JAIPURIA INSTITUTE OF MANAGEMENT LUCKNOW
SACHET MARKETING
SUBMITTED BY: Sheena Saxena (JIML-10-131) Shobhit Srivastava (JIML-10-138) Sujesh Khare (JIML-10-147) Sparsh Mishra(JIML-10-) Tulika Narayan (JIML-10-164) SUYASH PRATAP SING (JIML-10-154)
SUBMITTED TO: Prof. Shalini Singh
ACKNOWLEDGEMENT We express our deep gratitude to Shalini mam for her constant support, guidance and motivation that helped us immensely in completing this project. The project provided us with an opportunity to understand the sachet marketing. In addition we thank every individual who are directly or indirectly associated with the successful completion of this project.
SACHET – WHAT IT IS AND WHY BUSINESS SHOULD CONSIDER USING IT A SACHET is nothing more than sample size packets of various products. These packets come in a variety of sizes, shapes and packaging types. The three main types that you’ll see businesses use for samples are the peel-away type that you often see in magazines, the little tear corner packets and the newest version which is an innovative container called Snap-pak that snaps open using only two fingers. The peel-away type are typically used for perfume samples, just so potential customers can smell the scent. For many years, the tear corner packets have been the standard for most products but they have disadvantages that have now been overcome by the new snap open sachet – mainly they were hard to open and splattered the contents easily. Not only is offering a product sample sachet a great way to allow potential new customers to try your product, it’s a fantastic branding technique. Whether you buy the machinery needed and assemble the samples yourself or use a service to do it for you, it is easy to add your company logo and some information to these packages. Even those who don’t try the product will still be exposed to your company’s branding. Tests have shown that it can take up to seven times for a person to see your logo before it registers on his mind. Clearly getting your company’s brand in front of people as many times as possible is to your benefit. Obviously, there are some products that will not be suitable for a sachet but there are many that are ideal for this type of sample package. Anyone who manufactures body care, skin care or hair care products will find these perfect to hold a one-time use amount of the product. Paint manufacturers could offer tiny samples for people to test the colors. Cosmetic manufacturers will find them useful for allowing potential customers to test their products. If your business offers any product that could be distributed this way, it will be a marvelous branding and promotional tool. C K Ranganathan, CEO of CavinKare is somebody who changed the rules of the FMCG game and is widely regarded as the man behind the sachet revolution. The FMCG business is becoming increasingly
complicated with the biggie HLL competing with regional players in various parts of India. 1983, C K Ranganathan started selling shampoos in a sachet with an investment of Rs 15,000 and dared to take on the multinationals, Lever and P&G, the unquestioned leaders in that segment.
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Sachets were first introduced to India in the 1990’s by an Indian company selling a 10-milliliter sachet of Velvette shampoo. Before the sachet, shampoo in India was only available in larger bottles, therefore limiting its sales success among people with small incomes . Sachets meet the needs of the rural consumer in several ways. Sachets are inexpensive, they occupy a small amount of space, and they allow consumers to experiment with new products that they may never have tried before Sachet marketing defined as the practice of serving products and services in small, affordable size has been in prevalent use in the emerging markets such as Philippines, India and Indonesia SACHET MARKETING: The most effective way of influencing a customer to try out a product is to offer him enough for a trial. The latest initiatives taken up by most of the successful newly launched products are Sachet Marketing. This is where the producers make available the product to the customer for either of the two main goals: Offer the customer affordability. Give the customer the opportunity to try out the product. Here, the main objective is to convince the customers that the shampoos are indeed gentle enough to be used for the desired results. Hence, the product is offered in sachet, besides being made available in normal sized packs. The biggest factors determining sachet sales are: 1) number of stores per 1,000 population, number of corner stores per capita, 2) Frequency of use, 3) Percentage of daily laborers (there you have daily, weekly, casual laborers), 4) Strength of particular companies The single portion sachet revolutionizes convenience packaging for food, cosmetic and pharmaceutical liquids and cream.
A LIST OF SACHET MARKETING IDEAS FOR VARIOUS INDUSTRIES Companies from airlines to small businesses are using sachet marketing ideas these days. Since today’s advertising trends usually involve promotional marketing products, it’s not very surprising that something as seemingly simple as a sachet could provide so many solutions to all types of businesses. If you are looking for some unique sachet marketing ideas for promoting a company, here are the some of the many ways in which sachet products can be used:
Product samples. Your samples will stand out more if you give them out in a nice sachet. People will be less likely to overlook the free samples or throw them away if they are presented nicely with easy open containers.
