Cavinkare Private Limited: Innovative Tapping on Rural Doors

Topics: Marketing, Fast moving consumer goods, Strategic management Pages: 15 (4962 words) Published: June 1, 2011
“A spirit of innovation is generally the result of a selfish temper and confined views. People will not look forward to posterity, who never looks backward to their ancestors.” Edmund Burke C. K. Ranganathan, Managing Director of CavinKare Private Limited, developed an opportunity in a very innovative manner. While big competitors such as HUL AND P&G in India targeted the middle and upper class society with their products, CavinKare set up its unique way of tapping the untapped rural market. They further targeted the low-income groups thereby creating a brand image for itself. Its innovative style of marketing the product narrowed the gap between it and its consumers. MAJOR ISSUES RESPONSIBLE FOR GROWTH OF CAVINKARE IN SHAMPOO SEGMENT AFFORDABLE PRICE:

As chik shampoo was new in the market at that time and they were mainly focusing on the rural consumers, it was important for them to keep an affordable price to keep in competition with its competitors. As per their research they found that rural people were ready to use shampoo in daily purpose if the price is reduced to rs 2 per person and in 1999 with the help of help of company’s R&D’s department the company came out with new formulation which was priced at 50paise per sachet. With its launch the usage in rural market grew at the rate twice than that of urban market from 15% in 1980s to 35% in 2002. Because of outsourcing the production the cost per ml for Chik shampoo to Rs.12 which is far below from the its immediate successor Clinic Plus at Rs.45 and the same can be inferred from the sachet also. FOCUS ON RURAL MARKET:

The rural market in India was neglected by big players like HLL and P&G. CavinKare took this as an opportunity and it started targeting rural market for its product. Rural market accounted about 620 million people or 74.27%of the total population and the penetration for the usage stood around 16%. So a very vast market stood untapped. The company did take a lot of steps in order to increase consumption in the rural market. It started educating consumers which increased their sales increased from Rs 0.5million in 1984 to Rs 3.8million in 1985. EFFECTIVE MARKETING STRATEGY:

The best part of company marketing strategy was that they keep on restoring to different strategies from time to time. In the beginning they relied heavily on radio advertising popular movie dialogues in support of the brand. Further lots of popular movies stars from south were also hired to endorse the brand. Free samples were also distributed to create awareness among the consumers. Several other promotional schemes were also introduced by the company like if a consumer would return 4empty sachets to the retailer, he’ll get back 1sachet free. Single serve sachets priced at 50paise also gave a boost to shampoo’s sale. Company also started to take feedback from consumers so that they can fulfill consumer’s aspirations from the product. With the help of all these strategies compiled with few others the company’s market share in volume increased from 1% in1984 to 23% in 2002. EFFECTIVE DISTRIBUTION NETWORK:

The Company introduced a very innovative way of distribution. As it is difficult for any company to provide its product in each rural ma rket, so the company used to sell its product in periodic markets like Haats and Melas. Under periodic market the buyers and sellers used to meet at a specified place with the purpose of trade. Haats proved very effective for CavinKare in reaching out to the rural consumers. About 4000people used to get served by one haat. Melas were also important as they were held right after the harvesting season. So the villagers were left with enough cash and also a lot of other people also used to come from distant places. On an average Haats used to have transaction worth Rs0.2million in a day and Melas used...
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