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A PROJECT REPORT ON

THE IMPACT OF MARKETING STRATEGIES ADOPTED BY FMCG


COMPANIES IN INDIA

Submitted By

Pravira Shetty-75

Sonali Mhatre-104

Tittu Thankachan-113

Under the guidance of

Prof. Sanchayita Banerjee

ST. FRANCIS INSTITUTE OF MANAGEMENT AND RESEARCH, MT.


POINSUR, S.V.P ROAD, BORIVALI (W), MUMBAI-400103

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Acknowledgement

The success of this project would not have been possible without the constant
help and guidance of a few individuals who support has been vital to the
completion of the project.

We would like to show our greatest appreciation to our guide Prof. Sanchayita
Banerjee for the guidance during the project.

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Contents
Acknowledgement .................................................................................................................................. 2
INTRODUCTION ....................................................................................................................................... 4
BACKGROUND ......................................................................................................................................... 6
LITERATURE REVIEW ............................................................................................................................... 7
RESEARCH GAP ........................................................................................................................................ 8
OBJECTIVES ............................................................................................................................................. 8
METHODOLOGY ...................................................................................................................................... 8
SCOPE OF WORK ................................................................................................................................... 10
FINDINGS............................................................................................................................................... 10
RECOMMENDATION ............................................................................................................................. 12
CONCLUSION......................................................................................................................................... 17
REFERENCE ............................................................................................................................................ 18
APPENDIX .............................................................................................................................................. 18

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Research Topic: THE IMPACT OF MARKETING STRATEGIES
ADOPTED BY FMCG COMPANIES IN INDIA

INTRODUCTION

In today’s ever-changing market the customers have a lot of option to choose


from, their purchasing power has been influenced a lot by the introduction of
technology and product and market awareness amongst them, in such a scenario
for any company to position themselves distinctively in the market and in the
minds of the consumers they need to adopt new and innovative marketing
strategies.

These strategies aligned with their mission and vision would ultimately help
them achieve their organizational goals.

The application and success of marketing strategies adopted by any company is


crucial in their growth and development.

How effectively their strategies worked in the market decides whether they
should stick to the same strategy or adopt new one.

These strategies include their promotional, packaging, pricing, product and so


on.

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A company needs to constantly review the strategies they introduced so that
they can deliver exactly what the customer wants.

Strategies whether for urban market or rural market needs to be equally


effective as each one’s contribution matters in the long run.

Marketing strategies are nothing but proper utilization of marketing mix to


attract, retain and satisfy the needs and wants of the customers and to ultimately
gain profit.it is important for any organization to find out the needs and wants of
their customers so that they could provide them with what they actually want
and also their purchasing power.

So while framing any strategy they need to make sure all the above criteria are
met so that they don’t end up in failure.

But sometimes it does happen that the strategies they come up with do not
always succeed in the market.

There are various reasons to it and in our research we have studied what are
reactions of rural consumers towards acceptance of new and innovative
marketing strategies by various FMCG companies and how does it affect them
and the company.

Here to get accurate response we have interviewed retailers and customers in


rural areas and tried to find out how successful are various strategies adopted by
various FMCG companies and what impact does it have on them and the
company as a whole.

