The Nirma Story

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Case Details:

Case Code : MKTG008
Case Length : 8 Pages
Period : 1985 -2001
Pub Date : 2001
Teaching Note : Available
Organization : Nirma, HLL
Industry : FMCG
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"It all started to earn a side income, and at that stage, I had never imagined this kind of success."

- Karsanbhai Patel, CMD, Nirma Ltd.

"Like other FMCGs, we have not concentrated only on marketing strategy. From the very beginning, operational strategy in cost containment, backward integration, economies of scale, innovative production, packaging and penetration schemes have received equal attention."

- Hiren K Patel, CMD, Nirma Consumer Care Ltd. (Nirma's marketing arm)

Introduction

In the early 1970s, when Nirma washing powder was introduced in the low-income market, Hindustan Lever Limited (HLL)¹ reacted in a way typical of many multinational companies.

Senior executives were dismissive of the new product: "That is not our market", "We need not be concerned."

But very soon, Nirma's success in the detergents market convinced HLL that it really needed to take a closer look at the low-income market.

Starting as a one-product one-man outfit in 1969, Nirma became a Rs 17 billion company within three decades.

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

The company had multi-locational manufacturing facilities, and a broad product portfolio under an umbrella brand -Nirma. The company's mission to provide, "Better Products, Better Value, Better Living" contributed a great deal to its success.

Nirma successfully countered competition from HLL and carved a niche for itself in the lower-end of the detergents and toilet soap market. The brand name became almost synonymous with low-priced detergents and toilet soaps.

However, Nirma realized that it would have to launch products for the upper end of the market to retain its middle class consumers who would graduate to the upper end.

The company launched toilet soaps for the premium segment. However, analysts felt that Nirma would not be able to repeat its success story in the premium segment...

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1] HLL, a 51.6% subsidiary of Unilever Plc, was the largest FMCG company in the country, with a turnover of Rs114bn (1999-2000). The company's business extended from personal and household care products to foods, beverages, speciality chemicals and animal feeds. The company had a dominating market share in most categories that it operated in, such as toilet soaps, detergents, skincare, hair care, etc. It was also the leading player in food products such as branded packaged tea, coffee, ice cream and other culinary products.


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