Beauty samples. Attract the interest of female consumers by giving out free samples of makeup, bath products, fragrances, etc. You can have liquids such as perfume, skin cream, foundation, and shampoo packaged inside of sachets.
Food packaging. If you’re in the restaurant business, you could have sachets filled with condiments. It’s better to use your own custom packaging than that of other brands.
Medicine. If you’re in the pharmaceutical industry, these small bags can really come in handy. They can hold any type of medicine, including viscous liquids. Hand cream and sanitizing wipes can also be placed inside of these packages.
Bath products. Sachets can also be useful in the hotel industry. Whether you’re running a small inn or a large resort, you can have a large volume of shampoo, liquid soap, conditioner, hand wipes, etc. manufactured with your hotel’s name designed on the packaging.
Now that we have some sachet marketing ideas, we need to order a filling and packaging service from a good provider. The
right supplier should give you a variety of sachet sizes to choose from. We should also be able to have each packet designed with your company logo and name. Remember, the ease of use and attractiveness of the packet will have a big impact on your customer’s impression of your company.
WHAT IS SACHET MARKETING AND HOW CAN IT HELP YOUR COMPANY GROW ? If you’re looking for sample containers for your products, why not go for sachet marketing? Sachets are often underestimated by North American companies. Advanced equipment is used for the creation of sachet packaging. Any type of liquid you can imagine can be placed inside sachets. These small, but useful packets can help you establish your brand name. Despite common misconception, potpourri isn’t the only thing that can go into sachet bags. These days, people are putting everything from medicine to condiments inside of these pouches. You know those little ketchup or mayonnaise packets you find at restaurants? Those are sachets. So are those little packets which contain medicinal swabs and bandages. Contacting a manufacturer to help you produce a sachet marketing campaign for your company is a great idea. Here are some just some of the many types of sachet filling: Condiments Spices Powder for drinks Medicine Personal hygiene products Beauty samples Makeup
Insect repellants Restaurants, hotels, pharmaceuticals, cosmetics: these are just a few of the industries that use the services of sachet suppliers. As long as you choose a good manufacturer, you can trust that the packets will keep your product fresh.
These days, sachet packaging machines are so advanced that they can keep the substance fresh for a very long time! The Snappak sachets are designed to keep the air out in order to preserve the liquids within. Since air isn’t compressed when dispensing these products, there won’t be a risk of splatter or squirting. Thus, you won’t receive complaints from consumers over ruined shirts or tablecloths. There is even at least one company that produces the Snappak sachets that easily snap open, instead of the old tear method, which is much less likely to splatter. Why should you invest in sachet marketing? Well, think of it as marketing investment. You can have thousands of these packages produced at once, all of which will have your company’s name and phone number printed! Tiny and disposable though they may be, sachet can be the tool your brand needs to grow! Does sachet lower down the sales?
In consumer goods parlance, `economy pack' has usually referred to larger pack sizes. The economy pack is the marketer's way of rewarding a consumer who buys more of his brand at one go. But in 2001, the new rage for low-priced sachets in the shampoo market had just reversed this logic. With most shampoo sachets, one saves more if one buys less. For instance, while a consumer buying the 8 ml sachet of Sunsilk Black (Rs 2) is paying just 25 paise an ml, a consumer buying the
larger 200 ml bottle would be shelling out 45 paise an ml. But this was rectified after few months, so that sachets will be just convenient and not economical. The other viewpoint is that India is a huge market with 1.05 billion population and around 0.2 billion household. So even considering the very low price of shampoos, if 20% of the household buy a shampoo sachet per month of Rs.2 then the monthy sachet shapoo market is 0.2*0.2*2=Rs. 0.08 billion =80 million = Rs 8 crores .. so annual sales - 8*12=Rs. 96 = approx 100crore. SO thats the size. So the people who were initially not buying the shampoos, because of sachet will start buying it. TRENDS IN SACHET MARKETING Consider the following examples highlighting the SACHET MARKETING trend:
In Brazil, fast moving consumer goods giant Unilever sells Ala, a brand detergent created specifically to meet the needs of low-income consumers who want an affordable yet effective product for laundry that is often washed by hand in river water. In India, Unilever successfully markets Sunsilk and Lux shampoo sachets sold in units of 2-4 dollar cents; Clinic All Clear anti-dandruff shampoo sachets at 2.5 rupees each; and 16 cent Rexona deodorant sticks. In Tanzania, Key soap is sold in small units for a few dollar cents.
Filipino telco Smart has turned its customers into salespeople: the Smart Buddy System allows cell phone customers to resell their unused credits, which not only eases the strain on cash flow, but earns them money as well! For each 1,000 pesos sold, the 'merchant' receives a 150 pesos commission.
