NIRMA AND HLL – THE MOTHER OF ALL BRANDS

SNEHIL SINGH 311625

DIV -F

Karsan K. Patel the owner- Ceo of Nirma chemical works.

It was launched in 1969 by Karsanbhai Patel.

Nirma was the biggest detergent brand in India in 1980s.

During the 1980s Nirma had gone on to become the biggest detergent brand in India and then one of the biggest in the world, swamping Surf and threatening HLL’s Dominance in other sectors of the fabric wash market.

FACTS & HISTORY OF NIRMA

Hindustan Lever Limited was founded in 1930. The first Lever product to be introduced in India was Sunlight

soap. Mr. Prakash Tandon became the first Indian Director in 1951& by

1955 Unilever had a well-trained local taskforce with about 65% of all managers being Indian.

With products ranging from food and beverages to home and personal care products HLL was considered India’s largest household Packaged Mass Consumption Goods (PMCG) Company.

It major worldwide businesses were food and drinks which had 50 % of turnover in 1991, detergents, toilet preparations and other household products.

Unilever has always operated on the principle of ‘think globally, act locally’.

HLL was the undisputed leader in the Indian detergent industry.

FACTS AND HISTORY OF HLL

HLL came first into the market in 1960

Nirma entered into the market in 1980

Then in 1991 P&G entered in the market.

All the company have similar kind of product.

With a population of over 800 million people, India represented one of the largest fabric wash markets in the world.

The government too, had encouraged the growth of the NSD market to the curb of edible oil used in the manufacture of soap.

FACTS AND HISTORY OF WASHING POWDER INDUSTRY

Small scale startup was a problem for Nirma in the initial stage.

High market share of HLL’s Surf

Low distribution support system.

Small market in the initial period.

Quality of the Nirma turned out to be a problem for them after some years.

Introduction of Wheel by HLL.

PROBLEM FACED BY NIRMA

Government regulation on production capacity.

Introduction of Nirma at lower cost.

Not realizing the Nirma at initial stage.

Ignoring the changes in the market.

Not able to reduce the production cost of Surf..

Problem faced by HLL

Aggressive promotion of Nirma.

Changing mindset of people.

The quality seeking consumers also started using Nirma.

The absolutism of laundry soaps like Sunlight.

The increasing unorganized competitors.

The liability of paying octroi and taxes because of outside countries origin

Cont..

Production of Nirma Began in December 1969 in a small shed in Saraspur, a suburb of Ahmedabad in the state of Gujarat.

To sell it, he loaded several gunny bags of the powder sachets on his bicycle and began a house-to-house round of the city.

Patel did not follow a fixed set of business rules, but built an operation that was easily adapted to changing market circumstances.

From the early start of mixing the powder in his shed, Patel remained a small-scale producer.

ALTERNATE SOLUTIONS BY NIRMA

In Gujarat, soda ash and other raw materials were easily obtainable and Patel brought supplies locally using cash discounts.

Production was continuous from 8 a.m. to 6 p.m. with no interruption for Sundays or holidays.

The workforce consisted of contract workers, hired by job contractors and paid Rs. 85 per ton for mixing raw material which was then prepared in a sacks of 1000 bags of 1 kg each by job laborers.

In 1989, labor costs for Nirma’s 8000 workers were estimated at between Rs. 15-25 per person day.

Cont..

Nirma had no field force or sales organization of its own.

Sales were generated purely through promotion.

Once demand had outgrown personal deliveries by Patel on his bicycle, vans and later trucks were used to distribute Nirma.

Slowly, sales were extended first to retail outlets within Ahmedabad and later to surrounding districts and towns.

Cont..

To avoid central sales tax (CST) charges in other states, the stockiest were appointed as commission agents.

To qualify as a Nirma stockiest, minimum sales of 80-100 tons per month was demanded.

The system ran on advance payment by demand draft.

Cont..

HLL‟s reaction to Nirma comprised several stages.

Its first response was to begin selling Surf in polybags rather than the more expensive cartons.

HLL reduced its cost and offered a better value.

Another change was in the advertising approach.

Surf’s established campaign used the slogan ‘Surf washes whiter’

Another action was to launch a powder called sunlight. This was positioned to match Nirma directly on price.

ALTERNATE SOLUTIONS BY HLL

1988 was `a traumatic year "for HLL. liberalization policies adopted by Rajiv Gandhi’s government after 1984.

India’s industrial structure began to change, stimulating growth, investment and consumer spending but also intensifying competition.

The result was a changing pattern of consumption towards services and household goods and away from staples such as food and basic clothing. It also meant the emergence of a growing base of urban consumers, a `middle class’.

Sting operations

Cont..

STRENGHT –a) Low cost

b) Strong distribution channel

c) High brand equity

d) High productivity

SWOT OF NIRMA

Weakness-a) Sub optimal working condition

b) Less popular among elite class of people.

c) High interest burden

d) Lack of global tie up

Opportunities a) Growing FMCG market

b) Developing rural market

c) Entry into other categories like Shampoo’s

Threats – a) Strong competitors.

b) Substitute products

c) New players in the market

STARS – Nirma detergent powder and cake. CASH COWS – Nirma bathing soap. DOGS Nirma toothpaste QUESTION MARK – Nirma beauty shampoo

BCG MATRIX OF NIRMA