nirma vs hll

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Project S trategy T o I mpair N irma’s G rowth

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Page 1: Nirma vs Hll

Project

S trategy

T o

I mpair

N irma’s

G rowth

Page 2: Nirma vs Hll
Page 3: Nirma vs Hll
Page 4: Nirma vs Hll

Nirma Detergent Powder • Was launched in 1969

• In 1982 Nirma Detergent Powder became the largest selling detergent powder in western India

• 1989 the same was established on the national scene.

• Product was priced one third that of the nearest competitor.

• Detergent powder was converted into a common mans necessity

Page 5: Nirma vs Hll

Super Nirma • High quality spray dried detergent was launched

into market in 1996 with a price 40% lower than the nearest competitor offering the same quality.

• With in a short span of two years Nirma Super Detergent Powder cornered substantial market share in the premium detergent segment.

• The brand targeted towards Nirma consumers who were shifting towards more sophisticated form of washing, clicked very well as the ever dependable Nirma Brand name assured high quality at affordable prices.

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Nirma Popular Powder

• Nirma launched a flanking brand named Nirma Popular Powder in selected pockets where Detergent powder usage was limited or the “me too” brands were eating into Nirma's share.

• The substandard products took a severe beating in the pockets where Nirma Popular was launched.

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• Nirma Detergent Cake in 1987.The cake was launched keeping in mind the washing habits of rural India where limited use of bucket and more so of running water added to the wastage of washing powder.

• Nirma Popular Detergent Cake is similar but meant to fight other detergents cake in the unorganized players who have penetrated in cake market as compared to that in the powder market.

• Nirma introduced Super Nirma Detergent Cake in 1992. The cake has high detergency value at low price

• Nima Green Cake Launched in Q4 - '98 became a close no.2 in its segment within 3 months

• Nima Blue Detergent Cake was introduced as a low cost alternative to the then available blue detergent cakes in Q4 - '99 in very few select states and has ever since been performing very satisfactorily.

Blanketing with Nirma variants

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Blanketing with Nirma variants

• Nima Bartan Bar was launched in Q1 - 2000, gives an outstanding performance is Nirma's foray into this segment.

• The slogan "Darpan Hai Ya Bartan“ conveyed cleaning efficiency very quickly across all segments.

• Nirma Clean was launched in Q2 – 2000 with the "Chak Chaka Chak" television commercial showing a whole set of spotless, clean vessels in a kitchen reflected its high cleaning quality

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Bath Soaps

• Nirma Bath Soap (Carbolic) – 1990• Nirma Beauty Soap-1992• Nirma Premium Soap-1996• Nirma Lime Fresh-1997-98• Nima Rose-1997-98• Nima Lime-1997-98• Nima Sandal-1999• Nima Herbal-2000• Nirma Herbalina-2000

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Other products

• Hair care– Nirma Beauty Shampoo– Nirma Shikakai

• Toothpaste– Nirma Toothpaste

• Iodized Nirma Free Flow Salt • Industrial chemicals

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Pricing

Nirma’s Unique Selling

Proposition was & is

Price

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Value chain

• The company achieved a cost saving of 25% in material and handling costs by backward integration projects.

• Overall the backward integration has yielded a cost saving of Rs0.8-1bn per year

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Value chain

• Nirma saved millions in labor costs.

• Cottage industry Nirma was not compelled to abide by minimum wage rules.

• It was not until the mid 80’s that Nirma started to mechanize their production process

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Distribution

• Nirma could cast a PULL effect as agents from all over the country accepted to operate on the tiny margins that the business gave.

• In 1987 Nirma had a 350 strong sales force, a distributor strength of 400 and a retail reach of over 1 million outlets.

• Nirma also moved on to vans and then later to trucks at pre-negotiated prices on a daily basis

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Distribution• Hired stockists (those who stocked additional

quantities of the goods) as commission agents once it achieved a critical mass.

• This helped in avoiding central sales tax and the stockists were responsible for all transportation, octroi, handling and delivery costs.

• Distribution depended on prepayment for stocks so as to minimize risk for Nirma.

• The Nima distribution channel is 'flat' enabling swift market response.

• The company took great care that the new brand did not cannibalize on the existing brands.

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Promotion• Media assault was done only when the entire

distribution network had the product in place. • Their belief is that nothing can be more

irritating for a customer than to see a product advertised, and then find it has not reached his grocer.

• Advertising was just to tell people that a product is available. After that, the product has to stand on its own feet on quality and price.

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A catchy jungle hammered home the message to millions of housewives.

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Promotion

• The stockists were also responsible for promotions and they funded 50% of promotional expenditure for their goods.

• As a result of all the above measures Nirma survived and flourished on what looked like a miniscule margin per unit.

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Nirma needed a “new and improved look” in its promotional activities which it has tried to

achieve through this new commercial.

The obedient puddle

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Detegent market @

1969• Nascent and new• Low quality bars did not wash

well• Creating a basic market• Selling the idea of cleaning with

powder• Convincing the customers soap

powder wash better• Use “white as milk” as the

selling point to convey to the rural masses

1987• Growth market• Appeal to customers as a

better product• Good value for money• Understand the customer

beliefs and break in• Identifying the gaps or

windows of opportunity

Bootom of the pyramid

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Nirma road mapLean strategy and structure

• Cottage industry• Tax benefits• Low wages• Contract transportation• Product should be available within

an arm’s length• An outsourcing concept in storage

and distribution• Pull strategy due product demand • Made women to go to shops and

ask for Nirma product

Product and promotion

• Mainly soda ash and no active detergent

• Was hard on skin• Till 1985 hand mixed• Good brand recall - 90%• Point of sales promotion posters

etc• 1970 Jingles TV advertisement• Only Indian company to advertise

in 1980 Moscow Olympics• Caused enough dent even in

Surf market segment• 1987 - 66 percent of the market

Established low cost Nirma product successfully with a lean strategy

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Opportunity for Hll to leverage on Project Sting success

Their own R&D and other resources can create a product of

• low cost• good quality• Sustainability• profitability

If product became a success, it can

Generate profit in India Export the related

technologies to other Unilever markets.

