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1. SIGNIFICANCE OF THE PROJECT
The aim of this project topic is to find the role of packaging
on consumer buying behaviour.
The basic purpose behind it is to find out how such factors act
behind the success of
packaging. According to this research I try to find the positive
relationship between
independent variable and dependent variables. For collecting the
data I had used the
questionnaire.
The significance of the study, its limitations are discussed.
The consumer buying behaviour
is dependent variable. The packaging is the most important
factor. Packaging elements like
Packaging colour. Background Image, Packaging Material, Font
Style, Design of wrapper,
Printed Information and Innovation is taken as predictors.
Due to increasing self-service and changing consumers lifestyle
the interest in package as a
tool of sales promotion and stimulator of impulsive buying
behaviour is growing
increasingly. So package performs an important role in marketing
communications,
especially in the point of sale and could be treated as one of
the most important factors
influencing consumers purchase decision. Literature analysis on
question under
investigation has shown that there is no agreement on
classification of package elements as
well as on research methods of package impact on consumers
purchase decision.
By this article we seek to reveal elements of package having the
ultimate effect on consumer
choice. Taking into consideration that package could be treated
as a set of various elements
communicating different messages to a consumer; the research
model was developed and
tested in order to reveal impact of visual and verbal package
elements on consumers
purchase decisions.
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Objective of the Project: Important attribute in the research
Convenience, Materials, Aesthetic, Information.
To find out these Attributes affect Consumer Behaviour
Significantly.
To find out the priority of consumers towards Packaging.
To find out the demand for after-use Packaging and eco-friendly
Packaging.
Is there any significant difference between the Variables as
there is change in Products?
To find out the Consumer Attitude towards the new Packaging of
Preserved Products.
Is Packaging Influence Consumer to switch from one to another
Brand?
Are consumers willing to pay premium prices for better
packaging? Hypothesis: Packaging has least influence on consumer
buying behaviour.
Packaging only provides information.
Packaging cannot be used as a tool of marketing.
There is no difference in sales if the Packaging of a particular
product is being changed.
People do not purchase eco-friendly Packaged products.
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Methodology: The methodology for the survey on Consumer
Behaviour towards Packaging of FMCG
Products is the Questionnaire method where in questionnaire are
answered by 50
respondents (including Male and Female respondents) of 4 age
groups.
The responses are gathered in a standardized way, so
questionnaires are more objective,
certainly more so than interviews. Generally it is relatively
quick to collect information
using a questionnaire. However in some situations they can take
a long time not only to
design but also to apply and analyse.
Limitations: The only limitation behind this project was that
people were not responding as seriously as it
was expected and it is assumed that people have seriously filled
the questionnaires for the
exact result.
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2. INTRODUCTION
JO DIKHTA HAI WOH HI BIKTA HAI
The earlier approach to marketing was simple enough to make sure
that the product is
visible - on store shelves and through mass media advertising -
and it will more or less sell
itself. With the evolution of modern retail, though, the
emphasis is shifting to in-store
displays and promotions - probably also because for the first
time, the space for such
initiatives is available.
But manufacturers no longer have the last word on what will
happen at the store. "Modern
trade has a significant say in promotions, perhaps because it
offers far superior results with a
much faster lead time," says Future Group's Mall.
Cadbury India's Sethi points out that retailer are more
open to brand promotions and displays - including
posters, gondolas and danglers - when manufacturers
back up their ideas with shopper insights. "There will be
a shift from traditional media to increased
communication at the point of purchase," he says.
Initiatives that help grow the category as a whole are
particularly welcome, say analysts, since that boosts the
retailers' revenue. And many FMCG companies are predicting that
spends on promotion, in-
store and point of purchase displays will increase significantly
from the present 20-30 per
cent share of the marketing budget.
Consumer goods companies need to make several changes in
strategy and in attitude, if they
are to achieve the same level of success with organized retail
as they have with traditional
formats. Printing barcodes on their products would probably be a
good place to start.
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Meaning: Packaging is the science, art and technology of
enclosing or protecting products for
distribution, storage, sale, and use. Packaging also refers to
the process of design, evaluation,
and production of packages. Packaging can be described as a
coordinated system of
preparing goods for transport, warehousing, logistics, sale, and
end use. Packaging contains,
protects, preserves, transports, informs, and sells. In many
countries it is fully integrated into
government, business, and institutional, industrial, and
personal use.
The wrapping material around a consumer item that serves to
contain, identify, describe,
protect, display, promote and otherwise make the product
marketable and keep it clean is
said to be Packaging.
Packaging is more than just a product's pretty face. A package
design may affect everything
from breakage rates in shipment to whether stores will be
willing to stock it. For example,
"display ability" is an important concern. The original
slanted-roof metal container used for
Log Cabin Syrup was changed to a design that was easier to stack
after grocers became
reluctant to devote the necessary amounts of shelf space to the
awkward packages.
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Other distribution-related packaging considerations
include:-
Labelling: It may be required to include certain information on
the label of your product when it is distributed in specific ways.
For example, labels of food products
sold in retail outlets must contain information about their
ingredients and nutritional
value.
Opening: If a product is one that will be distributed in such a
way that customers will want to, and should be able to, sample or
examine it before buying, the packaging will
have to be easy to open and to reclose. If, on the other hand,
the product should not be
opened by anyone other than the purchaser, an over-the-counter
medication, for
instance--then the packaging will have to be designed to resist
and reveal tampering.
Size: If the product must have to be shipped a long distance to
its distribution point, then bulky or heavy packaging may add too
much to transportation costs.
Durability: Many products endure rough handling between their
production point and their ultimate consumer. If the distribution
system can't be relied upon to protect the
product, the packaging will have to do the job.
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History:
From the very earliest times, humans consumed food where it was
found. Families and
villages made or caught what they used. They were also
self-sufficient, so there was little
need for packaging of goods, either for storage or
transportation. When containers were
needed, nature provided gourds, shells, and leaves. Later,
containers were fashioned from
natural materials, such as hollowed logs, woven grasses and
animal organs. As ores and
chemical compounds were discovered, metals and pottery were
developed, leading to other
packaging forms. Packaging is used for several purposes:
Contain products, defining the amount the consumer will
purchase.
Protects products from contamination, from environmental damage
and from theft.
Facilitate transportation and storing of products.
Carry information and colourful designs that make attractive
displays.
For each product's needs, there are good packaging solutions.
Though packages are often
taken for granted, they are the result of many years of
innovation. A brief review of the more
popular packaging developments is included in this fact
sheet:
Paper and Paper Products: One way of placing packages into
categories is to describe them as flexible, semi-flexible, or
rigid. Flexible packaging includes the paper sacks that dog food
comes in, the plastic bags
that hold potato chips and the paper or plastic sacks in which
we carry home our purchases.
An example of semi-flexible packaging is the paperboard boxes
that cereal, many other food
products, small household items, and many toys are packaged in.
For many non-food items,
the packaging is made more rigid by formed packing materials
that slip inside the box and
hold the product and its accessories or components in place.
Forms of rigid packaging
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include crates, glass bottles, and metal cans. Cloth or paper
may be the oldest forms of
flexible packaging.
Glass: Although glass-making began in 7000 B.C. as an offshoot
of pottery, it was first
industrialized in Egyptian 1500 B.C. Made from base materials
(limestone, soda, sand and
silica), which were in plentiful supply, all ingredients were
simply melted together and
moulded while hot. Since that early discovery, the mixing
process and the ingredients have
changed very little, but the moulding techniques have progressed
dramatically.
At first, ropes of molten glass were coiled into shapes and
fused together. By 1200 B.C.,
glass was pressed into moulds to make cups and bowls. When the
blowpipe was invented by
the Phoenicians in 3000 B.C., it not only speeded production but
allowed for round
containers. Colours were available from the beginning, but
clear, transparent glass was not
discovered until the start of the Christian era. During the next
1000 years, the process spread
steadily, but slowly, across Europe.
The split mould, which was developed in the 17th and 18th
centuries, further provided for
irregular shapes and raised decorations. The identification of
the maker and the product
name could then be moulded into the glass container as it was
manufactured.
