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A PROJECT REPORT ON NEW PROUCT DEVELOPMENT OF NIRMA
B Y THE SPIRIT SQUAD UNDER THE GUIDANCE OF Prof. SMRITI KHANNA
PRATIK KHANDELWAL PRACHI KATAKWAR ABHISHEKH KUMAR VARSHA KARNAD DIPIKA KUMARI SEEMA KUMARI ASHISH KUMAR RITU LIKHITAR ROHIT KUMAR SUJIT KUMAR AFSHAN KHAN ANIL JUNWAL MEGHA JAIN TEJAS KALE VIRAJ JAIN
INDEXSr.No. Name of chapter
2. 3. 4.
PRODUCTS HISTORY CHALLENGES & PROBLEMS
5. 6. 7. 8. 9. 10. 11. 12. 13.
ROLE OF STAKEHOLDER ROLE OF HR POTENTIAL IN RURAL MARKETING CURRENT TRENDS IN RURAL BANKING SIZE AND NATURE OF MARKET
ROLE OF TOP MANAGEMENT R&D FUNCTION RELEVENCE IN IND MARKET REGULATION OPPORTUNITY IN NEW PRODUCT DEVLOPMENT
INTRODUCTIONNirma is a group of companies based in the city of Ahmedabad in western India that manufactures products ranging from cosmetics, soaps, detergents, salt, soda ash, LAB and Injectibles. Karsanbhai Patel, a well known entrepreneur and philanthropist of Gujarat, started Nirma as a oneman operation. Today Nirma has over 15000 employees and a turnover of over Rs. 3550crores. In 2004, Nirma's detergent approached 800,000 tonnesone of the largest volumes sold in the worldunder a single brand 'NIRMA'. Leading FMCG Company instantly recognized as Indian Brand for Detergents and Soaps Nirma operates with a MISSION to provide Better Products, Better Value, Better Living Nirma has achieved Full Backward Integration to support the business of DETERGENTS and SOAPS Enjoys Leadership presence in business of DETERGENT and SOAPS. Nirma in a humble way introduced Detergent business in the year 1969. Today Nirma enjoys positioning itself as one of Indias the Top 10 brands in the country.
Type Founded Key people Industry Products Revenue Employees
Public 1969 Karsanbhai Patel (CMD) FMCG Nirma detergent, Nima soaps Rs. 3350 crores (2009 standalone) Rs. 4898.71crores(2009consolidated) 14000
Leading FMCG Company instantly recognized as Indian Brand for Detergents and Soaps Nirma operates with a MISSION to provide Better Products, Better Value, Better Living Nirma has achieved Full Backward Integration to support the business of DETERGENTS and SOAPS Enjoys Leadership presence in business of DETERGENT and SOAPS Nirma in a humble way introduced Detergent business in the year 1969. Today Nirma enjoys positioning itself as one of Indias the Top 10 brands in the country. VISSION, MISSON AND PHILOSOPHY Nirma is a customer-focused company committed to consistently offer better quality products and services that maximize value to the customer. This customer-centric philosophy has been well emphasized at Nirma through: Continuously exploring & developing new products & processes. Laying emphasis on cost effectiveness. Maintaining effective Quality Management System. Complying with safety, environment and social obligations. Imparting training to all involved on a continuous basis. Teamwork and active participation all around. Demonstrating belongingness and exemplary behavior towards organization, its goals and objectives.MISSION STATEMENT
A statement of sustained innovation, an unceasing effort to deliver better value to consumers, through better product quality.