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Market information

• Rural customers did not use detergent every time they washed their clothes

• Objective was to increase the number of times they washed to increase market base

• Rural India did in fact have the money to buy packaged goods

• Price is decider but not the only determinant

• A change in value proposition

• It is now product with value at appropriate price

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Marketing Strategy options

Options• Just re-price and re-package a

mediocre version , build brand loyalty but keep costs down for HLL

OR• Be savvy enough to create a

‘high quality and good value for money’ product and communicate the difference between a low-end and high-end detergent to the customer

Chosen Marketing StrategyHigh quality and good value for money• This will ensure sustainability

if it is a success• Strategy was to build brand

equity and brand recall to confront Nirma’s strength

• Leverage on this equity incase the customers migrate out of this segment into middle class in future

• Leverage on learning curve effects to export knowledge

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Product designHigh quality (superior to Nirma) and perceived value for money

• Non-toxic and minimal pollution levels • Durable for rough transportation conditions • Tolerance for heat, dust, and long shelf life • High value for the money • low unit price and high functionality • Self-visibility and display • Easily disposable and dispensable • Available in small packages (innovation)• Strong but cost efficient marketing campaign • Wide distribution through rural India (available at every

corner of rural India)

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PriceWheel sold at Rs. 5.50, only 0.25 paise higher than Nirma.

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Promotion• Recruited local magicians, dancers, and

actors who knew each market and village that the company wanted to target.

• In total, 50 teams of 30 performers were recruited to serve as connections between the brands and the residents.

• Scripts were changed to accommodate the different dialects, education levels, and religions.

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Promotion

• Special stickers were put on hand pumps, the walls of the wells were lined with advertising tiles, and tinplates were put on all the trees surrounding the ponds.

• The idea was to advertise not only at the point of purchase but also at the time of consumption.

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Promotion

• Technology was used to push the product. • Using ultraviolet light sensors, HLL marketing

representatives scanned the villagers’ hands to show that, even when skin looks clean, dirt and germs can be present.

• Indirectly trying to cash on nirma’s effect on skin

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Distribution

• HLL outlets were set up in villages that had both all-weather roads and a population of more than 2000.

• In the early 1990s, 60,000 of India’s 570,000 villages qualified under these criteria, and, by 1994, HLL had outlets in 34,000 of them.

• At a later point, HLL set up regional distribution warehouses in these villages.

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Distribution

• For villages with less than 2000 people, HLL developed “Project Streamline”, which aimed to develop a network of rural sub-stockists

• Transportation involved using whatever was available, which could be anything from a bullock cart to a tractor

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Evaluation of strategy• 1989 Wheel was the second-largest brand in India.

• 1990, it had gained leadership in value, although not in volume

• Registered a 20 percent growth in revenues per year and a 25 percent growth in profits between 1995 and 2000.

• Over the same period, HLL’s market capitalization grew to $12 billion—a growth rate of 40 percent per year.

• By 2002, Nirma and HLL had become close competitors in the detergent market with approximately 38 percent market share each.

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Project Shakti- an innovation

• Addressed the self-help groups that ran micro-credit operations to increase coverage.

• The women had saved money from their daily wages and wanted to find ways of making those savings grow.

• Through Project Shakti (Strength), HLL offered to sell them company products at cost and teach them how to re-sell these products at a profit

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Learning curve effects

The company used many of these lessons in other

emerging markets including Brazil, Indonesia, the

Philippines, and the Congo.

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Segmentation of Detergent market in India

Segmentation Of Detergent

Powder Market

Premium

Ariel- Ultramatic & Spring clean Surf -Automatic & Quick

wash,

Mid – priced

Surf Excel Blue, Tide, Stain Champion

Mass Market

Wheel , Fena, Nirma,Ghadi etc.

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HLL and P&G price war affects Nirma

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Current value share of detergent market according to analysts.

• HUL 37 per cent • Ghari 12 per cent, • Procter & Gamble 10 per• Nirma 8 per cent.

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Some take aways• Low cost strategy requires strong value chain performance• Bigger the organization higher are the bureaucratic costs

and responses are delayed• Smaller organizations can have street smart strategies• Never ride on your size- you become complacent• To be lean requires a cultural transformation• Focused thinking and flexibility are essentials to win over

competition.• The customer is now demanding enough to expect not only

low price but better quality too - an area where Nirma, owing to its misdirected attitude to cost cutting, is not able to satisfy.

• Always look at how the customer uses the product.

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Family organisations and common problems

• Accountability is irritating• Management is adhoc• Direction infirm• Transparency issues• Cover ups & devious responses can be the norm• Problems delegated upwards• Problems on system and individual integrity • Reliable and honest people migrate• Cannot attract and retain high performers• Corporatization is essential after a certain level of

growth

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Strategy sometimes is out of box thinking

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There was a mix up in the factory assembly line.Boxes filled with the product and empty boxes got mixed up

How will you segregate the filled boxed and empty boxes?

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