session 7 map revised

8/13/2019 Session 7 MAP Revised

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Fast Moving Consumer Goods

MarketingSession: 7

Prof: Yasmin S
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Introduction

Fast Moving Consumer Goods (FMCG ) are products that are soldquickly at relatively low cost.Products which have a quick turnover,are known as Fast Moving ConsumerGoods (FMCG).

FMCG products are generallyreplaced or fully used up over a shortperiod of days, weeks, or months, andwithin one year.


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Introduction

FMCG is generally sold in largequantities, so the cumulative profit onsuch products can be large.

FMCG may also includepharmaceuticals, consumerelectronics, packaged food products,soft drinks, tissue paper, and chocolatebars.


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The factors that made the FMCGindustry a highly competitive one arelow operational cost, solid distributionnetworks, and emergence of newFMCG companies.

In addition, the growth of the worlds population is another responsiblefactor for the huge success of thisparticular industry.

Some of the leading FMCGcompanies all over the world are,Nestl, Unilever, Procter & Gamble,Coca-Cola.


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FMCG Evolution in India

1950s-80s

Low Investment in the sectorLow purchasing powerGovt. emphasis on small scale sectorHLL and other companys urban focus

Post liberalization

Entry of MNCsFocus shifted to getting to rural consumer firstOthers, like Nestle, remained with the urban populationLatest fad to hit the market is the sachet bug.

Mushrooming of regional brands Nirma enters and changes the focus to Value for Money inthe 70sPost liberalization, Jyothy Laboratories, Ghari Detergent andAnchor toothpaste giving the nation -wide brands a run fortheir money.


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Characteristics of the FMCG

Sector A well-established distribution network,intense competition between theorganized and unorganized segments,low operating cost, strong brandingcharacterizes the sector.


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The middle class and the ruralsegments of the Indian population

are the most promising market forFMCG, and give brand makers theopportunity to convert them tobranded products.

Most of the product categories like jams, toothpaste, skin care,shampoos, etc, in India, have low

per capita consumption as well aslow penetration level, but thepotential for growth is huge.


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Characteristics of FMCGsfrom the consumers' perspective:

Frequent purchase Low involvement (little or no effort to choose

the item -- products with strong brand loyaltyare exceptions to this rule)

Low price


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Characteristics of FMCGs from themarketers' angle:

High volumes

Low margins Extensive distribution networks High stock turnover


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Toiletries, soap, cosmetics, tooth cleaningproducts, shaving products and detergents,consumer electronics, packaged foodproducts, soft drinks, tissue paper, andchocolate bars.

A subset of FMCGs are Fast MovingConsumer Electronics which includeinnovative electronic products such as mobilephones, MP3 players, digital cameras, GPSSystems and Laptops


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Overview of the Indian FMCG

sector The Fast Moving Consumer Goods (FMCG)sector in India has been growing at a healthyCAGR of 11% over the last decade

Riding on the back of increasing demand andchanging consumer preferences, thanks tohigher disposable incomes and the retailrevolution, the sector has been postingdouble-digit growth over the past couple ofyears


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sector Growth in the sector is led by higherurban and rural demand. Goingforward , the governments growingsupport to agriculture will drive long-term growth in consumption from therural sector

Amongst all the FMCG segments, thefood segment will outperform over thecoming years


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sector To exploit this trend many companies havelaunched health based products viz.Britannia launched Nutrichoice biscuits,

Danone launching probiotic yogurt, Daburintroduced a juice with fiber and HULintroduced Soya and multigrain atta, iodizedsalt, energy drinks

It is believed that the demand for theseproducts is going to outpace the overallFood Category growth for the years to come


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Industry Overview

The market is estimated to grow to US$100 billion by 2025, according to marketresearch firm Nielsen

In the last decade the FMCG sector hasgrown at an average of 11% a year; in thelast five years, annual growth acceleratedto 17%

Rural India accounts for more than 700Million consumers or 70% of the Indianpopulation and accounts for 40% of thetotal FMCG market


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Scope of the sector

12.2% of the world population in thevillages of India.

Low per capita consumption for all

the products.


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Growth drivers for FMCG in

India Increasing rate of urbanization, expected to seemajor growth in coming years.

Rise in disposable incomes, resulting in premiumbrands having faster growth and deeperpenetration.

Innovative and stronger channels of distribution tothe rural segment, leading to deeper penetrationinto this segment.

Increase in rural non-agricultural income andbenefits from government welfare programmes.

Investment in stock markets of FMCG companies,which are expected to grow constantly.


