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ITM Executive Education - Batch 22: Nirdosh case study

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This blog is created by ITM Executive Education Batch 22 - Vashi for posting synopsis about Marketing lectures conducted by Prof Ankush. This is also a location where all the Batch 22 students can discuss about various Marketing topics.

THURSDAY, MARCH 8, 2012

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Nirdosh case study

Nirdosh case study is truly about a unique product in the tobacco industry segment pertaining to biris and cigarette smokers. A product that does not have a parallel should top the list in a market. Nirdosh is a smoking stick that Mr Bhavsar had the option of either rolling into bidis or cigarettes or both. However, the operating principles of segmentation with the various ``P's'' (marketing principles) , the product has very little scope for sustained demand. The demand gets further restricted in certain price segments and the concept of the product at a variance from the avowed objectives. It's truly a unique case study where the product faces rejection from the various segments and subsegments or categories it was expected to sell. True to its name, ``Nirdosh,'' remained an innocent victim of the market patterns because of the product not matching the requirements of the segments. ----------------------A Lowdown on the product: ``Nirdosh'' Advantages: The product being supreme for drawing customers or clients, Mr Bhavsar enjoyed a monopoly situation in the market. His smoking sticks had health benefits and tobacco that was not harmful. His sticks also ensured that smokers could actually quit or kick the habit. So, it was an anti-smoking product. He had proof of the product helping to cure variety ailments like cold, cough, fever, asthma, tonsillitis, premature greying of hair, insomnia, toothaches,weak gums, bad odour , gastric problems etc. Additionally, he had certified proof of the health benefits of his product from doctors, reputed institutions and celebrities like late cine star, Ashok Kumar. Clearly, his product was beneficial to cure variety common ailments. Exports opportunity: Mr Bhavsar had received inquiries from abroad about supply of ``Nirdosh.'' He had sent samples to the UK and USA where parties were attempting to get approval of appropriate authorities. Mr Bhavsar expected large orders once the formalities were carried out.

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2012 (22) August (1) March (15) Nagaraj Recap RECAP OF Session 5 to 8 `Whiteboard' GCMMF (Amol Story) Case Study Marketing Class Whiteboard Segmentation - Case Study Bhavsar's Herbal Smokin... Segmentation case study Nirdosh Herbal Smoking Dev... Vinayak recap Shine Recap Nirdosh case study Definition of Segment: Class of customers with sim... Case Studies : Nirdosh Beedis Segmentation Recap comments Lecture 3 & 4 Segmentation & case study February (6)

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Disadvantages: Despite a plateful of advantages, Mr Bhavsar had a problem with distribution and supply network within the country. Unlike others in the industry Mr Bhavsar had a distribution problem to target smokers of all kinds of brands of cigarettes and bidis. He had an outlet in Ahmedabad, his son did some door to door marketing, those who ordered his product by post and resellers whom he provided with discount. Mr Bhavsar's distribution network being weak, he had another major problem to enter the cigarette market or smoker's segment in the tobacco industry. He did not have the
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Shambhu Kumar Sachin Patil janmesh Nagarajan V Sanjay Yadav Dilip Desai Unknown
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ITM Executive Education - Batch 22: Nirdosh case study

wherewithal to roll out cigarettes because of lack of machinery and other infrastructure. This aspect was particularly important as there were 150 million smokers (25 mn cigarettes and 125 mn bidi) in 1979-80. His being a herbal product, the relevant herbs were prone to seasonal availability --------------------------------------------Mr Bhavsar's segmentation dilemma (New Smokers) : ``Nirdosh'' being an anti-smoking product, the appeal to new smokers was unarguably very little. New smokers would hardly light up his stick to quit smoking, for the very idea of smoking was to light up a stick to smoke. It's a contradiction. The monopoly situation enjoyed by Mr Bhavsar because of the herbal product is not subscribed to by the band of new smokers. This segment of the smoking industry has little scope for his product. Reason: Relative market share = Trial rate x repeat purchase formula clearly makes ``Trial rate'' of new smokers because of the nature of the product would be very low or in the worst case scenario nil to negligible. With very little scope for trial rate to touch significant numbers, the probability of repeat purchase too would be rather less. Possible Outcome: Chance of Mr Bhavsar making a dent into this segment is very, very little. -------------------------

