Cavinkare's Innovative Marketing Strategies
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Case Details:
Case Code : MKTG092
Case Length : 15 Pages
Period : 1991-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : CavinKare
Industry : FMCG
Countries : India
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Background Note
CavinKare was founded by Ranganathan in 1983, with a modest capital investment of Rs 15,000 and with a single product. The company was called Chik India Pvt. Ltd., and its product was Chik shampoo. The company targeted the local market and within a few years emerged as a leading regional player in the shampoo market in South India.
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CavinKare's strategy of outsourcing manufacturing activities was a major reason for its success. It helped the company to keep the costs low and allowed it to focus on marketing and distribution. Commenting on this, Ranganathan said, "The concept of exclusively outsourcing our manufacturing operations resulted in lower overheads, while ensuring all the advantages of in-house manufacturing operations.
We associate with people of similar wavelength in thinking - who will definitely take care of quality first and foremost - and besides, we have a strong system of quality monitoring. This is part of our strategy.
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We lay down all the ground rules for the manufacturers in maintaining our standards. This helps us in being nimble and agile."5 Outsourcing was one of the three cardinal rules of CavinKare's corporate strategy (See Table I for Cardinal Rules of CavinKare's Corporate Strategy).
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In 1990, CavinKare changed its name to Beauty Cosmetics, in line with its decision to establish itself as a national player. The company hired professionals in various business areas such as R&D, sales and distribution and expanded its network beyond South India.
In 1993, the company entered the non-cosmetic segment, by founding Packaging India, a wholly owned subsidiary, to manufacture polymer and packaging material for in-house consumption and for sale.
By 1995, Packaging India began exporting to countries such as the US, Nigeria, Bahrain, UAE, Taiwan, Nepal, Bangladesh and Sri Lanka. |
Between 1991 and 1998, CavinKare launched five product brands - Meera Herbal Wash Powder (1992), Nyle Shampoo (1993), Spinz Perfume (1997), Fairever Fairness Cream (1998) and Indica Hair Dye (1998). In 1998, the company adopted its present name, CavinKare Pvt. Ltd., to signify its change from a single-product company to a broader FMCG company, encompassing various market segments such as hair, skin and personal care...
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