared towards low cost, from distributors to salesmen and
logistics.

 Values mean money in long term: In the mid-nineties, CK got into some trouble with
the authorities over shortfall in sales tax dues. CK didn’t understand the nuances of
taxation, they were paying tax at the old rate of 12%, as opposed to the new 18% rule.
The company eventually went to court to pursue the dispute legally and eventually paid
the Rs 1.5 crore rightfully owed by them to the government.CK couldn’t compete with
their tax-evading peers on discounts, so they were forced to differentiate their products,
which grew their market share. Also decent talent was hired.

 Need Identification: Need for superior quality shampoo with affordable price.
Realized the gap for the need of herbal shampoo. Using consumer insights CK entered
into the fairness cream market. They did innovative packaging with sachets and low
units pack.CK targeted haats and melas to overcome difficulty of distribution in rural
areas.