IIM INDORE

Herbal Smoking Device -

NIRDOSH
Case Analysis

Vishal Nema
Vikrant Sangwan
Yagna Srikanth
Shashikant Kewale
Chandra Mohan Sumra
Sandeep Kumar Bhardwaj
RajaSekar Vijayaraghavan

7/13/2010




This document is an understanding write-up of Nirdosh, a herbal smoking device, the marketing
strategies that can be implemented for increasing sales of product, various alternative solutions for
the growth of the product.
Herbal Smoking Device - NIRDOSH

MAK, Section-A, Group 9 Page 2

Overview

Nirdosh is a unique non-tobacco smoking device developed in 1982 by Maans Products, Ahmedabad.
Mr. Bhavsar is involved in developing and promoting this new product and scouting for
opportunities to expand. This product is being sold in India with limited sales and few samples have
been sent to foreign countries already.

Situation Analysis
Customers
Major customers for Nirdosh product are:
o Cigarette Smokers who wish to quit smoking
o Alternative for smokers having ailments such as cold, cough etc
Competitors
The major competitors for Nirdosh are shown below:
1. Cigarette Manufacturing Companies
2. Pharmaceutical and Ayurvedic Companies

Objectives
To increase the market base as well as the profitability of Nirdosh
Create awareness in other cities of India about Nirdosh
Work for a smooth export process flow to foreign countries

Marketing Strategy
There are primarily two markets that the Nirdosh manufacturers can seek to penetrate:

1. Cigarette Industry - Market Nirdosh product to smokers as an alternative to tobacco
smokers
2. Pharmaceuticals Industry - Market Nirdosh product to the general public as a health remedy
to various ailments such as cough, cold, head-ache, asthma, etc.

Market Nirdosh product not as a pharmaceutical product (i.e.) as a medicinal cure based on the
following reasons:

Non-smokers (who might contribute a majority of the market) might not adopt smoking
Nirdosh over consumption of traditional medicines
The curing capacity of Nirdosh is not clearly defined and hence, the effectiveness of using
Nirdosh over traditional medicines is not clear or complete

Furthermore, we can market Nirdosh as an alternate to cigarettes for the following reasons:

1. Unique product with no substitutes available currently
2. People who start smoking because of peer pressure, to increase their cool quotient,
eventually realize the ill effects of cigarettes and want to quit at some point of time. Nirdosh
could be a viable alternative at this scenario that one can smoke and still not smoke in
Herbal Smoking Device - NIRDOSH

MAK, Section-A, Group 9 Page 3

actuality
3. The market available for cigarette industry is humongous and even a minor penetration into
this huge market would translate into considerable sales figures
4. Availability of a potentially untapped market that includes export market as well

Since Nirdosh has evolved into a filter bicet model, we have taken the filter cigarette
market to baseline our assumptions. The number of cigarettes that were sold in 1985 was 9000
crores of which filter cigarettes contribute 46% (Exhibit 3 - Table 2) i.e., 4140 crores. Let us assume
that 10% of the smokers want to quit the habit of smoking, the cigarette sale can potentially go
down by 414 crores. Let us make one more assumption that 25% quit successfully. That leaves 75%
for substitution which is 310.5 Cr cigarettes. Even if we can achieve a modest 1% market share, we
are considering a sales volume of approximately 31-32 crore cigarettes. Given that the current sales
figure is approximately 1 lakh bicets per year, the potential market seems to be too stiff a target to
achieve.

Nevertheless, it can be achieved over a span provided the product is ably backed by
positioning, pricing, promotion and an efficient distribution system.

Target Markets
Now that the market has been identified as the Cigarette Industry with an emphasis on filter tipped
cigarettes, it is important to identify the target market. We are primarily targeting the market of
smokers who want to quit the smoking habit but have been unsuccessful in their attempts.
Additional markets would be those who just want to quit the smoking habit, health conscious
smokers (perpetual sales), smokers with health ailments and also a percentage of first time smokers.

Production and Procurement
As the herbs are seasonal, Bhavsar needs to procure required quantity of herbs in bulk for the entire
year. These herbs are to be preserved in a large inventory away from humidity to avoid staling. More
space of inventory can be acquired for future purpose. Survey for future market expansion in other
areas of the country can be taken care.
If the demand grows, then the production of Nirdosh needs to be carried at a high volume and high
speed. Based on requirement, options to automate the manufacturing process can be considered.

Promotion and Distribution
Following strategies can be implemented for promoting the Nirdosh herbal smoking device
Redesigning the pack: The pack can provide the details of the herbs and benefits it offers to
the health of individual. These details will then be passed on from Nirdosh smokers to non-
Nirdosh smokers. The pack can be made strikingly different and attractive from other
cigarettes packs for unique identification.
Increasing door to door sales: Door to door sales executed by Mr. Bhavsars son was a huge
success selling around 50 packets a day. But this effort was concentrated only in Ahmedabad
and by only one person. This practice can be used to promote Nirdosh in different localities
of Ahmedabad and nearby towns. Salesman can convince smokers about the benefits of
Nirdosh Cigarettes by showing the doctor certificates.

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Leveraging Healthcare Networks: Healthcare networks such as hospitals, clinics and doctors
can be used for promoting the Nirdosh cigarettes. Two types of customers can be targeted:
1. Patients trying to quit cigarette and needing professional help for the same.
2. Patients suffering from ailments who are smokers and non receptive to the
tablets and other medicine.
Price competition: Targeting brands which have a price/pack more that 4 Rs. This constitutes
major brands like Wills and Gold Flake which have around 6-10% of market share.
Advertisement: Advertisement in Newspaper and other print media can be used to promote
the Nirdosh Cigarettes to reach out to masses.
Easy availability in Local Market: Samples can be provided to local pan shops and similar
outlets with a flexibility of paying back only if cigarettes are sold. This will help to increase
the presence of the product in the market as well as gauging the demand for Nirdosh in
several areas.

Positioning
Nirdosh should be positioned as a product that is an outcome of medical/ayurvedic research and is
more concerned about the health of general public. Investing in oneself is the best investment one
can ever make.

Future Prospects
1. We need to reach new and high rewarding overseas markets as the current demand in US,
UK for Nirdosh is encouraging. We can further explore more developed countries through
samples of Nirdosh. We can also take the help of Bhavsars friends, who are financial
institution officers and local political leaders of Ahmedabad.
2. We can target the PAAN market as well, by providing the herbal powder in place of tobacco
and continue to release these herbs in grinded form with flavors added to it as a
replacement of Pan-Masala.
3. To reach markets outside Gujarat, we can reach regional markets like Karnataka, West
Bengal, Kerala etc helping him to set his business in different zones. Also, the newspaper and
magazine advertising cost in these markets is economical. Once we get a good response in
these markets, we can plan to make Nirdosh a national brand.