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Buying less, more often: An evaluation of sachet marketing strategy in an

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DOI: 10.1362/146934709X414297

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Buying less, more often: an evaluation of sachet
marketing strategy in an emerging market1
Ramendra Singh, Indian Institute of Management Ahmedabad,
India*
Rodolfo P. Ang, John Gokongwei School of Management, Ateneo
de Manila University, Philippines
Joseph A. Sy-Changco, University of Macau, China

Sachets have for several decades now, been marketed by firms as a strategy
to increase trials and market penetration especially in the economically
underprivileged societies of the emerging markets. Very often the existence

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of an economic underclass is assumed to be a necessary prerequisite for the
successful implementation of sachet marketing strategy. The article challenges
this stance, and through our exhaustive and penetrating analysis of the pervasive
and successful use of sachet marketing in an emerging market like India, provides
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a managerially relevant theoretical framework to evaluate the sachet marketing
strategies of firms marketing in India. Our new theoretical framework, grounded
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in the relevant literature, is also coherent with the recent business practices. We
find that sachet marketing strategy does not necessitate the prevalence of poverty,
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and the critical success factors are an extensive retail distribution, favourable
socio-cultural factors, higher perceived value by the consumers, and technology
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to reduce packaging costs.

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Keywords Sachet marketing, Penetration strategy, Bottom of pyramid, Perceived

value, Unit price.
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Introduction

Sachet marketing, or the practice of serving products and services in small,

affordable sizes, is widely used to tap the lower-end market, nowhere more
successfully than in India, and in a few other south-east Asian nations such
as Philippines and Indonesia. The importance of the single serve shampoo
sachets in India can be gauged by the fact that it makes up more than
95% of industry sales in units, constituting 60% of sales value (Hammond

1
An earlier version of this paper was presented at the 2007 AMA Summers Educators
Conference, Washington DC, USA.

*Correspondence details and biographies for the authors are located at the end of the article.

The Marketing Review, 2009, Vol. 9, No. 1, pp. 3-17 doi: 10.1362/146934709X414297
ISSN1469-347X print / ISSN 1472-1384 online ©Westburn Publishers Ltd.
4 The Marketing Review, 2009, Vol. 9, No. 1

and Prahalad 2004). Clearly, the sachet has become an important device
for reaching the untapped market of the economic underclass. But is the
prevalence of poverty the main requisite for successful sachet marketing? If
poverty was the main reason for the success of sachet marketing, it should
have seen much more widespread popularity in countries much poorer than
India: Pakistan or Vietnam, for example. If the existence of a large economic
underclass is not the sole driver of sachet sales, then what factors contribute
to the success of sachet marketing as a tool for intensifying sales and market
share? What factors make a market more or less susceptible to the practice
of “buying less, more often”?
The term “sachet marketing” connotes marketing single-use shampoo
sachets which are sold for a few cents in underdeveloped and emerging
markets. We define “sachet marketing” as the entire marketing strategy
involving designing, packaging, and selling a product/service in a small pack
size at an affordable price point to consumers. The “affordability” aspect of
sachet marketing can be either in terms of lower price point (e.g. a sachet

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of shampoo would cost less than a bottle of shampoo, regardless of the
effective cost per ml, or in terms of unit cost (e.g. cost per ml of shampoo
in sachet form versus cost per ml of shampoo in a bottle). But the focus of
sachet marketing is not just on the product design or pricing, but rather
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on the entire marketing system: from pricing and packaging to delivery,
distribution, and usage occasion.
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This article seeks to take a closer look at the sachet marketing phenomenon
in India. We aim to provide both an historical perspective and a contemporary
snapshot of sachet marketing in the country, and identify some lessons and
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generalisable principles that can be drawn from the Indian experience. The
rest of the paper is laid out as follows: we first review the relevant literature
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on small size consumption and marketing. We then propose a theoretical

framework, discuss some barriers to the success of sachet marketing, as well
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as successful case studies in an Indian context. We finally present managerial

implications of the study and end with concluding remarks.
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Literature review

