Transcript
FMCG Marketing
Market Applications & Practices
Vidhya Srinivas
FMCG – Evolution
• 1950’s-80’s – Low Investment in the sector– Low purchasing power– Govt’s emphasis on small scale sector– HLL and other company’s urbane focus
• Post liberalization– Entry of MNCs– Focus shifted to getting to rural consumer first– Others, like Nestle, remained with the urban population– Latest fad to hit the market is the ‘sachet’ bug.
• Mushrooming of regional brands– Nirma enters and changes the focus to ‘Value for Money’ in
the 70’s – Post liberalization, Jyothi Laboratories, ‘Ghari’ Detergent
and ‘Anchor’ toothpaste giving the nation-wide brands a run for their money.
Fast Moving Consumer Goods (FMCG)
• Alternatively called as CPG (Consumer packaged goods) industry
• Products that are sold quickly at relatively low cost.
• Generally sell in large quantities
• Absolute profit may be small but cumulative profit can be large.
• Replaced or fully used up over a short duration
Fast Moving Consumer Electronics and Consumer
Durables (FMCE)
• Innovative electronic products
• Replaced more frequently than other electronic products
• Mobile phones, MP3 players, digital cameras, GPS Systems, and laptop computers
Neutraceuticals – The New age Fast Moving Health care Goods (FMHG)
• Essentially foodproducts and derivatives which have a health promoting or medicinal value
• Functional Foods, dietary suppliments, sports & energy products etc.
• Positioned as strong line of defence against lifestyle illnesses and ailments
Neutraceuticals
• 1989 – Dr. Stephen Defelice Founder & Chairman of the foundation for innovation in medicine
• Traditionally available in forms similar to other pharmaceutical products
• New generation Neutraceutical products- probiotic drinks & yoghurts available in supermarkets
Neutraceuticals
• Main ingredients are Neutrients, herbal products and dietry supplements
Neutraceuticals
• Genetically engineered foods with anti oxidents
• Herbal & organically grown foods
• Foods for vitality; sports and energy products
• Food with medicinal value
• Dietary suppliments & vitamins
Neutraceutical manufacturing companies
• Raptacos Brett & Co Ltd Mumbai :Threptin Biscuit
• Pfizer Ltd : Protinex
• Dabur India : Chawan Prash
• Himalaya Herbal health care
• Amway
Personal Care and Accessories
• Cosmetics and Toiletries :Fragrances, Skin-care, Color cosmetics, hair care, Men’s Grooming Expected to grow at 21% CAGR during 2009-12
• Oral Care: Toothpaste 60%, toothbrush 17% and toothpowder 23% segmentation
• The Spa Market
• The Gems and Jewellery Market
Cosmetics Industry overview
Source: RNCOS
Oral Care
Source: RNCOS
SPA Market
Gold Jewellery
Gold Jewellery
Baby Care Products
• Baby Toiletries
• Baby Hair Care
• Baby Skin Care
• Baby Care
Sales of Baby Care by Subsector
Rs. Milion 2008 2009 2010 2011 2012 2013
Baby Toiletries
1348.6 1428.2 1509.2 1602.4 1709.5 1832.4
Baby Hair Care
245.6 255.1 263.6 274.7 288.5 305.3
Baby Skin Care
1672.9 1768.6 1861.0 1978.3 2122.8 2299.2
Baby Care 3267.1 3451.9 3633.8 3855.3 4120.7 4436.9
Common FMCG products
• Food and dairy products
• Glassware
• Paper products
• Pharmaceuticals
• Consumer electronics
• packaged food products
Common FMCG products
• Plastic goods
• Printing and stationery
• Household products
• Photography
• drinks etc.
• Confectionaries
Leading FMCG companies & Brands
Indian FMCG Snapshots• Indian FMCG is fragmented and majorly
comprises of unbranded and unpacked products
• Due to slow down the growth will be 12% CAGR for the next few years
• Mid and Mass Markets are price elastic
• Largest employer in the country. The total salary outlay is 6% on the direct employment of the turnover of Rs. 7000 crores
• 12-13 million retail stores and 9 million Kirana stores currently operating.
