CavinKare Ltd.

Challenges in Rural India

Rural Market India Context

3 /4th of the population is in rural. 1/3rd of the National Income is generated by

rural market.
Middle class rural India having more disposable

income than urban India.

Vast difference in lifestyle between urban and

rural India.
Brand Choices are different as compare to urban

India.

Rural Market Change is in Progress

Shifting from traditional to new ways.

-E.g. Neem daatun to Colgate paste, Cow dung to Coil or Mats. Use of manufactured inputs like fertilizers , high yielding variety of seeds etc. Increasing influence of rural youth in households who are more open to fresh concepts, better educated and aspiring . Increasing brand awareness through cable network across India.

Personal care-Market Opportunities

Between 1994 & 1998 skincare product &

toothbrushes doubled in value , shampoos expanded 2.5 times. Hair Care products are growing very fast. 130
250 Hair Oil Shampoo Hair Colour Conditioners

1300 850

Market Value in Rs. Crore

Market for Shampoo

Penetration Level of 12% in rural India & 36% in

urban India. Shampoo Market dominated by mainly 3 players HLL 65% by volume share. CavinKare 19.8% volume share. P & G is only other large player in this category. HLLs long established ties with retailers & distributors probably acts as an entry barrier for new entrants. India is 4th largest shampoo market.

Major Barriers for Shampoo Industry

Perception that shampoo contains Harsh

Chemicals.
High Price View of Shampoo more as a glamorous product

rather than hygiene product.

Counter Measures
High Price Scaling down prices to increase

volume sales but it also lowers the profit margin. Viewed as glamorous product Adding utility in shampoo e.g. Anti-dandruff Shampoo , shampoo for dry, normal & oily hair. Use of chemicals Introduced Herbal Shampoo Products claim to use shikakai, amla , & other indian herbs. but this shampoo requires larger quantity to replicate the result of synthetic shampoo.(90% sold in urban markets)

CavinKare Ltd.
Chennai based Rs. 400 Crore company.

10 lakh outlet in India, serviced by 1,700

stockists. Primarily into 2 categories Hair Care and Skin Care Care & fragrances Hair Care Personal Skin Care
Chick Shampo
Karthika Shikakai Shampoo Meera Badam Shampoo Meera Herbal Shampoo Nyle Herbal Shampoo

Chik Talc
Electrix Perfume Indica Hair Dye Raaga Cool Spinz Deodorants

Fairever
Mantra Fairness Cream Nyle Herbal Cold Cream Nyle Moisturising Lotion

Growth of CavinKare Ltd.

CavinKare has been growing at an Average

growth rate of 31%. Over the past 10 years. CavinKares shampoo business grown faster than overall market.
Year 1998 1999 2000 CavinKares Growth 20% 4% 34% Overall Markets Growth 16% 1.7% 10%

Positioning
Moving in as a regional player sidestepping big

competitors.
Positioned themselves as a Value-for-money

brand.
Finding unique niche for each brand like CHIK

shampoo developed as a rural product.

Focused on scale down versions of its brands &

herbal shampoo.

Strategy
Value Pricing

Product performance
Brand Building

There are 3 major elements to this strategy Strong research & development. Investment into advertising processes. Outstanding efficiencies in manufacturing & sourcing for good pricing.

Strategy for CHIK Shampoo

Primarily targeted at the rural market. Rural market is a key driver of sachets. Introduced smaller 50 paise sachet . Offered floral fragrances for the first time in shampoos

(based on consumer insight in southern markets) Result: Sales jumped upto three times.
A new bottle of 50 ml at Rs. 6 has launched while

major player having 100 ml bottles & above.

Rural Penetration
Rural Penetration of CHIK Shampoo
500000 400000

45946 5

Population No. of Size Villages Less than 1000 14324 8 58029 459465

% of Total 69.6

300000
200000 100000 0

1000 to 1500
More than 1500

58029
143248

8.8
21.6

Less 1000 to More than 1500 than 1000 1500 No. of Villages

Market share of CHIK

Rural Market Share
25% 23% 22% 20% 9% 15% 15% 11% Market Share

Overall Market Share

40%

51%

CHIK Clinic Plus LUX

10% 5% 0% 1999

4%
2000 2001 2002

1998

Rural Hold of CHIK

States No. of Villages Market Share in Volume in % 66.86 21.96 31.82 39.01 45.77 18.42 Position

UP MP BIHAR AP TN ORISSA

1,07,440 55,392 45,113 28,123 16,870 55,352

1 2 1 1 1 2

Promotion
Demonstration camps on how to lather and

wash, comb hair & show the difference. Benefit : Breaks the ice & made people comfortable with the concept.
Anyone could take empty shampoo sachets to a

retailer & take a CHIK sachet for free. This method used to encourage trials.
CK made the low-price sales promotion scheme

as the permanent feature of their business model.

Factors which affects sales in rural market

S. No. 1 2 Factors Looking at the wrapper Retailer recommends % of respondent 60 25

3
4 5

Looking at the price

Logo identification Doesnt bother to check

4
2 9

Recommendations/Suggestions
Put printed ads at large congregation points like

village markets and fairs. Promotion by introducing celebrity. Promotion through supporting social causes like children's education. Introduced a new product CHIK shampoo for men. Hiring & training local people for sales. Take feedback of customers through retailers.