The Rise & Fall of Nirma

Have you ever imagined a farmer’s 24-year-old son shaking the roots of a 40-year-old business? 1969, This is the account of a chemist who used to do chemical experiments in his garden. More significantly, this is a story about a father who tragically lost his daughter. He created something that may be utilised in any home one day while exploring. Detergent Powder was the name of the substance.

How Nirma was started

Hindustan Unilever dominated the Indian market at the time. Every house has its own line of merchandise. HUL began in 1933 and continued to enhance their position until 1969, when it became impossible to beat them. But who would have guessed that a 24-year-old boy would beat Hindustan Unilever at their own game by selling detergent on his bicycle? Karsanbhai Patel, 24, was a chemist in 1969. And there was a time when he was experimenting with chemicals in his backyard. He also created a chemical that may be used as a detergent while testing. This detergent was given the name NIRMA by Karsanbhai. Nirupama was the source of this name. Karsanbhai’s daughter Nirupama Patel died tragically young.

Now that the product was complete, how could it be sold?

Initial journey of Nirma ‘s Business

Karsanbhai addressed stores and asked them to store and sell his merchandise. Then he was turned down by every shop. Because there was only one popular detergent at the time. Surf Excel was produced by Hindustan Unilever. Karsanbhai began selling Nirma door-to-door on his bicycle as a result of this. When he used to go to work in the morning, he would sell Nirma to homes along the road. And when he returned home from work, he repeated the process. Nirma wreaked havoc on the market in 1988. Every person in every house has only one name: NIRMA. Nirma was the market leader in India, with a 60 percent market share.Now the issue is, how did Nirma accomplish so much in such a short period of time? And, based on what we’ve seen today, Nirma may be used. What is the cause of this decline? And, most importantly, what are the business lessons that we can learn and apply to our own operations? If you had invested 1000 rupees in Nirma’s stock in 1994, it would have grown to 1 crore by 2009.

Power of Stock Market & Investing

In reality, if you had invested in any FMCG stock other than Nirma, it would have converted into crores today. Detergent Powder was considered a luxury in India in 1969. In some households, detergent powder was not utilised. In reality, soap was used to wash garments in 90% of Indian homes. The issue now becomes, “Why was that?” The HALO EFFECT is the cause behind this. In other words, if you make a selection based on only one or two qualities of a product, you will be disappointed. For example, suppose a man want to invest in the stock market but lacks sufficient understanding about the stock market. And then it occurs to him that Smallcase is a corporation that can assist him.As a result, a compact case offers individuals with stock baskets. Like FMCG Tracker, which has a compilation of the best-performing FMCG stocks. Also, House Of Tata, which holds the equity of Tata’s best-performing firms. The nicest part of Smallcase is that it allows you to increase your money regardless of market conditions. Because fund managers adjust holdings automatically in response to market conditions. After hearing these two facts, everyone who wishes to grow their money in the stock market securely will utilise Smallcase. Even if consumers are unaware of it, its news component supplies them with all relevant market information. And it’s known as ‘The Halo Effect.’

NIRMA Business strategy 

Similarly, prior to Nirma’s arrival, detergent was seen as a RICH THING. BOUNTY OF RICH is what we call it. At the time, Surf Excel cost 15 rupees. Now you’ll remark, “Bro, this isn’t that expensive.” I understand. However, it was expensive in 1969, according to an Indian middle-class family. After introducing Nirma, Karsanbhai noticed a gap in the market and used it to his advantage. Surf Excel cost 15 rupees, whereas Nirma was only 3 rupees. Surprisingly, HUL is unable to reduce the price of Surf Excel to roughly 3 Rs. Because Surf Excel was a high-priced product. And if a corporation lowers the price of a quality product by this much, people begin to question it and stop buying it.

Nirma Grand Business Success

That is why Adidas destroys old stock but never sells sneakers for 200 rupees. After then, Nirma became a household name. Everyone had detergent powder now, from the wealthy to the middle class. Then Karsanbahi Patel engaged several salespeople and began expanding his business.

Problem faced by Nirma 

Suddenly, a crisis arose in the market, and Nirma risked going bankrupt if nothing was done. CREDIT OVERLOAD was the issue. Retailers kept Nirma in their stores, but she had tantrums when it came to payments. When Nirma’s salesperson went to a store to collect payment, the store would offer an explanation. Nirma was still waiting for payment after 3-4 months. Nirma’s credit overload was so severe that if she didn’t get payments within the following two months, she would become bankrupt. Karsanbhai devised a SUPPLY SCARCE STRATEGY to get rid of it.

Nirma 2nd Business strategy 

So, let’s have a look at how it works. As a result of this basic economic theory, when demand for a product increases and supply is restricted, the price of the commodity rises. Karsanbhai, on the other hand, took a different approach. When the merchants refused to pay, Karsanbhai decided to return all of the product to the market. Nirma returned its shares within five days. Then there was an explosion: Nirma debuted their television commercial. This single advertisement altered everyone’s thoughts about detergents. Everyone just liked and desired Nirma once this ad got so famous. BUT WAIT, THERE’S MORE!!! Nirma was nowhere to be seen at the market. People began to demand Nirma from stores, but they had none on hand. Retailers were put under a lot of pressure as a result of this. Nirma is required, but how will we provide it if Nirma is not available? Then Karsanbhai spoke with shops and agreed to give them goods under certain conditions. Those shops who didn’t offer money for three to four months were now required to give full cash.

Nirma 3rd Business strategy 

Slowly yet steadily People stopped inquiring about Surf Excel since Nirma was so popular in every home. Nirma sold 1.72 tonnes of detergent powder till 2000. Karsanbhai Patel was India’s 92nd richest man till 2009. So, what happened to a company whose market share was once 60% and is now just 6%? The reason for this is because of the MARKET DYNAMIC ENVIRONMENT.

Why Nirma Failed 

Before 2010, India’s per capita income was 1000 rupees, but after 2010, thanks to the success of private sector enterprises, it began to rise quickly. People’s purchasing power grew. And, as I have stated, India is a society based on social standing. People here are more concerned with demonstrating status than with accumulating riches. People stopped utilising items that made them feel unappreciated. Nirma was inexpensive, but more significantly, its mood and packaging were inexpensive. As a result, Nirma became less popular. Nirma, on the other hand, did not innovate in either their product or their advertising. As a result, Nirma began to be forgotten. No one asks about a company that used to be the market leader. Nirma also dabbled in a variety of other industries. Nirma worked in the fields of education, chemistry, and cement until 2005. There’s nothing wrong with it. Diversification, on the other hand, necessitates specialisation. HUL is likewise varied, yet each business division is managed individually. As a result, their brand may function better on its own.

Business lessons to Learn from Nirma

1. NO WORK IS SMALL

Karsanbhai Patel sold Nirma door-to-door on his bicycle, and he didn’t think it was a minor job. Work is neither tiny nor large. Work is what it is. Never underestimate the importance of any task, large or little. Every piece of work has its own worth.

2. FILL THE GAP

There is a void in every sector. And the one who fills this void takes the initiative. Karsanbhai Patel saw a significant gap in the detergent industry. And it was by filling this need that he was able to build his vast empire.

 3. R.C.I

What exactly does this imply? Continuous Ritualistic Improvement When you say to yourself, “It’s done already, therefore there’s no need to work hard.” This is the beginning of the end for you. Any firm must strive to improve on a regular basis. Improve their procedures, their methods, and even their staff.