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BACKGROUND
 The Fast-Moving Consumer Goods (FMCG) sector is the fourth largest
sector in India.
 It has grown from US$ 31.6 billion in 2011 to US$ 52.8 billion in 2017-
18. The sector is further expected to grow at a Compound Annual Growth
Rate (CAGR) of 27.9% to reach US$ 103.7 billion by 2020. The sector
witnessed growth of 16.5% in value terms between June–September
2018; supported by moderate inflation, increase in private consumption
and rural income.
 It is forecasted to grow at 12-13% between September– December 2018
 Revenues of FMCG sector reached Rs 3.4 trillion (US$ 52.8 billion) in
FY18 and are estimated to reach US$ 103.7 billion in 2020.
 Growing awareness, easier access, and changing lifestyles are the key
growth drivers for the consumer market. The focus on agriculture,
MSMEs, education, healthcare, infrastructure and employment under the
Union Budget 2018-19 is expected to directly impact the FMCG sector.
 These initiatives are expected to increase the disposable income in the
hands of the common people, especially in the rural area, which will be
beneficial for the sector.
 The FMCG market in rural India is anticipated to expand at a compound
annual growth rate (CAGR) of 17.41percent to USS 100 billion during
2009-25
 Rural FMCG market accounts for 40 per cent of the overall FMCG market
in India, in revenue terms
 Amongst the leading retailers, Dabur generates over 40-45 per cent of its
domestic revenue from rural sales. HUL rural revenue accounts for 45 per

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cent of its overall sales while other companies earn 30- 35 per cent of their
revenues from rural areas
So, from this we can conclude that rural markets contribute greatly towards the
FMCG sector and hence it becomes crucial for the marketer to study and
understand the rural market so that they can adopt relevant marketing strategies
accordingly

LITERATURE REVIEW

“India lives in her villages” Mahatma Gandhi the father of our nation was right
when he made this statement. It proves apt as 660 million people live in Indian
villages which amount to around half a million. Rural India consists of 35
million households with a monthly income amounting to around 1,000 or more.
The average monthly average expenditure of these people is approximately
Rs.175.
As the market is spread out it makes it beneficial for the industry to view it as a
potential market.(L.K. Vaswani, Rajesh Aithal, Debasis Pradhan and G
Shridhar,2005)
It is true that rural marketing is viewed as potential market for the companies
but at the same time it also portrays certain difficulties when it comes to using
of similar marketing mix strategies which are used to tap urban consumers.
(Seema Shahaji desai,2013)

The once unknown or untapped rural market is now the attention seeker of other
huge global marketing companies and media planners. (Sandeep Anand and
Rajneesh Krishna,2008)
As the income level and the way of living of the rural population are changing,
the FMCG companies view it as a huge potential market. (John Mano Raj and P
Selvaraj,2007)
Even though Indian rural market gives immense opportunity for a company to
target on, they might face difficulties in dealing with the rural market.
(Anilkumar S Hagargi,2011)

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Chic Shampoo sachets @ Re 1, Parle G Tikki Packs @ Rs 2, Shanti Amla oil by
Marico were some of the products that were introduced by the respective
companies in order to tap the rural market which proved to be fruitful later, and
it was welcomed by the rural consumers in India. (Dr Ashfaque Ahmed,2011)
So these huge potential markets carry their own pros and cons when it comes to
the acceptance of the marketing strategies adopted by the companies especially
fast moving consumer goods (FMCG) companies as it is the most important
product sector in rural market.

RESEARCH GAP

Acceptance of Innovative Rural Marketing Strategies by Rural Consumers

OBJECTIVES

1. To Study the FMCG products buying behaviour of Rural


Consumers in the state of Maharashtra
2. To Study the factors that refrain the consumers from accepting
the innovative Marketing Strategies adopted by the FMCG
Companies
3. To understand the factors influencing Rural Consumers in their
reaction to different Marketing Strategies

METHODOLOGY

1) Research Design
Research design used was exploratory method wherein we interviewed 13
retailers and 11 customers from Vasai region

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2) Sampling Technique
Sampling technique is done by taking the interview of retailers and
consumers by going in rural areas.

3) Sample Size:
The sample size was 24 respondents which includes 13 retailers and
11 customers.

4) Sampling Population:
Our sampling population was Vasai region in that 3 places ie.
Manikpur, Vasai gaon and Chulna.

5) Research Instrument:
The research instrument used was interview schedule.

6) Primary Data:
The primary data for this research was collected by visiting Vasai
region wherein we interviewed consumers as well as the retailers in
order to get in-depth understanding of our topic.

