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INDEX CONTENTS NO. 01 02 03 04 05 06 07 08 09 10 11 12 13 RESEARCH METHODOLOGY INTRODUCTION TO THE SALT INDUSTRY EDIBLE IODISED SALT PEST ANALYSIS OF INDUSTRY FIVE FORCES ANALYSIS OF INDUSTRY COMPETITIVE ANALYSIS PROMOTIONAL CAMPAIGN IN EDIBLE SALT INDUSTRY NIRMA INDUSTRIES LIMITED SWOT ANALYSIS OF NIRMA SHUDH SALT DATTA ANALYSIS HYPOTHESIS FINDINGS SUGGESTIONS & RECOMMONDATIONS BIBLIOGRAPHY APPENDIX LIST OF THE GRAPHS PAGE NO. 03 08 15 19 22 25 29 31 41 43 67 73 77 X Y A
LIST OF THE GRAPHSTITLE NO. 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 USER OF THE IODISED SALT USERS IN AHMEDABAD DIFFERENT BRANDS OF SALT TO AREA RANKING PREFERENCE AVERAGE MEAN USERS OF SAME SALT BRAND FREQUENCY OF PURCHASE NUMBER OF 1 KG PACKETS REQUIRED FOR 1 MONTH PURCHASE DECISION MAKER FROM WHERE YOU PURCHASE SALT USER OF NIRMA SHUDH SALT RANKING PREFERENCE FOR NIRMA SHUDH SALT PRICE OF NIRM SHUDH SALT INFLUENCER OF PURCHASING NIRMA SHUDH SALT MEDIA USED HAD RESPONDENTS SEEN TELEVISION ADVERTISEMENT? AVAILABILITY DIFFICULTY DO YOU LIKE PACKAGING EDUCATION LEVEL INCOME LEVEL PROFESSIONS PAGE NO. 44 45 47 48 49 50 51 52 54 55 56 57 58 59 60 61 63 65 66 67 68
RESEARCH METHODOLOGY Research Methodology is a systematic design, collection of data, reporting of data and findings relevant to specific marketing situation that is faced by company with the paradigm in the market shifting, from the product to consumer, their needs and preferences have become essential to the considered by the producer today in the world of cut throat competition to be ahead in the race and to lead is required to reach consumer first. The NIRMA SHUDH SALT, which has newly relaunched in India. The sale of Nirma Shudh Salt is not increasing rapidly that is the problem. Therefore, research problem is to identify the consumer preference of edible (iodized) salt as well as the satisfaction level of consumer regarding the Nirma Shudh Salt and what are the problems they are facing regarding the product.
OBJECTIVE O F TH E STUDY To study the Consumer Preference for Edible Salt To study the Consumer Preference for Nirma Shudh Salt To study the awareness about Nirma Shudh Salt To know the brand awareness of Edible salt in different area of Ahmedabad and to illicit the consumer opinion about price, quality, reasons for choice, brand satisfaction etc. To study the purchasing pattern of Edible Salt. To know the criteria preferred by the consumer at the time of purchase of edible salt
R E S E A R C H D E S IG N A research design is the specification of methods that producer wants to acquire from the market. It is the overall operational patterned framework of the project that stipulates what information is to be collected and from which sources and from which producer of this competitive environment. Generally, there are basic three types of research design, Exploratory, descriptive and Casual research. Here Researcher has taken Descriptive Research Design and the reason behind it is as follows: The Descriptive Research Design is used when the researcher is interested in knowing the characteristics of certain group. Here Researcher is interested in knowing the proportion of people in a given population have behaved in a particular manner making projection of things or determines the relationship between two or more variables. The objective of the study will answer who, what, when, where, and how of the subject under investigation for consumers as well as retailers. It is therefore necessary that Researcher will give sufficient thought for framing research questions and deciding the type of data to be collected.
DATA COLLECTI ON METHOD 1. PRIMARY DATA: Using two methods, the data has been collected:
Observation: The purpose of observation was to have a look on the actual condition of which brand of salt are used by consumer. With the help of Retailers, Researcher have seen the consumers observation as actually, how much and which brand of salt they are using at present? What is the purchasing pattern of consumer?
Questionnaire method: The questionnaire is divided into two methods that is Structured and Non-structured Questionnaire Method. Researcher have used the Structured-Non-Disguised Questionnaire that is the part of a Structured Questionnaire. In that Method, the listing of question is a pre-arranged order and object inquiry is revealed to the respondent. Researcher have done the pilot survey of 20 customers for checking out validity of our questionnaire and then Researcher have finalized our questionnaire for the survey purpose.
2. SECONDARY DATA: Someone already collects these data and it is available for my present study. And the sources of the data are as follows:
Internal sources: Annual Report of NIRMA.
External sources: Magazine Newspaper Library books Web Sites Population List
Defining the population: It is the aggregate of all the elements defined prior to the selection of the sample. It is necessary to define population in terms of Element, Sampling extent and time. I have conducted a survey on the consumer to know the preference and satisfaction level for Edible Salt users (especially Nirma Shudh salt) with special reference to different areas of Ahmedabad. These specifications are as follows: Element: Buyer of Edible Salt. Sampling Size: 250 House Hold Sampling unit: Household respondents Sampling method: Stratified Convenient Sampling Sample size decision: For using the stratified sampling method, I have divided the city according to the Zone wise. And the Ahmedabad city is covered with many areas which are representative of the Ahmedabad as a whole. I have chosen areas like Maninagar, Satellite, Vadaj, Saraspur, Meghaninagar, Bapunagar and Naroda.
Hypothesis:A chi- square test for independence has been conducted for knowing the relation between the area and the preference towards salts. Ho: Preference towards salts and area are independent of each other. H1: Preference towards salts and area are dependent of each other.
LIMITATIONS OF THE STUDY The limitations of the study carried out are as follow: This study is limited to different areas of Ahmedabad I have considered the survey with only 250 households for knowing about consumer preference about the Edible Salt in Ahmedabad. The accuracy of the project and conclusion is totally dependent on the data collected and analyzed. The sample size is too small to predict the future growth of the edible salt industry.
Salt IndustryIntroduction India is the third largest salt producing country in the world (after the US and China) with an average annual production of about 148 lakh tones. In a very short period of time sufficiency was achieved (in 1953) and made a dent the export market. Since then, the country has never resorted to imports. Exports touched an all time high of 1.6 million in the year 2001. The per-capita consumption of salt in the country is estimated at about 12 kg, which includes edible as well as industrial salt. The current annual requirement of salt in the country is estimated to be 60 lakhs tones for industrial use. Caustic soda, soda ash, chlorine etc., are the major salt-based industries. Besides about 15 lakhs tones of salt is exported every year. Sea salt constitutes about 70% of the total salt production in the country. Salt manufacturing activities are carried out in the coastal states of Gujarat, Tamil Nadu, Andhra Pradesh, Maharashtra, Karnataka, Orissa, West Bengal Goa and hinter land State of Rajasthan. Among these States only Gujarat, Tamil Nadu and Rajasthan produces salt surplus to their requirement. These three states produce about 70%, 15% and 12% respectively of the total salt produced in the country and cater to the requirement of all the salt deficit and non-salt producing states. Private sector plays a dominant role contributing over 95% of the salt production, while the public sector contributes about 2-3%. The co-operative sector contributes about 8% whereas the small-scale sector (less than 10 acres) accounts for nearly 40% of the total salt production in the country.
Salt Production There are about 10107 salt works, mostly in small sector engaged in the production of salt. The total area under salt production is about 5.0 lakhs acres. The salt manufacturing activities provide direct employment to about one-lakh presons per day.
Distribution of Salt Railways play an important role in transporting salt from three surplus states to the entire length and breadth of the country. On an average, 55% of edible salt is transported by rail from production centers. The remaining quantity moves by road and waterway.
Iodized Salt With a vies to ensure universal access of iodised salt for the prevention and control of goiter and other iodine deficiency disorders in the country, Salt Commissioner's Office has been identified as the nodal agency for creation of adequate salt iodisation capacity, its distribution and quality monitoring at production centers, under NIDDCP. Salt Department has granted permission to more than 878 salt iodisatios units with an annual installed capacity of 112 lakh tones so far.
Exports Export of common salt and iodised salt is permitted under Open General License (O.G.L.). Salt is exported manly to Japan, Philippines, Indonesia, Malaysia, Nepal, and Bhutan etc. India has, for the fist time, exported 32,500 tonnes of common salt to the US during December 2002, creating a history of sorts.
