Adaptive Market Leadership

Individual Assignment on CavinKare

By:
Shubham Tiwari
Section: D2E
Roll No- 201831045

Course Instructor
Prof. Subodh Tagare

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CavinKare case: Tapping the Untapped

Company Profile
It was started by Mr. C.K. Ranganathan. The brand took 20 years to reach the position it
holds today in FMCG market. There are several products which consist of Chik
(Shampoo,Talc), Meera (Herbal powder, liquid hair wash, hair oil etc.), Nyle, Fairever,
Raaga, Karthika. The company was initially named as Chik India in 1983, which went on to
become Beauty Cosmetic Private Limited in 1990 and finally changed its name to CavinKare
Private Limited.The company saw a significant growth which can be seen from its turnover
value rising from Rs. 850 million to Rs. 2640 million in just 4 years. Since 1994 onwards, it
has been growing at a compounded annual growth rate o about 31%.

CavinKare made innovations in their ideas by interacting with people at very ground level to
seek what their target customers really wants. It was very important to fill the gap-the rural
customers. So C.K. Ranganathan, understood this and started to tap the rural area customers.
He started a small company with only Rs. 15000 in 1983, called Chik India. The company
saw slow and steady growth which led to turnover of Rs. 850 million in 1998-99. The
company was later named as CavinKare.

Growth during Initial years (Rural)

The company saw an opportunity where rest of the companies did not. In India majority of
the population lives in villages or belong to rural area. Most of the known brands were selling
their products to urban class people only. This created a mindset in the people’s mind that
shampoo belongs to only the rich who have enough disposable income. Due to this, the
awareness of use of shampoos was less in their targeted audience of lower middle class and
rural population. They advertised their products by using popular stars in advertisements in
order to create awareness among their targeted audience. Even after those efforts, they were
still unable to make big sales. So, after that they started interacting with people living in rural
areas and found out that most of them could not afford current price of the shampoo which
was priced at Rs. 2 per sachet. CavinKare then devised cost effective shampoo production
keeping the quality intact.

They also started the scheme of giving 1 free Chik shampoo sachet in lieu of 5 Chik shampoo
sachets. Soon the customers started asking for Chik sachets only. The sales went up from
Rs. 35,000 to Rs. 12 lakh a month. They also introduced jasmine and rose fragrances, which
made their sales jump to Rs. 30 lakh per month.

The rural market accounted for about 74.27% of population of India and contributed almost
60% to India’s gross domestic product. The rural markets significance for low priced

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products was very evident. In the exhibit we can clearly see that the low income group
households comprised of maximum market share of approximately 80%.

Challenges Unlocked

 Educating consumers
 Single serve sachets
 Innovation
 Outsourced manufacturing operations
 Price performance relationship
 Extending distribution reach

Actions that lead to success of CavinKare

The rural market was untapped and underlooked by the already existing players in the market
approx. 3/4th population was living in the rural market and which was untapped by major
players and the penetration and the distribution was low.

The purchasing capacity of local people is not that in rural areas and they have less money to
dispense so introducing a new variety of low cost and one time use item motivated the people
to think beyond their income and trying an 8 ml pack was not a big deal where other players
was restricted to big bottle of shampoo.
Understood the amount that people spent on soap and other product and multiplied with the
family expense then changed it with traditional ways of hair washing.

 Distribution is the key apart from unconventional method, the company

hired professionals for sales and distribution and expanded its network
beyond South India.
CavinKare targeted HATS & MELA’s to reach interior parts of rural India
Which helped them setting up from distribution strategy in the initial
phases, apart from the service charges CavinKare also gave retailers a
Chik Sachet free for every 4 empty sachets they get from the consumer.

Shampoo introduced with floral perfumes which was liked by the rural people as also they
introduced larger pack of bottle at lower price.

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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
Shampoo adaption at a very large scale is big problem and is planning to tap equity market in
next couple of years. The next phase of growth is likely to come from from inorganic growth
and is likely to grow more during the upcoming years.

Smart marketing and clear product positioning not only ensured CavinKare's growth but
also helped the company broaden its product portfolio extensively. The company now
markets ten major brands. Over the years, CavinKare has achieved a competitive edge with
sound understanding of mass marketing dynamics. The company offers quality Personal
care (hair Care, skin care, home care) and Food products borne out of a keen understanding
of consumer needs and keeping up company's the values of innovation and customer
satisfaction.