sachet marketting

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JAIPURIA INSTITUTE OF MANAGEMENT

LUCKNOW

SACHET MARKETING

SUBMITTED BY: SUBMITTED TO:

Sheena Saxena (JIML-10-131) Prof. Shalini Singh

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)



ACKNOWLEDGEMENT

We express our deep gratitude to Shalini mam for her constantsupport, 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 andpackaging types. The three main types that you’ll see businessesuse for samples are the peel-away type that you often see inmagazines, the little tear corner packets and the newest versionwhich is an innovative container called Snap-pak that snaps openusing only two fingers. The peel-away type are typically used forperfume 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 beenovercome by the new snap open sachet – mainly they were hard toopen and splattered the contents easily.

Not only is offering a product sample sachet a great way to allowpotential new customers to try your product, it’s a fantasticbranding technique. Whether you buy the machinery needed andassemble the samples yourself or use a service to do it for you, it iseasy to add your company logo and some information to thesepackages. Even those who don’t try the product will still beexposed to your company’s branding. Tests have shown that it cantake up to seven times for a person to see your logo before itregisters on his mind. Clearly getting your company’s brand in frontof people as many times as possible is to your benefit.

Obviously, there are some products that will not be suitable for asachet but there are many that are ideal for this type of sample

package. Anyone who manufactures body care, skin care or haircare products will find these perfect to hold a one-time use amountof the product. Paint manufacturers could offer tiny samples forpeople to test the colors. Cosmetic manufacturers will find themuseful for allowing potential customers to test their products. Ifyour 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 therules of the FMCG game and is widely regarded as the man behindthe sachet revolution. The FMCG business is becoming increasingly



complicated with the biggie HLL competing with regional players invarious parts of India.

1983, C K Ranganathan started selling shampoos in a sachet with aninvestment of Rs 15,000 and dared to take on the multinationals,Lever and P&G, the unquestioned leaders in that segment.

FEW FACTS ABOUT SACHET MARKETTING:

• 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 usuallyinvolve promotional marketing products, it’s not very surprisingthat something as seemingly simple as a sachet could provide somany solutions to all types of businesses. If you are looking for some unique sachet marketingideas 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 yougive them out in a nice sachet. People will be less likely tooverlook the free samples or throw them away if they arepresented nicely with easy open containers.

Beauty samples. Attract the interest of female consumersby 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, youcould have sachets filled with condiments. It’s better to useyour own custom packaging than that of other brands.

Medicine. If you’re in the pharmaceutical industry, thesesmall bags can really come in handy. They can hold any type

of medicine, including viscous liquids. Hand cream andsanitizing wipes can also be placed inside of these packages.

Bath products. Sachets can also be useful in the hotelindustry. 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’sname designed on the packaging.

Now that we have some sachet marketing ideas, we need toorder a filling and packaging service from a good provider. The



right supplier should give you a variety of sachet sizes to choosefrom. We should also be able to have each packet designed withyour company logo and name. Remember, the ease of use andattractiveness of the packet will have a big impact on yourcustomer’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 oftenunderestimated by North American companies. Advancedequipment is used for the creation of sachet packaging. Any type ofliquid 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 onlything that can go into sachet bags. These days, people are puttingeverything from medicine to condiments inside of these pouches.You know those little ketchup or mayonnaise packets you find atrestaurants? Those are sachets. So are those little packets whichcontain medicinal swabs and bandages.

Contacting a manufacturer to help you produce a sachetmarketing 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 samplesMakeup



Insect repellants

Restaurants, hotels, pharmaceuticals, cosmetics: these arejust a few of the industries that use the services of sachetsuppliers. As long as you choose a good manufacturer, you can trustthat 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 topreserve the liquids within. Since air isn’t compressed whendispensing these products, there won’t be a risk of splatter orsquirting. Thus, you won’t receive complaints from consumers overruined shirts or tablecloths. There is even at least one companythat produces the Snappak sachets that easily snap open, instead ofthe old tear method, which is much less likely to splatter.

