How Chik Shampoo was born

I named it Chik Shampoo after my father. The product did not succeed immediately; we learnt many things during the
process. In the first month, we could sell 20,000 sachets and from the second year, we started making profits.

I moved to Chennai in 1989 but our manufacturing unit continued to be in Cuddalore. It took me three years to get the
first loan because banks asked for collateral. I did not have any. But one particular bank gave me a loan of Rs 25,000 which
we rotated and later upgraded to Rs 400,000, Rs 15 lakh (Rs 1.5 million), etc.

You know what the bank manager wrote in our loan application? 'This person does not have any collateral to offer but there
is something interesting about this SSI unit. Unlike others, this company pays income tax!'

I must say my business never looked back because I was very particular about paying income tax.

Strategies that made Chik Shampoo No. 1 in South India [ Images ]

When Chik entered the market, Velvette Shampoo was being marketed aggressively by Godrej [ Get Quote ]. But a scheme
of ours became extremely successful -- we exchanged five sachets of any shampoo for a Chik Shampoo sachet, free.

Later, we altered the scheme -- we started giving one free Chik Shampoo sachet in lieu of five Chik Shampoo sachets only.
Soon, consumers started asking for Chik sachets only. The sales went up from Rs 35,000 to Rs 12 lakh (Rs 1.2 million) a
month.

When we introduced jasmine and rose fragrances, our sales went up to Rs 30 lakh (Rs 3 million) per month and with actor
Amala as our model, our sales rose to Rs 1 crore (Rs 10 million) a month! Each idea of ours was rewarded by our
customers. There has been no looking back since then.

Our market share increased and in 1992, we became the numero uno in South India. It took nine years for me to overtake
my brothers' business.

How Chik Shampoo conquered the rural market

Multinational companies sold products in big bottles and not in sachets and they sold only from fancy stores. They did not
look at the small kirana stores, nor did they look at the rural market.

We went to the rural areas of South India where people hardly used shampoo. We showed them how to use it. We did  live
demonstration on a young boy. We asked those assembled to feel and smell his hair.

Next we planned Chik Shampoo-sponsored shows of Rajniknath's films. We showed our advertisements in

between, followed by live demonstrations. We also distributed free sachets among the audience after these shows. This
worked wonders in rural Tamil Nadu and Andhra Pradesh. After every show, our shampoo sales went up three to four times.

Today, the Indian rural market is growing at a pace double than that of the urban market.

Shampoo market share

In the last two to three years, our market share has come down though we are growing. It is mainly because of the anti-
dandruff shampoos in the market. We do not have an anti-dandruff shampoo yet. From 0 per cent, the anti-dandruff
shampoos have taken over 25 per cent of the market. 

Only 75 per cent of the market, therefore, constitutes ordinary shampoos. We hold 20 per cent of the market share. 

But we are the largest brand in rural Uttar Pradesh [ Images ], Andhra Pradesh, etc. and we are the number one in many
other states as well.

Recently Ghari detergent has surpassed several multinational brands to become the second
largest-selling detergent in the country. Three years ago, Ghari had a share of 10 per cent which
now stands at 17%, second largest in Indian market. Out of Rohit Surfactants’ (Parent Company)
Rs 1,940-crore turnover in 2009-10, Ghari contributed as much as Rs 1,825 crore.

Question arises how Ghari Detergent, a Kanpur based brand with low advertising and
promotional activities managed to defeat brands such as Tide and Nirma.

The answer lies in beautifully carfted strategy, but before that let’s have a look on some industry
statistics to gain a better understanding
  

 
 

What Ghari Did (The Strategy):

1. Select a Profitable  and Force Concentration: In military terminology Force

concentration is the practice of concentrating a military force, so as to bring to bear such
overwhelming force against a portion of an enemy force that the disparity between the
two forces alone acts as a force multiplier, in favour of the concentrated forces. Ghari
also realized that it can not beat Giants like HU and P&G due to their financial muscle.
So it selected Uttar Pradesh, with a population of 167 million (highest in India) and
accounts for over 12% of the country’s FMCG sales. Ghari also implemented extensive
dealer network throughout the state. Thus, of the 3,000 Ghari dealers in the country, 900
are in Uttar Pradesh — 25 of them in Kanpur alone. Furthermore, nine of the company’s
18 manufacturing units are in Uttar Pradesh 
2. Know your consumer and reason to people consumer your product: Ghari focused
on housewives in small town and villages which are extremely value conscious buyer and
willing to switch brands. Ghari realized that the only differentiating factor it can offer is
the value of money. To offer value for money Ghari management settles the net profit
margin of 9% against the industry standard of 12 to 13% for the premium brands. What
 may work in Ghari’s favour is the higher profit margin of 9% the company offers its
dealers; rivals seldom offer better than 6% or 7% 
3. Be innovative in reaching the consumers:  With only 35 crores of budget allotted to
Marketing and promotional activities. Ghari detergent goes to train.  
4.
1. The first campaign was the Ghari Detergent Express (a summer special) in 2008
that ran between Lucknow and Guwahati for two months
2. Taking the cue from there, Ghari has now advertised in Pushpak Express that runs
between Lucknow and Mumbai. The brand can also be seen on railway crossings
in West Bengal and Uttar Pradesh. Advertisements also being displayed inside the
bogies of Swarna Jayanti Express (from Trivandrum to Hazrat Nizamuddin in
Delhi) last year that cuts across three or four states in south India

In addition, Rohit Surfactants promotes Ghari at roadside shows, magic shows and exhibitions in
smaller towns and cities. Customers are unlikely to see other brands at these places — an
innovative idea to break the clutter. The magic shows have given Ghari good visibility in cities
like Jaipur, Indore, Kota, Alwar and Kanpur. About 30 company-owned vehicles are used for
out-of-home advertising. Of late, the company has taken some tentative steps towards the
popular media. It has sponsored a show, Rakt Sambandh, on NDTV Imagine.

Case of Ghari detergent highlights that how a mediocre brand can compete successfully with big
brands with a clear strategy and vision.

But in the same time sacrificing your margin and competing on the basis of price alone are not
the part of sustainable competitive advantage and journey ahead is not going to be a cakewalk for
Ghari Detergent.