DECLARATION I,…….ABU SUFIYAN………Roll No…1019370003… student of MBA IVth Semester, Year 2011-12, hereby declare that the Research Project Report titled ...... STUDY OF MARKETING STRATEGY IN FMCG SECTOR………….being submitted in partial fulfillment for the award of MBA degree by MTU , Noida is my original work of Research and it has not been submitted to any Institute/University for the award of any degree. Date: Place:
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DECLARATION
I,…….ABU SUFIYAN………Roll No…1019370003… student of MBA IVth
Semester, Year 2011-12, hereby declare that the Research Project Report titled
...... STUDY OF MARKETING STRATEGY IN FMCG SECTOR………….being
submitted in partial fulfillment for the award of MBA degree by MTU , Noida is
my original work of Research and it has not been submitted to any
Institute/University for the award of any degree.
Date:
Place:
Student Name & Sign
ACKNOWLEDGEMENT
A truly independent project is a contradiction in terms. Every project involves contribution of
many people. This project also ears the imprints of many people and it is a pleasure to
acknowledge all of them.
I take this opportunity to convey my heart filled thanks to my project guide “Akanksha singh ”
who has been a source of guidance and has rendered constant encouragement to complete this
project.
I extend my gratitude to United College of Engineering & Research Gr. Noida
authorities, classmates and friend who were helpful at every step.
Last but not the least would be falling short of duties if I don’t mention. My sincere thanks to all
the staff members for providing me with great help.
(BIKRAM DAS)
PREFACE
In spite of the theoretical gained through classroom study, a person is incomplete if not subjected
to practical exposure of real corporate world and may have to face hurdles, which will be
difficult to overcome without any first-hand experience of business.
In the context, research program has been designed to make the person aware of the happenings
of the real business world. The research entitled” STUDY OF MARKETING STRATEGY IN
FMCG SECTOR” of has been done at as a completion part of MBA programme.
I whole heatedly appreciated the harmonic atmosphere provided to me by the staff of marketing.
The data has collected at primary source through interviews with the customer & discussions
with the retailer of different -different sections. The data which used in this project report are
secondary data. These secondary data so obtained were mostly collected from the management.
It would not have been possible to complete my research report in a manner. I reckoned & within
such a limited time. For this nice obliged to them.
TABLE OF CONTENT
Introduction of topic
Literature Review
Objectives & Scope of study
Research methodology(Hypothesis if any will be included here)
Findings
Conclusion
Suggestions & Recommendations
Bibliography
Annexure
INTRODUCTION OF TOPICS
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. Examples of FMCG generally include a wide
range of frequently purchased consumer products such as toiletries, soap,
cosmetics, tooth cleaning products, shaving products and detergents, as well
as other non-durables such as glassware, bulbs, batteries, paper products, and
plastic goods. FMCG may also include pharmaceuticals, consumer electronics,
packaged food products, soft drinks, tissue paper, and chocolate bars.
Indiaʹs FMCG sector is the fourth largest sector in the economy and
creates employment for more than three million people in downstream
activities. Its principal constituents are Household Care, Personal Care and
Food & Beverages. The total FMCG market is in excess of Rs. 85,000 Crores. It
is currently growing at double digit growth rate and is expected to maintain a
high growth rate. FMCG Industry is characterized by a well established
distribution network, low penetration levels, low operating cost, lower per
capita consumption and intense competition between the organized and
unorganized segments.
The Rs 85,000-crore Indian FMCG industry is expected to register a
healthy growth in the third quarter of 2008-09 despite the economic downturn.
The industry is expected to register a 15% growth in Q3 2008-09 as compared
to the corresponding period last year. Unlike other sectors, the FMCG
industry did not slow down since Q2 2008. the industry is doing pretty well,
bucking the trend. As it is meeting the every-day demands of consumers, it
will continue to grow. In the last two months, input costs have come down
and this will reflect in Q3 and Q4 results.
Market share movements indicate that companies such as Marico Ltd
and Nestle India Ltd, with domination in their key categories, have improved
their market shares and outperformed peers in the FMCG sector. This has
been also aided by the lack of competition in the respective categories.
Singleproduct leaders such as Colgate Palmolive India Ltd and Britannia
Industries
Ltd have also witnessed strength in their respective categories, aided by
innovations and strong distribution. Strong players in the economy segment
like Godrej Consumer Products Ltd in soaps and Dabur in toothpastes have
also posted market share improvement, with revived growth in semi-urban
and rural markets.
What are 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. Examples
of FMCG generally include a wide range of frequently purchased consumer products such as
toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as
other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG
may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks,
tissue paper, and chocolate bars.
