CavinKare - The Small 'Big' Company

The fact that we've managed to find and plug gaps in the existing market, the fact that as a company we were able to identify categories much before the established players and launch innovative products has given us our place under the sun."
- C. K. Ranganathan, Managing Director, CavinKare. 1 Introduction In November 2003, C. K. Ranganathan, Managing director, CavinKare Private Ltd. (CavinKare), was declared the Marketing Professional of the Year in the India Brand Summit-20032. The awards were given for Leadership Excellence to industry captains and organizations for impressive marketing and branding efforts. Pioneers of sachet packing and mass marketing in rural areas, CavinKare, had grown from a Rs.15,000 venture in the 1980s to a Rs.264 crore business in 2003. Could CavinKare become a Nirma and successfully take on a well-entrenched multi-national company like Hindustan Lever? That was the question which analysts pondered over as 2004 drew to a close. Background Note C. K. Ranganathan's (Ranganathan) father, Chinni Krishnan had an entrepreneurial streak in him. He had started a small-scale pharmaceutical packaging unit and gone on to manufacture pharmaceutical products and cosmetics. When his father passed away, Ranganathan was quick to enter the family business. His brother C. K. Rajkumar had been the brain behind Velvette International and the successful launch of Velvette shampoo sachets in the early eighties. However, Ranganathan found the family business environment stifling. He started Chik India as a small partnership firm. With an investment of Rs. 15,000, Chik India started off by offering a single product, Chik shampoo. Ranganathan took the then shampoo-market by storm, selling his Chik brand of shampoo in 50 paise sachets at a time when other shampoo sachets were selling at Rs. 2. He targeted rural and small town customers who used soaps to wash their hair. By 1990, Chik had become the market leader in the southern rural markets with over 50% market share. Chik India, which was renamed as Beauty Cosmetics in 1990, clocked an impressive 45% growth over the decade. The firm gradually extended its product range to herbal wash powder (Meera) in 1991,

herbal shampoo (Nyle) in 1993, perfume (Spinz) in 1997, fairness cream (Fairever) and hair-dye (Indica) in 1998, and herbal soap (Meera) in 2000. While brands like Chik, Nyle, Spinz and Fairever were launced nationally, others like Meera and Indica remained regional, with a predominant presence in the Southern states. In 1998, the company was renamed CavinKare Pvt. Ltd. Ranganathan wanted a name, which did not restrict its scope to just cosmetics. He had plans to enter segments like personal care products and detergents. The new name was chosen by combining 'Cavin', a literary word in Tamil language symbolizing beauty and grace, and Kare which was modified to start with a K instead of C as a tribute to Chinni Krishnan. Cavinkare's logo had the letters 'c' and 'k' well defined in a leaf-like form. This gave the company its herbal orientation, even though the herbal portfolio (Meera, the herbal hair wash powder, Nyle and Indica hair dye) contributed to less than half of its total revenues.

Marketing Strategy CavinKare's business strategy revolved around three core beliefs. First, CavinKare would never venture into manufacturing and would only focus on brand building, R&D and distribution management. The company had an array of third party manufacturers including exclusive producers in Pondicherry, Hyderabad, Ghaziabad, Haryana and Aurangabad... Chik Shampoo In 2003, CavinKare with its Chik and Nyle brands enjoyed a 11% share of the Rs 1,000 crore-shampoo market, The shampoo market in India was dominated by Hindustan Lever Limited (HLL), which enjoyed a 50% of the market share with its brands Clinic Plus, Sunsilk, Clinic All Clear, Lux and Ayush followed by Procter and Gamble (P&G) cornering 15% of the market with Pantene and Head & Shoulders... Fairever fairness cream While the total size of the skincare market was estimated at Rs 1500 crore, around 60% of it was held by fairness creams, growing at the rate of 10 to 15% per annum. In 2003, HLL held a 53% market share with Fair & Lovely followed by Fairever with a 13% share and Godrej FairGlow with 3.5%... Spinz In 2000, CavinKare extended its Spinz brand of perfumes to talcum powder. Spinz perfumes, which were launched in 1997, were available in four variants - Mist, Dusk, Wood and Storm, chosen after testing around 300 fragrances...