Liberalizatin and Simplification of Procedure Following amendments to Central Excise and Salt Act, 1944 in 1996, de-licensing the salt industry and salt Cess Rules, 1964 in 2001 and introducing self-removal procedure (SRP) instead of permit system for payment of cess and removal of salt from salt factories, several registers have been discontinued or reorganised. When the Father of the Nation, Mahatma Gandhi strode purposefully alongside thousands across the length of Gujarat in his historic Dandi March in 1930 to release the domestic salt industry from the shackles of the Britishers, little did he anticipate that half a century later the same salt industry -- at that time a mere 20 lakh tones of salt was being produced and salt was being imported to meet the domestic demands -- would end up as a Rs 3,600 crore industry accounting for the world's third largest production, averaging a whopping 14 million tones annually. Salt production encompasses an estimated area of over 4.8 lakh acres spanning the states of Gujarat, Rajasthan, Tamil Nadu and to a lesser extent, Andhra Pradesh, Tamil Nadu, Orissa and West Bengal. The industry directly employs over one lakh salt laborers. Salt is an essential commodity with inelastic demand. Planning of production targets, distribution of salt and price surveillance, promotion of technological development, maintenance of standards, improvement of quality of salt and promotion of exports are done by the office of the Salt Commissioner, Jaipur, India. Per capita consumption of salt in the country is estimated at about 12 kg. Per head per annum, which includes edible and industrial salt. Current annual requirement of salt in the country is estimated at 60 lakh tones for edible purposes (including animal consumption) and 60 lakh tones for industrial use. 9
Caustic Soda, Soda Ash, Chlorine, etc. are the major salt-based industries. The country is not only self reliant in salt production but also exports about 10 lakh tones of salt annually over the past few years. Salt is manufactured mainly by solar evaporation of seawater, sub-soil and lake brine. Sea salt constitutes about 70% of the total salt production in the country. Salt manufacturing activity is confined mainly to the coastal States of Gujarat, Tamilnadu, Maharashtra, Karnataka, Goa, Andhra Pradesh, Orissa, West Bengal and in the Hinterland State of Rajasthan. Gujarat, Tamilnadu and Rajasthan are surplus in salt production, producing about 72%, 14% and 11% respectively of the total salt production of the country and cater to the requirements of deficient and non-salt producing States. Salt works having an area of more than 10 Acres (including salt works set up by the co-operative societies) are covered under the provisions of the Salt Cess Act, 1953. Salt works having an area up to 10 Acres set up by individuals or groups of individuals are exempted from the provisions of the Act. The private sector plays a dominant role in the salt industry, contributing over 95% of the total salt production, while the public sector contributes about 3-4%. The small sector (less than 10 acres) accounts for about 30% of the total salt production in the country. There are also units in the co-operative sector. The salt manufacturing season begins with the closure of monsoons i.e., by the 15th October and lasts up to June next year coinciding with the onset of monsoon again.
COMMON SALT PROPERTIES AND USES Sodium chloride (Nacl) now called common salt is an example of the simplest type of chemical salt. a molecule of common salt contains an atom of chlorine combined with 23 parts by weight of sodium to form 58.5 parts of common salt., Rock salt is rarely found in an absolutely pure anhydrous state in which it is colourless and perfectly transparent. In most rock salt, mines such specimens are considered curiosities. In Wieliczka mine in Poland and in Khewra mine in the Punjab large masses of salt containing over 99 percent Nacl are met with. In the Punjab mines we meet with salt of different colours such as white, pink, darkish or red. The colour disappears when salt is crushed to powder. The colour of seawater is affected by the percentage of salt in it; as the quantity of salt decreases, the colour changes from blue to green. Salt is met with in any colours; white, pink, red, brown, greenish and grey. The red or green colour is attributed to the presence of infusoria. Salt is highly soluble in water, 100 parts of which dissolve 37 parts of salt. The specific gravity of such solution 1:2, the specific gravity of salt crystals is 2.16. The smallest quantity perceptible to taste is 68 grains of salt dissolved in a gallon of water. Pure Sodium Chloride is not deliquescent. It, however, absorbs moisture owing to the presence of magnesium chloride. Sodium Chloride melts at very high 10
temperature, at still higher temperatures it evaporates and at white heat it volatilizes forming thick clouds. It does not diffuse much, even when masses of varying densities are super-imposed on one another. Salt is fairly hard. there is no standard unit fixed for hardness. Geologists, however, compare the hardness of minerals by a comparative table (Mohs table of hardness) according to which the hardness of talc is considered as one and that of diamond ten. According to this standard the hardness of salt is 2.5. Its cohesion or power of supporting pressure is twice as great as that of bricks. Common salt is a crystalline substance: crystals generally form cubes and sometimes they form octahedrons. The form of crystals depends on temperature, state of rest or motion, length of time etc. Salt has a perfect cleavage. It splits up readily in to planes parallel to the faces of the cubes of which it is composed. Salt has acoustic properties as well that is to say; it is a good medium for the transmission of sound. Workmen in a salt mine are able to signal by blows on the face of the rock. Salt possesses in a high degree the power of staying decomposition in dead organisms and is the commonest of all preservatives. Owing to this property it is an absolute necessity to the life of man and the higher animals. Salt water trickling through the roof of a working also forms stalactites and stalagmites just as time-stone forms them. In Khewra mine we meet with long hollow tubes of salt formed by the brine trickling drop by drop through the roof. Rock salt has many minerals associates with it: for instance, gypsum, sodium sulphate, magnesium sulphate and magnesium chloride. In the Khewra mine, salt is found mixed with variously cioloured clays, white pink, red, variegated gypsum beds, limestone, and magnesium sulphate. Bad salt is associated with magnesium sulphate and good salt with calcium chloride. A cube foot of pure rock salt weight about 25 to 27 kgs. Common salt is a necessity of life. It imparts an agreeable flavour and improves the taste of food and is used as a condiment. it may be interesting to know how exactly salt consumed in its natural or artificial form functions in the human body. It is Iodised by infusion of minute doses of potassium iodide about .02% as prophylaxis for Goitre Similarly, it is medicated with phosphates or other ingredients to regulate the deficiencies in human system. Salt, in short, is a preserver health. Lord Lawrence, in his evidence before the Select Committee on East India Finance in 1873, attributed the prevalence of murrain in the Indian cattle to the want of salt in their food. It was used as chemical manure long before the Christian era and its value was recognized throughout Europe. the ancient Hebrews applied it as a manure over 2,000 years ago in Palestine and so did that eminently agricultural people in Chinese and do still to this day. The old Romans too used it as manure. In India its use in agriculture is rather looked on with 11
disfavour. Mr. Arthur Young, an outstanding figure in the history of English and even European agricultural renaissance, considered salt of great value as fertilizer. The use of salt in modern industries is equally or perhaps more important. A number of arts and manufacturers of modern civilizations owe their existences to salt. In short, salt is indispensable to industrial advance.
PRODUCTION Scanty rains and draught like conditions in major salt producing States of Gujarat and Rajasthan resulted in prolonged salt manufacturing season and thereby creating conditions for increases in salt production after 2000. With the increasing thrust on ionization of salt and to meet the quality needs of the industrial sector, emphasis is being laid on the manufacture of quality salt. Up gradation in quality of the raw salt manufactured from the solar salt works to cater the above requirement is undertaken in salt washeries and refineries. Salt Department has registered 39 salt washeries/refineries so far, of which, 31 units have commenced commercial production. The country is also focusing on the export of the salt as the production is increased beyond the consumption level of the Indian market. DISTRIBUTION Railways play an important role in the movement of salt from the three surplus salt producing states to the far-flung areas of the country. About 66% salt dispatches from the production sources are by rail the remaining by road and waterways. The Zonal Scheme formulated by the Salt Department in consultation with the Railways and the state Governments ensures adequate supply to the consuming areas. During the year 2001-02, no scarcity or abnormal price rise was reported in any part of the country. The companies, which are prevailing in the edible salt market, have the advantage of effective distribution network because it is one of the factors of making a success in the market. LIBERALISATION & SIMPLIFICATION OF PROCEDURE Cess on Salt is levied as per provisions of the Salt Cess Act, 1953, and the Rules made there under. With a view to further liberalize and facilitate realization of salt cess from the salt manufacturers (erstwhile licensees), the Government has introduced Self Removal Procedure (SRP) in place of consignment-wise 12
permits system for removal of salt from the Salt Factories vide Notification dated 4th September, 2001. The concessions provided in the rate of Cess in the Salt Cess Rules, 1964 and subsequent amendment made vide Ministry of Industrys Notification dated 09.09.1981 still continue to be in force. EXPORTS Despite being among the largest producers of salt in the world, India has not been able to make a dent in the international markets which is evident from the low volumes; our best export performance thus far has been a miniscule 6.66 lakh tones in 1990. The Indian salt industry has been singularly unsuccessful on the export front, despite India's salt probably being the cheapest in FOB terms compared to other salt exporting countries. This is mainly due to the high trade logistic cost which leads to interminable delays in the turnaround of vessels, which pushes up the CIF value of Indian salt to unacceptably high levels. The inability of India to have a global presence is also one of the main reasons for the prevailing glut conditions in the Indian market. Since the scope of increasing demand in the domestic market is fairly limited, the only way to come out of the glut crisis is by emphasizing on exports in a big way. Alarm bells are already ringing in the industry over the record 14.5 lakh tone salt production in 1998-99, which is expected to burgeon to around 16-18 million tones in the current year. While a mere two per cent of the country's salt is manufactured by the 11 public sector and joint sector undertakings -- Hindustan Salt Works (Kharaghoda and Mandi), Experimental Salt Farm (Bhavnagar), the Tamil Nadu Salt Corporation and Sambhar Salts-- a whopping 98 per cent is in the hands of the private, co-operative and unorganized sector. But here again, the big corporate have a low presence with the lion's share with the small and medium units. According to the salt department statistics, in 1998-99 there were 2,752 recognized salt units as against an estimated 6,408 unrecognized units in the country. The recognized salt manufacturers allege that these unrecognized units not only supply sub-standard salt in the market but are also causing major revenue losses to the government by evading cess and royalty payments. India produces more salt than its domestic requirements. These apart, the industry is also finding it difficult to keep its head above water on account of the drastic slump in demand for industrial salt by the recession-hit domestic soda ash and caustic soda industries which are the main salt consumers. Export of common salt and iodized salt is permitted under Open General License (O.G.L.) Salt is exported mainly to Japan, Philippines, Indonesia, Malaysia, Nepal and Bhutan, etc. 13
Every day, each of the earth's 5.9 billion inhabitants uses salt. Annual salt production has increased over the past century from 10 million tons to over 200 million tons today. Nearly 100 nations have salt producing facilities ranging from primitive solar evaporation to advanced, multi-stage evaporation in salt refineries. Humans need salt to live. Prehistoric man obtained salt from the meat of hunted animals. When man developed agriculture, salt was added to supplement the vegetable and cereal diet and the quest for salt became a primary motivation in history. In the mid-1800s, salt's value as an important raw material for the chemical industry was established when the Solvay process in Belgium converted salt to synthetic soda ash. Salt is, today, the largest mineral feedstock consumed by the world chemical industry. IODIZED SALT With a view to ensuring Universal Access of iodized salt to eliminate goiter and other Iodine Deficiency Disorders in the Country, the Salt Commissioners Office has been declared as the Nodal Agency for the creation of adequate capacity for the production, distribution and quality monitoring of iodized salt at the production centers under the National Iodine Deficiency Control Programme (NIDDCP). The Salt Department has registered more than 940 units with annual installed capacity of 147 lakh tones.