FMCG industry economy
• FMCG industry is regarded as the fourth largest sector in India with total market size of US$ 43 Billion Bn (2013)
• FMCG Sector in India is estimated to grow by US$ 74 Billion by 2018. (FICCI Technopak)
FMCG industry economy
• Per capita consumption is the lowest in the world
• Demand for new generation products at reasonable & affordable prices
• Changing Lifestyles and higher disposable income will fuel the demand for branded products
Source India Today - R K Swamy BBDO Guide to Urban Markets
Rank Towns Average Monthly Spending on FMCG Products* in Rs.
1 Chandigarh 3,4182 Greater Mumbai 2,9553 Chennai 2,8864 Ahmedabad 2,8695 Vadodara 2,8166 Pune 2,8047 Coimbatore 2,6848 Ludhiana 2,6749 Faridabad 2,59610 Hyderabad 2,533
Growth Drivers
Growth Drivers
Systematic Drivers•Favorable changes in Government Policies•Infrastructure Development
Demand side Drivers•Consistent GDP growth•Increasing Consumer Income•High private consumption•Rising Urbanization•Increasing Discretionary income
Supply side Drivers•Growth of Retail•Low Labour cost
Growth Drivers
Growth witnessed in both rural as well as urban areas
Business aquisitions & focus on efficiencies along with strong demand will drive the growth
Rapid urbanization, increased literacy levels, and rising per capita income.
Growth Prospects
12.2% of the world population in the villages of India
Increased focus on farm sector will boost rural incomes
Better infrastructure facilities will improve their supply chain
Low per capita consumption
Growth Prospects
Urban India
66% of total FMCG consumption,Home and personal care category, including skin care, household care and feminine hygiene
Rural India
34% of total FMCG consumption,More than 40% consumption in major FMCG categories such as personal care, fabric care, and hot beverages.
Go Rural !!!
70% of Indian population in 627,000 villages Two big Indian companies – HUL & ITC Toothpaste, hair oils & shampoos are the highest
growing categories Growth of shampoos was 30.8% in rural India vis a vis
11% in urban India Drastically lower penetration levels
Innovation !!! Innovation and not price war will be the key
driver Innovation in distribution, marketing and
creating brand names eg ITC e-choupal network
Hiking add spends Rationalizing brand portfolios Pricing strategies High decible promotional campaigns
Indian Competitiveness and Comparison with the World Markets
• Availability of raw materials
• Labor cost comparison
Indian Competitiveness and Comparison with the World Markets
• Presence across value chain – Amul supplies milk as well as dairy products
like cheese, butter, etc.
Top 10 FMCG Companies
Hindustan Unilever Ltd.
ITC (Indian Tobacco Company)
Nestlé India
GCMMF (AMUL)
Dabur India
Asian Paints (India)
Cadbury India
Britannia Industries
Procter & Gamble Hygiene and Health Care
Marico Industries
The Secondary Players
Colgate-Palmolive (India) Ltd.
Godrej Consumers Product Ltd.
Nirma Ltd.
Tata Tea Ltd.
Parle Agro
H. J. Heinz
Scenario Change since 1991
Market Share in %
MNCs 1992 2004 1992 2004
2 25 100 0 52 48
6 35 100 0 37 63
40 570 98 2 51 49TV 630 3030 97 3 49 51
Market Size in $ million
Indian Companies
Indian Companies MNCs
Breakfast cereals Wafers, potato chips
Washing Machines
1992 $=30 rupees 2004 $=45 rupeesSource: Center for Monitoring Indian Economy (CMIE)
Fast Moving Consumer Goods
SupplyAbundant supply in metros. Distribution networks are being
beefed up to penetrate the rural areas.
DemandFMCG market to triple in market size by FY12, which
highlights the potential.
Barriers to EntryHuge investments in promoting brands, setting up
distribution networks and intense competition, but the sector is not capital intensive.
Bargaining Power of Suppliers
Some of the companies are integrated backwards, which reduces the supplier's clout. Manufacturing is largely outsourced.
