You are on page 1of 22


T.Y.B.M.S. B


Sr. No



Page No.

Market means not a particular market place in which things are
bought and sold but the whole of any region in which buyers and
sellers are in such a free intercourse with one another that the
prices of the same goods tend to equality, easily and quickly.Cournot
Marketing is a process by which goods and services are exchanged
and their value is determined in terms of money prices. H. E.
Rural Marketing:
Rural Marketing can be defined as a function which manages all
those activities involved in assessing, stimulating and converting
the purchasing power into an effective demand for specific products
and services, and moving them to the people in rural areas to create
satisfaction and a standard of living to them and thereby achieve
the goals of the organization.
The term "Rural Marketing", which was used earlier as an Umbrella
term to refer to all commercial transactions of rural people, acquired
a separate meaning of great significance in 1990's.
Characteristics of Rural Markets
There are certain characteristics of Rural India, which every
prospective marketer needs to be aware of before unleashing his
Low income influenced by seasonal fluctuations
Low literacy

Diverse customs, languages and social structures

Resistant to change
Price sensitive
High brand loyalty
Influenced by traditions
Moderate aspiration levels
Quality Conscious
Low to moderate risk taking ability
Distinctive features of rural markets vis--vis urban markets
Demand pattern
Literacy level
Per Capita Income
Awareness of needs |
Sources of

Not entirely known
Word of mouth


personal/ direct


selling, TV, radio,


Erratic, untimely
Product info guidance Needed
Consumer Protection No awareness

Increasing awareness

These typical characteristics of the rural market make it evident that

there are huge challenges, which a marketer will face. These
challenges need to be tackled using appropriate strategies and
proper planning. The major obstacles can be classified as follows:








distribution of products and make the task of reaching the target

consumer difficult.
Traditional media is ineffective due to illiteracy and non

There is insufficient past research to provide some insight about

consumer behavior.
Disposable income is highly dependent on good monsoons and a
rich harvest.
Varying linguistic and socio-cultural norms compel the marketer to
vary his marketing message for different parts of the same country.
Role of women in buying process is still not independent of family
Inadequate credit availability hampers the ability of rural retailers
to carry stocks.
Understanding the psyche of the rural consumer and gauging the
complexity of the rural market has to be given utmost priority by
marketer. Creative marketing solutions need to be devised to
combat these barriers.

Nirma Limited
Nirma Ltd, promoted by Karsanbhai Patel, is a home-grown FMCG
major with a presence in the detergent and soap markets. It was
incorporated in 1980 as a private company and was listed in fiscal
1994. Associate companies' Nirma Detergents, Shiva Soaps and
Detergents, Nirma Soaps and Detergents and Nilnita Chemicals
were merged with Nirma in 1996-1997. The company has also set
up a wholly owned subsidiary Nirma Consumer Care Ltd, which is
the sole marketing licensee of the Nirma brand in India. Nirma also
makes alfa olefin, fatty acid and glycerine. Nirma is one of the most
successful brands in the rural markets with extremely low priced
offerings. Nirma has plants located in Gujarat, Madhya Pradesh and
Uttar Pradesh. Its new LAB plant is located in Baroda and the soda

ash complex is located in Gujarat. Nirma has strong distributor

strength of 400 and a retail reach of over 1 million outlets. The
company reported gross sales of US$ 561 million in 2003-04. It
plans to continue to target the mid and mass segments for future
Nirma's products over 800,000 tonnes of detergent and over
80,000 tonnes of toilet soaps annually are consumed by over 250
million customers, through a wide network of 400 distributors and
about a million retail outlets.
It ranks No.2 in toilet soaps; but mainly, in just seven years of
marketing soaps, Nirma sold more volumes than the others had in
25 years!
A brand that was to become a model for other budding
entrepreneur had very humble beginnings.
In scorching heat of 1969, a son of small-time farmer was trying to
mix Soda Ash and few other intermediaries, to make a detergent
produce. He was a qualified Science graduate and was working as
junior chemist in Government laboratory. As a moonlighting activity,
he was making detergents in the 100 Sq. Ft. back yard of his home,
using bare hands and bucket. Once the mixture is ready, he used to
pack them in polythene bag and was selling door-to-door
Gradually, the product became well accepted in the consumer
community, and the rest is known to one and all This is a success
saga of a first generation entrepreneur, on his way to create history
in the Indian marketplace - that was Dr. Karsanbhai Patel.

