STP review of Nirdosh - Herbal Cigarette, and possible explanations on what might have went wrong

1. Nirdosh–Herbal Cigarette
Introduction
Smoking has been enjoyed for over thousands of years. It is a social, traditional and
ceremonial activity that can be relaxing and enjoyable. A typical tobacco smoker,
smokes 05-12 cigarettes a day or even more. This smoke is highly toxic as it contains
tobacco.
Tobaccosmokeis acomplex mixture of over5,000 identified chemicals out of which
more than 60 causes cancer. Smoking is directly responsible for approximately 90
percent of lung cancer deaths and approximately 80-90 percent of COPD
(emphysema and chronic bronchitis) deaths.
Nridosh, a unique non-tobacco smoking device which was developed in 1982 by
Maans Products, Ahmedabad. It was made from 14 herbs (like Basil, Clove,
Cinnamon, Turmeric, Tendu leaves, Bishops weed, etc.) which were turned into
granular form and rolled in the shape of cigarette. These were then packed into a
cigarette-type cardboard boxwhich was in turn covered by cellophane wrapping.
Nirdosh can be used to quit smoking tobaccoor it can be smoked for its own sake
as an alternative for smokers having ailments such as cold, cough, asthma, etc.
Smoking natural herbs in Nirdosh and the benefits of Nirdosh are profound, while
the risk is minimal.
Background
Mr. Bhavsar Senior had been running a beedi manufacturing and marketing
enterprise for about two decades. The beedi business was flourishing with the total
sales volume of about 10 lac per annum.
When Bhavsar Senior was asked to roll the Ayurvedic material mix in the form of
beedi for the patients by some Vaidya, Mr. Bhavsar identified the existing gap in
the market and picked up the idea of manufacturing non tobacco smoking device.
He went through several hurdles for seven to eight years during the development of
Nirdosh into a perfect product.

2. The Four ‘P’ concept
Product;
 Raw Material:
Nirdosh was made from 14 different types of herbs. The problems faced
were: availability and procurement of the materials as most of the raw
materials were seasonal. Mr. Bhavsar had to develop a system for ensuring
the quality and availability of the productat reasonable rates.
 Filter paper and wrapping material:
Initially, Tendu leaves were used as a rolling material which was later
changed to an alternative white paper. However due to certain disadvantages
on using white paper like negative effect on smokers and herbs causing stains
on the paper, Mr. Bhavsar developed a special colored medicinal paper and
used a filter at one end to stop the powered material entering the mouth while
taking a puff.
 Pack and Print content:
Nirdosh was first packed in beedi form and the sticks were wrapped together
in an ordinary paper. Later they were changed to the cylindrical sticks Mr.
Bhavsar developed rectangularpacking and with a printed instruction leaflet
in it.
Price:
 In 1984, Nirdosh was priced at Rs.2.50 for a pack of ten sticks which was
revised to Rs.5per pack in 1989.
 Presently, in India it is priced at Rs.50 for a pack of ten sticks.
 For onlinesalesit is available at Rs.60 for a pack of ten sticks and also holds
the same price for export shipment.
 Discount is also provided on bulk orders.
Place:
 Nirdosh has one main outlet (manufacturing and storing premise) in
Ahmedabadwhich is considered as one of the major assets of the firm.
 Various other smalloutlets (distributors) in different cities of India

3.  Sales of the product through VPP (volumetric production payment) and also
Salesof Nirdosh in countries like US, UK.
 Currently Nirdosh markets through Internet only.
Promotion:
 Distribution of free samplesto various countries like US, UK and institutes,
organizations like Cancer Research Institute, Tata Institute of fundamental
Research emphasizing on the health benefits.
 Making the product more visible using low cost advertising medium like
Newspaper, Magazines, Radio, Doordarshan, Hoardings, etc.
 Door–to–door selling: initially when started by Mr. Bhavsar it was a huge
success, selling 50 packets a day however it was concentrated only in
Ahmedabad.
Marketing Strategy
Includes:
 Research: Market Survey and Data Analysis
 Development of the product: focusing on the Packaging and reasonable
Pricing,
 Implementation:ProductPromotion, ProductDifferentiation.
The ‘StP’ process
Nirdosh case study is truly about a unique productin the tobacco industry
segment pertaining to beedis and cigarette smokers. A productthat 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 beedis or cigarettes or both. However, the
operating principles of segmentation with the various P's, the producthas very little
scopefor sustained demand. The demand gets further restricted in certain price
segments and the conceptof the productat a variance.
It's truly a uniquecase study where the product faces rejection from the various
segmentsand sub-segmentsor categories it wasexpected to sell.

