Post on 18-Nov-2014
transcript
Case Analysis on Nirma
SUBMITTED BY:Aditya KashyapMohit Sharma
Amit KumarAbhay ChauhanHarkesh Singh
In NIRMA Case , these are the main points to be discussed:-
Its sense of CSR(corporate social responsibility)
Its Beginning and Growth Product Range
Technological & Overseas Operation
Emerging Issues for Nirma
INTRODUCTION
NIRMA is a perfect example of :-
SMEs vs. MNCs
NIRMA vs. HUL, P & G
Low priced vs. Premium ranged
NIRMA -
AN ORGANISATION WITH SENSE OF
CORPORATE SOCIAL RESPONSIBILITY
(NERF) Nirma Educational and Research Foundation , 1994
Nirma Labs
Nirma Memorial Trust and Nirma Foundation, 1979
In mid-2000s, Nirma was becoming known for its philanthropic , educational and charitable Institutions.
Was it always like this?
Lets take a look at Nirma’s story ……..
The detergent market can be classified into premium (Surf, Ariel), mid-price (Rin, Henko, Tide) and popular segments (Nirma, Wheel, Mr. White)
a) They account for 15%, 40% and 45% of the market respectively,
which is only 60 per cent of the total market.
b) Regional and small unorganized players still account for a significant 40% of the total detergent market.
c) Per capita consumption of detergent in India (2.7 kg) is lower than any other country
Nirma’s success “ Provide the common man with a quality product at an affordable price.”
In 1977… Surf - 31%...... Nirma - 12%
In 1987… Surf - 07%...... Nirma - 62%
FACTS
Inferior Quality.“Nirma contained no ‘active detergent’, whitener, perfume, or
softener. Tests performed on Nirma confirmed that it was hard on the
skin and could cause blisters.
To conclude:-
SUCCESS
Overall low cost structure--- Low overheads Indigenous machinery Lean and frugal top management Cost control.
Not only this ……..
Launched massive TV campaign ….
AFTER NIRMA SUCCESS
In 1987, HLL launched “WHEEL”.
---- low priced @rs.14/kg.
---- equivalent quality.
---- wheel blue and wheel green.
------> surf launched massive TV campaign .
RESULTS
NirmaHL
Wheel
Sales
(US$ million)150 100
Gross Margin (%) 18 18
NIRMA---- 1990’s Consisted of 5 companies:-
Nirma detergents limited, (NDL) Nirma soaps and detergents limited, (NSDL) Shiva soaps and detergents limited, (SSDL) Nilima chemicals limited, (NCL) Nirma limited.
MERGED in 1997.(Economies of scale, business synergy, reduction of overheads)
MARKETING AND DISTRIBUTION Alpa marketing enterprise, (AME).
Manufacturing at :-
--- 7 Locations in GUJARAT.
--- MP,UP,MAHARASHTRA.
1989, 350 Distributors. Distribution through 675,000 retail outlets.
SALES
44%
24%
20%
12%
WEST
NORTH
SOUTH
EAST
•Toilet soap•Tooth paste
•shampoo
TOILET SOAPSNirma bath (lever lifebuoy)Turnover 30% (total)Average growth 12%Tfn 60%Nirma beauty (lux,p&g ganga)Tfn 70%Nirma premium (camay)Tfn 80%
BUREAU OF INDIAN STANDARDSGrade 1 – TFM 76%
Grade 2 – TFM 70%
Grade 3 – TFM 60%
ToothpasteCompetition to babool & vicco
Market leader colgate
Failure
SHAMPOO
Patels launched shampoo
Principle “VALUE FOR MONEY”
Convert non-users of shampoo
Launched 100ml bottle retail 30
TECHNOLOGICAL EXPANSIONBesides low cost, labor intensive technique
they have modern manufacturing plants They plan for expansion and technological up-
gradationZero waste policy (vacuum drying).
DIVERSIFICATIONNirma soda ash plant at Bhavanigarh costing
Rs 1040 crore.Linear Alkyl benzene manufacturing facilityThese two chemicals account for three-
fourth cost of manufacturing detergentNirma LAB projects was the second of its
kind in Asia.As a part of backward integration, produce
oleum and sulphate
NIRMA`S OVERSEAS OPERATION
In Bangladesh Nirma cornered 60% of the market share because lower price then market leader Hindustan Lever Ltd.
Other countries under consideration China Russia Sri lankaOverseas operation contribute rs 20 crore
SOME EMERGENT ISSUES (IMAGE PROBLEM)
A “cheap” image attacked by rivals portraying the brand to be inferior, cheap and less smart alternative.
Rival attempts to reposition all Yellow powder as low quality.
rising income and ads by MNC emphasis zed that quality was more important than a marginal difference of price
RISING COSTDifficulties in maintaining low cost because
of raw materials such as soda ash and LAB.It had ensured respect and its moves would
be under sharp notice.
CHALLENGES FOR NIRMA1. How to make itself a professional.2. Identify its existing competences and new
one to fight global companies and at home as well
Sourcing tie-up Nirma entered in to the arrangement with the
P&G for an exclusive marketing of “Camay” Camay decision was based on quantitative
and qualitative research commissioned by Nirma to know customer needs and attitude
CAMAY LEVERAGE THE BRAND NIRMA After launch of new advertisement for Camay
Mr. Patel commented that “campaign reinforce the image of Camay as a skin care and earlier it was accessible to particular segment now anyone can buy it”
(PERCENTAGE BY VOLUMETOTAL VOLUME = 423.195 TONNES)
MARKET SHARES
STRENGTHS WEAKNESS
OPPORTUNITIESTHREATS
Nirma is an excellent example to see how to exploit 3 focus strategies of Porter:-
‘Cost Leadership’
Successfully carving out a ‘Niche Market’ .
This David of detergent ‘Differentiated its Product ’ from Industry Goliaths(HLL).
SUMMARY
Nirma is among the top 3 players in detergent industry as well as toilet soaps markets.
Aggressive pricing without compromising on quality.
Extensive Distribution Network
Backward integration (into 2 main raw materials- alkyl benzene and soda ash)
successful implementation of Porter’s 3 strategies..