NIRMA CASE STUDY
The year: 1969. Karsanbhai Patel, the son of small-time farmer from Ruppur, Gujarat, tries his hand at making phosphate-free detergent powder out of a small shed in Saraspur, an Ahmedabad suburb. A chemist in a government lab, Patel’s entrepreneurial instincts drive him to moonlight for work that would soon become his real professional calling: making a low-cost detergent. When it came to giving a name to his labor of love, Patel decided to call it Nirma (after his daughter Nirupama), a brand which today commands a value of Rs.4,840 crore and nestles under its fold an array of consumer products ranging from cosmetics, soaps, detergents, salt, soda ash and injectibles among others. Along the way, the Nirma brand name has become almost synonymous with low-priced detergents and toilet soaps. “If marketing is all about finding the gaps and filling them, Karsanbhai Patel and his Nirma brand scored a perfect slam dunk,” says an independent market analyst.
Once the mixture was ready, Patel packed them in polythene bags and sold it door-to-door. This way he was able to sell about 15 to 20 packets a day on his way to the office on bicycle, some 15 km away. Playing by the wisdom of the popular maxim – ‘the product should be available within an arm’s length of the desire’, Patel recruited local housewives to sell his product. Once the product started garnering name and sales, he started to look to expanding his distribution network. The product’s sales were steadily climbing and soon the Nirma brand was selling everywhere in Gujarat, in little shops round street corners and even in the remotest villages. Soon, the Nirma brand came to be well accepted in Gujarat and neighboring parts of Maharashtra. Patel, meanwhile began diligently cultivating the low-to-medium consumer pockets – a whole new consumer segment for detergent category. It was a massive market segment that was starving for a good-quality detergent at an affordable price.
Gradually, Nirma began to spread its footprint from the neighboring markets to more deeper recesses of the domestic market. Its handmade detergent packets had a price tag of Rs.3 per kg, which was one-third of the lowest priced popular detergents then. Eventually, this strategy helped him to make a fortune from the volumes. For hardscrabbled homemakers struggling to balance their monthly budgets, the product was a boon. At the time, detergent and soap markets were dominated by multinational corporations with products like Surf by Hindustan Lever (now Hindustan Unilever). They were priced above Rs.13 per kg, which was out of the reach of the majority of middle class homemakers. Seizing the opportunity, Patel kept his margins very low, and was happy to get anything between three and five percent, a strategy that helped him conquer a big share of the detergent market. In less than ten years, Nirma became the top selling detergent in India. “Nirma came in the market when brand energy was missing and it did wonders in the bottom segment of the market, on the simple philosophy of giving value products at an affordable price,” says Harish Bijoor, CEO, HarishBijoor Consults. When Nirma washing powder was making a name for itself in the low-income market, HLL 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.” Nirma’s marketing strategy at the time was to target its products at non-users of Surf. This way, it was able to avoid the attention of HLL while continuing to grow at a frenetic pace. By the mid Eighties, Nirma moved ahead of Surf to capture a large market share. When finally HLL executives were jolted into action to take a closer look at the low-income market, Nirma washing powder had become one of the most popular household detergents in many parts of the country. The achievement was all the more special for the company’s founder who had once said: “Nirma is not merely a...
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