In a short span, he captured the domestic market, with a

quality product. He swiftly crafted low-to-medium consumer pockets
a whole new consumer segment for detergent category. He took
on mighty multi-nationals and rewrote the marketing rules. In true
sense, he spearheaded the market revolution by offering innovative,
value-for-money products, and changed the cloth-washing habit of
Indian housewives - the revolution called Nirma, after his
daughter Nirupama, was cycled to retail outlets. Since its very
inception, Karsanbhai had his finger on the pulse of the people as he
realized the need for a cheaper detergent.
The best reward of all for Mr. K.K. Patel, as he often says
continues to be "the smile on the face of a satisfied buyer." He built
the brand, Nirma, from scratch, took it from strength to strength and,
in the process, pioneered rural marketing in India. The result being one
of the most comprehensive and widespread distribution networks in
the country. Housewives swear by it, retailers stock it, unfailingly, and
brand loyalty continues to increase.
Nirma has arrived and has truly become a household name, in
every sense of the term.
Commenting on his success the in September 10, 1988. The
Economist wrote:

"Rarely does a small manufacturer in a

developing country take on a big multinational and win. Mr. K.K.

Patel has done it in India, taking three-quarters of Hindustan
Lever's potential market from it."
From initial days, Nirma believed in value-for-money equation, in
creating and maintaining long-lasting relationships. It has always
remained committed to offer better products, at better value, for
better living Nirma is a customer-focused company committed to
consistently offer better quality products and services that maximize
value to the customer.

This customer-centric philosophy has been well emphasized at

Nirma through:









Laying emphasis on cost effectiveness.

Maintaining effective Quality Management System.

Complying with safety, environment and social obligations.

Imparting training to all involved on a continuous basis.

Teamwork and active participation all around.






towards organisation, its goals and objectives.

During that period the detergent powder category belonged
almost entirely to Unilever's Surf. Launched in 1959, Surf grew in the
market and became the benchmark in the eyes of both the
housewife and competition (which was then limited to three wholly
Indian manufacturers Godrej, Tata and Swastik). Common opinion
prevailed that a quality detergent, had to be a blue powder packed
in a colourful carton. But Nirma was launched as a white coloured
product, packed in pouches sealed at the top, with no colour or
design sophistication on the pack.
1. Product:
Nirmas core product was the cheap priced, unbranded, detergent powder
which penetrated the market snatching away a big player like HLLs share of its
potential market.
In 1985, Nirma adopted the product expansion strategy, launching a
detergent cake, and followed it up with Nirma Super detergent powder. By then,
Nirma was already established as the market leader in the industry.

Then came the period of line extension and consolidation. In 1990, they forayed
into the toilet soap segment, following the umbrella brand strategy. Nirma then
launched a beauty-soap with high TFM content at an affordable price point, and
followed it up with various new fragrance variants to strengthen their market
In a short span, Nirma gained the second position in the toilet soaps market.

Nirma is today ranked among India's top 20 .most distributed

brands. It has built up a 30% market share in the premium
detergent segment and also achieved greater than 20% share, in
less than two years, in the premium soaps market.
Today Nirma has diversified into personal care market with
Shikakai, Beauty Shampoo and toothpaste. Nirma further explored a new
product category and at Kalatalav, they developed one of the largest salt works of
Asia, and launched Nirma Shudh - an edible, free-flow, quality salt.

2. Packaging:
The attractive feature was to be the price-around 35% of Surf!
Bright colors on package
introduced cost-efficient poly-pouch packaging, when others were
operating through boxes.
3. Price:
Competitive pricing and Simple positioning was the growth strategy. The
cheapest brand in the market came at Rs 13 a kg. Nirma launched its unbranded
product at Rs 3 per kg. The product became an instant hit.

Of course since

the natural tendency in the rural is towards being economical, the

RC prefers to buy the lowest cost brand. Thus we see a brand of

soap like Nirma Saundarya Sabun priced at Rs 7.00 being

preferred over other brands because it is the least priced brand. By
the above information that we have, we can easily say that Nirma
had opted for Market Penetration Strategy with respect to
Soon the brand began to sell like hotcakes and Nirma's market
share grew from 0% in 1976 to 61.6% in 1987. It soon pushed HLL
over the top.
Here some interesting points are:
Why low cost? : The price difference between Nirma and other
brands is not significant, at least from an urban perspective. Lux
soap costs Rs 8.00. But even the difference of Re 1.00 is apparently
significant to the RC. This is not to say that Nirma is preferred due to
the price factor alone. Definitely there may be lots of families that
prefer Nirma because of its product related characteristics i.e.
simply because they like it better than other brands. But even
though the above reason is a common refrain, it is not difficult to
see that price has an important influence.

