India, loves to challenge management theories and come across as a winner. A few days ago, I wrote an article about how India is individually poor but collectively rich, and now during the times of rising inflation and sub-prime crisis, there is nothing more attractive than a lower price and there is a cut throat competition amongst retailers, to lower down there prices, bundle a lot of offers and then ultimately make a sale. One such company (FMCG) realised the potential way back in 1983, and since then has been selling a sachet of shampoo for exactly Rs. 1, (Damn you! Inflation) Chik Shamoo - which rules the rural India, and has made CavinKare, What all it is today, and led to a revolution which we all know as the Sachet Revolution of India. CK Ranganathan, the man behind this revolution, launched Chik shampoo in 1982, after unsuccessful attempts of selling talcum powder in a small sachet, and what followed was a very successful rural advertisement campaign (They even showed them how to wash hair using shampoo), and slowly the company rose to power to challenge HLL and P&G head on in the Indian market. As of December 20, 2007, an estimated 4 billion sachets of shampoos had been sold annually, which accounts to the 70% of the total sales.
What followed this revolution was a major conversion drive, thus we had:
- Ketchup Sachet
- Sugar Sachet
- Tea Bags
- Mini Maggi
- Chota Pepsi
- Chota Parachute Oil
- Chota Gold Flake - Oops
- and Chota what not?
” In consumer goods parlance, `economy pack’ has usually referred to larger pack sizes. The economy pack is the marketer’s way of rewarding a consumer who buys more of his brand at one go. But in 2001, the new rage for low-priced sachets in the shampoo market had just reversed this logic. With most shampoo sachets, one saves more if one buys less.For instance, while a consumer buying the 8 ml sachet of Sunsilk Black (Rs 2) is paying just 25 paise an ml, a consumer buying the larger 200 ml bottle would be shelling out 45 paise an ml.
But this was rectified after few months, so that sachets will be just convenient and not economical.
The other viewpoint is that India is a huge market with 1.05 billion population and around 0.2 billion household. So even considering the very low price of shampoos, if 20% of the household buy a shampoo sachet per month of Rs.2 then the monthy sachet shapoo market is 0.2*0.2*2=Rs. 0.08 billion =80 million = Rs 8 crores .. so annual sales - 8*12=Rs. 96 = approx 100crore. So thats the size “
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October 14th, 2008 at 9:46 am
Hi Sarthak,
Really nice work. Well wpmen in village were reluctant of using shampoo earlier and they were using soap to wash their hairs. They associated shampoo as something very costly and to be used by richer people only. But Chik with introduction of sachet revolutionized it completely.
This reminded me of HPCL’s Rasoi Ghar Project. People in villages were avoiding use of LPG as they thought it’s too costly. They even had a false notion that cooking food on LPG gas will result into gastric porblems in their stomach. Apart from this the altenatives like wood and dung were easily available to them.
So, HPCL with the help of MART set up ‘Rasoi Ghar’ i.e. community kitchen in villages and make women comfortable cooking in LPG gas. They use to charge Rs 4 per hour, an average family use to take 45 mins in entire cookig. So, it cost them Rs 3 per meal. After using it for some time the misconception they had regarding LPG washed out of their mind.
Moreover LPG launched single stove gas, smaller cylinder which can be refilled at just Rs 99 and make it easily available. They also educated people of health hazards cause by traditional cooking system. The efects of the smoke which comes out on women’s health. And this move also reduced deforestation in villages.
I will be uploading a PPT by HPCL on same which I got in google in ‘Download’ section.
October 14th, 2008 at 10:47 am
I think, the last statement was the crux of the whole article. Defying laws!!!. If you carefully study the amount in milligrams or millilitres of content in those satchets and then compare the price, you will be stunned as it quoted, that companies make huge profits. No one is doing a favour mind you. It all ranges from 13gm,17g,18g packets and pouches of detergents. Same goes for the shampoos as well. Nevertheless, thats how the BOP moolah lies by a lie.
October 14th, 2008 at 4:38 pm
Sachet Revolution truly is the marked a new beginning of Indian retail. The channel just became more swift.
India is a huge market with around 0.2 billion household so economy of scale make a huge difference. MNC’s will learn.
October 17th, 2008 at 3:56 pm
sir the calculation part of satchet market is underestimation of scenario.
we can redo it as one satchet is not sufficient for one day use of whole family.
moreover satchet is also preffered as we consumers can experiment with results of shampoos
October 17th, 2008 at 4:00 pm
Hey Ginny,
well you have rightly pointed out that its an underestimation, and this is what supports the articles, we have considered very low paramaters to understand the market, which means there is more potential…
October 19th, 2008 at 3:55 pm
hi
i wanna have a personal interview of a retail expert as i am making a project over it and i am in delhi and running out of time.
umm can you give me?