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FMCG Refers To Consumer Non Durable Goods required For Daily And Frequent Use.

FMCG is an acronym for Fast Moving Consumer Goods, which refer to things that we buy from local supermarkets on daily basis, the things that have high turnover and are relatively cheaper Also known as Consumer Packaged Goods (CPG)

Flavored Milk Juices Squashes Custard Coffee Tea Health drinks Milk Powder Cigarettes Mineral Water

Cereals Biscuits & Bakery Cookies Wafers Confectionery Dairy Products Butter Cheese Aerated Drinks

FMCG products are sold quickly at relatively low cost Absolute profit made on FMCG products is relatively small but they sell in large quantity & earn large profits. FMCG products have high turnover and are relatively cheaper. The goods that comprise this category are ones that need to be replaced frequently or are consumed frequently, compared to those that are usable for extended periods of time. FMCG goods represent a market that will always have consumers FMCG market is highly competitive due to high market saturation and low consumer switching costs.

Business limited to the upper segment of the society Low purchasing power Focus on Urban areas only Companies like HLL never bothered to enter Indian rural market

Focus

on rural markets Launch of Nirma changed the scenario Focus on the lower strata of the society making detergents very affordable Cavinkare sachet marketing started in 1983 which was also a lesson for the MNCs Companies like HLL woke up to the new market realities

Higher

number of domestic choices Both urban and rural as targets Value for money and value added offers Affluent customers who always had the money started splurging More number of players viz HLL, Marico, Henkel, Colgate, etc Sales boom was observed for first 4 yrs and then it stabilized

Growth rate of FMCG was torpid High penetration categories like toilet soaps & detergent bars were badly affected Crisis in agricultural sector & industrial slowdown forced consumers to cut down on spending Buyers moved from high end to low end products Most marketers offered smaller versions of products

FMCG

cos. got a new lease of life 2005 onwards Products of almost all categories witnessed a boost in sales Key reasons
Increase in per capita income Organized retail boom Increased rural penetration

New

range of affordable products were introduced

Target Market differs from product to product Examples: 1. Mc Donald's Youth 2. Vim bar - Housewives 3. Pepsodent Kids 4. Kellogg's Kids & adults 5. Sugar free Age group of 35 and more

Competitive Strategy consists of move of companies in order to attract customers, withstand competitive pressures and strengthen an organizations market position. The main objective of Competitive Strategy is to generate a competitive advantage, increase the loyalty of customers and to beat competitors. In FMCG sector, the competitive strategies varies from company to company
Three main competitive strategies are: Overall low cost leadership strategy Excellent distribution strategy Focused differentiation strategy

Advertising -Huge investment made on advertising assisted with frequent broadcast specially during peak hours, during live matches during popular TV shows Through banners, posters, trial packs, events, hoardings, radio etc. Occupying the best of the slots in print media

Sales promotion -Sales promotions is one of the most effective tools if they are used well with the overall strategy of the brand.

Objectives 1. To increase impulse purchase 2. Trying to switch consumer loyalties 3. Inducing a trial if the FMCG product is a new launch

A premium brand which gets into frequent sales promotion has the risk of losing its premiumness a permanent damage to a brand which has spent years creating the premium image.

A product line extension is the use of an established products brand name for a new item in the same product category according to the need of consumer
Why product line extension is done? To make the product more affordable to the various market segments To balance the profit through product line To avoid penetration by competitor Eg: Coca-Cola, Diet Coke, Vanilla Coke Surf, Surf Excel, Surf Excel Blue

Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category It gives credence value to the brand Eg: Dabur Toothpaste, Dabur Hair Oil, Dabur Shampoo Poor choices for brand extension may dilute and deteriorate the core brand and damage the brand equity

If

the products are differentiated in their characteristics and this difference is perceivable, there are chances of brand loyalty being formed based on satisfaction with greater performance or fit of product with needs. In this case, loyalty is driven by functional or symbolic benefits. Functional benefits would be specific tangible features of the product (Eg: Tide Plus) Symbolic benefits would be intangibles such as brand personality (Eg: Reebok, Nike)

The

shampoo sachets, soaps, toothpastes are available in even the smallest villages. 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. Hence, if distribution is ensured to the Feeder Markets in towns or villages with populations of 10-15,000, the first step has been taken towards reaching your target customer.