Prominent Display of Price

Whether or not to prominently display the price in a communication
through retail outlet displays, through TV commercials or
through any other medium is an issue of great significance. In
rural areas it is very essential that price be displayed on the
communication. One of the elements of any communication
that a rural consumer pays attention to is price and it definitely
influences the way he perceives the communication. Price is a
way to generate curiosity about a brand. Once a rural person
sees a price mentioned, whether its a product he has thought
of buying or not and irrespective of the magnitude of price (if
its well above what he can afford), he will be curious to know
why that particular brand costs that much. So even if he sees a
high priced motorbikes ad, hell pay attention to the
communication wondering what makes the bike so expensive.
And hell remember the communication.
Secondly, in rural areas, there are greater chances of overcharging
because of lack of communication and low literacy, because of
which some people may not know where to read the price on a
pack. Hence price should be prominently displayed in a
communication, written in Hindi, so that the rural consumer is not
4. Planning:
With one of the most comprehensive and widespread distribution
network, Nirma reached into the very heart of India. In the process,
it pioneered rural marketing in India-another reason for its
astounding success. In the early 1980's despite the fact that 70% of
India's 750 million lived in rural areas, big MNC's avoided them for
the simple reason that it was difficult to penetrate. Nirma's success
in rural India also dispelled the myth that rural consumers are poor

and do not have the disposable income to buy consumer goods.

Nirma's policy of manufacturing a low cost "value for money"
product was also aided by the fact that Nirma operated in the smallscale sector. This helped it save an enormous amount of excise duty
that multinationals had to pay on every kilo of detergent produced.
This prevented MNCs from pulling down prices to a level attractive
enough for the middle and lower-middle classes, the bulk segments
for Nirma sales. Understanding the economics and rules of the rural
game, Nirma identified that expensive advertising had no place in a
market where the buyer was too price-sensitive.
Nirma also dared to break the "rule" that a packaged, especially
advertised brand needed the paraphernalia of branch offices, area
managers, and sales representatives in order carry it through a wide
and complicated network. Instead, Nirma went in for what the West
would have called a 'no-frills', approach not just in the product
formulation and cost elements, but also in the all-important sales,
distribution and organisational arrangements. They adopted a flat
distribution structure against the industrys pyramid practice
In 1998, they established a unit to produce 75,000 TPA Linear Alkyl
Benzene, an important input for their end products, at Alindra, near
Baroda. In 2000, we established a soda ash unit in Kalatalav, near
Bhavnagar. Soda ash is again a key raw material for detergent and
has various industrial applications.
The price of this product was going up globally. So it was essential to
set up a production facility and keep prices under check. This way,
by following a backward integration strategy, they installed huge
facilities for vital ingredients for their end -products, making them

By manufacturing their own raw material, in the form of Linear

Akyl Benzene (LAB) and Soda ash, Nirma offers more value to its
buyers. The Rs. 4.5 billion LAB manufacturing plant at Savli (the
most modern in India and the second best in the world), was set up
in minimum time and cost once again showing astute management
skills. It also has the largest soap manufacturing facility in the
country, under a single roof. A state-of-the-art packaging plant
(another first in Gujarat) catering to a staggering 1.2 million
polythene bags and 6 million wrappers, daily! They also established craft
paper, corrugated box and ink producing units to achieve economies of scale

5. Promotion:
They backed their efforts on the ground with advertisements on the radio,
in 1976, and newspapers, in 1980. The jingle Dudh Si Safedi, Nirma Se Aayee..
did the rest.

Nirma used radio, posters, banners and mobile vans

among others as better media options. It was also one of the first
major advertisers on the National Network, a fact borne by its jingle
(Nirma Detergent tikia, iske jhaag ne jaadu kar diya), which still
generates instant recall. When you hear the all too-familiar tune
Washing Powder Nirma, you instantly know what it is talking about.
The title 'Nirma Girl' going round and round on her feet and her
white dress rising fluff too made for a strong mnemonic for the
brand. This stood up to Surf's Lalitaji's "samajhdari."
Slogans are the best way to make the rural consumers memorize
any benefit or service of the product, so that whenever they think
about using a product to get some kind of service or use, they
remembers our brands and also that it gives them the service they
require at that moment. For example, if a housewife remembers
slogan like Safaayee Badhiyaa Aur Daam Bhi Kam (Cleans
excellently and also less expensive) in case of washing powder of
Brand X, whenever she goes to make a purchase she will know what
she requires and that Brand X serves her as per her requirement.