Why should you invest in sachet marketing? Well, think ofit as marketing investment. You can have thousands of thesepackages produced at once, all of which will have your company’sname and phone number printed! Tiny and disposable though theymay 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 tolarger pack sizes. The economy pack is the marketer's way of rewarding a consumer who buys more of his brand at one go. But in2001, the new rage for low-priced sachets in the shampoo markethad just reversed this logic. With most shampoo sachets, one savesmore if one buys less.

For instance, while a consumer buying the 8 ml sachet of SunsilkBlack (Rs 2) is paying just 25 paise an ml, a consumer buying the

http://www.sachet.us/

http://www.sachet.us/



larger 200 ml bottle would be shelling out 45 paise an ml.

But this was rectified after few months, so that sachets will be justconvenient and not economical.

The other viewpoint is that India is a huge market with 1.05 billionpopulation and around 0.2 billion household. So even consideringthe very low price of shampoos, if 20% of the household buy ashampoo sachet per month of Rs.2 then the monthy sachet shapoomarket is 0.2*0.2*2=Rs. 0.08 billion =80 million = Rs 8 crores .. soannual 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 oflow-income consumers who want an affordable yet effectiveproduct for laundry that is often washed by hand in riverwater. 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 2.5rupees each; and 16 cent Rexona deodorant sticks. InTanzania, 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 reselltheir unused credits, which not only eases the strain on cashflow, but earns them money as well! For each 1,000 pesossold, the 'merchant' receives a 150 pesos commission.



Mexican Banco Azteca, which launched in December 2002, isgearing a 'less is more' approach towards 16 million Mexicanhouseholds 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 accountor solid proof of income, can now apply for a savings account,wire transfers, mortgages, or small one-year loans (sometimespurely based on their personal possessions).

The force behind Banco Azteca is Grupo Elektra, Mexico'slargest appliance retailer. Their 800+ appliance stores doubleas bank branches, and quite often bank clients are loyal GrupoElektra customers as well, giving them a partial credit history.

Grameen Phone, Bangladesh's leading cell phone operator, isoffering a special low-priced package to so-called 'phoneladies' in small villages, where fixed telephone lines are non-existent. The phone ladies share their cell phones with othervillagers at a few take a call.

In a surprising twist, Microfinance, which has blossomed inemerging economies in Asia, Africa and Latin America, is nowalso catching on in mature economies. The practice, whichinvolves lenders granting small business loans to entrepreneurswith low incomes or poor credit histories, is now taxdeductible in the US and the UK. In the UK alone, more than

20 microfinance banks (like WEETU for women and PRIME forentrepreneurs over the age of 50) qualify for the tax program.Another 40 are on the way, waiting to be accredited.

http://www.weetu.org/

http://www.primeinitiative.org.uk/

http://www.weetu.org/

http://www.primeinitiative.org.uk/



Participating UK businesses usually have fewer than fiveemployees, and require unsecured loans of between EUR 1,500and 15,000.

Whirlpool is cashing in on its line of inexpensive yetstylish 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, soWhirlpool 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 areoften placed in living rooms due to lack of space, extraattention was paid to sleek looks. Wash cycles were named ona by-country basis (in India, the delicate cycle is called the'sari' cycle). And like microfinance, Whirlpool is alreadyexploring the possibility of bringing these 'people's washers' to

Europe and North America. (Source: WSJ.)

By observing changes in consumer behavior and in businessthinking, on a broad a scale as possible. So whereas INSPERIENCESmay be about conspicuous consumption, our sachetmarketing trend caters to the other end of the spectrum: thoseconsumers who cannot (yet) afford to fully be part of the consumersociety. As you may recall, when we introduced our sachetmarketing trend, we noted that two-thirds of the world'spopulation makes USD 1,500 or less per year.

This is not to say that there's no market opportunity: according to arecent article in Foreign Policy by University of Michigan Business

http://www.whirlpool.com/

http://www.whirlpool.com/



School professor C. K. Prahalad, and Allen Hammond of the WorldResources Institute, the 18 largest developing nations are home tosome 680 million families earning USD 6,000 a year or less. Theselow-wage earners take in USD 1.7 trillion a year -- roughly the sizeof Germany's gross domestic product. The money is there, but why try selling these consumers expensive,bulky goods and services originally designed for consumers whoeasily make thirty times as much in North America, Western Europeor Japan?

