A role of Sales Promotion in Fast moving consumer

goods
INTRODUCTION
In todays world market the people are more insist for consumer goods.
Consumer goods are those goods which are entailing for human life in daily use. So demand
for those goods also increasing day by day. These goods are essential for human life. There
are many industries those who are like to produce such types of goods which are essential to
consumer in his day to day life. Industries or companies however, provides such products are
initially known as, Fast Moving Consumer Goods i.e. FMCG industries. These companies
produce such types of goods which are require in human day to day life such as bath soap,
toothpaste, hair oil, detergent etc. 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. 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.. The Rs 85,000-crore Indian FMCG industry
is expected to register a healthy growth in the third quarter of 2010-11 despite the economic
downturn.
In simple words, the more loyal the customers, the higher the customer equity

OBJECTIVES OF THE STUDY

1. To study the concept of FMCG i.e. Fast Moving Consumer Goods.

2. To study consumer preferences with respect to sales promotion in
FMCG sector.

3. To study the sales promotional strategies.

4. To study and analyze FMCG sector with SWOT analysis.
5. To study how the FMCG improves marketing productivity through
sales promotion activities.

6. To study the relationship with consumer maintained by FMCG with the

help of sales promotional strategies.
7. To study the factors influencing consumer oriented sales promotion.
8. To study the factors influencing Trade oriented sales promotion.
9. To study the effect of sales promotion activities on FMCG sector.
10. To study consumer behaviour in purchase of soaps and detergent.

PRODUCT CATEGORIES UNDER

STUDY

DETERGENTS:

Washing Powder for Clothes

TOILETERIES:

Soaps

RESEARCH METHODOLOGY

Primary Data :Primary data could be collected through survey method as well as questionnaire
method and personal interviews with certain consumers who are likely to use the
consumer goods as per company goodwill in their mind. Type of structured
questionnaire is open ended and closed ended.

Secondary Data :Secondary data would be collected from books, newspaper, articles, internet,
magazines, journal etc.

SAMPLING DETAIL
1. Target population:

The population for this research study consists of the

residence of Kalyan.
2. Sampling unit: In this study the sampling unit is individual consumer.

3. Sampling method:

Sample is selected by using convenience-sampling method.

LIMITATIONS OF THE STUDY

We considered Kalyan region only because of limited time duration.

Due to this, our sample size is only 100, which is not very large.

All the respondents could not fill their questionnaire on their own due to
language problem and also problem of time and lack of positive behaviour.

Respondent may give biased answer due to some lack of information about
other brands.

Findings of the study are based on the assumption that the respondents have
given correct information.

CHAPTER SCHEME

1. Introduction
Page8-10

I. Concept & definition

II. Characteristics of FMCG Product
III. Objective of the study
IV. Methodology and Sampling details

2. An overview of FMCG Sector and some FMCG companies.

Page11 14

3. An overview of Sales Promotion concept.

Page15 26

4. Sales promotional strategies

Page27 30

5. SWOT Analysis and Impact of Promotions

Page31 34

6. Data Analysis of the survey

Page35 65

7. Finding, Recommendation and Conclusion

Page66 71

8. Annexure, Questionnaire
Page72 81

Bibliography

Page83

INTRODUCTION

CONCEPT & DEFINITION

The term FMCG (fast moving consumer goods), although popular and frequently
used does not have a standard definition and is generally used in India to refer to
products of everyday use. Conceptually, however, the term refers to relatively fast
moving items that are used directly by the consumer. Thus, a significant gap exists
between the general use and the conceptual meaning of the
One of the factors on which the turnaround depends is the purchase cycle.
However, the purchase cycle for the same product tend to vary across population
segments. Many low-income households are forced to buy certain products more
frequently because of lack of liquidity and storage space while relatively high-income

households buy the same products more infrequently. Similarly, the purchase cycle also
tends to vary because of cultural factors. Most Indians, typically, prefer fresh food
articles and therefore to buy relatively small quantities more frequently. This is in sharp
contrast with what happens in most western countries, where the practice of buying and
socking foods for relatively longer period is more prevalent.

