buying behavior of fmcg products debajyoti paul.doc

8/9/2019 Buying Behavior of FMCG Products Debajyoti Paul.doc

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RESEARCH PROJECT REPORT

“Consumer Buying Behavior of FMCG

companies”

A Research project report submitted in partialfulllment for the award of the diploma

POST GRADUATE DP!O"A #"A#AGE"E#T

$Appro%ed b& A'TE( #ew Delhi)$*+,-.*+,/)

SUPERVISR B!"SUBMI##E$ B!

Dr0 1#EET 2AUS32 S3REAS3'3A2RA4ORT5Associate Professor Roll no06,-+,++/

1


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Dewan 1 S nstitute of"ana7ement

4&.Pass Road( Partapur( "eerut.*/+,+-

PRE8A'E

Theoretical 9nowled7e is not su:cient to the professional eld0 So to

o%ercome the limitation of theoretical 9nowled7e( we PGD" students

ha%e to wor9 on research project0 The research project report 7i%es us

real picture of professional setup of or7ani;ational beha%ior0 t also

7i%es opportunit& to PGD" student to use their theoretical 9nowled7e

and chec9 their rele%ance 7ain0

The condence for all this re

BU!I%G BE&'VIR F FMCG PR$UC#>?0All these inputs will help

us when we embar9 upon a career and a mana7er in a similar

or7ani;ation0

2


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S3REAS3

'3A2RA4ORT5

Roll no06 ,-+,++/

'c(no)*e+gemen,

My first regards are to God, the Almighty, who has enabled me to move on this righteous

path.I am extremely grateful and indebted to (ASSOCIATE PROFESSOR) Dr. Vineet

Kaushik (Faculty Of ana!e"ent) for pursuing me to under go this researh under his

proper guidane, giving me invaluable experienes. !is onstant enouragement and

inspirations have been instrumental for me the ompletion of this researh.

I do not have words to express my respet to "ur !on#ble $iretor %ol. Dr. #aresh

Ku"ar $%yal& 'OD Dr. Rahul har*a+, my parents Mr. $ebara& 'aul who helped

me a lot during this researh wor.

)


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S'REAS'I C'AKRAORT,

R%ll n%.- /0001

ST2DE#T DEC3ARATIO#

I do hereby delare that the piee of dissertation report entitled *2,I#$

E'AVIO2R OF FC$ PROD2CTS4 has been prepared by me under the

guidane and supervision of (ASSSOCIATE PROFESSOR) Dr. VI#EET

KA2S'IK as a part fulfillment for the re+uirement of the degree in Master of

usiness Administration under DE5A# VS I#STIT2TE OF

A#A$EE#T& EER2T during the session of 2-1)2-1/.

0o the best of my nowledge belief, this is my own wor and has not been submitted

anywhere earlier for any other degree.

S'REAS'I C'AKRAORT,

R%ll n%.- /0001


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/


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#a-*e of Con,en,

,0 E@ecuti%e summar& $)

*0 ntroduction

$B)

-0 O%er%iew of 8"'G

$C)

0 8"'G in *+,, $)

/0 'omparison between 8"'G in *+,+ F *+,,

$,+)

0 Sectors outloo9

$,,.,*)

B0 Scope of 8"'G

$,-)

C0 Growth prospects

$,.,/)

0 Top pla&ers in 8"'G sector F secondar& pla&ers0

$,),+0 Research objecti%es

$,B)

,,0 Research methodolo7&

$,C.,)

,*0 ncome based classication0

$*+)

,-0 'onsumer classication0

$*,)

,0 Socio H economic classication0

$**)

,/0 A7e demo7raphics

$*-)

3


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,0 Anal&sis

$*.--)

,B0 'onclusion

$-)

,C0 Su77estions F recommendations

$-/)

, 0 4iblio7raph&

$-)

*+0 Iuestionnaire

$-B.-C)

