Monday, April 14, 2014

Achievers from the bottom of the pyramid

In my blogs, I have often written about Indian retail and home grown brands which have made it big in this space. This time around, I feel I need to talk about brands which may not have a dominant national presence but have actually realigned market spaces in their own small way to challenge multinational and established brands.

If you are in any way connected with marketing, ‘Bottom of the Pyramid’ is not a new phrase you might come across. In fact it is not new to begin with as its first recorded mention was by Roosevelt in 1932 as he unveiled plans for wide scale infrastructure and development projects in the shadow of the depression. The phrase again caught the wind in its sails when C K Pralhad and Stuart Hart proposed the market development strategy for the billions earning below $2 a day and found buyers at times when the urban demand was unable to drive the economy.

What is admirable though is that this concept was implemented in India far before the marketing strategy was proposed and the point where the company which implemented this stands today is a testimony to its success. Way back in 1980’s a then small company from Chennai with a manufacturing unit in Cuddalore run by C K Ranganathan started selling Chic shampoo in a sachet priced at 50p. The FMCG market in India at that point had big wigs like Hindustan Lever, P&G, TOMCO offering shampoo in bottles, while traditional herbs like shikakai and reetha were also prevalent.

Shampoo or a soapy emulsion have always been a part of the Indian personal care arena for two basic reasons: India is a tropical country making sweat and grime an everyday thing- not to forget the fact that use of oil in hair for nutrition is a tradition well entrenched. In both cases, removing the oil from the hair and scalp was a need irrespective of socio-economic class. The availability of shampoo at an affordable price, in traditional fragrances like jasmine and enriched with the goodness of natural extracts all helped it gain market share.

A huge part of the success was also the fact that in this market segment, brand did not matter as much as availability and affordability. So even when the FMCG giants took notice of the success through small packaging for tier 2 brands, Chic managed itself through aggressive promotions. Not just one time sale- it was about repeat purchasing to a level where actions become habits. Exchange 5 empty sachets for one free; this was like a boon for the buyers in respect for their loyalty. Also, since they were predominantly selling to women in southern India, roping in Arvind  Swamy for an ad was like a master stroke.

By 1993, Chic was not just No 1 in Southern India but also ruling the Pan-Indian rural markets. The company underwent changes right from its name; from Chic India Pvt Ltd to Beauty Cosmetics and finally settling in on Cavin  Kare in the late 90s. The company is now based out of Mumbai and has diversified into other personal products like hair oils, hair dyes along with a professional care range of them. But the company has also ventured into other verticals like pickles (Ruchi and Chinni), and most shockingly (for me at least) packaged farsan snacks (Garden) and dairy products (Cavin). I will confess, I have seen Ruchi pickles and Garden snacks in supermarkets but never knew that who owned them- Garden being an acquisition thanks to their established popularity in Mumbai.

Never the less, while I think of Garden snacks I feel the packaged snacks category cannot undermine the contribution of a certain Virani family (not from Saans bhi kabhi bahu thee fame J) which brought a radical change.

Chips and farsan have long existed in every part of India traditionally. The typical source for it was either homemade or bought from a reputed Surti  Farsan mart. There was nothing called branded farsan or chips until some like Simba or Uncle Chips tried some moves. But the landscape transformed around 1991 when PepsiCo (then Leher-Pepsi) got in Cheetos and Lays. But I believe even they realised that it was easy to enter the market with Indian taste rather than impose US palette.

But while farsan, sev-bhujia got picked up, a part neglected was the variety of nuts and pulses that formed a big part of the Indian choice. Rise up time for Balaji Wafers. The roots cannot be further modest as suppliers of namkeens and wafers to Aston Cinema in Rajkot. As demand grew, the family got into their own production. Growing from the city limits to the state, the company has a formidable distribution presence in western India- its boasts of availability at every few 100 meters. I don’t think they are off the reality. While competition is stiff in the chips category; Balaji has been monumental in the packed nuts and pulses coming back in vogue.

Balaji Wafers is an empire standing on quality product at affordable pricing. A  26 gms pack of Lays costs Rs 10, with Balaji, its 45 gms at Rs 10. At its defined price band, Balaji is something that a pan-vendor, cold drink house or even a wine shop is ready to stock. The biggest reason for the openness of this distribution channel is their customers are usually interlinked. A cheap and wholesome pack of farsan or chips goes over a smoke, a soft drink and definitely munches along with some beer.

Advertising- no; availability- yes; affordability- yes.  Lays builds the aspirations, Balaji fulfils it for the masses. Lays rides on the brand and value sales; Balaji fuels its growth on smaller margins but the volumes given by the pyramid bottom.

A small dipstick I did just gave me an insight that people now at times also ask for Balaji out of choice rather than chance. Reason: it is cheaper, tastier and more appealing to the palette than a pack of Lays or Bingo. As for availability in small towns; wafers was a term that got no response- but yes for Lays and was handed over a pack of Balaji. The first thought in my mind, wow- I wonder what the biggies from the Biz-schools are thinking at PepsiCo or ITC. 

The two above cases are just few of many where the rabbit has taken down the lions; but goes miles to say that it is not about the big budgets as much as business acumen that transforms into success.