Analysis of the case THE NIRMA STORY

By Monica Tanwar (10BSP0715) Vijay Emanuel Francis (10BSP1215) Gunjan Malhotra (10BSP1120)

INTRODUCTION Nirma is a group of companies based in the city of Ahmedabad in western India that manufactures products ranging from cosmetics, soaps, detergents, salt, soda ash, LAB and Injectibles. Karsanbhai Patel, a well known entrepreneur and philanthropist of Gujarat, started Nirma as a one-man operation. Today Nirma has over 15000 employees and a turnover of over Rs. 3550 crores. In 2004, Nirma's detergent approached 800,000 tonnes one of the largest volumes sold in the world under a single brand 'NIRMA'. HISTORY In 1969, dr. Karsanbhai patel, a chemist at the Gujarat Government's Department of Mining and Geology manufactured phosphate free Synthetic Detergent Powder, and started selling it locally. The new yellow powder was priced at Rs. 3.50 per kg, at a time when HLL's Surf was priced at Rs 15. Soon, there was a huge demand for Nirma in Ruppur (Gujarat), Patel's hometown. He started packing the formulation in a 10x10ft room in his house. Patel named the powder as Nirma, after his daughter Nirupama. Patel was able to sell about 15-20 packets a day on his way to the office on bicycle, some 15 km away. By 1985, Nirma washing powder had become one of the most popular, household detergents in many parts of the country. By 1999, Nirma was a major consumer brand offering a range of detergents, soaps and personal care products. In keeping with its philosophy of providing quality products at the best possible prices, Nirma brought in the latest technology for its manufacturing facilities at six locations in India. Nirma's success in the highly competitive soap and detergent market was attributed to its brand promotion efforts, which was complemented by its distribution reach and market penetration. Nirma's network consisted of about 400 distributors and over 2 million retail outlets across the country. This huge network enabled Nirma to make its products available to the smallest village. Starting as a one-product, one-man outfit from a 100 sq ft (9.3 m2) room in 1969, Nirma became a very successful company within three decades. The company had multi-locational manufacturing facilities, and a broad product portfolio under an umbrella brand Nirma. The company's mission to provide, "Better Products, Better Value, Better Living" contributed a great deal to its success.

Nirma successfully countered competition from HLL and carved a niche for itself in the lower-end of the detergents and toilet soap market. The brand name became almost synonymous with low-priced detergents and toilet soaps. However, Nirma realized that it would have to launch products for the upper end of the market to retain its middle class consumers who would graduate to the upper end. The company launched toilet soaps for the premium segment. However, analysts felt that Nirma would not be able to repeat its success story in the premium segment. In 2000, Nirma had a 15% share in the toilet soap segment and more than 30% share in the detergent market. Aided by growth in volumes and commissioning of backward integration projects, Nirma's turnover for the year ended March 2000 increased by 17% over the previous fiscal, to Rs. 12.17 bn. In November, 2007, Nirma purchased the American raw materials company Searles Valley Minerals Inc. - making it among Top-7 Soda Ash manufacturer in the world. Nirma is one of the few names - which is instantly recognized as a true Indian brand, which took on mighty multinationals and rewrote the marketing rules to win the heart of princess, i.e. the consumer. Nirma, the proverbial Rags to Riches saga of Dr. Karsanbhai Patel, is a classic example of the success of Indian entrepreneurship in the face of stiff competition. Starting as a one-man operation in 1969, today, it has about 14, 000 employee-base and annual turnover is above Rs. 25, 00 crores. India is a one of the largest consumer economy, with burgeoning middle class pie. In such a widespread, diverse marketplace, Nirma aptly concentrated all its efforts towards creating and building a strong consumer preference towards its value-for-money products. It was way back in 60s and 70s, where the domestic detergent market had only premium segment, with very few players and was dominated by MNCs. It was 1969, when Karsanbhai Patel started door-to-door selling of his detergent powder, priced at an astonishing Rs. 3 per kg, when the available cheapest brand in the market was Rs. 13 per kg. It was really an innovative, quality product with indigenous process, packaging and low-profiled marketing, which changed the habit of Indian housewives for washing their clothes. In a short span, Nirma created an entirely new market segment in

