Marketing of Fast Moving

Consumer Goods (FMCG).

• 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 may also include pharmaceuticals,
consumer electronics, packaged food products,
soft drinks, tissue paper, and chocolate bars.
• The factors that made the FMCG industry a
highly competitive one are low operational
cost, solid distribution networks, and
emergence of new FMCG companies.
• In addition, the growth of the world’s
population is another responsible factor for the
huge success of this particular industry.
• Some of the leading FMCG companies all
over the world are Sara Lee, Nestlé, Unilever,
Procter & Gamble, Coca-Cola, Carlsberg,
Kleenex, General Mills, etc.
• A subset of FMCGs are Fast Moving Consumer
Electronics which include innovative electronic
products such as mobile phones, MP3 players,
digital cameras, GPS Systems and Laptops.
• These are replaced more frequently than other
electronic products.
• White goods in FMCG refer to household
electronic items such as Refrigerators, T.Vs,
Music Systems, etc.
• The middle class and the rural segments of the
Indian population are the most promising market
for FMCG, and give brand makers the
opportunity to convert them to branded products.
• Most of the product categories like jams,
toothpaste, skin care, shampoos, etc, in India,
have low per capita consumption as well as low
penetration level, but the potential for growth is
huge.
THE TOP 10 COMPANIES IN FMCG
SECTOR
Sr. Company
1. Hindustan Unilever Ltd.
2. ITC (Indian Tobacco Company)
3. Nestlé India
4. GCMMF (AMUL)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene and Health Care
10. Marico Industries
 FMCG Product Categories

• There are mainly 4 product categories in

FMCG:
• Home and Personal Care (Home Care and
Personal Care)
• Foods and Beverages
• Cigarettes
• Alcohol
• Household Care: It can be divided into the
following categories
• Fabric wash - Laundry soaps and Synthetic
detergents
• Household cleaners - Dish/utensil cleaners,
floor cleaners, Toilet cleaners, Air fresheners,
Insecticides and Mosquito repellants, Metal
polish and Furniture polish
• Personal Care: It can be divided into the following categories
• Oral Care - Toothpaste
• Skin Care - Creams, Lotions, Gel
• Hair Care - Hair Oil, Shampoos
• Personal Wash - Soaps
• Cosmetic & Toiletries
• Talcums
• Deodorants
• Perfumes
• Paper Products - (tissues, diapers, sanitary)
• Shoe care
 Foods

• Confectionary
• Staples/ Cereals
• Bakery products - Biscuits, bread, cakes
• Snack food
• Chocolates
• Ice cream
• Processed fruits
• Vegetables
• Meat
• Dairy products
• Branded flour, rice, sugar
 Beverages
• Tea
• Coffee
• Juices
• Bottled water
• Health beverages
• Soft drinks
 Innovations in FMCG sphere
• There are two types of innovations –
• Evolutionary and
• Revolutionary
• Evolutionary: Its just an addition to some innovation/ launch
etc done in past. Just take the example of Colgate Maxfresh.
Its just an addition of a new attribute to the existing portfolio.
• Revolutionary: It is something out of box - altogether new
where nobody has entered so far. Lets take an example of
Lays Kurkure where they did some innovation with Snack
Foods category in FMCG.
• Other example is Salt Toothpaste - its exactly not
revolutionary, but its really a different value propositions
which consumers never thought of. This was possible after
lot of R&D done in area of dental
• Now think of weird innovations - some liquid
which when applied on hands will remove all
the germs and make your hand absolutely clean
without even using water.
• It has an awesome utility - its is revolutionary.
But here the important point is whether this is
launched in right time to the right markets for
set of consumers.
 Trade Schemes for different FMCG
Categories
• Different FMCG categories should have
different trade schemes.
• Atta: Quantity Purchase Scheme(QPS) will
work here. This will have different slabs and
will have higher incentive for higher slabs.
• Eg. On buy of 10 tonnes of Atta for a period of
2 months, 5 % additional discount will be given
and a washing machine will be given
• Salt: Its more of a wholesale driven category,
where price is a crucial dimension. Just by cutting
30 paisa on a Kg of Salt, respective companies
can increase their sales.
• Biscuits: Here trade schemes are in form of some
discount if they clear the bill on time. Its called
CD - Cash Discount - normally companies give
1% CD. but its very important to understand that
its more of a consumer pull category and trade
push doesn't work here.
• Soft Drinnks: QPS works here as well.
 Growth Drivers: FMCG Sector

