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CavinKare Private

Limited
GROUP-8
Introduction

 Mr. CK Ranganathan, the Founder Chairman


 Started from Chik India in 1983with an initial investment of Rs. 15,000
 Changed its identity :
– 1990 :Beauty Cosmetic Pvt. Ltd.
– 1998 : Cavinkare Pvt. Ltd.
– Products : Personal Care, Food, Beverages, Dairy and Snacks
Vision and Mission

 Aim to reach 52 billion revenue by 2012


 Current turnover 5 billion
 Try and build cash cows to increase revenue and compete with
players with deep pockets
 Continue with the companies strategy of innovation
 Target the rural market segment
What has been the performance of CavinKare in the market
so far?

• Distant second by a wide margin in market share in most of their categories


• They are Market Challengers
• They are into personal care, foods and International Business (Strategic Business Units)
• Three Major FMCG Categories ( market size)
1. Personal Care (RS 117000 Million)
2. Household care (Rs 66000 Million)
3. Food and beverage (Rs 4510000 Million)

• Food production business grown 10 times in 4 years (2006-07)


• In the year 2006-07 the turn over of CavinKare was 5 billion
• The company had all-India network of 1,300 stockists catered to over 2.5 million outlets
• Trends in Vogue has high potential to provide the much needed growth acceleration
• CavinKare registered its footprint in neighboring countries like Bangladesh, Nepal,
Srilanka, Malaysia, Indonesia.
• CavinKare invested heavily in innovation and advertising.
What are the key capabilities that helped CavinKare establish its foothold in
the Indian FMCG market?

 CavinKare focused on innovation and research and advocated“ creating


competitive advantage through innovation”
 CavinKare unlike other FMCG invested in basic research, as a backbone for new
product development
 CavinKare encouraged Intrapreneurship
 The pase of work from idea to execution was very fast
 Extensive Customer interaction. Every employee had to visit15 customers/month , 30
min each.
 They reached the lowest end of retail serving population of less than 2500( Sales and
Marketing)
 They were centrally manufactured, but packed regionally to ensure consistent quality
and cost reduction which also ensured local variations in terms of packaging,
seasoning and garnishing.( Operations)
What were the strategic reasons behind CavinKare's decision to diversify?
Is it justifiable for the company to venture into an entirely new business
instead of focusing on its current business?

 They could use Trends in Vogue as a cash cow for the diversification
 Expansion in salon business will provide the company with much-
needed acceleration for growth
 Men’s grooming market was expected to grow and CavinKare
found good potential
 It was distant second in the market share of many categories it
served in, CavinKare wanted to change this
 The complexity of the manufacturing process in the instance of food
products made it extremely difficult to earn high margins. Hence
diversification.
Assuming there is no price war, should the company enter the soaps &
detergents market? How would the current price war between the two
FMCG giants impact this decision?

 Rising Input Cost


 $370 per ton in Jan 2006 to $450 per ton in Nov 2006
 This will significantly affect the operating margins
 Fragmented market
 It is not preferable for CavinKare to enter soaps and detergents
market.
 Current price war between FMCG is very cut throat
Identification of Consumer Needs

 First identification in the early 1980’s:


– Need for superior quality shampoo with affordable price.
–Clinic plus and shampoo targeting urban area
– Introduce chik sampoo in 1983
– Targeted consumers having lower income 1000-1500 per month
– In 1984, Increased the sales from 0.5 million to 3.8 million in 1 year
– In 1990, raised to 35 million
Identification of Consumer Needs
Contd
 Second identification gap:
– CavinKare realized the gap for the need of herbal shampoo
– In 1993, it rolled out Nyle shampoo.
– Positioned it at the safest shampoo to use.
– By 2001, Nyle was among top five shampoo brands
Delivering Customer Value through
Affordable Products
 It focus on volumes and scale of economy resulted in lower costs of
production.
 CavinKare entered the perfume business to introduce quality
perfume at an affordable price.
 It launched perfume brand Spinze in the Year 1997.
 The product was introduced in bottles as well as small packs called
“Dab-on”.
Packaging Innovation: Sachets
and Low units pack
 Sachet shampoo introduced in 1976 for velvette by Chinni Krishnan
 Popularized by Ranganathan through chik(LUPs)
 High acceptance
 Helped in the risk of trial
 Innovative packaging
– In 2000, introduced single use perfume ‘c’
– Help trial use and new users to product
– Concept of “Once a day”
Diversification into New Businesses

 Entered into food and retailing business


 Entering to the soap and detergent
– Organic and non-organic route to grow
 Entry into food– Launched pickles to grow-Chinni
 Retailing Ambition
– Branded and skincare salon
– Invest 250million and open 250 salons named green trends
Thank You