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.
In 2005, the Rs. 48,000-crore FMCG segment was one of the fast growing industries in India.
According to the AC Nielsen India study, the industry grew 5.3% in value between 2004 and
2005.
Indian FMCG Sector
The Indian FMCG sector is the fourth largest in the economy and has a market size of US$13.1
billion. Well-established distribution networks, as well as intense competition between the
organised and unorganised segments are the characteristics of this sector. FMCG in India has a
strong and competitive MNC presence across the entire value chain. It has been predicted that
the FMCG market will reach to US$ 33.4 billion in 2015 from US $ billion 11.6 in 2003. 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 Indian Economy is surging ahead by leaps and bounds, keeping pace with rapid
urbanization, increased literacy levels, and rising per capita income.
The big firms are growing bigger and small-time companies are catching up as well. According
to the study conducted by AC Nielsen, 62 of the top 100 brands are owned by MNCs, and the
balance by Indian companies. Fifteen companies own these 62 brands, and 27 of these are owned
by Hindustan Lever. Pepsi is at number three followed by Thums Up. Britannia takes the fifth
place, followed by Colgate (6), Nirma (7), Coca-Cola (8) and Parle (9). These are figures the soft
drink and cigarette companies have always shied away from revealing. Personal care, cigarettes,
and soft drinks are the three biggest categories in FMCG. Between them, they account for 35 of
the top 100 brands.
THE TOP 10 COMPANIES IN FMCG SECTOR
S.
NO.
Companies
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
The companies mentioned in table, are the leaders in their respective sectors. The personal care
category has the largest number of brands, i.e., 21, inclusive of Lux, Lifebuoy, Fair and Lovely,
Vicks, and Ponds. There are 11 HLL brands in the 21, aggregating Rs. 3,799 crore or 54% of the
personal care category. Cigarettes account for 17% of the top 100 FMCG sales, and just below
the personal care category. ITC alone accounts for 60% volume market share and 70% by value
of all filter cigarettes in India.
The foods category in FMCG is gaining popularity with a swing of launches by HLL, ITC,
Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crore. Nestle and
Amul slug it out in the powders segment. The food category has also seen innovations like
softies in ice creams, chapattis by HLL, ready to eat rice by HLL and pizzas by both GCMMF
and Godrej Pillsbury. This category seems to have faster development than the stagnating
personal care category. Amul, India's largest foods company, has a good presence in the food
category with its ice-creams, curd, milk, butter, cheese, and so on. Britannia also ranks in the top
100 FMCG brands, dominates the biscuits category and has launched a series of products at
various prices.
In the household care category (like mosquito repellents), Godrej and Reckitt are two players.
Goodknight from Godrej, is worth above Rs 217 crore, followed by Reckitt's Mortein at Rs 149
crore. In the shampoo category, HLL's Clinic and Sunsilk make it to the top 100, although P&G's
Head and Shoulders and Pantene are also trying hard to be positioned on top. Clinic is nearly
double the size of Sunsilk.
Dabur is among the top five FMCG companies in India and is a herbal specialist. With a turnover
of Rs. 19 billion (approx. US$ 420 million) in 2005-2006, Dabur has brands like Dabur Amla,
Dabur Chyawanprash, Vatika, Hajmola and Real. Asian Paints is enjoying a formidable presence
in the Indian sub-continent, Southeast Asia, Far East, Middle East, South Pacific, Caribbean,
Africa and Europe. Asian Paints is India's largest paint company, with a turnover of Rs.22.6
billion (around USD 513 million). Forbes Global magazine, USA, ranked Asian Paints among
the 200 Best Small Companies in the World
Cadbury India is the market leader in the chocolate confectionery market with a 70% market
share and is ranked number two in the total food drinks market. Its popular brands include
Cadbury's Dairy Milk, 5 Star, Eclairs, and Gems. The Rs.15.6 billion (USD 380 Million) Marico
is a leading Indian group in consumer products and services in the Global Beauty and Wellness
space.
INTRODUCTION ON MARKETING STRAGY
‘‘Marketing strategy is a process that can allow an organization to concentrate its limited
resources on the greatest opportunities to increase sales and achieve a sustainable.’’
A marketing strategy allows an organization to concentrate its limited resources on the greatest
opportunities to increase sales and its competitive advantage. Often companies will spend a ton
of money on promotional activities that don't get results. Instead take a closer look at your
product, packaging and pricing; your customer; and what makes your company stand out. When
you are clear and confident on your offerings, you can spend less on your marketing strategy and
achieve better results.