EDIBLE IODIZED SALTINTRODUCTION The scenario on the edible salt front is not so grim thanks to India's burgeoning population. To some extent, decrease in demand for industrial salt is being nullified by the increase in demand for edible salt. An individual's annual requirement for salt has been pegged at 6 kg. Taking the country's present population at 100 crores, the requirement for edible salt would be 60 lakh tones per annum. Despite a burgeoning population and the corresponding increase in the demand for edible salt, it is clear that on the industrial salt front, the industry has heavy odds stacked against it. As an industry observer sums up, What we need is not only large markets within the country only but outside too. And for this, the country requires standardization of quality and concentration of supplies instead of the present scattered quantities available with the small manufacturers. And an influx of technology as well. The sooner this is done, the better it is for the health of the industry. Competition is hotting up in the branded salt market with Tata Salt, the blockbuster brand of Tata Chemicals Ltd, emerging as the market leader. Tata Salt has a market share of around 37 per cent while its closest competitor, Annapurna from Hindustan Lever Ltd, is breathing down its neck with a market share of around 35 per cent, a recent ORG-MARG retail audit revealed. The ORG-MARG retail audit showed that the 15 lakh tones domestic branded salt market would witness stiff competition among popular brands such as Dandi, Surya and Nature Fresh as they try to grab a comfortable share, each with intensive marketing strategies and advertisement campaigns. The ORG-MARG figures revealed that during the financial year ended March 31, 2002, on an average basis, Tata Salt grabbed a market share of 36.58 per cent, while Annapurnas market share touched 34.46 per cent. DCW Home Products Ltds Captain Cook (now with HLL) had 7.78 per cent market share and other brands such as Dandi, Nirma Shudh and Natural Fresh had market shares of 0.97 per cent, 1.37 per cent and 0.14 per cent respectively. In March 2002, the market share of Tata Salt touched 39 per cent, while Annapurnas market share during the same period was around 30 per cent. According to analysts tracking the industry, the recent entrant to the branded salt category is Dandi salt. The brand is being advertised heavily on the regional channels and it has managed to gain around 0.97 share of the branded salt market. However, they said that the unbranded sector continues to control a sizeable share of the overall salt market in the country. Meanwhile, sources said that Tata Chemicals has already initiated new efforts to involve and engage its business associates in marketing and strategy processes to enhance the brand muscle of Tata Salt. While Captain Cook is positioned on the basis of its unique selling point, the free-flowing nature of its salt, Tata Salt is positioned on the purity platform and Annapurna is positioned on the health benefit impact of the iodine content in the salt." Tata Salt, the first branded salt in the country, was launched in 15
1983, DCW launched its brand in 1991 and Hindustan Levers Annapurna was launched in 1996. Other FMCG companies such as Dabur India and Marico Industries have also got a presence in the salt market, though insignificant, with their brands Nutra salt, a low sodium salt and Saffola Salt, which is a mineral enriched low sodium salt respectively. Both the above brands are positioned on the health platform and are priced at a significant premium to the normal salt brands. EDIBLE SALT IS BETTER IN COMMODITY MARKET The trend of commodity-to-brand is yet to gain pace. While performance of staple foods has been patchy and has fallen short of expectations, one market that's remained on top of the heap and growing faster is branded salt. Well, if there's one commoditised brand that has been outperforming others such as atta, sugar, rice and staples, it is good old salt. Salt, sugar, atta - all are commodities but at very different stages of evolution with different brand building drivers. And while the three segments are not entirely comparable as products, in evolutionary terms, salt is ahead. Take FMCG giant HLL. It was some four years ago that HLL, based on recommendations by McKinsey's Food & Agriculture Integrated Development Action (FAIDA) buoyant report on the foods industry, had decided to push mass consumed staples such as atta, salt and rice. HLL's projections - of a million tones by year 2000-01 - have since fallen short with current volumes of salt and atta adding up to less than half-a-million tones. While rice has been pulled back and atta has seen a fall in market share this year, the eight-year-old Annapurna salt is not only doing well, but is profitable at that. According to ORGMARG's retail store audit data for April 2002, the size of the iodized branded salt market is estimated at 15 lakh tones per annum (by value, about Rs 500 crore), and is estimated to be growing at 20 per cent annually. National brands take a 45 per cent share, and local brands account for the remaining 55 per cent share of this market. Compare this with other branded commodities - while branded, packaged sugar is estimated to be a 40,000-tonne market, industry estimates peg the size of the domestic branded wheat market at roughly 1.8 lakh tones. Tata Salt continues to reap the early bird advantage, with a leading 39 per cent share of the national branded salt segment, and a 17 per cent share of the total iodized branded salt market. HLL's Annapurna salt brand is estimated to have a market share of about 16 per cent. (DCW Chemicals' Captain Cook, launched in 1991, was subsequently acquired by International Best foods, which in turn was acquired by Unilever.) HLL continues to distribute Captain Cook salt, but the brand isn't being pushed as aggressively. New entrant Nature fresh, from the Cargill Foods stable, claims to be showing positive results. "Nature fresh salt, introduced in December last year, has been able to make inroads, generating switch in brand preference from the top end of the edible salt market. Other significant branded players include Marico's Saffola, positioned as a niche, low-sodium brand introduced about four years ago, and Nirma Shudh, which isn't completely national yet. Meanwhile, another ambitious entrant that's making waves within the branded salt category is Dandi, launched last October 16
by Surat-based businessman Suresh Aggarwal. The brand is threatening to shake up market shares of established players in the category. Dandi has already grabbed a four per cent share of the market, which amounts to Rs 44 crore by value. The marketing mix for Dandi has been bang on - attacking tea through a grassroots level Rs 8-crore ad campaign which gave the brand instant recognition, ensuring retail push, and cross-selling (giving away a saree free with purchase of Dandi salt - the Kunvar Ajay saree brand is owned by the same group). In addition to kitchen salt, one segment that has remained the stronghold of the Delhi-based Rs 700-crore DS Group is that of table salt. The table salt market is limited - estimated at Rs 25 crore - and dominated almost entirely by DS Foods' Catch brand. Catch, introduced in 1987, is available in 16 different products (including spices and variants such as pepper and black salt) in 100 gm tabletop dispensers, and has its production base in Noida. Catch free-flowing table salt's performance is satisfactory, but there are no plans to extend it to kitchen salt. The brand occupies a niche and is doing well for itself. Table salt, for example, has less than one per cent impurity compared to 30-40 per cent impurities in kitchen salt. Even the best quality kitchen salt would be having an impurity level of 15-20 per cent. So why is salt on stable turf while performance of other branded commodities has been, by and large, patchy and below expectations? One of the reasons why salt is outperforming other branded commodities is to do with the life span of branded salt being longer. Apart from that, there's been an effective `iodine deficiency campaign', owing to which the penetration of branded salt is about 20 per cent nationally, compared to one per cent for branded atta and sugar. While salt has been branded for some two decades now, it is in recent times that the branded salt market has witnessed the entry of several players. The trend of branded atta is only a three-four year old phenomenon, and unlike salt and sugar, branded atta has very limited shelf life and freshness is crucial to end product quality. Besides, significant laddering benefits of branded atta haven't yet evolved. As for branded sugar, the story is just beginning, with brands like Dhampure coming up and Amul planning to enter the category. But what about brand loyalty? Do differentiators such as `free flowing', `iodized', `granular' and `vacuum evaporation' actually influence brand purchases when salt remains a low-value, low-involvement product with few differentiators of significance? While the consumer is swayed by a number of brands and benefits, which indicates low brand loyalty, there is a preference for reputed brands and familiar names. That's because salt is a habitual product and the consumer doesn't prefer frequent brand switches. The Indian consumer is willing to switch among a set of preferred brands, depending on availability, personal preference and product offering. Once a consumer gets a certain branded salt free with another purchase, the housewives may just continue with the brand.