Although initially sachets became popular as a tool to encourage product

trials (sampling), today they have become one of the key drivers of product
sales in volume terms, especially for customers at the middle and bottom of
the economic pyramid. Sachet marketing is also described as the practice
of “thinking small, but in large volumes” (Trendwatchers 2004). Moreover,
companies are beginning to tap into the hitherto untapped markets with
different pack sizes in the wake of increased competition in the consumer
goods’ category (Elliott 1993). Since little empirical research has been carried
out involving sachet marketing, we draw insights from extant studies on
packaging. Folkes, Martin, and Gupta (1993) suggest that consumers may
prefer large pack sizes over small ones to reduce their concerns of running
out of the product. Another reason cited is that of lowering their transaction
(replacement) costs for using the product (Lynn 1992; Worchel, Lee, and
Adewole 1975). Wansink’s (1996) study on the effect of package size on
consumption concludes that consumption tends to increase when product
 Singh, Ang and Sy-Changco Buying less, more often 5

issuance is in larger sizes, largely due to the consumers’ belief that unit cost
is reduced when the product is purchased in larger packages. However the
actual unit cost may be different from the perceived unit cost of the product.
An interesting conclusion from this study is that large pack size itself does
not increase usage volume, but rather it induces lower perceived unit costs
as a result of which usage goes up. Thus pack size and usage volume are
independent. This finding is consistent with an earlier study by Granger and
Billson (1972), which found that consumer migration to larger sizes, was
greatly accelerated when the lower per-unit cost was clearly indicated. On
the whole the studies have two important implications for sachet marketers:
(1) Since sachet is a small pack size, consumers would perceive it to have
higher unit cost (compared to large pack sizes), thus reducing their usage
volumes or consumption, and (2) Customers who cannot afford large pack
sizes (due to increased risk or lack of affordability), will find the sachet’s
lower price point attractive enough to induce trial and initiate consumption
activity. Moreover from consumption perspective, since large-size packs

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are more difficult to control and more prone to product wastages (Stewart
1994), the sachet offers additional benefits of control of use and lower
wastages. Reduced wastages further reduce the unit cost of the sachet. From
a household storage perspective, sachets are better than large packs as they
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take up less space in a household inventory (Hendon 1986).
As packaging innovations make product sachets more economical not
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just in total cost but in per-unit cost as well, all consumers, not just those at
the bottom of the economic pyramid, should migrate to sachet sizes.
Rundh (2005) enumerates the different functions of packaging, and
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discusses how packaging can in fact be used strategically as a source of

competitive advantage. Four of the ten functions that he cites are directly
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served through sachet sizing: (1) to provide consumer convenience, (2) to

contain prices, (3) to promote hygiene and safety, and (4) to be the source of
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innovation. Garber’s earlier study (1995) already points out the important role
that packaging plays in product choice. More recent studies have specifically
looked at the question of product size as a strategic tool (Jardine 2006; Lee
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2006), and downsizing as a competitive response to supersizing (Dickenson

2005; Packaging Digest 2006; Rigby 2006). Creusen and Schoormans’ study
(2004) points out the role that product appearance, and thus perception,
plays on consumer choice, and highlights the importance of considering the
affective, and not just the rational aspects of consumer behaviour.
However, much of the literature related to sachet marketing has been
anecdotal rather than empirical, and typically discusses sachet marketing
as a way for branded products to penetrate the market at the bottom of
the pyramid, or BOP (Prahalad 2004). Mahajan and Banga (2006) present
their strategies for selling to the poor, and identify many of the strategies
that define sachet marketing: filling the just-in-time pantry, allowing smaller
payments, combining products to conserve space, streamlining offerings to
make them more affordable. They discuss how economies of volume, rather
than economies of scale, are more important in sachet marketing, using
population density and the geographic concentration of BOP markets to
demonstrate how the resulting distribution efficiencies provide economies of
volume, if not economies of scale.
Although sachet marketing has been presented in the literature primarily
6 The Marketing Review, 2009, Vol. 9, No. 1