Mexican Banco Azteca, which launched in December 2002, is gearing a 'less is more' approach towards 16 million Mexican households who make too little (from USD 250-1300 a month) to attract the interest from established financial institutions. These Mexican consumers, even those without a bank account or solid proof of income, can now apply for a savings account, wire transfers, mortgages, or small one-year loans (sometimes purely based on their personal possessions).
The force behind Banco Azteca is Grupo Elektra, Mexico's largest appliance retailer. Their 800+ appliance stores double as bank branches, and quite often bank clients are loyal Grupo Elektra customers as well, giving them a partial credit history.
Grameen Phone, Bangladesh's leading cell phone operator, is offering a special low-priced package to so-called 'phone ladies' in small villages, where fixed telephone lines are nonexistent. The phone ladies share their cell phones with other villagers at a few take a call.
In a surprising twist, Microfinance, which has blossomed in emerging economies in Asia, Africa and Latin America, is now also catching on in mature economies. The practice, which involves lenders granting small business loans to entrepreneurs with low incomes or poor credit histories, is now tax deductible in the US and the UK. In the UK alone, more than 20 microfinance banks (like WEETU for women and PRIME for entrepreneurs over the age of 50) qualify for the tax program. Another 40 are on the way, waiting to be accredited.
Participating UK businesses usually have fewer than five employees, and require unsecured loans of between EUR 1,500 and 15,000.
Whirlpool is cashing in on its line of inexpensive yet stylish washing machines in Brazil, India and China. Both price and looks have received a SACHET MARKETING makeover: Machines cost USD 150 - 200 (about half of the US average) and are customized to local tastes. For example, in Brazil, customers wanted to see the machine operate, so Whirlpool made a transparent acrylic lid, that also happens to be cheaper than glass. Machines also have a smaller capacity, because lower income Brazilians do laundry more frequently. In China, where washers are considered status symbols and are often placed in living rooms due to lack of space, extra attention was paid to sleek looks. Wash cycles were named on a by-country basis (in India, the delicate cycle is called the 'sari' cycle). And like microfinance, Whirlpool is already exploring the possibility of bringing these 'people's washers' to Europe and North America. (Source: WSJ.)
By observing changes in consumer behavior and in business thinking, on a broad a scale as possible. So whereas INSPERIENCES may be about conspicuous consumption, our sachet marketing trend caters to the other end of the spectrum: those consumers who cannot (yet) afford to fully be part of the consumer society. As you may recall, when we introduced our sachet marketing trend, we noted that two-thirds of the world's population makes USD 1,500 or less per year.
This is not to say that there's no market opportunity: according to a recent article in Foreign Policy by University of Michigan Business
School professor C. K. Prahalad, and Allen Hammond of the World Resources Institute, the 18 largest developing nations are home to some 680 million families earning USD 6,000 a year or less. These low-wage earners take in USD 1.7 trillion a year -- roughly the size of Germany's gross domestic product. The money is there, but why try selling these consumers expensive, bulky goods and services originally designed for consumers who easily make thirty times as much in North America, Western Europe or Japan?
The solution: SACHET MARKETING, named after single-use shampoo sachets which sell for a few cents in emerging economies (for example, more than 60 percent of the value of the shampoo market and 95 percent of all shampoo units sold in India are now single-serve; source: Foreign Policy), which is all about microselling methods, about serving up products, services and loans in small portions and sizes, light versions, or single-use sachets, so that aspiring consumers can afford AND get to know and like your brand. Like the Smart Buddy system in the Philippines we recently highlighted, and Banco Azteca in Mexico, Unilever in Tanzania, or Whirlpool in South America. With the number of aspiring MASS CLASS members steadily rising, SACHET MARKETING is on a roll. Time for some inspiring new spotting, proving that virtually every business discipline and B2C industry can play at this game:
DOMESTIC APPLIANCES Consul, a Brazilian affiliate of Whirlpool, has designed a fully automatic three-cycle centrifuge washing machine that costs no more than a clunky tank washer, about USD 220. In India, Electrolux Kelvinator launched a refrigerator that keeps ice frozen for up to six hours after a power failure, which is an
essential feature in a region plagued by blackouts. (Sources: NYT, Newsweek.)
FINANCIAL SERVICES, MICROFINANCE Bradesco, Brazil's biggest private bank, invested USD 100 million to set up very basic teller services (called Banco Postal) in underused post offices. Even though most depositors earn USD 65 a month or less, Banco Postal has already captured 1.6 million new accounts, and is expected to break even soon.
