Project report On MARKETING IN FMCG SECTOR

Submitted for the partial fulfillment of the award Of

Master of Business Administration DEGREE

(Session 2011-2013)

SUBMITTED BY: Anurag kumar

ROLL No. 1103270028

UNDER THE GUIDANCE OF

Mrs. Amrita Singh School of Management ABES ENGINEERING COLLEGE GHAZIABAD

AFFILIATED T MAHAMAYA TECHNICAL UNIVERSITY, NOIDA

Candidates Declaration /Certificate

I Anurag Kumar declare that the work is being presented in this report entitledsMarketing in FMCG Sector is an Authentic record of my work carried out under the supervision of Mrs Amrita Singh.

The matter embodied in this report has been submitted by me for the award of any Other degree.

Dated:

ANURAG KUMAR MBA Department

This is certifying that the above statement made by the candidate are correct to the best of my knowledge .

PROF.RAKESH PASSI (Head of Department) Date

Ms. Amrita Singh Designation: Assistant professor Department: MBA Date..

ACKNOWLEDGEMENT
I express my sincere gratitude to my external guide Mr. Amit Kumar Pandey and for his guidance, continuous support and cooperation throughout my project without which my project would not have been possible. I pay my deep regards to my parents whose blessings have made this project a success.

I am extremely thankful to my respectable Prof. Rakesh Passi (HEAD OF DEPARTMENT) MBA, ABES Engineering College, Ghaziabad for allowing me to do summer training so that I could use my theoretical knowledge that I learned in classroom into practical knowledge. I would like to express my heartfelt gratitude & thank to Mr. Alok Singh (Asstt.Professor) MBA Department, ABES Engineering College, Ghaziabad for her proper guidance and support throughout this training project. I would like to thank each & every member of airtel family for making me feel comfortable & helping me in every possible manner.
I would also like to express my gratitude to every faculty member and all staff of my MBA department to provide me proper guidance from time to time to complete my Summer Training Project.

DATE: PLACE: Anurag Kumar

CONTENT

PART I
PageNo. Chapter I Introduction Need of study Scope of study Objective of study
1-20 21-22 23-24 25-26

PART II
Chapter II Research methodology Limitation Chapter III Descriptive study on subtopic of the study Chapter IV Data analysis & interpretation Chapter V
27-31 32-33

34-45

46-68

Conclusions & Suggestion Chapter VI Bibliography Chapter VII Appendices

69-72

73-77

78-84

PART

INTRODUCTION
Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. Indias FMCG sector is the fourth largest sector in the economy and creates employment for more than three million people in downstream activities and 14 million in total. The sub sectors of FMCG sector are Household Care, Personal Care and Food & Beverages. On the basis of price, FMCG goods are divided into three segments- low priced, mid-priced/ mass or popular and high-priced/ premium end. Typically the lower segments of the market drive volumes. The premium segment is less price-sensitive and more brand conscious.The total FMCG market is in excess of $ 28 billion. FMCG sector is growing at double digit growth rate of 15.4 per cent and is expected to maintain a high growth rate. FMCG is characterized by a well-established distribution network, low penetration levels, low operating cost, lower per capita consumption and intense competition between the organized and unorganized segments. Unlike other sectors, the FMCG industry did not slow down during recent recession. As it is meeting the every-day demands of consumers, it will continue to grow. Market share movements indicate that companies such as Marico Ltd and Nestle India Ltd, with domination in their key categories, have improved their market shares and outperformed peers in the FMCG sector. This has been also aided by the lack of competition in the respective categories. Single product leaders such as Colgate Palmolive India Ltd and Britannia Industries Ltd have also witnessed strength in their respective categories, aided by innovations and strong distribution. Strong players in the economy segment like Godrej Consumer Products Ltd in soaps and Dabur in toothpastes have also posted market share improvement, with revived growth in semi-urban and rural markets.
Major Segments Of The FMCG Industry

Household Lighting Care 2% 10% Tobacco 15% Food and Beverages 53% Personal Care 20%