as a means for reaching the economic underclass and converting them from
non-branded to branded product users (Prahalad 2004; Mahajan and Banga
2006), there is really no reason to limit its potential. Drawing from earlier
studies that rational consumers were drawn to larger sizes because of the
lower per unit costs (Wansink 1996), it seems that if packaging innovations
and distribution efficiencies can bring down the cost of sachet sizing such that
per unit costs can now be lower than regular or super sizes, then consumers
at all (not just the lowest) economic levels can be drawn to use sachets and
increase both market share and total consumption of the product: well-off
consumers would purchase sachet sizes because of the lower per-unit cost,
and could even increase total consumption level because it is now more
affordable than before. Poorer consumers will patronise a branded sachet
item because they can now afford the product, and get dual benefits of
lower total cash outlay required for purchase, as well as unit cost.

Theoretical framework

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The two main sources of economy for sachet marketing have been considered
to be typically technological innovations in packaging design (Ramirez 2006)
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and distribution efficiency (Santos 2006).
In order to develop a theoretical framework to explain the factors
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determining the success of sachet marketing strategy, we look at some of
the studies determining consumption phenomenon in a cultural context.
Earlier studies have shown that affective factors play an important role in
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determining consumer choice. Few others have noted that economics also
has an important, but not exclusive role in determining the buying behaviour.
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Besides, socio-cultural factors are important in determining the success

of sachet marketing strategy. The theory on normative political ideology
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(Crockett and Wallendorf 2004) explains why even the poorest economic
segments of society desire to use branded products which have hitherto
been beyond their reach. Thus sachet marketing strategy is not just for the
BOP market, and the existence of an economic underclass is not the only pre-
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requisite for the successful deployment of this strategy. Conversely, economic

factors are not the only determinant of success for sachet marketing.
There are several other factors that drive sachet sales, one of them being
cultural factors. In the shampoo market, for example, South India contributes
to 70% of total sachet sales; while north India contributes to 50% of bottles’
sales. Besides the fact that the sachet was first introduced and popularised
by Cavin Kare in south India, we also observe that poverty alone is not a key
driver of sachet sales, as north India with BIMARU states (Bihar, MP, UP and
Rajasthan) constituting a sizable bulk of total population, are also the most
poor of all the Indian states. Hence, this phenomenon can be explained by
socio-cultural factors, given the fact that (for shampoo at least) sachets have
been adopted by rural and urban consumers alike across different income
categories.
One of the most important drivers of sachet growth in India has been
the retail structure of the country. Despite World Bank ranking India fourth
in terms of PPP after US, China and Japan, the retailing structure in India
is unorganised to the extent of 97% (Source: PricewaterhouseCoopers-CII
 Singh, Ang and Sy-Changco Buying less, more often 7

Report, “The Rising Elephant” 2006), with a modest 5% annual growth in

the sector. India is popularly known as a nation of shopkeepers as it has
over 12 million retailers (Source: PwC-CII report 2006). These mom-and-pop
stores reach every nook and cranny of the country’s hinterland and have
developed specialised skills and processes in not only retaining customers
but also in providing unmatched proximity, convenience and services that
the organised retail can probably never match, such as providing easy credit
to their customers. According to the PwC-CII report, the unorganised stores
would largely remain entrenched, despite the entry of large format retailers
in the near future. This scenario is similar to the retail story in China and
Mexico, where despite the presence of more than 100 large format stores of
Carrefour and Walmart, the domestic players hold more than 90% market
share; Mexico has in fact witnessed an actual 2% growth in the mom-and-
pop stores. The report also forecasts that 72% of the Indian population
that survive on agriculture and reside in the rural areas are most likely to
be impacted by the modern trade. Such opportunities in rural areas are

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likely to flow from sourcing to large retailers. Ever since large companies
have realised the multiple gains from cutting the supply chain inefficiencies,
several of them, both Indian and MNCs have started to build business
relationships directly with the farmers. One such example is that of ITC’s
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E- (a last mile infrastructure initiative), which has managed to reach out to
more than 3 million farmers to source soybean, coffee, wheat, rice, pulses,
C
and even shrimps, spread across 31,000 villages in India through more than
5000 kiosks in six states (PwC-CII Report 2006). Now even MNCs are tapping
into this network e.g. Philips is selling their lighting products through E-
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Choupal.
Another example of how modern trade is leading to the expansion of
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market pie and increased purchasing power of farmers, is that of RPG’s