7) Secondary Data:
The secondary data for this research was collected through journals
and websites.

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SCOPE OF WORK

Rural India contributes majorly towards the Indian FMCG market. Rural India’s
contribution becomes crucial for any FMCG company to study the attitudes,
behaviours and reactions of the rural consumers towards various marketing
strategies adopted by them.

Knowing what the market wants and how do they perceive every move made by
the companies to attract them is crucial in any company’s growth.

Here in our research work we have sincerely done our best to study the factors
which influences the rural consumers to accept or reject what they have been
offered.

FINDINGS

Marketing is a core of any business and a part and parcel of life, be it a thing to
be sold or an idea to be marketed. With focus on the customer, marketing is one
of the premier components of business management.

After a day full of interviewing the retailers there’s a set of conclusion derived
of the various approach of the marketing techniques used in rural area for the
FMCG products.

Firstly all the FMCG products for the retailers in particular areas are provided
by the same distributor. A particular area of say 8-10 kms have same set of
distributors. On conducting a survey amongst 3 localities in Vasai area of
Manikpur, Vasai gaon and Chulna, the distributors set up a perimeter for their
distribution of FMCG products and it goes on to the Naigaon area as well.

There are varieties of products in mom and pop store and ask about what family
prefer to buy amongst these, the foremost thing are the bread and milk on daily
basis, but the whole of the buying of the products depends upon the requirement
of the family and need for that particular product. Chocolates and chips are the
other products that are often of interest to the customers.

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On the buying behaviour of the consumers, the retailers think that this again
depends upon the family’s need and requirement but mostly Sachets are
preferred over the bottle. One of them also reviewed that the lower class people
mostly opt for the sachets and they buy it whenever required.

On discussing the in store advertisements and packaging of the product, we


interpreted that any new product in the market, the consumers behaviour
towards their original product does not change and will continue to buy so. The
in store advertisements are told by the distributors to which they tend to put up
the products in presentable manner to which consumers will buy that product
but will depend on the pricing and the quality of the product to do so. It means
that the people tend to concentrate mainly on the quality of the product more
than any attractive marketing strategy.

The fair and market does not affect the retailers in the rural areas as fairs are put
up once or twice in year and which does not display the FMCG products in
these sectors. Also the customers tend to be loyal to from where they buy their
products, so even if any FMCG products are displayed in these Fairs or product,
the customers still buy it from a retail store.

The fake products are seldom bought up in the market but customers are able to
distinguish between the fake and the original products. And they tend to buy
these products if the pricing is less and what additional benefits are available for
the product. Until and unless these requirements are not met, the customers are
loyal to their brand.

The buying behaviour of the consumers mostly depends on which class they
belong , people with daily wages buy the products on daily basis, the middle
class people buy it weekly and the people with fixed income buy it monthly. It
depends on the size of the family as well
If the product gets over before the expected date, they buy only if they have
sufficient money with them or else they wait for 2-3 days.
The consumers try out a new product if they are referred by their neighbours or
people close to them because they fall under the same class category. So we
interpreted that word of mouth does play an important role in publicity of a
particular product.
According to the consumers, their preference for buying a particular product
won’t change if there is a slight increase in the price of the product. They would
shift from their loyal brand only if there is a high increase in the price.

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RECOMMENDATION

In our research, it is observed that some of the respondents are brand loyal but
majority of them said that the brand did not matter to them, they are more
concerned with the quality of the product.
So in this regard, we suggest that the marketers should concentrate more on the
value and reliability of the product.
It is observed that the consumers consider the retailers as their source of
information for the purchase of a product, thus it is advisable that the retailers
should be given sufficient margin as compared to other products so that they
can increase the sale of a particular product.
The rural consumers mostly prefer small packaging, so the companies should
mainly focus on the small packaging of a product.

