The ‘Nirma’ success story of how an Indian Entrepreneur took on the big MNCs and rewrote the rules of business :
It was in 1969 that Dr. Karsanbhai Patel started Nirma and went on to create a whole new segment in the Indian domestic detergent market. During that time the domestic detergent market only had the premium segment and there were very few companies , mainly the MNCs, which were into this business.
Karsanbhai Patel used to make detergent powder in the backyard of his house in Ahmedabad and then carry out door to door selling of his hand made product. He gave a money back guarantee with every pack that was sold. Karsanbhai Patel managed to offer his detergent powder for Rs. 3 per kg when the cheapest detergent at that time was Rs.13 per kg and so he was able to successfully target the middle and lower middle income segment.
Sabki Pasand Nirma!
Nirma became a huge success and all this was a result of Karsanbhai Patel’s entrepreneurial skills.
Karsanbhai Patel had good knowledge of chemicals and he came up with Nirma detergent which was a result of innovative combination of the important ingredients.Indigenous method was used ,and also the detergent was more environment friendly.
Consumers now had a quality detergent powder, having an affordable price tag.
The process of detergent production was labour intensive and this gave employment to a large number of people.Nirma focused on cost reduction strategies to make a place for itself in the market.Nirma has always been known for offering quality products at afforbable prices and thus creating good value for the consumerÃ¢ï¿½ï¿½s money.
In the 1980s nirma moved ahead of Surf , a detergent by HLL , to caputre a large market share.Later, Nirma successfully entered in the premium segment of soaps and detergents.Nirma went on to become the largest detergent and the second largest soap company in India.Nirma had more than 35% market share in the detergent segment and around 20 % market share in the toilet soap segment.The company got listed on the stock exchanges in the year 1994.
The Marketing Strategy of Nirma:
As Nirma started to grow and the salesmen started to reach out to the retailers, who were working with multinational brands till then, did not pay attention and used to take the stock on long credits and as a special favour. As and when the salesmen would go asking for the payment either he will be shown the door or may be offered a part payment even in the condition that the total material was sold. To the insisting ones they will give the material back asking them not to show up again. This carried on for some time and there was huge accumulated credit in the market making it difficult for the Nirma to operate. This is when Karsanbhai said enough was enough and called the entire team one day and decided on a drastic step which was risky but revolutionary. Karsanbhai was realizing the power of advertising and promotions which made him take this step.
The day after the meeting all the team member went out in the market and collected either cash or material. Next day on retailers were shocked, competition was dazed and market was without Nirma. For full one month the media was carpet bombed with the campaign WASHING POWDER NIRMA, WASHING POWDER NIRMA, DOODH SI SAFEDI (WASHING POWDER NIRMA, WASHING POWDER NIRMA, WHITENESS LIKE MILK)
Now what this did was kick start the consumer demand. People started asking for Nirma but it was not to be found. When the demand reached its peak then the Retailers started to look for Nirma. This is what Karsanbhai was waiting for.
One fine day the team was called for another meeting and Delivery vans were cleaned, material loaded and NIRMA hit the market again. Now Nirma was dictating terms. All cash on delivery, no credits and tight supply. Overnight the brand was changed and within no time gave a fantastic fightback to the leading global brands.
The best case of – Give your consumer what he wants, when he wants, where he wants and at the price he wants, selling will be done quite automatically. This is the marketing ‘mantra’ of Nirma.
Nirma adopted backward integration strategy for the regular supply of raw materials, 90 % of which they manufacture themselves. Nirma also gave due importance to modernization ,expansion and upgradation of the production facilities. The company also made sure that it uses the latest technology and infrastructure.
As far as Corporate social responsibility (CSR) is concerned, Nirma has made some good efforts by starting Nirma Education & Research Foundation (NERF) in the year 1994 for the purpose of running various educational institutes.Nirma has also set up Nirma labs , which prepares aspiring entrepreneurs to effectively face the different business challenges.Nirma also runs Nirma Memorial Trust, Nirma Foundation and Chanasma Ruppur Gram Vikas Trust as a part of their effort as a socially responsible corporate citizen.
The company that was started in 1969 with just one man who used to deliver his product from one house to the other,today employs around 14 thousand people and has a turnover of more than $ 500 million. In 2004 Nirma’s annual sales were as high as 800000 tonnes.According to Forbes in 2005 Karsanbhai Patel’s net worth was $640 million and it’s going to touch the $1000 million mark soon.