Household Care: The detergents segment is growing at an annual growth rate of 10 to 11 per cent during the past five years. The local and unorganized players account for a major share of the total volume of the detergent market. The preference is given to detergents in urban area compared to bars. Household care segment is featured by intense competition and high level of penetration. With rapid urbanization, emergence of small pack size and sachets, the demand for the household care products is booming. In washing powder segment, HUL is the leader with ~38 per cent of market share. Other major players are Nirma, Henkel and Proctor & Gamble. India has an abundant supply of caustic soda and soda ash, the chief raw materials required in the production of soaps and detergents, which enables the household section of the industry to excel and grow. Personal Care Personal care segment includes personal wash products, hair care products, oral care products, cosmetics etc. The Indian skin care and cosmetics market is valued at $274 million and is dominated by HUL, Colgate Palmolive, Gillette India and Godrej. The coconut oil market accounts for 72 per cent share in the hair oil market. The hair care market can be segmented into hair oils, shampoos, hair colorants & conditioners, and hair gels. In the branded coconut hair oil market, Marico (with Parachute) and Dabur are the leading players. Sachet makes up to 40 per cent of the total shampoo sale. Again the market is dominated by HUL with around 47 per cent market share; P&G occupies second position with market share of around 23 per cent.Personal wash can be further segregated into three segments namely Premium, Economy and Popular. Here also, HUL is the leader with market share of 53 per cent; Godrej occupies second position with market share of 10 per cent. Swelling disposable

incomes of the Indian consumers, growth in rural demand and upgrading to the premium products are the key drivers for future demand growth in major FMCG categories. The skin care market is at a primary stage in India. With the change in life styles, increase in disposable incomes, greater product choice and availability, people are becoming more alert about personal grooming. The major players in this segment are Hindustan Unilever with a market share of 54 per cent, followed by CavinKare with a market share of 12 per cent and Godrej with a market share of 3 per cent. The oral care market can be segmented into toothpaste - 60 per cent; toothpowder - 23 per cent; toothbrushes - 17 per cent. This segment is dominated by Colgate-Palmolive with market share of 49 per cent, while HUL occupies second Dabur are the major players. Food and Beverages This segment comprises of the food processing industry, health beverage industry, bread and biscuits, chocolates & confectionery, Mineral Water and ice creams. The three largest consumed categories of packaged foods are packed tea, biscuits and soft drinks. Indian hot beverage market is a tea dominant market. The major share of tea market is dominated by unorganized players. Leading branded tea players are HUL and Tata Tea. Major players in food segment are HUL, ITC, Godrej, Nestle and Amul. Our country has a varied agro-climatic condition which enables to offer extended raw material base suitable for many FMCG sub sections like food processing industries etc.

Structure and Characteristic of FMCG Industry

Competition: The market of FMCG is very competitive and manufacturers are coming forward with the latest ideas and techniques to beat the competition and remain on the top. . There are top business giants taking lead and several hundred emerging companies trying hard to come forward and stand with leading FMCG producers. The easing of the trade barriers encouraged the MNCs to invest in the Indian market to cater to the needs of the consumers. The living standards rose in the urban sector due to high disposable income along with the rise in the purchasing power of the rural families which increased the sales volume of various manufacturers of the FMCG products in India. The large-scale companies such as HLL, Godrej Consumer, Marico, Henkel, Reckitt Benckiser and Colgate have targeted the

rural consumers and have also expanded their retail chain in the mid-sized towns and villages. On the contrary to this, Nestle has always targeted the market of urban India and focuses largely upon the value added products for the elite class or upper middle class population.