Of course, distribution muscle is key. Tata Salt penetrates semi-urban and rural markets through economy pack sizes and forms and product development for newer, more `evolved' offerings. And Dandi already reaches 1,000 towns, piggybacking on 1,150 distributors. So where is the much-talked-about commodity to brand movement headed for? "It will happen and at a much faster pace now than before, due to the consumer's consistent quality demands and improving supply chain of produce from farms." "The commodity market will progressively move into the branded portfolio as long as the `value delivery' is in line with the product price. Margins will continue to be thin till the consumer's perception of the differentiated values that brands offer over commodities changes significantly.
PEST ANALYSIS OF INDUSTRY Whichever the industry is, the political, economical, social & technological environment plays an important role. These factors are the factors, which will influence the industry as a whole that means any company cannot ignore the PEST for their further development. Following are some of the factors that are influencing the edible salt industry.
POLITICAL/LEGAL FACTORS Government has imposed a ban on non-iodized salt that means more market for the iodized salt in the edible salt segment. It is when a legion of 70 million goiter-affected people stand as a pointer to the magnitude of iodine deficiency in the country that the Center has made a move to withdraw restriction on sale of common edible salt. Though de-licensed in 1996, the government retains a modicum of control over the industry. It controls leasing of all Central Government land for salt manufacture along with planning the production targets. The Government has adopted the Universal Salt Ionization Programme under the aegis of the World Health Organization. The Central Government also supervises equitable distribution, monitors quality and prices, ensures maintenance of standards and improvements quality and promotes technological developments along with training of personnel. The salt department is under the purview of the industry ministry and is responsible for collecting the salt cess, assignment fees, ground rent and other dues. On the welfare front, the government acts as a nodal agency for planning, formulating and monitoring development and the labour welfare schemes. And if the issue is one of loss of employment of some small-scale producers of salt, the solution is formation of salt co-operatives, which should be given free equipment and other facilities for salt ionization. As Gujarat is the main producer of Salt, the Government of Gujarat has exempted the Salt industry form VAT that will be implemented from 1st of May. The Centers recent decision to impose anti-dumping duties on soda ash imports from China has been hailed widely by the salt industry. It is felt that the results of this measure will soon be visible in the healthier balance sheets of both the salt manufacturers and the soda ash and caustic soda industries. 19
ECONOMICAL FACTOR The U.S. is the world's largest salt producer as well as the largest consumer. The U.S. salt industry earns more than $1 billion a year. The second-largest producer is China, then Germany, Canada, and India. Only 17 per cent of the iodized salt produced in India is of the refined category, which means that the remaining 83 per cent salt is being produced by medium and small manufacturers. Under normal conditions, of the average salt production (13.5 to 14 million tones), around 4.5 to 5 million tones is consumed for edible purposes while, 5 to 5.5 million is utilized for industrial purposes. Industrial salt is also used extensively in the chemical industry for the manufacture of plastics, glass, chlorine, soap, textiles, paints, rubber, paper and caustic soda for aluminum production. The annual increase in overall demand for the commodity is pegged at a healthy 10 per cent and by 2005; the total demand for salt is expected to increase by 40 to 50 per cent. Branded salt accounts for 20 per cent of a five million-tone market, say some industry analysts. Valued at Rs 500 crore, the market is growing at 20 per cent per annum. Tata Salt leads the market with around 30 per cent market share followed by Hindustan Lever's Annapurna and DCW's Captain Cook at around 15 per cent. Nirma Shudh salt, Surya salt, Saffola salt, Nature Fresh salt, Nutra salt and unorganized salt firm are the major threats to the market leader. SOCIOCULTURAL FACTORS Iodine deficiency is the single most important cause of preventable brain damage and mental retardation, most of the damage occurring before birth. It also significantly raises the risk of stillbirth and miscarriage for pregnant women. The successful global campaign to iodize all edible salt is reducing the risk associated with this deficiency, which threatened 1.6 billion people as recently as 1992. Nevertheless, it is estimated that 43 million people worldwide are suffering from varying degrees of brain damage; there are an estimated 11 million overt cretins. Some 760 million people have goiters. The Tata Chemicals has also some social responsibility and brand commitment and to this end has launched the Desh Ko Arpan programme where 10 paise on each pack of Tata Salt sold in a month would go to CRY. The salt is being consumed by richest to the rich and poorest to the poor, so the Government maintains the affordability of the price.
Nirma Shudh Salt is providing the edible salt with best quality at lower cost to provide customer a value for their money. Dabur and Saffola have launched low sodium salt for the health conscious people, which is for the better living of the people. TECHNOLOGICAL FACTORS National Research Development Corporation, Government of India Enterprise, is a premier technology transfer Corporation with four decades of experience. It has helped establish over one thousand projects in the small and medium scale sector and which will help the different companies to set up their own plants. Basically, Refined Iodized free Flowing Salt Plants are mainly of five types: Vacuum Refinery. Mechanical Refinery. Solar evaporation of sea water Sub-soil Lake brine Companies are using the latest technology day by day to increase the production of the salt. Nirma Shudh Salt is using about 7 machines, which will produce about 10 packets in a second. That will help the company to produce more and more.
FIVE-FORCES ANALYSIS OF INDUSTRY According to this model the competition in an industry goes well beyond the established players. Through this five-force model the different companies are able to source the different competitive pressure that highlights the critical strengths and weakness of the company, which will help the company to know its position in the market, and able to highlight the areas where industry trends promise to hold the greatest significance as either opportunity or threats. Here the primary focus will be on the strategy of the individual industry. Following are some aspect, which are cover for the purpose of five-force model of the salt industry. 1) THREAT OF ENTRY No license fees: The cost of entry is negligible. If the person has the capital and salt field from where he can produce the salt in a large quantity, the person can start the business. However according to the role of Government, every company in this industry has to produce the edible salt according the standard set by them with respect to the iodization. Minimum set up cost: The company required not much of the initial cost as the raw material and the labour forces are easily available. The company has just the cost of establishing the plant. Price war: There are big players existing in the market like Tata, HLL, Nirma, Dabur, and Marico etc., which has the stiff competition for the price. The local players are also the major threats to the competitive market. Scope for expansion: As the companies existing in the edible salt market has the over capacity of the production and they are producing more than consumption of India, the new entrants will face a major problem for the purpose of remaining in the market. Thus those companies that have the huge profit from other sources will think about entering into this market.
2) THREAT OF SUBSTITUTE: The salt is consumed by the richest to rich and poorest to the poor and salt is the commodity, which is required the most. For the purpose of health consciousness, salt is the best way to maintain the level of iodine in the body. There is no substitute available for the salt and still there is no research is on for the finding of the substitute. The salt is available in a huge quantity whenever and wherever required. Thus there is no problem of availability of the salt at any point of time that will make the producers not to think about the salt substitute. Thus as there is no threat of the substitute; the industry rivals will be able to concentrate on other things rather than giving time on thinking about the salt substitute. However there are companies who are thinking about introducing the edible salt in a tablet form. Thus there is a substitute for the packaging but not for the commodity itself. 3) BARGAINING POWER OF BUYER Because of the availability of different brands of edible salt, a very small income and low consumer involvement require for the purchase of edible salt results in a very little cost for buyers on to other players. Low switching cost. Industry comprises of big as well as many local players. Customers are low price sensitive.
4) BARGAINING POWER OF SUPPLIER The suppliers of the salt industry cannot able to increase the price of commodity because of the huge stock available in the market that means the importance of the commodity is not vary much high to the customers and it is the low involvement product which is not required much of the interest of the customers to buy the product. Thus, whichever company will try to increase the price of the commodity will loose the market drastically and not been able to achieve the growth as expected by the company. Thus the bargain power of the supplier is not very influencing as compare to the bargaining power of the buyer. The only advantage to the suppliers is the non-availability of the substitute product, which makes the customers to remain with the same commodity. 5) COMPETITIVE RIVELRY Tata Salt (Tata Chemicals) is the market leader with sales of 0.29m-ton pa. Annapurna (HLL) and Captain Cook (DCW Home Products) are the two other major brands, which sell about 0.2mn and 0.3mn ton pa each. While Captain Cook is positioned on the USP of free flowing nature of its salt, Tata Salt is 23
positioned on purity platform and Annapurna is positioned on the health benefit impact of the iodine content in the salt. Nirma and Dabur are the two latest entrants in the branded salt market. Tata Salt, the first branded salt in the country, was launched in 1983. Tata salt is manufactured by Tata Chemicals as a by-product of its water distillation plant. DCW launched salt in 1991. It has three plants in Maharashtra, Gujarat and Tamil Nadu. In August 98, Corn Products Company (India) Ltd (manufacturer of Knorr brand of soups) acquired the Captain Cook brand and the salt manufacturing facility at Gandhidham for a consideration of Rs900mn. Corn Products, renamed as International Best foods Limited wef October 98, will now be one of the leading players in the segment. Hindustan Levers Annapurna was launched in 1996. HLL operates three plants at Maharashtra, Delhi & Bangalore. Nirma is setting up a soda ash plant, which will produce 280,000 TPA of salt as by product. The company is currently test marketing Nirma Free Flow Salt. Nirma has the advantage of a well-established distribution network of grocery stores (where its soap and detergent brands are typically sold). With its strategy of competitive pricing, the company has the potential to become a significant player in the segment Dabur has recently launched Nutra salt, a low sodium salt. Marico has also launched Saffola salt which is a mineral enriched low sodium salt. Both the above brands are positioned on the health platform, and are priced at a significant premium to normal salt brands. Besides there are a large number of other local/regional brands in refined and iodized salt.