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and quickly emerged as dominating market player a position it has never since relinquished. Rewriting the marketing rules, Nirma became a one of the widely discussed success stories between the world. The performance of Nirma during the decade of 1980s has been labelled as Marketing Miracle of an era. During this period, the brand surged well ahead its nearest rival Surf, which was well-established detergent product by Hindustan Lever. It was a severing battering for MNC as it recorded a sharp drop in its market share. Nirma literally captured the market share by offering value-based marketing mix of four Ps, i.e. a perfect match of product, price, place and promotion. Now, the year 2004 sees Nirmas annual sales touch 800,000 tones, making it one of the largest volume sales with a single brand name in the world. Looking at the FMCG synergies, Nirma stepped into toilet soaps relatively late in 1990 but this did not deter it to achieve a volume of 100,000 per annum. This makes Nirma the largest detergent and the second largest toilet soap brand in India with market share of 38% and 20% respectively. It has been persistent effort of Nirma to make consumer products available to masses at an affordable price. Hence, it takes utmost care to provide finest products at the most affordable prices. To leverage this effort, Nirma has gone for massive backward integration along with expansion and modernization of the manufacturing facilities. The focal objective behind modernisation plan is of up gradation with resource-savvy technology to optimise capabilities. Nirmas six production facilities, located at different places, are well equipped with state-of-art technologies. To ensure regular supply of major raw materials, Nirma had opted for backward integration strategies. These strategic moves allowed Nirma to manage effective and efficient supply-chain. Nirma has always been practiced value-for-money plank. Nirma plans to extend the same philosophy in categories as commodity food products, personal care products and packaged food. Distinct market vision and robust infrastructure allowed Nirma to have cost leadership. Apart from this, lean distribution network, umbrella branding and low profile media promotions allowed it to offer quality products, at affordable prices. the four-walls of the B-school classrooms across

In present scenario, an inspiring 59-year-old persona, Dr. Karsanbhai K. Patel, leads Nirma, playing role of key strategic decision-maker, whereas his next generation has already skilled management capabilities. Shri Rakesh K Patel a qualified management graduate, is spearheading the procurement, production and logistic functions, whereas Shri Hiren K Patel a qualified Chemical engineer and management graduate, heads the marketing and finance functions of the organisation. Shri Kalpesh Patel, Executive Director, leads the professional organisational structure. The man behind the success of Nirma phenomenon Dr. Karsanbhai Patel is a recipient of various awards and accolades. He has been bestowed with various awards like

Udyog Ratna by Federation of Association of Small-Scale Industries of Gujarat, New Delhi. Outstanding Industrialist of Eighties by Gujarat Chamber of Commerce and Industry, Ahmedabad (in 1990). Gujarat Businessman Award in 1998 by Gujarat Chamber of Commerce and Industry, Ahmedabad. Excellence in Corporate Governance Award by Rotary International District 2000. A&M Hall of Fame, _______.

Shri Karsanbhai has been awarded an Honorary Doctorate by Florida Atlantic University, Florida, USA in the year 2001 in recognition of his exceptional accomplishments as a philanthropist and businessman. This world has also recognised his ability, acumen and wisdom and in recognition of the services rendered by him in his various capacities. Dr. Karsanbhai Patel has also served as a Chairman for two terms to the Government of Indias Development Council for soaps and detergents, as a Member of Bureau of Indian Standards Committee for Soaps and Detergent Industries and President of Gujarat Detergent Manufacturers Association. In scorching heat of 1969, a son of small-time farmer was trying to mix Soda Ash and few other intermediaries, to make a detergent produce. He was a qualified Science graduate and was working as junior chemist in Government laboratory. As a moonlighting activity, he was making detergents in the 100 Sq. Ft. back yard of his home, using bare hands and bucket. Once the mixture is ready, he used to pack them in polythene bag and was selling door-to-

door Gradually, the product became well accepted in the consumer community, and the rest is known to one and all This is a success saga of a first generation entrepreneur, on his way to create history in the Indian marketplace - that was Dr. Karsanbhai Patel. In a short span, he captured the domestic market, with a quality product. He swiftly crafted low-to-medium consumer pockets a whole new consumer segment for detergent category. He took on mighty multi-nationals and rewrote the marketing rules. In true sense, he spearheaded the market revolution by offering innovative, value-for-money products, and changed the cloth-washing habit of Indian housewives - the revolution called Nirma. From initial days, Nirma believed in value-for-money equation, in creating and maintaining long-lasting relationships. It has always remained committed to offer better products, at better value, for better living Nirma is a customer-focused company committed to consistently offer better quality products and services that maximise value to the customer. This customer-centric philosophy has been well emphasised at Nirma through:

Continuously exploring & developing new products & processes. Laying emphasis on cost effectiveness. Maintaining effective Quality Management System. Complying with safety, environment and social obligations. Imparting training to all involved on a continuous basis. Teamwork and active participation all around. Demonstrating belongingness and exemplary behaviour towards organisation, its goals and objectives.

Nirma is a phenomenon and synonymous with Value for Money. The brand transcends the specific dynamic of any particular product category, which is best captured in its above mission statement - a statement of sustained innovation, an unceasing effort to deliver better value to consumers, through better product quality.

Vision, Mission & strategy Nirma is a customer-focused company committed to consistently offer better quality products and services that maximise value to the customer. This customer-centric philosophy has been well emphasised at Nirma through Continuously exploring & developing new products & processes. Laying emphasis on cost effectiveness. Maintaining effective Quality Management System. Complying with safety, environment and social obligations. Imparting training to all involved on a continuous basis. Teamwork and active participation all around. Demonstrating belongingness and exemplary behaviour towards organisation, its goals and objectives. Nirma is a phenomenon and synonymous with Value for Money. The brand transcends the specific dynamic of any particular product category, which is best captured in its above mission statement - a statement of sustained innovation, an unceasing effort to deliver better value to consumers, through better product quality. PRODUCT Nirma is aptly considered as a marketing miracle and this is reflected in the strength of the brand. Nirma has successfully challenged and changed the conventions of detergents marketing and today leading business schools are analyzing it's strategies to demystify this miracle. Nirma's core marketing thrust revolves around prompting consumer trials by offering a good quality product at most competitive price and retaining these new consumers by continuously offering the same 'Value for Money' equation. This is borne by the fact that today Nirma can boast of a strong brand loyalty from its 400 million consumer base. Based on the pragmatic concept of 'Umbrella Branding', Nirma has been increasingly successful in extending its brand equity to other product categories like Premium Detergents, Premium Toilet Soaps, Shampoos, Tooth pastes and Iodized Salt, thus opening new vistas to the field of Brand Building. Detergents Nirma dominates the popular detergent segment with brands like Nirma Popular powder, Nirma Detergent powder, Nirma bar, etc. Super Nirma detergent powder is positioned in the mid-priced segment. Detergent volumes in FY00 increased by 4.4% to 615,749 tons. Nirma Detergent Powder was launched in 1969, by Mr. Karsanbhai Patel. The product created a loyal customer base that increased day by day. In 1982 Nirma Detergent Powder became the largest selling detergent powder in western India and by 1989 the same was established on the national scene. The detergent when launched was priced one third that of the nearest competitor. The detergent powder was overnight converted into a common mans necessity from being a luxury of a few. The credit goes to the pioneer of this new environmental friendly technology, Mr. Karsanbhai Patel who lowered

the usage barrier and started the Nirma phenomenon which took the world by storm. After a period of more than 20 years the poly packet for Nirma Detergent Powder was changed in 1998 to differentiate it from me too look alike'. The strategy seems to have worked as consumers have successfully identified the new pack as a genuine Nirma product. The product today is available in two pack sizes 500 grams and 1000 grams. Super Nirma high quality spray dried detergent was launched into market in 1996 with a price 40% lower than the nearest competitor offering the same quality. Within a short span of two years Nirma Super Detergent Powder cornered substantial market share in the premium detergent segment. The brand targeted towards Nirma consumers who were shifting towards more sophisticated form of washing, clicked very well as the ever dependable Nirma Brand name assured high quality at affordable prices. The powder is available in 25 grams, 500 grams and 1000 grams in polypacks. Nirma launched a flanking brand named Nirma Popular Powder in selected pockets where Detergent powder usage was limited or the me too brands were eating into Nirma's share. The product was a good product available at prices that would switch people to use branded powder. The substandard products took a severe beating in the pockets where Nirma Popular was launched. It is available in 500 grams and 1000 grams pack sizes. The product with similar name and slightly different formulation is being sold in the exports market successfully. Nima Green Powder introduced in Q4 - '99 is Nirma's introductions in a segment which was not addressed by Nirma till then. This powder positioned in the economy segment has lingering fresh lime perfume. It scores high on cleaning efficiency and generates a good amount of lather leaving clothes sparkling clean. This powder is packed in multi-colour poly bag. This product is available in 500-grams and 1-kg packing and is sold exclusively through the efficient Nima distribution network. Driving the inspiration from its success in Detergent powder market, Nirma expanded its product portfolio by introducing Nirma Detergent Cake in 1987. The cake was launched keeping in mind the washing habits of rural India where limited use of bucket and more so of running water added to the wastage of washing powder. The answer was brought by Nirma in form of Detergent Cake. The brand today is ranked as most distributed detergent cake brand in the country by AIMS retail audit. The product is available in two pack sizes of 125 grams and 250 grams The positioning of Nirma Popular Detergent Cake is similar to that of Nirma Popular Detergent Powder but meant to fight other detergents cake. This product is more important as the unorganized players are far more