Bargaining Power of Customers
In case of branded products, there is little that the consumer can influence, but intense competition within the FMCG companies results in value for money deals for consumers (e.g. buy one, get one free concept).
CompetitionCompetition is faced from both domestic, MNCs and also
from cheaper imports, which are increasingly visible in urban markets. Price wars are a common phenomenon.
Analysis of FMCG Sector
Strengths
Low operational costs
Presence of established distribution
networks in both urban and rural areas
Presence of well-known brands in
FMCG sector
Analysis of FMCG Sector
Weaknesses
Lower scope of investing in technology and
achieving economies of scale, especially in small
sectors
Low exports levels
Analysis of FMCG Sector
Opportunities:
Untapped rural market
Rising income levels, i.e. increase in
purchasing power of consumers
Large domestic market- a population of over
one billion.
Analysis of FMCG Sector
Opportunities:
Export potential
High consumer goods spending
Analysis of FMCG Sector
Threats: Removal of import restrictions resulting in
replacing of domestic brands
Dependence on agriculture and monsoon for rural
demand
The increased scale of operations of retailers is shifting
the bargaining power from FMCG companies to retailers.
Analysis of FMCG Sector
"Me-too" products, which illegally mimic the labels of
the established brands. These products narrow the
scope of FMCG products in rural and semi-urban
market.
The growing adoption of private labels household
care segment
Threats
Think of it ................
Most commodities in the retail market such as milk, salt, water, atta have made their mark in the market due to their brand names. But it is a wonder that sugar has not taken any packaged format till now........
Shagun – Triveni Engineering
Originale -Modi Sugars
Trust -Simbhaoli Sugars
Indian Consumer Class
Dealing with many small markets at one time
High distinctiveness in demand
Different social customs and food habits
Several religious and personal beliefs
Indian Consumer Class
Youngest population amongst the major countries
Different income categories.
15 official languages
population of over 1 billion and 4 climatic zones
Indian consumer class can be classified according to the following criteria:
1. Income
2. Socio-Economic status
3. Age demographics
4. Geographical dispersion
5 groups on the basis of annual household income
1. Higher income
2. Upper middle income
3. Middle middle income
4. Lower middle income
5. Lower income
Income
Does not represent a real scenario for an international business
Income Classification
Purchasing power of currencies differs significantly.
Consumption and ownership trends in the economy do not completely depend on the income
National Council of Applied Economic Research (NCAER) there are 5 consumer classes
• The Rich
•The Consuming Class
•The Climbers
•The Aspirants
•The Destitute
Consumer Classification
Consumer Classification
Consumer Classes 1996 2001 2007 Change
The Rich 1.2 2 6.2 416.00%
The Consuming Class 32.5 54.6 90.9 179.00%The Climbers Rs. 22-45,000 54.1 71.6 74.1 37.00%The Aspirants Rs. 16-22,000 44 28.1 15.3 -65.00%
The Destitute 33 23.4 12.8 -61.00%
Total 164.8 180.7 21.00%
Annual Income in Rs.
Rs. 215,000 and more
Rs 45- 215,000
Below Rs. 16,000
199.
2
Factors responsible for choice of FMCG Products
Pepsodent 36%
Colgate 33%
Close up 27%
Dabur Lal 4%Others 1%
Awareness of Different Brands of Tooth Paste
Factors responsible for choice of FMCG Products
Pepsodent 37%
Colgate 34%
Close up 25%
Dabur Lal 2%Others 2%
Present Brands Being used
Factors responsible for choice of FMCG Products
Tv Advt 63%
Peer Group 14%
Others 14%
Internet 2%News Paper 7%
Source of Brand Knowledge
Factors responsible for choice of FMCG Products
Regular 30%
Gel 41%
Both 29%
Preference of Flavours
Case Study published in Indian Journal of Marketing – August 2009
Inference...........
3 main factors Total Dental Care
Decay Protection, Stronger teeth, Fight germs, fresher breath, health gums, white teeth
Product Features Taste, flavour, colour, foam
Price Consciousness Price, scheme, packaging
Points to be addressed .....
