Individual assignment

Submitted by
Rohit Trivedi
Roll no.-2015297
Sec-EF

Cavinkare private limited: Serving Low Income Consumers

About company
Cavinkare private limited was founded by C.K Ranaganathan in 1983. Company started in small
boarding room emerged as an strong player in Indian fast moving consumer market was different
product offering like Chik (shampoo, talc), Meera (herbal powder liquid hair wash shampoo, hair oil)
nyle, fair ever spinz, indica, raga cool and karthika, company had turnover of Rs. 850 million in 199899 which increase over Rs.2640 million in 2003 with regular compounded annual growth rate of 31%.
Rural market: untapped opportunity
Its and untapped market by major FMCG company like Hindustan lever and Dadur but Cavinkare find
its and big opportunity as market account for over 620 million or 74.27% of the population of India.
The rural market has almost 60% of contribution in Indian GDP.
Penetration level of FMCG goods in rural areas low as
compare to urban areas products like hair wash about only 16% in rural area were as it was 40% in
urban areas, Cavinkare focused more in rural market and find it as big opportunity to grow in the
market.
Chik shampoo: Product for the low income consumers
Best example of Cavinkare success as it tap the low income market focusing Rs 1500 3000 monthly
income semi-rural population. Chik shampoo also differentiated itself in its quality and superior
fragrance and company mostly selling to rural consumer were as big brands like Sunsilk and clinic
plus from HUL mostly selling to urban consumer and ignored the rural market was created Cavinkare
to tap the rural market.
Educating Consumers
Rural consumer were mostly using soaps primary to wash hair and wasnt aware of damage caused by
it, Company conducted different consumer education on use of shampoo through different
communication plan like

Radio advisement
Leveraging movie star
Live demonstration by company officials
Door to door sampling

It helped company to gained the market road shows and promotion helped to increase the sales .5
million to 3.8 million.

Single-server sachets
This strategy worked very well for the company and boost the consumption shampoo in India and
especially in rural markets. As low income group they could not afford the comfort of inventory
because of limited cash also sachets grow 15 % much faster than shampoo bottle which was about 3
% only and also sachets reduces the risk of trial as well.
Extended Distribution reach
Biggest challenge was to develop the nationwide distribution network as rural market had poor
infrastructure most of its part was not even connected to roads. Cavinkare approached the rural
consumer in innovative manner by using periodic market in that Haats and melas are major role
player haats were periodical marketing which held once in week and melas was held during harvest
season these time villager had enough cash to spent and large number of buyers. Key reason was
better quality and product assortment was available in haats. Sales during haats was .2 million per day
and 1.43 million per melas which increased the penetration in rural market by focusing on periodic
market.
Reinventing price-performance relationships
Company come up with innovative pricing strategy like launching 4ml sachets at 50 Paise which
increased the market share of chik 23% and chik became the recruitment brand for industry and
doing innovation with other product like spinz perfumes in small pack called dab-on
CavinKare followed a four-fold strategy for promoting the culture of innovation within the
organization:
Constant engagement with customers to gain special insights.
Screening customer insights for their potential and translating them into meaningful products.
Challenging all conventional ways while translating insights into products.
In the case of problems, going back to the customer again to refine products and re-launching
improved ones
Outsourcing manufacturing operations and it developed the system and process which ensured the
quality of its products
Competitors and its response to Chik
Major competitor for Cavinkare are

Hindustan lever limited

Proctor and gamble
Dabur

Hindustan lever generally focused on higher margin group and find rural market tough to penetrate
but it realized that potential of rural market have been overlooked so the they introduced Lux
shampoo in 50 Paise segment to compete with Chik.
Conclusion
Company focused more on rural they have realized that rural market was untapped and with

Keen understanding in rural market

Developing of affordable product
Low cost operations
And extensive distribution network

This above points helped Cavinkare to gain market and Chik became the second most selling
shampoo category in 2002.