4. Segmentation:
 A detailed survey on the consumption and production of cigarettes and
beedis was taken into consideration.
 Demographicprofilesofsmokers like monthly income, average age, etc. was
also considered.
 At the beginning more emphasis was laid on the rural population than urban
since it was more in comparison.
 Also considered the market potential for various pharmaceutical and
ayurvedic products to cater the patients of various ailments.
Segment 1:- New Smokers:-
With New smokers the concept of Nirdosh being a non-tobacco based
smoking device, the idea is difficult to communicate and will not be
acceptable by them. They may try it out to find the difference between the
Tobacco based and Nirdosh, but will not lead to repeat purchase as Nirdosh
idea is to make people quit smoking. This Product fails in the Sustainability
and hence will not succeed in this segment.
Segment 2:- Quit smoking:-
With people who are already smokers and if they do not have any health
problem, they may not even try this product. If they have health problem like
cough, cold then they may use this only till they get cured, but may not
continue or shift from their original brand which they are used to
smoke. Nirdosh had repeat sale from customers through VPP and his sale
grew from 6000packs per month in 1984 to 8000 packs per month in
1989. But when we look into the competition. The cigarette manufacturing
company had a huge financial, machinery to increase production and channel
marketing to increase sale. These were not adopted by Nirdosh, although in
comparison with some companies, price wise they were competitive, refer
exhibit, but in satisfying customer wants, needs, desire, they could not. They
also had an advantage that this productwould make regular smokers to quit ,
which they were not able to otherwise in addition to helping them in healing
for certain ailments. They were able to create value to their customer. They
could have been success full in this market segment if they increased the

5. production capacity, make proper sales channel and identifying target
customers. The other Problem they face is seasonal availability of Raw
material. They will not be successfulin this segment overall.
Segment 3:- Health
Nirdosh herbal smoking device was primarily developed based on the inputs
from Vaidya’s. Doctors and the conceptas acure for various disease was good.
It got acceptance from various institutes like TIFR, CRIetc. and proved to be
non-harmful and advantageous to people in helping them cured from ailments
like asthma, cough, cold. They had sustainable business, since they had repeat
orders. Sale grew from 6000packs per month in 1984 to 8000 packs per
month in 1989. They are competitive to the price of the medical products
targeted to cure same type of disease. They had advantages of having all the
documentation right. But in India “smoking will cure ailment”, the concept
was difficult to digest by customers, in 1984-89 & even today Smoking is
considered as a taboo. They will not be successfulin this segment too.
Segment 4:- International market
In this segment Nirdosh trial rate was there. The repeat business depended on
getting the product approved through appropriate authorities in those
countries. There was expectation of receiving large orders, but they did not
have the machinery and technology to producein Quantity. This Productwill
not be sustainable in this segment too.
Targeting:
Primarily targeted two industries;
 Cigarette Industry: To attract smoking population and market Nirdosh as an
alternative to smoking tobacco.
 Pharmaceutical Industry: To market Nirdosh as a health remedy which will
cater to the patients of various ailments like cough, asthma, cold, etc.

6. Positioning:
 Nirdosh has positioned itself as a nicotine and tobacco free smoking device
and as a substitute for the harmful cigarettes in the minds of the smoker.
 Nirdosh has been advised bythe doctors as a remedy to various diseases (for
improving the health of a patient).
 The producthas been designed (in terms ofthe appearance) in sucha way that
it is accepted by the new generation.
On the face of it, Mr. Bhavsar had a clear monopoly ofhis product, butafter defining
the segments of smoking industry and health sector in terms of the concept of the
productrelated 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 forpopular
health ailments, but because of the clash in conceptof 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 ofvarious
medical products.
True to its name, “Nirdosh''remained an innocentvictim ofthe marketpatterns
because of the productnot matching the requirementsof the segments.
Suggestions
 Developing a strong distributionchannel
 Availabilityofthe productin the local market for the non-internet users
 To raise revenue (funds) for the infrastructure and development.
 Creating awarenessof the benefits of the product.
 Promoting the product using different channels like advertising, online
promotions, newspapers to increase the total sales.

7. Nirdosh case study
Batch: Warren Buffett
Date: 12/09/2015
Submitted By:
Group: 03
Ritesh Hati (365)
Anirban Banerjee (371)
Alok Rai (487)
Namrata Agnihotri (382)
Lakshyaraj Singh Rathore (399)
Anuja Patil (411)