 Objective of Diversification: Become INR 52 Billion company by 2012 by increasing its market share in

various product categories and achieving faster growth by diversifying its current business
 Market Strategy:
 Introduce high performing and novel products at a price acceptable to customers
 Focus on product innovation, value for money pricing, investment in brand development and superior
understanding of customer
 Strengths:
 Excellent understanding of customer needs
 Chik Shampoo (sachets), Nyle (herbal shampoo)
 Product innovation
 Meera Herbal Oil (Perforated container containing herbal extracts inserted in bottle of coconut oil)
 Marketing Communication appealing to Masses
 Use of Movie stars and Radio
 Affordable Prices: Value pricing in all products and outsourcing of production
 Nation-wide distribution Network
 Reach to 0.75 Million Outlets
 Melas and Haats
 Threat of New Entry: Medium
 Less Investment intensive due to relatively low fixed assets requirement
 High R&D costs for launching good products

 Buyer Power: HIGH

 Very high price sensitivity of customers
 Low difference between products
 Low switching cost

 Supplier Power: Low

 Large number of suppliers
 Small size of suppliers

 Threat of Substitutes: LOW

 No good substitute available in 2004

 Competitive Rivalry: High

 Very big multinational players like HUL, P&G etc.
 Large number of local players
 Low switching cost for customers
 Similar products
 YES:
 Deep understanding of Indian customers and strong R&D will help in launching product based on current customer need
 Low manufacturing costs will facilitate in gaining price based strategic advantage
 Wide distribution network with high rural market penetration
 Proven track record of successfully introducing new brands in Indian FMCG industry
 Inline with its target of becoming INR 52 billion company by 2012

 NO:
 Both Soap and detergent industry has negative growth rate from last 3 years
 Low chance s of market expansion due to very high market penetration- Soap: Urban: 97.1%, Rural: 87.6%; Detergent: Urban:
95.0%, Rural: 85.0%
 Price war between HUL and P&G means very low profit margin
 Strong presence of HUL and P&G in both mid-priced and popular categories after price cuts

 Verdict: CavinKare should not enter into the Soap and detergent business as its core competency lies in deeper
customer understanding and launching innovative products and expanding the Market of the category. As, both HUL
and P&G have very strong presence in soap and detergent category and are pushing aggressively in these sectors by
lowering prices and low chances of further category expansion due to high penetration; the chances of success is very
low. So, it should NOT ENTER in soap and detergent business