Branding: Creating strong brands is important for FMCG companies and they devote considerable money and effort in developing bands. With differentiation on functional attributes being difficult to achieve in this competitive market, branding results in consumer loyalty and sales growth. Leading FMCG firms like HUL, ITC, Nestle, Procter & Gamble and GlaxoSmithKline Healthcare which account for almost 70 per cent of FMCG revenues in the country spend almost 10 per cent of their turnover on advertising and brand promotion. The promotion strategy includes tying up with top actors and other celebrity brand ambassadors, besides going in for high-profile launches at leading retail mall and outlets. Distribution Network: Given the fragmented nature of the Indian retailing industry and the problems of infrastructure, FMCG companies need to develop extensive distribution networks to achieve a high level of penetration in both the urban and rural markets. Once they are able to create a strong distribution network, it gives them significant advantages over their competitors. The supply chain of products in the FMCG market in India is one of the longest supply chains an industry could really have. What has been observed is that even though these FMCG companies are big multinationals and Indian but face a major challenge of making their products available in the market in the right quantities and in the right time. This is simply because these companies dont really have a wide network of sales agents and other force which is required and is ideal for catering their products to the markets. This aspect is taken over by distributors, wholesalers and retailer whose margins on these products actually double the price of these products when a final consumer buys it. The products in this industry are transported from manufacturing units via c & f agencies or warehouse to distributors who further sell the same to wholesalers or stockiest who finally sell it to the retailers in the market. Contract manufacturing: As FMCG companies concentrate on brand building, product development and creating distribution networks, they are at the same time outsourcing their production requirements to third party manufacturers. Moreover, with several items reserved for the small scale industry and with these SSI units enjoying tax incentives, the contract

manufacturing

route

has

grown

in

importance

and

popularity.

Large unorganized sector: The unorganized sector has a presence in most product categories of the FMCG sector. Small companies from this sector have used their geographical advantages and regional presence to reach out to remote areas where large consumer products have only limited presence. Their low cost structure also gives them an advantage.

NEED OF THE STUDY

Every organization has to achieve its organization goals. For this it is very essential for an organization to know about the view of consumers and their competitive products. This survey research may be also aimed as to estimate potential buyer for the product. The need of the study is as under: To study the market share of fmcg sector. To study customer buying behavior and factors which influence the purchase decision Process. To know how the company has been successful in aggressive marketing. To suggest various measures of increasing the market share. To study the level of consumer satisfaction in fmcg product. To study the consumer preferences.

SCOPE OF THE STUDY

To conduct this research the target population was the mobile users, Who are using GSM technology. Targeted geographic area of Delhi/ NCR. Sample size of 50 persons was taken. To these 50 people a questionnaire was given, the questionnaire was a combination of both open ended and closed ended questions. The date during which questionnaires were filled. Some dealers were also interviewed to know their prospective. Interviews with the managers of GSM service providers were also conducted. Finally the collected data and information was analyzed and compiled to arrive at the conclusion and recommendations given

Sources of secondary data

Used to obtain information on, Vodafone & Bhartis history, current issues, policies Procedure and whatever required. Magazine Journals internet

OBJECTIVE OF STUDY
A study on various product offer by diffrent fmcg copanies and consumer respond toward these product

OBJECTIVE:
1. How people of different age group respond to Advertisement.

2. Positioning strategies use by fmcg companies and their impact on Customer. 3. To find out relative customer perception. 4. To find out which fmcg company have good product and what type of product customer like.

5. Role of fmcg goods on the buying behavior of the customer.

6. To Study the share fmcg sector

7. To study the marketing strategy of fmcg sector

8.To study the distribution channel used by the fmcg sector

RESEARCH METHODOLOGY
Achieving accuracy in any research requires a deep study regarding the subject. The prime objective of the research project is to know the marketing in fmcg sector . The research methodology adopted is basically based on primary data via which the most recent and accurate piece of first hand information could be collected. Secondary data has been used to support primary data wherever needed. Primary data was collected using the following techniques Questionnaire Method Direct Interview Method and Observation Method

The main tool used was, the questionnaire method. Further direct interview method, where a face-to-face formal interview was taken. Lastly observation method has been continuous with the questionnaire method, as one continuously observes the surrounding environment he works

TYPE OF REARCH METHODOLOGY

EXPLORATORY:
Type of Research carried out was Exploratory in nature. The objective of such research is to determine the approximate area where the drawback of the company lies and also to identify the course of action to solve it for the purpose the information provide useful for giving right suggestion to the company

DATA COLLECTION METHOD

There are two types of methods of Data Collection: PRIMARY DATA SECONDARY DATA

Primary data was collected using the following techniques Questionnaire Method Direct Interview Method and Observation Method

The main tool used was, the questionnaire method. Further direct interview method, where a faceto-face formal interview was taken. Lastly observation method has been continuous with the questionnaire method, as one continuously observes the surrounding environment he works in. DATA USED FOR THE RESEARCH WORK WAS PRIMARY IN NATURE.

