Abstract

The Fast Moving Consumer Goods (FMCG) sector is very important for Indian economy. This sector touches every aspect of human life. The FMCG companies are now encashing that opportunity. the fact about the consumers that their income is increasing and the lifestyles are changing. There are as many middle-income households in the rural areas as there are in the urban.This paper focuses on understanding factors that purchase decision on FMCG sector.

Keywords : FMCG, purchase decision, SWOT, PEST Note: any correction or changes accepted..

Introduction
India has a diverse agro-climatic condition due to which there exists a wide-ranging and large raw material base suitable for food processing industries. India is the largest producer of livestock, milk, sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat and fruits & vegetables.As we are approaching to the twenty first century the FMCG product market is growing like a money plant in this world. Not only companies are gaining huge profit from these product sources but these products are also one of the main ingredients in our day today life. So the customer has to think and decide on the products which he is going to purchase because of the availability of the choices replicates variants in every section of the products. Now a days customer has a wide variety of choice while selecting FMCG, producer has to innovate additional values to the product that the product continues it presence in the market. Different factor governing the customer based on different product category like milk products, beverages, prepared dishes, Chocolates & Confectionaries, personal care, fabric care etc. This minor project consist of the response of different age group respondents who specifies their predetermined factors which drives them while purchasing The factors which drive them to buy the products are as under, Price, Availability, Brand name, Quantity, Quality, Packing, advertisement. Through this we can understand that the customers in the current scenario not only purchase the product based on the one quality that it contains. But they carefully analyze it and then go for the purchase. So knowing the customers attitude is important and what are the factors they considered when purchasing a product. So by this

project we can come to know the factors considered by a consumer while purchasing a FMCG product.

Fast Moving Consumer Goods (FMCG)

We regularly talk about things like butter, potato chips, toothpastes, razors, household care products, packaged food and beverages, etc. But do we know under which category these things come? They are called FMCGs. FMCG is an acronym for Fast Moving Consumer Goods, which refer to things that we buy from local supermarkets on daily basis, the things that have high turnover and are relatively cheaper. FMCGs constitute a large part of consumers budget in all countries. The retail sector for FMCGs in India is in the process of a drastic transformation. The transformation of the retail market is likely to have a longlasting impact on wholesale trade and the distribution of FMCGs as well. Traditional wholesalers are the most likely losers, because large retailers tend to buy directly from suppliers. The Indian FMCG sector is the fourth largest sector in the economy, with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well established distribution network, intense competition between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. FMCG are products that have a quick shelf turnover, at relatively low cost and don't require a lot of thought, time and financial investment to purchase. The margin of profit on every individual FMCG product is less. However the huge number of goods sold is what makes the difference. Hence profit in FMCG goods always translates to number of goods sold. Fast Moving Consumer Goods is a classification that refers to a wide range of frequently purchased consumer products including: toiletries, soaps, cosmetics, teeth cleaning products, shaving products, detergents, and other non-durables such as glassware, bulbs, batteries, paper products and plastic goods, such as buckets. Fast Moving is in opposition to consumer durables such as kitchen appliances that are generally replaced less than once a year. The category may include pharmaceuticals, consumer electronics and packaged food products and drinks, although these are often categorized separately. The term Consumer Packaged Goods (CPG) is used interchangeably with Fast Moving Consumer Goods (FMCG). Three of the largest and best known examples of Fast Moving Consumer Goods companies are Nestl, Unilever and Procter & Gamble. Examples of FMCGs are soft drinks, tissue paper, and chocolate bars. Examples of FMCG brands are Coca-Cola, Kleenex, Pepsi