In 1969, Karsanbhai Patel , a chemist at the Gujarat Government's Department of Mining and Geology manufactured phosphate free Synthetic Detergent Powder, and started selling it locally. The new yellow powder was priced at Rs. 3.50 per kg, at a time when HLL's Surf was priced at Rs 15. Soon, there was a huge demand for Nirma in Ruppur (Gujarat), Patel's hometown. He started packing the formulation in a 10x10ft room in his house. Patel named the powder as Nirma, after his daughter Nirupama. Patel was able to sell about 15-20 packets a day on his way to the office on bicycle, some 15 km away. By 1985, Nirma washing powder had become one of the most popular, household detergents in many parts of the country. By 1999, Nirma was a major consumer brand offering a range of detergents, soaps and personal care products. In keeping with its philosophy of providing quality products at the best possible prices, Nirma brought in the latest technology for its manufacturing facilities at six locations in India. Nirma's success in the highly competitive soap and detergent market was attributed to its brand promotion efforts, which was complemented by its distribution reach and market penetration. Nirma's network consisted of about 400 distributors and over 2 million retail outlets across the country. This huge network enabled Nirma to make its products available to the smallest village. In November, 2007, Nirma purchased the American raw materials company [Searles Valley Minerals Inc.] - making it among Top-7 Soda Ash manufacturer in the world. PRODUCTS Consumer Products Soaps ; Nirma Beauty Soap, Nirma Lime Fresh Soap, Nima Rose, Nima Sandal Detergents; Nirma Washing Powder, Nirma Detergent Cake, Super Nirma Washing Powder, Super Nirma Detergent Cake, Nirma Popular Detergent Powder, Nirma Popular Detergent Cake Salt: Nirma Shudh Scouring Products: Nirma Clean Dish Wash Bar, Nima Bartan Bar
LAB ( Linear Alkyl Benzene ) AOS ( Alfa Olefin Sulfonate ) Sulfuric Acid Glycerin Soda Ash Pure salt Vacuum Evaporated Iodized Salt SSP ( Single Super Phosphate ) Sodium Silicate
CHALLENGES FACED Initially, Patel had a great deal of difficulty in persuading the local shop owners to stock his product. It was only when he recruited local housewives to help sell and create demand for the Nirma product that he stumbled upon a compelling and scalable business model. By the early 1970's Nirma had appeared on the radar screen of executives at Hindustan Lever Limited. HLL was the manufacturer of Surf, one of the best-selling detergents in the country. However, their reaction was dismissive, saying, "That is not our market,and We need not be
concerned."Their perspective was that Nirma was an inferior quality product being sold to people who weren't currently purchasing Surf, and that their sales would be unaffected by any growth in Nirma's popularity. Luckily for HLL, they soon recognized the disruptive threat posed by Nirma, and were able to adapt their own strategy to compete, launching Wheel detergent to try and stem the (ahem...) tide of Nirma into the low end of the market. In developing their strategy to fend off Nirma, HLLs wheel product was created specifically for low-end consumers. HLL noted that the primary source of water for washing was river water, and so created Wheel with a high percentage of oil relative to water. HLL also created entirely new production, distribution and marketing capabilities in order to deliver and sell Wheel, investing heavily in creating entrepreneurial door-to-door programs aimed at driving sales at the village level by tapping into the networks of local rural women, just as Nirma had done. So, what lessons can we draw from this case? 1. Target disruptive products at non-consumers: By targeting nonconsumers of existing laundry detergents, Nirma was able to stay 'below the radar' of Hindustan Lever, giving them time to experiment with their sales strategy, refine their business model and then grow rapidly - all while avoiding competition. 2. Create a compelling solution by considering Gives and Gets relative to existing solutions: Nirma offered a compelling solution allowing consumers to make a simple trade-off relative to existing products. Get a far cheaper alternative to Surf, but Give up a fraction of the cleaning power, which was already more than sufficient for most laundry occasions. 3. Think expansively about how you define your market. Rather than categorizing it along traditional dimensions, consider definitions using a jobs-based segmentation. Had HHL thought of their market in this way, it would have been far clearer that Nirma was a disruptive threat at an earlier point in time.
ROLE OF STAKEHOLDERS The Management honors the information requirements of the public and the stakeholders of the Company.. In all its public appearance with respect to disclosing Company and business information to public constituencies such as the media, the financial community, employees and shareholders, only specifically authorised directors and/or officer shall represent the Company. It will be the sole responsibility of these authorised representatives to disclose information of the Company. ROLE OF HR Nirma believes in disciplined, serene and pleasant working environment. Such environment helps to inspire the internal customers to deliver their best with greater satisfaction. Empowerment, Equality, Security and Opportunity are the vital values which organisation infuses in its vast employee-base. The conventional wisdom at Nirma empowers every employee to have autonomy in the way he can plan, organize and carry out his work.
