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Detergent wars: Nirma, Wheel & Ghari

HLL entered India in 1957 and was the undisputed leader in detergent space. Surf was the most selling
detergent in India. However in 1980's Surf suffered huge losses at the hands of a new and small firm,
Nirma Chemicals. Nirma was launched in 1969 and its primary focus was to create a good, branded
product at affordable prices. The product was priced far lower than the market leader - Surf. Nirma caught
the attention of the middle-class and lower middle class customers and had such great sales that it
evicted HUL's Surf from the No. 1 position in 1985. HLL then had a look at the situation and found that
there was a large market segmentation in detergent space and then came up with lower priced Wheel
(green) and Rin (blue) detergent powders targeted at different market segments. This segmentation
helped HLL regain part of its lost market.
This post deals with price wars which are becoming an essential part of business. But a cut in price is the
last resort in a price war. We will discuss more on various tactics to fight a price war. I will primarily focus
on price wars in the detergent space, will also chip in with more examples as and when suitable.
Before i delve into more theories and strategies, lets have a look at some stats and series of events:
The detergent market in India can be divided into premium (Surf, Ariel), mid-price (Rin, Henko, Tide) and
popular segments (Ghari, Wheel, Nirma, Mr. White). They account for 15%, 40% and 45% of the market
share, which is 60% of the total market. Regional and small unorganized players still account for the 40%
market. Per-capita consumption of detergent in India at 2.7 kg is the lowest in the world.

HLL entered India in 1957, Surf was the market leader for a long time.
Nirma Chemicals was started in 1969, in 1985 Nirma became the leading detergent in India.
In 1987, Ghari was launched by RSPL (Rohit Surfactancts Pvt. Ltd.), the product was also less priced and
targeted at the rural customers, middle class and lower-middle class customers. It also had more or less
the same positioning strategy as Nirma.
In 1988, HUL launched Wheel to take on Nirma.
In early 2000's Wheel beats Nirma and takes the No.1 spot.
In late 2011 and early 2012, Ghari beats Wheel and takes the numero-uno spot in Indian detergent
industry.

a train whose exteriors are painted with Ghari branding that ran between Lucknow and Guwahati for two months.5 kg pack is priced Rs 85 only. high-volume strategy. This was followed by other such trains connecting northern regions with both west and south of India. Ghari is the market leader with a market share of 17. HUL is still the overall market giant with Wheel. Villagers are persuaded to move to a branded detergent like Ghari which is well within their reach and has far better cleansing power than slabs of cheap local soaps." .3%. Ghari ad with its classical logo . However dollar wise HUL is still the market leader. The company has entered 10 more states in the last three years and now peddles its ware in 19 states. RSPL flagged off the 'Ghari Detergent Express'.5%. which is its biggest audience. The company participates in exhibitions. Ghari has grown from strength to strength with its target market segment and affordable pricing. Ghari has spread its distribution network to more states now and directly reaches rural markets. RSPL has proved that one can be innovative without splurging .and without hiring anyone from the IIMs. But Ghari is now the overall market leader. Combined with its great distribution network and a good product. Two years ago.as against 12-14% spent by its MNC peers . It has 21 manufacturing units. melas and road shows mostly in rural India. in line with the company's geographical ambitions. the sales of the Ghari detergent have risen admirably. A one kg pack of Ghari detergent is priced at Rs 35 and a 2. Wheel is at number 2 with a share of 16.9%. The company continues to target cheaper and unbranded local products to create more market for Ghari detergent powder. Nirma has market share of less than 6% now. Rin and Surf (one product for each segment) doing well. Tide is 3rd with a market share of 13.Currently. On the advertising and promotions (A&P) front. 15 of which were added since 2006.500 dealers. That Ghari spends under 2% of sales on A&P ."pehle istemaal karein phir vishvaas karein" which means "First use and then trust. either. through more than 3. Interesting facts.helps it sustain its low-margin.

The process emphasizes understanding the opportunities for pricing actions based on current market trends and responding to competitor's actions based on the players and their resources. .The detergent episode mentioned over here is a classic example of how new products can be introduced in a market to thwart off price wars. capabilities and strategic positioning. 3) Use complex price actions: A company can offer bundled prices. resellers or providers of related services. Companies also use grammage in packaging to counter price cuts by competitors. or loyalty programs for its products. A very important aspect to determine which tactic is to be deployed to fight a price war is to thoroughly diagnose the situation. introduced flanking brands of the likes of Wheel. 4) Contributor issues: or the other players in the industry whose self-interest or profiles may affect the outcome of a price war. 2) Co-opt contributors: A company can form strategic partnerships by offering cooperative or exclusive deals with suppliers. capabilities and strategic positioning. this reduction is quantity goes unnoticed by most of the customers. They can emphasize the performance risks in low priced options and reveal their products' cost advantage. There can be other tactics to fight a price war like: 1) Compete on quality: A company can increase product differentiation by adding features to a product. 2) Company issues: such as business's cost structures. 4) Deploy simple price actions: A company can adjust the product's regular price in response to a competitor's price change or another potential entry into the market. Now also its Rs 10 for a pack of Masala curry. price promotions. A good example is of Maggi. Rin and Sunlight to compete in customer segments that were being challenged by competitors like Nirma. two-part pricing. analyzed the situation carefully and instead of reducing the price of Surf. or build awareness of of existing features and their benefits. Maggi used to come in a 100 gm packet for Rs 10 at a point of time. HUL after losing out to Nirma. As in they can lower the quantity of the product and continue to sell it at the same price. 3) Competitor issues: such as rival's cost structures. Intelligent analysis that leads to accurate diagnosis is half the job done. but the quantity has been cut from 100 gm to 90 gm to 80 gm now with time. A good diagnoses involve analyzing these four key areas in the theater of operations: 1) Customer issues: such as price sensitivity and the customer segments that may emerge if prices change. quantity discounts.

a few phone calls by the manager of this small firm. its customers would be facing a monopolist.economictimes. but that price would have been below the supplier's marginal costs and the company would have to face huge losses if they did so. One option was to cut the prices in a tit to tat move.com/2011-05-06/news/29517095_1_ghari-detergentbrand-nirma/2 http://www.com/about_rspl.gharidetergent. 2) The manager called local customer representatives/retail dealers and asked them for their support. I would like to end this post with a small case: Consider a small commodities supplier that suddenly found that its largest competitor had slashed prices to a level well below the small company's costs.including defusing the conflict. References: http://articles. coupled with my secondary research on detergents in Indian markets. The supplier correctly diagnosed the pricing move as predatory and elected to do two things: 1) The manager called customers in the competitor's home market to let them know that the price-cutter was offering special deals in another market. pointing out that if the small supplier was driven off the market. revealed that the competitor has reduced its prices locally only in an attempt to drive them out of business.indiatimes.Companies that step back and examine those four areas carefully often find that they actually have quite a few different options . Ankit PS: Most of the inputs are from Harvard Business Review on Marketing. This helped put pressure by the local customers in the competitor's home market. The supplier identified solutions that eschewed further price cuts and thus averted a price war. The short team price cuts would turn into long term price hikes. Hope this mammoth post was informative and fun! Cheers. thus a deep cut in prices was not possible.htm . Fortunately. fighting it out on several fronts or retreating.