and Believe. The FMCG sector represents consumer goods required for daily or frequent use. The main segments of this sector are personal care (oral care, hair care, soaps, cosmetics, and toiletries), household care (fabric wash and household cleaners), branded and packaged food, beverages (health beverages, soft drinks, staples, cereals, dairy products, chocolates, bakery products) and tobacco. The Indian FMCG sector is an important contributor to the country's GDP. It is the fourth largest sector in the economy and is responsible for 5% of the total factory employment in India. The industry also creates employment for 3 m people in downstream activities, much of which is disbursed in small towns and rural India. This industry has witnessed strong growth in the past decade. This has been due to liberalization, urbanization, increase in the disposable incomes and altered lifestyle. Furthermore, the boom has also been fuelled by the reduction in excise duties, de-reservation from the small-scale sector and the concerted efforts of personal care companies to attract the burgeoning affluent segment in the middle-class through product and packaging innovations. Unlike the perception that the FMCG sector is a producer of luxury items targeted at the elite, in reality, the sector meets the every day needs of the masses. The lower-middle income group accounts for over 60% of the sector's sales. Rural markets account for 56% of the total domestic FMCG demand. Many of the global FMCG majors have been present in the country for many decades. But in the last ten years, many of the smaller rung Indian FMCG companies have gained in scale. As a result, the unorganized and regional players have witnessed erosion in market share. History of FMCG in India In India, companies like ITC, HLL, Colgate, Cadbury and Nestle have been a dominant force in the FMCG sector well supported by relatively less competition and high entry barriers (import duty was high). These companies were, therefore, able to charge a premium for their products. In this context, the margins were also on the higher side. With the gradual opening up of the economy over the last decade, FMCG companies have been forced to fight for a market share. In the process, margins have been compromised, more so in the last six years (FMCG sector witnessed decline in demand).

Products and Categories:Personal Care, Oral Care, Hair Care, Skin Care, Personal Wash (soaps); - Cosmetics and toiletries, deodorants, perfumes, feminine hygiene, paper product; Household care fabric wash including laundry soaps and synthetic detergents, household cleaners, such as dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito

repellents, metal polish and furniture polish - Food and health beverages, branded flour, branded sugarcane, bakery products such as bread, biscuits, etc., milk and dairy products, beverages such as tea, coffee, juices, bottled water etc, snack food, chocolates, etc.

Top 10 FMCG Companies in India

1. Hindustan Unilever Ltd. 3. Nestle India 5. Dabur India 7. Cadbury India 9. Procter & Gamble Hygiene 2. ITC (Indian Tobacco Company) 4. GCMMF (FMCG) 6. Asian Paints (India) 8. Britannia Industries 10. Marico Industries

The factors which customer focuses while purchasing FMCG products are
Price QualityPacking Availability Advertisement Brand name Reference Quantity

Indian FMCG market size

(Source: IBEF FMCG Analysis) According to estimates based on China's current per capita consumption, the Indian FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. The dominance of Indian markets by unbranded products, change in eating habits and the increased affordability of the growing Indian population presents an opportunity to makers of branded products, who can convert consumers to branded products

Objective Of The Study

To study the factors determining the pre purchase decision. To study focusing SWOT & PEST analysis of FMCG To study the FMCG industry and its major players in India. To analyze the FMCG industrys contribution towards Indian economy. To study the trends of the FMCG industry in India.

Research Methodology
Types of research Type of data Data collected method Sample size Area of study Data analysis technique Data analysis tool descriptive Primary and secondary Structured questionnaire 100 Kumbakonam quantitative Bar chart, pie charts

SWOT analysis Of FMCG Sector

STRENGTHS: 1. Low operational costs 2. Presence of established distribution networks in both urban and rural areas 3. Presence of well-known brands in FMCG sector WEAKNESSES: 1. Lower scope of investing in technology and achieving economies of scale, especially in small sectors 2. Low exports levels 3. "Me-too" products, which illegally mimic the labels of the established brands, narrow the scope of FMCG products in rural and semi-urban market. OPPORTUNITIES: 1. Untapped rural market 2. Rising income levels i.e. increase in purchasing power of consumers 3. Large domestic market - a population of over one billion 4. Export potential 5. High consumer goods spending THREATS: 1. Removal of import restrictions resulting in replacing of domestic brands 2. Slowdown in rural demand. 3. Tax and regulatory structure

Structural Analysis Of FMCG Industry

Typically, a consumer buys these goods at least once a month. The sector covers a wide gamut of products such as detergents, toilet soaps, toothpaste, shampoos, creams, powders, food products, confectioneries, beverages, and cigarettes. Typical characteristics of FMCG products are: The products often cater to 3 very distinct but usually wanted for aspects - necessity, comfort, luxury. They meet the demands of the entire cross section of population. Price and income elasticity of demand varies across products and consumers. Individual items are of small value (small SKU's) although all FMCG products put together account for a significant part of the consumer's budget. The consumer spends little time on the purchase decision. He seldom ever looks at the technical specifications. Brand loyalties or recommendations of reliable retailer/ dealer drive purchase decisions. Limited inventory of these products (many of which are perishable) are kept by consumer and prefers to purchase them frequently, as and when required. Brand switching is often induced by heavy advertisement, recommendation of the retailer or word of mouth.

