I firmly believe that to be a market leader, you have to behave like one.

CK Ranganathan, managing director, CavinKare, has set a very clear goal before his company and knows how to reach there. His Rs 203-crore company has some winners in its product portfolio. Its top brand Fairever is the second largest in the popular fairness cream segment; Nyle is the second largest brand in the herbal shampoo category and Meera is market leader in the hair-wash powder category. That's not all. Till the year 2000, CavinKare's Spinz was the market leader in perfumes. In this rare interview to Shamni Pande of agencyfaqs!, 41-year-old Ranganathan shares how he built that impeccable product portfolio and the challenges that lie ahead.

Edited Excerpts

True, there is a big invasion of foreign products today; but it has not affected us in any way. Most of these imported products are relevant at the top end of the market and this has left players like us to determine the needs of the mass market.

Let me put it this way. There is a change in the sense that the consumer has more choice and is more aware. But in terms of market opportunities, or in terms of competition, there is not much of a change.

Chik shampoo, followed by Fairever, are our two biggest brands. Spinz was the leading perfume brand at one point in time, but lost out for its own reasons. The product had packaging problems and we consciously slowed down our supplies. Now these problems have been sorted out.

For the record, we are the second largest shampoo company with a market share of 21.17 per cent in the Rs 984-crore shampoo industry. Nyle is the second largest herbal shampoo brand. Fairever is the second largest fairness cream in the Rs 718-crore fairness cream market. Spinz is the fourth largest perfume brand (in value terms) in the Rs 70- crore perfume industry in the country.

In terms of individual market shares, the figures available to us as of November 2001 (in volume terms) are as follows: Chik shampoo has 15.56 per cent: Nyle 4.77 per cent, Spinz perfume 6.85 per cent (in value terms), Spinz deo 3.08 per cent, Fairever 12.92 per cent, and Indica 3.68 per cent (in value terms).

The fact that we've managed to find and plug gaps in the existing market, the fact that as a company we were able to identify categories much before the established players and launch innovative products has given us our place under the sun.

There's no doubt about the fact that advertising has been a crucial factor in our success, but it is not the only thing. It was essentially the product, which was able to satisfy certain needs and meet with the quality requirements of the people.

Take Fairever. It combines the goodness of saffron and milk - the two ingredients known for their beneficial properties for the skin. This was something new in the category and consumers identified with its benefit immediately. The initial innovative approach has been supported by actual product benefits. This helped it corner large chunks of the market. We introduced Meera shampoo (an extension of Meera brand into the category) last month in Tamil Nadu, which has the goodness of almonds and shikakai - again an innovative and relatable offering. We have also made our entry in the anti-dandruff category recently. The new product contains 'climbizole' and is based on our internal R&D, which has shown that this ingredient helps fight dandruff.

Of course, our attempt to make Chik as widely available as possible continues. The fact that we were able to offer a single-use sachet at 50 paise has seen its market share treble in the last two years. We disagree with the popular notion that shampoo bottles are meant for the rich, while sachets are meant for the poor. If you want consumers to use your product more and drive volumes then you can easily work at making bulk buying more affordable. While the market has easily lapped up the sachet revolution, it has done little to make bulk buying really attractive.

Take the case of shampoos. There are 8-ml sachets available in the market for around Rs 2.50. When a consumer buys a 100-ml bottle, it should not cost more than Rs 30. However, what the consumer ends up paying is something upwards of Rs 40. Manufacturers love to give the excuse that bottles attract higher excise duty. But that logic has found ground only in the last two years, when excise duty went up. What about before that? We have managed to offer a 50-ml Chik shampoo bottle for Rs 6 since the year 2000 and this has been a runaway success. Consumers are very discerning; I have actually seen them calculate such minute differences.

In our country we have a strange case where manufacturers have managed to actually downgrade consumers from bottles to sachets instead of helping them upgrade. At an all-India level, the ratio of sachets to bottles is around 66 per cent to 34 per cent. In Tamil Nadu, the share of sachets is as high as 83 per cent! Nothing wrong in this; but if you want a graduation from the sachet to the bottle to induce bulk buying, then let us price them cheaper than sachets. After all, the sachet user is one who either cannot afford to pay a premium or block money for a convenience product. Besides, sachets by their very nature, tend to minimise usage - it not a very convenient thing to run up to a store and buy packs every time.

When you offer genuine innovations that address specific consumer needs, then the market opens up. Of course, any effort has to be backed by quality and continuous supply - an issue we have sought to address right from the start.