COMPETITIVE ANALYSIS The company, who wants to be the market leader in the edible salt segment, must know their competitor from the bottom. Here we have tried to explore as many competitors as possible, which will help the Nirma to know about their competitor. While talking about the different competitors of Nirma Shudh Salt, let see where the company stands in the market first. NIRMA INDUSTRIES LTD. (NIRMA SHUDH SALT) Nirma is an over Rs. 17 billion brand with a leadership presence in Detergents, Soaps and Personal Care Products, offering employment to over 15,000 people. Mr. K. K. Patel introduced the Brand in 1969. Making phosphate free synthetic detergent powder by hand and selling it at Rs. 3/- per kg., when the lowest priced detergent brand was Rs. 13/-. This value-for-money plank revolutionized the industry and made fabric wash detergents available to the masses. Today, Nirma sells over 800,000 tones of it's detergent products annually, giving it a 35% share of the Indian Market, which is the world's second largest fabric wash products market. This makes Nirma India's largest detergent marketer and one of the world's biggest detergent brands. Even though Nirma was a late entrant in 1990 in the highly competitive toilet shop market, it is already the second largest manufacturer, selling close to 1,06,000 MT of bathing soaps in 1999-00. The brand has over the years introduced products in toiletries and personal care with soaps, shampoos and toothpaste, thus offering the consumer a complete product portfolio. Carrying on Nirma's mission of providing 'Better Products, Better Value, Better Living' to its over 300 million consumers through an efficient distribution network. Following are the main competitors of Nirma Shudh Salt in the Edible Salt industry. The company can only be successful if they know about their competitor very well.
TATA CHEMICALS LTD. (TATA SALT) Launched in August 1983, Tata Salt was the first national brand of packaged salt to be marketed in India. To millions of Indian housewives, it presented a welcome move away from the loose, unbranded salt of suspect quality to the reassurance of clean, pure salt guaranteed by Indias most trusted business house. Tata Salt leads the way as first mover and leader in the branded iodized salt market. It has a 17per-cent market share in the branded salt category and among national brands; its share is higher at 38 per cent. The marketing strategy would be to continue expanding reach and availability of the product while improving the market base. It will continue upgrading users of unbranded, unhygienic loose salt and continue to improve product and packaging offering to the consumer. The company has also some social 25
responsibility and brand commitment and to this end has launched the Desh Ko Arpan programme where 10 paise on each pack of Tata Salt sold in a month would go to CRY. An average of three crore Tata Salt packs are sold each month. Advertising for the product largely revolved around the television medium with Doordarshan forming the dominant chunk of its media plan given it still has the highest reach especially in areas like UP, MP and Bihar where vast numbers of consumers are unbranded and loose salt users. This year will see TCL spend about Rs 10 crore on advertising between the Tata Salt and Samunder brands. Though the market is competitive with multinationals and Indian firms alike pumping money into messaging the consumer, Tata Salt will continue to lead as long as it reaches out and makes itself available. The company always has an ear to the ground to be in touch with the consumer's needs. The company is also exporting their salt to the Middle East and Bangladesh.
MARICO INDUSTRIES LTD. (SAFFOLA SALT) Marico Industries with an extension of the Saffola brand equity, a 30-year old kardi oil brand associated with "the heart of a healthy family", to salt which forms part of a larger purpose: to develop Saffola into a strong umbrella brand riding on its age-old USP of "good for the heart". There was a need in the marketplace for such a product, which cannot be directly, compared to other branded salts because of the price premium those Saffola salt commands. Saffola salt is priced at Rs. 25 for a one kg jar (this is the first time that the most common food ingredient salt is being introduced in a jar form. The price premium is partly due to this additional cost). The company has launched the salt in select towns like Mumbai, Delhi, Chandigarh, Calcutta and Pune at a special price of Rs. 20. The pricing may, a complete value to the consumer who gets a re-usable jar along with the salt. The company may later look at introducing other sizes and try to cut down on the cost, which would eventually bring down the price to the consumer. However, this price would still be at a slight premium over other branded salts in the market due to its unique qualities, put off a consumer whos used to paying Rs. 6 to Rs. 7 for a kg of common salt. Salt for Saffola, well known among those health conscious consumers? The thinking behind extending the brand to the common salt was simple: "Because salt is the main intake most consumers suffering from hypertension, a common heart ailment, are asked to cut down on. They have tested the salt with doctors and have been introspecting on the concept for over a year now. It involves, in addition to iodizing the salt, a reduction of around 25 per cent of sodium, which has been substituted by an equivalent amount of potassium. Further, they have also not compromised on the taste element. The company has not yet launched any conventional modes of promotions like advertising. The company feels that the Saffolaconscious consumer is the company's primary target and that would mean four lakh households. As far as penetration is concerned, Saffola salt, like the oil, will be an urban phenomenon. Although Saffola salt 26
has been launched without much fanfare, the repeat purchases since its launch a few days back are commendable. HINDUSTAN LEVER (INDIA) LTD. (ANNAPURNA SALT) Hindustan Levers Annapurna was launched in 1996. HLL operates three plants at Maharashtra, Delhi & Bangalore. The company has achieved almost 30% market share across the country but not able to do too much of the business in western segment. The company has more market share towards the northern part of the country. The company has the advantage of best and most successful distribution network for their different product line, which has help, the company to provide the edible salt whenever and wherever required. The company has also launched its consumer schemes of two sachet of Clinic all Clear free with the 1 Kg pack of Annapurna salt. The company is also focusing on the southern region of the country where the local players has the more market share. The company has acquired the Captain Cook brand from the Corn Products Company. The only brand where there is an overlap is Captain Cook in the staple food categories of salt and atta. With both Captain Cook as well as Kissan Annapurna currently being sold on an almost similar price platform, a re-look at the positioning of the Captain Cook brand is inevitable. Also problems faced post acquisition and inadequate marketing support has somewhat tarnished the equity of this once extremely popular brand. But given that the brand even today enjoys a strong recall, it is unlikely that Captain Cook will die a silent death. A more likely possibility is that HLL will use Captain Cook as a flanking brand, positioning it in a different consumer price segment, as has been HLLs strategy in most product categories. Besides the brand provides HLL an excellent opportunity to strengthen its position against Godrej Pillsbury and Tata Salt the two most potent competitors in the atta and salt markets. KUNVAR AJAY INDUSTRIES (DANDI SALT) Unleashing a multi-brand strategy, the company has decided to launch its first product, salt, under the Dandi brand, with more products to follow under different brand names. With no synergies between the two lines of business, the 20-year old saree player has decided to get adventurous and venture into the guarded territories of biggies such as Hindustan Lever and the Tatas. Pricing their brand of Dandi on par with the existing brands of Annapurna and Tata salt, the Rs 7 per one kilo bags are being made available at a national level. Relying purely on internal funds, the company, which heavily advertised its saree brand on a budget of nearly Rs 25 crore, has marked a healthy budget of Rs 10 crore for its new salt brand. Using the USP of being a pure product, it is the triple-refined process in manufacturing which is expected to hold the product in good stead (considering most branded salts are double-refined). The company has positioned itself as the Amrit hai buddhi aur Shakti ke liye (good for the health and mind) that may make a difference in this competitive industry. Realizing that distribution will be the key to 27
getting its products accepted, the company has already covered 414 towns reaching out to half-a-million retailers within the 14 weeks since launch. It aims to reach out its salt to two lakh retailers by March. Besides, it has also decided to sell its salt on an advance demand draft system, breaking away from the long credit-based system adopted for its saree business. CARGILL (INDIA) PRIVATE LTD. (NATURE FRESH): Nature Fresh, Cargill India's staples brand, is forcing big names in the highly fragmented and competitive market to take note of it. Catalyst presents insights into Operation Cargill. If Nature Fresh is making big names in the industry sit up and takes note, it is because Cargill India is not exactly just a new kid on the block. Cargill India Pvt. Ltd., the 100 per cent subsidiary of the Minneapolis-based, $49 billion agri foods major, has varied interests. And given its historical strengths in agri-economy and logistics management, Cargill India is advantageously positioned to service its supply chain. And according to ORG-MARG's retail store audit data, the size of the iodized branded salt market is estimated at 15 lakh tones per annum (which works out to about Rs 500 crore by value). National brands comprise only 45 per cent share of this market. Among other reasons, one reason why salt is bigger than other branded commodities is the Government's iodization drive. According to Cargill officials, the new advertising will be significantly different from the earlier communication. While ad and promotional budgets are not available, the company says it is doing the needful to take the battle of the brand head on. UNBRANDED\LOCAL PLAYERS The major threat to any company in the edible salt segment is with the local unbranded players. There is a huge market for the loose salt because of its cheapest price. This unorganized sector has covered about 85% market of the edible salt market. If any company will overcome this problem then there is a huge market for the edible salt. There are many local players existing in Gujarat, namely, Taja, Tara, Haathi, Sagar, Ambica, Shagun, Umiya etc. they are major threat to the edible salt industry, which must be overcome.