Sadashiv Vinayak Veena Nautiyal Prashant Unknown Mandar Patankar Shine Babu sanban

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Existing smokers : As for those who were already into smoking, various exhibits in the case study suggest a huge and potential market for Mr Bhavsar's product to make a dent. Here again though it would be those who were willing to quit smoking. This is the most important or only determinant for defining choice patterns of people who were into smoking to subscribe to ``Nirdosh.'' This segment is well-defined--- biri and cigarette smokers. Bidi smokers are far more (125mn). Consumption of tobacco was estimated (1979-80) at 125mn kg or more by another estimate (153 mn kg) against 85mn kg for rolling out cigarettes nationwide. The market for bidis is good, but Mr Bhavsar decided to shift from Plan A (rolling out bidis) to Plan B (cigarettes) in 1984. He first sold it for Rs 2.50 per pack of 10 (filter tipped) till 1989 and thereafter at Rs 5.00 per pack of 10. Data available (Exhibit--111: Table 7) of early 1970's. As per this table the prices of the brands were those prevailing in 1986, so one can take it as a reference point for Nirdosh cigarettes costing 50 paise per stick for Rs 5.00 per pack of 10. Fifty paise per cigarette is clearly a higher price compared to nine popular brands of cigarette. So would an average smoker smoking these brands want to purchase Nirdosh? It's a question of choice pattern if the smoker wanted to quit smoking. Most of the brands out of the nine had fairly young smokers below the age of 35. How health conscious would they be to switch over to Nirdosh? The lower priced cigarette smokers comprised of those who were engaged in manual jobs and except for three brands did not have a sizeble presence of smokers doing white collar jobs. This additionally, would not have made ``Nirdosh,'' a very appealing concept as white collar job involves people assumed to be more health conscious while those in manual jobs look upon cigarette smoking as a concept to relax. ``Nirdosh'' pricing made it come close to the pricing of cigarettes to Wills Filter (tipped), Four Square King, Gold Flake (King) and India (Kings) that topped the list with one cigarette costing Rs 1. The others in this group ranged from 55 paise to 65 paise. Age wise a matured and elderly population comprised smokers of three brands and in this
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Nirdosh case study Nirdosh case study is truly about a unique product in the tobacco industry segment pertaining to biris and cigarette smokers. A product th... Comments on recap I have some queries though. When a guy is selling a product, say a pen or blades of a certain company on a local train--what exactly is... Segmentation case study Nirdosh Herbal Smoking Device Segment 1:- New Smokers With New smokers the concept of Nirdhosh being a non tobacco based smoking device , the idea is difficult t... Segmentation - Case Study Bhavsar's Herbal Smoking Device"NIRDOSH" Segmentation Definition: If we consider that there are no Classifications in the market is market than we can say that its a ...
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ITM Executive Education - Batch 22: Nirdosh case study

high pricing segment those who smoked comprised a good chunk of those were doing white collar jobs. Mr Bhavsar could possibly have looked at this segment.

Marketing Case Studies No 1: Kanpur Confectioneries Private Limited (KCPL )

Conclusion: Relative market share = Trial rate x repeat purchase--- this formula would reveal the scope for less trial rate by smokers of lower priced cigarettes and also for smokers for high ended cigarettes (subject to individual preferences). As those smoking the high ended priced cigarettes and also other brands involves a chunk of those into newspaper and magazine reading and going to cinema, this segment of smokers are more into enjoying mode and were quite unlikely to disengage with the thrill of smoking. The scope for repeat purchase too, therefore, be limited.