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As techniques were further refined in the 18th and
19thcenturies, prices of glass containers
continued to decrease. Owens invented the first automatic rotary
bottle-making machine,
patented in1889. Suddenly, glass containers of all shapes and
sizes became economically
attractive for consumer products, and from the early 1900s until
the late1960s glass
containers dominated the market for liquid products. A typical
modern bottle-making
machine automatically produces 20,000 bottles per day.
While other packaging products, such as metals and plastics,
were gaining popularity in the
1970s, packaging in glass tended to be reserved for high value
products. As a type of "rigid
packaging," glass has many uses today. High weight, fragility
and cost have reduced the
glass markets in favour of metal and plastic containers. Still,
for products that have a high
quality image and a desire for high flavour or aroma protection,
glass is an effective
packaging material. The packaging glass used today is the only
type of glass accepted in US
recycling programs.
Metals: Ancient boxes and cups, made from silver and gold, were
much too valuable for common
use. Metal did not become a common packaging material until
other metals, stronger alloys,
thinner gauges and coatings were eventually developed. One of
the "new metals' that
allowed metal to bemused in packaging was tin. Tin is a
corrosion-resistant metal, and
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ounce-for-ounce, its value is comparable to silver. However, tin
can be "plated" in very thin
layers over cheaper metals, and this process made it economical
for containers. The process
of tin plating was discovered in Bohemia in 1200 A.D., and cans
of iron coated within were
known in Bavaria as early as the 14th century. After William
Underwood transferred the
process to the United States via Boston, steel replaced iron,
which improved both output and
quality.
The term 'tin can' referred to a tin-plated iron or steel can
and was considered a cheap item.
Tin foil also was made long before aluminum foil. Today many
still refer to metal cans as
'tin cans' and aluminum foil as 'tin foil', a carryover from
times well past. In 1764, London
tobacconists began selling snuffing metal canisters, another
type of today's "rigid
packaging." But no one was willing to use metal for food since
it was considered poisonous.
The safe preservation of foods in metal Containers were finally
realized in France in the
early1800s. In 1809, General Napoleon Bonaparte offered 12, 000
francs to anyone who
could preserve food for his army. Nicholas Appert, a Parisian
chef and confectioner, found
that food sealed in tin containers and sterilized by boiling
could be preserved for long
periods. A year later (1810), Peter Durand of Britain received a
patent for tinplate after
devising the sealed cylindrical can. Since food was now safe
within metal packaging, other
products were made available in metal boxes. In the 1830s,
cookies and matches were sold
in tins and by 1866 the first printed metal boxes were made in
the United States for cakes of
Dr. Lyon's toothpowder.
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The first cans produced were lead-soldered by hand, leaving a 1
1/2-inch hole in the top to
force in the food. A patch was then soldered in place but a
small air hole remained during
the cooking process. Another small drop of solder then closed
the air hole. At this rate, only
60cans per day could be manufactured. In 1868, interior enamels
for cans were developed
but double seam closures using a sealing compound were not
available until
1888.Aluminum particles were first extracted from bauxite ore in
1825 at the high price of
$545 per pound.
When the development of better processes began in 1852, the
prices steadily declined until
1942, when the price of a pound of aluminum was $14.Although
commercial foils entered
the market in1910, the first aluminum foil containers were
designed in the early 1950s while
the aluminum can appeared in 1959.
Plastics: Plastic is the newest packaging material in comparison
with metal, glass, and paper.
Although discovered in the 19th century, most plastics were
reserved for military and
wartime use.
Plastics have become very important materials and a wide variety
of plastics have been
developed over the past 170years. Several plastics were
discovered in the nineteenth
century: styrene in 1831, vinyl chloride in 1835, and celluloid
in the late 1860s.
However, none of these materials became practical for packaging
until the twentieth century.
Styrene was first distilled from a balsam tree in 1831, but the
early products were brittle and
shattered easily. Germany refined the process in 1933 and by the
1950s Styrofoam was
available worldwide. Insulation and cushioning materials as well
as foam boxes, cups and
meat trays for the food industry became popular.
Vinyl chloride, discovered in 1835, provided for the further
development of rubber
chemistry. For packaging, molded deodorant squeeze bottles were
introduced in 1947 and in
1958; heat shrinkable films were developed from blending styrene
with synthetic rubber.
Today some water and vegetable oil containers are made from
vinyl chloride. Celluloid was
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invented during the American Civil War. Due to a shortage of
ivory, a United States
manufacturer of billiard balls offered a $10,000 Reward for an
ivory substitute.
A New York engineer, John Wesley Hyatt, with his brother Isaiah
Smith Hyatt,
experimented several years before creating the new material.
Patented in 1870, "celluloid"
could not be molded, but rather carved and shaped, just like
ivory. Cellulose acetate was
first derived from wood pulp in 1900 and developed for
photographic uses in1909. Although
DuPont manufactured cellophane in New York in 1924, it wasn't
commercially used for
packaging until the late 1950s and early 1960s.
A Review: From containers provided by nature to the use of
complex materials and processes,
packaging has certainly changed. Various factors contributed to
this growth: the needs and
concerns of people, competition in the marketplace, unusual
events (such as wars), shifting
lifestyles, as well as discoveries and inventions. Just as no
single cause influenced past
development, a variety of forces will be required to create the
packages of the future, but a
very important factor will always be consumer choice.
Ultimately, only the packaging that
our society demands is produced. We choose by the products we
purchase.
Current packaging designs are beginning to incorporate
recyclable and recycled plastics but
the search for reuse functions continues.
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3. PACKAGING INDUSTRY
History:
In pre industrial society, packaging of food was far from being
unknown. It was used for food storage at home and for transport
from the production place, the farm, or workshop to
the local or regional market. Examples are the transport of
cereals or flour in bags, tea in
wooden boxes or tinplate canisters, and oils in jars. At the
household level, people salted
meat and pickled vegetables and preserved them in jars. In
groceries at the end of the
nineteenth century, most commodities were still unpacked and
sold in bulk. Products such as
tea, coffee, sugar, flour, or dried fruits were weighed out in
front of the customer and
wrapped in paper or put into a bag. In major cities in the
1880s, the milkman came around
with a dipper and can to deliver milk, which was often
dirty.
Origin of Modern Packaging and Canning:
Early methods of sealing jars included waxed paper, leather, or
skin, followed by cork
stoppers and wax sealers. The beginning of modern food
technology started with the
experiments of the French confectioner Nicolas Appert
(17501841). In 1795, the French
government offered a prize of 12,000 francs to anyone who could
find a way to preserve
food because Napoleon Bonaparte needed to provide the military
with a safe food supply.
(The requirements of providing adequate food supplies for armies
and navies have been of
great significance in the history of modern packaging and food
preservation.) After fourteen
years of experimentation, Appert developed a method for
preserving foods by heating.
The food, meat, or vegetables, was first cooked in open kettles
and placed in glass jars. After
removing as much air as possible, the jars were carefully sealed
with corks wired in place
and then submersed in boiling water.
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Appert chose glass for the container because he believed that it
was air that caused the
spoilage, glass is a material least penetrated by air. It is of
importance to note that, in
Appert's time, it was not known that microorganisms caused food
to spoil.
The processes involved in food spoilage were not understood
until the second half of the
nineteenth century as a result of the work of scientists such as
Louis Pasteur (18221895) on
microorganisms (Thorne, 1986).
In 1810 Appert published his prize-winning essay on food
preservation and the French
emperor Napoleon awarded the 12,000-franc prize to him. Within a
year, an English version
appeared in London, and the new method of preserving food in
glass spread quickly to other
countries.
Canning: Two individuals in England are given credit for
applying and improving Appert's invention,
Bryan Donkin and Peter Durand. Bryan Donkin, an associate of
John Hall's at his Dartford
Iron Works, realized in 1811 that iron containers could be used
instead of the fragile glass,
and in 1812 the factory began to produce canned food such as
meat. In 1810, Peter Durand
patented the use of metal containers, which were easier to make
and harder to break than
glass jars. (The glass jars used by Appert frequently broke.) He
covered iron cans, which
were prone to rust, with a thin plating of tin (which is not
adversely affected by water), and
invented the "tin can." By 1813, Durand was selling canned meat
to the Royal Navy. The
British admiralty bought these foods as part of the medical
stores for distribution to sick men
as well as to supply expeditions.