PROMOTIONAL CAMPAIGN IN EDIBLE SALT INDUSTRY Tata company manufactured Tata Salt, Indias first iodized salt. The first competitive challenge came in the early 1990s with the launch of Captain Cook. Positioned as a freeflowing salt, it helped create awareness about brands in the salt segment. Tata Chemicals responded by releasing ads to counter Captain Cooks claims. As more consumers moved from non-branded or local products to the national brands, Tata Salts inherent superiority and strong distribution network ensured its continuing growth in terms of market share and category expansion. In 1996, Annapurna, another national salt brand, was launched. It was positioned on the health benefits of iodine. Iodization had become almost a hygiene factor and consumers did not perceive it as a differentiator. The rising number of players in the brandedsalt segment got Tata Chemicals to think of strategies to combat the possibility of its market share being eroded. In 1998, the company conducted a comprehensive market research study to understand the consumer psyche. The results ranked Tata Salt high on attributes such as iodization, free flow, purity and whiteness (consumers thought of Tata Salt as a saltier salt). Acquired from DCW Home Products Ltd for an estimated price of Rs 85 crore, the brand is back on retail shelves after a hiatus of nine months. Captain Cook is available at an introductory price of Rs 6 per one kg pouch, which is a 25 per cent discount to brands like Kissan Annapurna from Hindustan Lever and Tata Chemicals' Tata salt. Although the company was not available for comment, an International Best food has not made any major changes in the product packaging. Even the ad campaign, is a re-run of the mid-nineties campaign. During the past one year, the complexion of the Rs 100 crore branded salt market has changed considerably. There is a new entrance in the market -- Marico Industries Limited -, which launched two variants of branded salt under the Saffola umbrella. The existing players, Tata Salt and HLL's Kissan Annapurna salt have been aggressively pitching for market shares. Tata Salt and Annapurna have gained market share at the expense of Captain Cook, which has lost around four per cent market share to 11 per cent due to erratic supply over the past one year. Tata Salt leads the market with an estimated share of 33 per cent. The second in the rung is Annapurna, with close to 16 per cent share. Owing to increased competition in the marketplace, the `free flow' proposition that had established the Captain Cook brand in the early 1990s is quite basic to the category by now. Marketers have started `adding value' and hard selling ingredients in the branded commodities market. While Tata salt changed its positioning to `vacuum evaporated ' from `iodized salt' a few months ago, the product ingredient `iodine K15' is the focal point of communication for Annapurna salt. Marico Industries 29
is also not offering anything basic with its `potassium enriched salt' that hinges on the strong `heart care' equity of Saffola. Analysts say that Captain Cook has challenging times ahead in a competitive environment. With branded salt contributing close to 20 per cent of a five million-tone market, this category has huge potential going by the 20 per cent growth per annum. AFTER colas and toothpaste, the stage is set for another potential ad war on the fast moving consumer goods front. This time around, it is the good old salt, which is turning out to become the bone of contention between two major players. Tata Chemicals, which markets Tata Salt, has taken umbrage to the electronic campaign for Hindustan Lever's Annapurna salt. Tata Chemicals has approached the Advertising Standards Council of India (ASCI) against the currently on air advertising for Annapurna salt, which ends with a child bidding goodbye (or `Tata') to all other salts available in the market. According to ORG-MARG estimates, the domestic branded salt market, by volume, is estimated at 15 lakh tones. Tata Salt leads in the branded salt market with a market share of 18 per cent, according to a recent ORG-MARG retail audit. HLL's Annapurna, which has been very aggressive in marketing-related activities in the recent months, has a market share of 16 per cent. Another recent entrant to the branded salt category is Dandi salt. While this brand is being advertised heavily on regional channels, it has managed to gain only a 1.5 per cent share of the branded salt market, according to ORG-MARG estimates. Apart from Tata Salt and HLL's Annapurna, the market share of other players is by and large fragmented, according to industry analysts. The unbranded sector continues to control a sizeable share of the overall salt market in the country.
Nirma is the Rs.17 billion Detergents, Soaps and Personal Care Products Brand, a market leader in the Indian detergent market and second largest in bathing soaps... the brand NIRMA being one of the world's biggest in it's segment... a result of it's mission to provide'BETTER PRODUCTS, BETTER VALUE, BETTER LIVING'.
Shri Karshanbhai Patel's vision introduced a new philosophy or approach, which held that better quality, can be offered even at lower prices. NIRMA in late seventies introduced the concept of TOTAL QUALITY MANAGEMENT (TQM) in Indian detergent market. It not only followed kaizen & kanban the famous management philosophies. But more importantly it followed them successfully. At NIRMA, they first identify the market, establish themselves there & then try for a market unlike others who first advertise & then try for a market share. His philosophy has always been: " first test the market & then advertise, Go to the public with a good product, establish it in the market & then go for publicity." The cornerstone of Nirma business philosophy is captured pithily in their new slogan, "Better products, Better Value, Better Living." Karshanbhai's business policy may be stated thus: " Good quality at a affordable price makes selling automatic." Karshanbhai's NIRMA was catapulted by " A smart pricing strategy for a particular quality to a developing mass market." 31
Shri Karshanbhai Patel attributes his entrepreneurial success to: Enjoying work more than the monetary gains. Enjoying smile on the faces of a satisfied NIRMA customer. Ability of taking right decision at the right time.
Vision, Mision & Philosophy Nirma is a customer-focused company committed to consistently offer better uality products and services that maximise value to the customer. This customer-centric philosophy has been well emphasised 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 organisation, its goals and objectives. Nirma is a phenomenon and synonymous with Value for Money. The brand transcends the specific dynamic of any particular product category, which is best captured in its above mission statement a statement of sustained innovation, an unceasing effort to deliver better value to consumers, through better product quality. Shri Karshanbhai, from a chemist with Gujarat Government's department of mining & Geology became the owner of the market leader in detergent business. His business vision & ability to understand what consumer need & wants, allowed him to transform his backyard business into a reputed market leading company. India is a famous for the leader like Dhirubhai Ambani, J.R.D. Tata, Azeem Premji, and Narayan Murti. Among the corporate leaders of Gujarat, Shri Karshanbhai Patel's name stands apart. Shri Karshanbhai's success is the inspiring story of a self-made man who inherited neither a family business nor a business background. Coming from a family of farmers he has risen to be among the most powerful impact generating entrepreneurs of our country. Shri Karshanbhai Patel, a down to earth man started a moon-lighting activity choosing to manufacture a down-to-earth product for the ordinary, average, not-too-rich, not-too-sophisticated consumer & met sky rocketing success leveling multinational like Hindustan Lever in lower and humbler clouds. 32
Karshanbhai was born in 1944 in Ruppapur, a small village in Gujarat. Karshanbhai's went to school there & later at the age of nineteen, qualified as a chemist with a B.Sc. Degree. For the next six years, he worked as a laboratory technician first at the cotton mills & later in the Gujarat Government's Department of Mining & Geology. In his free time in the evenings, with the limited know-how he has acquired at work, he started experimenting in the background of his house to produce liquid detergent. The idea, however, has to be promptly abandoned, as liquid detergent was difficult to make & would certainly be difficult to market, for it was too new a concept for the consumer. Then he tried his hand at making detergent powder & succeeded. The production started in 1969, with initial investment of Rs. 1000/- borrowed from friends & relatives. Karshanbhai set up a company "NIRMA Chemical works" named after his one -year -old daughter Nirma (Nirupama). The process of manufacturing the detergent powder was manual & required no sophisticated machinery or technology. For the next three years, Karshanbhai managed a one-man show in the time he had at his disposal after his office hours. At that time, he followed one man - door-to-door marketing. Slowly and gradually, price-conscious housewives became eager buyer of this homemade and low-priced (Rs. 3/kg) product. Karshanbhai was selling on a satisfaction or refund basis. Thus a whole new market of middle-class consumer was created. Initially, the powder was sold to some friends and relatives, then to us many customers as Karshanbhai could pedal to, a new salesman were hired on commission basis for selling door-to-door. A salaried chemist by day and manufacture, distributor and service manager by evening, Karshanbhai became a well-known figure though his personalized attention to his customers. The demand for his product increased, the profits improved and the future crystallized. He gave up his Government job and expanded his moonlighting ventures into a fall-time manufacturing operation in 1972. At this stage, he found small 12-sq. yard industrial shed in Khokhara Mehmedabad near Ahmedabad and shifted his production there. Within three years, Nirma had established a market in Gujarat and Maharastra. Then came on the plastic bag of the detergent powder, now nation wide picture of his dancing in a sparkling white frock. In 1977, Karshanbhai started advertising on the radio! Slides were made for advertising on the cinema screen also. These were followed by the resounding television advertisements. All this publicity paid of in rich measure. Within five years, Nirma was visible on the national scene. Nirma had distributed the well-settled Hindustan Lever and notched up 60% of the 33
powder market share in the western region and dislodged Hindustan Lever from the first position. An almost primitive manufacturing process and some ingenious marketing was giving the professionallymanaged company's product a run for its money. Karshanbhai's company has always used a well-planned business strategy and marketing policy to hold its price line. Increase in the costs of raw material and labor has been offset by increase in production. Nirma have used the concept of value engineering. They avoided the use of those ingredients, which did not give functional value for the money. Karshanbhai's looks at his cost versus what people are willing to pay. Today, round about 5,00,000 retailers watch Nirma packets disappear from their shelves. Nirma is the impressive success story of the simple. Unassuming man is manufacturing a down-market product by using appropriate technology. Which is neither very modern nor sophisticated. It is the story of a company that rose from a 12-sq. yard covering factories at Vatva, Chhatral and Mehsana in Gujarat. From making a small lot of a powder once a week in 1969, Karshanbhai moved up to 500 kg. A month in 1972 and today is selling 1,200 tunes of powder 700 tunes of detergent cakes per day. Over 200 trucks line up near he gates of Nirma plants, to pick up the product to satisfy the large and growing demand steadily at he rate of 50% for the last 14 years. In no country anywhere in the world does one company sell much detergent less than one brand name.
