Project

S trategy To I mpair N irmas G rowth

Nirma Detergent Powder

Was launched in 1969

In 1982 Nirma Detergent Powder became the largest selling detergent powder in western India 1989 the same was established on the national scene.
Product was priced one third that of the nearest competitor. Detergent powder was converted into a common mans necessity

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. With in 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.

Nirma Popular Powder

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 substandard products took a severe beating in the pockets where Nirma Popular was launched.

Blanketing with Nirma variants

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. Nirma Popular Detergent Cake is similar but meant to fight other detergents cake in the unorganized players who have penetrated in cake market as compared to that in the powder market. Nirma introduced Super Nirma Detergent Cake in 1992. The cake has high detergency value at low price Nima Green Cake Launched in Q4 - '98 became a close no.2 in its segment within 3 months 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.

Blanketing with Nirma variants

Nima Bartan Bar was launched in Q1 - 2000, gives an outstanding performance is Nirma's foray into this segment. The slogan "Darpan Hai Ya Bartan conveyed cleaning efficiency very quickly across all segments. Nirma Clean was launched in Q2 2000 with the "Chak Chaka Chak" television commercial showing a whole set of spotless, clean vessels in a kitchen reflected its high cleaning quality

Bath Soaps
Nirma Bath Soap (Carbolic) 1990 Nirma Beauty Soap-1992 Nirma Premium Soap-1996 Nirma Lime Fresh-1997-98 Nima Rose-1997-98 Nima Lime-1997-98 Nima Sandal-1999 Nima Herbal-2000 Nirma Herbalina-2000

Other products
Hair care
Nirma Beauty Shampoo Nirma Shikakai

Toothpaste
Nirma Toothpaste

Iodized Nirma Free Flow Salt Industrial chemicals

Pricing

Nirmas Unique Selling Proposition was & is

Price

Value chain
The company achieved a cost saving of 25% in material and handling costs by backward integration projects. Overall the backward integration has yielded a cost saving of Rs0.8-1bn per year

Value chain
Nirma saved millions in labor costs. Cottage industry Nirma was not compelled to abide by minimum wage rules. It was not until the mid 80s that Nirma started to mechanize their production process

Distribution
Nirma could cast a PULL effect as agents from all over the country accepted to operate on the tiny margins that the business gave. In 1987 Nirma had a 350 strong sales force, a distributor strength of 400 and a retail reach of over 1 million outlets. Nirma also moved on to vans and then later to trucks at pre-negotiated prices on a daily basis

 Hired stockists (those who stocked additional quantities of the goods) as commission agents once it achieved a critical mass. This helped in avoiding central sales tax and the stockists were responsible for all transportation, octroi, handling and delivery costs. Distribution depended on prepayment for stocks so as to minimize risk for Nirma. The Nima distribution channel is 'flat' enabling swift market response. The company took great care that the new brand did not cannibalize on the existing brands.

Distribution

Promotion
Media assault was done only when the entire distribution network had the product in place. Their belief is that nothing can be more irritating for a customer than to see a product advertised, and then find it has not reached his grocer. Advertising was just to tell people that a product is available. After that, the product has to stand on its own feet on quality and price.

A catchy jungle hammered home the message to millions of housewives.

Promotion
The stockists were also responsible for promotions and they funded 50% of promotional expenditure for their goods. As a result of all the above measures Nirma survived and flourished on what looked like a miniscule margin per unit.

Nirma needed a new and improved look in its promotional activities which it has tried to achieve through this new commercial.

The obedient puddle

Detegent market @
Bootom of the pyramid

1969
Nascent and new Low quality bars did not wash well Creating a basic market Selling the idea of cleaning with powder Convincing the customers soap powder wash better Use white as milk as the selling point to convey to the rural masses

1987 Growth market Appeal to customers as a better product Good value for money Understand the customer beliefs and break in Identifying the gaps or windows of opportunity

Nirma road map

Lean strategy and structure
Cottage industry Tax benefits Low wages Contract transportation Product should be available within an arms length An outsourcing concept in storage and distribution Pull strategy due product demand Made women to go to shops and ask for Nirma product

Product and promotion

Mainly soda ash and no active detergent Was hard on skin Till 1985 hand mixed Good brand recall - 90% Point of sales promotion posters etc 1970 Jingles TV advertisement Only Indian company to advertise in 1980 Moscow Olympics Caused enough dent even in Surf market segment 1987 - 66 percent of the market

Established low cost Nirma product successfully with a lean strategy

Opportunity for Hll to leverage on Project Sting success

Their own R&D and other resources can create a product of
low cost good quality Sustainability profitability

If product became a success, it can Generate profit in India Export the related technologies to other Unilever markets.

