ChiK- Shampoo Sachet

Dr Amit Rangnekar www.dramitrangnekar.com

Case Objectives
• To understand • Indian rural dynamics & consumer behaviour • Highlight successful strategies that made Chik Shampoo the biggest shampoo brand in rural India

amitrangnekar@gmail.com

The concept of sachets
• C K Ranganathan, CMD, CavinKare, showed it is possible to beat MNCs even in FMCGs • Business- Started with Rs 15,000, now Rs 500 crore • “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 salt came in 100 gm packs, he sold it in 5 gm sachets ” • “Sachets are going to be the product of the future, as they would be affordable to all. But my father was a great innovator, but a poor marketer”

amitrangnekar@gmail.com

How Chik Shampoo was born
• Family: Launched Velvette shampoo sachet successfully in the South in the late 1970s • 1982- Ranganathan joined, differences, separated • Started Beauty Cosmetics • Chik named after father, Chinni Krishnan • Started with 20,000 sachets, but profitable from Y2 • 1989: Office- Chennai, manufacturing- Cuddalore • Beauty Cosmetics name- restrictive • 1998- in-house contest suggested CavinKare • Cavin (Tamil= beauty & grace), C and K (father's initials) spelt in capitals
amitrangnekar@gmail.com

Snippet
• “Took me 3 years to get my first loan as banks asked for collateral, I had none. One bank gave me a 25,000 loan, which we rotated & upgraded to 4 lakh & then 15 lakh. The bank manager wrote 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!”

amitrangnekar@gmail.com

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
amitrangnekar@gmail.com

Indian Shampoo Market 1980s
High

MNC Brands
Shampoo Bottles

Price

Local Players

Chik
Low
Poor

Need Gap
Good

Quality
amitrangnekar@gmail.com

Chik Targeting
High

Cost to Consumer

Chik

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

Low

Availability of Product
amitrangnekar@gmail.com

Target audience
• • • • • Lower middle-class/ semi-rural (Sec B2,C,D) MHHI Rs 1,500–3,000 Females Age group of 16-plus

amitrangnekar@gmail.com

Accessibility & Affordability
• Sachet success changed the shampoo industry structure • New consumer layers, mainly from rural pockets, could now afford shampoos • „Upper class‟ tag of shampoos fast faded away • Extremely cut-throat market emerged • Significant trade influence on what the consumer bought

amitrangnekar@gmail.com

amitrangnekar@gmail.com

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
amitrangnekar@gmail.com

Promotion
• Ad strategy- harness 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
amitrangnekar@gmail.com

Trials
• • • • • • • • Shampoos- poor penetration levels Many people had no clue how to use a shampoo Encouraging trials, key to rural success CavinKare‟s team travelled deep in rural pockets Trials on schoolboys Demonstrate how to lather and wash, comb hair 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”

amitrangnekar@gmail.com

School Demo

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‘Champi’ on schoolboys

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Promotion
• “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 started giving 1 free Chik Shampoo sachet in lieu of 5 Chik Shampoo sachets only. Soon, consumers started asking for Chik sachets only • Sales rose from Rs 35,000 to Rs 10 lakh a month

amitrangnekar@gmail.com

Innovation
• “Consumer insights in the Southern markets conveyed that women keep flowers in the hair for fragrance. We introduced for the 1st time, floral fragrances (rose, jasmine) in shampoos. The concept was a hit, and sales jumped three times from Rs 10 lakhs to Rs 30 lakhs a month”

amitrangnekar@gmail.com

1990s
• Chic, quite popular in the southern markets • Shampoo market growing at a healthy 15% • “When Amala endorsed, sales rose to Rs 1 crore a month! Each idea was rewarded by our customers” • Chic continued with popular cinema actors • 1992: extended celebrity endorsement to TV amitrangnekar@gmail.com • 1992: No 1 in South India

Taking on the MNCs
• “MNCs sold products in bottles, not in sachets and sold only from fancy stores. They did not look at the small kirana stores, nor at the rural market” • “We went to rural areas in South India where people hardly used shampoo. We showed them how to use it by doing live demonstration on a young boy. We asked people to feel & smell his hair”
amitrangnekar@gmail.com

Growth strategy
• Chik sponsored shows of Rajniknath's films • Flashed Chik ads in between • Followed up with live demonstrations • Distributed free sachets to audience after every show • Tremendous response in rural TN & AP • Shampoo sales went up 3-4 times after every show
amitrangnekar@gmail.com