penetrated in cake market as compared to that in the powder market. The product is available in 125 grams and 150 grams pack sizes. . To meet the consumer's growing aspirations and to allow consumers to upgrade to a better quality product, Nirma introduced Super Nirma Detergent Cake in 1992. As Nirma Detergent Cake is to Nirma Detergent Powder, Super Nirma Detergent Cake is to Super Nirma Detergent Powder. It was launched to woo back the Nirma Detergent Cake user who had shifted to the competitor's product. The cake has high detergency value at an affordable price. It is available in 125 grams and 250 grams sizes. Launched in Q4 - '98, Nima Green Cake became a close no.2 in its segment within 3 months of its launch and was successful in arresting the growth of competition in this segment. This brand has seen a number of consumer promotion schemes tied with it. The splendid laminated multi-colour wrapper, which shows a slice of lemon and trishul, exemplifies razorsharp dirt cutting efficiency of this cake. This cake is rich in lime perfume and has an exceptionally high brand recall. It is available in sizes of 125 grams and 250 grams Nima Blue Detergent Cake was introduced as a low cost alternative to the then available blue detergent cakes in Q4 - '99 in very few select states and has ever since been performing very satisfactorily. It is the epitome of Nirma's endeavor to provide better products at more competitive prices. It is available in 125 gram and 250 gram pack sizes. This cake is packed in a dark blue wrapper and has strong eye catching presence on the shelf. Nima Bartan Bar was launched in Q1 - 2000, gives an outstanding performance is Nirma's foray into the scourer's market. The slogan "Darpan Hai Ya Bartan" in the product's TV commercial has helped immensely in conveying the message of "Bartan Bar's cleaning efficiency very quickly across all segments. Our TV commercial supports our positioning of Nima Bartan Bar as the one giving superior quality cleanliness and making the utensils shiny and sparkling clean. Nima Bartan Bar is available in a 400 gram packing. Nirma Clean was launched in Q2 - 2000 and is available in a 300 gram bar packing. The "Chak Chaka Chak" television commercial of 'Nirma Clean', showing a whole set of spotless, clean vessels in a kitchen sparkling with starlight, delineates the high cleaning quality of this scouring cake. It is targeted at the low end of the market. 'Clean' is expected to trigger conversion from the unbranded detergent powders and cakes. Nirma expects the scourers market to undergo dynamism with its introduction of two scourer cakes. Bathing Soaps Nirma Bath Soap (Carbolic): Toilet soap market was dominated by few MNC's who could monopolistically drive the prices. The growth of toilet soap market was tremendous in 90's and was expected to increase further. Nirma's brand equity in detergent market was very strong and was unanimously associated with value for money products. We saw no reason why cannot this