Market information
Rural customers did not use detergent every time they washed their clothes Objective was to increase the number of times they washed to increase market base Rural India did in fact have the money to buy packaged goods Price is decider but not the only determinant A change in value proposition It is now product with value at appropriate price

Marketing Strategy options

Options
Just re-price and re-package a mediocre version , build brand loyalty but keep costs down for HLL OR Be savvy enough to create a high quality and good value for money product and communicate the difference between a low-end and highend detergent to the customer

Chosen Marketing Strategy

High quality and good value for money

This will ensure sustainability if it is a success Strategy was to build brand equity and brand recall to confront Nirmas strength Leverage on this equity incase the customers migrate out of this segment into middle class in future Leverage on learning curve effects to export knowledge

Product design
High quality (superior to Nirma) and perceived value for money Non-toxic and minimal pollution levels Durable for rough transportation conditions Tolerance for heat, dust, and long shelf life High value for the money low unit price and high functionality Self-visibility and display Easily disposable and dispensable Available in small packages (innovation) Strong but cost efficient marketing campaign Wide distribution through rural India (available at every corner of rural India)

Price
Wheel sold at Rs. 5.50, only 0.25 paise higher than Nirma.

Promotion
Recruited local magicians, dancers, and actors who knew each market and village that the company wanted to target. In total, 50 teams of 30 performers were recruited to serve as connections between the brands and the residents. Scripts were changed to accommodate the different dialects, education levels, and religions.

Promotion
Special stickers were put on hand pumps, the walls of the wells were lined with advertising tiles, and tinplates were put on all the trees surrounding the ponds. The idea was to advertise not only at the point of purchase but also at the time of consumption.

Promotion
Technology was used to push the product. Using ultraviolet light sensors, HLL marketing representatives scanned the villagers hands to show that, even when skin looks clean, dirt and germs can be present. Indirectly trying to cash on nirmas effect on skin

Distribution
HLL outlets were set up in villages that had both all-weather roads and a population of more than 2000. In the early 1990s, 60,000 of Indias 570,000 villages qualified under these criteria, and, by 1994, HLL had outlets in 34,000 of them. At a later point, HLL set up regional distribution warehouses in these villages.

Distribution
For villages with less than 2000 people, HLL developed Project Streamline, which aimed to develop a network of rural sub-stockists Transportation involved using whatever was available, which could be anything from a bullock cart to a tractor

Evaluation of strategy
1989 Wheel was the second-largest brand in India.

1990, it had gained leadership in value, although not in volume

Registered a 20 percent growth in revenues per year and a 25 percent growth in profits between 1995 and 2000. Over the same period, HLLs market capitalization grew to $12 billiona growth rate of 40 percent per year. By 2002, Nirma and HLL had become close competitors in the detergent market with approximately 38 percent market share each.

Project Shakti- an innovation

Addressed the self-help groups that ran micro-credit operations to increase coverage. The women had saved money from their daily wages and wanted to find ways of making those savings grow. Through Project Shakti (Strength), HLL offered to sell them company products at cost and teach them how to re-sell these products at a profit

Learning curve effects

The company used many of these lessons in other emerging markets including Brazil, Indonesia, the Philippines, and the Congo.

Segmentation of Detergent market in India

Segmentation Of Detergent Powder Market

Premium Ariel- Ultramatic & Spring clean Surf Automatic & Quick wash,

Mid priced
Surf Excel Blue, Tide, Stain Champion

Mass Market Wheel , Fena, Nirma,Ghadi etc.

HLL and P&G price war affects Nirma

Current value share of detergent market according to analysts.

HUL Ghari Procter & Gamble Nirma 37 per cent 12 per cent, 10 per 8 per cent.

Some take aways

Low cost strategy requires strong value chain performance Bigger the organization higher are the bureaucratic costs and responses are delayed Smaller organizations can have street smart strategies Never ride on your size- you become complacent To be lean requires a cultural transformation Focused thinking and flexibility are essentials to win over competition. The customer is now demanding enough to expect not only low price but better quality too - an area where Nirma, owing to its misdirected attitude to cost cutting, is not able to satisfy. Always look at how the customer uses the product.

Accountability is irritating Management is adhoc Direction infirm Transparency issues Cover ups & devious responses can be the norm Problems delegated upwards Problems on system and individual integrity Reliable and honest people migrate Cannot attract and retain high performers Corporatization is essential after a certain level of growth

Family organisations and common problems

Strategy sometimes is out of box thinking

44

There was a mix up in the factory assembly line. Boxes filled with the product and empty boxes got mixed up

How will you segregate the filled boxed and empty boxes?