Consumers started demanding Chik

amitrangnekar@gmail.com

National Footprint
• 1993- Chik mulled a national presence • Objective: Expand the market, attract new consumers in the category • Focus- largely rural, value-conscious sections in urban • Distribution- innovative trade schemes & consumer offerings

amitrangnekar@gmail.com

Rural dynamics
Population size < 1000 1000-5000 >5000 Villages 459465 58029 143248 % 70 9 21

• 1993-Indian rural market barely outgrew urban • 70% villages in India have population < 1,000 • Low accessibility, undeveloped local markets • How do you market your products to these villages?
amitrangnekar@gmail.com

Rural Dynamics
• Opportunity- 47,000 haats & 25,000 melas organised in such villages • Average daily business in these haats was Rs 2 lakh • Strategy: created rural wholesale network, ensure availability • “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”

amitrangnekar@gmail.com

Mid 1990s
• The shampoo market surged by 25% • Small packs contributed 40% of total shampoo volumes • Rural markets grew much faster than urban • Key challenge- rural reach and recall • Packaging critical for rural marketing • 1999- Chik, second largest shampoo brand in India(also in rural markets)- next only to HLL‟s Clinic Plus

amitrangnekar@gmail.com

Key factors in rural purchase
Factors influencing purchase of shampoos in rural markets % of respondents

Looking at the wrapper Retailer recommends Looking at the price Logo identification Doesn‟t bother to check

60 25 4 2 9

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Chik‟s response
• Make packaging & branding prominent to enable quick identification by the rural consumer • Create Chik- Mnemonic • Change pack to bring in design & colour elements • Enable „onshelf‟ differentiation and aided recall

amitrangnekar@gmail.com

Shampoo-nomics
• “Years back, a rural consumer recalled he used soap to wash his hair for ages, and 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 couldn’t 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 sounded ridiculous”
amitrangnekar@gmail.com

The 50-paise shampoo sachet
• “We worked backwards. Developing the formula & packaging took us over 2 years. Finally, we launched Chik shampoo sachet @ 50 paise in September 1999, the first ever such price point” • Price point helped penetrate deep rural pockets • Chik market share flared from 5.6%(1999) to 23%(2004) • Rural shampoo volumes grew at 2X urban sector • 2005: Chik Rs 100 crore brand • No.1 Indian rural shampoo, 65% rural market sales

amitrangnekar@gmail.com

amitrangnekar@gmail.com

Rural Chik
• “Chik’s 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 UP Bihar AP TN No. of Villages 107440 45113 28123 16870 MS % (Volume) 67 32 39 46 Rank 1 1 1 1

MP
Orissa

55392
55352
amitrangnekar@gmail.com

22
19

2
2

The Urban thrust
• Tangled hair- Common complaint in girls & women • Hot climate, difficult to maintain softness & shine • Unique formula – Active Double Conditioners • The iconic Chik Girl • Tagline- “Yun Kiya Ho Gaya” • Popular phrase

amitrangnekar@gmail.com

amitrangnekar@gmail.com

amitrangnekar@gmail.com

amitrangnekar@gmail.com

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. and the number one in many other states as well”

amitrangnekar@gmail.com

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 (Rs 20) 250 ml & 500ml • Anti Dandruff Shampoo, containing climbazole and lemon extracts for dandruff and itching

amitrangnekar@gmail.com

Mobile beauty parlours
• Unconventional media to entice consumers • “TVC are not enough to drive consumer trials. The mobile parlour exercise aims to provide a complete brand experience by having hair stylists use Chik on volunteers and distribute its Re 1 sachets as samples.” Viswanathan, VP • Chik Shampoo Parlour Vans- cover 900 towns/month • Reach: 50,000 hairwashes, touch 25 lakh people • Target- girls' colleges, market places & residential localities with 20-50,000 population • Expand to metros and Class I towns • Play TVC as stylists work on volunteers • Promotional spots on Radio Mirchi, on-site commentary & contests
amitrangnekar@gmail.com

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 used for fair complexion • Indica Hair dye- ”Baalon ko de dil ki umar” • Ruchi Pickle sachets (2004)- No.1, 5000 tpa pickles • Chinni’s Masala range

amitrangnekar@gmail.com

• • • • • • • • • •

2006-2007- CavinKare 500 crores 11% value share of Rs 1,500-crore shampoo market 19 per cent volume share of 63,000 tonne market No 2 to Clinic Plus, 29% market share 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
amitrangnekar@gmail.com

Reasons behind CavinKare’s success
• “Teamwork is the main reason for our success. We have good professionals who work really hard. The second reason of our success is innovation and thirdly we have executed innovative ideas well”

amitrangnekar@gmail.com

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