CHARACTERISTICS OF FMCG PRODUCT

Individual items are of small value. But all FMCG products put together account
for a significant part of the consumer's budget.
The consumer spends little time on the purchase decision. Rarely does he/she look
for technical specifications (in contrast to industrial goods). Brand loyalties or
recommendations of reliable retailer/dealer drive purchase decisions.
Trial of a new product i.e. brand switching is often induced by heavy
advertisement, recommendation of the retailer or neighbours/friends.

OBJECTIVE OF THE STUDY

1. To study consumer preferences with respect to sales promotion in FMCG sector.

2. To examine tradeoffs, relative importance of different attributes while responding to

a sales promotion offer.
3. To study the effect of sales promotions in FMCG sector esp. in soaps and detergent
industry.
4. To study consumer behaviour in purchase of soaps and detergent

METHODOLGY AND SAMPLING DETAILS

Research design selected for this project is Descriptive.

Data collection Method:

(a) Primary Data Collection Method:
Survey method was used for primary data collection.
We used questionnaire as an instrument for survey method.
Structured questionnaire.
Type of questionnaire: Open ended and closed ended.

(b)

Secondary Data Collection method:

Reference books.

Internet.

Articles, Magazines and Journals

Sampling Detail
1. Target population:
the

The population for this research study consists of

residence of Kalyan.

2. Sampling unit:

In this study the sampling unit is individual

consumer.
3. Sampling method:

Sample is selected by using convenience-sampling

method.

AN OVERVIEW OF FMCG SECTOR AND SOME

FMCG COMPANIES.

FMCG SECTOR
Individual require goods which are require daily in their life. Those goods are called

as consumer goods which can be produce by FMCG companies. These companies produce
consumer goods, sell those goods into consumer market and makes huge amount of profit.
These goods include such goods which the people required in their day to day life for e.g.
hair oil, toothpaste, shaving cream, soap, detergent etc.
FMCG stands for Fast Moving Consumer Goods which is also known as consumer
packaged goods (CPG). FMCG products are relatively small but in generally include a wide
range of frequently purchased consumer products such as soap, cosmetics etc. as well as

other non-durable such as glassware, bulbs, batteries, paper product and plastic goods.
FMCG may also include pharmaceuticals, consumer electronic, packaged food products and
drinks, although these are often categorized separately.. In short, FMCG provides such goods
or consumer market sells those goods which are daily required in human life. Broadly
speaking most of the companies using Marketing Mix which includesPrice, Place
(Channel of Distribution)Product Promotion.

SOME TOP TEN FMCG COMPANIES

Hindustan Unilever Ltd.:

It is a leading name in India in producing personal and healthcare products. The
company was awarded the Golden Super Star Trading Company status from the
Government of India.

Dabur India Ltd.:

Dabur India produces a variety of healthcare products and enjoys a turnover of
approximately INR 1899 crores.

Indian Tobacco Company:

ITC is in existence since 1910 and has diversified its business in producing a variety of
consumer goods. The company is known for ensuring the highest level of employee
satisfaction.

Nestle India:
It started its journey in 1912 as an Anglo-Swiss collaboration for
condensed milk export. It produces a variety of dairy products of
international standard.

Amul:
This is the first co-operative milk marketing initiative in India. Currently, it is the
market leader in producing milk, butter, cheese, ghee, chocolates, ice cream and other
dairy items.

Cadbury India:
Cadbury is synonymous with chocolates in India. But apart from chocolates, the
company also manufactures other food and health drink products like Bourn-vita.

Procter & Gamble Hygiene and Health Care:

The product range of P&G comprises personal care products, pet foods and variety of
domestic cleaners.

Britannia Industries:
Britannia is known for manufacturing varieties of biscuits, cookies and also milk,
cheese, butter, ghee etc and enjoys all India market.

Colgate Palmolive:
It is a trusted name in India for personal care, home care, pet care and oral care
products. Colgate is named as Indias Most Trusted Brand in 2011 in the survey
conducted by Nielson.

