I have the habit of roaming around book stores at any airport before check-in. Lately I have noticed many management books written by Indians. Subrato Bagchi, with his trilogy of books, has captured the attention of both Indian and foreign readers. One of the recent books, I picked up, was on "Making Breakthrough Innovation Happen" by Porus Munshi. It talks about how 11 Indians pulled off the impossible. A very refreshing read, it makes every Indian proud of the innovations that are happenning in India. If the last decade made the world notice "India shining", the next decade will be even more prosperous for India. I pick the strides made by Cavinkare as the topic for this blog. Cavinkare has innovated to take on giants like Unilever ( Hindustan Lever in its previous avtar).They break the myth that R&D and technology-led innovation can happen only in large organisations. They have demonstrated how entrepreneurs can create winning ideas, even in markets dominated by giants.As we begin the new year, I felt it is apt to share these learnings on Innovation.
CK Ranganathan who started Cavinkare came from the family that pioneered the satchet marketing revolution in India by introducing the famous Velvette shampoo. He branched off and setup his own company and produced Chik shampoo sachet to be sold at 1 Rs. In creating his marketing network, he decided to change the norms. He did not enter into arrangements with established players, but with stockists who had no prior experience in selling FMCG products. He did this so that the stockists would work on his terms. Though the Chik business grew, it did not command the share Velvette shampoo had. Ranga came up with an out-of-the-box strategy to make consumers come back again and again and ask for Chik shampoo. He came up with the innovative marketing idea : he would give one sachet of Chik shampoo free for every four empty sachets of any shampoo. This scheme was the first of the kind and it took the market by storm. Later he changed the strategy and began giving one free sachet for every four used Chik sachets. The sale of Chik shampoo soared and it became an established brand. It had become second-largest selling shampoo in Tamilnadu behind Velvette.
Ranga realised that the penetration of shampoos in India was only 14%. He found out the rest of the 86% were using soap. The strategy of educating the people of disadvantage of using soap and advantages of using shampoo was not helping. One of the insight he had was that, if the consumer believed strongly in something, then don't attack it. Instead find the barriers to their using your product. Indeed, he found price as the barrier. So he came up with yet another innovation of making a concentrated version of the shampoo that was half the size of the original Chik shampoo. The size perception would make the Rs 1 consumer feel that it was a small size, therefore not for him. The existing consumers would, he believed, continue with the Re 1 sachet, while hordes of new customers, who were earlier locked out, would come in at the fifty-paisa price point. The Rs 1 shampoo was improved to have more conditioning and fragrance. With these types of, and more innovations Ranga tapped huge untapped markets and increased the market share of Chik from 5% to 22%. Today it is the second largest selling shampoo in the country.
He further found out that there were many people who were using natural products like shikakai, hibiscus leaves etc., He then created the shampoo "Meera" which had reetha nuts and almond. It was an instant success and still sells at a premium. He then launched Meera with shikakai in Tamilnadu, with hibiscus leaves in kerala. Because of the innovative initiatives, Cavinkare is the largest overall hair wash company in South India. Hindustan Lever and P&G are behind them.
He then took on the "Fair & Lovely" fairness cream. This was the business with higher margins and was dominated by a single player - Fair & Lovely.He realised that he needed to build credibility in the minds of his customers and make his products appeal to them. He found that pregnant women were given saffron and milk as they felt this would make the child fair and healthy. He used this fact and created the fariness cream that has milk and saffron in it. He also wanted to position this cream as something that could help change one's life/future forever. So he branded the fariness cream as "Fairever" and priced the product at a premium, based on insights that told him that the customers were willing to pay more as they knew that saffron was expensive. Again Fairever was able to wrest upto 18% market share in the first year of its introduction in South India.
What learnings can one can take from the success story of CavinKare? Go beyond market segmentation. See how to grow the overall market share. Listen to the customers. If it is the high price that is the barrier then innovate and create products that are low in price and tap into markets that did not exist. Keep prototyping in real time: do limited launch, let customers use the product, get feedback, make changes and launch again. Prototyping is one of the highest forms of insighting. Co-evolve the product working with the customers. Playing fields of the giants can be leveled by using insights that lead to innovation.
Wishing you a happy new year and that it bring lots of opportunites for innovation.
Happy reading,
Ram
No comments:
Post a Comment