Entrepreneurship and New Ventures Case Analysis

Case:

C K Ranganathan
Submitted By: Group 4 Paul Jinto (127) | Arka Biswas (132) | Ashima Aggarwal (135) | Kunal Kumar (204) | Amit Das (305)

Question:
Assess the effectiveness of the marketing strategies followed by C.K. Ranganathan. Do you think that it is an innovative strategy? If yes can a similar strategy be used to promote any other product launched in the Indian market?

Answer:
C K Ranganathan knew that an innovation will be successful only if it is marketed properly. He founded Chik India in 1983 and targeted rural market that was not being targeted by other shampoo companies. In this process, he focussed on all the 4Ps of the marketing mix, i.e. Product, Price, Place and Promotion. Product: A basic product, the shampoo. Later, to differentiate his product from others, Ranganathan incorporated rose and jasmine fragrances into it. He also sprayed fragrance over all the consignments before sending them to the stockists for the purpose of letting the stockists appreciate the fragrance. Price: Chik Shampoo was available in small sachets priced at 90 paise and later at just 50 paise when competitors were charging Rs 2. The loss due to charging low price was compensated through high volumes. Place: Like other elements of the marketing mix, marketers need to be very innovative in shaping the distribution network for rural markets. Ranganathan created his own distribution network rather than depending on the network of large manufacturers. Chik shampoo was distributed through small kirana shops in the villages instead of fancy urban stores.

Promotion: For rural consumers the message has to be simple and logical due to lower literacy level and diversity in language, culture and lifestyle. Ranganathan organized live demonstrations and Chik-shampoo sponsored shows of Rajnikanths films, where their advertisement was shown. They chose South Indian actress Amala for advertising their shampoo to the rural population. Ranganathan even decided to give one Chik shampoo free to every customer who brought five empty shampoo sachets. With the help of innovative marketing strategies, annual sales of Chik shampoo grew from 35,000 sachets to 35 lakhs sachets, and later to 10 million within a few years. In 9 years, Chik shampoo overtook Velvette shampoo and gained second largest market share in India after Clinic Plus of Hindustan Unilever. With increasing revenue, the company launched a series of other personal care products, food and home products. It also took its operations international by marketing its brands across more than 13 countries. CavinKare tried to implement a similar strategy for other products like pickles and toilet cleaners. With the help of companys R&D department, the company was able to introduce successful sachet packaging for both the products targeted at the rural and semi-urban population. Other products like face creams, hair dye, talcum powder, etc. already come in sachet packaging priced low to provide value for money to the consumers. More companies are following this route of introducing smaller SKUs of their products priced in the range of Rs 3-10 to tap the rural market.