E6ecuti7e Su""ary

n this research the researcher has put an eJort to understand the

bu&in7 beha%ior of the consumers towards 8"'G products0

,0 n this report( the researcher has rst of all 7i%en a brief re%iew

about 8"'G sector as a whole0

*0 Then he has 7i%en a re%iew of the ndin7s of some of the

researches that has alread& been conducted b& %arious

researchers0

-0 Then he has enumerated her research objecti%es0

0 Then he has 7i%en the panoramic %iew re7ardin7 the topic0

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/0 Then he has described her research methodolo7& i0e0( the

sample unit( sample si;e( samplin7 re7ion( samplin7 procedure

that he has used in her report0

0 3e has used stratied random samplin7 as her samplin7

procedure0

B0 Then he has anal&;ed the data which was collected b& a


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0he rural maret is the one of the best opportunity for the 5M%G setor in the India. It

is wider and less ompetitive maret for the 5M%G. As the inome level of the rural

onsumers inreasing, the demand of 5M%G is inreasing ontinuously. 5ast moving

onsumer goods (5M%G7 are popularly named as onsumer paaged goods. Items in

this ategory inlude all onsumables (other than groeries8pulses7 people buy at regular

intervals. 0he most ommon in the list are toilet soaps, detergents, shampoos, tooth paste,

shaving produts, shoe polish, paaged food stuff, household aessories, extends to

ertain eletroni goods. 0hese items are meant for daily or fre+uent onsumption have

a high return. A ma&or portion of the monthly budget of eah household is reserved for

5M%G produts. 0he volume of produts irulated in the eonomy against 5M%G

produts is very high, as the number of produts the onsumer uses, is omparatively

very high. %ompetition in 5M%G setor is very high resulting in high pressure on

margins.

5M%G ompanies maintain intense distribution networ. %ompanies spend a large

portion of their budget on maintaining distribution networs. 9ew entrants who wish to

bring their produts in the national level need to invest huge sums of money on

promoting brands. Manufaturing an be outsoured. A reent phenomenon in the setor

was entry of multinationals and heaper imports. Also the maret is more pressuri:ed

with presene of loal players in rural areas and state brands.

O7er7ie* %f FC$

5M%G is an aronym for 5ast Moving %onsumer Goods, whih refer to things

that we buy from loal supermarets on daily basis, the things that have high turnover

are relatively heaper.

;


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1-


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FC$ in 80

After years of dull performane in both revenues profits, 5M%G setor has

now, i.e., sine 2-11, gained the momentum, prinipally beause of the smaller

ompanies that have substantially improved their maret shares at the ost of larger

players, in some ases, the regional players.

If we arefully observe the 5M%G index


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C%"9aris%n %f 800 an 80

After two years of sining performane of 5M%G setor, the year 2-1- has witnessed the

5M%G#s demand growing. -3.?ith the rise in disposable inome and the eonomy in good health, the urban onsumers

ontinued with their shopping spree. 0he rural demand grew at around 11@, while both

the urban and rural setor together registered a growth of around 6@. 'aets and sahets

ontributed to the highest growth in rural areas. Growth in 5M%G depends on two

fators

• Inrease in penetration and onsumption in rural areas

• %hange in aspirations and tastes of the urban population

oth these fators ontributed to growth in 2-11. esides demand, pries also inreased,

beause of whih only the seleted onsumers moved up in the value hain. 0he large

format retail stores in metros also stimulated sales, even if on a very small base.


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Sect%r:s Outl%%k

5M%G is the fourth largest setor in the Indian =onomy with a total maret si:e of Bs.3-,--- rores. 5M%G setor generates /@ of total fatory employment in the ountry

and is reating employment for three million people, espeially in small towns and rural

India. Aording to a %II C A 0 Dearney Beport, the 5M%G setor in India is expeted to

grow at a ompounded growth rate (%AGB7 of ;@ to a si:e of Bs.1,),--- rores by

2-1- from Bs. ;),--- rores at present.

?ith a growth of /2./@, the -3, the setor has witnessed a

doubledigit growth in profits and revenues. 0he setor has registered an uptrend in

growth aross ategories, suh as health supplement, shampoo, toothpaste, hair oils, and

mos+uito repellant, as shown in table below

1)


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Sales Value $r%*th ;

Cate!%ries 800


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Return %n Ca9ital

E"9l%ye (ROCE)B.; 1.0; B1.1;

PE Rati% 8>.; 8.; 8.0;

S%urce- CII A T Kearney Re9%rt& (8008)

Sc%9e %f the FC$ Sect%r

0he Indian 5M%G setor has a maret si:e of F< 1).1 billion. 5M%G setor is expeted

to grow by over 3-@ by 2-1-. 0hat will translate into an annual growth of 1-@ over a

period of / years. It has been estimated that 5M%G setor will rise from around Bs.