By 1819 canning had arrived in the United States, but no one
wanted canned food until the
Civil War started. In 1821, the William Underwood Company in
Boston introduced
commercial canning in the United States. For a long time, people
regarded canned foods
with suspicion, and for good reasons. In the middle of the
nineteenth century, the foods
produced by the canning industry were as likely to spoil as not
because of inadequate
heating techniques (Morris, 1958). Then, beginning in 1868,
first in the United States and
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later in Europe, handmade cans were replaced by machine-cut
types. The new technology
made it possible for giant meat-canning firms like P. D. Armour
to emerge in Chicago and
Cincinnati. The product, however, was packed in big, thick,
clumsy red cans and was not
very appetizing.
The American Gail Borden was a pioneer in food canning. In 1856,
he successfully
produced sweetened condensed milk in cans and was granted a
patent on the process. With
financial support, the New York Condensed Milk Company was
established in 1857.
The demand for condensed milk was at first limited, but during
the American Civil War
(18611865) it was introduced on a large scale. The Civil War
contributed significantly to
the popularization of canned foods in general (Clark, 1977). The
army had to be fed and the
government contracted with firms to supply food. Under difficult
circumstances, people
learned that canned foods such as condensed milk can be tasty
and nourishing. The
invention of practical can openers at the end of the nineteenth
century made cans easier to
open, making them even more convenient for consumers.
For many years, however, the flavour of most canned food left
much to be desired. On the
other hand, it should be realized that products such as canned
peas and salmon were usually
sold to people living on the American prairies or in the urban
slums in Great Britain, most of
whom had never eaten the fresh product. In addition, losses due
to spoilage caused by
microorganisms remained high. It was not until the end of the
nineteenth century that
research carried out at Massachusetts Institute of Technology
made a substantial
contribution to improving the keeping quality, nutritional
value, and taste of food products
preserved in cans and glass.
In the early twentieth century, the heavy cans were replaced by
those made of lighter
materials, and manufacturers could stress that their products
were hygienically processed
and, therefore, safer to eat than the traditionally unpackaged
products that had been sold in
bulk. As food technology advanced, numerous chemical additives
were developed to control
or speed up food processing and to increase the keeping quality
of canned foods.
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Originally, the nutritional value of food preserved by canning
was not high, mainly due to
the length of time required by the heating techniques. From the
1920s onward, however, the
nutritional value of canned foods gradually approached that of
the fresh product, thanks to
modern food technology.
Finally, in the 1960s, Reynolds and Alcoa companies succeeded in
making all-aluminum
cans out of one piece of metal, thereby solving the problem of
the weight of the cans; only
the lid needed to be attached (Clark, 1977). At the same time,
the invention of the rip-off
closure and the pop-top lid on aluminium cans made them even
more convenient, and made
can openers unnecessary. For consumers, the choice between fresh
or canned food became
largely a question of taste, convenience, and preference.
Overview:
The global packaging industry is approximately a $433 billion
market. The domestic
packaging market, which is the major focus of this report,
represents approximately 29%, or
$124 billion of the global market. The industry consists of four
general segments classified
by material type: paper and board, plastics, glass and metal.
The largest segments of the
industry are paper and board and plastics, which account for 36%
and 35%, respectively, of
the global packaging market.
The packaging industry is a large, fragmented market with
thousands of competitors. While
packaging companies serve a variety of markets, the largest end
markets for packaging
products are food and beverage. Food packaging accounts for
approximately 40% ($175
billion) of all packaging applications. Beverages represent
approximately 18% or $80 billion.
These end markets are stable, non-cyclical, steadily growing
markets that are consequently
attractive, regardless of the economic climate.
The growth rate of the packaging industry is primarily driven by
growth rates and market
trends within various end markets. Growth rates vary from a low
of 3.2% for beverages to a
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high of approximately 5% for health care products. The largest
end market, food, has
historically grown at slightly less than 4% annually. It should
be noted that sub segments of
an end market may grow at higher rates than the end market
itself. For example, while the
beverage market has generally been a low growth market, the
bottled water sub segment of
the beverage market has recently achieved very strong
growth.
With liberalized trade and economic policy, The Nation has
achieved a higher rate of growth
and accelerated the reform revolution. Advance estimate for GDP
growth for 2005-06
expects the economy to grow by
8.1 %. Manufacturing Sector is said to grow at 9.4% in 2005-06
compared to 8.1 % in 2004-
05. Agricultural Sector is projected to expand at 2.5 % in
2005-06 compared to 0.3% growth
in 2004-05. Due to FDI in retail sectors, the Retail Sector in
India is expected to grow by
20 % in the next 10 years. These developments will give a boost
to all the sectors,
Packaging Industry in particulars and open up tremendous
opportunities in the packaging
Industry.
Indian Packaging Scenario:
Indian Packaging Industry is worth ` 2,00,000 crores with growth
rate varying from
5% in some sectors to as much as 20% in Sectors like Flexible
Packaging, compared to
3% in developed countries.
Most of the basic raw materials needed for Packaging Industry
such as Paper, Board, Plastic, Glass, Metal and others are
available in abundance.
Packaging Machinery Sector involved in making Packaging
Converting Machines, Product Packaging Machines and allied
equipments have adopted modern technology
are exporting the machines even to developed economies of the
world.
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Over 40% of Export is done by small and medium Sector Industries
where Packaging Industry has its major presence.
A number of State of Art Package Converting and Manufacturing
plants have been set up in the country; some of them are exporting
to developed countries.
Major Players:
1. In Flexible Packaging:
Overview:
Consists of typically multi-layered laminated sheets or a
combination of various
subtracts such as polymers, aluminium fibres and paper.
Market around ` 2,000 crores (US $ 465 mn.)
Laminated sheets are generally a combination of polyester films,
BOPP, Polyethylene, etc. Others - metallic packaging, co-extruded
fibres, lamination.
BOPP and polyester film are major raw materials - account for
60% of the raw materials cost.
Industry:
There are over 150 manufacturers in the sector.
There are nearly 100-150 manufacturers in the small scale
industry with capacities < 250 tonnes per annum and 10-15
players with capacities over 1000 tonnes per annum.
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Major players - Paper Products, Akar Group (Akar Laminates,
Sharp Industries, Vishnu Vijay Packers, Orient Press, India Foils,
Flex Industries, RT Packaging,
Mukund Flex Pack, etc.
Players categorised as class A, B & C. Class A caters to
premium brands of MNCs and large companies. Class B caters to
lesser known brands - cost conscious segments.
Import duty : Basic - 35%; Surcharge - 10%; Countervailing Duty
(CVD) - 16% and Special Additional Duty (SAD) - 4%
Usage:
Flexible packaging is primarily used in the packaging of food
and beverages.
Food sector alone consumes two third of laminates produced in
the country.
Personal products such as hair care products, pan masala, tea,
coffee and industrial products account for the balance.
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2. In Films:
BOPP films first used in 1960 in the packaging industry.
Polypropylene is the basic raw material for BOPP films.
Many manufacturers depend on imports to meet raw material
requirement.
Market around ` 400 crores (US $ 90 mn.)
Indias share of the world market of 2 mntpa (million tonnes per
annum) is very low < 5%
Share of BOPP improving over competitive materials such as PET
and Cellophane.
BOPP may substitute polyester films as it is cheaper to PF,
however converters need to upgrade their technology.
Players:
Segment dominated by Cosmo Film (14500 T) and Gujarat Propak
(11500 T).
Others - Sharp Industries, Max India, Supreme Oriented Films, MM
Rubber Co., Hindustan Adhesives, etc.
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3. Polyester Films:
Industry:
Market around ` 850 crores (US $ 195 mn.)
First segment to enter packaging.
Initially polyester films were imported.
Now packaging polyester films are made from polyester films
which are in turn made from Dimethylterepathalate (DMT), Purified
Terapthalic Acid (PTA) or Monoethylene
Glycol (MEG).
Players: Garware Polyester was the first to set-up a unit in
1981.
Major players in this sector are Garware Polyester, Polyplex
Corporation, Ester Industries, Venlon Polyester, Siltap Chemicals,
Jindal Polyester, Jalpac India, Amco
Vinyl, etc.