Product Characteristics
Products belonging to the FMCG segment generally have the following characteristics:

They are used at least once a month They are used directly by the end-consumer They are non-durable They are sold in packaged form

PEST analysis of Indian FMCG Political / Legal Factors

Tax reforms The government has gradually removed the restriction on imports of consumer goods in the country and also significantly reduced excise duties {25% in 91-92 to 15% in 01-02}. The domestic tax structure of these products, however, has not been rationalized to provide level playing field for competition this is adversely affecting the FMCG industry and could have far reaching adverse impact. The following taxation issues need urgent attention of the government: 1) Irrational domestic tax structure encouraging imports

Significant reduction in custom duty rates of the consumer goods has made imported products cheaper as compared to indigenously manufactured products, due to irrational domestic tax structure. For instant, goods manufacturing in India suffered for cascading effects of taxes on inputs as additional cost compared to imports. The cascading effects of sales tax and local levies on inputs used in domestic manufactured should be eliminated by providing either MODVAT credit or by introducing national VALUE ADDED TAX. Covering both central and state taxes on an urgent basis. Moreover, maximum retail price based excise duties levies on a large number of FMCG products. Countervailing duty in the same product when imported is charged on CIF value. The MRP base assessable for excise does not allow abatement for cost manufacturing costs such as advertising and selling expenses whereas CIF value considered for the purpose of import duty does not include costs of these elements incurred subsequently by imports. 2) Inverted duty structured for selected inputs Duty on certain raw material higher or the same as compared to finished products in which these materials are used. In addition custom duty, raw materials are also subject to sales tax and octroi and therefore total tax incidence and cost of indigenous goes up. The import duty on raw materials needs to be rationale so that it dose not exceed 60 to 70 percent of the duty on finished goods. 3) 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 reserve for the small-scale industries and with these SSI units enjoying tax incentives, the contract manufacturing route has grown in importance and popularity.

Economic Factors:
FMCG growth is directly linked to growth of Indian economy. The sector will be the biggest beneficiary when the economy turns around and rural demand picks up. This indicates immense potential for FMCG in India over the long term. Duty stagnant market in Urban India, rural market can be developed. This depends on the monsoon, as rural economy is heavily dependent on agriculture.

Sociocultural Factors:
Life style:

A considered part of rural population now has access to television and cable television and aspiration about life style are changing fast. Rural India accounts for over 70 percent of the countrys population. Income level: Income levels are low and consumers are highly price sensitive. Lower income and lower middle groups accounts for over 60 percent of the sectors sales. Local / unorganized players operating at low overheads will continue to give stiff competition.

Technological:
Basic technology for manufacturing is easily available. Also, technology for most products has been fairly stable. Modification / improvements rarely change the basic process. Nonetheless, major global players enormous sums on R&D due their ability to spread cost over the wider base of their global operations. Their R&D efforts are towards Cost effective manufacturing process without compromising on quality and functional performance. Research driven formulations, which give cutting edge. Standardize formulation, which can be used across countries.

Findings
1. It is found in the survey that females are the main decision maker for the FMCG products. As per the data, 65% of female and 35% of male makes purchase decision. 2. Based on the occupation of the customer, it is found in the survey that 65% are the housewives and 35% are from various occupations such as a businessman, employee, farmers, etc for the FMCG products. 3. The main purchasing factors for the FMCG products are Quality and Brand image. The data reveals that 42% influences on Quality and 32% influenced for the Brand. 4. 88% of the total respondents are using product since from a long time. The majority of the respondents are using FMCG products from more than 3 years. 5. It is found in the survey that customer are influencing through Word of Mouth

Conclusions
From the survey conducted it is observed that FMCG products have a good market share. From the study conducted the following conclusions can be drawn. The factors considered by the customer before purchasing FMCG products are freshness, taste, durability and easy availability. Finally I conclude that, majority of the customers are satisfied with the

FMCG products because of its good quality, reputation, easy availabilities. Some customers are not satisfied with the FMCG products because of high price, lack of availability, spoilage and low shelf life etc. therefore, if slight modification in the marketing programme such as dealers and outlets, promotion programmers, product lines etc., definitely company can be as a monopoly and strong market leader.

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