Delegation is not confined only to the higher levels and there is adequate decentralization to the departmental level in all types of decision-making. Equality, in our organization refers to integrity and honesty in all dealings between the staff and the organisation i.e., setting clear standards of performance; attitude and behaviour at work in rewarding performance. Equality of opportunities and access to promotion, training and development are absolute here. We tend to provide the highly rewarded value - security, both economic and emotional. This value helps to instil family-kind relations among employees. We also provide enough career advancement opportunities and thus they form another contemporary value. Career paths are clearly laid down for employees and they are helped to become aware of the career opportunities in the company. Managers share diversification / expansion plans to provide career related information.
Apart from these values, our management philosophy constitutes the management ethos of high order. People in our organization are more Action-goal oriented. They have a high sense of adequacy with clear goals about their future and are directed by these goals. Their proactive behaviour has led our company to a position of one of the top business houses of India. Developing human resources is a continuous process at Nirma involving overseas training programmes, on-the-job orientation for the trainees, inhouse computer education and personality development sessions. The belief is that all this makes an individual a better person, which in turn leads to better productivity and a spirit of accountability and commitment in each member of the Nirma family. Also, employees here receive adequate information relating to their tasks through circulars, notices and meetings to enable them to plan and perform their jobs well. Apart from this, our organization pays attention to improving the communication infrastructure through latest technologies available in this area. Nirma hires only the best people in their respective fields, people with a capacity to take on the challenge of realizing the Nirma's vision. Proactive, dynamic professionals with the expertise of executing mega projects would integrate Nirma into a conglomerate by providing the best in technological advancements, right from product development to inventing new categories. So, if you subscribe to this philosophy, we may have the right career opportunity for you.
POTENTIAL IN RURAL MARKETING In the Indian market, the detergent maker Nirma adopted a strategy of developing a base in the hinterland and the rural areas before attacking the big metropolises. Nirma's founder knew chemicals well enough to develop an effective low-priced detergent of good quality but did so starting in his home state of Gujarat before launching in other regions. He called the yellow powder detergent Nirma after his daughter. He started by selling to his neighbours for a small profit and built his consumer base slowly. Because a strong distribution network is so important in emerging markets like India, he concentrated on widening his distribution network. Nirma began surfacing all over Gujarat, in small shops in the remotest villages.
The company has succeeded among other things by developing a very extensive distribution network in the rural market. Its products are priced low and as such, have been very successful in other developing countries such as Nepal and Fiji. Nirma have understood that the key to succeeding in market is a good understanding of the rural consumer and a vast distribution network. Consumers in rural India buying small doses of detergent or shampoo.
SIZE AND NATURE OF MARKET
Nirma sells over 800,000 tones of detergent products every year and commands a 35% share of the Indian detergent market, making it one of the worlds biggest detergent brands. Nirma and Nima with 32 variants are distributed through more than 2 million retail outlets, generating gross sales in excess of Rs.2600 crore. The company has reported 4% drop in sales and 13% decline in net profit margins. The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 25 billion. The Indian FMCG market is set to treble from US$ 25 billion in 2006 to US$ 40 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Around 70 per cent of the total households in India (188 million) reside in the rural areas. The total number of rural households is expected to rise from 135 million in 2005-06 to 153 million in 2009-10. This presents the largest potential market in the world. The annual size of the rural FMCG market was estimated at around US$ 16.5 billion in 2006- 07. With growing incomes at both the rural and the urban level, the market potential is expected to expand further.
ROLE OF TOP MANAGEMENT To provide basic sense of direction to the activities of the company by setting its long range mission and translating into clear set of objectives. To design the organization structure of the company in terms of differentiated and integrated activity, roles of various position, responsibility between them. Top management must ensure the quality of personnel in terms of their skills, orientation and commitment. To ensure that the resource conversion and exchange system are designed and operated carefully. Periodic review of objective for necessary modification is a part of this function.