4. In Laminate Tubes:
Industry: Market around ` 750 crs. (US $ 175 mn.) Tubes are of
two types - laminate tube and seamless tube. Laminate tube
comprises of 5 layer printed laminate where as a seamless tube
body
comprises mono or multi layered extruded. Seamless tubes (no
seam in the tube) was first introduced in 1996.
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Properties of these tubes can be varied by using a variety of
polymers. Popularly used in cosmetic, dentrifice, pharmaceuticals,
etc.
Usage: Major applications. Seamless - cosmetics,
pharmaceuticals, processed food, industrial products, etc. Laminate
- Cosmetics, pharmaceuticals, processed food, adhesives, industrial
greases,
chewing gums, etc. Players: Sector dominated by Essel
Packaging.
Others - Paper Products; Akar Laminates.
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4. TYPES OF PACKAGING Protecting goods is very important. Food,
electronics, clothes, furniture and other consumer
goods all come in packaging meant to protect them during
transportation and storage. There
are different types of packaging solutions and materials.
Packaging can be standard or
custom made, for instance.
Paper and Carton Packaging:
Paper and carton packaging is used for different types of goods
(food, electronics, toys,
shoes, kitchenware and even other packaging materials). Paper
and carton packaging
companies produce wrapping paper, inflated paper, sheets, boxes,
tubes, pallets,
interlayers, corners, edges and custom protective systems
(depending on the dimension
and shape of the packed good, the carton is cut and modelled to
fix and protect the
product). Paper can be used to laminate other materials in order
to make them stronger.
There is also anticorrosive paper that can be used to wrap goods
or to laminate other
materials.
Film Packaging: There are multiple types of films used in the
packaging industry, most commonly
polyethylene (PE), polypropylene (PP), polyolefin and polyvinyl
chloride (PVC) films.
The films usually come on a roll and are used to wrap goods,
cover goods, protect boxes
and make other packaging products (such as bags, tubes, bubble
wrap and sheets). Films
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can be used for lamination, printed or perforated. They can be
anticorrosive, antistatic,
shrinkable or non shrinkable, and slippery or non slippery.
Foam Packaging:
Foam used for packaging can be produced on a roll or in sheets
of different thicknesses.
The foam is used to wrap goods or make bags (usually laminated
with high-density PE),
corners, edges and custom systems. The corners and edges are
used to protect flat glass,
furniture and sharp edges. Foam can be cut and modelled on the
product's shape to fix
and protect it. It can be antistatic and has good insulation
properties.
Textile Packaging:
There are some goods that are best protected by textiles. For
example, there are custom-
made textile insertions used in the automotive industry to
protect car parts during
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25
transportation. The textile insert is put on a metal frame that
fits into a metal container.
There is also textile material used for box covers.
Plastic Boxes and Containers:
Multiple types of plastic boxes and containers are used in all
industries. For example, in
the food industry there are plastic containers for goods like
ketchup, yogurt, milk and
juices. Plastic boxes are mainly used for transporting goods and
are reusable. They can
be stacked, folded when empty to save storage space and
recycled.
Packaging Systems:
Packaging companies offer different types of systems that can be
divided into two
categories: special solutions and packaging machines. The
special solutions are used for
valuable products that don't have a regular, simple shape. For
example, parts of
airplanes or expensive decorative glass objects need special
solutions to be packed. The
goods fit perfectly into the packaging and are protected against
damages. Packaging
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26
machines are used for wrapping (wrapping the stretch film on the
pallet), strapping
(applying and sealing straps on boxes), sealing (with tape for
boxes and with heat for
films) and shrink wrapping (applying PVC or polyolefin film on
products or boxes).
There are also machines that inflate film, paper and instant
foam.
Other Types:
Adhesive tapes are also considered packaging materials, as they
help seal boxes. They
are usually made out of PE or PP film that has acrylic or
solvent glue applied to it and
that can be printed on. Strapping tapes are usually applied on
boxes or pallets. They are
made out of PE or PP and can be printed with one color. The
standard colors are black
and clear for PP and green for PE.
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5. FUNCTIONS OF PACKAGING
The basic functions of packaging is to protect, distribute,
inform, attract and sell. The choice
of material is crucial. Durability, weight, formability, colour,
texture, touch and feel, costs,
filling line requirements, source reduction and other ecological
aspects. In primary
packaging, glass and plastic are the predominant options but not
the only ones. For example,
paperboard cartons with carefully tailored barrier properties
could be just the solution; if
needed, the package can even be made airtight.
In secondary packaging, paperboard carton is the clear winner
with superb performance
across all packaging functions. The heart of the matter,
however, is not the material, but how
to use it.
Billions of pounds are spent on packaging food and other items
each year. Sixty percent of
all packaging is for food products. At the beginning of the 20th
century most food was sold
loose. It was weighed and measured out and placed in bags or
directly into the shoppers bag
to carry home. Packaging and advertising were virtually unknown.
Today packaging is a
massive, lucrative industry and often it is the way the
packaging looks that persuades the
shopper to buy the product inside it.
Functions: Protective Function:
The protective function of packaging essentially involves
protecting the contents from
the environment and vice versa. The inward protective function
is intended to ensure
full retention of the utility value of the packaged goods. The
packaging is thus intended
to protect the goods from loss, damage and theft.
In addition, packaging must also reliably be able to withstand
the many different static
and dynamic forces to which it is subjected during transport,
handling and storage
operations. The goods frequently also require protection from
climatic conditions, such
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as temperature, humidity, precipitation and solar radiation,
which may require "inward
packaging measures" in addition to any "outward packaging
measures".
The outward protection provided by the packaging must prevent
any environmental
degradation by the goods. This requirement is of particular
significance in the transport
of hazardous materials, with protection of human beings of
primary importance. The
packaging must furthermore as far as possible prevent any
contamination, damage or
other negative impact upon the environment and other goods.
The inward and outward protective function primarily places
demands upon the
strength, resistance and leak proof properties of transport
packaging.
Sales Function:
The purpose of the sales function of a package is to enable or
promote the sales process
and to make it more efficient. It is rightly said that packaging
works as silent salesman.
It catches the attention of customers, who pick up the product,
go through its description
and are induced to purchase the product. Self service is
becoming more and more
common in the field of shopping, where the customer picks up the
product himself and
makes its payment on the counter. Packaging in these
circumstances promotes the sales.
Promotion Function:
Promotional material placed on the packaging is intended to
attract the potential purchaser's attention and to have a positive
impact upon the purchasing decision. Promotional material on
packaging plays a particularly important role on sales packaging as
it is directly addressed to the consumer. This function is of
subordinate significance in transport packaging. While product
awareness is indeed generated along the transport chain, excessive
promotion also increases the risk of theft.
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Service Function:
The various items of information printed on packaging provide
the consumer with
details about the contents and use of the particular product.
Examples are the nutritional
details on yogurt pots or dosage information on medicines.The
package may also
perform a further function once the contents have been used
(e.g. storage container,
toy).
Guarantee Function:
By supplying an undamaged and unblemished package, the
manufacturer guarantees
that the details on the packaging correspond to the contents.
The packaging is therefore
the basis for branded goods, consumer protection and product
liability. There are
legislative requirements which demand that goods be clearly
marked with details
indicating their nature, composition, weight, and quantity and
storage life.
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6. PACKAGING AND MARKETING Thousands of new products are
introduced every year, more than 15,000 to be exact. How
can a product compete, not only with established brands but with
the plethora of new
products that are being introduced? The answer of course is THE
PACKAGING. The right
packaging with the right message will rise above the competitive
landscape. But very few
companies understand the value behind packaging as a marketing
tool. Most just look at as a
way to convey the product or recycle tired images and product
packaging that doesn't work.
Understanding the complexities of how a package reaches out to a
consumer is one of the
most important things to understand. Communicating that message
on product packaging is
a time consuming and difficult challenge. The answer derives
from understanding what the
consumer wants from their product packaging.
What compels us to look at a new product? What drew us to pick
it up and take a closer
look? Our answer may be different from that of another member of
our family or a
significant other but the message is the same. We were intrigued
enough by whatever that
made us pick up the product and take a closer look. That's half
the battle won because a
product will never sell if someone doesn't pick it up in the
first place.
It's a trite saying by now but seriously "think outside the
box." That is what makes a product
unique from its competitors. Here are a few questions to ask
yourself about your package.
Remember think from the consumers' perspective not from the
manufacturers.