Foodworld. Today, more than 40% of the merchandise of this store chain
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comes from 500 small scale industries (SSIs). Never before has India witnessed
such successful business relationships being built between marketing giants
like RPG and SSIs which also creates seamless supply chain synergies for
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both partners, and simultaneously has backward linkages’ related benefits

to farmers e.g. increased yield for their produce. Using small size packs or
sachets, Foodworld has also managed to increase the market size of jams in
India by 45%, without eating into the share of the existing brands.
Such initiatives will lead to an increase in financial capability, hence
affordability for the middle and bottom of the pyramid and also fuel growth
in market size in most product categories of mass consumption, through
successful sachet marketing strategies. Moreover, consumers at the bottom of
the pyramid are just as brand-conscious as anyone else and just as interested
in value (Wood 2006). Thus, for sachet marketing strategy success across
all strata of the economic pyramid, it is important that not only penetrative
pricing but more importantly high perceived value of the product sachet is
required. Sachet thus would have the dual benefits of lower price point and
lower unit cost, and score over large size packs, if the perception of value is
rightly positioned in consumers’ minds.
Moreover Wansink (1996) mentions that some products like consumer
and food products are more price elastic, and hence get substituted as their
prices rise, and are thus sensitive to pack size; on the other hand a few other
8 The Marketing Review, 2009, Vol. 9, No. 1

Figure 1 Socio-cultural and economic factors as determinants of

sachet sales success

Affordability

Socio-Cultural Factors
Sachet Sales Performance

Retailing Structure

Customers’ Perceived Value

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Usage Variance

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goods like medical products are less price elastic and hence less susceptible
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to changes in price and pack sizes. This characteristic of the product usage,
called “usage variance” is incorporated as a moderator in our suggested
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theoretical framework (see Figure 1).

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Barriers to sachet marketing success

However, the most important misconceptions about sachet marketing are
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that: (1) sachets costs more than regular packs, and (2) only customers with
cash flow limitations would consider buying sachets because of the poor
value that they provide.
While some companies are still unable to cost-effectively sell their
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products in sachet form, improvements in packaging technology, (in process

and materials), and greater efficiencies in distribution strategies have made
it possible to bring down packaging costs to make the sachets now cost less
per unit than larger pack sizes. Many manufacturers now find it cheaper to
pack their coffee, shampoo, or liquid soap in a strip of single-use sachets
than in a plastic or glass bottle, and their selling prices reflect this change
in their cost structures. Customers on both ends of the economic spectrum
now purchase products in sachet sizes, with sachet market shares for some
products rising to as high as 90% of total sales.
Sachets are not only attractive to sell in the BOP markets in India, but
also for their ability to penetrate the upper segments, which often buy in
bulk, yet now they can buy in sachet form: thus, instead of buying a 100-
gram bottle of instant coffee, they will buy an entire box of fifty 2-gram
sachets of instant coffee, or defer some portion of the bulk purchase, since
the unit cost of the sachet is better than for a large sized pack. In other cases,
it is the improved portability and/or dosage control that are attractive to
the upper class (Dinakar 2005): Napkins in travel packs fit into their trouser
 Singh, Ang and Sy-Changco Buying less, more often 9

pocket or purse, single-use shampoo sachets or soap bars are easy to bring
to the gym or on overnight trips. People who are trying to kick their smoking
habit want to purchase their cigarettes by the stick, because having a pack
of cigarettes handy causes them to smoke much more than they want to.
Instant coffee in a sachet lets you know exactly how much coffee you’re
putting into your cup, and exactly how strong your coffee is going to be.
Automated teller machines allow us to withdraw cash from the bank more
often, but in smaller amounts. Many people believe that having less money
in their wallet will encourage them to spend less. Packaging innovations such
as flip-top caps and snap-and-squeeze packs have also been important in
reinforcing the convenience proposition of sachet products, making them
even more attractive when compared against their full-sized equivalents. For
companies that are reluctant to go after the low-end market because they
feel that there is still plenty of opportunity to grow their existing business
in the wealthy segments of society, sachet marketing is still an interesting
strategy to pursue because if their sachets provide the consumer with more