In villages, children are those who mostly remember slogans. So

if we present communications having jingles, easily understandable
and appealing to them, they will keep on repeating it and the elders
around are bound to subconsciously remember them.
Karsanbhai was so confident about his product that he even
offered a money-back guarantee to customers. This proved to be a
good promotion tool and soon they were the dominating market
player a position Nirma has never since relinquished
Understanding the consumer and giving them live demonstrations:
With the changing market scenario, introduction of new products,
increasing awareness amongst customers and the overall
development in rural sector, required a change in corporate
marketing strategies, and this was done. The sales team was asked
to be more aggressive. With distribution in place, communication
was simpler and had a regional flavour. The strategy to tap the rural
market has to be more customised, simpler and based on one-toone communication. One has to reach the doorstep of the rural
consumer to educate him on brands. It is said that brand loyalty is
higher in the rural customer. Even in big villages and kasbas, the
consumers would not be able to read but they refer to Nirma as the
peela powder.
Why Brand? : Another interesting feature is that the Nirma is
preferred over local brands, which are cheaper than Nirma; in fact
as cheap as Rs 5.00. The reason for this being the top of the
mind factor. Nirma is a national brand, prominently advertised
through various media like TV, newspapers etc. People have
preference nowadays for such products. More than what you show
in your communication, just the simple fact that you have a
communication especially on national TV, gives an impression to the
rural consumers that your brand is a national brand. Besides

the simple top of the mind factor, other things such as likeability of
the ad and notions such as If the company can afford to spend so
much on advertising, definitely its product must be good. Its
worthwhile to try it once. Probably the reason for this increased
preference for brands nowadays is that the perception that using
brands is good for once well-being, besides the obvious usage
benefits that a good brand gives over local brands and unbranded
products. For example using Nirma soap would give them a better
experience, good fragrance, feeling of freshness etc. and also there
is a feeling that using Nirma is better for hygiene as compared to
using a local brand. This perception is due to better communication
of the brand and also due to its product quality. Hence the RC
prefers Nirma to cheaper priced local brands.
To summarize, what the rural consumer wants is an affordable
quality, not necessarily good quality. Thats why there is a craze for
brands like Nirma, which are perceived to be brands and hence
satisfactory in quality and also they are the affordable.
Use of Celebrity Endorsement
Nirma has used Sonali Bendre as the brand ambassador for its
Soap category, Nirma Saundarya Sabun. Heavy advertisements
were carried out on T.V. as people associated Sonali Bendre with
beauty which in turn made a tremendous impact on their purchasing


Strong Brand equity. Nirma is a Rs. 17 billion-umbrella brand offering
consumers a broad portfolio of products at multiple price points in
the Detergents, Soaps & Personal Care market.

Produces a range of industrial chemical products which primarily

serve as raw material or intermediates for Soaps and Detergents
Market leadership in detergents and fabric wash and second largest
player in toilet soaps.
Wide distribution network.
High interest burden.
Less presence in premium segment.
Lacks global tie-ups and thus finding it hard to tap export markets.
Always associated with low-price (people perceive low quality).
Lack of planning before implementing strategies Umbrella
Brand Strategy & Market Skimming Strategy.
Market analysts say Nirmas problems are one of brand image and
name. Nirmas brand image is that of a low-priced product and
maybe low quality as well. This has come in the way of the company
getting into the high end of the market.
Secondly, the brand name Nirma is strongly associated with washing
detergent powder and hasnt worked wonders with other products
that it has introduced into the market. For instance, Nirma Shudh
Salt, launched a couple of years back, achieved a turnover of Rs 16
crore in 2001-02 as against Kunwar Ajay Sareess Dandi Namak,
which, launched later, has already become a Rs 100-crore brand.

