Nirma: Warrior at Crossroads The beauty of marketing is that often giants are shaken out their slumber when

salvos get fired from unexpected quarters. Corporate consciousness marred by tunnel vision fails to anticipate threats from the unexpected. The so called detergent market or fabric washing market was about to turn from the peaceful coexistence to a battle ground when a simple chemist at Gujarat began to produce a phosphate free detergent powder in seventies. Hundreds of entrepreneurs start their ventures only to bite dust. So it wasnt a great shake to produce a powder capable to washing clothes by simply mixing some chemical ingredients. Anybody familiar with preliminary knowledge of chemistry could produce a detergent powder. There was no reason for a giant like Lever to take cognizance of somebody operating from a small ten by ten room who went on to sell his stuff to a very proximate area. The man behind these operations was Karsanbai Patel who named his commercial baby after his real baby girl as Nirma. In the beginning he actually paddled Nirma door to door on his bicycle and obviously the reach was limited by his ability to cover only a short distance. This way to many a new product was born but for Patel it wasnt a product but an idea whose time had come. Starting as a modest operation in early seventies nobody could anticipate the things to come in detergents market dominated by big names like Surf, Det, and Swastik. It was something like an organized market or no market. The regulated business environment did not favor entrepreneurship. Indian markets were by and large characterized by dormant demand and supply constraint. During this period of scarcity there was little incentive for firms to promote their products. Whatever little was done it was to create awareness. Patel simply emptied a measured quantity of a kilo into a polythene transparent pack with its brand name printed on it in red color in the name of packaging. However one thing that stood out was the mascot on the transparent pack. It was a girl dressed in a frock. This mascot probably was inspired by Amul girl or because of the sentimental reason as Nirma was named after Patels daughter Nirupma. This modest operation starting in a small place in Gujarat was destined to become one of the largest selling detergents in the world. In the beginning Nirma was priced at about Rs 3.50 a kilo. Hindustan Unilever (HUL then) brand of detergent Surf was exorbitantly priced at about 15 a Kg. Strategically Nirma did not set out to compete with HULs Surf. It was a simple cost plus reasonable margin pricing where in a margin to recover a reasonable surplus was added to the cost of production. The back of the house operations allowed Patel to minimize expenditure on overheads. And by and large manual operations kept the capital expenditure down to its minimum level. The simplicity of operations and a realistic assess of what would be willing to pay for a locally made no frill product opened gates in the market what was to be known as the economy segment of the market. The low price of the product allowed customers to lay their hands on a washing powder- powdered form-which hither to be beyond the means of middle class because of high price. The options the available to customers was factory made brown soaps and flakes.

Patel started his very localized production of synthetic detergent in 1960. But it took about two decades for the venture to become private limited company in 1980. The company was engaged in production of synthetic detergents, soaps, chemicals and other related products. Later in 1993 the company changed into a deemed public limited company then later in the same year it converted into a public limited company. 1994 saw the company going in for a public issue of shared which were priced at a premium of Rs 100 each. Christened as Nirma Ltd the company operated in a number of fields including washing powders to toilet soaps to chemicals like sulphuric acid and glycerin. In 1995 the company set up a salt plant to meet its entire salt needs. 1996 saw launch of Nirma shampoo which during the time of its testing showed great promise. By 1997 Nirma emerged as the largest producer of detergents selling over 4.4 lakh tones which 1

