Ranganathan of Cavinkare who Locked Horns with FMCG MNSs
Unilever and Proctor & Gamble are the two giants who dictate the entire FMCG market in Asia. They had a first real challenge in seventies in the washing powder segment from a Ahmedabad based entrepreneur Karsan Ghavri in such a way that these MNCs were compelled to redesign their market strategies in the washing powder segment, lowering prices and most importantly the diversifying the product range. Due to the internal push and pulls Patel’s Nirma could not sustain its growth and now become not so significant player. The second serious challenge came from an entrepreneur C K Ranganathan from South India, in early eighties. He started his company Cavinkare in 1983 in Shampoo segment with a seed capital of just Rs15000. The first years’ turnover was Rs. 5 lac . In the initial years the growth was slow. There is no look back for Ranganathan, his company diversified product range and become a strong force to reckon within India with annual turnover Rs 1200 Crore and now spreads its wings in 13 countries. The company set up annual target of Rs3000 Crore by 2015-16.
In 1983, Ranganathan, fondly called Ranga by his friends, left his family business, Velvette, and started of his own. His family brand Velvette was pioneer in sachet marketing revolution in India. Ranga took a house cum office just for Rs 250 per month against an advance of Rs 1000 and factory space for Rs 300 per month against an advance of Rs 1200 , bought a shampoo packing machine just for Rs 3000. He started his journey with Chik Shampoo, after his father, Chinni Krishan. It was a landmark innovation that democratized the use of shampoos among the masses in India. He could not get a bank loan for first three years in business as he could not have any property to offer as collateral. Ultimately a bank manager financed him and in his recommendations wrote that though this business does have security to offer but it pays income tax unlike other SSI units.
Over the years, CavinKare has successfully transformed itself from a pure Personal Care player to a FMCG conglomerate with interests in Dairy, Snacks, Pickles, Food and the Beverages businesses. In the Dairy business, Cavin’s is the mother brand which offers milk and milk based products such as milkshakes, ghee, curd, UHT and pasteurized milk. In the snacks business, Garden is the mother brand offering an entire gamut of salted snacks including namkeens and western snack offerings. In the foods business, they have a presence across various price points in the pickle segment, with Ruchi in the premium range and Chinni’s in the mass-premium range. Other products include Chinni’s Vermicelli, Chinni’s
Energy Peanut Snack and Ruchi Magic Culinary pastes. In the beverages business, they are present in non-carbonated fruit drinks with Maa as the flagship brand. Maa is available in several flavours including guava, apple and mango.
Game Changer
Ranga started with one rupee sachet with his Shampoo Chick like other players in the market, but soon realized that with 72% of country’s population living in rural area and only 14 per cent of India’s population use Shampoo. On his own people to people contact he come to conclusion that in rural area, people are price conscious, so with his own academic background of chemistry and his team’s R&D efforts, the company was able to sale a sachet for fifty paisa . This strategy worked out well. At that time he did not have big advertising budget, so he worked on an unique marketing strategy bring four empty sachets of any brand of shampoo and take away one sachet of Chik, the scheme skyrocketed their sale. Right now despite tough competition, n terms of sale they are only next to market leader Clinic Shampoo.
Ranga realized that one thing that takes organizations rapidly down the path of diminishing returns and frozen innovation is the fear of cannibalization. The businesses are so pertified of cannibalization that they would rather keep themselves open to outsiders innovators coming in to capture the entire market rather than cannibalize their own products. What is so sacrosanct about his product any way ? instead of going for another product developed by the company which can get the larger market share over all, most organizations focus on market segmentation. They slice, dice, cube, minimize markets so much that finally it is a wonder any part of the market is left standing. What about the big picture ? What about grabbing the entire market ? And that means nor just the existing buyers, but also those who have never bought the product before. When one operates from scarcity mindset, we see that the market as limited to a fixed number of buyers. When one operates from an abundance mindset, the whole world becomes his market. This is the way Ranga thinks, acts upon and successful in the market.
What keeps Ranga stands out in the market ? He keeps prototyping in the real time. First does a limited launch, let the customers use his product and make a change based on the feedback received from customer. He keeps going back to the customers with product versions. That is one of the key differentiators of radical innovators. Ranga took Spinz, his brand of perfume to the consumers, the fact that consumers prefer a small glass vial to plastic or a pouch and a perfume whose aroma last all the day. So finally when the perfume finally launched it incorporated all these elements plus it was price wise very competitive, a glass vial for single use for Rs.2.
Next big success came for his fairness cream product Fairever. Before launching this product, in his initial market insight he come to know that the business was dominated by only one large player - Fair and Lovely with 90 % market share, its penetration level was vey low (only 6%) and with high profit margin. Several players unsuccessfully tried to enter in the market, the biggest constraint was huge marketing and advertising budget. The Fair and Lovely’s advertising budget exceeded Cavinkare’s entire turnover! Ranga and his team thought of launching their product in such a manner that it build credibility in the mind of customer and have appeal. So instead of making the product inhouse, Ranga and team decided to tap into customer’s beliefs and tradition. The believe if during pregnancy Saffron and milk is consumed then the child born will be of fair colour. Till than their strategy was to keep prices lower vis a vis competitors but for fairness cream they kept this product in premium range. The product was an instant hit.
