Amity Business School

The Nirma Story

Submitted By:-
Dushyant Shah(14)
Kartik Tewari(22)
Naval Garg(44)
Himanshu Parmar(46)
Deepak Sharma(51)
Kunal Kaushal(52)
 Introduction Amity Business School

• The case study 'The Nirma Story' talks about how Nirma
carved a niche for itself in the highly competitive
detergents and toilet soaps market in India.

• The case focuses on the various strategies employed by

the company to counter the competition from the FMCG
giants, particularly HLL.

• It shows how Nirma used its cost-reduction strategies to

achieve success. The case also highlights Nirma's entry
into the premium segment of the toilet soaps, and the
detergents market.
 Contd… Amity Business School

• Karsanbhai Patel, CMD Nirma Ltd., to earn a side income and

became a successful product in the detergent market.
• Starting as a one-product one-man outfit , Nirma became
Rs.17bn company within 3 decades.
• The co. mission is to provide-”Better product, Better Value,
Better living” which contributed a lot to its success.
• Nirma realized that it would have to launch products for the
premium segment also.
• In 2000 Nirma had a 15% share in the toilet soap segment and
more than 30% in the detergent market.
 Amity Business School

• The product directly went from the factory to the distributor,

the company maintained depots in states like Andra Pradesh,
Tamil Nadu and southern Karnataka.
• In states like UP and MP stock was delivered directly from the
plant.
• In march 2000, company acquired Kissan Industries to further
reduce the cost, it opted for in house printing and packaging.
• Nirma also had an innovative marketing strategy, in mid-
nineties it successfully extended its brands to other product
categories(Premium detergent and premium toilet soaps)
• Nirma’s expense on its advertising was also vey low, it used to
spend 1.25-2% of its turnover as compared to 6-10%.
 Amity Business School

The Indian Detergent Industry

 Amity Business School

• Household care segment is characterized by high degree

of competition and high level of penetration.
• With rapid urbanization, emergence of small pack size
and sachets, the demand for the household care
products is flourishing.
• The demand for detergents has been growing but the
regional and small unorganized players account for a
major share of the total volume of the detergent market.
• In washing powder HUL is the leader with ~38 per cent
of market share.
• Other major players are Nirma, Henkel and Proctor &
Gamble.
 Amity Business School

• The size of the detergent market is estimated to be Rs.

12,000 Cr.
 30% detergent cakes
 70% detergent powder
• Total market 23 million tons in volume
 7 million tons market laundry soaps & bars
 16 million tones market synthetic detergents
• 38% share of HUL (Surf approximately 10-12%)
• 8% share of P&G (Ariel approximately 1-1.5%)
 Amity Business School

Source: Russell Davies, NIRMA(2007-08)

 Amity Business School
Market Segmentation

Segmentation of Detergent Powder Market

Ultra – Premium Premium-Surf Mid – Priced- Mass – Market-

Automatic, Ariel SurfExcel Wheel, Fena, Nirma,
- Amway(SA8)
Ultramatic Blue,Tide,Henko Ghari
 Pricing of detergents cakes
Amity Business School

  100 gm 120 gm 125 gm 150 gm 200 gm 240 gm 250 gm 400 gm

Surf Excel   15       27   33

Rin         12   16  

Tide     8.5       17  

Henko 5     10       25

35
30
25
20
Surf Excel
15
10 Rin
5 Tide
0 Henko
 Amity Business School

Q1. Will Nirma’s cost effective business

model be successful in the long run?
Justify your answer.
 Amity Business School

• Yes, it would be successful. As in India the

people are very price sensitive they always look
for value for money product .
• Nirma offer good quality product at unbeatable
price which is very well appreciated by the
people.
• Even in the time of recession, sales of Nirma
detergent had gone up as compared to other
brands, as other brands product were quite
expensive so people switch to Nirma.
 Amity Business School

Q2. There are many big players in the

detergents and personal care market in
India, which are giving tough competition
to Nirma. How can Nirma effectively
counter this increasing competition?
 Amity Business School

• It can counter the increasing competition by

following its original pricing strategies.

• By managing the diverse customer preference.

• Using its old concept of E.O.S and incorporating

advt. schemes focusing on quality not on price.
 Amity Business School

Q3. By 1990, Nirma gained a sizeable

foothold in the lower end of the detergents
and toilet soaps market. Was it necessary
for Nirma to enter the premium segment?
Give reasons for your answer.
 Amity Business School

• Yes it was necessary for Nirma to enter in the

premium segment as to retain its middle class
customer who would graduate to upper end.
• Also to extend its product line, and cater the
upper end.
• As there was a large chunk of potential customer
in that segment and to tap that segment Nirma
had to enter in the premium segment.
 Recommendations Amity Business School

• Rural marketing has become the latest marketing mantra

of most FMCG majors.
• Rural India is vast with unlimited opportunities, Waiting to
be tapped by detergent industry.
• To gain advantage of this the Indian FMCG sector is
busy putting in place a parallel rural marketing strategy.
• 70 percent of the nation's population that means rural
India can bring in the much-needed volumes and help
FMCG companies to log in volume-driven growth.
• This would benefit the FMCG players who have already
hit saturation points in urban India.
 Amity Business School

THANK YOU