PRIMARY DATA:
Primary data is that which is collected for the first time and thus happen to be originated in character.

QUESTIONNAIRE SURVEY:
In the studies a questionnaire is prepared. The Questionnaire consists of 15 Questions.

SECONDARY DATA
Secondary data refer to the data that has been already collected. The secondary data which has been used to carry out this study are as follows:

 Books, Journals, Magazines, Newspaper. Industry report Companys Internet Sites. some other relevant study material and Websites.

SAMPLE UNIT: - Raj nagar, Sanjaynagar, Navyug Market in Ghaziabad

The Research process was done by interacting with number of customer during the activities performed which included Market cold calling, Canopies, etc. Sample design consists of Random Sampling.

SAMPLE SIZE: - 50 PEOPLE

LIMITATION
The following were the limitation that were during the cource of the study

limited time period less number respondent

Primary data was collected using the following techniques

1. 2. 3.

questionnaire method direct interview method Observation method

The main tool used was ,the questionnaire method ,further direct interview method where a face to face formal interview was taken lastly observation method has been continuous with the questionnaire method as one continuously observes the sourcing environment the work in.

DESCRIPTIVE WORK ON SUBTOPIC OF STUDY

MARKET OVERVIEW
The overall picture of the corporate sector emerging after the first quarter result shows that the tempo of the Indian economys integrating into the global economy is gathering momentum at a rapid pace. This can be seen from the rise in outsourcing in the Information Technology (IT) and IT-based service sectors, growth in export-import trade and in global acquisitions. Rapid urbanization, increased literacy and rising per capita income, have all caused rapid growth and change in demand patterns, leading to an explosion of new opportunities. Consumption demand for consumer is increasing which can be seen from the improvement in the performance of the fast moving consumer goods (FMCG) companies.
FMCG Industry Trends and Players:-

Trends:Estimated at around US$ 14.5 billion (approximately Rs.69, 000 crores) in 2011, Indias fast moving consumer goods (FMCG) sector is the fourth largest industrial sector in the countrys expanding economy. It has a strong MNC presence and is characterised by a well established distribution network, intense competition between the organised and unorganised segments and low operational cost. Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. Another is the striking contrast between the rural and urban segments - the average consumption by rural households is much lower than their urban counterparts. Low

penetration indicates the existence of unsaturated markets, which are likely to expand as the income levels rise. This provides an excellent opportunity for the industry players in the form of a vastly untapped market. Moreover, per capita consumption in most of the FMCG categories (including the high penetration categories) in India is low as compared to both the developed markets and other emerging economies. A rise in per capita consumption, with improvement in incomes and affordability and change in tastes and preferences, is further expected to boost FMCG demand. Growth is also likely to come from consumer "upgrading", especially in the matured product categories. Most Indian FMCG companies focus on urban markets for value and rural markets for volumes. The total market has expanded from US$ 17.6 billion in 1992-93 to US$ 22 billion in 1998-99 at current prices. Rural demand constituted around 52.5 per cent of the total demand in 1998-99. Hence, rural marketing has become a critical factor in boosting bottomlines. As a result, most companies' have offered low price products in convenient packaging. These contribute the majority of the sales volume. In comparison, the urban elite consume a proportionately higher value of FMCGs, but not volume. PLAYERS: A distinct feature of the FMCG industry in India is the presence of domestic as well as global players through their subsidiaries (HUL, P&G, and Nestle).

Domestic Players:Britannia India Ltd (BIL):-

Britannia India Ltd was incorporated in 1918 as Britannia Biscuit Co Ltd and currently the Groupe Danone (GD) of France (a global major in the food processing business) and the Nusli Wadia Group hold a 45.3 per cent equity stake in BIL through AIBH Ltd (a 50:50 joint venture). BIL is a dominant player in the Indian biscuit industry, with major brands such as Tiger glucose, Marie gold, Fifty-Fifty, Good Day, Pure Magic, Bourbon etc. The company holds a 40 per cent market share in the overall organized biscuit market and has a capacity of 300,000 tonne per annum. Currently, the bakery product business accounts for 99.1 per cent of BIL's turnover. The company reported net sales of US$ 280 million in 2002-03. Britannia Industries Ltd (BIL) plans to increase its manufacturing capacity through outsourced contract manufacturing and a Greenfield plant in Uttaranchal to expand its share in the domestic biscuit and confectionery market.