AN OVERVIEW OF SALES PROMOTION

CONCEPT

CONCEPT OF SALES PRMOTION

Traditionally, sales Promotions have been used by marketer to increase sales in

the short term. However, in the last few decades this communication tool has evolved and
now is considered from a strategic point of view. For this reason, it is necessary to realize
new studies in this area and study how consumers evaluate sales promotions. Sales
promotions have grown in both importance and frequency over the past few decades.
Although an accurate estimate for total sales promotions expenditures does not exist, we
can be sure that the trend is up. Sales promotion serves three essential roles: It informs,

persuades and reminds prospective customers about a company and its products. Even the
most useful product or brand will be a failure if no one knows that it is available. As we
know, channels of distribution take more time in creating awareness because a product has
to pass through many hands between a producer and consumers.

CONSUMER ORIENTED SALES PROMOTION

Consumer Oriented Sales Promotion is the main topic of this project. Here emphasize
is given to motivate consumer to increase sales. Consumer Oriented Sales Promotion
includes Sampling, Couponing, Premiums, Contest, Refunds, Rebates, Bonus Packs, Priceoff, Event marketing etc.
Definition: Kotler defines sales promotion as: Sales promotion consists of a diverse
collection of incentive tools, mostly short-term designed to stimulate quicker and/or greater
purchase of particular products/services by consumers or the trade.

Tools of Consumer Oriented Sales Promotion:

There are so many tools or technique available to the marketers for
achieving objective of sales promotion. These tools should be used

considering all other factors affecting such as cost, time, competitors,

availability of goods etc. These tools are as under
1. Coupons
2. Price-Off
3. Freebies
4. Scratch Cards
5. Lucky Draws
6. Bundling Offer
7. Extra Quantity
Lets have look at each tool
1.

Coupons:
Coupon is the oldest and most widely used way of sales promotion.
Coupons have been used since 1895. It is mostly used by packaged
goods. It is worthwhile to use coupon as a promotion tool because
data shows that market for packaged goods increased from 16
billion in 1968 to 310 billion in 1994. To boost up the sales not only
manufacturer but retailers personally can also used. A coupon leads
to price reductions so as to encourage price sensitive customers.
Non users can try a product which may leads to regular sales.

2. Price-off:
A price-off is simply a reduction in the price of the product to
increase sales and is very often used when introduction a new
product. A reduction in price always increases sales but the use of
this technique should be carefully considered in the current market

situation. Price-off is the most preferred sales promotion technique

because consumers response very positively to this scheme. Not
only that but it also cause large increase in sales volume. E.g.
Krack Jack offers 30% Price-off.
3.

Freebies:
Freebies are a popular form of modern marketing and are some of
the best things about the internet. The definition of freebies is
products or services given away for free at no cost to the
consumer. Well thats the definition we came up with. I am a
bargain freebie shopper, pretty much going for any free product
and informing everyone about it. At different times, big and small
companies often give away prizes and money which is too good to
be true. Often its in the pursuit of more customers or a larger fan
base and it often works.

4.

Scratch Cards

A scratch card (also called a scratch off, scratch ticket, scratcher,

scratchie, scratch-it, scratch game, scratch-and-win or instant
game) is a small token, usually made of cardboard, where one or
more areas contain concealed information: they are covered by a
substance that cannot be seen through, but can be scratched off.

5.

Bundling Offers
Product bundling is a marketing strategy that involves offering
several products for sale as one combined product. This strategy is
very common in the software business (for example: bundle a word
processor, a spreadsheet, and a database into a single office suite),
in the cable television industry (for example, basic cable in the
United States generally offers many channels at one price),

SALES PROMOTION STRATEGY

CONCEPT
Sales promotions are specific efforts that are designed to have an immediate impact on

sales. It refers to many kinds of incentives and techniques directed towards consumers and

traders with the intention to produce immediate or short-term sales effects. For example,
buy one get on free, introductory offers etc.
There are three types of sales promotion strategies:

Push Strategy:
A push sales promotion strategy involves pushing distributors and retailers to sell
your products and services to the consumer by offering various kinds of promotions
and personal selling efforts. What happens here is that a company promotes their
product/services to a reseller who in turn promotes it to another reseller or to the
consumer. The basic objective of this strategy is to persuade retailers, wholesalers and
distributors to carry your brand, give it shelf space, promote it by advertising, and
ultimately push it forward to the consumer. Typical push sales promotion strategies
include; buy-back guarantees, free trials, contests, discounts ,and specialty advertising
items.

