INDIAN SOAPS AND DETERGENT INDUSTRY

Compiled By: Ajitabh Srivastava Sakshi Sachdeva Kriti Khosla Abhishak Patel

KEYWORDS FOR THE CASE:

Monopoly Competition Monopolistic Competition Niche Market Pricing, Market Segmentation and Targeting

Cost Leadership, Cost Cutting Optimum Production Product Differentiation

THOUGHT PROCESS :

Companies that are selling product of lower quality but also at

lower price than its competitors are sustainable in long run? Can success of Nirma be extended to other product group?

CURRENT SCENARIO OF THE INDUSTRY

1) Indian soap industry is Monopolistic market.

2) Large number of players which occupy 25% market share.

3) Big brands like HLL, P& G and Nirma. , with Nirma leader with 38% share. 4) Category: Laundry soap, synthetic detergent cakes and powder. 5) Market potential: Market for soap and detergents has increased due to :

Growing purchasing power. Increased awareness about personal hygiene. Responsiveness to brands superior offerings value . Penetration in media

Changing life style of consumer..

POST 1970s SITUATION

Detergent powder featured Premium segment dominated

by big players.
Smaller player restricted to share small share of market. Almost Monopoly of Hindustan Lever Limited (HLL)

with premium product SURF

High quality (ingredients like Active detergent (AD),

builder, buffer etc) at high price. (Rs.13 /Kg.)

Since high price accessible to few people. Enjoying supernormal profits as no competitor and high

demand of product and can act like price maker/ setter.

AFTER 1969 SITUATION

Dr. karasanbhai Patel : Visualize : Strong market for the detergent at

lower price (NIRMA).

Priced : Rs 3/Kg But how?? COST CUTTING!! Produced at his home in backyard. Cost Cutting:

a) Product did not contain ingredients to make fabrics white. b) AD half to that used in SURF

Result: Keep prices Low, created new niche market segment (lower end of

detergent and toilet soap) and emerged as household brand.

TRANSFORMATION OF ALMOST MONOPOLY TO MONOPOLISTIC COMPETITION

The rise in Nirma in niche segment gave it confidence to target the

premium segment of detergent and soap.

Nirma kept growing both in volume and market. Competition for Surf. Strategy of Surf: Tried to gain attention by highlighting the distinct

attributes but evently had to enter low price segment WHEEL at price Rs.11/Kg. differentiation, Product portfolios and packaging etc

Nirma on the other had continued its pace with high Product

Nirma developed cost leadership, relied on low cost technology and suitable pricing.

Surf tried promotional schemes like offering bucket for every 1 Kg of surf and various advertisements to prove its product worthiness. However, Nirma took a Premium product from classes to the masses . Its price led strategy forced the market leader to review its strategy. Let see how the graph for market structure would look like.

Thank You Have a nice day!