Dabur India Ltd. :Established in 1884, Dabur India Ltd is the largest Indian FMCG and ayurvedic products company. The group comprises Dabur Finance, Dabur Nepal Pvt Ltd, Dabur Egypt Ltd, Dabur Overseas Ltd and Dabur International Ltd. The product portfolio of the company includes health care, food products, natural gums & allied chemicals, pharma, and veterinary products. Some of its leading brands are Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola, Lal Dant Manjan, Pudin Hara and the Real range of fruit juices. The company reported net sales of US$ 218 million in 2003-04. Dabur has firmed up plans to restructure its sales and distribution structure and focus on its core businesses of fast-moving consumer good products and over-the-counter drugs. Under the restructured set-up, the company plans to increase direct coverage to gap outlets and gap towns where Dabur is not present. A roadmap is also being prepared to rationalise the stockists' network in different regions between various products and divisions.

Indian Tobacco Corporation Ltd (ITCL);Indian Tobacco Corporation Ltd is an associate of British American Tobacco with a 37 per cent stake. In 1910 the company's operations were restricted to trading in imported cigarettes. The company changed its name to ITC Limited in the mid seventies when it diversified into other businesses. ITC is one of India's foremost private sector companies with a turnover of US$ 2.6 billion. While ITC is an outstanding market leader in its traditional. Businesses of cigarettes, hotels, paperboards, packaging and agriexports, it is rapidly gaining market share even in its nascent businesses of branded apparel, greeting cards and packaged foods and confectionary. After the merger of ITC Hotels with ITC Ltd, the company will ramp up its growth plans by strengthening its alliance with Sheraton and through focus on international projects in Dubai and the Far East. ITC's subsidiary, International Travel House (ITH) also aims to launch new products and services by way of boutiques that will provide complete travel services.

Marico
Marico is a leading Indian Group incorporated in 1990 and operating in consumer products, aesthetics services and global ayurvedic businesses. The company also markets food products and distributes third party products. Marico owns well-known brands such as Parachute, Saffola,

Sweekar, Shanti Amla, Hair & Care, Revive, Mediker, Oil of Malabar and the Sil range of processed foods. It has six factories, and sub-contract facilities for production. In 2003-04, the company reported a turnover of US$ 200 million. The overseas sales franchise of Marico's branded FMCG products is one of the largest amongst Indian companies. It is also the largest Indian FMCG company in Bangladesh. The company plans to capture growth through constant realignment of portfolio along higher margin lines and focus on volume growth, consolidation of market shares, strengthening flagship brands and new product offerings (2-3 new product launches are expected in 2004-05). It also plans to expand its international business to Pakistan.

Nirma Limited
Nirma Ltd, promoted by Karsanbhai Patel, is a homegrown FMCG major with a presence in the detergent and soap markets. It was incorporated in 1980 as a private company and was listed in fiscal 1994. Associate companies' Nirma Detergents, Shiva Soaps and Detergents, Nirma Soaps and Detergents and Nilnita Chemicals were merged with Nirma in 1996-1997. The company has also set up a wholly owned subsidiary Nirma Consumer Care Ltd, which is the sole marketing licensee of the Nirma brand in India. Nirma also makes alfa olefin, fatty acid and glycerine. Nirma is one of the most successful brands in the rural markets with extremely low priced offerings. Nirma has plants located in Gujarat, Madhya Pradesh and Uttar Pradesh. Its new LAB plant is located in Baroda and the soda ash complex is located in Gujarat. Nirma has strong distributor strength of 400 and a retail reach of over 1 million outlets. The company reported gross sales of US$ 561 million in 2003-04. It plans to continue to target the mid and mass segments for future growth.