Marketing strategies of fast moving consumer goods
The current recession is the most brutal economic downturn in a lifetime. One industry where the
consequences of the recession are felt particularly hard is the fast-moving consumer goods
(FMCG) industry. In the past, this industry was dominated by such well-known manufacturer
brands as Ariel detergent, Nescafé coffee, Philadelphia cream cheese, Flora margarine, and
Pampers nappies. However, in recent decades, so-called private labels or store brands – brands
owned by retail giants such as Wal-Mart, Tesco, Carrefour and Aldi – have made huge inroads,
especially in western Europe and the US. Today they control 20 per cent of the US FMCG
market, 35 per cent in Germany, and more than 40 per cent in the UK Much of the loss of market
share of manufacturer brands is initiated in economic downturns. Faced with a pressing need to
save money, shoppers turn to (cheaper) store brands. They discover that the quality is good and,
consequently, many stick with the brand when the economy improves again.
Types of Marketing Strategy
One of the most important concepts of the marketing planning process is the need to develop a
cohesive marketing strategy that guides tactical programs for the marketing decision areas. In
marketing there are two levels to strategy formulation:
1-General Marketing Strategies
2-Decision Area Strategies
General Marketing Strategies
These set the direction for all marketing efforts by describing, in general terms, how marketing
will achieve its objectives. There are many different General Marketing Strategies, though most
can be viewed as falling into one of the following categories:
1-Market Expansion
2-Market Share Growth
3-Niche Market
4 Status Quo
5-Market Exit
Market Expansion
With this strategy marketers look to grow overall sales in one of two ways:
Grow Sales with Existing Products – With this approach the marketer seeks to actively
increase the overall sales of products the company currently markets. This can be
accomplished by:
1. getting existing customers to buy more
2. getting potential customers to buy (i.e., those who have yet to buy)
3. selling current products in new markets.
Grow Sales with New Products – With this approach the marketer seeks to achieve
objectives through the introduction of new products. This can be accomplished by:
1. introducing updated versions or refinements to existing products
2. introducing products that are extensions of current products
3. introducing new products not previously marketed.
2-Market Share Growth
This strategy looks to increase the marketer’s overall percentage or share of market. In
many cases this can only be accomplished by taking sales away from competitors.
Consequently, this strategy often relies on aggressive marketing tactics.
3-Niche Market
This strategy looks to obtain a commanding position within a certain segment of the
overall market. Usually the niche market is much smaller in terms of total customers and
sales volume than the overall market. Ideally this strategy looks to have the product
viewed as being different from companies targeting the larger market.
4-Status Quo
This strategy looks to maintain the marketer's current position in the market, such as
maintaining the same level of market share.
5-Market Exit
This strategy looks to remove the product from the organization’s product mix. This can be
accomplished by:
1-selling the product to another organization
2-eliminating the product the company's product offerings
Decision Area Strategies
These are used to achieve the General Marketing Strategies by guiding the decisions within
important marketing areas (product, pricing, distribution, promotion, target marketing). For
example, a General Marketing Strategy that centers on entering a new market with new product
may be supported by Decision Area Strategies that include:
(FMCG) industry revealed that over 98% of the total cycle time (total elapsed time
between the start and end stages of the product development process) of each case
comprised complete inactivity. This was surprising because a fast time to market
capability was expected to be highly valued, especially within the low and medium
innovation level cases where the resultant products were not competing on their
innovative merits.
A review of the literature to explore this problem further revealed that little had been
written about the design and organization of development processes in the UK FMCG
industry. It also revealed that the great majority of the new products developed by this
industry were of these lower innovation types (Ernst & Young/ ACNielsen, 1999), and
that no study had been conducted that attempted to explain the causes of the cycle time
performance of these processes. In addition to its obvious academic merits, such a study
would yield benefits to the community of FMCG product development practitioners. It
would explain the root causes of delay and hence facilitate meaningful interventions to
these processes to enable sustained improvements to their cycle time performance.
However, a pre-requisite to being able to explain these causal relationships it is necessary
to first be able to adequately describe the development processes themselves. This is
conventionally achieved via a stage model, which is a diagrammatic representation
describing the discrete stages that an organization typically conducts when conceiving,
developing and introducing a new product or other innovation.
The literature review had revealed no such stage model that had been presented
specifically for the UK FMCG industry, and those stage models that were presented did
not accord with the product development processes witnessed during the pilot cases. The
first major research question of the study was consequently established to be what is the
sequence of main stages for lower innovation product development processes in the UK
FMCG industry? This paper attempts to make four contributions to the theory on organizational
innovation. It characterizes a dominant paradigm that has emerged within this body of
literature; presents a detailed explanation of a UK FMCG product development process
that has previously been lacking; develops a new stage model that better describes
development processes in this industry and suggests four additional forms of
representation to supplement this stage model in order to facilitate the improved
communication, control and performance of such development processes.
