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Product Life Cycle of Chik Shampoo in Rural India

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Rural MarketingGroup 8

Presented byq Deepankar 08PG0010 q Toshal 08PG0027 q Arpit 08PG0109 q Venugopal 08PG0146 q Roy Stephen 08PG0236 q Catherin 08PG0250 q Ketan 08PG0314 q Varun 08PG0342 q Sandhya 08PG0364

Rural Market Half the national income is generated in the Rural India. 2/3rd of the population live here. A World Of Opportunities and Challenges Traditional Outlook Large and Scattered market Major income from Agriculture

Challenges Lower literacy rates Seasonal demand Spurious goods Different from Urban market Lower per capita Income Many languages, Dialects Underdeveloped Lack of Physical communication, Infrastructure

Case Objectives To understand the Indian rural dynamics and Indian Rural consumer behavior. To Provide a backdrop of Indian Shampoo Market in rural context To highlight the successful strategies that Chik Shampoo employed in the rural market

Corporate Vision "We shall achieve growth by continuously offering unique products and services that would give customers utmost satisfaction and thereby be a role model In 1983 with a single product, CavinKare started out as a small partnership firm. The Company that began its journey as Chik India Ltd was renamed as CavinKare Pvt. Ltd (CKPL) in 1998. With innovative Entrepreneur C.K. Ranganathan at the helm, CavinKare emerged into a successful

Established with an initial investment of Rs 15,000 in 1983. CavinKare has set an ambitious sales target of Rs 5,000 crore by 2012

Birth of Chik Shampoo late 70s :Successful launch of Velvette Shampoo in the South 1982 : Ranganathan joined. But seperated over differences with family members. Started beauty cosmetics ,with Chik Shampoo named after his father Chinni Krishnan Chik began with only 20,000 sachets but made profits from second year 1989 : Office in chennai, manufacturing in cuddalore 1998 : in-house contest suggested CavinKare Cavin in Tamil means beauty and Grace, and C and K (Fathers Initials) spelt in capitals.

CHIK SHAMPOO Just a mention of Chik Shampoo today gives rise to varied perceptions. To the rural and semi urban population of India, it is the preferred daily shampoo. To the market and its players, the second largest selling shampoo in the country.

Chik Shampoo identified a humongous opportunity in rural and semi urban India and created waves with its entry into these markets. Combining innovative sachet packing, strategic pricing (At Re.1 and 50p) and a strong and motivated distribution network, Chik Shampoo transformed the very nature of shampoo packaging and usage.

The Concept of Sachets Whatever I make, I want the coolies and rickshaw pullers to use . I want my product affordable to them Sachets are going to be the product of future 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 pack, he sold it in 5 gm sachets

Shampoo market in IndiaEarly 1980sHigh

Price

High Poor

Quality

Good

Target Audience Lower Middle Class Semi Rural (Sec B2, C, D) Monthly household income of Rs 1500 3000 Females in age group of 16 - plus

Promotion Trial and free samples Ad Strategy based on the powerful appeal of cinema among common masses Innovative radio ads based on popular cinema dialogues, unlike plain radio jingles of competitors Popular cine stars endorsed Chik Amala, Khushboo, Manorma and Charlie Radio used as a sole mass advertising medium Annual ads spend about Rs 2 Lacs Cinema is the most cherished means of family entertainment and cine stars have cult following in south. Therefore the communication strategy was to leverage

Multinational companies sold products in big bottles and not in sachets and theysold only from fancy stores. MNCdid not look at the small kirana stores, nor did they look at the rural market. CHIK went to the rural areas of South India where people hardly usedshampoo. Showed them how to use it, did live demonstration ona young boy and

Shampoo Rural MArket CavinKare- Pioneering attempt to offer shampoos in small pillow packs Market flooded with 70 odd small shampoo labels with little differntiation Velvette (family business), synonymous with sachet shampoo, aggressively marketed by Godrej. Consumers will ask for velvette but walk with whatever label the retailer gave them Many never knew the difference, for others it did not matter

Shampoo Market Urban/Rural split-up (volume)35 % RURA L U RBA

65 %

Chik moves up the value chain Chik Satin- bottle shampoo is priced at Rs 56 for a 200 ml bottle While Clinic Plus is priced at Rs 63 and Sunsilk at around Rs 87 at the higher price point.