/3,/-- rores in 2--6 to Bs. ;2,1-- rores in 2-1-. !air are, household are, male

grooming, female hygiene, the hoolates onfetionary ategories are estimated to

be the fastest growing segments, says an !


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$r%*th Pr%s9ects

?ith the presene of 12.2@ of the world population in the villages of India, the Indian

rural 5M%G maret is something no one an overloo. Inreased fous on farm setor will boost rural inomes, hene providing better growth prospets to the 5M%G

ompanies. etter infrastruture failities will improve their supply hain. 5M%G setor

is also liely to benefit from growing demand in the maret. eause of the low per

apita onsumption for almost all the produts in the ountry, 5M%G ompanies have

immense possibilities for growth. And if the ompanies are able to hange the mindset of

the onsumers, i.e. if they are able to tae the onsumers to branded produts and offer

new generation produts, they would be able to generate higher growth in the near future.

It is expeted that the rural inome will rise in 2-1-, boosting purhasing power in the

ountryside. !owever, the demand in urban areas would be the ey growth driver over

the long term. Also, inrease in the urban population, along with inrease in inome

levels and the availability of new ategories, would help the urban areas maintain their

position in terms of onsumption. At present, urban India aounts for 33@ of total

5M%G onsumption, with rural India aounting for the remaining )@. !owever, rural

India aounts for more than -@ onsumption in ma&or 5M%G ategories suh as

personal are, fabri are, and hot beverages. In urban areas, home and personal are

ategory, inluding sin are, household are and feminine hygiene, will eep growing at

relatively attrative rates. ?ithin the foods segment, it is estimated that proessed foods,

baery, and dairy are longterm growth ategories in both rural and urban areas. Indian

%ompetitiveness and %omparison with the ?orld Marets

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0he following fators mae India a ompetitive player in 5M%G setor

1. Availability of raw materials eause of the diverse agrolimati onditions in India,

there is a large raw material base suitable for food proessing industries. India is the

largest produer of livesto, mil, sugarane, oonut, spies and ahew and is the

seond largest produer of rie, wheat and fruits vegetasoda and soda ash, whih are

re+uired for the prodution of somaterials gives India the loation advantage

2. Habor ost omparison

How ost labor gives India a ompetitive advantage. IndiaEs labor ost is amongst the

lowest in the world, after %hina Indonesia. How labor osts give the advantage of low

ost of prodution. Many M9%Es have establihed their plants in India to outsoure for

domesti and export marets.

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).'resene aross value hain Indian ompanies have their presene aross the value

hain of 5M%G setor, right from the supply of raw materials to paaged goods in the

foodproessing setor. 0his brings India a more ost ompetitive advantage. 5or

example, Amul supplies mil as well as dairy produts lie heese, butter, et.

T%9 Players in FC$ Sect%r

1. !industan lever limited (!HH7

2. I0% (Indian 0obao %ompany7

). 9estle India

. G%MM5 (AMFH7

/. $abur India

3. Asian 'aints (India7

4. %adbury India

6. ritannia Industries

;. 'roter Gamble !ygiene !ealth %are

1-. Mario Industries

Sec%nary Players

1. %olgate'almolive (India7 Htd.

2. Godre& %onsumers 'rodut Htd.

). 9irma Htd.

. 0ata 0ea Htd.

16

http://www.naukrihub.com/india/fmcg/companies/colgate-palmolive/http://www.naukrihub.com/india/fmcg/companies/godrej/http://www.naukrihub.com/india/fmcg/companies/nirma/http://www.naukrihub.com/india/fmcg/companies/tata-tea/http://www.naukrihub.com/india/fmcg/companies/colgate-palmolive/http://www.naukrihub.com/india/fmcg/companies/godrej/http://www.naukrihub.com/india/fmcg/companies/nirma/http://www.naukrihub.com/india/fmcg/companies/tata-tea/


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/. 'arle Agro

3. !. . !ein:

Research %+ecti7es

• 0o understand the demand pattern of 5M%G produts in the rural maret.

• 0o now the amount of household inome spent on the onsumption of 5M%G

produts.

• 0o understand the image of the produts in the eyes of the onsumers.