The solution: SACHET MARKETING, named after single-useshampoo sachets which sell for a few cents in emerging economies(for example, more than 60 percent of the value of the shampoomarket and 95 percent of all shampoo units sold in India are nowsingle-serve; source: Foreign Policy), which is all about micro-selling methods, about serving up products, services and loans in

small portions and sizes, light versions, or single-use sachets, sothat aspiring consumers can afford AND get to know and like yourbrand. Like the Smart Buddy system in the Philippines we recentlyhighlighted, and Banco Azteca in Mexico, Unilever in Tanzania, orWhirlpool in South America.

With the number of aspiring MASS CLASS members steadilyrising, SACHET MARKETING is on a roll. Time for some inspiring new

spotting, proving that virtually every business discipline and B2Cindustry can play at this game:

DOMESTIC APPLIANCES

Consul, a Brazilian affiliate of Whirlpool, has designed a fullyautomatic three-cycle centrifuge washing machine that costs nomore than a clunky tank washer, about USD 220. In India,

Electrolux Kelvinator launched a refrigerator that keeps icefrozen for up to six hours after a power failure, which is an

http://www.trendwatching.com/TRENDS/2003/06/MASS_CLASS.html

http://www.trendwatching.com/TRENDS/2003/06/MASS_CLASS.html



essential feature in a region plagued by blackouts. (Sources:NYT, Newsweek.)

FINANCIAL SERVICES, MICROFINANCEBradesco, Brazil's biggest private bank, invested USD 100 millionto set up very basic teller services (called Banco Postal) inunderused post offices. Even though most depositors earn USD 65a month or less, Banco Postal has already captured 1.6 millionnew 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 ATMto serve micro-savers in remote areas of the subcontinent. It canprocess small denominations (normal ATMs don't dole out 10-rupeenotes, yet many Indian consumers need them) and worn notes thatare the main currency in Indian villages, and at only $800, themachine costs less than one-twentieth of the price of a regularATM.

Meanwhile, Citibank India was the first in India to open online-only accounts for small savers. Customers with only USD 20 todeposit can get special convenience accounts whereby they doeverything through ATMs, the Internet or the phone. Thenumber of these accounts has surged more than 60 in the pastyear to one million.

PACKAGING

With sachet marketing innovations taking off, it will come as nosurprise that the sachet itself is ready for innovation too. Check



out Snap! International and Snap Pak, two companies that providepackaging of sachet products and a unique new advertisingmedium. The units are designed to open and dispense the productwith a two-fingered snap-and-squeeze (rather than cutting ortearing). In addition to more convenience, one side of thepackaging can be printed with high-resolution, photographic qualityartwork. For more info, see an earlier article on Springwise NewBusiness, our other website.

TELCO

The Cell Phone is the new Car, and nowhere does

this ring more true than in SACHETMARKETING prone regions! For example, one ofthe most popular cell phones in rural India is thesturdy Nokia 1100, which is advertised as dust-resistant and doubles as a flashlight, as powersupply 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 withheavy roaming restrictions that cost as little as 0.20 yuan a minute,a price that rural residents, most of whom rarely travel, are willingto 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, Brazilianconsumers snapped up 1.5 million cell phones, the vast majority of

them 'prepagos' -- basic, cut-rate handsets that operate on prepaidphone cards and which can be had on installment plans for as littleas USD 3 a month. In neighboring Venezuela, BellSouthInternational's USD 4 phone cards (instead of the usual USD 10 orUSD 20 cards) are wildly popular, and sell at more than 30,000retail outlets. (Sources: IHT, Foreign Policy, Newsweek.)

http://www.springwise.com/newbusinessideas/snapSachets.htm

http://www.springwise.com/newbusinessideas/snapSachets.htm



AUTOMOTIVE

At the lower end of the MASS CLASS you'll find consumers dreamingof owning a Volkswagen Golf, though insufficient funds may enticethem to go for a Chery QQ or Renault X90 instead. These new 'MASSCLASS' 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 theconsumer society are discovering the convenience of sachets:both Mikrotravel and TravelBags offer stylish sachet kits to servicelast minute travelers, or those just tired of having to lug around amultitude of heavy flasks and tubes.