Foreign players;Cadbury India Ltd (CIL):Cadbury Indian Ltd is a 93.5 per cent subsidiary of Cadbury Schweppes Plc, UK, a global major in the chocolate and sugar confectionery industry. CIL was set up as a trading concern in 1947 and subsequently began its operations with the small scale processing of imported chocolates and food drinks. CIL is currently the largest player in the chocolate industry in India with a 70 per cent market share. The company is also a key player in the malted foods, cocoa powder, drinking chocolate, malt extract food and sugar confectionery segment. The

company had also entered the soft drinks market with brands like 'Canada Dry' and 'Crush', which were subsequently sold to Coca Cola in 1999. Established brands include Dairy Milk, Perk, Crackle, 5 Star, clairs, Gems, Fructus, Bournvita etc. The company reported net sales of
US$ 160 million in 2003. The company plans to increase the number of retail outlets for future growth and market expansion.

Cargill;Cargill Inc is one of the world's leading agri-business companies with a strong presence in processing and merchandising, industrial production and financial services. Its products and geographic diversity (over 40 product lines with a direct presence in over 65 countries and business activities in about 130 countries) as well as its vast communication and transportation network help optimize commodity movements and provide competitive advantage. Cargill India was incorporated in April 1996 as a 100 per cent subsidiary of Cargill Inc of the US. It is engaged in trading in soyabean meals, wheat, edible oils, fertilisers and other agricultural commodities besides marketing branded packaged foods. It has also set up its own anchorage facilities at Rosy near Jamnagar in Gujarat for efficient handling of its import and export consignments.

Coca Cola:Coca-Cola started its India operations in 1993. The Coca-Cola system in India comprises 27 wholly company-owned bottling operations and another 17 franchisee-owned bottling operations. A network of 29 contract-packers also manufactures a range of products for the company. Leading Indian brands Thums Up, Limca, Maaza, Citra and Gold Spot exist in the Company's international family of brands along with Coca-Cola, Diet Coke, Kinley, Sprite and Fanta, plus the Schweppes product range. During the past decade, the Coca-Cola system has invested more than US$ 1 billion in India. In 2003, Coca-Cola India pledged to invest a further US$ 100 million in its operations. ColgatePalmolive India Colgate Palmolive India is a 51 per cent subsidiary of Colgate Palmolive Company, USA. It is the market leader in the Indian oral care market, with a 51 per cent market share in the toothpaste segment, 48 per cent market share in the toothpowder market and a 30 per cent share in the toothbrush market. The company also has a presence in the premium toilet soap segment and in shaving products, which are sold under the Palmolive brand. Other wellknown consumer brands include Charmis skin cream and Axion dish wash. The company reported sales of US$ 226 million in 2003-04. The company's strategy is to focus on growing volumes by improving penetration through aggressive campaigning and consumer promotions. The company plans to launch new products in oral and personal care segments and is prepared to continue spending on advertising and marketing

to gain market share. Margin gains are being targeted through efficient supply chain management and bringing down cost of operations.

H J Heinz Co. ;A US$ 8.4 billion American food major, H J Heinz Co comprises 4,000 strong brand buffet in infant food, sauces and condiments. The company was the first to commence manufacturing and bottling of tomato ketchup in 1876. In India, Heinz has a presence through its 100 per cent subsidiary Heinz India Pvt Ltd. Heinz acquired the consumer products division of pharmaceutical major Glaxo in 1994. Heinz's product range in India consists of Complan milk beverage, health drink Glucon-D, infant food Farex and Nycil prickly heat powder, besides the Heinz ketchup range.

Hindustan Unilever Ltd (HUL);Hindustan Unilever Ltd is a 51 per cent owned subsidiary of the Anglo-Dutch giant Unilever, which has been expanding the scope of its operations in India since 1888. It is the country's biggest consumer goods company with net sales of US$ 2.4 billion in 2003. HUL is amongst the top five exporters of the country and also the biggest exporter of tea and castor oil. The product portfolio of the company includes household and personal care products like soaps, Detergents, shampoos, skin care products, colour cosmetics, deodorants and fragrances. It is also the market leader in tea, processed coffee, branded wheat flour, tomato products, ice cream, jams and squashes. HUL enjoys a formidable distribution network covering over 3,400 distributors and 16 million outlets. In the future, the company plans to concentrate on its herbal health care portfolio (Ayush) and confectionary business (Max). Its strategy to grow Includes focussing on the power brands' growth through consumer relevant information, cross category extensions, leveraging channel opportunities and increased focus on rural growth.

