Assignment: Microeconomics

INDUSTRY ANALYSIS OF FMCG

INTRODUCTION
 Fast moving consumer goods (FMCG) is the 4th largest
sector in the Indian economy.
 There are three main segments in the sector – food and
beverages which accounts for 19 per cent of the sector,
healthcare which accounts for 31 per cent and household
and personal care which accounts for the remaining 50 per
cent.
 The products are sold quickly and at relatively low cost.
 The Indian FMCG industry is largely classified as organized
and unorganized.

The purpose is to:-

 Analyze how different mall price similar product
(FMCG) and different strategies adopted by the malls
for promotion, pricing and discounts.
 The market structure, competition and pricing
strategies for the selected FMCG product.

Description of the product

Krackjack biscuit is selected as the main product and
Britannia 50-50 as the substitute product for
krackjack. Following malls were selected
 Total Mall, Madiwala
 Star Bazaar, Koramangala
 Big Bazaar, Koramangala
India biscuit industry is the second largest manufacturer of
biscuits in the world with the total turnover of RS 3000 cores.
Indian biscuit industry is growing at 17%. Biscuit market is
dominated by Parle-G and Britannia in India, with Parle-G
having around 40% market share and Britannia having 40%
market share. Krackjack is sweet and salt biscuit from Parle-G
and Britannia 50-50 is also a sweet and salt biscuit from
Britannia. Britannia 50-50 is a substitute for Krackjack, as it
serves for the same purpose.

 Nature of the product

Biscuit has become a house household item.
Biscuits fall under essential consumer goods
category. Consumer tend to buy essential goods
irrespective of the change in the price of the
essential goods.

Demand and Supply

There is always a demand for biscuits. The price
of biscuits is increased and the demand remains
inelastic. The law demand is not applicable for
essential goods like biscuits. Parle- g and
Britannia manufacture biscuits to meet the
consumers demand. If the supply increase, price
is not increased and if the supply decrease, price
is not decrease. Biscuits prices are inelastic to
the quantity manufactured.
 Income Effect
The quantity of biscuits consumed by
household remains constant irrespective of
the increase or decrease in the income
levels of the house hold. The household
demand for biscuits is inelastic to the
income of the household.

 Elasticity
 Price Elasticity: - The demand for biscuits are
constant for the household, the price elasticity
for biscuits zero. Change in price does not
affect the quantity of biscuits consumed in the
household.
 Demand Elasticity: - The demand for biscuits
are constant for the household, the demand
elasticity for biscuits is zero, irrespective of
the price change.
 Income Elasticity: - The income increases or
decreases, the demand for biscuits is constant
for the household. So income elasticity for
biscuits is zero.
 Market Structure
Biscuits are heterogeneous product. Biscuits
industry’s market structure is oligopoly, and is
dominated by Parle-G, Britannia and ITC.
 Britannia and ITC together control 90% of the
biscuit industry in India. Parle-G and Britannia
are the price setters in the biscuits industry.
Parle-g has 40% market share and Britannia also
have 40% market share.
 Pricing Strategies
Government fixes price for essential goods.
Biscuits are low margin business, biscuit
manufacturer can make more profits by selling
more quantity of biscuits is sold to customers
through various channels like- wholesaler,
distribution network, retail stores and malls.
Conclusion
The study reveals how business make decisions
like quantity of goods to be produced and its
price based on the supply and demand ,how to
maximize the profit . This study also reveals how
the customer behavior varies on the situation.
NAME: - NISHA BISHT
SEC: - D
ROLL NO. CMSPGDM20180116