1;

http://www.naukrihub.com/india/fmcg/companies/parle/http://www.naukrihub.com/india/fmcg/companies/heinz/http://www.naukrihub.com/india/fmcg/companies/parle/http://www.naukrihub.com/india/fmcg/companies/heinz/


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Research "eth%%l%!y

Data c%llecti%n

Sa"9le unit-

1. woring people (inluding men women7

2. ollege students

). shool students

. senior iti:ens

Sa"9le sie-

1. woring people )2@

2. ollege students 2;@

). shool students 2)@

. senior iti:ens 13@

Sa"9lin! re!i%n-

1. 0he researher has seleted Gha:iabad, the ity of Fttar 'radesh as her area of

study.

2. !e has hosen Gha:iabad, Modinagar as her areas of researh. In these areas he

an easily meet woring people (both male female7, shool students, ollege

students senior iti:ens.

2-


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Sa"9lin! 9r%ceure -

0he researher will tae stratifie ran%" sa"9lin! as the sampling proedure.

Data c%llecti%n "eth%-

./ Pri"ary ata- it will be olleted with the help of a selfadministered

+uestionnaire. 0his +uestionnaire aims to gather information related to various

randed produts.

0/ Sec%nary ata - it will be olleted with the help of boos, researh papers,

maga:ines, newspapers, &ournals, internet, et.

Research instru"ents-

Guesti%nnaire esi!n-

As the +uestionnaire is selfadministrated one, the survey is ept simple and user friendly.

?ords used in +uestionnaire are readily understandable to all respondent. Also tehnial

&argons are avoided to ensure that there is no onfusion for respondents.

21


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Inc%"e ase classificati%n

India has a population of 1.-;/ billion people, omprising of 183th of the world

population. IndiaEs population an be divided into / groups on the basis of annual

household inome. 0hese groups are

1. !igher inome

2. Fpper middle inome

). Middle middle inome

. Hower middle inome

/. Hower inome

0he inome lassifiation does not represent a real senario for an international

business beause the purhasing power of urrenies differs signifiantly. 0he real

purhasing power of Indian rupee is higher than the international exhange value.

In addition to that, inome lassifiation is not an effetive tool to asertain

onsumption and ownership trends in the eonomy.

22


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C%nsu"er Classificati%n

Aording to 9ational %ounil of Applied =onomi Besearh (9%A=B7

there are / onsumer lasses that differ in their ownership patterns and

onsumption behavior aross various segments of goods.

C%nsu"er

Classes

Annual Inc%"e

in Rs.


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S%ci% ec%n%"ic classificati%n

In addition to inome lassifiation and onsumer lassifiation, Indian

households an also be segmented aording to the oupation and eduation levels of

the hief earner of the household (the person who ontributes most to the household

expenses7. 0his is alled as


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India is a very young nation, if ompared with some advaned and developed ountries.

9early two thirds of its population is below the age of )/, and nearly /- @ is below 2/.

Mareters explain that the boom in the onsumption level and leisure related

expenditures beause of this young population. It will have a signifiant impat over the

onsumer goods maret. In addition to that, it is expeted that this will generate trade

opportunities and ontinuous investment in the eonomy.

A!e istriuti%n if Inian 9%9ulati%n (In illi%ns)

,ear A!e 800< 800


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Trans9%rt H C%""unicati%nB.1;

Recreati%n& Eucati%n& an Culture3ess than B;

'%"e $%%s/.81;

Analysis

• ?hih soap u prefer to useJ

0he reation of people towards various


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• ?hih pa u prefer to useJ

In order to determine the inome pattern of the onsumers, it

was neessary for the researher to distribute the onsumers on the basis

of their demand for the various pas of


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• ?hih tea u prefers to useJ

0he reation of people towards various 0=A brands an be tabulated in the following

manner

rans Tata Tea r%%ke %n Ta+ ahal Others

Percenta!e /8 8? ? 88

In the survey that the researher onduted, it ould easily be

%onluded that 0A0A 0=A, the produt of 0A0A has a maret share of

)2@. 0his is followed by, B""D= "9$, with a maret share of 26@.

5ollowed by other brands (=K%='0 0A0A 0=A, B""D= "9$, 0A

MA!AH7 with a maret share of 22@. 0his is finally followed by 0A

MA!AH, the produt of !FH whih holds16@ of the maret share.

