Sachet revolution: Buy less, save more!

Aarati Krishnan

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 the new rage for low-priced sachets in the shampoo market has just reversed this logic. With most shampoo sachets, one saves more if one buys less.

The major shampoo brands have been so intent on cutting prices on the lower-priced versions, that the sachets actually cost less on a millilitre (ml) basis than the larger pack sizes. 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.

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This `reverse economy' holds true for most other brands too. A 10 ml sachet of Head & Shoulders Menthol would cost 50 paise per ml, but a consumer who goes for the 90 ml bottle would have to fork out 75 paise per ml. The recent introduction of 50 paise sachets is only likely to skew this equation further.

Doesn't this kind of price discount dilute the premium image of the brand? Maybe it does. This is probably why most players distinguish between their `recruitment' brands (brands targeted at first-time shampoo users and the premium brands (targeted at existing shampoo users).

While Cavin Kare has Chik as its recruitment brand, Nyle continues to enjoy a price premium. Similarly, HLL has used its well-recognised soap brand Lux rather than its premium Sunsilk, for its 50 paise sachet.

The expansion of the shampoo market after the Chik innovations proves the efficacy of the small unit pack strategy for volume expansion. However, there could be long term disadvantages to the low price strategy. If much of the expansion in the shampoo market is to happen at the lower end, this is bound to restrict margin expansion for players.

``But players are not really sacrificing margins in the sachet revolution,'' refutes Mr Nandakumar of Cavin Kare. ``Manufacturers are just passing on savings in packaging costs to consumers. The sachet is a real innovation,'' he feels. However, realisations per ml are bound to come down with extensive use of sachets. It is therefore difficult to dispute that a higher proportion of sachet sales could impact profit growth. But players probably feel that this is a price worth paying if it peps up the overall market growth rates.

There could also be another drawback to sachet sales. By encouraging users to buy less per purchase, are the players also encouraging switching brands? Could you actually lose consumers in the process? ``The sachet is an intermediate step in recruitment. Once the consumer tries your brand, you should try to upgrade his usage. This is best done by offering a range of pack sizes from the 8 ml sachet to the 100 ml bottle,'' replies Mr Nandakumar.

The players in the shampoo market probably feel persuading the consumer to take the first step, of switching from soaps or natural products to shampoos, as the most difficult barrier to surmount in this market. Once this is done and the consumer crosses over, getting him to use more of the same product or better products, is probably not as difficult.

Since price is the most potent weapon in the marketer's armoury, this is where most of the major players in the shampoo market are devoting their attention. And for HLL, which already controls nearly 70 per cent of the existing market, the only way to grow would be to expand the market itself.