Ranganathan of Cavinkare is quintessential orbit shifter and challenger. He is not intimidated by big business read MNC FMCGs. If anything, he intimidates big big business. If there is one thing that his story tells us, it is that any playing field can be leveled by using insights that leads to innovation. A very inspiring thing , if Ranganathan can do it, so we can also. The only thing, look for insights.
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| Cavinkare Journey started with Chik Shampoo |
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| Cavinkare :Product Range |
Ranga with family
In 1983, Ranganathan, fondly called Ranga by his friends, left his family business, Velvette, and started of his own. His family brand Velvette was pioneer in sachet marketing revolution in India. Ranga took a house cum office just for Rs 250 per month against an advance of Rs 1000 and factory space for Rs 300 per month against an advance of Rs 1200 , bought a shampoo packing machine just for Rs 3000. He started his journey with Chik Shampoo, after his father, Chinni Krishan. It was a landmark innovation that democratized the use of shampoos among the masses in India. He could not get a bank loan for first three years in business as he could not have any property to offer as collateral. Ultimately a bank manager financed him and in his recommendations wrote that though this business does have security to offer but it pays income tax unlike other SSI units.
Over the years, CavinKare has successfully transformed itself from a pure Personal Care player to a FMCG conglomerate with interests in Dairy, Snacks, Pickles, Food and the Beverages businesses. In the Dairy business, Cavin’s is the mother brand which offers milk and milk based products such as milkshakes, ghee, curd, UHT and pasteurized milk. In the snacks business, Garden is the mother brand offering an entire gamut of salted snacks including namkeens and western snack offerings. In the foods business, they have a presence across various price points in the pickle segment, with Ruchi in the premium range and Chinni’s in the mass-premium range. Other products include Chinni’s Vermicelli, Chinni’s
Energy Peanut Snack and Ruchi Magic Culinary pastes. In the beverages business, they are present in non-carbonated fruit drinks with Maa as the flagship brand. Maa is available in several flavours including guava, apple and mango.
Game Changer
Ranga started with one rupee sachet with his Shampoo Chick like other players in the market, but soon realized that with 72% of country’s population living in rural area and only 14 per cent of India’s population use Shampoo. On his own people to people contact he come to conclusion that in rural area, people are price conscious, so with his own academic background of chemistry and his team’s R&D efforts, the company was able to sale a sachet for fifty paisa . This strategy worked out well. At that time he did not have big advertising budget, so he worked on an unique marketing strategy bring four empty sachets of any brand of shampoo and take away one sachet of Chik, the scheme skyrocketed their sale. Right now despite tough competition, n terms of sale they are only next to market leader Clinic Shampoo.
Ranga realized that one thing that takes organizations rapidly down the path of diminishing returns and frozen innovation is the fear of cannibalization. The businesses are so pertified of cannibalization that they would rather keep themselves open to outsiders innovators coming in to capture the entire market rather than cannibalize their own products. What is so sacrosanct about his product any way ? instead of going for another product developed by the company which can get the larger market share over all, most organizations focus on market segmentation. They slice, dice, cube, minimize markets so much that finally it is a wonder any part of the market is left standing. What about the big picture ? What about grabbing the entire market ? And that means nor just the existing buyers, but also those who have never bought the product before. When one operates from scarcity mindset, we see that the market as limited to a fixed number of buyers. When one operates from an abundance mindset, the whole world becomes his market. This is the way Ranga thinks, acts upon and successful in the market.
What keeps Ranga stands out in the market ? He keeps prototyping in the real time. First does a limited launch, let the customers use his product and make a change based on the feedback received from customer. He keeps going back to the customers with product versions. That is one of the key differentiators of radical innovators. Ranga took Spinz, his brand of perfume to the consumers, the fact that consumers prefer a small glass vial to plastic or a pouch and a perfume whose aroma last all the day. So finally when the perfume finally launched it incorporated all these elements plus it was price wise very competitive, a glass vial for single use for Rs.2.
Next big success came for his fairness cream product Fairever. Before launching this product, in his initial market insight he come to know that the business was dominated by only one large player - Fair and Lovely with 90 % market share, its penetration level was vey low (only 6%) and with high profit margin. Several players unsuccessfully tried to enter in the market, the biggest constraint was huge marketing and advertising budget. The Fair and Lovely’s advertising budget exceeded Cavinkare’s entire turnover! Ranga and his team thought of launching their product in such a manner that it build credibility in the mind of customer and have appeal. So instead of making the product inhouse, Ranga and team decided to tap into customer’s beliefs and tradition. The believe if during pregnancy Saffron and milk is consumed then the child born will be of fair colour. Till than their strategy was to keep prices lower vis a vis competitors but for fairness cream they kept this product in premium range. The product was an instant hit.
Ranganathan of Cavinkare is quintessential orbit shifter and challenger. He is not intimidated by big business read MNC FMCGs. If anything, he intimidates big big business. If there is one thing that his story tells us, it is that any playing field can be leveled by using insights that leads to innovation. A very inspiring thing , if Ranganathan can do it, so we can also. The only thing, look for insights.
Very useful information thanks for sharing this regards
ReplyDeletechyawanprash