26


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• ?hih tooth paste u prefer to useJ

In the initial years, the rural onsumers preferred tooth powders, datoons et. ut from

the last deade, the preferene of onsumers towards toothpaste has been hanged. A

huge number of toothpastes of different ompanies are sold in rural maret.

rans Pe9s%ent C%l!ate Cl%se 29 Others

Percenta!e 8 /1 88 >

In the survey that the researher onduted, it ould easily be seen that %"HGA0=,

the produt of %"HGA0= 'AHM"HIL= is the maret leader, whih overs )/@ of

the total maret. After that, '='


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• ?hih detergent u prefer to useJ

0he reation of people towards various $=0=BG=90 brands an be tabulated in the

following manner

rans Surf Rin Tie OthersPercenta!e 8 /1 88 >

In the survey that the researher onduted, it ould be easily onluded that BI9, the

produt of !FH aptures )/@ of the total maret share. 0his is followed by


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• ?hih shampoo u prefer to useJ

0he reation of people towards various

sh%ulersOthers

Percenta!e // 81 8? B

In the survey, that the researher onduted it an easily be onluded that %HI9I%

'HFGAMH= whih holds 26@ of the maret share. 0his is followed by


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• ?hih bisuits u prefer to useJ

0he reation of people towards various I,

the produt of BI0A99IA holds a ma&or maret share of )6@. 0his is followed by

MABI= G"H$, another produt of BI0A99IA whih holds 2@ of the maret share.

After that, 'ABH= G, the produt of 'ABH=, holds 21@ of the maret share. 0his is

followed by other brands (=K%='0 MABI= G"H$, G""$ $A>, 'ABH= G7 whih

hold a maret share of 14@.

)2


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• ?hih hair oil u prefer to useJ

0he reation of people towards various !AIB "IH brands an be tabulated in the

following manner

rans Parachute Daur A"la Daur Vatika Others

Percenta!e / 8< < 1

In the survey, that the researher onduted, it an easily be onluded that

'ABA%!F0=, the produt of M=BI%" aptures )4@ of the total maret share. 0his is

followed by $AFB AMHA, the produt of $AFB whih aptures 2;@ of the total

maret share. 0his is followed by $AFB LA0IDA, another produt of $AFB whih

aptures 1;@ of the maret. And after that, followed by other brands (=K%='0

'ABA%!F0=, $AFB AMHA, $AFB LA0IDA7 aptures 1/@ of the maret share.

))


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• ?hih ream u prefer to useJ

0he reation of people towards various %B=AM brands an be tabulated in the following

mannerrans P%n:s Fair H l%7ely Ayur Others

Percenta!e 8? /8 B 8>

In the survey, that I onduted, it an easily be onluded that 5AIB H"L=H>, the

produt of !FH, holds the ma&or maret with a share of )2@. 0his is followed by,

)


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'"9$#s, another produt of !FH, whih holds 26@ of the maret share. 0his is followed

by, other brands (=K%='0, '"9$#s, 5AIB H"L=H> A>FB7, whih aptures 23@

of the maret share. 0his is followed by A>FB, the brand of A>FB A%A$=M> "5

9A0FBAH =AF0> (AA97 whih holds 1@ of the total maret share.

• ?hih offee u prefer to useJ

0he reation of people towards various %"55== brands an be tabulated in the following

manner

rans ru #estle #escafe Others

Percenta!e 8> /8 /8 0

In the survey, that the researher onduted, it an be easily onluded that all the brands

are faing tough ompetition. 9=


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In the ase of 0=A, 0A0A holds a ma&or share. In the ase of %"55==, 9=


38/41

the produt. 0herefore, it#s the responsibility of the organi:ation to reate

awareness amongst the onsumers.

2. 0hey should adapt rigorous mareting strategies, in order to sustain in the maret.

). 0here is immense ompetition in this setor. 0herefore, the organi:ations should

try to gain ompetitive advantage against their ompetitor#s.

. 0hey should try to reah as many people as possible.

/. 5or the organi:ations that are not muh popular amongst the onsumers, should

adopt


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4/


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a. Hux b. $ettol. lifebuoyd. others

27 ?hih pa u prefer to useJa. single b. family pa ( ) in 17

)7 ?hih tea u prefer to useJa. 0ata tea b. brooe bond. 0a& Mahald. others

7 ?hih tooth paste u prefer to useJ

a. 'epsdent b. %olgate. lose C upd. others

/7 ?hih detergent u prefer to useJa.


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buying behavior of fmcg products debajyoti paul.doc

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