CavinKare, a Chennai-based unlisted FMCG company known for its Chik brand, has embarked on a strategy which will test its mettle as a low-cost bottled shampoo-maker in the southern markets.
The company, which has successfully competed with multinationals, including Hindustan Unilever, in the sachet segment to retain leadership in key southern markets, will now have to prove its acumen in the bottled shampoo segment, which is increasingly getting competitive after new marketing strategies were adopted by ITC and other players.
CavinKare's sub-brand Chik Satin will address affluent customers, pitting the company against HUL's Clinic Plus and Sunsilk brands. Chik, as a shampoo brand, has been predominantly sold in the sachet format and has been positioned as an economy brand consumed largely in the rural market.
In effect, while attempting to address a larger portion of the urban market, CavinKare is also pushing its economy brand to the next level, which is currently populated by brands from HUL and P&G.
The overall market for shampoos in India is estimated at Rs 2,000 crore (Rs 20 billion) a year. The popular segment, where Chik Satin has been positioned, commands an estimated 25 per cent of this market.
According to a CavinKare executive, 75 per cent of Chik's sales come from the rural market, while the industry sells only 52 per cent of its shampoo brands in the rural markets.
In the Indian shampoo market, where sachet (7 ml) format accounts for 75 per cent of the total sales, Chik has been bringing in 90 per cent of its sales in this format.
CavinKare's Executive Director Ramesh Viswanathan said, "Chik Satin is not a premium or niche segment product. It is slightly higher in the value chain."
Experts believe that what CavinKare is attempting now is a bit risky and has not worked in the past. However, the earlier failures were at a time when the affluence levels in the Indian market were far lower than what it is now.
"Traditionally, when brands tried to move from the bottom of the pyramid to the top, they have not succeeded. For instance, Lux to Lux International and liquor brands such as Bagpiper to Bagpiper Gold. But then, times have changed. Those were when the economy was liberalising and now it is liberalised. It may work. We just have to wait and watch," said Madhukar Sabnabis, country head, discovery and planning, Ogilvy & Mather.
The pricing of the new product is also done with the intention of taking on the market leaders such as Clinic Plus. Chik Satin is priced at Rs 56 for a 200 ml bottle, while Clinic Plus is priced at Rs 63 and Sunsilk at around Rs 87 at the higher price point.
Sabnabis cites another recent success -- Ponds Age Miracle, an anti-aging product that has found a niche for itself.
Santosh Desai, CEO of Future Brands (part of Kishore Biyani's Future Group), believes there is no one stand on whether what CavinKare is attempting will succeed. "When you attempt to move the economy brand up the value chain, it will not work if you peg it on price or as a category about status. It would be a numerator game, if value is equal to what you offer divided by the price."
Desai cities the success of Lifebuoy soap that had managed to move up the value chain from being an economy product for several decades.CavinKare has budgeted Rs 4 crore (Rs 40 million) for television commercials to promote the new Chik Satin over a four-week period.