If

price is the only differentiating factor, then products become a commodity If the price differentiation in the market is perceivable, Price-led loyalty might exist in the market. Price-led loyalty is practiced by FMCG brands apparel brands which come out with frequent sales promotions Low pricing may lead to the customer perception that quality of the product is low. Lower prices should create a sense of value

Introduction of packs with smaller sizes Eg: Introduction of 25 gm of Amul Butter along with standard sizes of 100 gm & 500 gm Sachets of some shampoos like Chik Shampoo in rural India

How is your brand placed? Is it a strong brand with many loyal buyers that people know & are willing to pay an extra premium for? Or is a weak brand commanding little loyalty? Strong brands demand more shelf space of the retailers & have a larger & more committed customer base

4 scenarios can take place during recession period 1. Brand equity (High): Reduction in Brand investments: High loss potential 2. Brand Equity (High): No reduction increase in brand investments: Recession is opportunity 3. Brand equity (Low): Reduction in Brand investments: Survival game 4. Brand equity (Low): No reduction in Brand investments: Double or Nothing

Focus

on health

Sugar free chyavanprash, multi grain biscuits, probiotic ice creams, smart snacks (lays with 40% less saturated fats)
Micro

segmentation value SKUs or sachetization

Age- Junior Horlicks Gender- Womens Horlicks, Male fairness creams


Lower

Jet

Under

All types of flakes Pastas, noodles, soups, pizzas, burgers Energy drinks Chopped veggies, ready to eat parathas, etc Different varieties of bread Skin/fairness creams Anti ageing solutions Deodorants, perfumes, body wash, shampoos, conditioners, etc Cosmetics

age consumer products

penetrated growth categories

Evolved

forms of products Dish wash (powder bar to liquid) Shaving (creams to foams/gels) Mosquito repellents (coils to aerosols) Toilet cleaners (acids to Toilet Sanitizers)

Dabur India Limited is the Fourth largest FMCG Company in India with interests in Health Care, Personal Care and Food products. Dabur has a Turnover of more than Rs. 1600 crore with powerful brands like Dabur Amla,Dabur Chyawanprash, Vatika, Hajmola & Real. 2 major strategic business units (SBU) Consumer Care Division (CCD) and Consumer Health Division (CHD) 3 Subsidiary Group companies Dabur Foods, Dabur Nepal and Dabur International

Largest Indian Personal & Health care Company


Revenue of over USD 350 mn Market Cap of USD 1 Bn

World Leader in Ayurveda


Portfolio of over 400 Herbal / Ayurvedic Products

Professionally Managed
Strong rating on governance by CRISIL

Strong Internal Competencies


Robust Manufacturing Set up & State of the Art R&D Facilities

Dabur is cautiously optimistic about its prospects in 2011-12 They believe that, if the Indian economy continues to grow by over 6.5 per cent, demand for FMCG products is bound to increase. However, a bulk of this demand growth will be from smaller towns and rural centers. This also points to the fact that growth will largely be volume driven. The major concern for 2011-12 is to do with prices of inputs.

Hindustan Unilever Ltd is Indias largest FMCG sector company with all type of household products available with it. It has Home & Personal Care products in its kitty. According to Brand Equity, HUL has largest no of brands in most trusted brands list. 16 of HULs brands featured in AC-Nielson Brand Equity list of 100 most trusted brands in 2008 in an annual survey.

After stagnating between 1999 and 2004, the company is back on the growth track. In the past five years, till 2010 HULs net sales & profits have witnessed substantial growth

HUL always believes in customer friendly products with major emphasis on low cost overall without compromising on the quality of the product. The entire product portfolio is also being tweaked to include premium offerings such as Ponds Age Miracle and Dove shampoo in skin and hair care.

Hindustan Unilever Ltds (HUL) beverage brands have been amalgamated under two umbrella brands Brooke Bond and Lipton and in the fabric wash category, the company has retained only Rin, Surf and Wheel. HUL has withdrawn brands such as Sunlight, 501& Dalda Some brand extensions like Clinic All Clear anti-dandruff shampoo to hair oil category had been successful

SoapsLux, Pears, Lifebuoy ShampoosSunsilk, Clinic Plus, Dove DetergentsSurf, Wheel Talcum PowderPonds TeaTajmahal, Bru, Lipton, Red Label Fairness & Skin CreamFair & Lovely, Lakme, Ponds Fairness Cream, Ponds Age Miracle

The Company has been launching new products and brand extensions, with investments being made towards brandbuilding and increasing its market share. HUL is also streamlining its various business operations, in line with the One Unilever philosophy adopted by the Unilever group worldwide. Introduction of premium products and addition of new consumers via market expansion will be HULs growth drivers

Being an MNC operating in India, HUL is more conservative in its strategies than its Indian counterparts. Prolonged inflation may lead to margin contraction, in case HUL is not able to pass on this burden to consumers. The companys large size also poses a problem, since it does not give HUL the agility to address the competition it faces from national and regional players.