Rank these attributes for our product and then the nearest
competitive product or a product
that we recently purchased that was outside our normal buying
pattern.
Is it new and innovative? Is it fulfilling a need? Is it easy to
use and convenient?
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Is it a good value? Does it make the consumer happy? Does it
inspire consumer trust and loyalty? Is it safe and secure? Does it
compel you to want to know more? So how does your product stack up
in solving a consumer want or need? Would your package make someone
desire to take a closer look?
Remember it's the package talking here. It's the one doing the
work marketing what's inside
to the customer. That's what we need to drill in our brain about
our package.
Evaluating or developing product packaging with the consumer in
mind is the first step in
creating a package that markets all the products attributes to
the ultimate decision maker, the
customer.The "consumer connection" is what we try to create. Of
course the more needs we
can fulfil the better "connection" to the consumer. So think
outside the typical behaviour and
solve the hidden need that will make a consumer buy our product
and not competitors.
Branding and packaging are two of the most important components
of marketing. Branding
is a term used to describe the name, description and design of a
product. Branding
differentiates a company's product from their competition.
Packing is a marketing tool used
to reflect the brand. A company uses packaging to sell the
product inside. The colours, fonts,
descriptions and logo are designed to drive consumers to buy the
product.
Sales: The entire focus of a marketing department is to
strategize methods to sell the company's
products. Branding and packaging are two of the most effective
ways to do this. Once a
brand has been determined, methods are employed to sell the
product. Advertising, the
company website and product packaging must all present a
cohesive brand or image. In
successful brand campaigns, customers recognize the company's
product packaging and
purchase in part because they identify with the brand.
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Branding: When a company brands a product, they determine its
"personality." Creating a brand that is
instantly recognizable and perceived positively is the ultimate
goal. Branding integrates
components such as colour, style and visual imagery to
distinguish a company's products
from the competition. Developing logos, slogans and tag lines
are all ways that marketers
communicate a specific brand.
Slogans: One of the most effective methods of branding is the
use of slogans. Companies often
identify a specific characteristic that sets their product apart
from the competition. The
slogan becomes a key component in all marketing efforts,
including packaging. For example,
Nike has effectively marketed both their logo and slogan "Just
do it" into an easily
recognized brand.
Packaging: Packing is designed to capture a customer's attention
and it can directly effect whether they
buy the product or not. Innovation and creativity come into play
when it comes to packaging.
A well-marketed product is packaged in a way that compels the
customer to pick it up and
take a closer look, at which point product descriptions and
graphics must be clear.
Packaging Tools: Colours, fonts, descriptions and logos are the
tools that are used in packaging design.
Companies market their brands by creating a specific "look and
feel" to their product's
packaging. A customer must feel comfortable enough with the
presentation of the company's
brand to want to purchase the product.
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Company Image: Branding and packaging are created by a company.
While these efforts are used to market
products, they in turn market the company itself. Branding
reflects the image that the
company seeks to project. For example, IBM takes on a more
conservative, well-established
corporate image while Apple brands itself as a hip and cutting
edge company. These images
reflect the market that the company has identified as target
customers.
Marketing Role - Brand Identity and Differentiation: As the only
part of the marketing communication that the consumer takes home,
Packaging
plays a key role in communicating and reinforcing brand values
over time. Packaging has
the power to make, but also to break brand relationships.
A key example of the latter, is a case cited by Hofmeyr and
Rice, where a change in pack
design contributed towards a drop in a leading beer brands
market share by more than 20%
in the space of just one year. Nothing other than the packaging
had changed, the product
itself had not changed in any way. The pack change, although not
dramatic (the same style
but with lighter colouring) led to a perception that the beers
quality had been compromised
and that it was now weaker. This caused many previously loyal
consumers to lose faith in
the brand and to move to the brands stronger competitors
instead. This is a clear example
of the power of bad packaging. Although a non-favourable
advertisement might be quickly
forgotten, poor packaging (if it remains with the brand
throughout its usage cycle) provides
a continual reminder of the brands perceived failing. Likewise,
favorable packaging can be
a means of continually reinforcing the brands appeal.
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Also, an example of the worlds largest selling biscuits i.e
PARLE-G is that after
launching a new packaging of a high-class biscuit in the name of
same brand did not made
huge sales as huge as the original package. This resulted also
because of price variation. The
original biscuit was named PARLE-G while the new packaged
biscuit named PARLE-G
GOLD. The packaging of both of them is:
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7. WASTE MANAGEMENT OF MATERIAL USED IN PACKAGING Package
development involves considerations for sustainability,
environmental
responsibility, and applicable environmental and recycling
regulations. It may involve a
lifecycle assessment which considers the material and energy
inputs and outputs to the
package, the packaged product (contents), the packaging process,
the logistics system, waste
management, etc. It is necessary to know the relevant regulatory
requirements for point of
manufacture, sale, and use.
The traditional three Rs of reduce; reuse, and recycle are part
of a waste hierarchy which
may be considered in product and package development.
Most favoured option
Least favoured option
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THE WASTE HIERARCHY 1) Prevention:
Waste prevention is a primary goal. Packaging should be used
only where needed.
Proper packaging can also help prevent waste. Packaging plays an
important part in
preventing loss or damage to the packaged-product (contents).
Usually, the energy
content and material usage of the product being packaged are
much greater than that of
the package. A vital function of the package is to protect the
product for its intended
use: if the product is damaged or degraded, its entire energy
and material content may
be lost.
2) Minimization: The mass and volume of packaging (per unit of
contents) can be measured and used as
one of the criteria to minimize during the package design
process. Usually reduced
packaging also helps minimize costs. Packaging engineers
continue to work toward
reduced packaging.
3) Re-use: The reuse of a package or component for other
purposes is encouraged. Returnable
packaging has long been useful (and economically viable) for
closed loop logistics
systems. Inspection, cleaning, repair are often needed. Some
manufacturers re-use the
packaging of the incoming parts for a product, either as
packaging for the outgoing
product or as part of the product itself.
4) Re-cycling: Recycling is the reprocessing of materials (pre-
and post-consumer) into new products.
Emphasis is focused on recycling the largest primary components
of a package: steel,
aluminum, papers, plastics, etc. Small components can be chosen
which are not difficult
to separate and do not contaminate recycling operations.
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5) Energy Recovery: Waste-to-energy and Refuse-derived fuel in
approved facilities are able to make use of
the heat available from the packaging components.
6) Disposal: Incineration and placement in a sanitary landfill
are needed for some materials. Certain
states within the US regulate packages for toxic contents, which
have the potential to
contaminate emissions and ash from incineration and leach ate
from landfill. Packages
should not be littered.
Development of sustainable packaging is an area of considerable
interest by
standards organizations, government, consumers, packagers, and
retailers
Sustainable packaging is the development and use of packaging
which results in improved
sustainability. At the end stage of design it involves increased
use of life cycle inventory
(LCI) and life cycle assessment (LCA) to help guide the use of
packaging which reduces the
environmental and ecological footprint, but in the very first
steps requires a look at the
whole of the supply chain: from basic function, to marketing,
and then through to end of life
(LCA) and rebirth. The goals are to improve the long term
viability and quality of life for
humans and the longevity of natural ecosystems.
Sustainable packaging must meet the functional and economic
needs of the present without
compromising the ability of future generations to meet the
functional and economic needs of
the present without compromising the ability of future
generations to meet their own needs.
Sustainable packaging is a relatively new addition to the
environmental considerations for
packaging. It requires more analysis and documentation to look
at the package design,
choice of materials, processing, and life cycle.
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This is not just the vague "green movement" that many businesses
and companies have been
trying to include over the past years. Companies implementing
these eco-friendly actions are
reducing their carbon footprint, using more recycled materials,
reusing more package
components, etc. They often encourage suppliers, contract
packagers, and distributors to do
likewise.
For example, researchers at the Agricultural Research Service
are looking into using dairy-
based films as an alternative to petroleum-based packaging.
Instead of being made of
synthetic polymers, these dairy-based films would be composed of
proteins such as casein
and whey, which are found in milk. The films would be
biodegradable and offer better
oxygen barriers than synthetic, chemical-based films. More
research must be done to
improve the water barrier quality of the dairy-based film, but
advances in sustainable
packaging are actively being pursued.