PRODUCT LIST DETERGENT POWDERS: Nirma washing powder Super nirma detergent powder Nirma popular detergent powder Green nirma washing powder Nima detergent powder
DETERGENT CAKES: Nirma popular detergent cake Nirma detergent cake Super nirma detergent cake Nima green detergent cake Nima blue detergent cake Nimabartan bar Nirma clean
BATHING SOAPS: Nirma beauty soap Nirma bath soap (carbolic) Nirma premium soap Nirma lime fresh soap Nima rose Nima lime Nima winner Nima sandal Nirma rose Nima herbal Nirma herblina
OTHER PRODUCTS: Nirma beauty shampoo Nirma shikakai Nirma toothpaste Nirma shudh iodized free flow salt 35
INDUSTRIAL PRODUCTS: Sulphuric acid Linear alkyl benzene Glycerin Fatty acids Soda ash
MANUFACTUIRNG PLANTS: Mehsana Ahmedabad Bhavnagar Rajkot Dhar Kanpur Gujarat Gujarat Gujarat Gujarat Madhya Pradesh Uttar Pradesh
NIRMA SHUDH SALT The edible salt industry in India is unique in away that it is only 10% branded the rest constitute of unbranded loose salt. The per capita consumption is 6 kg though the point to ponder is the rate at which unbranded market will convert to the branded. Nirma has decided to become the driver of this growth. The salt market provides attractive avenues for Nirma, as there are huge volumes and low branded salt penetration. Nirma salt has one of the best qualities in terms iodine content of 30 ppm, free flow property, whiteness and saltiness. It is refined through a process, which retains natural mineral content in balanced quantity. The moisture proof pack keeps Nirma Iodized Salt non sticky and fresh. The salt is available in 1 kg pack size. MARKETING STRATEGY "Marketing strategy is nothing but a combination of decisions bearing of the various aspects of marketing mix". These are product, pricing, delivery, distribution, packaging and promotion. NIRMA concentrate more on all aspect that's why NIRMA has very good market in not only Gujarat but also in other state of the India. 1. For product planning: NIRMA take decision for new product whether product or not? Then they research the product by research department. Research departments are divided as under:
2. MIS: In this step they collect details about competitors product. They saw the pricing of product features, advertisement, packing fragrance promotion of product etc. 3. After this two-step they do the production of a particular product.
MARKET SEGMENTATION We know that market segmentation means dividing a market into district groups of buyers with different needs, characteristic or behavior. We might require separate products or marketing mixes? It refers to large heterogeneous market into smaller homogeneous parts in order to select any one out them in which the company thinks it satisfy customer more effectively different products for different segmentation. Male/female segmentation & fragmentation are also part of market segmentation. For larger, the target is fulfilling by the help of advertisement & promotional base. There are different classes of people purchasing the product of NIRMA, like Lower middle class family Middle class family Upper middle class family Higher-class family
PRICING POLICIES Price refers to the value of product attributes. Expressed in monetary terms with a customer pay or is accepted or afford utility. Value is referring to the quantitative aspect product relative to other product. In NIRMA, Pricing Policies of work like as under: MIS First MIS show the price of competitors. Parallel Pricing Policy: 1. Bunch marketing 2. Profit margin They give 5% to retailers, 1% to distributors & the company will get the remaining profit. Nirmas main objective is service rather than profit. No doubt there is profit but pricing is just to meet minimum margin. Thus it has bee observed that their pricing policy is very effective in the rural market. 38
Company wants to maximize its profit then unit established higher policy. The company wants to cover the larger part of the market and for that the company may establish negligible profit policies for its different products. CHANNEL OF DISTRIBUTION The channel of distribution will play an important role for the company that are operating their business in the edible salt market because people will buy only that product which will be available at the purchase outlet. The level of brand switching is high here. Thus channel of distribution will play an important role for effective reach to the end consumer.
The other channel of distribution is as follows:
SALES PROMOTION We know that sales promotion means short-term incentives to encourage purchase or sales of a products or services. The company, Nirma is also providing sales promotions to promote their brands like: CONSUMER PROMOTIONS TRADE PROMOTIONS SALES FORCE PROMOTION PROMOTIONAL EXPENCES NIRMA does promotional expenses as under:
TOTAL PROMOTIONAL EXPENSE (3% OF SALES)
ADVERTISING (2% OF SALES)
SALES PROMOTION (1% OF SALES)
Among all tools of promotion, advertising is given prime importance by the company. That can be seen from the above chart. More stress is put on Television. Press Media is also given importance.
SWOT ANALYSIS OF NIRMA SHUDH SALT
A scan of the internal and external environment is an important part of the strategic planning process. The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. The company Nirma has following strength and weakness, which will help the company to decide about the future planning for their success in their edible salt business.
Strong Brand equity. Nirma is an Rs.17 billion-umbrella brand offering consumers a broad portfolio of products at multiple price points in the Detergents, Soaps, Salt and Personal Care market.
Produces a range of industrial chemical products which primarily serve as raw material or intermediates for Soaps & Detergents business. Wide distribution network. Good advantage in the rural market because of its price.
WEAKNESS High interest burden. Less presence in premium segment. Lacking in the export market. 41
OPPORTUNITIES Exports Acquisitions for strengthening its distribution tie-ups. Entry into the South Indian market where there is a huge market for edible salt, which is not, captured by any national player and occupied by the unorganized sector. Entry into the tablet salt market. Government rule of selling only iodized salt, which will generate a huge market.
Emergence of regional but strong players. Entry of many big players like Adani, Marico, Kunvar Ajay etc. is a big disadvantage. Poor quality image of a company about the product in the urban areas.
Do you use Iodised Salt or Uniodisd Salt? (_) Iodised (_) Uniodised
Now a days most of the people are aware about the benefits of the Iodised Salt because iodine is a necessary requirement of a body and it will also helpful in curing some diseases like Thyroid, Goiter. Thus the awareness regarding the iodized salt is necessary. Following are some numbers which will shows the awareness regarding the iodized salt in a particular area.
No.of respondents Iodised Salt Uniodised Salt 229 21
Interpretation: From the graph we can conclude that there are 92% of the respondents are aware about the Iodised salt and they are using Iodised Salt and still 8% of the respondents dont know about the Iodised Salt.so there is more chance of occurring iodine deficiency disease to them. 44
Which brand of Iodised salt do you use? ___________________________________________________
TATA NIRMA ANNAPURNA DANDI SAFFOLA CAPTAIN COOK LOCAL
76 49 34 30 12 12 16
Interpretation: On the basis of this question preference for using Nirma Shudh Salt with other is easily found out by Respondents, so one can have rough idea about the market standing of the Nirma Shudh Salt with Other brand. Here TATA Salt is leading with 33% of the market of the Iodised Salt and it is followed by the Nirma Shudh Salt as 22% of the market of the Iodised salt. Annapurna and Dandi having shares of 13% and
15% respectively. In my sample size there are 7% of the respondents who are using local brands like Ambika and Taja salt. So I conclude that awareness regarding Nirma Shudh Salt is up to the mark as 22% of the market share of Iodised salt is acquired by the Nirma Shudh Salt. Nirma Shudh is not able to grasp good market though it has a good distribution network. Actually there is a need for the company to convenience people through advertisement to purchase their brand at a lower cost and best quality. TATA NIRMA DANDI ANNAPURNA CAPTAIN COOK MANINAGAR RANIP SATELLITE SARASPUR MEGHANINAGAR NARODA 14 18 17 10 11 6 9 10 7 9 7 8 4 6 3 4 8 5 6 4 5 8 5 6 3 2 2 2 3 0 0 0 0 4 3 9 OTHERS
From this graph it is easily concluded that users of the Nirma Shudh salt are ranging from 17% to 23% which is equal to the overall users of Nirma Shudh salt for Ahmedabad area. 46
On what basis do you select the salt brand?(Rank from 1 to 5 where 1 is best ) (_) (_) (_) (_) (_) Price Free flow Whiteness Brand Name taste
Interpretation: It is very important for any company that on what criteria or basis their product is purchased by the consumers. Here there are main five criteria on the basis of which consumers are using the salt. Here Respondents are asked to give Rank between 1 to 5(where 1 is best). After calculating the ranking preference Taste stood at first position with 47.15%, Price stood at second with 31.44%, Free flow stood at third position with 42.35%, Brand Name stood fourth with 31.44% and last whiteness of the salt with 49.33% of all the criteria.
AVERAGE MEAN PRICE FREE FLOW WHITENESS BRAND NAME TASTE 2.86 3.00 3.84 3.37 1.85
Here it is easily concluded from the above graph that taste is mostly preferred followed by price, free flow, brand name and whiteness for the selection of the salt brand by the consumers.