Pull Strategy:
A pull sales promotion strategy focuses more on the consumer instead of the reseller
or distributor. This strategy involves getting the consumer to pull or purchase the
product/services directly from the company itself. This strategy targets its marketing
efforts directly on the consumers with the hope that it will stimulate interest and

demand for the product. This pull strategy is often used when distributors are reluctant
to carry or distribute a product. Typical pull sales promotion strategies include;
samples, coupons, cash refunds or rebates, loyalty programs and rewards, contests,
sweepstakes, games, and point-of-purchase displays.

A Combination of Two Strategies:

A combination sales promotion strategy is just that; it is a combination of a push and a
pull strategy. It focuses both on the distributor as well as the consumers, targeting both
parties directly. It offers consumer incentives side by side with dealer discounts.

SWOT ANALYSIS AND IMPACT OF

PROMOTIONS

SWOT ANALYSIS OF FMCG SECTOR

Strengths:

 Well-established distribution network extending to rural areas.

Strong brands in the FMCG sector.
Low cost operations.

Weaknesses:
Low export levels.
Small-scale sector reservations limit ability to invest in
technology and achieve economies of scale.
Several "me-too products.

Opportunities:
Large domestic markets.
Export potential.
Increasing income levels will result in faster revenue growth..
Untapped rural market
High consumer goods speding

Threats:

 Removal

of

import

restrictions

resulting

in

domestic brands.
Tax and regulatory structures.
Slowdown in rural demand.

DATA ANALYSIS OF THE SURVEY

DATA ANALYSIS OF CONSUMER

replacing

of

Q1. Which brand of Soap / Detergent do you use?

Bathing
soaps

Responde
nts

Lux

41

Hamm

Lifebuoy

14

Nima

Others

34

Bathing soaps
50
40
30
20
10
0
Respondents

Lux

Hamam

Lifebuoy

Nima

Others

41

14

34

Interpretation:
The above question has been formed to know the soaps and detergents at the top of the
mind of the customers. It shows those consumers purchase and use of that particular brand.
It will help to the company to know the market scenario and the major brands in the market.

Form the above result it is clear that out of 100 customers more than 40 are consumers
are having the same brand as the image in their mind, whereas others category is also
showing the higher graph than these 3 major players(Hamam, Lifebuoy, Nima).
Detergent
powder

Responde
nts

Nirma supper

19

Wheel

14

Surf

35

Ariel

18

Others

14

Detergent Powder
40
35
30
25
20
15
10
5
0

Nirma sup

Wheel

Surf

Ariel

Othres

19

14

35

18

14

Respondents

Interpretation:

Form the above result it is clear that out of 100 customers 35 are
purchasing the same brand of detergent, whereas all others are on same
level.

Q2. Do you always buy the same brand of Soap / Detergent?

Particulars

Responde
nts

Yes

56

No

44

Brand loyal
60
50
40
30
20
10
0
Respondents

Yes

No

56

44

Interpretation:
The objective behind the formation of this question is to know
the level of brand loyalty of the consumers towards the brands of soaps
available in the market. The above figure shows that on 56% of the
respondents are loyal to their brands of detergent/soap. FMCG are such a
market where the level of loyalty remains low and this is because of
many reasons.

Q3.

Which factors do you normally consider while purchasing a

particular brand of Soap / Detergents?

Factors

Bathing
soap

Det.powder

Fragrance

19

18

Quality

33

36

Company
image

16

13

Price

23

19

Packaging

11

Others

Factors affecting purchase behaviour

40
30
20
10
0
Fragrance

Quality

Company
Image

Price

Packaging

Others

Bathing soap

19

33

16

23

Det.powder

18

36

13

19

11

Interpretation:
The objective behind this question is to know the effect of
influencing factors in the purchase decision of the soaps and detergent
powders. It mainly contains the factors like, quality which players an
important role in the purchase decision of the soaps and detergents
both. If we look at the graph of the soaps and detergent it shows quality
as the most influencing factors in the purchase decision while price is

also an important for purchase decision. their new products in the market
with which schemes.