Environmental marketing claims on packages need to be made (and
read) with caution.
Ambiguous titles such as green packaging and environmentally
friendly can be confusing
without specific definition. Some regulators, such as the US
Federal Trade Commission, are
providing guidance to packagers.
Companies have long been reusing and recycling packaging when
economically viable.
Using minimal packaging has also been a common goal to help
reduce costs. Recent years
have accelerated these efforts based on social movements,
consumer pressure, and
regulation.
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8. OVERVIEW OF FMCG INDUSTRY The FMCG industry manages consumer
packaged goods - production, distribution to
marketing.
The Indian FMCG industry is the fourth largest industrial sector
that has stayed recession-
resilient and shown signs of bright future.
The Fast Moving Consumer Goods (FMCG) industry primarily deals
with the production,
distribution and marketing of consumer packaged goods, i.e.
those categories of products
that are consumed at regular intervals. Examples include food
& beverage, personal care,
pharmaceuticals, plastic goods, paper & stationery and
household products etc. The industry
is vast and offers a wide range of job opportunities in
functions such as sales, supply chain,
finance, marketing, operations, purchasing, human resources,
product development and
general management. Global leaders in the FMCG segment are Sara
Lee, Nestl, Reckitt
Benckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg,
Kleenex, General Mills,
Pepsi and Mars etc.
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Performance: In India, the FMCG industry is the fourth largest
sector with a total (organized) market size
of over US$15 billion in 2007, and can be classified under the
premium and popular
segments. The premium segment (~25%) caters mostly to the
higher/upper middle income
consumers while the price sensitive popular or mass segment
(~75%) consists of consumers
belonging mainly to the semi-urban or rural areas that are not,
and cannot afford to be, brand
conscious.
The market growth over the past 5 years has been phenomenal,
primarily due to consumers
growing disposable income which is directly linked to an
increased demand for FMCG
goods and services. Indeed, it is widely acknowledged that the
large young population in the
rural and semi-urban regions is driving demand growth, with the
continuous rise in their
disposable income, life style, food habits etc. On the supply
side, the wide availability of
raw materials, vast agricultural produce, low cost of labour and
increased organized retail
have helped the competitiveness of players.
At a time when the economy and other large industrial sectors
such as automobiles, aviation
and financial services are reeling from the global slowdown, the
consumer goods sector in
India has managed to defy the trend. As very categorically said
by the Amway India
Enterprises managing director and chief executive, Mr. William
Pinckney, I am not saying
that our company [sector] is recession-proof but it is
recession-resilient. This statement on
the whole stands strong for most the leading players in the FMCG
sector.
While a price hike and cost-cutting were the first lines of
defense in a bid to protect margins,
Indian manufacturers were able to let logic rather than bottom
lines dictate measures, with
increased marketing efforts, a well-thought product mix and new
launches helping them
emerge unscathed from the turmoil. The prospects going forward
also remain promising.
Future Prospects: The only threats to this strong growth
trajectory remain the high portion of unorganized
trade, the limited distribution network of new entrants and the
pressure on profit margins
due to increasing competition. But these are likely to be of
diminished importance as
proportion of organized trade increases and players invest in
improving distribution. Going
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forward, the industry prospects remain attractive, and new
graduates can hope to leverage
the training and on-the-job learning at the leading players in
various functional roles, across
the Metros as well as the interior heartlands on India.
Scope of the Sector: Hair care, household care, male grooming,
female hygiene, and the chocolates and
confectionery categories are estimated to be the fastest growing
segments, says an HSBC
report. Though the sector witnessed a slower growth in
2002-2004, it has been able to make
a fine recovery since then.
For example, Hindustan Levers Limited (HLL) has shown a healthy
growth in the last
quarter. An estimated double-digit growth over the next few
years shows that the good times
are likely to continue.
Growth Prospects: Indian rural FMCG market is something no one
can overlook. Increased focus on farm
sector will boost rural incomes, hence providing better growth
prospects to the FMCG
companies. Better infrastructure facilities will improve their
supply chain.
FMCG sector is also likely to benefit from growing demand in the
market. Because of the
low per capita consumption for almost all the products in the
country, FMCG companies
have immense possibilities for growth. And if the companies are
able to change the mindset
of the consumers, i.e. if they are able to take the consumers to
branded products and offer
new generation products, they would be able to generate higher
growth in the near future.
Also, increase in the urban population, along with increase in
income levels and the
availability of new categories, would help the urban areas
maintain their position in terms of
consumption. At present, urban India accounts for 66% of total
FMCG consumption, with
rural India accounting for the remaining 34%. However, rural
India accounts for more than
40% consumption in major FMCG categories such as personal care,
fabric care, and hot
beverages.
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In urban areas, home and personal care category, including skin
care, household care and
feminine hygiene, will keep growing at relatively attractive
rates. Within the foods segment,
it is estimated that processed foods, bakery, and dairy are
long-term growth categories in
both rural and urban areas.
Indian Competitiveness and Comparison with the World Markets:
The following factors make India a competitive player in FMCG
sector: 1. Availability of raw materials:
Because of the diverse agro-climatic conditions in India, there
is a large raw material base
suitable for food processing industries. India is the largest
producer of livestock, milk,
sugarcane, coconut, spices and cashew and is the second largest
producer of rice, wheat
and fruits &vegetables. India also produces caustic soda and
soda ash, which are required
for the production of soaps and detergents. The availability of
these raw materials gives
India the location advantage.
2. Labour cost comparison:
Low cost labour gives India a competitive advantage. India's
labour cost is amongst the
lowest in the world, after China & Indonesia. Low labour
costs give the advantage of low
cost of production. Many MNC's have established their plants in
India to outsource for
domestic and export markets.
3. Presence across value chain:
Indian companies have their presence across the value chain of
FMCG sector, right from
the supply of raw materials to packaged goods in the
food-processing sector. This brings
India a more cost competitive advantage. For example, Amul
supplies milk as well as
dairy products like cheese, butter, etc.
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9. MARKETING STRATEGIES ADOPTED BY FMCG 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 competitive. A marketing strategy should be
centered on the key concept that customer is the main goal. SWOT
Analysis Strategy:
1. Strengths: Low operational costs. Presence of established
distribution networks in both urban and rural areas. Presence of
well-known brands in FMCG sector.
2. Weaknesses: Lower scope of investing in technology and
achieving economies of scale, especially
in small sectors.
Low exports levels.
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3. Opportunities: Untapped rural market. Rising income levels
i.e. increase in purchasing power of consumers. Large domestic
market- a population of over one billion. Export potential. High
consumer goods spending.
4. Threats: Removal of import restrictions resulting in
replacing of domestic brands. Slowdown in rural demand. Tax and
regulatory structure.
FMCG marketing Strategy in Rural India:
Barring a few, notable exceptions, rural marketing in India is
still about a van campaign, a
badly-made commercial, a few painted walls and the occasional
participation in village haats
and melas.But then, "rural" means different things to different
people: from 5,00,000 people
for consumer durables, to less than 50,000 for fast-moving
consumer goods.Still, it is
heartening to note the increasing awareness of the importance of
rural markets - or, at least,
of companies wanting to move beyond urban boundaries.
According to estimates by the Rural Marketing Agencies
Association of India, the total
budget for rural marketing is only about ` 500 crores (` 5
billion), compared to the over`
13,000 crores (` 130 billion) allotted to mass media.This is
grossly inadequate to cover the
huge potential for different products in rural markets. Of
course, clientsreluctance to spend
big money for bigger results in rural markets is because there
are no standard performance
yardsticks for judging the efficacy of the rural marketing
efforts.The TRPs and NRS/IRS
data help to determine the efficacy of TV and press marketing.
But there is no study to tell
what is the ideal cost per contact or What is the ideal number
of eyeballs or footfalls for
different rural activities.But only consider the huge successes
of some regional brands,
especially in the FMCG sector, which are giving the
multinationals a run for their money.
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Companies like CavinKare (Chik Shampoo, Meera Herbal Powder,
Fairever Cream and so
on), Anchor (100 per cent vegetarian toothpaste), Ghadi
detergent powder and Power soap
are proof that regional brands can become brands to reckon with.
And don't forget Nirma,
the most enduring example of a brand that began as a regional
player and is now a giant.