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INTERPRETATION
Sr.
Questions Answers Final concluded
No
Same for a particular area
Specific area for distributors where they operate.
Same for regions falling within a specific area
Vasai to Naigaon have one distributor
Same distributors for throughout the locality
Same Same for regions
Are all the distributors for falling within area
1 different FMCG retailers Whole area allotted for same distributors of 8-10 kms i.e.
same or different? Vasai has one distributor approximately
Vasai & Naigoan
Same
Same
Distributors are one throughout the area of 5-10km area
approx..
Same
All the distributors are same
Daily use products
Sachets of shampoos and oils, chips, biscuits
Chips, biscuits, chocolates, milks
Daily used products
As per requirements
bread and milk
What are the various FMCG According to their
2 milk and chips
products that people buy? requirement
As per requirements
As per requirements
Shampoos, toothpastes, soaps, detergents
As per requirements
Toothpastes, soaps
As per requirements
Depends to the various consumers
Sachets are preferred in quantity of 3-4
Lower class people tend to buy sachets more than bottles
Sachets of FMCG products
are more in demand than depends on family Depends on the
3
the bottle packs or larger Depends on the number of people will be using it family mostly
packs?
Depends on family
Depends on families
Bottle packs are preferred more

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Sachets are bought more
Depending on the families
Bottles are bought more
Depends on families
Sachets are preferred in quantity of 3-4
Quality of the product will be the deciding factors for the
customers to buy it again'
Yes, people tend to buy and try a variation
If they find the product attractive, they tend to buy it
If they like it, they buy it again
Yes, children find it interesting and they buy it
No, rarely Depends mostly on
Does instore
the price and
4 advertisements affect If the advertisements are attractive
quality of the
consumer preference?
No, doesn’t affect them much product
Depends on the pricing of the products if it is affordable
depends on the customers preference for a particular
product
Children's preference
Buy it once and will continue buying if the quality is good
Quality of that product will matter
Mostly depends upon the online marketing and
promotions
Buy it if the quality of the product is good
They do not attract but depends upon the necessity
Pricing will be a factor
Attractive
Depends upon the quality of the product packaging does
quality will determine upon buying the product play roles since
Does attractive packaging people tend to buy
5 enable consumers to buy a Sometimes depend upon the customer’s preference these products but
product? Depends upon the quality of the product continuity of these
If they like the product, they buy it again products depends
on how good that
Not only the packaging but also depends upon the quality product is
Depends on the pricing of the products
Quality is a factor, customers will look for
No, if pricing is more and yes, if it is affordable
Sometimes yes, they do
Do consumers still prefer Consumers sometimes unaware about the display so Fairs are put up
buying products from fairs there’s no problem only once or twice
6 Fair are put up once or twice in a loss
due to their price sensitive a year and there is
nature? No FMCG products are displayed in fairs no FMCG products

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No fairs in the area displayed in fairs or
events. And where
No fairs in the area
FMCG products are
People buy from local store than the fairs displayed in fairs
FMCG products are not displayed in the fairs there is no
difference in the
Customers stick to loyalty of the retailers consumers buying
Customers mostly buy it from retail sore even if fair is put behaviours
up
No fairs in the area
Fairs are put up once a year, so no major loss
No not necessarily
No fairs in the area
They prefer local market

Yes, but avoid buying it

Yes, but will check the pricing difference before buying it


Yes, won’t buy it
Yes, will not buy it because wont trust it Consumers are
Yes, will buy it sometimes aware of the fake
Are the customers able to
products but they
differentiate between fake Yes, will prefer to stick to the original product mostly stick to
7 and original products? If yes Yeah and they do buy it their original
do they buy those products? Yes, but if no change in price then will stick to the same product and stick
product to it if there are no
Yes but they wont buy it other parameters
affecting. E.g. price
Yes may buy it
Yes may look to buy it
Yes, but wont buy if price is same
Yes, but will stick to their original product