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benefits than simple affordability, they can also be effectively used to tap into
the higher-end market.
We illustrate our arguments above through practice of sachet marketing
strategy by P&G in India, which is one of three significant sachet markets for
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P&G in Asia. The table below shows a comparison of sachet versus larger size
of shampoo. We see that the unit cost to the consumer of the sachet is 55%
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of that of larger pack size, thus corroborating the fact that sachets are not
only lower in total pack cost but also in unit cost.
Sachet sales in India thus hold higher market share by volume and
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value than bottles, as seen in Table 1. Indians, it seems, have a much higher
propensity to purchase sachets than bottles, preferring sachets 2.33:1 over
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bottles, due to a whopping 45% saving on sachet purchases (price index of

.5556). We also see that India compared to other S-E Asian countries has
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Table 1 Selected shampoo sales figures, Procter & Gamble [2005-06]

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P&G Philippines Indonesia India Vietnam

shampoo
sales, (FY
2005-06) Sachets Bottles Sachets Bottles Sachets Bottles Sachets Bottles
Market 66 33 57 43 70 30 39 61
share, by
volume
Market 68 32 63 37 56 44 37 63
share, by
value
Price/ml (in 0.0072 0.0077 0.0124 0.0094 0.004 0.0072 0.0053 0.0057
USD)
Per capita
GNP(2005) 1170 1140 620 550
in USD
Price index,
sachet/ 0.9351 1.3191 0.5556 0.9298
bottle
10 The Marketing Review, 2009, Vol. 9, No. 1

the largest market share of sachet by volume, and second lowest by value.
India’s case clearly demonstrates that due to an economical price index of
0.556, it has been able to successfully drive volume share compared to its
S-E Asian neighbours like the Philippines, Indonesia and Vietnam. Also per
capita GNP is not directly related to volume or value market shares of sachet
products (shampoo in this case).

Successful cases of sachet marketing strategy

The first ever sachet in India was probably introduced by tea companies,
Brooke Bond and Lipton some 60 years ago, and was called the “Paisa Pack”.
It consisted of a paper enveloped with tea, which could make 1 or 2 cups of
tea, and was priced at 1 paisa. It was mainly targeted at casual daily wage
workers, who could feed themselves from their daily earnings. This sachet
marketing effort was eminently successful and became the world’s largest-
selling retail pack in terms of numbers sold (Source: Packaging South Asia

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2007).
In more recent times, the Indian marketers have been targeting the
middle class and upper middle class segments of the pyramid using a
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market-skimming strategy (Dubey and Patel 2004), but due to increasing
saturation in these segments and clutter of competitive brands in consumers’
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minds, the bottom of the pyramid segment was the only one left largely
untapped. With rural customers’ rising aspirations, the companies tried
to capitalise on their need for association with premium brands, and the
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only perceptual barrier seemed to be the notion of affordability, if reach

was achieved. Despite the prevalent notion that rural customers are poor
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and would respond to price cuts, the marketer soon learnt that even in this
segment, a price cut was a signal of low quality goods. This has caused the
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large or medium companies to go for the “sachet culture” (Dubey and Patel
2004). Today the product categories that have undergone “sachet-isation”
include cold drinks, chewing tobacco(paan masala), ice creams, mineral
water, shampoos, detergents, chocolates, tea, coffee, toothpaste, nail polish
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and even ready-to-eat meals, and mobile recharges. There is no doubt that
sachet-isation has made successful the shift in FMCG companies’ strategy
from market-skimming to that of penetration.
One of the most spectacular successes has been that of the chewing
tobacco, popularly known as ‘paan masala’ which is a very popular form of
chewing tobacco (also called Gutka or Zarda) and non-tobacco, mainly as
mouth fresheners. Earlier paan masala used to be available in 250gm packs
at Rs 50. But later sachets came out at Rs 2 for 5 gms and became an instant
hit among consumers, even though the unit cost of a sachet came to be
almost twice that of a pack.
Sachet-isation in India has been most successfully used for increasing
product trials, promotional purposes, increased frequency of use, increased
affordability, reach, storage, and portability (see Table 2 for classification of
target segments). For example, to increase the low consumption of coffee
in the market, companies have extensively promoted 50g packs and cup
sizes, which together account for 60% of the category sales (Globus 2002).
It is also well known that companies charge differential prices on different
 Singh, Ang and Sy-Changco Buying less, more often 11