• Disposable Income:
• Organized Retail:
• Distribution Depth - Rural Penetration:
• Buying Pattern Shift:
• Favorable Indian Economy & Demographics
 Disposable Income
• There is increase in disposable income, observed in both
rural and urban consumers, which is giving opportunity to
many rural consumers to shift from traditional unorganized
unbranded products to branded FMCG products and urban
fraternity to splurge on value added and lifestyle products.
• The increasing salaries, along with rising trend of perks in
the corporate sector at regular intervals, have increased
people’s spending power. As per some research, there is a
high correlation between Disposable per capita and HPC
per capita.
 Organized Retail
• The emergence of organized retail have lead to more variety
with ease in browsing, opportunity to compare with different
products in a category, one stop destination (entertainment,
food and shopping) etc, which is playing an important role in
bringing boom in the Indian FMCG market.
• Currently the modern trade is capturing 5% of the total retail
space, which will increase to 10% and 25% in 2010 and
2025 respectively. Also, as the credit card and organized
retail trend picks up, people won’t think much while buying
and buy more.
Distribution Depth - Rural Penetration:
• There are 5500 towns and 6.38 Lacs villages with 2.5Mln and
5Mln outlets respectively. Due to saturation and cut throat
competition in urban India, many FMCG companies are devising
strategies for targeting rural consumers in a big way. Many FMCG
companies are focusing on increasing their distribution network to
penetrate with a step by step plan.
• This is the reason that FMCG urban market size has dropped from
50% to 29% in last 5 years. The FMCG market size for semi-
urban and rural segment was 19% and 52% respectively for the
year 2006-07. As per FICCI, the FMCG market size for urban,
semi-urban and rural for year 2007-08 was expected to be 57%,
21% and 22%, which clearly shows that rural market is the growth
engine for FMCG growth.
• Though the urban markets are growing too, the
incremental addition in consumer’s households is much
more in rural space as compared to urban markets.
• The planned development of roads, ports, railways and
airports, will increase FMCG penetration in the long
term. 180 million rural and semi-urban people’s attention
has already been diverted towards FMCG products,
according to latest estimates released by industry
chamber, Assocham in 2008.
• Over 70% sale of FMCG products is made to middle
class households and over 50% of middle class is in rural
India.
 Buying Pattern Shift
• The crisis of declining FMCG markets during
2001-04 was driven by new avenues of
expenditure for growing consumer income such
as consumer durables, entertainment, mobiles,
motorbikes etc.
• Now, as many consumers have already
upgraded, their income is being directed
towards pampering themselves.
 Favorable Indian Economy &
Demographics
• 45% people in India are under 20 years of age. Per
capita disposable income has increased by9%.
• GDP is growing between 8 to 9%.In the next five
years, affluent and aspirers as a total will supersede
strivers and will be dominated by aspirers, as per
National Council for Applied Economic Research
(NCAER).
• Most FMCG companies are responding to the
new demand by concentrating on developing a
big theme and building a portfolio around it.
Nestle, for example, has identified 'health and
wellness' as its focus area, while Dabur is
positioning itself around ayurvedic (a
traditional Indian system of healthcare),
natural and herbal products.
• FMCG majors are widening their health food portfolio
to cash in on the rich, urban, health conscious Indian.
• Sugar free Chywanprash, organic spices and multi
grain pastas and biscuits are few examples.
• Urban India is high on health and FMCG majors are
cashing in on the opportunity.
• Processed foods particularly juices that are based on
the health platform would see stronger growth.
• Also, with the Indian consumer becoming increasingly
health conscious, the demand for juices has witnessed
rapid growth.
 Growth Strategies for FMCG
• The success of the FMCG depends on the marketing
strategy.
• A marketer pursues a wide range of strategies. When the
prices are competitive the company would use the
extensive distribution network, design suitable
advertising& sales promotion schemes.
• What makes an FMCG brand sell more than a competitor?
• What makes some brands outstanding/?
• How does a marketer convert a customer from buying a
