A little girl clad in a frilly white dress, twirling her way into a pack of detergent, to the tune of a distinctive, catchy jingle “Washing powder Nirma, Washing Powder Nirma”-doesn't it take you down the nostalgia lane? The Nirma girl remains one of the most endearing images from the TV ads of the 80s and 90s.
An FMCG company that was once a very successful brand and a strong rival of erstwhile Hindustan Lever Limited (now HUL), still enjoys a strong brand recall in the minds of Indian consumers. But despite its strong market position for 30 years, it is now in the declining stage of its product life cycle.
"Nirma suffered from the inability to innovate in the product categories it is present in and also tinker its pricing."
Nirma was founded when a chemist from Gujarat, Karsanbhai Patel manufactured a phosphate-free detergent in his backyard and started selling it locally. That time, Surf (a product of HUL), the Pioneer of Detergents, had priced its product at Rs.15 per Kg. The door-to-door campaigns for Nirma in 1969 were very well-timed. By coordinating and streamlining activities such as production, distribution, and marketing, Patel was able to sell Nirma at Rs. 3.5 per kg.
Since Nirma was priced way below than Surf, it became quickly popular in the rural market and positioned itself as a loved ‘low-cost, value-for-money’ household detergent in the minds of the consumers.
Nirma’s earthy and lively advertisements also succeeded in catapulting the brand to dethrone Surf. While other rival brands showed housewives washing clothes in the bathroom, Nirma ads portrayed the boring and mundane activity of washing clothes in a very playful way.
Detergent till then was perceived as a premium product, with most households using laundry soap instead. But as the prices of vegetable oil increased, synthetic detergents became the popular choice, supplemented by HUL's roadshows in villages. In the era of 90s, the huge popularity of the brand made it possible for it to attain a 15% market share in India, while Surf remained the undisputed champion of detergents with a 65% market share and targeted premium segment.
Nirma, despite being a household name for solely ‘detergents’, also started manufacturing bathing soaps and widened its product portfolio by introducing soda ash, salt, and scouring products.
Nirma also forced the FMCG giant HUL to go into a huddle to dispel a long-held belief of how MNCs should not indulge in selling low-end products. HUL's Operation STING (Strategy to Inhibit Nirma's Growth) resulted in the launch of Wheel washing powder in 1988. Nirma had around 60% market share by then, selling more than 1.72 lakh tonnes.
Nirma continued with the same characteristic jingle, "Doodh si safedi Nirma se aaye, Rangeen kapda bhi khil khil jaye" and the montage ad for the subsequent 13-15 years.
By then, Surf's Lalitaji was being given tough competition by Nirma's Deepikaji- two prudent housewives who vouched for the benefits of their respective brands. Despite the momentous efforts HUL put behind Wheel to take on Nirma, Wheel could only manage to climb to the top of the market (which had become mass brands-led) in the early 2000s. It struck a chord with Nirma users, who were reportedly smarting from burning sensation in their hands, by positioning itself as a much gentler product (priced almost at par with Nirma).
The Unabraded Competition
Nirma spent a meager 3-4% of its revenue on Marketing communications (Ad-campaigns) while other competing brands spent 6-8% on advertising. Nirma followed the same campaign throughout the years and it roped in Sonali Bendre, a Bollywood actress who was not a very popular face at that time to endorse its beauty soaps. Those were the days when a brand’s ambassador would reflect directly on the brand image.
The brand also started widening its product portfolio by introducing toothpaste and hair care products like Shikakai shampoos. The company chose to follow the same strategy of being ‘low cost, value for money’. However, despite being a 17 billion company, Nirma started losing market share to the unbranded competitive rival brands. It failed to retain the interest of the consumers as they started perceiving low-cost products as cheap. With rising disposable incomes, consumers shifted from economy brands to aspirational purchases and Nirma failed to capitalize on this shift. The company tried introducing ‘Nirma blue’ and ‘Nirma cake’, but could not succeed in differentiating the product and carving a distinctive positioning.
While other detergent brands went viral and all-out with their unique advertisement campaigns and diversified product offerings, Nirma continued to follow the same campaign and did not innovate. Most multinationals and local players in this segment have centered their messaging around visibility, viability, and affordability. But Nirma’s focus has always largely been on affordability. The brand has also not increased its prices since long despite the increase in prices of Linear Alkyl Benzene, a key ingredient used in manufacturing detergents and palm oil (another key ingredient used in the manufacturing of soap).
According to the analysts in a Mumbai based brokerage firm
"The rivals have products across all price points to mitigate the input cost effect, while Nirma is available in only one plank-value for money."
The rival brands have products across all price ranges to mitigate the input cost effect, but Nirma is available in only one category—value for money. This has proved disadvantageous for the brand. Consequently, the brand is now grappling with a shrinking market share in its core business. The company’s stock price and profitability have been on the decline since April 2006. Some of the major reasons for its downfall are:
1. Lack of innovation – There has been little to no improvement and innovation in the product lines of Nirma. This stemmed from a sense of complacency of being the market leader and failure to observe the market environment around.
2. Consumer Perception – Consumers began to perceive Nirma as an inferior brand due to its low price. This could also be attributed to the premiumization of the detergent segment by other FMCG giants such as HUL and P&G.
3. Lack of Focus - Except for the initial years, Nirma, as a brand failed to understand what they are good at and where their core competence lied. Venturing into other segments proved costly for the company.
The Road Ahead
The major challenge for Nirma now is to penetrate the premium segment of the detergent market, while maintaining a strong presence in the low-end segment. A few cosmetic changes in brand imagery could possibly make it more relevant. Nirma has a market share of around 10.4 percent, according to market estimates, which is far from the days when it scripted the quintessential underdog win.
Author: Rashmi Singh