Nestle India Ltd (NIL);Nestle India Ltd a 59.8 per cent subsidiary of Nestle SA, Switzerland, is a leading manufacturer of food products in India. Its products include soluble coffee, coffee blends and teas, condensed milk, noodles (81 per cent market share), infant milk powders (75 per cent market share) and cereals (80 per cent market share). Nestle has also established its presence in chocolates, confectioneries and other processed foods. Soluble beverages and milk products are the major contributors to Nestle's total sales. Some of Nestle's popular brands are Nescafe, Milkmaid, Maggi and Cerelac. The company has entered the chilled dairy segment with the launch of Nestle Dahi and Nestle Butter. Nestle has

also made a foray in non-carbonated cold beverages segment through placement of Nestea iced tea and Nescafe Frappe vending machines. Exports contribute to 23 per cent of its turnover and the company reported net sales of US$ 440 million in 2003.

Pepsi Co. :PepsiCo is a world leader in convenient foods and beverages, with revenues of about US$ 27 billion. PepsiCo brands are available in nearly 200 markets across the world. The company has an extremely positive outlook for India. "Outside North America two of our largest and fastest growing businesses are in India and China, which include more than a third of the world's population" (Pepsico's annual report). PepsiCo entered India in 1989 and is concentrating on three focus areas - soft drink concentrate, snack foods and vegetable and food processing. PepsiCo's success is the result of superior products, high standards of performance and distinctive competitive strategies.

Procter & Gamble Hygiene and Health Care Limited

Richardson Hindustan Limited (RHL), manufacturer of the Vicks range of products, was rechristened 'Procter & Gamble India' in October 1985, following its affiliation to the 'Procter & Gamble Company', USA. Procter & Gamble Hygiene and Health Care Limited (PGHHCL) acquired its current name in 1998, reflecting the two key segments of its business. P&G, USA has a 65 per cent stake in PGHHCL. The parent also has a 100 per cent subsidiary, Procter & Gamble Home Products (PGHP). The overall portfolio of the company includes healthcare; feminine-care; hair care and fabric care businesses. PGHH operates in just two business segments Vicks range of cough & cold remedies and Whisper range of feminine Hygiene. The detergent and shampoo business has been relocated globally to Vietnam. The company imports and markets most of the products from South East Asian countries and China, while manufacturing, marketing and export of Vicks and sanitary napkins has been retained in India. The company reported sales of US$ 91 million in 2002-03. The parent company has announced its plan to explore further external collaborations in India to meet its global innovation and knowledge needs.

PEST ANALYSIS OF FMCG SECTOR

Economic Political
ecological/environmental issues current legislation home market future legislation European/international legislation regulatory bodies and processes government policies government term and change trading policies funding, grants and initiatives home market lobbying/pressure groups international pressure groups home economy situation home economy trends overseas economies and trends general taxation issues taxation specific to

product/services seasonality/weather issues market and trade cycles specific industry factors market routes and distribution trends customer/end-user drivers interest and exchange rates

Social
lifestyle trends demographics consumer attitudes and opinions media views law changes affecting social factors brand, company, technology image consumer buying patterns fashion and role models major events and influences buying access and trends ethnic/religious factors

Technological
competing development research funding associated/dependent technologies replacement technology/solutions maturity of technology manufacturing capacity information and communications maturity and technology

advertising and publicity

consumer mechanisms/technology

buying

technology legislation innovation potential technology access, licencing.