generic washing powder to buying a particular brand?
 Multi brand Strategy
• A company nurtures a number of brands in the same
category. The main rational behind this strategy is to
capture as much of market as possible by trying to
cover as many segments as possible. This will enable
the company to lock up the more distributor shelf
space.
• Example : HUL, CADBURY.
• Another reason to adopt multiple brand strategy is to
protect its major brands by setting up flanked brands.
• Sometimes the company inherits different
brand names in the process of accquiring
other companies &each brand name has a
loyal following.
• Example: COCA COLA acquired THUMS UP
prior to its entry in the market.
 Product Flanking
• This refers to the introduction of different combinations of
products at different prices, to cover as many market segments as
possible. It is basically offering the same product in different
sizes & prices to tap diverse market opportunities. The
introduction of shampoos in small sachets has made them
affordable to the lower segments of consumers who previously
could not afford spend for a bottle of shampoo.
• The idea behind this is to flank the core product by offering
different variations of size & price so that the consumer fids some
brand to choose from.
• Example; Vicks is available in smaller container , cough drops, &
cough syrup.
 Brand Extensions
• Marketers like to have loyal consumer base so
that the particular brand enjoys high brand
equity . In such cases the companies make the
brand extensions in the hope that the
extensions will be able to ride on the equity of
the successful brand, & that the new brand will
stand in its own right in the course of time.
• Example : LIFEBOY, AMUL
 Building Product Line
• Some companies add related new product lines
to give the customer all the products he/she
would like to buy under one umbrella.
• Example: REVLON, BRITANNIA
• BRITANNIA has introduced different kinds of
biscuits & baked foods in the past few years.
By adding a number of flavours in each
product line the company grew in the industry.
 New Product Development
• A company can add new product through the
acquisition of other companies or by
developing new products. New products could
also mean offering improved performance .
• Example ; DOVE , DABUR VATYIKA HAIR
OIL ,consumer research revealed that Indian
ladies mixed a variety of herbs with hair oil
before application.
 Innovation in Core Product
• The life of the FMCG product is short
therefore marketer continually try to introduce
new brands to offer some thing new & meet
the changing requirements of the customer.
 Long Term Outlook
• Many companies adopt the long term outlook
towards growth in the FMCG market. The
concept of cornflakes for breakfast promoted
by Kellogg's is entirely American in nature.
 Extending the PLC
• FMCG company may have to reformulate its
marketing strategy because economic
conditions change, competitors launch new
assaults & the product encounters new types of
buyers &new requirements.
 Expanding markets by usage
• This is achieved by either increasing the number of
customers or by encouraging more consumption per intake.
• The usage rate of the consumers can be increased in a
number of ways –
• By persuading customer to use the product more frequently,
• Company can try to induce users to consume more of the
product on each occasion.
• Company can try to discover new product use & convince
customers to use the product in more varied way. –example
FEVICOL , M Seal.
 Wide Distribution Network
• A simple way of increasing an FMCG
company's market share is by developing a
strong distribution network , preferably in terms
of more locations.
• An extensive distribution system can be
developed over a time, or the company may
acquire another company which has extensive
distribution network.
• Example: ASIAN PAINTS , HUL,
MONITORING THE PULSE OF PEOPLE

• Organization spend considerable effort to find

out the whats, hows & when of their
consumers.
 Advertising & Media Coverage
• Advertising is required to build the awareness about a
FMCG or brand which is available in the market.
• Persuasive advertising becomes important in the
competitive stage.
• Reminder advertising is quite common with mature
products.
• The basic idea about growth through advertising is to
increase market share through more share of mind as
more information about the company & its products
will induce the customer at the time of actual demand .
 Sales Promotions
• Sales promotions offer a direct incentive to
buy more in the short term.