07 Sep 2018 21:12 IST

Long-lasting gloss of the Chik story

Low-priced, sachet packaging that made the shampoo affordable was a marketing revolution

The Chik shampoo story is said to be a popular case study in management schools across the world today. India’s first shampoo to be launched in sachet form was thought up in Puducherry by CK Ranganathan, one of the sons of an agriculturist and small-scale pharmaceutical packaging entrepreneur named Chinni Krishnan. The father had an innovative streak that made him offer customers talcum powder and Epsom salts in sachet form. He believed strongly that ‘What the rich man can enjoy, the common man should be able to afford’; and that the ‘sachet’ was the packaging product of the future.

From salts and talcs to shampoo in sachets was a natural step for him; but it was his son who made the sachet revolution one to reckon with, taking away the ‘elite’ tag associated with shampoo use. One of several better educated siblings, Ranganathan did not show much promise of the later-to-come entrepreneurial fire in his early days. When his father passed away and his brothers took over running the small family business to repay bank loans, he gladly joined them.

Several dissensions later, he took the bold step of quitting his safe job, left home and with just ₹15,000 saved from his salary, and opened his own shampoo manufacturing unit nearby — setting himself up in direct competition with his brothers, whose ‘Velvette’ brand of shampoo was doing well in the market.

The rest, as they say, is history. His company ‘Chik India’ launched its first product ‘Chik’ (named after his father) shampoo in 1983. It mainly targeted the rural market, still largely untapped by MNCs.

The low pricing and innovative sachet packaging made it affordable for even for the poorest of the poor, who had till then not even dreamt of using shampoo for their hair.

Product quality

These factors were supported by excellent product quality, which was ensured by the R&D laboratory, set up at Ekkaduthangal, Chennai by Ranganathan after just five months of starting his own business. (Today, it is known as the CavinKare Research Centre and is recognised by the Department of Scientific and Industrial Research, Government of India.)

By the end of the second year, the business, that began with just four employees, started earning profits. The brand continued to grow in strength. In 1988, it came out with a strategy that would effectively destroy competition from Velvette and other lesser known brands. Retailers were told to offer one free Chik sachet for every five empty sachets of any brand returned to them. Sales soared and the plan was soon cleverly reworked to include only empty Chik sachets. This brought in more brand recognition.

The latter part was important as, especially in rural areas, it is the colours, visuals and pricing (numbers) that matter more than brand names, with the ‘trusted’ retailer pushing the brand that offers him more incentive and returns. The company made its shampoo more affordable and available to the rural market through stand-out, easily identifiable packaging (that enabled ‘on-shelf’ identification); affordable pricing (50 p per sachet!); promotion (live demonstrations and movie shows interspersed with Chik ads); and distribution (on cycles and at kirana shops). The retailer was wooed with display and sales incentives, free bonus packs and other schemes to ensure loyalty. (Chik Shampoo’s extensive distribution network is still one of its best assets. The company hopes to increase the number of outlets to 2 million by 2020.)

Rural impact

During the ‘live’ demonstrations of shampoo usage, the audience was invited to touch and smell the freshly-shampooed hair of volunteers (usually young village boys). To many, it was also a demonstration of how to use a shampoo for the first time. Movies of popular actors like Rajnikanth were screened in villages and Chik shampoo advertisements were shown in between, thus creating a strong impression in the minds of viewers. Shampoo sachets were also distributed for free after such screenings and at festival venues to create awareness.

The very next year — 1989 — the turnover crossed ₹1 crore. The company now had time to focus on advertising and roped in reigning film actors and actresses for its campaigns. Advertisements on radio used variations of popular dialogues from movies to reinforce the ‘Chik’ image. Other promotional ventures included door-to-door sampling, wall paintings and video-on-wheels.

In 1990, Chik India became ‘Beauty Cosmetics Pvt. Ltd.’. In the following years, fragrance variants in Chik shampoo were introduced and a new brand ‘Meera’ (herbal hair wash powder) was launched. By 1992, Chik shampoo was number one in South India. The company continued to grow organically, launching various products in other categories under different brand names.

Name change

In 1998, a contest was launched among employees of the company to choose a new name that would reflect the company’s purpose. ‘CavinKare’ was chosen as it incorporated Chinni Krishnan’s initials and the word ‘Cavin’ meant ‘beauty and grace’ in the Tamil language. In the years that followed, even as the company grew organically with new products and variants on existing ones, Ranganathan went in for acquisitions like Maa Fruit Drinks, Ruchi pickles and the Mumbai-based Garden Namkeens Pvt. Ltd.

Today, the CavinKare product range covers shampoos, hair wash powders, hair colours, coconut oil, fairness creams, deodorants and talcs. It also offers retail salon products (Raaga Professional) and has a chain of beauty salons (Green Trends & Limelite). Pickles, snacks, beverages and dairy products complete the range.

Despite all this, Chik shampoo continues to remain CavinKare’s flagship brand. It is the largest selling shampoo brand in Andhra Pradesh, Uttar Pradesh and some other States. Of the company’s present turnover of ₹1,450 crore, it contributes ₹300 crores. Outsourcing of manufacturing activities and keeping packaging in-house (with its subsidiary Packaging India begun in 1993) has helped the company keep costs low.

All CavinKare products are available in about 23 countries worldwide including Nepal, Sri Lanka, Bangladesh, Malaysia and Singapore. It has two overseas subsidiaries — CavinKare Bangladesh Pvt Ltd and CavinKare Lanka Pvt Ltd.

Awards, CSR work

CavinKare has won several awards. The Harvard Business Reviewranked it among 50 home-grown champions in India, while the Economic Times included Chik shampoo in the list of ‘Top 100 Brands in India’. Chik also won the Advertisement Association of Chennai’s ‘AAA Award’. CavinKare is considered to be one of the ‘100 Best companies for Women in India’ (2016, Working Mother Media & AVATAR, Mumbai). According to the ‘Brand Trust Report India’ study 2016, CavinKare is ‘India’s most trusted FMCG diversified Brand’.

On the CSR front, in 2008, CavinKare was honoured with the Corporate Social Responsibility Award by the Rotary Club of Chennai. The company’s focus is mainly on education. It is associated with public charitable trusts that run schools and colleges like the CK School of Practical Knowledge, CK College of Engineering & Technology and an MBA institute in Cuddalore.

The Chinnikrishnan Innovation awards and CavinKare Ability Foundation awards (for the physically challenged achievers) recognise the entrepreneurial streak in young businessmen and women. (Ranganathan himself received the ‘Entrepreneur of the Year’ award from the Economic Times in 2004 and is a founder-member of the Ability Foundation.) Recently, CavinKare donated ₹70 lakh worth of their products to the Kerala Flood Relief Campaign.