Strengths: Strong brand portfolio, price, quantity & variety. Innovative Aspects. Presence of Established distribution networks in both urban and rural areas. A large no. of distributers 16 million outlets over the world. 700 million customer base. Strong R&D of the company Highly skilled human resource.

Weaknesses Strong Competitors. Local competitors also present Low exports level(at present). High advertising costs.

Opportunities: Large domestic market over a billion population. Untapped rural market. Changing Lifestyles & Rising income levels, i.e. increasing per capita income of consumers.

Threats Tax and regulatory structure. Fake brands which are cheaper Entry of ITC in FMCG sector. Increasing cost of raw material.

Distribution strategy (Strong distribution network) Distribution network(direct selling co. HULN; products marketed by AYUSH) Brand extension strategy (pears, lux, lifebuoy) Line extension strategy (surf, surf excel, surf excel +) Promotional strategy-ads,(Rs700-800 cr) Segmentation strategy Premium brands (ponds age miracle) Affordable & value for money brands Sachetization of shampoos Community services programs like SHAKTI for rural women & LIFEBUOY SWASTHA CHETNA which is a rural health program

ITC Business Portfolio


FMCG
Cigarettes Foods Personal Care Lifestyle Retailing

Education & Stationery

Matches

Incense Sticks

Hotels

Paper & Packaging

Agri Business

Information Technology

Branded Packaged Foods


6 chosen categories: Staples Aashirvaad Atta, Salt, Spices Biscuits Sunfeast Salty Snacks Potato chips, : Bingo! Confectionery Candyman, mint-o Noodles: Launched Sunfeast Yippee Noodles in Sept 10 in Karnataka and Tamil Nadu markets Ready to Eat Kitchens of India (Ready to Eat, Conserves & Chutneys and Frozen Foods), Aashirvaad (Instant Mixes & Cooking Pastes), Sunfeast Pasta

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Branded Packaged Foods

Aashirvaad Atta: Current market leader amongst national branded players; leverages the echoupal network for cost-quality optimisation and region specific offerings

Sunfeast Biscuits:

Differentiated & innovative products; continues to build consumer


franchise; distributed & outsourced supply chain being ramped up Targeted cost management actions shore up margins

Number of innovative products in the pipeline leveraging the capabilities of the ITC R&D Centre
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Safety Matches

Current industry consumer spend estimated at Rs. 1250 crores p.a. for 24 billion match boxes Fragmented supply base arising from policy of reservation for small scale industry Mass market moving from 0.50 p price point to Re 1.00. ITC markets its brands with value added products across each price point Support SMEs with complementary marketing strengths AIM Indias largest selling Safety Matches brand Successful acquisition of WIMCO Ltd. by Russell Credit Key brands: Homelites, Ship, Cheetah Fight etc.
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Incense sticks (Agarbattis)

Current industry consumer spend estimated at over Rs. 900 crores p.a.
ITC markets its brands with value added products across each price point Mangaldeep : second largest national brand in the country Support cottage sector with complementary marketing strengths Provides livelihood opportunities to more than 8000 under privileged women

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Personal Care Products

Current market size estimated at over Rs. 29000 crores (growing at 12% p.a.)

ITC presence established in Body Wash (Soaps, shower gels), Hair Care (Shampoos,

conditioner).
Product portfolio enlarged with the launch of Fairness cream Vivel Active Fair Portfolio approach straddling all consumer segments with 4 umbrella brands

Essenza Di Wills (Prestige)

Fiama Di Wills (Premium)


Vivel Di Wills and Vivel (Mid)

Products well received in the market, gaining customer acceptance

Supported by investments in brands celebrity endorsements


Investments being made in Research & Development and strategic tax incentivised

manufacturing sites
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ITCs Cigarettes Business

Market leadership

Powerful brands across segments


Leadership in all segments - geographic & price Extensive FMCG distribution network Direct servicing of 1,00,000 markets & 2 million retail outlets World-class state-of-the-art technology and products Investment - Rs.10 billion in six years Exciting long term growth potential

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Cigarettes: Growth potential

Cigarettes account for less than 15% of tobacco consumed in India unlike world pattern of 85% due to prolonged punitive taxation Cigarettes (15% of tobacco consumption) contribute nearly 85% of Revenue to the Exchequer from tobacco sector

48% of adult Indian males consume tobacco. Only 10.3% of adult Indian males smoke cigarettes as compared to 16% who smoke biris and 33% who use smokeless tobacco (Source: Global Adult Tobacco Survey India 2010)

Biri : Cigarettes ratio = 10 : 1

Annual per capita adult cigarette consumption in India is appx. one


tenth world average : 85 Future growth depends on relative rates of growth of per capita

income and moderation in taxes

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