What did these products do that was so different? Most of them
identified a segment that
was vacant in terms of product and area of operation. They all
started in small, concentrated
markets, appealing to the local ethos and aspirations of the
targeted area.Their
communication, be it a simple radio spot or a wall painting or a
theatre film, touched a chord
in the target audience. And, most importantly, their policies
were flexible and they could
adopt to fast changing marketing situations. What should
companies do to step up their
payback from rural marketing efforts? Here are some steps that
should help:
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People power:
Total commitment from top leadership, keeping in mind that rural
marketing is a long-term
relationship, is imperative - the successes of Hindustan
Unilever and ITC are proof of this
statement. But even more important is the need for a dedicated
task force.
Rural marketing efforts need special mindsets, which many of the
urban-oriented
management graduates who are at the helm of affairs at most
organizations do not possess.A
separate marketing and sales vertical headed by people with
passion and commitment to
rural marketing and supported by a field team that can face the
rough and tough of the vast
country-side with courage and conviction is a must.The best bet
is to recruit students from
specialized institutes such as the Indian Institute of Rural
Management, or at least,
management graduates who have studied the subject as an
elective.
Know your customers:
A good place to begin is studying the mindset of the customers,
so we can create a
customized plan of action. All too often, clients insist their
knowledge of their customers
(based on studies of urban India) is enough on which to base an
action plan. Our experience
shows that the attitudes, aspirations and fears of rural
customers, with regard to products and
brands, are very different from their urban counterparts.
Research can give invaluable ideas for new product development
as well as new methods of
reaching the target audience. The refrigerator with standby
power for 12 hours, pressure
cookers with two handles and a radio with key-winding mechanism
are all the result of
research.
More and more companies turn to the local haats to sell their
products. While haats offer
opportunities to target consumers from several villages at one
place, and to that extent make
your effort cost-effective, ensure that the people who patronize
these haatsare the kind who
will buy the product or brand.
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Ensure availability: Most anecdotes about rural marketing centre
on the distribution aspect - the humongous task
of physically reaching the product to over 6,00,000 villages,
most of them without
motorable roads. But it's not really as nightmarish as it is
made out to be, at least keeping in
mind the present goals of marketing companies in rural
India.
We've all heard about the shampoo sachets that are available in
even the smallest villages.
How does that happen? It's a direct result of rising
aspirations, fuelled by television
commercials. The consumer demands the product from the local
shopkeeper, who then buys
the products from the nearest feeder markets which means if we
can ensure distribution to
the feeder markets in towns or villages with populations of
10,000 - 15,000, weve already
taken the first step towards reaching our target customer.
Studies also indicate that rural consumers prefer to shop for
durables such as televisions,
automobiles and appliances in the nearest big town or city. So,
if our products are in towns
with populations of 50,000, we're closer to the rural consumer
than you would have thought.
The Mystery Game: It was a complete Mystery, HUL foxes P&G
through successful Ambush Marketing.
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It was a great outdoor marketing campaign by P&G in Mumbai,
and it did get foxed and
frustrated by HUL, but the outcome of the whole melodrama that
followed is still uncertain.
There were huge outdoor hoardings, model bus-stops, and full
page print ads by P&G to
create excitement over Pantene and its new packaging. Carefully
ironed out, or so P&G
envisaged. It was too open to attack, and Dove took the bold
step and stepped into the fray.
Kudos to HUL for getting it done within a dayit was more of a
done within a month than a
day. Competition intelligence as they call it has definitely
come into play here. HUL was
waiting for the bait to get hooked on. But still, a campaign
rolled out within a few weeks is
commendable. But did it achieve anything for HUL? Brand
connotation with the Mystery
Shampoo is and will always be Pantene; Dove did nothing to
change that.
All that HUL visualized was a retort back at P&G through the
necessary buzz within
everybodys mind. They achieved the buzz, but inside the
marketers head. The consumer
was left lurking during the delivery of the Dove message.(There
is no Mystery, Dove is
the No.1 Shampoo)
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Marketing circles were talking about it for weeks. But the real
consumer, the actual user of
the brand & the product didnt see any value in the fracas
between HUL and P&G. Sadly,
this event might in the short run; temporarily, end such
campaigns, where the consumer is
kept at the edge of his/her seat before the prized message is
communicated.
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10. ROLE OF PACKAGING IN FMCG
The importance of packaging design as a vehicle for
communication and branding is
growing in competitive markets for packaged FMCG products. This
research utilized a focus
group methodology to understand consumer behaviour towards such
products.The challenge
for researchers is to integrate packaging into an effective
purchasing decision model, by
understanding Consumers behavior towards the packaging of FMCG
products.
When consumers search for and process information in-store, the
product's package can
contain relevant and useful information for the consumer.
Product packaging forms the end
of the 'promotion-chain' and is close in time to the actual
purchase and may therefore play an
important role in predicting consumer outcomes.
Packages also deliver brand identification and label information
like usage instructions,
contents, list of ingredients or raw materials, warnings for use
and directives for care of
product.
Packaging is the container for a product encompassing the
physical appearance of the
container and including the design, colour, shape, labelling and
materials used
Packaging has a huge role to play in the positioning of
products. Package design shapes
consumer perceptions can be the determining factor in
point-of-purchase decisions which
characterize the majority of shopping occasions.In recent years
the marketing environment
has become increasingly complex and competitive. A products
packaging is something
which all buyers experience and which has strong potential to
engage the majority of the
target market. This makes it an extremely powerful and unique
tool in the modern marketing
environment.In addition to its benefits in terms of reach, some
marketers believe that
packaging is actually more influential than advertising in
influencing consumers, as it has a
more direct impact on how they perceive and experience the
product.
In most cases, the experience has been that pack designs are
more likely to influence
the consumer perception of the brand. For products with low
advertising support,
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packaging takes on an even more significant role as the key
vehicle for communicating the
brand positioning.
Fast Moving Consumer Goods (FMCG), also known as Consumer
Packaged Goods
(CPG), are products that are sold quickly at relatively low
cost. Though the absolute profit
made on FMCG products is relatively small, they generally sell
in large quantities, so the
cumulative profit on such products can be large.
Examples of FMCG generally include a wide range of frequently
purchased consumer
products such as toiletries, soap, cosmetics, teeth cleaning
products, shaving products and
detergents, as well as other non-durables such as glassware,
light bulbs, batteries, paper
products and plastic goods. FMCG may also include
pharmaceuticals, consumer packaged
food products and drinks.
Some of the best known examples of Fast Moving Consumer Goods
companies includes,
General Mills, H. J. Heinz, Reckitt Benckiser, Sara Lee, Nestl,
Unilever, Procter &
Gamble, Coca-Cola, Carlsberg, Kleenex, Kraft, Pepsi, Wilkinson
and Mars. Unlike
other economy sectors, FMCG share float in a steady manner
irrespective of global market
dip, because they generally satisfy rather fundamental - as
opposed to luxurious - needs.
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The Relevance of Packaging as a Marketing Tool:
Never underestimate the importance of packaging. Marketers often
measure consumer brand
perceptions and ignore the pack. Yet we know from the way that
consumers react to
unbranded products that packaging plays a huge role in
reinforcing consumer perceptions.
Packaging helps to drive the way consumers experience a product.
Yet, we spend little time
researching the connections between packaging and the direct
experience of the product.
What relevance does packaging have in the marketing world of
today?
Reaching the target market:
In recent years the marketing environment has become
increasingly complex and
competitive. Although advertising can be a highly effective
means of communication for
those consumers who are exposed to it, reaching the entire
target market for most products is
generally not a feasible prospect.
Media fragmentation has meant that it is becoming increasingly
difficult and expensive to
reach and communicate with customers and potential customers,
forcing marketers to adopt
more innovative means of reaching their target market.
In contrast to advertising, which has limited reach, a products
packaging is something
which all buyers experience and which has strong potential to
engage the majority of the
target market. This makes it an extremely powerful and unique
tool in the modern marketing
environment. In addition to its benefits in terms of reach, some
marketers believe that
packaging is actually more influential than advertising in
influencing consumers, as it has a
more direct impact on how they perceive and experience the
product.
