How Nirma Captured the Low Cost Detergent Market in India

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The Beginning

Nirma was started in 1969 by a chemist, Mr. Karshanbhai Patel.

Nirma was a solo man enterprise but later went on to become a billion dollar company in three decades. Incidentally, Nirma was named after Patel’s daughter Nirupama. Mr. Patel created and packaged Nirma in a 10 x 10 room and sold it for Rs. 3.50. This was at that time when the HUL was selling their detergent at Rs. 15.00 per kg.

The low cost of the detergent started attracting people on a budget.

In the beginning, Hindustan Level executives were dismissive of Nirma. They thought that Nirma did not pause a threat to their product as the two were targeting different segments of people. But very soon, the success of Nirma made them sit up and take notice.

Starting as a low cost detergent company, Nirmal entered the premium market later. But by then its reputation in the low cost segment was well cemented.

“Better products, Better value, Better living” that was the slogan of this brand and Nirma strived to provide all three in equal measure, that contributed immensely to its success.

It had multilocational facilities for manufacturing and a broad product portfolio. By 1999 Nirma was a major brand, offering detergent, soap and personal care products. A large part of its success can be attributed to its distribution network, which panned 400 distributors and 2 million retailers across the country. This vast network enabled Nirma to reach the smallest village in India.

Foreign Collaboration

The mega success in India encouraged Nirma to venture beyond the country. Its first foray was a joint venture with a Bangladeshi company Commerce Overseas Limited. The company became the highest detergent seller in Bangladesh within a year.

Nirma also planned business venture in Middle East, China, Russia, Africa and other Asian countries.

How Nirma Captured the Market

In the year 1990, Nirma entered the toilet soap market. By the year 1999, it became the second largest toilet soap manufacturer behind Hidusthan Uniliver Limited ( 65% market share ). In the same year, Nirma also garnered the top spot in detergent market share with 38%. HUL was at 31%.

The success story of Nirma can be attributed to its focus on delivering high quality products at affordable costs. Since the inception, Patel put focus on cost reduction with high quality.

To reduce costs further, two localised factories were established in Baroda and Bhavnagar. The two plants were completed before schedule and with a bit of reduced costs than estimated. In addition, the Bhavnagar plant required only 500 people to operate whereas TATA Chemicals required 10 times the manpower to handle a plant of twice the capacity.

The establishment of these two local factories further cut costs. Further, Nirma also cut down the intermediaries by offering direct distribution of its products. Trucks would load products and leave immediately to distibutors.

In states like Andhra Pradesh, Tamil Nadu and southern Karnataka, the company maintained depots, as stocks were harder to deliver sometimes to these states. States which were near plants, stock were delivered directly.

Nirma also cut down the cost of packaging by acquiring Kisan Industries. This acquisition helped them to improve on their existing packging quality and reduce costs at the same time.

In mid-nineties Nirma entered the premium segment in detergent and toilet soap with Nirma Premium detergent and Nirma Sandal and Nirma Lime Fresh. Actually it was not the premium sector but a sub-premium sector that was created out of Nirma’s efforts. Premium products at sub-premium price – that was the target.

Nirma also managed to understand the preferences of cosumers across various geographic sectors. North prefered pink soaps while south prefered green and Sandal soap were more popular in south.

The marketing strategy of Nirma always focused on putting the product on shelf, receive feedbacks and then create an enduring marketing campaign!

Cosing up to Retailers

There was a marked change in how the premium/sub-premium products were sold en-masse. The economy products were giving quality products at a cheap rate to customers, but these products gave the margin to retailers.

For Nirma premium soap the margin given to retailers was 52% and for Nirma Shampoo the margin was an astonishing 140%. These margins to retailers were unheard of in Indian context and were game changers. Retailers welcomed these changes and had no problem in stocking up Nirma’s products.

Changing Image Perception

In the late nineties Nirma spent close to Rs. 10 billion for an image make over. Till then Nirma’s brand perception was that it was a cheap brand. The company wanted to change that and attract the premium market in toilet soap and shampoo.

But its main problem was penetrating urban areas where it did not have much of a presence. So, the struggle to penetrate the high priced segment of society remains for Nirma.

What lies ahead

Nirma has come a long was as a cost effective brand. But the struggle in the premium sector has not been won yet and we can expect to see newer strategies there. Competitiors are not sitting idly, New players are emerging on the horizon and eating up market share, but Nirma believes that its strategies will prevail.

“A customer does not look for one-time frills or feel-good factors. Rather, the householder wants a long term solution to his or her needs.” The future looks certainly interesting for this multi awarded and much liked brand.

Product Portfolio of Nirma

Detergents, Toilet Soap, Packages Food, Fertilizers, Industrial Products.

It manufactures spray–dried powder, compact dry mixed powder, cakes. It also makes products like Nirma Bartan and Nirma Clean.

It manufactures beauty soaps, carbolic soaps and premium soaps.

Nirma entered the packaged food sector through its Nirma Shudh iodized salt.

Nirma manufactures industrial products such as LAB (linear alkyl benzene), glycerin, AOS (alfa olefin sulfonate), sulfuric acid, sodium silicate, soda ash and salt.

Nirma also manufactures single super phosphate.

Market Share

Nirma has a market share of 38%, making it the largest detergent maker in India.

It is the second largest toilet soap maker with market share of 20%.

Awards & Recognitions

Nirma received Excellence award for Best Advertisement of the year at FMCG awards 2003.

Nirma also won the Most Popular Brand in detergent powder, economy category, at FMCG awards 2003.

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