The Detergent Market Now

• The detergent market in India can be divided into premium (Surf, Ariel), mid-price (Rin, Henko, Tide) and popular segments (Ghari, Wheel, Nirma, Mr. White). They account for 15%, 40% and 45% of the market share, which is 60% of the total market. Regional and small unorganized players still account for the 40% market.

• Per-capita consumption of detergent in India at 2.7 kg is the lowest in the world.

War to wash…

Calm Before the Storm…

• 1956-57 : A local private sector firm, Swastik manufactured a powder called DET & Hindustan Lever Ltd (Then HLL) was test marketing SURF, which it began manufacturing in 1959. Det was successful in Eastern India but with time, Surf became the market leader nationally.

…Till

• In 1980's Surf suffered huge losses at the hands of a new and small firm, Nirma Chemicals…..

Nirma – Nimble Newbie• Humble Beginning

• In 1969, Karsanbhai Patel (Patel)2, a chemist at the Gujarat

Government's Department of Mining and Geology manufactured

phosphate free Synthetic Detergent Powder, and started selling it

locally.

• Patel hand-mixed the chemicals in batches & then packed it

into gunny bags.He started packing the formulation in a

10x12ft room in his house.

Nirma – Nimble Newbie

• 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 Kishnapur (Gujarat), Patel's hometown.

Patel named the powder as Nirma, after his daughter Nirupama.

Nemesis Named Nirma

• Started with door to door delivery- reached up to 200kgs a day

• Was sold in poly bags, as compared to surf ‘s significantly expensive cartons

• Positioned as a cheaper alternative to Surf and as a superior product compared to inferior washing soaps

• Aimed at the unorganized laundry soap market in the urban and rural areas

Newbie to Numero Uno - Product

• 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.

Newbie to Numero Uno - Product

• 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.

Newbie to Numero Uno - Price

• For harried housewives, struggling to balance their monthly budgets, Nirma came as a boom. It was much cheaper than Surf, which had already gone well out of their reach; and it washed clothes nearly as well. Its cleansing power was far superior to that of the slabs of cheap washing soaps that had been their sole alternative until then.

Newbie to Numero Uno – Cost Saviours

• Nirma operated in the small-scale sector and, therefore saved an enormous amount of excise duty that multinationals had to pay on every kilo of detergent produced. The latter simply could not hope to bring the price down to a level that was attractive enough for the middle and lower-middle classes, which were the bulks segments for Nirma sales.

Newbie to Numero Uno – Cost Saviours

• Till 1985 the Nirma ingredients were simply mixed by hand thus requiring neither machinery nor capital investment. Due to the scale of his product and the simple non-mechanized production process, Nirma gained a number of tax and excise benefits for not using electricity. Since Nirma was a small-scale local venture, they did not have to pay excise duties that were levied on multinationals.

Newbie to Numero Uno – Cost Saviours

• Another area where Nirma saved millions was in labor costs. Being a cottage industry Nirma was not compelled to abide by minimum wage rules.

• Payment was made according to work done and since labor was not permanent no additional overhead for benefits etc. needed to be paid.

• In 1989 Nirma’s labor costs for 8000 workers was estimated to be between Rs 15-20 per person day in comparison to HLL who paid their semi-skilled workers approximately Rs 30-40 per person day.

Current Cost Control

• To keep production costs at a minimum, Nirma sought captive production plants for raw materials. This led to the backward integration programme, as a part of which, two state-of-the-art plants were established at Baroda and Bhavnagar, which became operational in 2000. This resulted in a decline in raw-material costs.

Newbie to Numero Uno-Distribution

• When setting up a distribution system Karsanbhai was extremely aware of the importance of keeping costs down.

• Once demand for Nirma had outgrown his ability to deliver on bicycle he moved on to vans and then later to trucks.

• Nirma had neither a field sales force nor owned a distribution network. Karsanbhai negotiated prices with truck and van suppliers on a daily basis.

Newbie to Numero Uno-Distribution

• As sales grew Karsanbhai eventually hired stockists (those who stocked additional quantities of the goods) as commission agents.

• On the one hand it helped him avoid central sales tax and the stockists were responsible for all transportation, octroi, handling and delivery costs.

• There was also a strict system of protocol and distribution depended on prepayment for stocks so as to minimize risk for Nirma.

Elimination Of Intermediaries

• The product goes directly from the factory to the distributor.

• The company maintained depots in states like Andhra Pradesh, Tamil Nadu and southern Karnataka, as getting stocks to these areas was sometimes difficult.

• In states like Uttar Pradesh and Madhya Pradesh, stocks were delivered directly from the plants.

• “An order is placed and the truck leaves straightaway. It is like a current account. We send the stock, they send the money."

- Hiren K Patel (Hiren), CMD, Nirma Consumer Care Ltd.

Target -> Mass Acceptance• Patel hired young women, who would visit retail shops in

Ahmedabad, asking for Nirma. The effect was immediate, that shopkeepers now readily accepted Nirma.

