What is FMCG ?

Also known as Consumer Packaged Goods (CPG) Products with quick turnover &relatively low cost Less thinking by consumers Absolute profit made on FMCG products is relatively small but they sell in large quantity & earn large profits. Durable Products; E.g. Soaps, Cosmetics, teeth cleaning products, shaving products etc. Non-Durable Products; E.g. Glassware's, bulbs, batteries, plastic goods etc.

One of the fastest growing sector in early 1980s till 1990s After 1990s, o FMCG started losing their sheen due to introduction of other product types o Total lack of imagination on the part of FMCG companies. By 2000, volumes & margins either shrank or stagnated During 2006, Consumers willingness to upgrade to better, value added products helped FMCG. According to a McKinsey Global Institute (MGI) study titled 'Bird of Gold': The Rise of India's Consumer Market, the total consumption in India is likely to quadruple making India the fifth largest consumer market by 2025. Urban India will account for nearly 68 per cent of consumption growth while rural consumption will grow by 32 per cent by 2025. India ranks first in the Nielsen Global Consumer Confidence survey released in May 2010. India is one of the fastest growing markets in the world and the current consumer belief that recession would soon be a thing of the past has filled Indians with confidence, said Piyush Mathur, Managing Director, South Asia, The Nielsen Co. With 127 index points, India ranked number one in the recent round of the survey, followed by Indonesia (116) and Norway (115).

FMCG is the fourth largest sector in the Indian economy with a total market size of Rs.60,000cr. FMCG sector generates 5% of total factory employment in the country and is creating employment for three million people. FMCG Industry in India is expected to grow at an annual 12% to become a Rs.4,00,000 cr. Industry by 2020

FMCG companies are Nestle, Unilever, Proctor & Gamble. Their products are in varieties of soft drinks, chocolate bars etc. Few FMCG brands are Coca-Cola, Kleenex, Pepsi etc. FMCG industry is o Innovative o Full of Rich Experience o Worldwide reach o Frequently travelling opportunities

The products often cater to 3 very distinct but usually wanted for aspects- necessity, comfort, luxury. They meet demands of the entire cross section of population . Price and income elasticity of demand varies across products and consumers. Individuals items are of small value although all FMCG products put together account for a significant part of the consumers budget. The consumer spends little time on the purchase decision. He seldom ever looks at the specifications. Brand loyalities or recommendations of reliable retailer/dealer drive purchase decisions. Limited Inventory of these products are kept by consumer and prefers to purchase them frequently as when required.

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Large Domestic Market:Large Consumer Goods Spender:Low Penetration & Low per Capita consumption :Changing Lifestyles:Retailing New growth area Demand & Supply Gap

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Materials Availability:Leveraging The Cost Advantage:e.g. P & G outsourced Vicks Vaporub to Australia, Japan etc. from Hyderabad

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Geographic Demographic Social and Economic Behavioral

Household Care e.g. laundry soaps, mosquito repellents, dish cleaners etc. Food & beverages e.g. soft drinks, bakery products, tea, coffee, vegetables etc. Personal Care e.g. oral care, hair care, skin care, cosmetics, deodorants, perfumes etc.

Zone region- nearest zone will be targeted first Villages and town- helps to analyze marketing strategy Density Climate

Age- children or adult Gender-male or female

Income group- high, medium or low Social and Economic- Education (illiterate, literate , highly literate), social class

Occasions ( Diwali, Deshehra, Eid) Brand loyalty (rural area people are more brand loyal)

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Britannia India Ltd. (BIL) Dabur India Ltd. Indian Tobacco Corporation Ltd. (ITCL) Marico Nirma Ltd.

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Cadbury India Ltd. (CIL) Cargill Coca-Cola Colgate Palmolive India H.J. Heinz Co. Hindustan Lever Ltd. (HLL) Nestle India Ltd. Procter & Gamble

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Differs from product to product examples: 1. Mc Donald's Youth 2. Vim bar - Housewives 3. Pepsodent Kids 4. Kellogg's Previously kids now adults too 5. Sugar free Age group of 35 and more

Direct on-screen marketing (e.g. Harpic) Power brand strategy (Include those brand that have maximum pulling power and growth e.g. lifebuoy soap) Power brand extension (e.g. lifebuoy talcum powder) Exit from non power brand Using India as a brand

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Small size packet strategy Pricing strategy Mark up Go- deterring (e.g. bingo chips) Competitor based Product bundling Same value, size increase Same value, size decrease (e.g. society tea)

Huge investment on advertisement Frequent broadcast Specially during peak hours During live matches During popular TV shows Target TV channels ( M TV, V TV) Through banners, posters, trial packs, events, hoardings, radio etc. Based on Market Research

As a reminder To inform about our product To show the success of brand To attract the customers To hamper the unsecured mind of consumer (e.g. saffola,dettol) To arise the need purposely To attach consumer emotionally with product To show facts and figures of products

Surf excel for washing machine Vim bar gel Gillette razor Bingo chips Happy dent chewing gum Bourn vita, Horlicks Pepsodent, Colgate Pepsi, sprite, coca-cola

Attractive packs Vibrant colors Pack will show the important feature of product Protective packaging( bru coffee) Size wise packing (Navratna oil and Colgate) According to segmentation of Market Packaging should be enhanced time by time Affordable packs ( coca cola 200 ml).

Increasing per year with the growth rate of 9 percent Price of raw materials are decreasing Cost of machinery required for consumer goods are less then durable goods. - mint newspaper 23rd Jan 2010

According to the need of consumer To avoid the loss of product diversification To balance the profit through product line To avoid penetration by competitor ( perk glucose)

Industrial Marketing Relationship driven Maximize value of relationship Small focused target market Multi-step Buying process, longer sales cycle Rational buying decision based on business value

FMCG Product Driven Maximize value of transaction Large target market Single-step Buying process, shorter sales cycle Emotional buying decision based on status, desire or price

Case-Study HLL-JuggernautThe Dilemma Of Growth (FMCG Markets India)