The paper is presented in five parts. The first part establishes the theoretical framework
on stage model research. The second part explains the research methodology designed to
achieve the research objectives. The case study evidence is considered in part three, with
the Tesco food product development process being advanced as a representative process
then explained in some detail. Part four compares the descriptive power of the literature
against the case evidence collected. The final part develops an alternative stage model
for the UK FMCG industry and recommends multiple forms of representation to
supplement the stage model.It is this question that forms the subject of this paper
A review of the academic and technical literature on the subject of organizational
innovation reveals that an orthodoxy has emerged amongst scholars and practitioners.
Their convergent views form a dominant paradigm that emphasizes the high innovation,
low volume development environments of durable goods manufacturers from the
Automotive and Electronics/ IT industries (Francis, 2004).
Numerous research reviews, critiques and evaluations have been written to characterize
and categorize this extensive literature. Amongst these, Wolf (1994) identifies Stage
Model research as a distinct genre, which he characterizes as conceptualizing innovation
as a series of discrete stages that unfold over time. Its purpose is to determine whether
the innovation process involves identifiable stages, and if so, what they are and what their
order is.
The stage models illustrated in Table II are the yield of a sample of representative and
influential publications from within the generic product development literature, and are
presented as being representative of this background literature. These models confirm
that at a level of abstraction it is possible to identify common process stages between
these models even though they individually display a different scope, emphasis and level
of detail. Three broad process phases are also identifiable. These are referred to within
this paper as the Product Independent, Product Development and Post DevelopmentEvaluation
phases respectively.
The Product Independent phase refers to those process stages that are not directly and
wholly attributable to a single development project. These include strategic planning,
capability development, process improvement and general technological research and
development activities. The Product Development phase includes all those product
specific process stages required to design and introduce a new product. This typically
encompasses the idea generation through to commercialisation or launch stages of that
development process. Finally, the Post Development-Evaluation phase encompasses all
the process stages that might occur after the formal launch of a product. This includes an
evaluation of the performance of the development process itself, which is sometimes
referred to as a postmortem review. It also includes the evaluation of the new product’s
performance in the marketplace.
ITC (Indian Tobacco Company)
ITC is an Indian public conglomerate company headquartered in Kolkata, West Bengal, India.[2] Its diversified business includes four segments: Fast Moving Consumer Goods (FMCG),
Hotels, Paperboards, Paper & Packaging and Agri Business. ITC's annual turnover stood at $7
billion and market capitalization of over $33 billion. The company has its registered office in
Kolkata. It started off as the Imperial Tobacco Company, and shares ancestry with Imperial
Tobacco of the United Kingdom, but it is now fully independent, and was rechristened to Indian
Tobacco Company in 1970 and then to I.T.C. Limited in 1974.
The company is currently headed by Yogesh Chander Deveshwar. It employs over 26,000 people
at more than 60 locations across India and is listed onForbes 2000. ITC Limited completed 100
years on 24 August 2010.
ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging,
Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel,
prompted by concern about the Nestle's promotion of breast milk substitutes (infant formula),
particularly in less economically developed countries (LEDCs), which campaigners claim
contributes to the unnecessary suffering and even deaths of babies, largely among the poor.[2] Among the campaigners, Professor Derek Jelliffe and his wife Patrice, who contributed to
establish the World Alliance for Breastfeeding Action (WABA), were particularly instrumental in
helping to coordinate the boycott and giving it ample visibility worldwide.
Marketing strategies of Maggie noodles of Nestlé boycott
Maggi noodles is a brand of instant noodles manufactured by Nestlé. Maggi has been the highest sold noodles in India. It is a product of Nestle Brand. It took several years and lots of money for nestle to establish its noodles brand in India Maggi was invented in Europe by a person named Jullius Maggi.In India it was launched in 1980s by Nestle group of companies. Maggie had merged with Nestle family in 1947.Maggie has faced lot of hurdles in its journey in India…. The basic problem the brand faced was the Indian psyche. i.e Indians used to be conservative about the food habits so noodles faced a lot of problem in promoting sales. Initially nestle tried to to position the Noodles in the platform of convenience targeting the working women. However, the sales of Maggi was not picking up despite of heavy Media Advertising.To overcome this NIL conducted a research,which revealed that it was children who liked the taste of Maggi noodles and who were the largest consumers of the product.so they came up with Maggi- 2 minute noodles with price of Rs. 2.10 with a close of 100% margin. NIL shifted its focus from working women and targeted children and their mothers through its marketing. NIL's promotions positioned the noodles as a 'convenience product', for mothers and as a 'fun' product for children. The noodles' tagline, 'Fast to Cook Good to Eat'was also in keeping with this positioning. They promoted the product by 1.Distributing free samples. 2.Giving gifts on return of empty packets.3.Dry sampling-distributing Maggi packets 4. wet sampling - distributing cooked Maggi.5.Availability in different packages 50gm,100gm,200gm,etc.. and6.Effective Tagline Communication.