be extended to the personal care market. Nirma ventured into this market with Nirma Bath a carbolic soap to counter the largest selling soap from a MNC stable. The carbolic soap segment though a declining market saw a sudden burst of activity. Nirma Bath started gaining substantial volumes at the cost of he competitor's and India's largest selling brand. The pricing of the product was penetrative at a quality (TFM - 60%) which the competitor's could not match. The product is available in 75 grams and 150 grams pack sizes. Nirma Beauty Soap: After targeting the largest selling toilet soap with Nirma Bath, now was the time to target the second largest selling toilet soap. Nirma after successful launch of Nirma Bath launched, Nirma Beauty. Nirma Beauty was a popular category soap which targeted the middle and lower middle class population of the country. The product had high TFM content of 70%, an excellent aroma and an advertisement with a touch of aspiration. The product became an instant success, and in no time became India's third largest selling toilet soap brand. The volumes came from the category shift as well as brand switching. The product is available in 100 grams and 150 grams pack sizes and three different perfume variants. Recently company has changed its packaging and made it more contemporary by printing the wrappers on six color Cerruti machine from Italy thereby differentiating it from the me too look alike'. The brand today is growing very fast and is firmly moving towards the second position. Competitors tried to copy the concept and the commercial but were not able to match the success of the brand. As it is said you cannot fool consumers when it comes to quality Nirma Premium Soap: For the first time in the history of FMCG there was an attempt to extend the value for money proposition to the premium segment. The concept was innovated by none other than Nirma. Nirma launched Nirma Premium Soap during 1996 in the premium soap category with 80% TFM, mild fragrance, three variants and a touch of class in its advertising. The brand targeted to match the changing Nirma consumer's profile in terms of aspiration, quality consciousness and image perception. The brand has started picking up volumes in the premium soap market which is characterized by large number of brands and cut throat competition. Nirma Premium has been able to differentiate itself in this cluttered market its unique packaging and exclusive advertisement. Nirma Lime Fresh was launched in 1997 with absolutely no advertising support. The lime segment of the toilet soap market was growing at a sedate rate, prior to the launch of Nirma Lime Fresh. Launch of Nirma Lime Fresh saw the volumes of the segment grow at more than 10%. During the first year of the launch Nirma Lime Fresh over took the largest selling brand in the lime segment. The product is priced competitively with 80% TFM

content and strong tingling lime fragrance. The commercial was aired during the later part of the year which saw the volume grow rapidly. The commercial shot at Maldives and Switzerland with a new and young face was equally liked by consumers. The successful launch was termed as the seventh best launch of the year 1997-98 by Business Standard. There in no looking back and today Nirma Lime Fresh is the undisputed market leader in the lime segment and is giving shivers to the competition. The product is available in 75 grams and 150 grams. Nima Rose: The remarkable and phenomenal market response received by Nima Rose soap within just two months of its launch has once again proved the merits of Nirma's commitment towards its consumers. Nima Rose soap has got an exceptionally fine perfume of rose that lingers around your body for a long time even after you bath. Due to high TFM (Totally Fatty Matter) content, it provides one of the nicest baths. This brand has already carved niche in its particular segment by achieving leadership position just within two months of its launch. Nima Lime, the first product in the Nima range of products has a very high TFM content and was introduced in Q2 - ' 98 when the astounding success of Nirma Lime Fresh Soap prompted competition to launch lime variants in the same price segments. Nirma is committed to the concept of umbrella branding. We have reaped benefits of this strategy right from our inception till date. In the past, we have faced umpteen numbers of situations where the competition introduces special campaigns to draw away the consumer's attention from our core brands like Nirma Detergent Powder, Super Nirma Detergent Cake, Nirma Beauty Soap, Nirma Lime Fresh Soap, etc. The purpose was to lure away consumer attention from Nirma Lime Fresh Soap by temporarily modifying the product. We, at this point of time introduced a 'fighter brand' called Nima Lime to provide at shield to our core brand - in this case 'Nirma Lime Fresh Soap'. The success of Nima Lime has been the cornerstone in Nima brand growing into a full fledged business Nima Sandal: This soap was launched in Q2 - '99. Over a period of time, the Indian toilet soap market has fragmented and has seen the emergence of prominent segments such as Sandal, Rose, Jasmine, Body moisturizing soaps, Herbal etc. Nima Sandal is Nirma's offering in the ethnic sandal segment. With a rich and exotic perfume and 80% TFM content, this toilet soap is available in a 100 gram packing. Nima Sandal is promoted by a TV commercial shot at exotic locales depicting the form of 21st Century Indian woman. Early market indication promises this brand to be the future no.1 in this segment. Nima Herbal is the emanation of Nirma's quality and caliber. Nima Herbal is ingrained with benefits that accrue from using various herbs, shrubs, medicinal plants and various day-to-day commodities like sandal wood, lemon,