Acquisitions for strengthening its distribution tie-ups.
Entry into other categories like shampoos, toothpastes and fabric
MNCs coming, to India particularly in Toilet and Soap industry.
Emergence of small but strong regional players.
From spurious products, imitations-NIRBHA

Nirma as a brand has been able to etch a niche for itself in the face of
intense MNC competition. It has not only emerged victorious in its core
competency, detergents, but has also successfully moved on into
newer products. Nirma's achievement is surely something about
which an Indian can be proud of, a brand that has lived up to its
catch line; Better Products, Better Value, Better Living!
The Rival next door:

Nirma Ltd and Hindustan Lever Ltd. Detergent Marketing to the Poor (India)
In the 1990s, Nirma Ltd, a local Indian firm, began offering detergent products for poor
consumers, mostly in rural areas. Nirma created a new business system that included a new
product formulation, low-cost manufacturing process, wide distribution network, special
packaging for daily purchasing, and value pricing. Today, Nirma is one of the largest branded
makers in the detergent market, with 38 percent market share and 121 percent of return on
In response to Nirmas rapid growth, Hindustan Lever Ltd. (HLL) was altering its traditional
business model. Hills new detergent, called Wheel, was formulated to substantially reduce
ratio of oil to water in the product, responding to the fact that the poor often wash their
clothes in
rivers and other public water systems. HLL decentralized the production, marketing, and

distribution of the product to leverage the abundant labor pool in rural India, quickly creating
scales channels through the thousands of small outlets where people with low income shop.
HLL also changed the cost structure of its detergent business so it could introduce Wheel at a
low price
point. HLL stimulated by its emergent rival and its changed business model, registered a 20
percent growth in revenues per year and a 25 percent growth in profits per year between 1995

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.
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.
Currently, Nirma group is going through a phase of acquisitions and
takeovers. The group recently acquired the Porbandar-based soda
ash maker Saurashtra Chemicals. Nirma has also entered in
healthcare domain by taking over global scale IV-fluid production


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. The blame can also be given to Nirmas fixation with its outdated
ideologies and policies.

What according to you is/are the reason(s) for Nirma's downturn in the detergent
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 pricecutting and defensive strategies of coming up with matching products with some
differentiated elements such as in the case of 'Wheel' detergent.
Drucker talked about implicit and explicit theories that organizations develop for their
business wherein they incorporate assumptions about the environment, specifically
the markets, customers, and important technologies they deal with; the mission and
purpose of business; and the core competencies required to fulfill the mission.
Karsanbhai's implicit and explicit theories related to Nirma served it well until the
initial assumptions changed as they inevitably had to. I cannot say that Nirma did
nothing to respond to those changing assumptions; it did a lot. Nevertheless, it seems
these are now proving to be inadequate.
Take the case of its legendary lowcost leadership strategies. I think they outlived their
utility long back to the type of business environment that is emerging. Yet Nirma
continued to insist on replicating its proven formula for success. The marketing
environment was changing yet Nirma did not react fully to it and did not change its
assumptions. Is the customer, who relished buying Nirma's product in the 1990s the
same as today's customer? I do not think so. Therefore, a mismatch has occurred in
what Nirma offers and what the customer really wants. Obviously, the customer is
now demanding enough to expect not only low price but better quality too - an
area where Nirma, owing to its misdirected attitude to cost cutting, is not able to
'David can attack Goliath'-how relevant do you think is this in the case of Nirma?
David attacked Goliath and emerged as a winner vanquishing his much stronger
opponent. However, in the case of Nirma versus Hindustan Lever it is a continuing
warfare between the two. Goliath is yet to be vanquished and is making it difficult for
David to win. An allegory that seems more relevant to me in the Nirma-HLL case is a
fight between two lions vying for hunting space with each jealously guarding its own