Cigarettes :

We have seen the minimum pack of 10 cigarettes. They canintroduce packs of 4 cigarettes. So the users who smoke 1 or 2

cigarettes at a time, will like to buy 4 as it will beeconomical. Just take case of Wills Classic - Rs. 65 for 20sticks, so mathematically it should be Rs. 13 for 4. Now the



loose cigarettes are sold at Rs. 16 for 4 sticks. So consumerwill 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 theconsumer whilst away from home with innovative personalcare and grooming products that can be easily used at thebeginning and end of the day. Our products will allow you toreduce the time spent packing toiletry containers that are

too bulky to travel with and too time consuming to use." It'sa 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 broadbandservice, which are currently available only to urban territories.



To address this clear need, RCOM is launching BharatNet plan, the high-

speed 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 excludingthe metros and top 100 cities.

OPPROTUNITIES:

Thinking small in large volumes -- the essence of SACHETMARKETING -- yet never losing brand focus, could open up entirely

new markets for many of the worlds B2C and B2B manufacturersand service providers. If your customers are willing but cashstrapped, think micro loans, think mini-sizes, think leasing, thinkbundling, think reselling! It will make you money, AND lay thefoundation for brand awareness with future affluent customers.And as the microfinance and Whirlpool examples show, some of thethinking may eventually translate in innovative products for maturemarkets as well.

With SACHET MARKETING innovations taking off, it will come as nosurprise that the sachet itself is ready for innovation too. Check outSnap! International and Snap Pak, two companies that provide packagingof sachet products and a unique new advertising medium. The units aredesigned 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

Tapping the Indian Rural Market through SACHET marketing:



Ten years ago, foreign consumer products were scarce in India andonly available to the affluent. Import restrictions prevented orseverely hindered foreign consumer goods from entrance to India.With the economic liberalization that ensued, foreign brands arenow prevalent across India (Luce,2002). Today, multinationalcorporations view emerging markets such as India as primeopportunities for growth. According to Shanthi Kanaan, writer forThe Hindu, rural markets are growing twice as fast as the urbanmarkets (2001).With a rural population equal to just under 2.5times the population of the entire United States as of the 2000census, the potential consumer base is astounding. But generallyspeaking, success in India’s rural markets for multinationalcorporations has been mediocre at best. It is from these strugglesandfailures, however, that multinational corporations seeking to enterthe rural Indian market can learn how to do so more wisely.Kellogg’s‚ is an excellent example of a company that has struggledin the Indian market. Kellogg’s entered the Indian market in themid-1990’s. They had the intentions of finding a new market,which would consist of over a million people, many of whom didnot eat cereal. What Kellogg’s discoveredwas that they were introducing a completely new productcategory. This meant they would have to invest large sums ofmoney to create new eating habits in consumers. The mostcommon Indian breakfast consists of biscuits and tea (Dawar andChattopadhyay, 2002).While Kellogg’s was busy creating new eatinghabits, local competitors were ableto snatch away portions of India’s already small cereal market byintroducing localcereal flavors at lower prices (Prahalad and Lieberthal, 2003). Theunimpressivesales that followed in their first three years resulted in Kellogg’sneeding to completely realign their marketing to meet local needsas well as introduce aline of inexpensive breakfast biscuits. Disappointments like thishave causedcompanies who seek to enter the rural Indian market to reevaluatetheir entireapproach to sachet marketing.



HUL is credited with pioneering sachet marketing in India - amarketing format that refers to selling in small packs with low unitprice 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 differenttake on marketing to the bottom of the pyramid.

He said Infosys sold jobs because, as a knowledge company, itsmain resource is talent.

“The key question before us was how to get talent withoutreducing the currency for selling jobs - domain skills,communication skills and analytical skills,” Jha said.

“We did it through our Campus Connect programme which trainspeople coming from diverse backgrounds, including from low-income and rural households,” he said.

Advertising guru Alique Padamsee brought up the rear by declaringthe rural poor may seem to be visually illiterate but “they areaurally smart.”With rising disposable incomes, they have emergedas 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 aparticular shape, color, and content.A brand’s value could be communicated in a better way throughattractive packaging that has a ready appeal to the human eye. It’snot all about low pricing product customization plays a pivotal roleVisual communication is important given the high illiteracy rate.

sachet marketting

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