This comment is entirely unjustified and I disagree with it. It is part of a correction exercise, if at all we have done that. We would withdraw a product only to go back to the drawing board for fresh inputs based on actual consumer preference feedback. And relaunches are restricted to a limited area - usually a state. We do not go national with a brand and then undertake this exercise. For instance, we are planning to relaunch Nyle moisturising lotion. In the past, some experiments and launches have not worked and have been withdrawn from the market, but I guess every company faces such situations.

True, it is easier to launch brand extensions than establish new brands. If we feel that there is a category where a brand extension would serve the purpose better, then we do that. For instance, there is Meera Soap, Meera hairwash herbal powder, and now we have Meera shampoo. Similarly, Nyle brand has been extended to cold cream and moisturising lotion. However, all these exercises are based on some logic and information available with us. However, if you are clear that individual brands can be supported and the category size is large enough, then I would say standalone brands work out much better. For instance, Fairever was launched in 1998 and it has not been extended. The category is big - valued at Rs 718 crore and it is witnessing a growth - and we felt that a new brand would work better here rather than a brand extension. Similarly, our experience proved that for hair dyes also we needed to launch a new brand and Indica (hair dye powder in sachets) was launched in 1998. The hair colour category, which is at a nascent stage, is again very big and is valued currently at Rs 274 crore.

To answer your questions, we have not avoided brand extensions, but we have simultaneously tried to build many strong brands as well. Besides, many companies get into brand extensions because they feel that, one, it is a good way to reinforce brand presence per se and, two, it is a way to spread into new categories at less cost - by investing less on advertising etc. We are very clear that our decision to allocate advertising spends will be fairly distributed among all the products and not swayed by the fact that it is an individual brand or an extension. Also, brand extension beyond a point is self-defeating.

We, as a company, look at various categories and their growth rates, the penetration levels, the usage, the opportunities and the players. We also try to look at the experiences of developed countries and how a certain category has evolved, we then try to look at it in the context of our environment. This is a continuous exercise. We also look the inhibitors to the growth of any product. Once you answer these questions, then the process of decision-making becomes that much easier.

Perfumes, for instance, are very highly priced. Not everyone can afford them. We did not just lower the price point alone; but we have come up with an innovative concept of single-use packs. The question is of affordability. A manufacturer may like to think that the price is low, but a consumer may not be able to shell out that kind of money for a product he/she thinks they can do without. Besides, 75 per cent of the population lives in rural- to semi-rural areas. They do not choose to live there, but their situation is such. Hence, you have to offer affordable products that can really fill a gap.

Sure. Do not take what I say as it is. Let me explain. The question is not of high price or of low price per se. It is one of perceived value. If consumers feel what they pay for my product is not a very high price, that's good for me, isn't it? So long as the consumer feels she is getting value for money, it's okay.

I believe that to become a leader you have to think and act like one. So like a leader, we focus on driving the penetration levels of our products. If I sit back to argue that my market share is very low and it is not my job to think of driving penetration levels, then I can never become a player of any significance. I do not cut or raise price levels by looking at others. My company has always followed a policy of offering innovations.

Though available data suggests what you are saying, I just cannot imagine that to be true. My only explanation is that with technological innovations in soaps and detergents, one needs to use less for the same result. As for our plans to enter the detergents category, we are working on it. It is likely to be a new brand and it could happen this year itself.

No. We have slowed down our launches considerably. We had planned around eight launches by March this year. But we have postponed our plans to enter the food segment as we feel that the existing sectors require bigger focus - both financially as well as in terms of managerial input.

Greenie has been our attempt to learn directly from the consumers. We have never tried to project our company name in that venture. It just happened that media got wind of this initiative. However, the segment for personal grooming for men is very crucial and as far as I am aware no corporate entity has entered this segment. Also, men necessarily have to visit a barber, if for nothing else, to get their hair trimmed. So this was a good starting point for us. We also plan something for women; but we cannot reveal more at this stage.

I was very clear that I did not want to mess up my focus by getting involved in production, when there are highly skilled and competent people to do the job for you. My focus was to build brands, be hands-on where marketing and distribution was concerned. In fact, this is not unique to us. Many companies globally do not manufacture but contract it people who have capabilities and can keep a tight quality check.

We are present in 10 lakh outlets across the country and have followed the policy of 'active' distribution wherein we are directly involved in the distribution process. This helps in opening channels and reaching our products to the interiors of the country.

In the last couple of years we have started going to management schools to recruit young people. I am very pleased with the kind of talent that we have managed to attract and also the attention and image our company has. In fact, I am very serious about building our corporate image and we have hired the services of a public relations company two years ago to help us in the process.