Karsanbhai Patel does not have a professional degree in marketing. He proved that a professional marketer does not need a formal degree in marketing to be successful.
Dr. Karsanbhai Khodidas Patel is the founder of the present Rs. 3550 crore Nirma group with main activities in detergents, soaps, cosmetics, and salt. If marketing is to find the gaps and fill them, Karsanbhai Patel just hit the bull’s-eye.
Karsanbhai Khodidas was born in 1945, in Ruppur village in north Gujarat in a family of farmers. He graduated in Chemistry at the age of 21. Initially, he worked as a lab technician and later served the state Government. In 1969 at the age of 24, Karsanbhai started manufacturing phosphate free detergent powder, Nirma (named after his daughter Nirupama) in his backyard. He dedicated after office hours for manufacturing Nirma and sold on his bicycle while going to his work place, which is 17km from his home. The handmade detergent packets were sold at Rs. 3 per kg, which was one-third of then least priced popular detergents.
Karsanbhai Established Nirma with Simple Yet Superior Marketing Strategy
Product Positioning
Karsanbhai found a massive market segment that was starving for a good-quality detergent at an affordable price. He Kept his margins very low, and was happy to get anything between three and five percent. Eventually, this strategy made him to discover the fortune from the volumes. Nirma was much cheaper than the existing multinational products like Surf and almost equally performing well. On the other hand, Nirma was far superior to that of the cheap washing soaps that were the only alternative to costly detergents until then. Thus, Nirma found its place between the expensive detergents and inferior washing soap slabs. The Nirma brand was quickly recognized in Gujarat and neighboring parts of Maharashtra and the rest is history.
Pricing
Nirma transformed the face of Indian detergent market by staging the strength of low-cost detergent powder segment. For hassled homemakers struggling to balance their monthly budgets, the product was a boon. At the time, detergent and soap markets were dominated by multinational corporations with products like Surf by Hindustan Lever (Indian arm of UniLever – a British-Dutch FMCG giant). They were priced above Rs. 13 per kg, which was out of the reach of the middle class homemakers. Seizing the opportunity, Nirma was priced at one-third of the leading detergents’ price that rapidly conquered the detergent market share. In less than ten years, Nirma became the top selling detergent in India.
Karsanbhai stayed focused on cost reduction strategies to cement the slot for Nirma in the market. Consequently, Nirma adopted backward integration strategy while introducing latest technology to its production facilities to offer a better product at a reasonable price.
Distribution
Karsanbhai knew the popular maxim – ‘the product should be available within an arm’s length of the desire’, but the local retailers did not support him initially. He had to recruit local housewives to sell his product which was innovative and very effective. Once he gained strength, he took a massive expansion of the width and depth of the distribution network. As a result, Nirma began sprouting everywhere in Gujarat, in little shops at the street corners, and even in the remotest villages. It took no time to catch wild fire of word of mouth publicity that gained the trust of the agents and distributors across the country. As a result, Nirma reached those uncharted markets that were alien to its predecessors. At present Nirma has 450 exclusive distributors and over 1 million retailers. The marketing strategy applied here is – Target disruptive products at non-consumers i.e. Nirma targeted non-users of Surf thus avoided the attention of HLL and later grew rapidly and was unstoppable once it is in the right mode.
Challenging established multinationals needs extreme courage and to win in the long run needs marketing foresight. Karsanbhai Khodidas Patel, once a government servant with the knowledge and experience as a chemist offered a good product and was aggressive in marketing strategy. He made the multinationals to follow Nirma and introduce substitutes such as Wheel. In this respect, the Nirma case can be compared to those of Ford, Apple, Sony, and Honda, all one-of-a-kind entrepreneurs who built their empire on gut feeling rather than following the classical patterns taught in business schools. This is a genuine road from rags-to-riches one would like to follow. The story of Nirma has become a classic marketing case study.