Problems in entering bottle shampoo Chik ranks poorly in terms of quality as compared to the bigger brands Consumer perception rates Clinic as a higher-end brand while Chik is the economical shampoo The company faces in-house competition from its own herbal shampoo brand Nyle, a popular brand in the metros

Competitors Hindustan Unilever Ltd. (HUL), Procter & Gamble Company (P&G) Dabur Himalaya Colgate-Palmolive Indian shampoo market, where sachet (7 ml) format accounts for 75 per cent of the total sales, Chik has been bringing in 90 per cent of its sales in this format.

2004 -HLL had launched sachets at 50 paise and Re 1 compared to its rival's (Procter & Gamble) sachets at Rs 2 and Rs 3 for its three brands. P&G had priced its sachets Rejoice at Rs 2, and Pantene and Head & Shoulders at Rs 3 each. Such an offer (buy one, get one free) was the company's first in 10 years

Bangalore: ``gold maal hai bhai, sab gold maal hai.'' sachets of clinic plus and sunsilk that consumers can wash their hair and land up winning prizes in gold: one first prize of 2.5 kg of gold, 5 second prizes of 250 gm of gold and 4,400 third prizes of gold coins.

Clinic Plus multi-sachet a pack of 4 targeted at a family of 4 for Rs 3. HUL also launched a Clinic All Clear triple pack shampoo sachet for Rs 5. Marico recently launched the Rs 4 sachet of its Hair & Care product Silkn-Shine. Marico also offers Parachute Advanced Starz shampoo sachets for kids at Rs 3. Chik goes to court wins against HUL

Chiks ReactionVariants and Innovative promotions Promotional and sampling exercise in Tamil Nadu, which is the largest market for Chiks Jasmine variant. Sixteen bus terminals across the State will witness this promotion. Prominent flower markets in Chennai have also been done up with the new Chik Jasmine branding. The prices remain at 50 paise and Re 1 for its sachets and Rs 30 for a 100-ml bottle. The company aims to raise the market share (volume) of Chik from 18.5 per cent to 25 per cent in the next two years.

Recent activities In March, the company also launched Chik Floral. The bigger markets for Chik are Andhra Pradesh and Uttar Pradesh, where the sales come from the Chik Black variant. CavinKare will soon launch another fairness cream brand, Chik Fairness Cream, targeting the mass segment. The new brand will be sold in two packs - 25 gm for Rs 10, and Rs 2sachets

Worry worry worry. Industry observers also point out that despite being launched in the metros in 2000, Chik is hardly visible in retail outlets The shampoo bottle business has been dropping industry-wide, he said, with users downtrading to sachets or switching brands. Sachets account for about 82 per cent of the Rs 2,400-crore shampoo market.

Facts n figures 20% share of India's Rs 930 crore Indian shampoo market, Chik is firmly rooted in the mind. The shampoo market in India was estimated at Rs. 21.41 billion per annum as of February 2008, growing annually at a rate of 14.5 percent.

Accessibility and Affordability The success of sachet changed the structure of the shampoo industry New layers of consumers, mainly from rural pockets and could not afford shampoos The upper class tag attached to the shampoos fast faded away Extremely cut-throat market emerged Significant trade influence on what

Distribution strategyHigh High

Cost to custo mer

Low

Availability of product

High

Conquering the MarketTRIALS Shampoos getting encouraging trials from rural consumers, but extremely low penetration levels Many people had no clue how to use a shampoo To encourage trials, CavinKares team travelled extensively in rural pockets. Trials on school boys Significant impact in FREE SACHET SCHEME 1 Chik Shampoo Sachet in lieu of 4 empty sachets of any shampoo Later 1 Chik Shampoo Sachet in lieu of 5 Chik shampoo sachets Sales went up from Rs 35000 to Rs 12 Lacs a month

Turning PointFloral Fragrence Shampoo Southern Cine Stars

Consumer Insight Southern Women keep flower in hair for fragrance Introduced Jasmine and Rose Fragrance shampoo Sale went up from Rs 12 Lac to Rs 30

Cinestars Amala, Khushboo, Manorma and Charlie Popular among rural people Sales went up to Rs 1 Crore a month

Recommendations Variants and Innovative Promos State sensitive instead of Nationalizing Focus on strengths Change Mindset Improve packaging for bottles Totally different brand

The SuccessTeamwork 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.

Thank you.