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Fast Moving Consumer Goods Marketing

Session: 7 Prof: Yasmin S

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Fast Moving Consumer Goods (FMCG) are products that are sold quickly at relatively low cost. Products which have a quick turnover, are known as Fast Moving Consumer Goods (FMCG). FMCG products are generally replaced or fully used up over a short period of days, weeks, or months, and within one year.
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is generally sold in large quantities, so the cumulative profit on such products can be large. FMCG may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars.

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The factors that made the FMCG industry a highly competitive one are low operational cost, solid distribution networks, and emergence of new FMCG companies. In addition, the growth of the worlds population is another responsible factor for the huge success of this particular industry. Some of the leading FMCG companies all over the world are, Nestl, Unilever, Procter & Gamble, Coca-Cola.
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FMCG Evolution in India

1950s-80s Low Investment in the sector Low purchasing power Govt. emphasis on small scale sector HLL and other companys urban focus Post liberalization Entry of MNCs Focus shifted to getting to rural consumer first Others, like Nestle, remained with the urban population Latest fad to hit the market is the sachet bug. Mushrooming of regional brands Nirma enters and changes the focus to Value for Money in the 70s Post liberalization, Jyothy Laboratories, Ghari Detergent and Anchor toothpaste giving the nation-wide brands a run for their money.
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Characteristics of the FMCG Sector

A well-established distribution network, intense competition between the organized and unorganized segments, low operating cost, strong branding characterizes the sector.

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The middle class and the rural segments of the Indian population are the most promising market for FMCG, and give brand makers the opportunity to convert them to branded products. Most of the product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per capita consumption as well as low penetration level, but the potential for growth is huge.
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Characteristics of FMCGs from the consumers' perspective:

Frequent purchase Low involvement (little or no effort to choose the item -- products with strong brand loyalty are exceptions to this rule) Low price

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Characteristics of FMCGs from the marketers' angle:

High volumes Low margins Extensive distribution networks High stock turnover

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Personal Care. Household Care.

Branded and Packaged Food and Beverages.

Spirits and Tobacco.
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Toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars. A subset of FMCGs are Fast Moving Consumer Electronics which include innovative electronic products such as mobile phones, MP3 players, digital cameras, GPS Systems and Laptops
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Branding. Distribution Network. Contract manufacturing.

Large Unorganized Sector.

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Overview of the Indian FMCG sector

The burgeoning middle class Indian population, as well as the rural sector, present a huge potential for this sector. The FMCG sector in India is at present, the fourth largest sector with a total market size in excess of USD 13 billion as of 2012. This sector is expected to grow to a USD 33 billion industry by 2015 and to a whooping USD 100 billion by the year 2025.
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Overview of the Indian FMCG sector

The Fast Moving Consumer Goods (FMCG) sector in India has been growing at a healthy CAGR of 11% over the last decade Riding on the back of increasing demand and changing consumer preferences, thanks to higher disposable incomes and the retail revolution, the sector has been posting double-digit growth over the past couple of years
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Overview of the Indian FMCG sector

The industry is volume driven and is characterized by low margins. The products are branded and backed by skilled marketing, heavy advertising, slick packaging and strong distribution networks. Also, raw material prices play an important role in determining the pricing of the final product Modern retail formats too have contributed in a major way in pushing the growth in the FMCG sector. With rising income levels and the spread of modern retail, the FMCG industrys future prospects look bright which is expected to further boost sales Free Powerpoint Templates

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Overview of the Indian FMCG sector

Growth in the sector is led by higher urban and rural demand. Going forward , the governments growing support to agriculture will drive longterm growth in consumption from the rural sector Amongst all the FMCG segments, the food segment will outperform over the coming years
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Overview of the Indian FMCG sector

To exploit this trend many companies have launched health based products viz. Britannia launched Nutrichoice biscuits, Danone launching probiotic yogurt, Dabur introduced a juice with fiber and HUL introduced Soya and multigrain atta, iodized salt, energy drinks It is believed that the demand for these products is going to outpace the overall Food Category growth for the years to come
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Industry Overview
The market is estimated to grow to US$ 100 billion by 2025, according to market research firm Nielsen In the last decade the FMCG sector has grown at an average of 11% a year; in the last five years, annual growth accelerated to 17% Rural India accounts for more than 700 Million consumers or 70% of the Indian population and accounts for 40% of the Free Powerpoint Templates Page 20 total FMCG market

Scope of the sector

12.2% of the world population in the villages of India. Low per capita consumption for all the products.

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Growth drivers for FMCG in India

Increasing rate of urbanization, expected to see major growth in coming years. Rise in disposable incomes, resulting in premium brands having faster growth and deeper penetration. Innovative and stronger channels of distribution to the rural segment, leading to deeper penetration into this segment. Increase in rural non-agricultural income and benefits from government welfare programmes. Investment in stock markets of FMCG companies, which are expected to grow constantly.
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Challenges for FMCG sector

Increasing rate of inflation, which is likely to lead to higher cost of raw materials. The standardization of packaging norms that is likely to be implemented by the Government by Jan 2013 is expected to increase cost of beverages, cereals, edible oil, detergent, flour, salt, aerated drinks and mineral water.