is higher than its archrival HUL. However HUL leads the pack if detergents are combining with toilet soaps. Nirma has also become the largest producer of toilet soaps. In its efforts to grow Nirma launched edible salt in 1999 sensing the market opportunity. in 2002 in its bid to achieve a big breakthrough the company signed an agreement to market P&Gs brand Camay in India. By 2004 Nirma washing powder achieved the distinction of being the largest volume brand in the world. Nirmas sales touched 8 lakh tones. Nirmas entry into the toilet soap market was late but it contributed another 2 lakh tones. Nirma as a result become the largest detergent and second largest toilet soap brand in India. Now Nirma was not a small fry. In detergents and toilet soaps its market share rose to 38 and 20 percent respectively. Nirmas phenomenal growth is often attributed to its unique value for money proposition. It struck gold by striking at the ignored untapped middle class economy conscious market. In terms of the product Nirma is a washing powder which washes the dirt without any other benefit. However people lapped it up because of it catered to the aspirations of millions who wanted to buy a detergent yet could not afford it. With time Nirma launched two more variants Nirma Super at the high end and Nirma Popular at the lower end. The company also launched a fragrant detergent powder Nima Green with the smell of lime. This was an attempt of the company to provide a fragrant detergent powder different from Nirma to the economy segment. Nirma also launched detergent cakes with each of its detergent variations. Nirma detergent cake came in 1987 followed by Nirma Super detergent cade in 1992. And then came Nirma Popular detergent cake, Nima Green and Blue detergent cake followed the suit 1998 and 1999. Contiuing with the expansion Nirma saw opportunity in utensil cleaning market and launched Nima bartan bar (scouring cake) in 2000. The brand was promoted with the tag line Bartan hai ya darpan. Not to be left behind then came another product in this market Nima Clean( promoted as Chak chaka chak). The force called Nirma did not stop at detergent powders and cleaning bars. Rather toilet soaps category became the next target of the company. The first attempt of the company was to launch all male carbolic soap named Nirma Bath Soap in early nineties. This product brought Nirma in direct competition with Lifebuoy of HUL and OK of TOMCO. Nirma differentiated its carbolic soap by lower than competition pricing and higher fatty matter. Soon to arrive on the scene was Nirma Beauty targeted at women market. This was foray also followed the overall Nirma imprint of value for money strategy. The product was priced lower to competition but offered better quality in terms of the TFM. The market responded favorably and soon it becomes the third largest selling soap in the country. In 1996 the company took the Nirma to the premium segment by launching Nirma Premium toilet soap with a higher TFM of 80%. The action was not limited to Nirma, the company launched Nima brand of soaps with primarily fragrance oriented positioning. This was reflected in the naming of the products. The fragrance was combined with the brand to create the name like Nima Rose, Nima Lime, Nima Sandal. Later toward the turn of the century two more products to hit the market were Nima Herbal and Nirma Herbolina. The companys detergent business is showing signs of decline. Nirma which wrote a new chapter in the history of detergents in India seem to be losing luster. Although still detergent enjoys a dominant position is witnessing signs of decline. The companys priorities seem to be undergoing a transformation as it has branched into several businesses overtime. Although detergent business accounts for about 37 per cent of the companys consolidated sales, it may take a back position in future. In 2010 the turnover declined to Rs 1787 croes from Rs 2109 crore last year. Nirma is now a diversified company with presence in different businesses. These include chemicals, pharmaceuticals, soda ash and alkyl benzene. The company also plans to get into cement business in 2

coming times. These businesses certainly provide outward signs of the internal growth blueprint. It is certainly a matter of great curiosity to find out the pattern in this so called conglomerate growth strategy. One of the experts observed: The products and businesses that a business has is nothing but outward manifestation of an internal game plan. Understanding that game plan is often crucial. What is the method in this madness that must be laid bare? Nirma starting as a very local player managed to achieve a rare feat. A time came when Nirma commanded close to half of the total detergent market humbling a giant like Hindustan Unilever. But today the brand has been reduced to a share of about ten percent. Hindustan Lever enjoys 35 percent market and Kanpur based Ghari has gradually managed to built up share of 13 percent. Himanshu Kakar one of the observers of the industry has the following to say: If the company takes its foot off the detergent pedal, it will be a great departure from the past. Detergent business is what made Patel what he is today. He owes it to detergent business. Nirma certainly is at cross roads. From being nothing worth noticing in the beginning Nirma became a power to reckon with but now brand Nirma is gradually being pushed into a corner. It has lost market share in a growing market. It is a paradox. The Indian fabric wash products industry has been through a subtle transformation. Prior 1970s the washing products were dominated by locally made washing cakes, long bars and flakes. The wash process involved rubbing, beating and rinsing and often heating soap applied clothes. Then can came 1980s when washing began to move in favor of detergents powders. This was the beginning of soak, soap and rinse type of culture. This was followed by the launch of advanced compact detergents. The new enzyme based formulation provided customers with the benefits of doing away with soap application in the washing process. The top contenders in this space of advanced detergents are HUL and P&G with which market Surf Excel and Ariel brands respectively. The soak and rise is sufficient to get a complete wash. One of the industry experts expressed this transition as following: The transition from locally produced brown washing soaps like Naulakha and 555 brands to washing powder like Nirma and Vimal to detergents like Surf and Tide to advance compacts like Surf Excel and Ariel is about both technology change and consumer benefits. Consumers preference has been evolving with time. Back in time in seventies the focus was on washing or get the dirt off clothes. But with the passage of time new consideration of fabric care emerged. And the present consumer expects newer forms of augmentations or enhancements. Typically like a ladder brands need to move up the ladder as strategy to leave stay ahead of competition. This fluidity is both an opportunity and threat. The middle class which in which Nirma had built a huge loyal customer base has not been a constant but certainly it appears Nirma has been. This disconnect is manifested in loss of it leadership. The first set of detergent brands including Surf typically were faced with challenges associated with any new product launch. The old ingrained beliefs and behaviors entrenched the act of washing. And soap cake mostly made with vegetable oils played a significant role. Mostly these cakes were either sold unbranded which were bought either by the weight or number. Different shades of greenish browns were primary differentiator. Some of the cakes did carry labels indicating the name of owners or some kind of mark. First movers like Surf which was a detergent had to expand efforts in getting the customers switch from bars or cakes to powder. But the price of Surf excluded the most market from conversion. It is in this context Nirma became an instant success when it offered an aspirational product at an affordable price. 3

