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Nirma started as a single detergent product made in 1969 in India and grew to a large conglomerate producing various household and personal care products. It pursued a strategy of low pricing, cost reduction, and expanding product lines. This allowed it to gain significant market share against larger competitors. However, its profits gradually decreased between 2011-2015 as incomes rose and competitors adopted similar strategies, demonstrating the challenges of long-term viability with a low-cost approach alone. The success of Nirma's strategy provides an example of how monopolistic competition can allow new entrants to disrupt an existing market.

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Manu M Nelagali
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68 views

Me

Nirma started as a single detergent product made in 1969 in India and grew to a large conglomerate producing various household and personal care products. It pursued a strategy of low pricing, cost reduction, and expanding product lines. This allowed it to gain significant market share against larger competitors. However, its profits gradually decreased between 2011-2015 as incomes rose and competitors adopted similar strategies, demonstrating the challenges of long-term viability with a low-cost approach alone. The success of Nirma's strategy provides an example of how monopolistic competition can allow new entrants to disrupt an existing market.

Uploaded by

Manu M Nelagali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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INTRODUCTION

 Starting as one product, from a room in backyard in 1969 and


made a detergent name “NIRMA”after his daughter name
Nirupama.
 In 1969 Dr. Karsanbhai Patel , at Gujrat government department of
mining and geology manufactured phosphate free detergent powder
, started selling it locally.
 NIRMA is a group of companies based in city of Ahmedabad in
western India that manufacture product ranging from cosmetics,
soaps, detergents, salt, and many more.
 Today nirma has over 15000 employees and turnover of Rs. 3550
crores. In 2004 nirma detergent approach 800,000 tonnes one of the
largest volumes sold in the world under single brand name.
STRATEGIES BY NIRMA
 Nirma started there market with price- led marketing strategy. They started with
price of Rs. 3/kg, when the available cheapest brand in the market was Rs.
13/kg.
 Mr. Patel bet India masses will buy if its affordable. They firstly focus on rural
area. This describe the LAW OF DEMAND i.e. when the price of the product
decrease , demand for that product increase. Every pack of nirma came with
money back guarantee.
 Cost reduction strategy of nirma helps them to entre in market withes. 3/kg.
Nirma powder did not contain any ingredient to improve the whiteness of fabric.
it does not contain ant perfuming agent or active agent in ingredients this is the
reason they able to keep the price low. Nirma relied on low cost technology,
process and raw material.
 Availability of nirma washing powder in different pack sizes 30gms,
200gms,500gmsand 1kg for different segment of population.
 Nirma expanded its portfolio by including fabric care product, personal
product.
Countered by Hindustan Lever Limited

 HLL led differentiation led strategy, highlights the merits of surf as


detergents and market it as “premium product”.
 The company decide to enter the low price segment by positioning
WHEEL against nirma at Rs. 11.
 To counter In personal care product HLL introduced “breeze”
soap.
 Sale promotion campaign by offering bucket with 1kg surf.
 HLL did head on attack on nirma that 1kg of surf can wash more
clothes than the low priced yellow washing powder hence
economical to buy surf.
Nirma road to success:
 Nirma ranked as largest detergent selling product in the world, and
 Second largest seller in toilets soaps.
 By 1999, Nirma had more than 35% market share in detergent segment and
around 20% market share in the toilet soap segment.
 The company got listed on the stock exchange in the year 1994.
ANALYSIS OF NIRMA STORY
Nirma is based on the monopolistic competition approach. It shows how the
equilibrium price and quality are determined in short run and long run. It is form of
market organization in which there are many seller of heterogeneous or differential
product ,differential products are those that are similar but not identical and satisfy
the same need. For example numerous brands of detergents.
LONG RUN: In long run more firms may enter into the market, there may be many
producers and many consumers in the long run and no business has total control
over the market price. There will also be break even situation in the long run that is
neither profit nor loss, the firm will make zero economic profit.
SHORTRUN: In short run the competitive firm reduces a differentiated product the
demand curve it faces will be negatively sloped since there are many close substitute
for the product the demand curve is highly price elastic. The price elasticity of
demand is higher the smaller is the degree of product differentiation
POSERS
 Would you regard detergents as an industry or a product
group?

 We regard detergent as an industry instead of a product.


 Because industry is a place where different kind of products are
manufactured and nirma started as an industry with one head
product.
 Late 1960’s the detergent powder market featured mainly on the
premium segment dominated by big players.
 Which feature of monopolistic competition is exhibited in
the above case?

 High price led strategy of HLL before nirma entered into the
market.
 Product differentiation
 More elastic
 Economies of scale
 Selling cost
 As a managerial economist you can visualize the long
term sustenance of a company that sells a product that
has lower quality but also lower price in comparison to
its rival companies?

 As a managerial economist we cannot visualize the long term


sustenance of a company that sells product with low quality and
low price.
 Because in long run the income of a customer may rise and they
tend to no longer using the low price products.
 They move towards luxury products or other substitutes goods
may enter into the market with a same strategy and with more
quality, so visualizing the product success could be not up to the
mark for this particular product.
YEARS PROFIT IN CRORES

2011 546
2012 510
2013 386
2014 385
2015 243

 From the above table we can conclude that there was gradual
decrease in the profit of nirma.
 Because in long run there may be entry of new firms with the same
strategy which leads to increase in its substitutes and
 Also the income of the people may rise and they may shift to luxury
goods, so we cannot visualize long run sustenance properly.
Can success of nirma be extended to other product groups?
Yes, the success of nirma can be extended to other products. The some of
the products of nirma which got success are
 Nirma is 7th successful brand in India.
 Soda ash: In 2007 nirma purchased the American raw material
company Searle’s valley minerals making it among top 7 in the world.
 Nirma also entered into toilet soap market to target premium segment
and it become second largest toilet soap brand in India.
 Selling of Nirma products in India:
 Toilet saop-3 million pieces.
 Detergent powder-6.2 millions.
 Lime fresh toilet soaps-17 millions.
 Nirma also entered successfully into other products like cosmetics,
beauty soaps, food products, this shows that the success of nirma can
be extended to other product groups also.
THANK YOU

PRESENTED BY:
MANU M N
MANIKANTA
MANJUPRASAD
MADHUSHREE

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