Table 2 Target segments of various package sizes (adapted from Dubey and
Patel 2004)

Target segment Large & medium Sachet size

package size
Geographical coverage Urban and semi-urban market Urban , semi-urban and rural
market

Income group Higher and middle class Higher, middle and lower class

User frequency Medium to high frequency user Medium to high frequency and
occasional use

Retail store Large and mid-size stores with Even a small paan shop (kiosk)
requirements reasonable storage space can display and store.

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levels of brands in their portfolio e.g. HLL charged an 87% premium (Surf
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Excel) while P&G (Tide) charged an 80% premium for their 500gm pack size
compared to the respective sachet sizes (Economic Times 2004). Companies
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have also resorted to sachet-isation to shift consumer usage patterns e.g.
Bisleri launched a 500ml bottled water pack priced at Rs 5, which has not
only fuelled growth in volumes (consumers have shifted from 1 litre pack),
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but also due to Bisleri’s economies of scale has made sure that entry barriers
are sustained in this sachet product size, and except Bisleri, there is little
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chance of any other company becoming profitable in this pack size (Sen
2001).
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Other success stories in the Indian market include:

• Soap - Godrej introduced Cinthol, Fairglow and Godrej soaps priced

between Rs 4-5 in 50g sizes for economically weak states like MP, UP
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and Bihar. Similarly HLL has introduced Lifebuoy soap at Rs 2 for 50g
in several states.
• Biscuits - Britannia introduced its Tiger brand at Rs 3-4 in small packs.
Parle has also come up with glucose biscuits at Rs 2 to increase
penetration.
• Aerated drinks - Coca-Cola and Pepsi-Cola had around 2004
introduced 200ml bottles of soft drink priced at Rs 5, which was very
successful in rural markets.
• Toothpaste - Colgate introduced toothpaste in sachet form, not
targeted at lower income segment, but towards children, which has
become popular in hotels.
• Chocolate - Nestlé launched Nestlé Chocostick at Rs 2, and Cadbury
and Nestlé also launched several brands at Rs 5 like gems, KitKat,
Cadbury 5 Star. In the same year, such small packs increased Cadbury’s
volumes by 19% over previous year (Domain-b.com 1999).
• Tea - Small size pack (50 gms) has shown an increasing trend in
12 The Marketing Review, 2009, Vol. 9, No. 1

their market share from 32% to 45% between 1995 and 2000, and
contributes 31% to total volumes (Globus 2002).
• Detergents - Contribution of the sachet in the detergents market in
India has marginally increased from 10% to 11% between 2003 and
2004 (Blonnet.com 2004). In P&G, sachets contribute to 40% of its
Rs 200 core detergent business.
• Wheat Flour (Atta) - Pillsbury launched a 200g pack for Rs 5 targeting
low wheat consuming families.

The pioneering initiative in sachet marketing strategy goes back to 1976,

when CavinKare launched its ‘Velvet’ brand of shampoo in sachet form, and
more recently in 1999, it launched a 50 paise (1 cent) shampoo sachet under
the brand, ‘Chik’, which made the market share of this brand jump from 5.6%
in 1999 to 23% in 2003 (Ranganathan 2003). This strategy was matched
by its competitor HLL who responded with the launch of several of their
shampoo brands in sachets. Since shampoo has witnessed the maximum