DATA ANALYSIS OF RETAILERS

Q1. Since how long are you in this business?

Particulars

Respondents

1-5 Years

24

5-10 Years

27

More than 10
years

49

60
50
40
30
20
10
0

1-5 Years

5-10 Years

More than 10 years

24

27

49

Respond

Interpretation:

This question gives idea about the benefit to the retailers who
are on the market from long period of time and the benefits they are
getting more as compare to others. It also shows their experience in the
field and the services they are providing too their new and regular
customers..

Q 2. Name the Soap / Detergent (Company) you stock for.

Companies

Responde
nts

Nirma

96

HUL

100

P&G

90

Godrej

94

Others

68

Soap / Detergent in stock

120
100
80
60
40
20
0

Nirma

HUL

P&G

Godrej

Others

96

100

90

94

68

Series1

Interpretation:

It gives idea about the capacity of the retailers to stock the

goods and also the variety of the products they are stocking. It will also
make clear the demand of the goods in their stores and the selling of the
product in market. Most of the retailer stocks all types of soap and
detergent.

Q3. Rank the following factors that customers look for in the
purchase of Soap / Detergent.
(Rank from 1 to 6)
Factors

Fragrance

24

33

22

10

66

23

18

34

24

11

17

28

24

16

Packaging

27

38

24

Others

34

55

Quality
Company
Image
Price

Bathing Soap
70
60
50
40
30
20
10
0

Fragrance

24

33

22

10

Quality

66

23

Company Image

18

34

24

11

Price

17

28

24

16

Packaging

27

38

24

Others

34

55

Interpretation:

It gives an idea about the priority the influencing factors to the consumers and also the
weight age of that factor over other factors.
In the above result people are more quality and price oriented. On the other hand
people are also conscious about the company image because sometimes the consumer
remembers that name of the product by the company name and also from the past
performance of that company. Fragrance and packaging are not influencing factor as per
the respondents.

Factors

Fragran
ce

11

17

41

21

Quality

43

34

16

13

16

27

26

11

27

28

14

16

Packagi
ng

33

43

11

Others

32

63

Compan
y Image

Price

Detergen
t

70
60
50
40
30
20
10
0

Fragrance

11

17

41

21

Quality

43

34

16

Company Image

13

16

27

26

11

Price

27

28

14

16

Packaging

33

43

11

Others

32

63

Interpretation :
It gives an idea about the priority the influencing factors to the consumers and also the
weight age of that factor over other factors.
In the above result people are more quality and price oriented. On the other hand
people are also conscious about the company image because sometimes the consumer
remembers that name of the product by the company name and also from the past
performance of that company. Fragrance and packaging are also play important role for
purchasing detergent powder.

FINDING, RECOMMENDATION AND CONCLUSION

FINDINGS
Sales Promotion, a short-term inducement, offered to a consumer or trade has gained

momentum as a promotional tool world over. It represents nearly three fourth of the marketing
budget at most consumer product companies. Sales promotions can enhance consumers selfperception of being smart or a good shopper
FMCG are such a market where the level of loyalty remains low and this is because of
many reasons.
Quality as the most influencing factors in the purchase decision while price is also an
important for purchase decision.
Schemes always attract more and more consumers towards particular brand. TV as the
best media to market the product which will cover majority of the viewer ship. On the
second place it shows news papers as the media to promote the product in the market.
Customers are looking for any type of the promotions on the product before them going
to purchase.
NIRMA is mainly offering credit facility which is offered by all major players it may
differ in the time limit of the credit.

RECOMMENDATION

The findings of the empirical study indicate that unless the brand to be promoted is in
the consideration set of the consumer, sales promotion by itself is unlikely to have any
major impact. Clearly this shows that managers need to invest into brand building exercise
so that his/her brand appears in the consideration set of the target consumers. Only after this
should he spend time, money and energy on sales promotion activities.
Companies need to create sufficient awareness about sales promotion schemes through
mass media in order to create awareness. FMCG products are low involvement products
characterized by switching behaviour. Also the person going to the shop for the purchase of
soap is the final decision maker of the brand. Hence it is essential that companies need to
design attractive, striking, visible POPs for scheme announcements.With respect to nature
of scheme, the finding suggested that premium (free gift) was popular with companies.
While both retailers and consumers preferred price offs. So it is necessary that the perceived
value of a free gift has to be appealing and high for the target consumers.
The findings exhibited that both the retailers and consumers perceived that sales
promotion activities.Developing a system to tap such responses from time to time both at
retailer and consumer level would be helpful for planning future sales promotion activities.
In order to build trust and commitment companies should tap preferences, perceptions of
retailers as well as consumer.