But with time probably brand could not evolve with time. One of the commentators on brand had the following to say: One of the key ingredients of Nirmas success has been simplicity of product and its communication. A lot of money was spent on popularizing the brand by using television and radio. Brands simple see packaging with the image of a dancing frock clad girl could develop and instant connect with the potential customers. The minimalistic packaging signaled affordability. The jingle:Washing powder Nirma, Washing powder Nirma; Doodh si safedi Nirma se aaye, rangeen kapda bhi khil-khil jaye; Rekha, Jaya, Meena aur Sushma, Sabki pasand Nirma played a significant role in creating awareness which translated into buying. Brand recognition and recall played a significant role in making Nirma one of the top sellers in the country. But what is surprising is that brand is promoted with almost similar kind of communication and product even now. This certainly is lack of evolution. The brand could not move with time what to talk of moving ahead of time. The loss of share is its own creation not something done by the competition. Mr Singh of a consultancy firm has the following opinion on Nirma story: Brand recall does not translate into consumer buying. First and foremost is the product utility. Advertising can create brand recognition and recall but it is the product performance which ultimately matters. The initial excitement wears off once the product is tried and it fails to live up to expectations. Nirma and its advertising did excite people two decades back but now it does not. The category has grown crowded and many similar and different brands adorn the shelf space. The detergent category evolved no different from the category law. The brands have multiplied. There are hundreds of brands similar to that of Nirma in look, feel, performance, names and even communication. There was a time when Nirma set itself apart from others on dimensions important to its target market. But this is not true any longer. One of the partners in brand consulting firm Marketing Crow had the following to say: Nirma failed to factor in dynamism of the market. The market as it stands today is completely transformed. Nirmas efforts have been half hearted when they introduced new products in the detergent arena. Brand differentiation based fundamentally on color could hardly be of any significance and customers discovered that. There are many examples of firms which struck gold with one product but later could not repeat the same for others. Nirmas competitors both old and new moved on with time. One of the college goers for whom detergent is a peripheral product in current stage of life observed: I am very different from my mom. And my washing needs are also very different. Gone are the days when clothes were differentiated on the basis of material used like cotton or silk now they are dresses. Think of Nirma it reminds of my mom. It is my mothers washing powder not mine. Look at the jingle what does it say Washing powder Nirma, Washing powder Nirma; Doodh si safedi Nirma se aaye, rangeen kapda bhi khil-khil jaye; Rekha, Jaya, Meena aur Sushma, Sabki pasand Nirma, I dont want safedi, my dresses are colored and I dont want to join the club of Meena and Sushma. Nirma is a profitable business for the company. But this is not it. It must grow if the market is promising. It will be very unfortunate if the brand which challenged the might of MNCs and gave Indians entrepreneurial confidence vanishes into oblivion. The brand still enjoys huge recall, recognition and trust. All it needs a fresh approach and moves. 4