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Challenges for FMCG sector

Steadily rising fuel costs, leading toincreased distribution costs.

The present slow-down in the economy may

lower demand of FMCG products, particularlyin the premium sector, leading to reducedvolumes.

The declining value of rupee against othercurrencies may reduce margins of manycompanies, as Marico, Godrej ConsumerProducts, Colgate, Dabur, etc who import

raw material s.
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Why INDIA?1. Large Domestic Market

2. Large Consumer Goods Spender

3. Low Penetration & Low per Capitaconsumption :-

4. Changing Lifestyles

5. Retailing New growth area

6. Demand & Supply Gap


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Comparison with the WorldMarkets

Availability of raw materials

Labor cost comparison


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Market Players In Indian FMCG Sector

Domestic Players:-ITC Lim itedMaricoNirma Lim i tedJyo thy Labora tor ies L td .

Foreign Players:- Cadbu ry Ind ia Lim i tedCargil lCoca ColaColgate Palm ol ive IndiaHindu stan Uni lever Lim itedNest le Ind ia Lim itedP & GPepsiCo


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S. NO. Companies

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

3. Nestl 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

THE TOP 10 COMPANIES IN FMCG SECTOR


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FMCG Vs. Industrial Marketing

Industrial Marketing FMCGRelationship driven Product Driven

Maximize value of

relationship

Maximize value of

transactionSmall focused target market Large target market

Multi-step Buying process,longer sales cycle

Single-step Buying process,shorter sales cycle

Rational buying decisionbased on business value

Emotional buying decisionbased on status, desire orprice


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Innovations in FMCG sphere

There are two types of innovations Evolutionary and Revolutionary


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Evolutionary: Its just an addition to someinnovation/ launch etc done in past. Just takethe example of Colgate Maxfresh. Its just anaddition of a new attribute to the existingportfolio.

Revolutionary: It is something out of box -altogether new where nobody has entered sofar. Lets take an example of Lays Kurkure wherethey did some innovation with Snack Foodscategory in FMCG.

Other example is Salt Toothpaste - its exactly

not revolutionary, but its really a different valuepropositions which consumers never thought of.This was possible after lot of R&D done in areaof dental



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Now think of weird innovations - someliquid which when applied on hands willremove all the germs and make yourhand absolutely clean without even using

water. It has an awesome utility - its isrevolutionary. But here the importantpoint is whether this is launched in right

time to the right markets for set ofconsumers.



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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 competitivethe company would use the extensivedistribution network, design suitableadvertising& sales promotion schemes.

What makes an FMCG brand sell more thana competitor?

What makes some brands outstanding/? How does a marketer convert a customer

from buying a generic washing powder tobuying a particular brand?


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Multi brand Strategy A company nurtures a number of

brands in the same category. Themain rational behind this strategy is tocapture as much of market aspossible by trying to cover as many

segments as possible. This will enablethe company to lock up the moredistributor shelf space.

Example : HUL, CADBURY.

Another reason to adopt multiplebrand strategy is to protect its majorbrands by setting up flanked brands.


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Marketing Strategy

Direct on-screen marketing (e.g. Harpic) Power brand strategy

(Include those brand that have maximumpulling power and growth e.g. lifebuoysoap)

Power brand extension (e.g. lifebuoytalcum powder)

Exit from non power brand Using India as a brand


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Marketing Strategy

Small size packet strategy Pricing strategy

1. Mark up

2. Competitor based3. Product bundling

Same value, size increase Same value, size decrease


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Product Flanking This refers to the introduction of different

combinations of products at different prices, tocover as many market segments as possible. Itis basically offering the same product in differentsizes & prices to tap diverse marketopportunities. The introduction of shampoos in

small sachets has made them affordable to thelower segments of consumers who previouslycould not afford spend for a bottle of shampoo.

The idea behind this is to flank the core productby offering different variations of size & price so

that the consumer fids some brand to choosefrom. Example; Vicks is available in smaller container ,

cough drops, & cough syrup.


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Brand Extensions Marketers like to have loyal

consumer base so that theparticular brand enjoys high brandequity . In such cases thecompanies make the brandextensions in the hope that theextensions will be able to ride on the

equity of the successful brand, &that the new brand will stand in itsown right in the course of time.

Exampl e : LIFEBOY, A MUL
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Building Product Line

Some companies add related newproduct lines to give the customerall the products he/she would liketo buy under one umbrella.

Example: REVLON, BRITANNIA BRITANNIA has introduced

different kinds of biscuits & bakedfoods in the past few years. Byadding a number of flavours in eachproduct line the company grew inthe industry.