CONCLUSION

The study reflects that the use of sales promotion undeniably has increased over the
years in India. Future holds lot of promise for such schemes across wider range of productmarkets.
Sales Promotion has ceased to be major differentiator at least in the metros, with almost
all companies offering similar freebies and gifts.. Currently Price off and buy one get one
free offers are very effective to attract the consumers towards the products. With the
Increasing number of supermarket, the branded packaged goods work as silent sales person.
So in such stores, sales promotion plays a more effective role in stimulating consumers
demands.
One of the very important facts we came to know from this project is that sale of goods
which contain large quantity and having big packaging e.g. detergent are stagnating because
consumer prefer to buy small pack goods, the reasons are: small pack goods reduce risk of
bad quality, It had low cost or say price, and last but important factor i.e. mentality to
purchase just to try first. Sales of small pack goods are quite high, but from the companys
point of view small pack goods is less profitable compare to large pack goods.
So here marketer tries to increase sales of large pack goods by using sales promotion
tactics like price off and percentage extra.

ANNEXURE
QUESTIONNAIRE FOR CUSTOMER
I am student of M.com (Semester III) studying in K J SOMAIYA COLLEGE
VIDYAVIHAR , and carrying out a survey for our academic project to Role
of sales promotions in FMCG. So please fill this questionnaire. Your
identity would reveale and information will only be used for academic
purpose.

Bathing soaps
Lux
Hamam
Lifebuoy
Nirma
Others

Responden
t

Q1. Which brand of Soap /

Detergent do you use?
Detergent
powder

Responde
nt

Nirma
Wheel
Surf
Ariel
Others

Q2. Do you always buy the same brand of Soap / Detergent

Particula Responde
rs
nt
Yes/No

Q3. Which factors do you normally consider while purchasing a

particular brand of Soap / Detergents?
Factors

Bathin
g soap

Det.powd
er

Fragrance
Quality
Company image
Price
Packaging
Others

Q4. Do you consider promotional schemes while purchasing a

particular brand of Soap / Detergent?
Particulars

Responde
nt

Yes
No

Q5. Which of the following promotional schemes you have come

across so far?
Promotiona
l schemes
Coupons

Responde
nt

price off

QUESTIONNAIRE FOR RETAILERS

QUESTIONNAIRE

I am student of M.com. (Semester III) studying in K J SOMAIYA

COLLEGE VIDYAVIHAR and carrying out a survey for our academic
project to Role of sales promotions in FMCG.

So please fill this

questionnaire. Your identity would not be revealed and information will

only be used for academic purpose.
Q1. Since how long are you in this business?

Particulars

Respondent

1-5 Years
5-10 Years
More than 10
years

Q2. Name the Soap / Detergent (Company) you stock for.

Companies

Responde
nt

Nirma
HUL
P&G
Godrej
Others

Q3. Rank the following factors that customers look for in the
purchase of Soap / Detergent. (Rank from 1 to 6)
Factors

Fragrance
Quality
Company
Image
Price
Packaging
Others

Q4. Do you suggest customers to purchase a certain brand?

Particul
ar

Responde
nt

Yes
No

Q5. If Yes why?

Particula
r
High

Responde
nt

margin
Quality
Relationsh
ip
No reason

BIBLIOGRAPHY
1)

Reference Books
Marketing Management by Philip Kotler, Parling Kindersley
(India) pvt ltd.
I.

Industrial Marketing by C.S.G. Krishnamachatyula and

Lalitha R., Jaico Publishing

2)

Journal
Special Issue on Customer Equity Management

3)

Magazines
Business Today

4)

News Papers
The Times of India
DNA

5)

Web Sites
www. wikipedia. Com
www.nirma.co.in_files
www.godrej_files