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Challenges for FMCG sector

Steadily rising fuel costs, leading to increased distribution costs. The present slow-down in the economy may lower demand of FMCG products, particularly in the premium sector, leading to reduced volumes. The declining value of rupee against other currencies may reduce margins of many companies, as Marico, Godrej Consumer Products, Colgate, Dabur, etc who import raw materials. Free Powerpoint Templates

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1. 2. 3. Large Domestic Market Large Consumer Goods Spender Low Penetration & Low per Capita consumption :Changing Lifestyles



Retailing New growth area

Demand & Supply Gap
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Comparison with the World Markets

Availability of raw materials
Labor cost comparison

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Market Players In Indian FMCG Sector

Domestic Players:ITC Limited Marico Nirma Limited Jyothy Laboratories Ltd.

Foreign Players:Cadbury India Limited Cargill Coca Cola Colgate Palmolive India Hindustan Unilever Limited Nestle India Limited P&G PepsiCo
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S. NO. 1. Companies Hindustan Unilever Ltd.

3. 4. 5. 6. 7. 8. 9.

ITC (Indian Tobacco Company)

Nestl India GCMMF (AMUL) Dabur India Asian Paints (India) Cadbury India Britannia Industries Procter & Gamble Hygiene and Health Care


Marico Industries
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FMCG Vs. Industrial Marketing

Industrial Marketing
Relationship driven Maximize value of relationship Small focused target market Multi-step Buying process, longer sales cycle Rational buying decision based on business value

Product Driven Maximize value of transaction Large target market Single-step Buying process, shorter sales cycle Emotional buying decision based on status, desire or price
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Innovations in FMCG sphere

There are two types of innovations Evolutionary and Revolutionary

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Innovations in FMCG sphere

Evolutionary: Its just an addition to some innovation/ launch etc done in past. Just take the example of Colgate Maxfresh. Its just an addition of a new attribute to the existing portfolio. Revolutionary: It is something out of box altogether new where nobody has entered so far. Lets take an example of Lays Kurkure where they did some innovation with Snack Foods category in FMCG. Other example is Salt Toothpaste - its exactly not revolutionary, but its really a different value propositions which consumers never thought of. This was possible after lot of R&D done in area of dental
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Innovations in FMCG sphere

Now think of weird innovations - some liquid which when applied on hands will remove all the germs and make your hand absolutely clean without even using water. It has an awesome utility - its is revolutionary. But here the important point is whether this is launched in right time to the right markets for set of consumers.
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Growth Strategies for FMCG

The success of the FMCG depends on the marketing strategy. A marketer pursues a wide range of strategies. When the prices are competitive the company would use the extensive distribution network, design suitable advertising& sales promotion schemes. What makes an FMCG brand sell more than a competitor? What makes some brands outstanding/? How does a marketer convert a customer from buying a generic washing powder to buying a particular brand?
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Multi brand Strategy

A company nurtures a number of brands in the same category. The main rational behind this strategy is to capture as much of market as possible by trying to cover as many segments as possible. This will enable the company to lock up the more distributor shelf space. Example : HUL, CADBURY. Another reason to adopt multiple brand strategy is to protect its major brands by setting up flanked brands.
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Marketing Strategy
Direct on-screen marketing (e.g. Harpic) Power brand strategy (Include those brand that have maximum pulling power and growth e.g. lifebuoy soap) Power brand extension (e.g. lifebuoy talcum powder) Exit from non power brand Using India as a brand

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Marketing Strategy
Small size packet strategy Pricing strategy
1. 2. 3.

Mark up Competitor based Product bundling

Same value, size increase Same value, size decrease

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Product Flanking
This refers to the introduction of different combinations of products at different prices, to cover as many market segments as possible. It is basically offering the same product in different sizes & prices to tap diverse market opportunities. The introduction of shampoos in small sachets has made them affordable to the lower segments of consumers who previously could not afford spend for a bottle of shampoo. The idea behind this is to flank the core product by offering different variations of size & price so that the consumer fids some brand to choose from. Example; Vicks is available in smaller container , cough drops, & cough syrup.
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Brand Extensions
Marketers like to have loyal consumer base so that the particular brand enjoys high brand equity . In such cases the companies make the brand extensions in the hope that the extensions will be able to ride on the equity of the successful brand, & that the new brand will stand in its own right in the course of time. Free Powerpoint Templates Example : LIFEBOY, AMUL Page 44

Building Product Line

Some companies add related new product lines to give the customer all the products he/she would like to buy under one umbrella. Example: REVLON, BRITANNIA BRITANNIA has introduced different kinds of biscuits & baked foods in the past few years. By adding a number of flavours in each product line the company grew in Free Powerpoint Templates Page 45 the industry.

