Case Analysis on Nirma

SUBMITTED BY:
Aditya Kashyap
Mohit Sharma
Amit Kumar
Abhay Chauhan
Harkesh Singh
 In NIRMA Case , these are the main
points to be discussed:-
 Its sense of CSR(corporate social responsibility)

 Its Beginning and Growth

 Product Range

 Technological & Overseas Operation

 Emerging Issues for Nirma

INTRODUCTION
NIRMA is a perfect example of :-

SMEs vs. MNCs

NIRMA vs. HUL, P & G

Low priced vs. Premium ranged

NIRMA -

AN ORGANISATION
WITH SENSE OF
CORPORATE SOCIAL
RESPONSIBILITY
 (NERF) NirmaEducational and
Research Foundation , 1994

 Nirma Labs

Nirma Memorial Trust and Nirma Foundation, 1979

In mid-2000s, Nirma was becoming
known for its philanthropic ,
educational and charitable
Institutions.

Was it always like this?

Lets take a look at Nirma’s story ……..

 The detergent market can be classified into premium
(Surf, Ariel), mid-price (Rin, Henko, Tide) and popular
segments (Nirma, Wheel, Mr. White)

a) They account for 15%, 40% and 45% of the market respectively,
which is only 60 per cent of the total market.
b) Regional and small unorganized players still account for a
significant 40% of the total detergent market.
c) Per capita consumption of detergent in India (2.7 kg) is lower
than any other country
Nirma’s success “ Provide the common man with a quality product
at an affordable price.”

 In 1977… Surf - 31%...... Nirma - 12%

 In 1987… Surf - 07%...... Nirma - 62%

 FACTS
 Inferior Quality.
 “Nirma contained no ‘active detergent’, whitener, perfume, or
softener.
 Tests performed on Nirma confirmed that it was hard on the
skin and could cause blisters.

To conclude:-
 SUCCESS
 Overall low cost structure---
 Low overheads
 Indigenous machinery
 Lean and frugal top management
 Cost control.
Not only this ……..
Launched massive TV campaign ….
 AFTER NIRMA SUCCESS
 In 1987, HLL launched “WHEEL”.
---- low priced @rs.14/kg.
---- equivalent quality.
---- wheel blue and wheel green.

------> surf launched massive TV campaign .

 RESULTS

HL
Nirma
Wheel

Sales
150 100
(US$ million)

Gross Margin (%) 18 18

 NIRMA---- 1990’s
 Consisted of 5 companies:-

 Nirma detergents limited, (NDL)

 Nirma soaps and detergents limited, (NSDL)
 Shiva soaps and detergents limited, (SSDL)
 Nilima chemicals limited, (NCL)
 Nirma limited.

MERGED in 1997.(Economies of scale, business synergy,

reduction of overheads)
 MARKETING AND DISTRIBUTION
 Alpa marketing enterprise, (AME).

 Manufacturing at :-
--- 7 Locations in GUJARAT.
--- MP,UP,MAHARASHTRA.

 1989, 350 Distributors.

 Distribution through 675,000 retail outlets.
 SALES

12%

20% 44% WEST

NORTH
SOUTH
EAST

24%
•Toilet soap
•Tooth paste
•shampoo
 TOILET SOAPS
Nirma bath (lever lifebuoy)
Turnover 30% (total)
Average growth 12%
Tfn 60%
Nirma beauty (lux,p&g ganga)
Tfn 70%
Nirma premium (camay)
Tfn 80%
BUREAU OF INDIAN STANDARDS
Grade 1 – TFM 76%

Grade 2 – TFM 70%

Grade 3 – TFM 60%

 Toothpaste
Competition to babool & vicco

Market leader colgate

Failure
 SHAMPOO

Patels launched shampoo

Principle “VALUE FOR MONEY”

Convert non-users of shampoo

Launched 100ml bottle retail 30

 TECHNOLOGICAL EXPANSION
 Besides low cost, labor intensive technique they have
modern manufacturing plants
 They plan for expansion and technological up-
gradation
 Zero waste policy (vacuum drying).
 DIVERSIFICATION
Nirma soda ash plant at Bhavanigarh costing Rs 1040
crore.
Linear Alkyl benzene manufacturing facility
These two chemicals account for three-fourth cost of
manufacturing detergent
Nirma LAB projects was the second of its kind in
Asia.
As a part of backward integration, produce oleum and
sulphate
 NIRMA`S OVERSEAS
OPERATION
 In Bangladesh Nirma cornered 60% of the market
share because lower price then market leader
Hindustan Lever Ltd.
 Other countries under consideration
 China
 Russia
 Sri lanka
 Overseas operation contribute rs 20 crore
SOME EMERGENT ISSUES (IMAGE
PROBLEM)
A “cheap” image attacked by rivals portraying the
brand to be inferior, cheap and less smart alternative.
Rival attempts to reposition all Yellow powder as low
quality.
rising income and ads by MNC emphasis zed that
quality was more important than a marginal
difference of price
 RISING COST
Difficulties in maintaining low cost because of raw
materials such as soda ash and LAB.
It had ensured respect and its moves would be under
sharp notice.
 CHALLENGES FOR NIRMA
1. How to make itself a professional.
2. Identify its existing competences and new one to
fight global companies and at home as well
Sourcing tie-up
 Nirma entered in to the arrangement with the P&G
for an exclusive marketing of “Camay”
 Camay decision was based on quantitative and
qualitative research commissioned by Nirma to know
customer needs and attitude
CAMAY LEVERAGE THE BRAND
NIRMA
 After launch of new advertisement for Camay Mr.
Patel commented that “campaign reinforce the
image of Camay as a skin care and earlier it was
accessible to particular segment now anyone can
buy it”
(PERCENTAGE BY VOLUME
TOTAL VOLUME = 423.195
TONNES)
MARKET SHARES
STRENGTHS WEAKNESS

OPPORTUNITIES
THREATS
see how to exploit 3 focus
strategies of Porter:-

 ‘Cost Leadership’

 Successfully carving out a ‘Niche Market’ .

 This David of detergent ‘Differentiated its Product ’

from Industry Goliaths(HLL).
 Nirma is among the top 3 players in detergent industry as well
as toilet soaps markets.

 Aggressive pricing without compromising on quality.

 Extensive Distribution Network

 Backward integration (into 2 main raw materials- alkyl benzene

and soda ash)

 successful implementation of Porter’s 3 strategies..