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HLL & Nirma
Hindustan Lever Limited (HLL) was the market leader in the Indian detergent market. In the late 1960s and 1970s, Nirma emerged as a strong challenger offering cheaper detergents and gained significant market share. In response, HLL launched new brands like Wheel at lower prices and improved product quality and distribution to regain market share. While Nirma's growth slowed, Procter & Gamble entered India in the 1990s with the premium brand Ariel, forcing HLL to innovate and focus on different segments of the market to maintain its leadership position.
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HLL & Nirma
- 1. HLL Jyoti Jain Lt ColS D Singh Lt Col Puneet Bhalla Prayas Wg Cdr RS Rawat Wg Cdr Karthik
- 2. • HLL • Comfortof Market Leader • Challenge by Nirma • Overcoming the Challenge • Lessons Background VS
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- 4. • Market Rs15,000 Cr • 1.9 Million Tonnes • Third Largest • Segments : Economy, Mid Range & Premium Industry Brief • High Competition • Per Capita Consumption : 2.7 Kgs • CAGR : 11% • Powder Predominance
- 5. Market Share HLL RohitSurfactants (Ghari) P&G Nirma Jyothy (Henko)
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- 8. History : HLL Goodsfrom Mumbai factory being shipped Sunlight Soap Ad
- 9. Background Hindustan Lever Limited- 1956 United Traders - 1935 Lever Brother - 1933 HVM - 1931 • HLL part of Group of Seven Companies • Anglo-Dutch Multinational – 75 Countries • Size & Geographical spread • Food & drinks, detergents, toilet preparations & household products • 10,000 people & 230,000 others • 30 manufacturing units
- 10. HLL : Present •India’s largest F.M.C.G • Turnover of over Rs.11000 Cr • 3 million retail outlets • HLL has 36,000 employees • 1,350 managers Peroorkada Factory Thiruvananthapuram (PFT), HLL’s first plant which began operations on April 5, 1969
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- 12. Levers for Change LOWRisk •Psychological •Financial •Social •Functional •Product Differential • Case Study by :Charlotte Butler 2000, London Business School • How HLL overcame threat from Nirma • David & Goliath • Empty chair in the Board Room • Lessons – Change – Competitive Edge : Marketing, Distribution & Technology – Revolution in processes
- 13. Leadership • Local Autonomy •Indian Managers – 1939 • First Indian Director – 1951 • Indian Chairman – 1961 • 93% HLL Managers – Indian • Contribution in Indian Development •Honesty & Integrity •Meritocracy •Enable Ordinary people to Perform Extraordinarily Values Thinking Culture
- 14. • How acompany identifies its primary competitors and ascertains their strategies. • Review how to design competitive intelligence systems. • Learn how a company decides whether to position itself as a market leader, a challenger, a follower, or a nicher. • Identify how a company can balance a customer vs. competitor orientation. Learning
- 15. • HLL (aftermerging) increased production capacity of Vanaspati by purchasing factories. • Between 1960 and 1970 HLL launched: • LUX SOAP • SUNSILK SHAMPOO • RIN WASHING BAR • CLINIC SHAMPOO • LIRIL SOAP Case – Part I
- 16. • Established numeroussmall scale and medium production units in rural areas • Between 1983 to 1989 there was much more expansion and HLL moved into agro-products. Introduced new variants of Lux soap, Lifebuoy • Personal and Breeze soaps. Case – Part II
- 17. Timelines 1959 •HLL -Surf 1969 •Nirma 1987 •Ghari 1988 •HLL - Wheel 1991 •P&G - Ariel 2000 •P&G - Tide
- 18. • NIRMA theyear 1969, the Man : Karsanbhai Patel • Ahmedabad, Gujrat • Chemist by profession • Lab Assistant in the Geology and Mining Department • NIRUPMA to NIRMA • Journey sale of 15-20 packets • Lower in quality than surf but far more effective than traditional slab of soap Nirma – VALUE FOR MONEY
- 19. Nirma – TODAY Nirmais a customer-focused company committed to consistently offer better quality products and services that maximise value to the customer. 18,000+ employee-base, annual turnover is more than 7,000 Cr
- 20. MARKET SHARE 0 10 20 30 40 50 60 70 75 7677 78 79 80 81 82 83 84 85 86 87 88 89 SURF NIRMA PRICE DIFF
- 21. “Sabki Pasan Nirma” •Cost Leadership Strategy • Rs 3.5 Vs Rs 15 • First Mover Advantage - Poor consumers, rural areas • New Product Formulation – Soda Ash • Low Cost Manufacturing – By Hand – No fixed Costs Nirma – Strategy-I
- 22. “Sabki Pasan Nirma” •Stockist responsible for all transportation & delivery • Family Affair • Distribution dependent on prepayment for stocks • Substantial Ad Budget Nirma – Strategy - II
- 23. • Strategy ToInhibit Nirma Growth • 1977- Alarm Bells • Nirma Bar 1/3 of Rin • Box- Polybags • Formula & Discounts • Advertising – LalitaJi • Sunlight-Powder • 1988 – traumatic year STING
- 24. • Deregulation openedup economy & production restrictions lifted • Middle Class Explosion • Radical Alteration – Quality – Financial Management – Production & Distribution • Competitors Meeting • Better Quality Product at Right Price • 1986 – Wheel Brand Name Resurrected STING - PLANNING
- 25. • Production Method •Wheel Business System – LOW COST • Raw Material Availability - PLANT • Third Party Production – Semi-Automated – Raw Material by HLL – Flexible O/P – SEPAN-Marketing & Distribution – Circumvent Labour Issues STING - PRODUCTION
- 26. • Distribution • 4layer – Extensive but Expensive – Factory – Carrying & Forwarding Agents – Redistribution Stockists – Retailers • Direct to Stockists • Advertising – dissonance – Safety & Reasoning for Switch – Extra Power, Extra Lather & Safe for Hands – 5.5 to 5.25 STING - DISTRIBUTION
- 27. • 1987 Lost •1990 Regained – IN VALUE • RIN relaunched – 1989 • WHEEL Bar relaunched • SUNLIGHT – Technological Breakthrough • New Threat - P&G- ARIEL STING - RESULTS
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- 29. Failed : Deeppsychological bonds with their soap brands Moreover, the market was segmented by HLL by price, by scent appeal, and by brand personality STORY AFTER
- 30. • Both Wheel& Nirma usurped by GHARI • Nirma failed to recover • NO premiumisation • NO innovative variants • Hema-Rekha-Jaya-Sushma - Nirma girl stops twirling • Brand merged into the sea of detergent brands – 400 • Market share of around 10 per cent • A far cry from the days when it scripted the perfect underdog win STORY AFTER
- 31. • Threat fromP&G – Ariel • Concentrate Sector- Rin Powder • Stepped up advertising for Surf • Roll out of Rin Concentrate • ULTRA product – R&D Condensed - PARALLEL • 2 years to 4 Months • Segmentation & Positioing CHANGED MINDSET
- 32. • NO Competitor– Left Unchallenged • Reposition itself at the frontier of emerging market • Change • New Challenges STRATEGIC APPROACH
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