Customer evaluates a brand based of various factors
Customer exhibits some amount of Brand Loyalty but why........?
Hence the need to highlight the core product features with a value addition keeping in mind the need of the customer while making the product
Points to be addressed .....
Advertisement not effective unless the product can meet the innate need of the customer
Message content needs to be strong A new P called Perception , if strong then it
increases Brand Loyalty
Case Discusion: ITC
Other Businesses
• PaperBoard and Packaging
• Agri Business
• Hotels
FMCG Business - ITC
• Cigarettes: ITC is the market leader in cigarettes in India. With its wide range of invaluable brands, ITC has a leadership position in every segment of the market. ITC’s highly popular portfolio of brands includes Insignia, India Kings, Lucky Strike, Classic, Gold Flake, Navy Cut, Players, Scissors, Capstan, Berkeley, Bristol, Flake, Silk Cut, Duke & Royal.
FOOD
• The Foods business is today represented in 4 categories in the market. These are:
• Ready To Eat Foods
• Staples
• Confectionery
• Snack Foods
Ready to Eat…
RTE VEG
RTE BIRYANI
RTG NG
RTE HALWASINDIAN MASALA
STAPLES
• Ashirwad Atta
• Multi grain Atta
• Ashirwad Salt
• Spices
• Pickle Masala
• Instant Mixes
• Ready Meals
SNACKS
Confectionery : LICKS and CANDYMAN
SNACK FOOD
LIFE STYLE RETAILING
• ITC's Lifestyle Retailing Business Division has established a nationwide retailing presence through its Wills Lifestyle chain of exclusive specialty stores. Wills Lifestyle, the fashion destination, offers a tempting choice of Wills Classic work wear, Wills Sport relaxed wear, Wills Clublife evening wear, fashion accessories and Essenza Di Wills - an exclusive range of fine fragrances and bath & body care products and Fiama Di Wills - a range of premium shampoos and shower gels. Wills Lifestyle has also introduced Wills Signature designer wear, designed by the leading designers of the country.
• With a distinctive presence across segments at the premium end, ITC has also established John Players as a brand that offers a complete fashion wardrobe to the male youth of today. With its brands, ITC is committed to build a dominant presence in the apparel market through a robust portfolio of offerings
PERSONAL CARE
• ITC's Personal Care portfolio under the 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel UltraPro', 'Vivel' and 'Superia' brands has received encouraging consumer response and is being progressively extended nationally.
'Essenza Di Wills
• ITC launched an exclusive line of prestige fine fragrances under the Essenza Di Wills brand in mid 2005. Essenza Di Wills is an exclusive range of fine fragrances and bath & body care products for women and men.
'Fiama Di Wills
• Fiama Di Wills Hair Care Range consists of the Colour Damage Repair System, the Anti Hair Fall System and the Total Damage Repair System
• Fiama Di Wills Skinsense Bathing Bar
• Fiama Di Wills Shower Gels & Shower Gel Bars
• Fiama Di Wills Face and Body Talc
• Fiama Di Wills Swiss Soft Fiama Di Wills Men
'Vivel• Vivel Young Glow is enriched with Vitamin E and Fruit Infusions which
help in providing youthful glow to the skin.
• Vivel Satin Soft is enriched with Vitamin E and Aloe Vera which help the skin feel beautifully soft.
• Vivel Sandal Sparkle is enriched with Sandalwood Oil and Active Clay which helps in providing clear skin.
• Vivel Ayurveda Essence is enriched with multiple Ayurvedic Ingredients which help protect skin from germs and harsh environment, keeping it healthy and beautiful.
• Vivel Silk Spring is enriched with Green Apple extracts and Olive oil which help in making skin smooth.
Vivel
Superia
Stationery
• Classmate : notebooks, pens, pencils, mechanical pencils, precision instruments, erasors and sharpners
• Colorcrew : wax crayons and color pencils
• Papercraft : Business stationery
Matchsticks
Agarbatties
Thanks!!!
top related