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action in sachet marketing strategies, we look at a comparison of some of
India’s leading shampoo brands and their relative price differential between
their sachet and bottle packs in Table 3.
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Also it’s not only products that have been successful in sachet marketing,
but also services. Some of them being- low cost airline carriers, low budget
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mobile phones (bundled with low airtime charges). But an important case
is that of the growth of microfinance (self help groups and banks tie up
to provide small loans to people from lower income class) in India, which
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has led to economic and social empowerment of millions of people hitherto

living in poverty. Interestingly, regulatory forces can also promote sachet
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marketing e.g. Reserve Bank of India’s (RBI) recent guideline in 2006, that
all banks in India must provide the consumers with a “no-frills” savings bank
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account with zero minimum balance and a reasonable banking service, has
brought consumer banking closer to people, who had been hitherto left out
of it, and thus achieving financial inclusion of millions of urban and rural
underprivileged (Punnathara 2006).
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Table 3 A comparison of price differential between sachet and

bottle unit cost for leading shampoo brands in India (Source: www.
blonnet.com 2004)

Shampoo Company Unit cost Unit cost % Price

brand owning the (bottle) in Rs (sachet) in differential
brand per ml (at MRP) Rs per ml (at
MRP)
Clinic All Clear HLL 0.508 0.313 38%
Clinic Plus HLL 0.445 0.250 43%
Head & P&G 0.610 0.600 1.6%
Shoulders
Pantene Pro-V P&G 0.560 0.400 29%
Normal Hair
Sunsilk HLL 0.475 0.250 47%
Fruitamins
Sunsilk Black HLL 0.495 0.250 50%
 Singh, Ang and Sy-Changco Buying less, more often 13

Limitations of sachet marketing strategy

Noted Strategist, C. K. Prahalad states that small packs like sachets increase
affordability and thus encourage consumption and provide a choice for the
poor (Prahalad 2005). Moreover, the popular business press is going gaga and
making tall claims about the unqualified success of sachet marketing in the
Indian markets. Yet evidence indicates that there are some product categories
where sachets have failed to drive volumes, increase trials, fasten adoption,
or increase frequency of consumption versus their larger counterparts (large
pack sizes) e.g. in jam and milk powder categories, 500gm packs sell more
than their sachet counterparts (12gm sachet in jam; 3gm sachet in milk
powder). Thus the validity of Prahalad’s argument that the poor “look for
single-serve packaging” (Prahalad and Hart 2002, p.10) can be questioned.
Moreover ACNielsen’s study on rural markets in India reveals that for several
products, the largest contributing pack size is the same across rural and
urban areas (Dobhal and Das Munshi 2005). Another study by LG Healthcare

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in India also questions the benefits of sachets for marketers, as although
sachets have helped in increasing penetration, they have also caused a
decrease in overall consumption (Economic Times 2004).
The interesting insight that we get from the shampoo market is that
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even after 30 years of the introduction of sachets in this product category,
sachets have not been able to drive penetration in the Indian market. A study
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shows that all India penetration of shampoo is still at 14% (Urban - 40%;
Rural - 10%), despite the fact that sachets contribute 70% to total shampoo
sales in the Indian market. Another interesting lesson to be learnt is that of
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creating awareness and its link to product sales. We observe that although
product awareness does not differ too much between Urban vs. Rural areas
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(90% vs 80%), sales differ significantly (80% in Urban vs. 20% in Rural)
(Source:Sify.com 2007). This goes to show that despite high awareness,
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consumers in rural areas are not buying enough, despite the widespread
availability of sachets, while urban consumers are lapping the sachets up.
Maybe, even at the lowered cost, rural consumers are still not convinced on
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reasons for buying a shampoo (low perceived value), and are thus unwilling
to shift from other substitutes for washing their hair like detergents and local
remedies. Another possibility can be the lower consumption per use and
lower number of occasions that rural consumers versus urban consumers use
shampoo, which can be addressed through educating them on the proper
use of shampoo.
Thus consumer financial capability is not the only reason driving sachet
sales, and other factors like cultural and affective factors, the value that
individual consumers derive from use of sachets, and reach (retail distribution)
are also important to be considered by the marketers.

