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Introduction
As the market becomes more complex and the FMCG sector, a very fast growing
market, has more and more players, companies turn to strategies to maintain/dig deep
into others market share.One such strategy used is “differentiation”. In this paper I
would be examining “differentiation strategy” which I trust is the key to successful
Market hold and be submitting the grounds on which this inference is based.
Furthermore I would be analyzing the Case of the Indian wonder “Nirma” and would
formulate a viable strategy for its foray into the FMCG sector
Differentiation Strategy
Definition
The concept of being unique or different is far more important today than it was ten
years ago. The key to successful marketing and competing is differentiation.
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It is a strategy whereby a marketer offers a product as unique in industry by proving
that it provides a distinct advantage over other products by setting it apart from other
competitors’ brands in some way or the other, besides price.
Products sold by two different firms may be exactly the same, but if customers
believe the first is more valuable than the second, then the first product has a
differentiation advantage. The existence of product differentiation, in the end, is
always a matter of customer perception but firms can take a variety of actions to
influence these perceptions.Differentiated strategies include targeting, positioning and
segmentation. Most of the FMCG products carry this differentiation through
advertisements to reach the customer in an effective way .In Non price competition
the price is kept constant and differentiation can be created through various novel
promotional ways like ‘buy one get one/two, 25% extra for the same price, free
samples etc
Godrej with its 300 ltrs and 390 ltrs refrigerators targeting high
lifestyle people.
Differentiation by packaging:
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Hit for cockroaches with sleek nozzle for hidden areas.
Differentiation by design:
Differentiation by positioning:
Trends or Fads:
Government Policy:
Social Causes:
Social causes can create demand for differentiated products that help people
further their cause of choice.For eg credit cards issued n partnership with World
Wild Life Fund ,retail stores become a point of differentiation in the credit card
business
Economic Conditions:
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Eeconomic condition creates opportunities for product differentiation .It can either
cater to the premium or the low end market depending on the state of economy.
Product differentiation helps reduce the threat of new entry by forcing potential
entrants to an industry to absorb not only the standard costs of beginning business but
also the additional costs associated with overcoming current firms' product
differentiation advantages
Threat of rivalry
Each firm in an industry attempts to carve out its own unique product niche. Rivalry is
not reduced to zero, for these products still compete with one another for a common
set of customers, but it is somewhat attenuated, because the customers each firm seeks
are different.
Threat of substitutes
Firms reduce the threat of substitutes by making a firm's current products appear more
attractive than substitute products
Threat of suppliers
Powerful suppliers can raise the prices of the products or services they provide.
These increased supply costs must be passed on to a firm's customers in the form of
higher prices.A firm without a highly differentiated product may find it difficult to
pass its increased costs on to customers, since these customers will have numerous
other ways to purchase similar products or services from a firm's competitors.
Threat of buyers
When a firm sells a highly differentiated product, it enjoys a near monopoly in that
segment of the market. Buyers interested in purchasing this particular product must
buy it from a particular firm. Eg. Ipod.Any potential buyer power is reduced by the
ability of a firm to withhold highly valued products or services from a buyer.
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The challenge
Anything a company can do to create value for buyers represents a potential basis for
differentiation.
Management Controls
Managers and employees have the freedom to be flexible, they should also be
encouraged to be creative and adaptable. Decision making should be more
decentralized in a product differentiation strategy which allows managers to make
decisions and take actions that allow the focal firm to differentiate its products and/or
services through a high degree of responsiveness to customers.Managers and
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employees should unequivocally be given the freedom and encouragement to
experiment with new ideas.
Nirma has been a huge success story. It has a good hold into the FMCG market but
has been recently crowded out by HLL and other major players.In this following
part,I would be formulating a strategy for Nirma to stay afloat in the Fmcg market
Products
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• Nirma Beauty Soap
• Nirma Lime Fresh Soap
• Nima Rose
• Nima Sandal
• Nirma Washing Powder
• Nirma Detergent Cake
• Super Nirma Washing Powder
• Super Nirma Detergent Cake
• Nirma Popular Detergent Powder
• Nirma Popular Detergent Cake
• Nirma Shudh Iodized Salt
• Nirma Clean Dish Wash Bar
• Nima Bartan Bar
Market leadership in detergents and fabric wash and second largest player in
toilet soaps.
Weakness:
Lacks global tie-ups and thus finding it hard to tap export markets.
Strong and well differentiated brands like HLL occupying the market
Low technological prowess when compared with the major market players
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Opportunities:
There’s a great awareness and attractiveness towards herbal products. Nirma can tap
this potentially vast market.
Exports
Entry into other categories like shampoos, toothpastes and fabric whiteners.
Threats:
The rural market is getting empowered and has more disposable income.They like
to be associated with more Internationally known brands.This can severely cripple
Nirma in the near future
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TOWS MATRIX
STRENGTH(S) WEAKNESS(W)
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SO STRATEGIES
WO STRATEGIES
Nirma has to boost its presence in the premium FMCG segment like
shampoos,toothpaste etc by introducing premium products.Thiss can either with a
tieup with MNC or introduce its own premium,high priced products.In this way it can
challenge HLL & ITC.The perceived brand weakness due to the negative smearing by
competitiors can be tackled by introducing premium brand products and by roping in
Brand ambassadors who appeal across all segments of the society.Positive
Advertisements in order to tackle the perceived cheap brand weakness
ST STRATEGIES
Nirma is the market leader in detergents and the second largest player in toilet soap
market.It can effectively cut off the MNC trying to enter the market by offering
premium beauty soaps,introduce new products like toothpastes,shampoo.Using its
wide distribution network it can make sure that the products are always “consumer
ready”.Capitalize on the fast growing FMCG market and introduce more products to
the middle class consumer who are moving into an upward trend towards more
branded products
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WT STRATEGIES
A tieup with a Internationally known brand would definitely boost its image and
augur well to remove its low brand image amond the premium market.Introduce new
line of packaging and designing which would appeal to the mass market.Tieups to
export its products will definitely create new oppurtinities to expand while allowing it
to apply the learnt lesson to the Indian market.Introduce latest state of art technology
along with new product lines to take the majors like HLL,ITc at their own turf
STRATEGY:
Nirma’s strength has always been value for money. It has successfully managed to
defeat many MNC with this policy and at this turf.But the other companies have
quickly learnt from their mistakes and have differentiated their products to compete
with Nirma.Unfortunately Nirma has not been able to move upstream with their
products to the premium segments.To sum up,to stay competitive and stay as a major
player in the Fmcg market ,Nirma has to do the following as evident from the Tows
and Swot matrix.
Export products wherein the vast diaspora of Indians presents a huge market.
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Introduce new products like shampoos,toothpaste ,deodorants etc
Conclusion:
Nirma as a brand has been able to etch a niche for itself in the face of intense MNC
competition. It has not only emerged victorious in its core competency, detergents, but
has also successfully moved on into newer products. Nirma has two options to go
ahead first to concentrate only on bottom of pyramid and develop a huge
distribution network to reach to every corner of the country and other is to cater
to needs of growing middle class, which is a primary target customer of all the
companies. I believe if the above strategy is followed Nirma will be a strong
player in the Fmcg market for years to come.
References:
1. Strategic management from theory to Implementation-David Hussey 4th ed
2. Concepts in Strategic management and business policy(Thomas
L.Wheelan,J.David ( 9ed)
3. Strategic management an Integrated approach(CharlesW.L.Hill,Gareth
R.Jones 6 ed)
4. www.nirma.com
Word count:2300
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