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Winning at the First and Second Moment of Truth:
Packagings dual role is what makes it a truly unique marketing
tool. Unlike other forms of
communication which tend to be fleeting, packaging plays a
crucial role not only at the point
of sale, but also after the actual purchase of the product. The
packaging has to provide
consumers with the right cues and clues both at the point of
purchase and during usage.
The first moment of truth is about obtaining customers attention
and communicating the
benefits of the offer. The second moment of truth is about
providing the tools the customer
needs to experience the benefits when using the product.
The Point Of Sale (The 1st Moment Of Truth): The importance of
making an impact at the point of sale cannot be underestimated. A
recent
Point of Purchase Advertising Institute (POPAI) survey in the UK
found that over 70% of
all purchasing decisions are made in-store at the point of
purchase. Brand purchases are
being made or broken in the final five seconds.At the point of
purchase, packaging serves a
number of key functions, namely:
1. Cutting through the clutter actually getting the consumer to
notice/see the
product.
2. Communicating marketing information.
3. Stimulating or creating brand impressions.
4. Providing various brand cues:
Value. Quality. Safety.
Of course, if packaging does not cut through the clutter and
catch the consumers attention,
none of packaging do other functions even come into play. The
most brilliant and creative
packaging is useless unless it is seen. Creating a powerful
shelf presence so that the brand
stands out from the crowd and is actually noticed is the first
and most vital step for any
product on a shelf.In our experience, most categories have a
mixture of customers with high
and low Involvement levels. Even categories which are
traditionally considered high
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involvement decisions, such as motor vehicles, have people for
whom the decision is made
without much consideration and categories which are often
considered to have few
involved consumers, such as soap, is an important, deliberated
decision and assessed in
depth by some.
Usage (The 2nd Moment of Truth):
Unlike advertising exposure which can be relatively brief,
packaging continues to build
brand values during the extended usage of the product and can
drive brand equity and
loyalty.
After purchase, packaging plays both a functional and a
marketing role.
1. Functional Role: From a functional perspective, packaging is
often part of the usage/consumption,
experience not only is a means of providing any necessary
information, but it can
also form a part of the actual product and provides functional
benefits (e.g. being
easy to use, fitting into storage space, etc.). If packaging is
unwieldy it can hamper
the relationship with the brand for instance if it breaks
easily, doesnt fit in the
fridge, can cut the consumer, etc., the experience with the
product can be negative.
2. Marketing Role - Brand Identity and Differentiation:
As the only part of the marketing communication that the
consumer takes home,
Packaging plays a key role in communicating and reinforcing
brand values over time.
Packaging has the power to make, but also to break brand
relationships.
A key example of the latter, is a case cited by Hofmeyr and
Rice, where a change in
pack design contributed towards a drop in a leading beer brands
market share by more
than 20% in the space of just one year. Nothing other than the
packaging had changed
the product itself had not changed in any way. The pack change,
although not dramatic
(the same style but with lighter colouring) led to a perception
that the beers quality had
been compromised and that it was now weaker.
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This caused many previously loyal consumers to lose faith in the
brand and to move to
the brands stronger competitors instead. This is a clear example
of the power of bad
packaging. Although a non-favourable advertisement might be
quickly forgotten, poor
packaging provides a continual reminder of the brands perceived
failing. Likewise,
favourable packaging can be a means of continually reinforcing
the brands appeal.
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11. FACTORS INFLUENCING PACKAGING DECISIONS
Packaging decisions are important for several reasons
including:
Protection: Packaging is used to protect the product from damage
during shipping and handling,
and to lessen spoilage if the protect is exposed to air or other
elements.
Visibility: Packaging design is used to capture customers
attention as they are shopping or
glancing through a catalog or website. This is particularly
important for customers who
are not familiar with the product and in situations, such as
those found in grocery stores,
where a product must stand out among thousands of other
products. Packaging designs
that standout are more likely to be remembered on future
shopping trips.
Added Value: Packaging design and structure can add value to a
product. For instance, benefits can be
obtained from package structures that make the product easier to
use while stylistic
designs can make the product more attractive to display in the
customers home.
Distributor Acceptance : Packaging decisions must not only be
accepted by the final customer, they may also
have to be accepted by distributors who sell the product for the
supplier. For instance, a
retailer may not accept packages unless they conform to
requirements they have for
storing products on their shelves.
Cost : Packaging can represent a significant portion of a
products selling price. For example,
it is estimated that in the cosmetics industry the packaging
cost of some products may
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be as high as 40% of a products selling price. Smart packaging
decisions can help
reduce costs and possibly lead to higher profits.
Expensive to Create: Developing new packaging can be extremely
expensive. The costs involved in creating
new packaging include: graphic and structural design,
production, customer testing,
possible destruction of leftover old packaging, and possible
advertising to inform
customer of the new packaging.
Long Term Decision: When companies create a new package it is
most often with the intention of having the
design on the market for an extended period of time. In fact,
changing a products
packaging too frequently can have negative effects since
customers become conditioned
to locate the product based on its package and may be confused
if the design is altered.
Environmental or Legal Issues: Packaging decisions must also
include an assessment of its environmental impact
especially for products with packages that are frequently
discarded. Packages that are
not easily bio-degradable could draw customer and possibly
governmental concern.
Also, caution must be exercised in order to create packages that
do not infringe on
intellectual property, such as copyrights, trademarks or
patents, held by others.
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12. PACKAGING EXPENDITURE
Packaging today provides the basis for many forms of shelf-life
extension, essential for
modern retailing. However, packaging is often criticized on the
grounds of cost and of being
a waste of natural resources and energy. Packaging is necessary
to protect the product from
spoilage and to maintain public health and that the packaging
industry, just like any other
industry, cannot exist without raw materials and energy.
The total value of the UK packaging industry is 4,000 million
per annum (approx 2,600
million for foods). However the total energy involved is only
about 5% of the national
energy consumption. The food packaging industry has always been
anxious to conserve
resources due to economic pressures. This has been achieved by
using less packaging
material, or by turning to cheaper, more abundant materials. In
addition, recycling and
package reuse/refilling schemes have been introduced voluntarily
to save materials and
energy and to protect the environment.
A sharp surge in packaging costs is tormenting consumer product
marketers, squeezing their
margins and forcing them to consider increasing prices of
processed food and some other
products in a cut-throat market. Prices of packaging materials
such as aluminium foil, Kraft
paper, and adhesives for corrugated boxes and packaging plastics
have increased up to 25%
in the last five months, forcing companies such as Marico and
Dabur to talk price hike in a
marketplace where increasing prices and cutting advertising
spends could prove fatal.
FMCG companies, working with extremely low margins after
absorbing most of last years
rise in raw material prices and higher logistics costs due to
fuel price hike, are also exploring
innovation in packaging and hedging materials to retain
profitability.In the current scenario
FMCG companies will exercise options like trimming internal
costs, hedging in the
packaging materials or cut down advertising & promotional
expenses for a quarter if they
are not launching any new products. A Dabur India official said
while the company has
absorbed higher packaging costs so far, it may increase prices
in some categories if costs
rise further.
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Companies are also exploring innovation in packaging. Shyam
Sunder, senior design
manager at IDE (Innovation Design Engineering) division of Tata
ELXSI, said many FMCG
companies now demand for smarter and cost-efficient packaging
solutions. Packaging costs
typically account of 8-10% of the total costs in a FMCG company.
According to Maricos
Gupta, rising material prices have increased packaging costs
about 7-8 % year-on-year. This
will rise if the administered fuel prices policy is scrapped, he
added. The government is
reported to be working to end fuel subsidies let market forces
decide the pricing. The prices
of corrugated boxes have increased 25-30% in last quarter
because of low availability of
Kraft paper. An HUL official said the firms bottom line has been
dented due to mounting
costs, branding expenses and the demanding nature of consumers.
Thats the story of every
FMCG company.
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13. PACKAGING AS A MEDIUM TO INCREASE SALES
Catching consumers attention is the first step in making the
sale
Packaging plays an important role as a medium in the marketing
mix, in promotion
campaigns, as a pricing criterion, in defining the character of
new products, as a setter of
trends and as an instrument to create brand identity and self
impact in all product groups.
The findings of many other research projects are supplemented by
the survey carried out by
IRI (Information Resources Inc.), which provides information
about this subject from
extensive, in-depth interviews and POS polls, specifically
including the issue o