-Nirma announced Prize draws offering winners huge sum of money like 30000 & rs.50000 (enormous in that time).

- Nirma was the only Indian brand other than SBI, as a sponsor to Moscow Olympics in 1980.

Early Reaction

• In the early 1970s, when Nirma washing powder was introduced in the low-income market, Hindustan Lever Limited (HLL)1

reacted in a way typical of many multinational companies. Senior executives were dismissive of the new product: "That is not our market", "We need not be concerned."

Nemesis Named Nirma

• By 1985, Nirma washing powder had become one of the most popular detergent brands in many parts of the country. By 1999, Nirma was a major consumer brand – offering a range of detergents, soaps and personal care products. Nirma's network consisted of about 400 distributors and over 2 million retail outlets across the country.

Let the War begin

• -From 1986,HLL had woken up & decided to stop Nirma. Made a STOP NIRMA strategy- codenamed- STING (Strategy to inhibit Nirma Growth)

Choice of Aggression

• 1. Aggressive advertising• Creating a jingle that connects to the market• A new fresh advertising campaign• Guerilla advertising• IMC• New agency: new ideas, new creative

Choice of Aggression• 2. Decreasing price of existing product• Nirma consumers received “acceptable” quality in lieu of low

price• HLL COULD possibly follow this way.• Launch a new cost competitive product as compared to Nirma• Tap markets which were unexplored by Nirma• Nirma was popular in Gujarat in 1980s• Was gaining on markets as yet unexplored by Surf (middle to

lower classes, rural)• Surf could have adopted various measures like price decrease to

appeal to rural markets

Choice of Aggression

• 3. New Promotion tactics along with advertising

• Some amount extra with pack• Free items (buckets etc)• Produce sachets• Stick sachets in magazines and newspapers

What HUL did ?

• 1. Cost Reduction: decided to sell Surf in polybags as against its previous expensive cartons

• 2. Revamped its advertising• Earlier, Surf’s campaign ads were always used to

establish ‘Surf washes whiter’.• In 1985, HLL created a character called Lalitaji,

potrayed by TV artist Kavitha Chowdhary. Lalithaji represented a smart housewife who knew that good value always comes at a price.

What HUL did ?

• 3. Launch of Sunlight• Then launched a white detergent powder

called Sunlight in 1985• priced to match Nirma• targeted the eastern and southern markets

where Nirma was not very strong

What HUL did ?

• 4. Launch of Wheel• R&D department of HLL was given the responsibilty

of producing a low-cost detergent, which gave better performance, at the same time, without any side-effects like ones caused by high soda-ash content in Nirma.

• 1986: developed a NSD(non-soap detergent): Wheel • launched as a detergent bar too to counter Swastik’s

Super 777

What HUL did ?

• 5. Packaging in 30 grams plastic sachets• Wheel Detergents powder was packed in 30-gram

plastic sachets, instead of usual one-kg packs. It was priced at Rs. 5.50 as against Nirma’s Rs. 5.25.

• 6. Advertising strategy• Campaigns emphasized that Wheel provided “extra

power, extra lather and was safe on hands and clothes.”• aimed at creating dissonance in the minds of Nirma

buyers about the safety aspects and the benefits of switching over to Wheel.

New Battlefronts

• In the mid-nineties, Nirma successfully extended its brand to other product categories like

• premium detergents (Nirma Super Washing Powder and Detergent Cake)

• premium toilet soaps (Nirma Premium, Nima Sandal, Nirma Lime Fresh).

• In 2000, the company entered the hair care market with Nirma Shikakai, Nirma Beauty Shampoo, and Nirma Toothpaste.

Soaps – Segmented by HLL, Attacked by Nirma…

• HLL had segmented the soap sector by price, by scent appeal, and by brand personality.

• So, Nirma positioned • Nirma Bath against Lifebuoy, • Nirma Beauty Soap against Lux, • Nirma Rose against Breeze, • Nirma Lime against Jai Lime.

…With some twists

• Nirma noticed that North Indianspreferred pinks soaps and while the South Indians preferred green ones. Sandal soaps were more popular in the South.

• . The advertising spend of the company was very low, as compared to other FMCG companies. Nirma spent only 1.25-2% of its turnover on advertising as compared to the normal 6-10%

Ad Campaign…

• Nirma always preferred to place the product on the shelves first, receive feedback, and then create an enduring ad campaign.

• For endorsing soaps, the company used starlets like Sangeeta Bijlani, Sonali Bendre, and Riya Sen, who were relatively unknown at that time. The advertisement messages were also very simple and focused on the benefit of the product.

Current Trends

• Ghari Detergent Powder has crossed Wheel, as the most preferred detergent.

• HUL is still the overall market giant with Wheel, Rin and Surf (one product for each segment) doing well.

Nirma has market share of less than 6% now