In India, India's ICICI Bank together with engineers at the Indian Institute of Technology in Chennai have built the first rural ATM to serve micro-savers in remote areas of the subcontinent. It can process small denominations (normal ATMs don't dole out 10-rupee notes, yet many Indian consumers need them) and worn notes that are the main currency in Indian villages, and at only $800, the machine costs less than one-twentieth of the price of a regular ATM. Meanwhile, Citibank India was the first in India to open onlineonly accounts for small savers. Customers with only USD 20 to deposit can get special convenience accounts whereby they do everything through ATMs, the Internet or the phone. The number of these accounts has surged more than 60 in the past year to one million.
PACKAGING
With sachet marketing innovations taking off, it will come as no surprise that the sachet itself is ready for innovation too. Check
out Snap! International and Snap Pak, two companies that provide packaging of sachet products and a unique new advertising medium. The units are designed to open and dispense the product with a two-fingered snap-and-squeeze (rather than cutting or tearing). In addition to more convenience, one side of the packaging can be printed with high-resolution, photographic quality artwork. For more info, see an earlier article on Springwise New Business, our other website.
TELCO The Cell Phone is the new Car, and nowhere does this ring more true than in SACHET MARKETING prone regions! For example, one of the most popular cell phones in rural India is the sturdy Nokia 1100, which is advertised as dustresistant and doubles as a flashlight, as power supply isn't always as reliable as it should be.
In China, China Mobile brought out the Shenzhouxing brand, aimed at low-end users, many of them rural. The brand offers plans with heavy roaming restrictions that cost as little as 0.20 yuan a minute, a price that rural residents, most of whom rarely travel, are willing to pay. Low-end wireless services from Netcom and China Telecom - also with restricted roaming - are comparably priced. And this May, in the run-up to Mother's Day, Brazilian consumers snapped up 1.5 million cell phones, the vast majority of them 'prepagos' -- basic, cut-rate handsets that operate on prepaid phone cards and which can be had on installment plans for as little as USD 3 a month. In neighboring Venezuela, BellSouth International's USD 4 phone cards (instead of the usual USD 10 or USD 20 cards) are wildly popular, and sell at more than 30,000 retail outlets. (Sources: IHT, Foreign Policy, Newsweek.)
AUTOMOTIVE
At the lower end of the MASS CLASS you'll find consumers dreaming of owning a Volkswagen Golf, though insufficient funds may entice them to go for a Chery QQ or Renault X90 instead. These new 'MASS CLASS' cars, sometimes costing less than 2000 euros, come in 'light' versions, though sport nice enough design to not be uncool.
TRAVEL
And in an interesting (if not ironic) twist, 'mature' members of the consumer society are discovering the convenience of sachets: both Mikrotravel and TravelBags offer stylish sachet kits to service last minute travelers, or those just tired of having to lug around a multitude of heavy flasks and tubes.
Cigarettes: We have seen the minimum pack of 10 cigarettes. They can introduce packs of 4 cigarettes. So the users who smoke 1 or 2 cigarettes at a time, will like to buy 4 as it will be economical. Just take case of Wills Classic - Rs. 65 for 20 sticks, so mathematically it should be Rs. 13 for 4. Now the
loose cigarettes are sold at Rs. 16 for 4 sticks. So consumer will see a benefit of Rs. 3.
Salt packs of Rs 1: This will help in travelling
From mikroTRAVEL's website: "We address the needs of the consumer whilst away from home with innovative personal care and grooming products that can be easily used at the beginning and end of the day. Our products will allow you to reduce the time spent packing toiletry containers that are too bulky to travel with and too time consuming to use." It's a SACHET world, indeed!
RCOM targets rural customers with new services & sachet pricing for mobile Internet access. RCOM targets rural customers with new services & sachet pricing for mobile Internet access. Reliance Communications, India’s largest dual network operator and one of India’s biggest telecom player has introduced major strategic initiatives aimed at growing the mobile telecom and internet penetration in Rural India. This is in line with the company’s objective of bridging the Digital Divide. With this rural drive, RCOM is launching three initiatives i.e. 1- BharatNet plan 2- Grameen VAS 3- M2M (Machine to Machine) solutions. 1-BharatNet Plan: RCOM’s strategy to drive rural internet penetration. Today, there is an existing addressable market base of around 4 million PC users in rural India. However these users are faced with an inherent limitation of dial-up services on quality, speed and an effective broadband service, which are currently available only to urban territories.
