Cavinkare private limited case study

Executive Summary

CavinKare Group is an Indian conglomerate headquartered in Chennai, India. It was founded by second generation entrepreneur C.K.Ranganathan in 1983 as an extension to his family owned business of small-scale pharma packaging and cosmetic manufacturing in a small coastal town Cuddalore in Tamilnadu. He has started it in Chennai as Chik India. It changes its identity twice on its way. Cavinkare became Beauty cosmetics Private Limited in 1990. In 1998 it became Cavinkare Private Limited with the aim of going beyond cosmetics, and offering a wide range of consumer products. Cavinkare has its businesses in personal care, soaps and detergents, food products etc.

Cavinkare products in the market are

Business

Products

Skin care

Fairever Fairness cream

Nyle Herbal cold cream

Nyle Moisturising Lotion

Hair Care

Chik Shampoo

Nyle Herbal Shampoo

Meera Shampoo/Meera Herbal Powder/Meera Hair oil

Karthika Shampoo

Personal care

Spinz perfume

Spinz deodorants

Spinz Talc Meera

Herbal Soap

Food Products

Chinni

Garden Namkeens

Ruch

i Retailing

Green trend Salons by 2005

Situation Analysis

Market Summary: Cavinkare identified the gaps overlooked by established players in the market. The major challenge was to put in place a strategy to translate the vision of making CavinKare a billion-dollar entity (Rs. 52000 million) by 2012 into reality.

STP Analysis:

Target Markets CavinKare, The first identification was done in the early 1980s. The shampoo market was cluttered with some 70 plus small labels with very low and brand awareness level. There was a clear need for a superior quality shampoo with appealing perfume at an affordable price. CavinKare CavinKare also realized that there was a clear need for a good quality herbal shampoo which improves the texture and manageability, nourishing the hair, free of harsh chemicals and that’s how Nyle, the safest shampoo CavinKare introduced into the market. Positioning

CavinKare successfully positioned itself as a non-chemical or safest brand. It has also positioned itself as an affordable yet good quality production brand. Geographic CavinKare targeted the Regional media largely promoting and distributing its value propositioned products in the local areas extensively. Later through Electronic Media Campaigns it has given rigorous competition to its rivals.

SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses of CavinKare and identifies he opportunities and threats facing it. Strengths Portfolio of strong brands - wide range of hair care, skin care and personal care products Vast distribution network – Availability - Cavinkare’s distribution system reached out to 0.75 million outlets out of the 5.5 million outlets in India. Image positioning – CavinKare has very strong image base in Indian market. Innovation – Variety - CavinKare popularized the sachet through Chik shampoo. Besides being low cost it offers convenience of buying it only when required. Similarly, Singlez, a single use perfume, was launched in 2000 in the form of a gelatinous capsule in a blister pack. Cost effective – Affordable, Value for money - Superior quality products with affordable cost products accounted to the maximum popularity of CavinKare products.

Weaknesses

Dependency on narrow product lines. Narrow portfolio cannot give higher margins. Most of the products offered by Cavinkare have low margins (since most products are sold at affordable prices). The products offered are better known in certain regions. For example, Chik shampoo help more than 50% of shares in southern rural markets but more not as visible in the domestic markets across the country.

Opportunities

The rural markets still have a huge potential that can be utilized for better brand building and increasing overall market share. Also, Cavinkare has several untapped opportunities in urban areas. The company is yet to venture into the international markets which can have a tremendous growth potential. The company can also aim to leveraging their existing brands.

Threats

Existence of fragmented markets which include competition from several local brands. Strong competition from the established market players like HUL which holds a larger market share. For example, in terms of market share for fairness creams, Fairever brand has a market share of 9.5% as against 62% of Fair & Lovely. Similarly, Spinz talcum powder had a market share of 4.27% in 2004 as against 55% market share of HUL. Also, while Cavinkare’s distribution system reached out to 0.75 million outlets, HUL has a direct coverage of about 1 million outlets. Presence of various easily available substitutes.

Changing trends in consumer usage pattern - Market turbulence is also a major threat

Products/Service Offering

CavinKare, over the years, introduced a number of products in the market. Market shares of different products are as follows. Segment Profile Market Share Way Forward Hair care Chick shampoo Shampoo that used French perfume in its formulation Largest selling brand in southern rural market with a market share of over 50% by1990 Increase their market share by concentrating on market and product development Chick shampoo First floral shampoo Ranked 2nd in terms of market share.

Nyle shampoo Ranked number 1 Herbal shampoo brand in the country 5.5% market share in the shampoo industry for the year 2004

Meera Herbal Powder Largest selling brand of hair wash powder Consistent market share of more than 75% since the time of launch in 1991

Skin Care Fairever Fairness cream Market share of 9.5% as on 2003 Huge gap exists in the market share of Fairever and Fair & Lovely which holds 62% market share. Hence, the objective would be to shorten the gap.

Personal care Products Spinz Perfumes, talcum powder, deodorants. Market share of 7% in perfume category and a market share of 4.27% in talcum powder. Increase the market share of the brand.

Marketing Strategy

Marketing Objectives

The overall objective of CavinKare is to achieve growth by continuously offering unique products and services that would give customers utmost satisfaction. CavinKare has crossed 2000 million turnover in the year 2000 and 2640 million by 2003.

Financial Objectives

1. The company had the turnover of over Rs. 2640 million in 2003 and had set a vision of Rs 52 billion company by 2012. 2. The target set was aimed on achieving through two-prolonged strategy: Increase market share of its current products and diversify into new businesses.

Marketing Program – 4 P’s

Pricing

Cavinkare offers its products with superior, value based and affordable pricing. Value for money propositions could attract price conscious consumers towards CavinKare. CavinKare created the shampoo market out of non-users or infrequent users by introducing the affordable products. It kept the focus on volumes and scale of economy and that resulted in lower costs of production. Lower pricing, though made low to modest profit per customer but the gross profit was high owing to volumes. Reduced cost structures enabled it to sell the quality products to customers at affordable cost.

Distribution

Nationwide connectivity, large number of retail outlets, distribution access, especially in the rural areas which is often characterized by low penetration and dispersed consuming population was tapped by CavinKare in an innovative way. The periodic markets like Haats, Melas etc which was the public gathering of buyers and sellers were well utilized by CavinKare to create the access of its products. One of the efficient ways to increase the visibility and connectivity of the products.

Promotion

Promotion was largely relied upon the usage of regional media, radio for mass media advertising especially for Chik shampoo. Leading south indian film actresses were roped in for endorsements. While in the case of promotion at the national level was taken care of through the advertising campaigns for its products especially for Fairness creams.

Product Superior products at affordable costs played an important role in CavinKare’s success esp. Chik Shampoo. It adopted value pricing strategies for its shampoo products in intial phase of the growth. Shampoo which was a relatively low penetration category in India was taken care by the innovation strategies adopted by CavinKare.