nirdosh case analysis marketing

IIM Indore

Herbal Smoking Device - NIRDOSH

Case Analysis

Vishal NemaVikrant SangwanYagna Srikanth

Shashikant KewaleChandra Mohan Sumra

Sandeep Kumar BhardwajRajaSekar 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.


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

CustomersMajor customers for Nirdosh product are:

o Cigarette Smokers who wish to quit smokingo Alternative for smokers having ailments such as cold, cough etc

CompetitorsThe major competitors for Nirdosh are shown below:

1. Cigarette Manufacturing Companies2. 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 StrategyThere 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 smokers2. 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 currently2. 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

MAK, Section-A, Group 9


actuality3. The market available for cigarette industry is humongous and even a minor penetration into

this huge market would translate into considerable sales figures4. 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 MarketsNow 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 ProcurementAs 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 DistributionFollowing 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. Bhavsar’s 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.



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.

PositioningNirdosh 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 Prospects1. 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 Bhavsar’s 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.


nirdosh case analysis marketing

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