Managerial lessons from the Indian experience

Several lessons can be culled from the Indian experience:

1 While the presence of a large economic underclass is a necessary

requirement for the success of a sachet marketing strategy, it is not,
by itself, sufficient to ensure such success. Many countries poorer
14 The Marketing Review, 2009, Vol. 9, No. 1

than India have not proven to be significant sachet markets. Moreover

within India, the sachet has become more successful in urban areas
rather than rural areas (with lower per capita income).
2 The full potential of sachet marketing can only be realised as long as
unit costs for the sachet are lower than that for the full-sized pack.
Improvements in packaging technology and distribution efficiencies
are the main drivers of cost reduction for sachet products. The most
successful sachet items provide real savings in per-unit costs.
3 The most effective sachets provide benefits other than just affordability,
and are thus attractive to the entire economic spectrum. Among
these benefits are better portability, controlled dosage, and sustained
product quality, as promised by well known brands.
4 A critical success factor for any sachet strategy is the presence
of a distribution network that reaches into every corner of every
neighbourhood, making it convenient for residents to purchase
products only as needed and only in the quantities needed.

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Concluding remarks

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Sachet marketing has been applied to almost every product and service
category in India. It is easy to conclude that this success can be readily
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replicated in any other country with a large economic underclass. A closer
look reveals that many different factors, historical, cultural, and not just
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economic, have contributed to the success of sachet marketing in India. The

success of sachet marketing is due to its enthusiastic adoption by Indians from
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all economic brackets, and not just the lowest ones. Today, sachet marketing
strategy in India is being used to drive volumes rather than value (and profits)
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for the company, but unless companies adopt means to increase value to
consumers (especially rural consumers) and simultaneously reduce internal
operational costs (e.g. distribution and packaging costs), they are unlikely to
be successful for shoring up their bottom-line in the long run.
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From the researchers’ perspective, an interesting direction to extend the

present work would be to take a closer look at similarities and differences
between the sachet marketing experiences in India, Indonesia, and the
Philippines, to evaluate which other factors may have resulted in them being
the three most important sachet markets in Asia.

Acknowledgement

Comments from Anand Kumar Jaiswal on some ideas in the papers are
greatly appreciated.

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About the authors and correspondence

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Ramendra Singh is a Doctoral Candidate (Marketing) at the Indian Institute

of Management Ahmedabad. His research interests includes salesperson’s
customer orientation, salesperson’s performance, and marketing at the
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bottom of pyramid. He has published in Asia Pacific Journal of Marketing

and Logistics, Journal of Medical Marketing, and Global Business Review. His
research has been presented or published in the conference proceedings of
INFORMS, Academy of Marketing, and EMAC Doctoral Colloquium. He is a
member of AMA, and INFORMS.
Corresponding author: Ramendra Singh, Doctoral Candidate
(Marketing), Indian Institute of Management Ahmedabad, India, FPM
House 1; IIM Ahmedabad; Vastrapur; Ahmedabad 380015; India
T +91 79 66327901
F +91 79 66306896
E ramendras@iimahd.ernet.in

Rodolfo P. Ang is an Associate Professor and Dean of the John Gokongwei

School of Management, Ateneo de Manila University, Philippines. He is a
member of the Technical Panel for Business and Management Education of the
Philippines’ Commission on Higher Education, and Chairman of its Technical
Committee for Entrepreneurship. His research interests are in the areas of
 Singh, Ang and Sy-Changco Buying less, more often 17

entrepreneurship, family business management, and business franchising.

Dean Ang is currently enrolled in the doctoral program of the University of
the Philippines’ College of Business Administration. He completed his MBA
at Boston College, graduating Valedictorian of his class.
Rodolfo P. Ang, Associate Professor and Dean of the John Gokongwei
School of Management, Ateneo de Manila University, Philippines
T +632 426 1204
F +632 426 1204
E rang@ateneo.edu

Joseph Sy-Changco is an Assistant Professor of Marketing at the Faculty

of Business Administration of the University of Macau. Previously, he also
held the position of International Exchange Coordinator for his faculty for
13 years. He earned his PhD in International Marketing in 2007 at the Aston
Business School, Aston University in the United Kingdom. His area of research

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focuses on export marketing, organisational memory, consumer marketing,
and small and medium enterprises.
Joseph A. Sy-Changco, Assistant Professor (Marketing), University of
Macau, Macau, China
T +853 8397 4721
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F +853 2883 8320
E JosephS@umac.mo
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