From a strategic point of view, everything that could be done by Nirma to create a
low-cost product was in fact done: A high level of backward integration leading to
captive supply sources, in-house manufacturing and packaging design, direct
distribution channels, personal and trust-based relationship with distributors, and
sustained, enduring, and low key promotion. In retrospection, one could discern an
integrated approach in the panorama of activities that Nirma performed. Such a
strategic approach yielded handsome results.
What according to you are the strategies Nirma should adopt to retain its
customers' loyalty and regain its No.2 position in the market?
Conventional wisdom could say that Nirma can embark on a series of short-term
measures to tinker with its strategy and manage to keep afloat. However, that is the
worst thing that can happen, though I feel it might also be the most likely thing to
happen since that seems to be the obvious solution. In my opinion, ideally what is
required is a fundamental shift in its thinking, whereby it revises its assumptions that
makes it rethink its implicit and explicit theories about its business.
Take for instance the case of customer loyalty. Just like employee loyalty, customer
loyalty is a chimera. I think any company trying to gain or regain customer loyalty
is living in a fool's paradise. The Indian market-as is the case with Indian society - is
fast becoming a transactional market. Customers do not buy a product because it is
from company X or Y. They buy it, since it satisfies their needs and wants. So who is
Nirma's customer? Is she/he the same person who was the customer earlier in the
1990s? Or is she/he a different person? If yes, then how should the realignment in the
strategy take place to make her continue buying Nirma's product? That is the route to
rethinking about the assumptions that govern business. That is the type of rethinking
that I am proposing for Nirma.
Any other thoughts/views you would like to share with our readers?
Corporate affairs are too complex to capture by means of a single or a few strategies,
or some programs and plans. I will just take up a few issues and write out my thoughts
about Nirma.
First issue that I would like to write on is the size of the company. Nirma has
undoubtedly grown into a big corporation, and has ventured into so many different
areas by means of a variety of strategies like integration and diversification. With size,
arise the challenges of organization and control. Nirma needs to focus on these
challenges and see how it can retain some of its nimbleness and yet reap the
advantages of size, such as the scale economies.
Secondly, Nirma has reached a stage in its evolution, where it seriously needs to
rethink its vision and mission. Here, I do not mean that it should rewrite its mission
statement in more beautiful words. I mean that it should think seriously, what has
made it reach the stage where it is. Nirma focused on the customer whose basic
requirement was an acceptable quality product available at an affordable price. This
customer still demands that. But, a slow change has been taking place all these years

especially in post-1991 period in India. The indices capture much of that change, yet
some escape attention. The customer, in the segments that Nirma served, no longer
wants just a cheap product. She/he demands quality too, and is willing to pay a bit
higher for that. That means there is a requirement for the best value product: A
product that offers quality that would be an 'aha' experience at that price.
Nirma needs to resolve this dilemma: Does it want to serve its original customer
segment that still wants a cheap product and may be even ready to compromise on
quality; or does it want to move up serving the value-conscious customer (that was its
customer in the 1990s)? If I were asked which direction Nirma should go in resolving
its dilemma, I would unreservedly say it should remain in the direction of its original
customer segment. Why? Because, the value-conscious customer-that Nirma struggles
to serve, and that it can't do as well as its rivals can do-has a choice. Leaving Nirma
aside, she/he can move to Hindustan Lever or Proctor & Gamble or Wipro. That is
what has been happening. In the segments that Nirma has moved up, owing to the
initial momentum of following its customer, it has too much competition to handle
and is clearly not up to the task.
By bowing down to serve its original customer, Nirma would be creating a space for
itself, where many will not be willing to come. This customer is the poor customer
who needs to eke out a living and buy the necessities at a low price to make both ends
meet. She/he lives in the vast expanses of India where life is a daily experience of
struggle to somehow keep body and soul together. She/he is a part of a 600+ million
customers market. To do this means that a company like Nirma needs to leverage on
two things: Scale economies and low-cost operations. Nirma has accumulated
enough learning to undertake low-cost operations. What it needs is to build scale
economies with a sharp focus on a limited range of complementary products.
If I would frame a vision for Nirma, it would go something like this: "A big company
dedicated to serving continually the daily needs of the small woman and man."

Thus looking at the challenges and the opportunities which rural
markets offer to the marketers it can be said that the future is very
promising for those who can understand the dynamics of rural
markets and exploit them to their best advantage. A radical change
in attitudes of marketers towards the vibrant and burgeoning rural

markets is called for, so they can successfully impress on the 230 million rural
consumers spread over approximately six hundred thousand villages in rural India.
In the end it is certain that FMCG companies will have to really
gain inroads in the rural markets in order to achieve double digit
growth targets in future. There is huge potential and definitely there
is lot of money in rural India but the smart thing would be to weigh
in the roadblocks as carefully as possible. The companies entering
rural market must do so for strategic reasons and not for tactical
gains as rural consumer is still a closed book and it is only through
unwavering commitment that the companies can make a dent in the
market. Ultimately the winner would be the one with the required
resources like time and money and also with the much needed
innovative ideas to tap the rural markets.
A mention of rural India may conjure up an image of abject
poverty in the minds of many people. This, however, does not hold
true in the case of a few fast moving consumer goods (FMCG)
companies that have over the years been giving their rural
operations a renewed thrust. Why would these companies be
tapping into the rural markets in the first place?
The success of these companies has as much to do with
understanding the psyche of the rural family as it have to do with a
rural distribution network. A typical rural family is a price conscious
consumer and this is where the key to success lies. Nirma, for
example, extended its strategy of volume driven growth into rural
markets and met with much success.