Growth Prospects of FMCG Sector

Rise in 2007, boosting purchasing power in the countryside. However, the demand in urban areas would be the key growth driver over the long term. Also, increase in the urban population, along with increase in income levels and the availability of new With the presence of 12.2% of the world population in the villages of India, the Indian Urban FMCG market is something no one can overlook. Increased focus on farm sector will boost Urban incomes, hence providing better growth prospects to the FMCG companies. Better infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit from growing demand in the market. Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth. And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the

consumers to branded products and offer new generation products, they would be able to generate highis growth in the near future. It is expected that the Urban income will categories, would help the urban areas maintain their position in terms of consumption. At present, urban India accounts for 66% of total FMCG consumption, with Urban India accounting for the remaining 34%. However, Urban India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care, and hot beverages. In urban areas, home and personal care category, including skin care, household care and feminine hygiene, will keep growing at relatively attractive rates. Within the foods segment,

it is estimated that processed foods, bakery, and dairy are long-term growth categories in both Urban and urban areas. Indian Competitiveness and Comparison with the World Markets: The following factors make India a competitive player in FMCG sector: 1. Availability of raw materials Because of the diverse agro-climatic conditions in India, thise is a large raw material base suitable for food processing industries. India is the largest producer of livestock, milk, sugarcane, coconut, spices and cahew and is the second largest producer of rice, wheat and fruits &vegetables. India also produces caustic soda and soda ash, which are required for the production of soaps and hair remover s. The availability of these raw materials gives India the location advantage.
2. Labor cost comparison

Low cost labor gives India a competitive advantage. India's labor cost is amongst the lowest in the world, after China & Indonesia. Low labor costs give the advantage of low cost of production. Many MNC's have establihed their plants in India to outsource for domestic and export markets.

4.Presence across value chain Indian companies have their presence across the value chain of FMCG sector, right from the supply of raw materials to packaged goods in the foodprocessing sector. This bveetgs India a more cost competitive advantage. For example, Amul supplies milk as well as dairy products like cheese, butter, etc.

Top Players in FMCG Sector

1Hindustan lever limited (HLL)

1. ITC (Indian Tobacco Company) 2. Reckitt Benkiser (India) 3. GCMMF (AMUL) 4. Dabur India

5. Dabur India 6. Asian Paints (India) 7. Cadbury India 8. Britannia Industries 9. Procter & Gamble Hygiene & Health Care 10. Marico Industries Secondary Players 1. Colgate-Palmolive (India) Ltd. 2. Godrej Consumers Product Ltd.

3. Nirma Ltd. 4. Tata Toilet cleaner Ltd. 5. Parle Agro 6. H. J. Heinz

GROTH POTENTIOL IN FMCG

Indias FMCG sector is the fourth largest sector in the economy and creates employment for more than three million people in downstream activities. Its principal constituents are Household Care, Personal Care and Food & Beverages. The total FMCG market is in excess of Rs. 85,000 Crores. It is currently growing at double digit growth rate and is expected to maintain a high growth rate. FMCG Industry is characterized by a well established distribution network, low penetration levels, low operating cost, lower per capita consumption and intense competition between the organized and unorganized segments. Market share movements indicate that companies such as Marico Ltd and Nestle India Ltd, with domination in their key categories, have improved their market shares and outperformed peers in the FMCG sector. This has been also aided by the lack of competition in the respective categories. Singleproduct leaders such as Colgate Palmolive India Ltd and Britannia Industries Ltd have also witnessed strength in their respective categories, aided by innovations and strong distribution. Strong players in the economy segment like Godrej Consumer Products Ltd in soaps and Dabur in toothpastes have also posted market share improvement, with revived growth in semi-urban and rural markets. Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples and Dabur in toothpastes have also posted market share improvement, with revived growth in semi-urban and rural market of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well

as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars.

Indias FMCG sector is the fourth largest sector in the economy and creates employment for more than three million people in downstream activities. Its principal constituents are Household Care, Personal Care and Food & Beverages. The total FMCG market is in excess of Rs. 85,000 Crores. It is currently growing at double digit growth rate and is expected to maintain a high growth rate. FMCG Industry is characterized by a well established distribution network, low penetration levels, low operating cost, lower per capita consumption and intense competition between the organized and unorganized segments. Market share movements indicate that companies such as Marico Ltd and Nestle India Ltd, with domination in their key categories, have improved their market shares and outperformed peers in the FMCG sector. This has been also aided by the lack of competition in the respective categories. Singleproduct leaders such as Colgate Palmolive India Ltd and Britannia Industries Ltd have also witnessed strength in their respective categories, aided by innovations and strong distribution. Strong players in the economy segment like Godrej Consumer Products Ltd in soaps