To address this clear need, RCOM is launching BharatNet plan, the highspeed wireless internet service in over 20,000 rural locations across the country. This will be a high-speed variant of its Reliance Net Connect service, but specifically designed for the rural and sub-urban markets offering speeds of approximately 153 Kbps, which is 4 to 8 times the current dial-up speed of the wire-line services. Additionally, speed quality will improve since it is no longer dependent on the quality of the copper wire. As part of this, RCOM is offering Bharat Net internet access for just Rs 98 /week with downloads upto 350 MB. With this sachet pricing, RCOM plans to create appeal with both, casual and heavy users. This tariff will be available across rural India excluding the metros and top 100 cities. OPPROTUNITIES: Thinking small in large volumes -- the essence of SACHET MARKETING -- yet never losing brand focus, could open up entirely new markets for many of the worlds B2C and B2B manufacturers and service providers. If your customers are willing but cash strapped, think micro loans, think mini-sizes, think leasing, think bundling, think reselling! It will make you money, AND lay the foundation for brand awareness with future affluent customers. And as the microfinance and Whirlpool examples show, some of the thinking may eventually translate in innovative products for mature markets as well. With SACHET MARKETING innovations taking off, it will come as no surprise that the sachet itself is ready for innovation too. Check out Snap! International and Snap Pak, two companies that provide packaging of sachet products and a unique new advertising medium. The units are designed to open and dispense the product with a two-fingered snap-andsqueeze(rather than cutting or tearing). In addition to more convenience, one side of the packaging can be printed with high-resolution, photographic quality artwork Tapping the Indian Rural Market through SACHET marketing:
Ten years ago, foreign consumer products were scarce in India and only available to the affluent. Import restrictions prevented or severely hindered foreign consumer goods from entrance to India. With the economic liberalization that ensued, foreign brands are now prevalent across India (Luce,2002). Today, multinational corporations view emerging markets such as India as prime opportunities for growth. According to Shanthi Kanaan, writer for The Hindu, rural markets are growing twice as fast as the urban markets (2001).With a rural population equal to just under 2.5 times the population of the entire United States as of the 2000 census, the potential consumer base is astounding. But generally speaking, success in India’s rural markets for multinational corporations has been mediocre at best. It is from these struggles and failures, however, that multinational corporations seeking to enter the rural Indian market can learn how to do so more wisely. Kellogg’s‚ is an excellent example of a company that has struggled in the Indian market. Kellogg’s entered the Indian market in the mid-1990’s. They had the intentions of finding a new market, which would consist of over a million people, many of whom did not eat cereal. What Kellogg’s discovered was that they were introducing a completely new product category. This meant they would have to invest large sums of money to create new eating habits in consumers. The most common Indian breakfast consists of biscuits and tea (Dawar and Chattopadhyay, 2002).While Kellogg’s was busy creating new eating habits, local competitors were able to snatch away portions of India’s already small cereal market by introducing local cereal flavors at lower prices (Prahalad and Lieberthal, 2003). The unimpressive sales that followed in their first three years resulted in Kellogg’s needing to completely realign their marketing to meet local needs as well as introduce a line of inexpensive breakfast biscuits. Disappointments like this have caused companies who seek to enter the rural Indian market to reevaluate their entire approach to sachet marketing.
HUL is credited with pioneering sachet marketing in India - a marketing format that refers to selling in small packs with low unit price so as to be affordable to people with low disposable incomes. Interestingly, Aditya Nath Jha, vice-president and head of global branding Infosys Technologies, came up with a completely different take on marketing to the bottom of the pyramid. He said Infosys sold jobs because, as a knowledge company, its main resource is talent. “The key question before us was how to get talent without reducing the currency for selling jobs - domain skills, communication skills and analytical skills,” Jha said. “We did it through our Campus Connect programme which trains people coming from diverse backgrounds, including from lowincome and rural households,” he said. Advertising guru Alique Padamsee brought up the rear by declaring the rural poor may seem to be visually illiterate but “they are aurally smart.”With rising disposable incomes, they have emerged as a huge business opportunity.
CONCLUSION Thinking small in large volumes -- the essence of SACHET MARKETING -- yet never losing brand focus, could open up entirely new markets for many of the worlds B2C and B2B manufacturers and service providers. If your customers are willing but cash strapped, think micro loans, think mini-sizes, think leasing, think bundling, think reselling! It will make you money, and lay the foundation for brand awareness with future affluent customers. And as the microfinance and Whirlpool examples show, some of the thinking may eventually translate in innovative products for mature markets as well. Keeping in mind the low literacy levels at the BOP, it is important for companies to help consumers associate their products visually. Emotional Surplus Identity (ESI) is a concept in which packaging of a
brand is made distinctive to the eye of the customer by applying a particular shape, color, and content. A brand’s value could be communicated in a better way through attractive packaging that has a ready appeal to the human eye. It’s not all about low pricing product customization plays a pivotal role Visual communication is important given the high illiteracy rate.
