Brand Equity and Competitive Strategy of NIrma
After hearing the word “Nirma” the first thing that strikes almost everyone is the
decades old jingle “Doodh si safedi Nirma se ayi..”. Apart from that, low-cost has
become synomous to Nirma. Nirma was the invention of Karsanbhai Patel,a chemist
from Gujarat who worked for the Department of Mining and Geology. Nirma was
founded in 1969 and was named after Karsanbhai Patel's daughter Nirupama. He
was experimenting to develop a detergent for door-to door selling in oder to earn
some extra income and so Nirma came into existence.
The USP of this detergent was that firstly it was phosphate free unlike other washing
powders. Secondly, due to good quality and low price and thirdly because of the
distribution model adopted by Patel which was door to door selling. At that time
when the Surf was priced at Rs 15 per kg ,Nirma costed only Rs 3 per kg. Due to
these reasons the popularity of Nirma grew in Patel's hometown and so he started
the packing of Nirma washing powder in the room of his house itself.
Nirma was becoming popular mainly in the lower end segment due to a number of
factors. Firstly even after a good start and success they did not give up on their
philosphy of “providing quality products at best prices” .Second factor which
contributed to the success was their promotional efforts and distribution network.
They used around 400 distributors who would supply to over 2 million retail .One
factor which diffrentiated it from its competition was that Nirma also had a deep
penetration on the rural sector too which was untapped by Surf which mainly
operated in the upper segment.
By 1970 HLL took notice of Nirma but did not give it a much thought as they thought
that “this is not our market”. Their perspective was that Nirma is a inferior quality
product and it can not affect Surf's business. But soon HLL realized the potential
danger from Nirma due to its increasing market share. To combat the competition it
launched Wheel. Wheel just like Nirma catered to the low end segment. HLL also
developed door to door distribution stratergy for Wheel. It was in 1980 that Nirma
moved ahead of Surf. In 1982 that Nirma launched it's first TV commercial with it's
famous “Washing powder Nirma, Nirma” jingle. Since then the jingle has been a part
of all Nirma communications. By 1985 Nirma had become a popular brand in
households. After establishing itself in India, Nirma expanded to markets abroad in
1999. Its first foray was into Bangladesh, through a joint venture – Commerce
Overseas Limited. Within a year, the brand became the leader in the detergent
market in Bangladesh. The company also planned to enter other regions like the
Middle East, China, Russia, Africa and other Asian countries
Patel now was thinking of cost reduction without affecting the quality of the
detergent. So it planned for a backward integration to reduce the cost of the raw
materials.It was planned to set up two plants at Baroda and Bhavnagar. Today it
produces 90% of the raw material in their plants itself. They further eliminated the
intermediaries and adopted the policy of directly supplying the order to the
distributors using their own vehicles. In some places like Andra Pradesh ,Tamil Nadu
where it was difficult to reach on short notice depots were maintained. They further
started with in-house printing to reduce the cost of packaging.
Nirma was operating in the low end segment,and the upper segment was yet to be
explored by them and so expanded in the beauty segment in the mid 90s. People
were skeptical if Nirma would be able to repeat its success in the premium segment
or not. Even in the premium segment it kept its prices lower than the competing
brands. It created a sub premium brand by selling high fatty and rightly scented
soaps at much lower prices. To combat competition from HLL it positioned its
products against it like Nirma Bath against Lifebuoy, Nirma Beauty Soap against Lux.
One interesting study was conducted by Sansika Marketing Consultant -Nirma's
Marketing Firm that in North people prefer pink color soas, in South people like
green color soaps and sandal soaps. Hence it tried to segment the market on that
basis. This time to succeed in this segment it passed the benefits to the retailers and
offered them huge margins .An unbelievable margin of 140% was given on Nirma
Shampoo.
Though Nirma was better known as a producer of low-cost economy range of
products, it was successful in the middle- and up-market segments. But at the same
time, competition was also increasing. While HLL continued to be a major
competition, P&G and Henkel SPIC also adopted aggressive measures 10 . Players
from unorganized sector were also adding to the competition in the detergents and
washing powder industry. However, Patel was confident of tackling the competition.
Today it is the second largest toilet soap brand in India and has one of the largest
volume sales with a single brand name in the world.
Medha Mishra
MBA I
Section: E
Roll no.: 19202326