turmeric, coconut, tulsi, neem etc. that are gifted to mankind by nature. Nima Herbal is the nature's legacy. It is reflection of Nirma's conviction of "Care For The nature's legacy. It is reflection of Nirma's conviction of "Care for the Consumers". It was launched in Q3, 2000 with a 78% TFM content in a 100 gram packing. Nirma Herbalina: Nirma has invariably identified the nerve of the market and answered it at the proper time. We addressed the ayurvedic and medicated soap segment with Nirma Herbalina. Launched in Q3 - 2000 with a high TFM content, 'Herbalina' is Nirma's latest introduction in the range of toilet soaps. The natural commodities that are shown on the wrapper blend very well with the green colour of the eye-catching pack

Brand Wars Over here we get to see that not only were the in washing powder segment, but were also expanding in other product categories like premium detergents such as Nirma Super Washing Powder and Detergent Cakes and premium toilet soaps such as Nirma premium, Nirma sandal and Nirma Lime Fresh. What remained the same was the pricing strategy used by nirma which was the same as in the detergent category. In 2000 they also entered in the hair care market with Nirma Shikakai and Nirma beauty shampoo. Nirma produced high-fatty-matter9 soaps with the right scents, and priced them much lower than other brands. Nirma positioned itself with the competitors in the various categories because they were exploring in new markets. For eg;

Nirma Bath against Lifebuoy Nirma beauty soap against Lux Nirma Rose against breeze Nirma Lime against Jai Lime How did they manage so well in cost? Well it was low compared to other FMCG companies which mean that when in that time companies were spending 6 to 10% on ads Nirma was spending only 1.25 to 2% on the ad expense. When all companies were using famous celebrities for brand endorsement, Nirma used fresh not so known faces of those days like Sangeeta Bijlani, Sonali Bendre, and Riya Sen. The advertisement messages were also very simple and focused on the benefit of the product. Nirma always preferred to place the product on the shelves first, receive feedback, and then create an enduring ad campaign. While introducing toilet soaps and detergents in the premium segment, Nirma relied on its time-tested weapon - Price. The company planned to concentrate on volumes in these segments as well. But there was a change in the margins given to retailers. Unlike the economy products, where the cost benefits were passed on to the consumers, Nirma passed on this benefit to the retailers. It gave them huge margins. For instance, for Nirma premium soap, it offered 52% and for Nirma shampoo, it offered an unbelievable margin of 140%. Analysts were skeptical about Nirma's chances of success in the premium segment of the soaps market. Unlike detergents, the soaps and shampoo market was highly fragmented. There were about 15-20 brands, and it was difficult for any soap to get a sizable market share. Moreover, this market was less price sensitive. So, it was difficult for any company to sustain itself on price alone. Analysts felt that it would take years to change Nirma's brand image. According to a survey conducted by Samsika Marketing Consultants, Nirma's marketing firm, Nirma was considered to be a cheap brand. Many people were almost ashamed to admit that they were using it. To shed this image, in the late nineties, Nirma released corporate advertisements worth Rs 10 bn throughout India. Analysts felt that the fast growing shampoo

market was a better bet than the premium soaps market. In India, only 30% of the population used shampoos and more than 70% of this group was in the urban areas. However, according to some analysts, though the perceived potential of the rural market was very high, in actual practice, it was difficult to persuade rural folk to use shampoos. Another problem Nirma faced was that of inadequate infrastructure. Though it had a strong presence in the smaller towns and villages, it lacked the network necessary for penetrating urban areas. Thus, Nirma's entry into premium soaps and shampoos seemed to have failed. The Road Ahead: As far as Corporate social responsibility (CSR) is concerned, Nirma has made some good efforts by starting Nirma Education & Research Foundation (NERF) in the year 1994 for the purpose of running various educational institutes. Nirma has also set up Nirma labs, which prepares aspiring entrepreneurs to effectively face the different business challenges. Nirma also runs Nirma Memorial Trust, Nirma Foundation and Chanasma Ruppur Gram Vikas Trust as a part of their effort as a socially responsible corporate citizen. They believed in bonding with the customer which has been used by Nirma for the last 25 years. It is also known as the producer of low cost economy range products.