Market position of Maggie:1.No.1 in instant noodles and sauces.2.No.2 in healthy soups.3.Market share of noodles- 80%4.current sales-5.5crores boxes in India
A biscuit manufacturing company launched its business with a marginal capital of Rs295 in 1892 in a non descript house in Calcutta. What can one do with Rs.295.00 in today's world ?
There was no electricity, the burning wood was used as the main fuel. But the taste of the biscuit manufactured was the most influencing factor to the general public. Gupta brothers acquired the factory and ran it in the name of V.S.Brothers.1910 was the year when electricity was ushered in and there was a great deal of activities accompanied in the manufacturing of Biscuits. An English man by name Homes joined as a partner in the year 1918. The company acquired the name "Britannia Biscuit Company ". The infra-structure facilities , machineries, gas ovens were imported from Britain in two years time. Britannia got the name and became famous for using gas for the first time in Asia in manufacturing Biscuits.
Britannia inculcated the culture of eating biscuits in the minds of Indian people in a big way with the slogan "Eat Healthy, Think Better " . A production centre was established in Mumbai also. Perceiving the opportunities for a rapid growth, Peek Bern in U.K. made a substantial investment in Britannia.
During the second world war , Biscuits were specially manufactured for the British Govt. which were deported for these of soldiers engaged in the war. In the period 1945- '50, after the world war II, Britannia saw its capital to grow to a sprawling Rs.128 lakhs, which meant to them 8 folds the capital they had in 1940. Britannia shifted its gear in the marketing of Biscuits from Parry & Co to themselves from 1975 onwards. The company took a new birth in the name "BRITANNIA INDUSTRIES LIMITED " The sales touched a peak of Rs.100 Crores in 1983.
Britannia celebrated its Platinum Jubilee in the year 1992. It is now in the hands of well known Wadia Group jointly with the world wide Groupe DANONE. " GOOD FOR HEALTH; GOOD FOR TASTE; FINEST IN BRAND; AFFLUENT IN PRICE"ARE THE STRATEGIES employed by Britannia for its towering stature today.
Marketing Strategies :-Milk-Biskies are made specially for children. Britannia TIGER Biscuits are made for boys and girls in the age group of 7to14. Britannia is quick to realize the wants of Teenagers, it brought a special brand for this group in the name "Little Hearts" which became super hit in no time. Britannia's next strategy was to introduce a new brand with a question tag " Sweet or Hot "
biscuit. It was branded as "50-50-Biscuit". When the decision is referred to the 3rd umpire in cricket, we all see "50-50" blinking in the screen, it is also a way to impress the biscuit brand's name in the minds of cricketing world. Marrie Gold is an universal brand introduced by Britannia which is sought after in tea time and when travelling, thus making the demand for this brand as the highest which is also due to an affluent price.
Promotional Strategies:-"Eat Britannia, Go for World Cup" was the theme adopted in 1999 .People bought the biscuit packs and searched for the lucky scratch for flying to England to see world Cup Cricket match.The sales bounced 37% high on account of this strategy.The scheme came alive again during the world Cup Match in 2002-2003 in South Africa. " Lagan - the super hit movie " brought fame to Britannia Biscuits also as 40000 buyers of Britannia Biscuit packs were invited to see and a small lucky group to play the game with the movie Stars of Lagan. What a novel way to promote a product - a perception in correct proportion indeed !!
Summary:-* Britannia Industries have a base of 23000 share holders with a paid up capital of 23890163 shares of Rs10/each today.
* Largest company in India in food processing industries where product range also includes Breads and Cakes.
* Manufacturing and sourcing locations spread across the length and breath of the country.
* Tens of Thousands of outlets having one of the largest distribution net work in the country.
* Britannia Biscuits enjoy a brand loyalty in Export Houses also.
* When it TIGER brand was introduced in the market , Britannia supplied Note Books, Scales, Pencils to Children in the name of its new brand free of cost.
* Britannia now owns an ultra modern manufacturing facility. It has built up a big consultancy centre also.
* Biscuits sold in a year when kept in pile formation one above the ones may scale 10 times higher than the Everest Peak.