Do you use same brand of the salt everytime? (_) Yes (_) No
Interpretation: With the help of this question brand loyalty of the respondents for the Iodised salt is found out. Here there are 69% of the respondents are brand loyal to same salt brand where as 31% of the respondents are not brand loyal.
How often do you purchase salt? (_) (_) (_) (_) 15 days duration 1 month duration number of Packets: number of Packets: _______ _______ _______ _______
1.5 months duration number of Packets: 2 months duration number of Packets:
No. of Respondents 15 Days 1 Month 1.5 Month 2 Month 53 157 19 0
Interpretation: Here from the graph and responses obtained there are 69% of the respondents purchase salts monthly where as 23% of respondents purchase salt fortnightly.
Respondents family member 1 packet 2 packets 3 packets 4 packets 13 117 22 5 2 5 6 7
And out of the 157 respondents 75% are using 2 packets of the 1 kg salt.
From this graph one can conclude that 1 packet (1kg) of salt is used by 2 family member for one month, 2 packets of salt are used by 5 member of the family monthly, 3 packets of salt are used by 6 member monthly, 4 packets are used by 7 member of the family for 1 month so one can have idea about family size, purchase pattern and no. of packet required for 1 month.
Who decides of purchasing salt? (_) (_) Elders (_) Wife Husband (_) others ___________
ELDER HUSBAND WIFE OTHERS
63 41 78 47
Interpretation: Here from the graph it is concluded that 34% of the purchase decision are taken up by wife, 18% of husband takes purchase decision, 27% of the purchase decision is taken by elders of the family and 21% of the decision is taken by the others (housewife).
From where you purchase salt? (_) (_) Super Market (_) (_) Provision Store any other___________ Convenience Shop
super market Convenience Shop provision store other
48 65 105 11
Interpretation: 46% of the respondents are purchasing salt from the provision store, 28% of the respondents are purchasing salt from nearby shop, 21% of the respondents are purchasing salt from supermarket and 5 % of the respondents are purchasing from different places like Mall, Departmental store etc.
Have you ever used Nirma Shudh Salt? (_) Yes (_) No.
There are 62% of the total respondents who have used Nirma Shudh Salt one or more time but out of that many respondents are not stick to one brand thats why market share is lower than TATA.
If yes, what do you like most about Nirma Shudh Salt?( Rank from 1 to 5 where 1 is best ) (_) (_) (_) (_) (_) Whiteness Free flow Price Double refined Salt taste
Interpretation: From the graph it is concluded that for the use if Nirma Shudh Salt consumer prefer price at first rank followed by taste, double refined salt, free flow and whiteness.
(11) How you find the price of Nirma Shudh salt? (_) (_) Very High Low (_) High (_) Very low (_) Average
If high, then what do you think the price should be for Nirma Shudh salt? Price: ________Rs/Kg.
very high High Average Low very low
0 0 174 55 0
Interpretation: 76% of the Nirma Shudh Salt user saying that they find price of the salt as average price and 24% of respondents find price low as compared to other salt brands.
From where you influenced to purchase Nirma Shudh Salt? (_) (_) Advertisement Retailers (_) Friends (_) (_) Others ______ Relatives
If Advertisement, then what was the media? (_) (_) (_) Television Hoardings Other __________ (_) (_) News paper Magazines (_) Radio
ADVERTISEMENT FRIENDS RETAILERS RELATIVES
115 40 48 22
Interpretation: Advertisement of the Nirma Shudh salt is the main influencer for the purchasing of Nirma Shudh salt as 51% of the respondents are influenced by the advertisement in different media. It is followed by friends, retailers and relatives as 21%,18% and 10% respectively.
MAGAZINES NEWSPAPER RADIO HORDINGS Television
74 5 0 0 68
Interpretation: Those who are influenced by the advertisement are mostly influenced by two media one is TV AS broadcasting media and Magazine as print media.
Have you seen the Television Advertisement of the Nirma Shudh Salt? (_) Yes (_) No
If Yes, How did you find it in terms of message? (_) (_) Very good Bad (_) (_) Good (_) Very bad Average
respondents YES NO 195 34
Interpretation: Here there are 85% of the respondents said that they had seen the television advertisement. No. of respondents very good Good Average Bad very bad 60 6 96 62 31
Interpretation: Out of those 85% respondents 49% had find advertisement good, 3%find it very good, 32% of them find ad average and 16% of them find it bad so it is concluded that TV ad prepared is good at some extent.
Do you find any difficulty in availability of Nirma Shudh Salt? (_) Yes (_) No.
Here 96% of the respondents dont find any difficulty in availability of Nirma Shudh salt whereas 4% of them find difficulty in availability. So it is concluded that there is no shortage of the stock for Nirma Shudh Salt.
If Nirma Shudh Salt is not available in store, you will, (_) (_) Try another brand Postpone Purchase (_) Go to another shop
try another brand go to another shop postpone purchase
167 14 48
Interpretation: Here if there is stock out situation for Nirma Shudh salt then 73% of respondents will try another brand of salt, 6% will go to another shop and 21% will postpone their purchase so they are not stick to one brand.
Do you like the packaging of Nirma Shudh Salt? (_) Yes (_) No
Here 48% of the respondents said that they dont like packaging of the Nirma Shudh salt Where as 52% of the respondents like the packaging. So as respondents who dont like packaging of salt is high so there will be requirement for changing the packaging of the Nirma Shudh Salt.
Interpretation: Most of the respondents who are purchasing Nirma Shudh Salt are 12th pass or graduate from different area of the Ahmedabad city.
Interpretation: Here in the different area of Ahmedabad the respondents who are purchasing salt are having income level b/w 5000 to 10000.in some of the area below 5000 RS- income level are respondents who are purchasing salt.
Interpretation: Most of the respondents are housewife and service people who are purchasing salt so company can target them for their advertisement.
HYPOTHESIS CALCULATIONHo: Preference towards salts and area are independent of each other. H1: Preference towards salts and area are dependent of each other.
Where: Fo= observed frequency Fe= expected frequency for each cell Fe=(frequency for the column)(frequency for the row)/n
Calculation Observed Frequency TATA NIRMA MANINAGAR RANIP SATELLITE SARASPUR MEGHANINAGAR NARODA Total 14 18 17 10 11 6 76 9 10 7 9 7 8 50 DANDI 4 6 3 4 8 5 30 ANNAPURNA CAPT C. 6 4 5 8 5 6 34 3 2 2 2 3 0 12 0 0 0 4 3 9 16 36 40 34 37 37 34 218 OTHERS total
Expected Frequency TATA MANINAGAR RANIP SATELLITE SARASPUR MEGHANINAGAR NARODA 12.55 13.94 11.85 12.89 12.94 11.89 NIRMA 8.25 9.17 7.7 8.48 8.48 7.7 DANDI 4.9 5.5 4.67 5.09 5.09 4.6 ANNAPURNA CAPT C. OTHERS 5.61 6.2 5.32 5.77 5.77 5.32 1.98 2.2 1.87 2.03 2.03 1.87 2.64 2.93 2.49 2.71 2.71 2.49
Fo 14 18 17 10 11 6 9 10 7 9 7 8 4 6 3 4 8 5 6 4 5 8 5 6 3 2 2 2 3 0 0 0 0 4 3 9
Fe 12.55 13.94 11.85 12.89 12.94 11.89 8.25 9.17 7.7 8.48 8.48 7.7 4.9 5.5 4.67 5.09 5.09 4.6 5.61 6.2 5.32 5.77 5.77 5.32 1.98 2.2 1.87 2.03 2.03 1.87 2.64 2.93 2.49 2.71 2.71 2.49
Fo-Fe 1.45 4.06 5.15 -2.89 -1.94 -5.89 0.75 0.83 -0.7 0.52 -1.48 0.3 -0.9 0.5 -1.67 -1.09 2.91 0.4 0.39 -2.2 -0.32 2.23 -0.77 0.68 1.02 -0.2 0.13 -0.03 0.97 -1.87 -2.64 -2.93 -2.49 1.29 0.29 6.51
(Fo-Fe)^2 [(Fo-Fe)^2]/Fe 2.1025 0.16753 16.4836 1.182468 26.5225 2.238186 8.3521 0.647952 3.7636 0.29085 34.6921 2.917754 0.5625 0.068182 0.6889 0.075125 0.49 0.063636 0.2704 0.031887 2.1904 0.258302 0.09 0.011688 0.81 0.165306 0.25 0.045455 2.7889 0.597195 1.1881 0.233418 8.4681 1.663674 0.16 0.034783 0.1521 0.027112 4.84 0.780645 0.1024 0.019248 4.9729 0.861854 0.5929 0.102756 0.4624 0.086917 1.0404 0.525455 0.04 0.018182 0.0169 0.009037 0.0009 0.000443 0.9409 0.463498 3.4969 1.87 6.9696 2.64 8.5849 2.93 6.2001 2.49 1.6641 0.614059 0.0841 0.031033 42.3801 17.02012 2Cal=41.18375
2Cal = 41.18375 Degree of freedom=(R-1)*(C-1) = (6-1)*(6-1) =25 Confidence level = 95 % Therefore 2tab = 14.611 Now in this case 2cal > 2tab hen