Monday, July 16, 2007

Sachet Revolution is Back

In continuation to - “C K Ranganathan, CEO of CavinKare: Rags-to-riches!!”

Today economic times - “Small is big again: FMCGs bring back sachet culture

Let me first enumerate few latest sachet examples:

1. Amul after becoming 1b$ organization to come up with
1.1. 25 gms “munna” butter packs in retail market
1.2. Small milk packs in select markets including Pune
2. Kellogg’s recently launched small packs of corn flakes to attract non-consumers
3. Piramyd Retail too is promoting small packs in its private labels in select Tru Mart stores
4. Telecom pre paid connections
5. Tata Sky different packages

This is not a new concept in India, as it was started in early eighties by Caninkare in form of their Chic shampoo and after that has shifted its gears to almost all possible categories like detergents, soaps, toothpaste, sauces, maggi chotu packs, Atta, mineral water, toiletries and the list goes on.

Let us know look into the reasons for this revolution:

1. Affordably priced product
2. Less investment
3. Reduced risk of buying
4. Use and throw – single serve packs

FMCG organizations would like 1B population of India to atleast try their products and convert them from non-user of products/ brands to trial consumers and finally the endeavor to make them repeat consumers. How can we miss here Mr. C K Prahalad – who wrote in his book “Bottom of Pyramid” that the volumes lie in rural India and sachetization is one key to it. The other big advantage for them is to address different consumer segments and get feedback from them as well.

Now for a marketer it is very important to understand the target consumer and the geographies where this concept is successful. If you see the buying behavior of a housewife, she would like to buy detergents, food items like – Atta, sauces etc in bulk, mainly because she is responsible for 4 people in the family, she would not like to revisit the shop again and again, and lastly and most important is that she get good schemes which keep running.

Now have a look of a kitchen of a bachelor, who is not in a situation to cook proper food, would like to have small bottle of ketchup, small hair oil bottle, half litre or even a small pack of milk to prepare tea, compact liquid shoe polish, ready to eat packs for a single person for single serving. These bachelors who are working in IT, BPO, Sales etc makes a huge population of consumers who are ready to pay money, but for smaller packs and lie in different pockets of India.

1. Gurgaon – Professional bachelors
2. Pune – students in different colleges
3. Kota – students preparing for IIT
4. Chandigarh - coaching centers

Very interesting example of sachetization is the tiffin system. The local housewife aunty in the vicinity will prepare 2 vegetables and will pack into small foil bowls with rice/ chapattis. It is pure unbranded sachet revolution. I sometime think why the FMCG companies don’t test this in some markets and see a response. When Amul can make Amul Pizza, why don’t they make Amul Lunch Thali/ Amul Dinner Thali. I understand that supply chain will be in issues, but still something can be worked out.

So it’s important for FMCG companies to take a region-centric look and look for segments which are large and profitable enough to serve.

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