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					SACHET MARKETING
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.
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 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 non-
  existent. 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 micro-
selling 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 online-
only 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 dust-
  resistant 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 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 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-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 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 low-
income 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.