fmcg mrktng

7/31/2019 fmcg mrktng

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ITC Business Portfolio

,

Paper &

PackagingHotelsAgriBusiness

Information

Technology

Cigarettes Personal CareFoods Lifestyle Retailing

Education & StationeryMatches Incense Sticks


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Also known as Consumer Packaged Goods (CPG)

Products with quick turnover & relatively low cost

Less thinking by consumers

Absolute profit made on FMCG products is relatively small but theysell in large quantity & earn large profits.

Durable Products; E.g. Soaps, Cosmetics, teeth cleaning products,

shaving products etc.

Non-Durable Products; E.g. Glassware's, bulbs, batteries, plastic goodsetc.


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1950s-80s Low Investment in the sector

Low purchasing power

Govt. emphasis on small scale sector

HLL and other companys urbane 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 Anchortoothpaste giving the nation-wide brands a run for their money.


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Personal Care.

Household Care.

Branded and Packaged Food andBeverages.

Spirits and Tobacco.


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Branding.

Distribution Network.

Contract manufacturing.

Large Unorganized Sector.


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Domestic Players:-

ITC LimitedMarico

Nirma Limited

Jyothy Laboratories Ltd.

Foreign Players:-Cadbury India LimitedCargill

Coca Cola

Colgate Palmolive India

Hindustan Unilever LimitedNestle India Limited

P & G

PepsiCo


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The FMCG sector has been registering double-digit growth in

sales since the last couple of years. Currently, with annual

revenues of US$ 14. 74 billion, it is the one of the most promising

sectors.

The FMCG sector is witnessing rapid growth in rural areas and isestimated to grow by 40 per cent compared to the growth of 25

per cent in urban areas.

PepsiCo has announced a US$ 500 million investment in India

over the next three years. FMCG companies have acquired about 15 companies and have

spread their presence in more than a dozen countries.


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Design and manufacturing

Low capital intensity

Technology

3 party manufacturing

Marketing and distribution

High initial launch cost

Limited mass media options

Huge distribution network


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India's FMCG sector is the 4th largest sector in

the economy and creates employment for more

than 3 million people in downstream activities.

The FMCG Industry remained insulated from

inflation led demand slowdown.

reduction in packaging cost and changes in product

mix


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1. Large Domestic Market:-

2. Large Consumer Goods Spender:-

3. Low Penetration & Low per Capita consumption :-

4. Changing Lifestyles:-

5. Retailing New growth area

6. Demand & Supply Gap


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1. Materials Availability:-

2. Presence across value chain

3. Labour cost comparison:

4. Leveraging The Cost Advantage:- e.g. P & G outsourced Vicks

Vaporub to Australia, Japan etc. from Hyderabad

5.


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Industrial Marketing FMCGRelationship driven Product Driven

Maximize value of

relationship

Maximize value of

transactionSmall focused target market Large target market

Multi-step Buying process,longer sales cycle

Single-step Buying process,shorter sales cycle

Rational buying decisionbased on business value

Emotional buying decisionbased on status, desire orprice


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Strengths: Low operational costs

Presence of establisheddistribution networks in bothurban and rural areas

Presence of well-known brandsin FMCG sector

Weaknesses:

Lower scope of investing in technologyand achieving economies of scale,especially in small sectors

Low exports levels "Me-too products, which illegally mimic

the labels of the established brands.These products narrow the scope ofFMCG products in rural and semi-urbanmarket.

Opportunities:

Untapped rural market

Rising income levels Large domestic market- a

population of over one billion.

Export potential High consumer goods spending

Threats:

Removal of import restrictionsresulting in replacing ofdomestic Brands

Slowdown in rural demand

Tax and regulatory structure

SWOT Analysis


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Large market

Spending pattern

Changing profile and mindset of consumer

Money for Value rather than Value for Money.

A. C. Nielsen 71% of Indians take notice of

packaged goods' labels containing nutritional

information compared to two years ago which

was only 59%.


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1000

1100

1200

1300

1400

1500

1600

1700

2000 2010 2020 2030 2040 2050

Tota

lpopulation

(inb

illions)

Chart Title

India

China


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Geographic

Demographic

Social and Economic

Behavioral


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Zone region- nearest zone will be targeted first

Villages and town- helps to analyze marketing strategy

Density

Climate


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Age- children or adult

Gender-male or female


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Income group- high, medium or low

Social and Economic- Education (illiterate,

literate , highly literate), social class


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Occasions ( Diwali, Deshehra, Eid)

Brand loyalty (rural area people are more brand

loyal)


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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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Small size packet strategy

Pricing strategy

1. Mark up

2. Go- deterring (e.g. bingo chips)

3. Competitor based

4. Product bundling

Same value, size increase

Same value, size decrease (e.g. society tea)


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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 too5. Sugar free Age group of 35 and more


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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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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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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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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 ( perkglucose)


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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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Increasing per year with the growth rate of 9 percent

Price of raw materials are decreasing

Cost of machinery required for consumer goods areless then durable goods.


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De-verticalization

Rural marketing

Distribution

Brand managers to business managers


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Vast rural market

Export - Leveraging the Cost Advantage

Sectoral Opportunities


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Dairy Based Products India is the largest milk producer in the world, yet only around 15 per cent of the

milk is processed. The organized liquid milk business is in its infancy and also haslarge long-term growth potential. Even investment opportunities exist in value-added products like desserts, puddings etc.

Packaged Food

Only about 10-12 per cent of output is processed and consumed in packagedform, thus highlighting the huge potential for expansion of this industry.

Oral Care

The oral care industry, especially toothpastes, remains under penetrated in Indiawith penetration rates around 50 per cent. With rise in per capita incomes andawareness of oral hygiene, the growth potential is huge. Lower price and smallerpacks are also likely to drive potential up trading.

Beverages Indian tea market is dominated by unorganized players. More than 50% of the

market share is capture by unorganized players highlighting high potential fororganized players.


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Governmental policy

Central and state initiatives

FDIs

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