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FOR CONSUMERS

Weekly

Once in 2 weeks
10 days
Weekly Depends on
How frequently Monthly people, which class
1 you buy the Monthly they belong and on
product? the size of the
10-15 days family as well
Weekly
Weekly
once in 2 weeks
Weekly
Friends and family’s suggestion and products effectiveness
No, if they haven’t tried out on their own
Yes, if neighbours tend to buy products on regular basis
Yes, they have been staying amongst them for ages and trust them They would try out
a new product if
Does word of Will be asking family and friends referred by their
mouth play an
Yes, if the neighbours are using a product on regular basis and if neighbours or
2 important role in
they recommend it people close to
publicity of
Will listen to their neighbours them because they
product?
fall under the same
No, will prefer to stick to their existing product
class category
Yes, if the product is in their budget
Won’t change their loyal product
Will listen to their neighbours, friends and families

No, if price change is not more

No, if price change is not high


Yes, if price rise is up to certain level Preference won’t
No, if price rise is less than won’t change the product change if there is a
slight increase in
Does change in Will think if the price rise is high price, they would
price of product
3 Depends on the price rise shift from their
affect consumer
If rising by less margin, then will stick to the product or shift to a loyal brand only if
preference?
substitute product there is a high
Refer to other product if price rise is more increase in the
price
Yes, if a substitute product costs less
Depends upon the increase in the price
No, some are brand loyal

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CONCLUSION

Consumers buying behavior and purchasing pattern is influenced a lot by the


various marketing strategies that are adopted by the companies, be it in terms of
product, price, promotion, packaging etc.
The companies think these strategies will help them in bringing about a change
in the consumer behavior and would ultimately help in increasing the sales.
But at times it may happen that a strategy adopted by a company do not succeed
in the market and this Is mainly because the marketer did not provide what the
customer actually wants or he might not have studied the market well before
taking up a decision.
And through our study we came to a conclusion that there are lot many changes
happening in the rural sector of India, be it in terms of their product knowledge,
technological advancements, etc.
Unlike the olden times people are now able to differentiate between what is
good and what is bad for them.
This is highly reflected in the products they purchase or to be precise this is
impacted on the way they accept the innovative marketing strategies adopted by
various FMCG companies.
Further marketers must concentrate on rural areas as compared to urban market
is mainly because there has been a major change in the level of income amongst
the rural people, their spending capacity is increasing at a fast pace.
Urban market saturation, rising literacy rate, introduction of technology could
be some reasons why marketers should concentrate more in rural areas.
So here we would like to conclude that people do get influenced by the
marketing strategies of FMCG companies in rural India but not as much as it
used to influence them some 10-15 years back, and this happened mainly due to
various factors such as increased product knowledge, introduction of
technology, increased standard of living etc.

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REFERENCE

https://www.researchgate.net/publication/258142746_Rural_Marketing_in_the_
Development_Paradigm

http://ijmcr.com/rural-retail-innovations-in-india-new-dimension-in-marketing/

https://www.researchgate.net/publication/238669875_Rural_Brand_Preference_
Determinants_in_India

https://scholar.google.co.in/citations?user=baaLFXgAAAAJ&hl=en

http://ijemr.in/wp-content/uploads/2018/01/Rural-Market-in-India-Some-
Opportunities-and-Challenges.pdf

http://www.himpub.com/documents/Chapter1266.pdf

APPENDIX

INTERVIEW QUESTIONS

FOR RETAILERS
1. Are all the distributors for different FMCG retailers same or different?
2. What are the various FMCG products that people buy?
3. Sachets of FMCG products are more in demand than the bottle packs or
larger packs?
4. Do instore advertisements affect consumer preference?
1. Does attractive packaging enable consumers to buy a product?

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2. Do consumers still prefer buying products from fairs due to their price
sensitive nature?
3. Are the customers able to differentiate between fake and original
products? If yes do they buy those products?

FOR CONSUMERS
1. How frequently you buy the product?
2. Does word of mouth play an important role in publicity of product?
3. Does change in price of product affect consumer preference?

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