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Blame it on Competition

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Nirma, one of the leading names in the Indian detergent market, has been going through a rough time of late, after giving big names like HLL a run for their money. It seems the big players have cracked the mystery, and are now finding it easy to turn the table on Nirma. This interview probes the reasons behind this sudden reversal of fortunes.

Interview by -  Pradip Sinha,
Associate Consultant,
ICMR (IBS Center for Management Research).


Do you think continuous innovation of products plays a crucial part in a company's long term sustainability in the market?

Let me start by saying that despite all the glamour associated with innovation, I feel it remains an enigmatic human phenomenon: At the same time that it is invigorating, it is energy sapping too. Corporate innovation is like that. To resolve this dilemma, I believe the better approach is to consider innovation as an integral part of the company's product/service mission. This means selective innovation.

Having said that let me accept that there is no doubt that continuous innovation of products/services plays a crucial part in any company's long-term sustainability in the market. However, there are certain caveats to this proposition. Innovation of products/services must be in response to emerging customer needs and preferences. It should be tailored to the market demands, and at the same time fit in with the positioning of the company's products/services in the market. Any innovation that is just done to 'keep up with the Joneses' or emerges out of a "me-too" strategy does not really serve the purpose. Witness the very low percentage of product/service ideas that reach the commercialization stage, and you would know the high mortality rate of ideas.

A genuine innovation, in my view, is necessarily not a technological marvel; it could be a unique way to produce and market a product or service. For instance, it could be a new way to distribute a product or service that no one in the industry thought of earlier. Alternatively, it could be a novel way to provide after-sale service. Therefore, product innovation is just a sub-set of a larger canvas of innovations in all the value chain activities of a company. Besides that, we must not be ignoring the potential of managerial innovation: Innovations that bring out novel ways of managing within organizations. These types of innovations cut across the product/market boundaries, and help the company apply newer techniques to a wide variety of product/market combinations.

What according to you is/are the reason(s) for Nirma's downturn in the detergent segment?

At the immediate level, Nirma's downturn is a combination of offensive and defensive strategies adopted by its rivals in the detergent segment of the industry. Having taken an initial beating, Hindustan Levers Ltd (HLL) has reacted to the low-cost provider strategies of Nirma in so many different ways. Besides its Project Millennium and continual efforts at restructuring, HLL has been alive to the market needs. HLL, despite being a bulky and bureaucratic corporate entity, has always been a practitioner of innovative techniques, especially in its strong area of rural marketing. HLL has undertaken several actions, and among these we have the offensive strategies of price-cutting and defensive strategies of coming up with matching products with some differentiated elements such as in the case of 'Wheel' detergent.

Besides these, there are other deeper reasons too that I reflect on in my answers to the other questions.

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