Target market
Differs from product to product examples: 1. Mc Donald's Youth 2. Vim bar - Housewives 3. Pepsodent Kids 4. Kellogg's Previously kids now adults too 5. Sugar free Age group of 35 and Free Powerpoint Templates more Page 46

Huge investment on advertisement Frequent broadcast Specially during peak hours During live matches During popular TV shows Target TV channels ( M TV, V TV) Through banners, posters, trial packs, events, hoardings, radio etc. Based on Market Research
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Why advertisement?
As a reminder To inform about our product To show the success of brand To attract the customers To hamper the unsecured mind of consumer (e.g. saffola,dettol) To arise the need purposely To attach consumer emotionally with product To show facts and figures of products
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Message delivery
Surf excel for washing machine Vim bar gel Gillette razor Bingo chips Happy dent chewing gum Bourn vita, Horlicks Pepsodent, Colgate Pepsi, sprite, coca-cola
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Why product line extension is done?

According to the need of consumer
To avoid the loss of product diversification To balance the profit through product line

To avoid penetration by competitor ( perk glucose)

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Attractive packs Vibrant colors Pack will show the important feature of product Protective packaging( bru coffee) Size wise packing (Navratna oil and Colgate) According to segmentation of Market Packaging should be enhanced time by time Affordable packs ( coca cola 200 ml).
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New Product Development

A company can add new product through the acquisition of other companies or by developing new products. New products could also mean offering improved performance . Example ; DOVE , DABUR VATYIKA HAIR OIL ,consumer research revealed that Indian ladies mixed a variety of herbs with hair oil before application.
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Innovation in Core Product

The life of the FMCG product is short therefore marketer continually try to introduce new brands to offer some thing new & meet the changing requirements of the customer.

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Long Term Outlook

Many companies adopt the long term outlook towards growth in the FMCG market. The concept of cornflakes for breakfast promoted by Kellogg's is entirely American in nature.

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Extending the PLC

FMCG company may have to reformulate its marketing strategy because economic conditions change, competitors launch new assaults & the product encounters new types of buyers &new requirements.

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Expanding markets by usage

This is achieved by either increasing the number of customers or by encouraging more consumption per intake. The usage rate of the consumers can be increased in a number of ways By persuading customer to use the product more frequently, Company can try to induce users to consume more of the product on each occasion. Company can try to discover new product use & convince customers to use the product in more varied way. example FEVICOL , M Seal.
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Wide Distribution Network

A simple way of increasing an FMCG company's market share is by developing a strong distribution network , preferably in terms of more locations. An extensive distribution system can be developed over a time, or the company may acquire another company which has extensive distribution network. Example: ASIAN PAINTS , HUL,
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Organization spend considerable effort to find out the whats, hows & when of their consumers.

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Jyothy Laboratories came into being in 1983, powered by the vision of one man M.P Ramachandran - the current Chairman & Managing Director. Engaged across the complete FMCG product cycle- management, research, manufacture, marketing and branding. Marketing a range of daily household and personal care products. Headquarter in Mumbai with a nationwide office network. Started operations with a corpus of INR 40,000 to a company with a turnover of over INR 400 crores, Jyothy Laboratories Limited has come a long way. Free Powerpoint Templates

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21 manufacturing facilities across 14 locations- Trichur, Wynad, Roorkee, Pondicherry, Chennai, Hyderabad, Bhubaneswar, Bankura, Guwahati, Baddi, Silvassa, Salem, Jammu and Pithampurproximate to consumer locations. Most plants are ISO 9001 and ISO 14000- certified. 40 depots to service customer requirements. Network of more than 2,500 distributors. Motivated team of more than 1,500 marketing and sales members. Employee strength of over 3,500. Exports to 14 countries including Sri Lanka, Bangladesh, Mauritius, Malaysia, UAE, Hong Kong and Saudi Arabia. Products accessible across more than 750,000 Indian households.

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Ujala (flagship): Liquid fabric whitener. Maxo: Mosquito repellent. Exo: Dish washing soap and dish washing scrubber. Ujala Stiff & Shine: Fabric enhancer. Jeeva: Personal Care toilet soap. Maya: Incense Sticks Ujala Detergent: Detergent washing powder.

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Earlier known as Hindustan Lever Limited. Was formed in 1933 as Lever Brothers India Limited. Headquartered in Mumbai. HUL is the market leader in Indian products such as tea, soaps, detergents etc. The companys statement of corporate purpose is to meet the everyday needs of people, everywhere.
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The company was renamed in late June 2007 to Hindustan Unilever Limited, to provide the optimum balance between maintaining heritage of the company and future benefits.

HUL holds 100 factories across India for manufacturing its diverse product range.

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Some of its brands include: Kwality Wall's ice cream. Lifeboy. Lux. Breeze. Liril. Hamam. Pureit Water Purifier. Lipton tea. Brooke Bond tea. Bru Coffee. Pepsodent and toothpaste and brushes and many more..
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GSK Consumer Healthcare Ltd. Product Portfolio

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