‘Happy margins turn retailers into brand ambassadors’
By Swaminathan Balasubramanian | August 13, 2019
Palakkad based company Good Buy Soaps and Cosmetics launched ‘Cutee-The Beauty Soap’ in the market in 2014, focusing on a segment that wanted good quality products at a low price. The brand now sells around 3.5 million pieces in the South market which comes in 10 exotic fragrances. The group’s turnover grew from Rs 56 lakhs in 2007 to Rs 50 crore by FY 2018-19. In an exclusive chat with Retail4Growth K.P.Khalid, Managing Director, Good Buy Soaps and Cosmetics talks about the success of his brand and the expansion plans.
How did GoodBuy enter into the retail segment?
To attract retailers, normally, we think that retailers are not much calculative or very conventional in their accounts. However, the fact is different. Every retailer has a daily sales target, especially in the case of FMCG products. This product gives them a guaranteed margin, and they know what the customers will buy and what it is going to sell, because of that they are much attracted in their margins. Normally, m0st of MNCs were not providing proper margins or happy margins to retailers. In my case, I provide 'Happy margins' to retailers. After giving a margin, if the product positioning and packing is good and bigger in size, the retailers start to sell it to the consumer with a better recommendation. This magic had worked in rural market first.
In the rural market, the customer knows the retailer well and vice-versa. Because they are all daily buyers. It is always the lady in the family who does the product purchase. Any product which is given by retailers with recommendation is accepted by consumers, as there is authentication on that. Thus, a retailer who is an influencer for the customer has become an ambassador for my brand. If the product is good people think that is viable definitely and they will come back and ask for the product. If the product is economical, then definitely they will buy the product.
How did the product got recognized by the people without any marketing campaign?
For my brand, the retailer is the brand ambassador. A retailer will always calculate his rent, electricity and other expenses while taking a profit from a product. Thus, if we are going to give them more than the expected profit, the retailer will sell the product on the capacity of being our brand ambassador. Thanks to our constant effort, our products started finding place in the front positions in racks and we have always focused mainly in the rural market. Information spreads faster in the rural part of India and 'word-of-mouth' was the biggest support to take our product to the next level. Thus, there was no real need for promoting our product through any forms of mass communication.
What were the challenges you faced while promoting the product through retail?
The initial challenge was product placements. Secondly, getting a good salesperson is also difficult. I have appointed one salesperson for two to three districts and instructed him to appoint a distributor who is also a self-employer. To reach out to the market, we found small distributors who are having their own vehicles. In most cases, the business owner himself goes to the market and promotes the product. I told my distributors to find out small distributors who can work as a sales-executive for us. This strategy has helped us and later on every single panchayat of Kerala we had distributors, and have thus overcome with the issues of unavailability of a salesperson. We addressed it with distributors who have voluntarily come across to promote the product. As a brand, we had given ample commissions which had more margins. Normally, a soap brand might give 7% to 8% margin while our standard rates are up to 11% and sometimes even more.
What type of soap variants you have?
For the Cutee, we have ten variants plus one international variant. 50% of the sale comes from sandal. We also have some exotic range of soaps and have some different fragrances which is accepted well in some parts of Kerala.
Which retail format is supportive for you?
Our presence in the rural market is 80-90 %. In suburban market we have around 60 to 70% placement, of course in the main towns and urban we don't have much placement even in the modern market. In some of the major retail chain like Reliance we have more stocks. Our products are also available at Bismi hypermart in Kerala. But our products are not available in some of the local A class supermarkets as the requirement of margin they need is very high, and sometimes if they promote the product they give very high discount like twenty rupees soap for fifteen rupees, which affects the small retailers, these are some of the challenges we face. But our products are available at modern supermarkets except Big Bazaar.
What are the in-store activities you do in a store?
We don't do much in-shop activities. Class-A supermarkets are aware about our products but we don't have much placements but we do have some displays over there also. In case of rural grocery shops, stationeries and fancy shops we have good placements like good rack presence. And if there the product is selling better than it is attractively displayed at the shop. You don't need to pay much fees for displaying the products in rural shops.
Whereas, in the case of A-class supermarkets, you have to pay for the racks to display your product and have to appoint a person to keep an eye on the racks. And if your representative is away from the place the rack gets stolen from the place. However, in case of small shops and stationery definitely, they have their own racks with the most sold product is kept nearest and visible to serve easily by the shopkeeper we don't spend much on this display or in shop activities. Initially we did a lot of in-store campaigns at many parts of Kerala like sample giving, putting a table in front of shops and displaying the products, making it available for the customer to feel the product. Truly speaking, now, we own 44% market share in Kerala. In fact, put together if you take 20% to 30% of the whole soap market is controlled by Cutee.
What are your expansion plans?
We had already started our operations in Coimbatore, which will be commenced by the end of August this year. This will be a huge factory with most advanced technology, in terms of advanced and contemporary machinery with quality control facilities, lab facilities and has a huge capacity to produce fifty to sixty tons per day. We have already started selling in Tamil Nadu, Karnataka, Andhra Pradesh also so we are going to focus in these three states. Our plan is to achieve one thousand crores turnover in another five years.
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