Case Studies : Nirdosh Beedis Case Study Link : Case Studies Following points were raised by Prof Ankush post our discussion of the case study: 1) Is the M... Recap of Lecture 1 & 2

Possible Outcome: Limited chance of success for ``Nirdosh'' for the reasons cited in the above para. Additionally, (Exhibit --111: Table--6) buttresses the limited scope of success as in the category of filter cigarettes % changes in monthly sales show an overall negative swing (34-43= -9%) . Except for King Size premium filter (60 paise) that had a negative swing of 17 %, the other three categories, as per pricing, ( 20 paise to 35 paise ) had a mixed swing with positive swing in king sized popular filter and popular regular filter. The positive swing being in the lower priced category cigarettes than ``Nirdosh,'' it wouldn't have made any difference. But, with the higher segment sales declining, maybe ``Nirdosh,'' had a better chance of appealing as a downward swing would imply people quitting smoking.

Date:-1... ITM EMBA- Class 22 Marketing Lecture The first class of marketing for ITM EMBA- Batch 22 was conducted on 12th February 2012 at Vashi. ... MKG case study Q) Do local companies have capabilities to fight against national companies? The MKG case study is an eye opener. A local brand, MKG u... Lecture 3 & 4 Segmentation & case study Session -3 Segmentation Definition :Segmentation is classifying market by studying consumer behavior pattern based on prefer...

----------------------Health Segment: ``Nirdosh,'' had very little chances in this segment as well. Going by the health benefits, yes, truly Mr Bhavsar's herbal smoking stick is wonders, but then how many of chidlren, men and women would take to smoking to get rid of such common ailments? How many doctors would, in fact, therefore recommend smoking to cough lozenges, syrups and other drugs. The pricing of the medicines too weigh in favour of drugs and pharmaceutical industry compared to one stick of ``Nirdosh'' cigarette. Besides, the organised retail chain with popular cough lozenges marketed by general provision store did not augur well for Mr Bhavsar as he had a disadvantage of supplying his product. Mr Bhavsar faced a dilemma in concept selling of marketing despite his product being unique. The appeal of the herbal cigarette as a remedy for asthma though would be great to smokers as was the case with the legendary cine star--- Ashok Kumar. -------------------Mass marketing: Despite being a rather unique product among smokers and one involving proven health benefits , Mr Bhavsar though had little scope for making a positive impact in the two segments. It is an irony that his product faced a very potential rejection by the tobacco industry and had little scope for success in the health segment because of the dilemma the product faced both on account of doctors recommending smoking to intake of medicines, a large number of non-smokers like children, women and men (in that category) suffering from the common ailments that Mr Bhavsar's herbal stick could cure, and the pricing of cough syrups and lozenges and other
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medicines very competitive. --------------------Can ``Nirdosh'' be mass marketed? The obvious answer is No because there is very little demand that can be sustained over a long period of time . Segmentation of the market(s) along with the various marketing principles of product, pricing, promotion and people bring out clear cut contradictions. -------------------In the realm of sustainability, competitiveness and advantage, ``Nirdosh,'' shared a mixed bag of fortunes:

On the face of it, Mr Bhavsar had a clear monopoly of his product, but after defining the segments of smoking industry and health sector in terms of the concept of the product related to people, habits, demographic group, their choice pattern along with pricing of ``Nirdosh,'' it is clear that the herbal stick was not sustainable in the new smokers category while had limited sustainability though competitive in the existing smokers category. It had an advantage as a herbal smoking remedial cure for popular health ailments , but because of the clash in concept of the product (cigarette) being recommended by doctors against popular and well-known medicines, it was not sustainable for promotion. It was not competitive either in terms of prices of various medical products. Perhaps it's positioning (image) was incompatible in the health segment, and also in the new smokers category. As for export market, yes, the product has a bright future because of the awareness towards health and also chances of both trial rate and repeat purchases possibility high of smokers. But how does it work out?

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Posted by sanban at 11:45 PM

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2 comments:
Vinayak March 9, 2012 at 7:35 AM Hi Sanjayji, Nicely and aptly put. Reply

Nagarajan V March 9, 2012 at 9:02 AM Hai Sanjay,

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ITM Executive Education - Batch 22: Nirdosh case study

Nice & elaborate explanation on each detail. Reply

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