R&D FUNCTION RELEVENCE IN IND MARKET R&D plays an important role in the innovation process. It results in the technology that brings new products and services to the market place or underpins better processes. Innovation results in high quality jobs, successful businesses, better goods and services and more efficient processes.
The Company proposes to establish R&D Centre at site for better Waste utilisation and infrastructural betterment. This product created a marketing miracle, when introduced in the domestic marketplace. In 1969, when the detergents were priced so exorbitantly that for most of the Indians, it was a luxury item. Nirma envisioned the vast Fabric Wash market segment and sensed a tremendous potential therein. This product was priced at almost one third to that of the competitor brands, resulting into instant trial by the consumers. Owing to its unique environment-friendly, phosphate-free formulation, the consumers became loyal to this brand, helping it to over-take the decades old brands, in terms of volumes. This brand had been ranked as the Most widely distributed detergent powder brand in India as per All India Census of Retail Outlets carried out in 435 urban towns by the AIMS (Asian Information Marketing & Social) Research agency [Brand Equity - The Economic Times, March 11, 1997]. As per the ORG-MARG Rural Consumer Panel [December 1998] survey, Nirma brand has been ranked as highest in terms of penetration in washing powder category [BT Rural Market Watch, Business Today, June 22, 1999]. REGULATION INTELLECTUAL PROPERTY Manuals, codes and agreements of the Company shall govern the use of the Company name and trademarks owned by the Company. The use of the Company brand is permitted only by the Board of Directors of the Company. All documents, processes, manuals, literature, systems etc. or any other intellectual property developed or created by the Management during the association of the Management with the Company are sole property and intellectual property rights of the Company. The Company became a deemed public limited Company under Section 43A of the Companies Act, 1956 and was then converted into a Public Limited Company by passing a special resolution at the Extra-ordinary General Meeting held on November 08
OPPORTUNITY IN NEW PRODUCT DEVLOPMENT
India is world's 12th largest consumer market. Indian FMCG was one of the few sectors world over that could withstand brunt of global melt down and emerge without major damage. While high level of penetration prevented perceptible volume growth, the burgeoning Indian middle class provided value growth in the sector to help the industry players ward off the cascading effects on their margins. Willingness of the consumers to spend backed by the ability to do so was instrumental in isolating the sector from effects of economic slow down. Timely intervention by the Government in the form of policy measures provided much needed respite to the sagging bottom lines of the companies. The Soap and Detergent industry recorded value growth rates during the financial year. Going forward the growth will be moderate or could even decline as most of the current growth was cost driven increase. Volume growth for Detergent and Soap will continue to be marginal in view of high level of penetration in India. Much will also depend on the pan India sufficiency of rains. Hence key to success lies in better integration, conservative financial policies, export focus and cost conscious business practices. Acquisitions for strengthening its distribution tie ups and various entry into other categories like shampoos, toothpastes and fabric whiteners.
CONCLUSION Nirma has arrived and has truly become a household name, in every sense of the term. The Economist wrote: "Rarely does a small manufacturer in a developing country take on a big multinational and win. The man behind the success of Nirma phenomenon Dr. Karsanbhai Patel is a recipient of various awards and accolades. He has been bestowed with various awards like Udyog Ratna by Federation of Association of SmallScale Industries of Gujarat, New Delhi. Outstanding Industrialist of Eighties by Gujarat Chamber of Commerce and Industry, Ahmedabad (in 1990).
Gujarat Businessman Award in 1998 by Gujarat Chamber of Commerce and Industry, Ahmedabad. Excellence in Corporate Governance Award by Rotary International District 2000. In 2001, Karsanbhai was awarded an honorary doctorate by Florida Atlantic University, recognizing his exceptional entrepreneurial and philanthropic accomplishments. In 1990, the Federation of Association of Small Scale Industries of India (FASII), New Delhi, awarded him the 'Udyog Ratna' award. The Gujarat Chamber of Commerce felicitated him as an 'Outstanding Industrialist of the Eighties'. He has served twice as Chairman of the Development Council for Oils, Soaps and Detergents.