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Target market

Differs from product to productexamples:

1. Mc Donald's Youth2. Vim bar - Housewives3. Pepsodent Kids

4. Kellogg's Previously kids nowadults too

5. Sugar free Age group of 35 and

more


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Advertisement

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


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Why advertisement?

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


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Wh d li i i


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Why product line extension isdone?

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 ( perkglucose)


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Packaging

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 bytime Affordable packs ( coca cola 200 ml).


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New Product Development

A company can add new product throughthe acquisition of other companies or bydeveloping new products. New productscould also mean offering improvedperformance .

Example ; DOVE , DABUR VATYIKA

HAIR OIL ,consumer research revealedthat Indian ladies mixed a variety of herbswith hair oil before application.


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Long Term Outlook

Many companies adopt the long termoutlook towards growth in the FMCGmarket. The concept of cornflakes forbreakfast promoted by Kellogg's isentirely American in nature.


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Extending the PLC

FMCG company may have to reformulateits marketing strategy because economicconditions change, competitors launchnew assaults & the product encountersnew types of buyers &new requirements.


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Expanding markets by usage

This is achieved by either increasing the numberof customers or by encouraging moreconsumption per intake.

The usage rate of the consumers can be

increased in a number of ways By persuading customer to use the product morefrequently,

Company can try to induce users to consumemore of the product on each occasion.

Company can try to discover new product use &convince customers to use the product in morevaried way. example FEVICOL , M Seal.


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Wide Distribution Network

A simple way of increasing an FMCGcompany's market share is by developinga strong distribution network , preferably

in terms of more locations. An extensive distribution system can bedeveloped over a time, or the companymay acquire another company which hasextensive distribution network.

Example: ASIAN PAINTS , HUL,


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MONITORING THE PULSE OFPEOPLE

Organization spend considerable effort tofind out the whats, hows & when of theirconsumers.


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COMPANY PROFILE


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Jyothy Laboratories came into being in 1983, powered by the vision ofone man M.P Ramachandran - the current Chairman & ManagingDirector.

Engaged across the complete FMCG product cycle- management,research, manufacture, marketing and branding.

Marketing a range of daily household and personal care products.

Headquarter in Mumbai with a nationwide office network.

Started operations with a corpus of INR 40,000 to a company with aturnover of over INR 400 crores, Jyothy Laboratories Limited hascome a long way.

INTEREST & ACTIVITIES


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INTEREST & ACTIVITIES 21 manufacturing facilities across 14 locations- Trichur, Wynad,

Roorkee, Pondicherry, Chennai, Hyderabad, Bhubaneswar, Bankura,

Guwahati, Baddi, Silvassa, Salem, Jammu and Pithampur- proximate to consumer locations.

Most plants are ISO 9001 and ISO 14000- certified. 40 depots to service customer requirements. Network of more than 2,500 distributors. Motivated team of more than 1,500 marketing and sales members. Employee strength of over 3,500. Exports to 14 countries including Sri Lanka, Bangladesh, Mauritius,

Malaysia, UAE, Hong Kong and Saudi Arabia.

Products accessible across more than 750,000 Indian households.

PROMINENT BRANDS


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PROMINENT BRANDS Ujala (fl agship): L iquid fabric whi tener .

M axo: M osquito r epellent.

Exo: Di sh washi ng soap and dish washi ng scrubber .

Ujala Stif f & Shine: F abr ic enhancer .

Jeeva: Personal Care toi let soap.

M aya: I ncense Sticks

Ujala Detergent: Detergent washi ng powder .


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Earlier known as H industan L ever L imited. Was formed in 1933 as L ever Brothers I ndia

Limited . Headquartered in Mumbai. HUL is the market leader in Indian products

such as tea, soaps, detergents etc. The companys statement of corporate purpose

is to meet the everyday needs of people,everywhere.

CONTD


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CONTD

The company was renamed in late June 2007 toHindustan Unilever Limited, to provide theoptimum balance between maintaining heritage ofthe company and future benefits.

HUL holds 100 factories across India formanufacturing its diverse product range.

PROMINENT BRANDS


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PROMINENT BRANDS. Some of its brands include:

Kwality Wall's ice cream. Lifeboy. Lux. Breeze. Liril. Hamam. Pureit Water Purifier. Lipton tea. Brooke Bond tea. Bru Coffee. Pepsodent and toothpaste and brushes and many more..

GSK Consumer Healthcare Ltd


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GSK Consumer Healthcare Ltd.Product Portfolio

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