prof. atul tandan
TRANSCRIPT
18/03/2008
Small is Big
Prof. Atul TandanDirectorMICA
18/03/2008
Indian Economy
Year GDP growth rate in %
2003-04 8.4
2004-05 8.3
2005-06 9.2
2006-07 9.7
2007-08 8.7 projected
Source: Business Standard 1/03/08
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The Indian Consumer - Age
Age Total % Urban % Rural %
12-14 9.9 8.5 10.5
15-19 13.5 13.6 13.5
20-29 22.8 24.2 22.2
30-39 20.0 20.3 19.9
40-49 14.3 15.2 13.9
50+ 19.4 18.1 20.0
Source: IRS 2007
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Market Classification
• The Globals:– Who buy the most expensive consumer products
• The Strivers:– Who buy the bulk of all consumer goods marketed in India
• The Seekers: – Who own some durables especially, televisions and small
home appliances
• The Aspirers:– Who possess the most basic durables such as transistor
radios, bicycles, and aspire for the rest
• The Deprived: – Who are generally not consumers of manufactured goods
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Consumer Diversity
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Consumer Diversity
• India’s economic diversity matches its social diversity
• Class is difficult to define in India• Incomes alone don’t define the class• Purchase behaviour is related to cultural
conditioning, location, source of income, education and occupation
• The salaried prefer the finance packages but the rural rich relying on agriculture make cash purchases
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Small gives “Value”
• Small is convenient
• Small is affordable– Price
• Small is to attract – Non-users– One time users– New users
• Small saves the space
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Small is Big
• For customers, small packs mean – Affordably priced products– Less investment– Reduced risk of buying
• And for companies, it translates into– Large volumes– Helps address diverse customer segment– Attracts non-users
• Single-serve packs are expected to find more prominence in low penetration categories like health food, baby products and more
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Small is Big – Retail Outlets
• 15 million retail outlets spread across India
• Stamping the country with the epithet
"Shopkeepers' Nation"
• More than 80% of these 15 million outlets are from small family businesses
Source: The Times of India 29/11/2007
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Small is Big
• Apart from paying less for a quality product, Indians are very sensitive to costs
• A large section of sachet users feel that they can restrict the consumption of the product by buying sachets
• Give consumers more of a chance to experiment with a larger range of brands
• Sachets also grow due to the Indian tendency of top-up shopping, as opposed to buying large quantities at the end of the month
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Sachets: The Next Big (Small) Thing
• Mass market phenomenon• 50 paise and Rs 1 are entry level• Sachets are well ensconced in few categories and the
trend will a rising one• Increase category penetration of, which extends their
appeal beyond just the lower end of the market• Work better with single-use categories with a low
frequency of purchase • According to Kakkar, the market is polarised between
the LPU consumers and those who prefer bottles
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War within a Brand to get a market share
• Small pack vs. Big pack• Sachet vs. small bottle
– Nescafe– Sunsilk– Vaseline– Colgate– Nivea– Ponds– Maggi– Clinic All Clear– Dabur Honey
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Small FMCG
• Shampoo• Detergent • Hair oil• Fairness cream• Toothpaste• Shaving cream• Soap
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Novino
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Small Packs
• FMCG companies are focusing more on smaller packs to tap the rural and smaller markets
• Small cos use trial packs in newer markets to attract new users
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Small Packs
• Small unit packaging– Britannia’s Tiger Glucose Biscuit– Cadbury’s Dairy Milk Chocolate– Parle-G
• Inducing product trial– Coke
• Panch matlab chota Coke• Thanda matlab Coca Cola
• Colgate Palmolive distributed free herbal toothpaste for trial use
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Small Packs
• Shampoo of Rs.1000 crore category– 80%t of sales of shampoos from 50 paise and Re 1
pack– CavinKare’s Chik shampoo prices at 50 paise for 8
ml• Fairness cream of Rs. 900 crore category• Sell almost 40% through sachets
– Sachet of 9 gram of fairness cream costs Rs 5 and if you need 3 such packs translates 27grams for Rs 15. You also have a choice of buying a pack of 25 grams for Rs 28
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Small Packs
• Sachet sales are strong in hair care and detergent categories• Detergents
– Large pack users prefer the convenience of buying only one pack at a time, rather than using a sachet each time to wash clothes.
– Low and mid-tier detergent sachet users, sachets act as a great trial-builder to eventually move to large packs" a P&G spokesperson said
• Dabur’s Hajmola – Sachets are for a younger – Bottles are primarily a medicinal offering bought by older
people
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Small Packs
• Cadbury is pushing Bournvita at Rs 3.50– To taste the product
• Starting price point for Cadbury Gems for instance is Rs. 1 for a pack of just four units– The lower price unit (LPU) at the company are
growing at a healthy 30%• Frito Lays considers it,
– The Rs 5 and sub-Rs 5 segment– Offerings between Rs 5 and Rs 2 for namkeens– Rs 3 for Kurkure, co-exist with larger packs. – The number of transactions according to Anand
(MD) is almost 50-50
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Cadbury
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Affordable Products
• Nestle’s brands – Maggi at Rs. 5– KitKat at Rs. 2
• CavinKare’s brand– Chik at Rs. 17 for 100 ml.
• Godrej Consumer Product• Cinthol, Fairglow and Godrej No. 1 (50 gm at Rs.5)
• Hamam at Rs. 3.25
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Hamam
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Sachet, Not StripedUrban Contribution of Small Packs (% of Sales)
Categories 1998 2001 2007 (est.)
Toothpowder 35.7 42.9 57
Talcum Powder 13 18.1 28
Hair Oils 9.8 11.5 15
Coffee 8.3 13.3 23.3
All Biscuits 1.4 4.4 10
Coconut Oil 4 7.9 16
Toothpaste 0.9 2.7 6.2
Mosquito Rep. 1.3 4.1 9.7
Source: KEIC
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Small is bigRural Contribution of Small Packs (% of Sales)
Categories 1998 2001 2007 (est.)
Toothpowder 49.8 65.8 95
Talcum Powder 22.3 31.6 49
Hair Oils 16.4 18.3 22.1
Coffee 19.6 37.8 73
All Biscuits 1.5 5.2 12.6
Coconut Oil 6.4 13.1 26.5
Toothpaste 0.8 3.4 8.5
Mosquito Rep. 2.8 4.7 9
Source: KEIC
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Pepsodent
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Colgate
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Small Packs - Cosmetics
• 'look good' products – Nail polish– Lipstick– Same penetration in metros and non-metros– Close to 30% of the new growth in these
categories comes from less than 1 lakh towns
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Small is Big
• New generation foods– (cheese, noodles, cornflakes) are growing; – 36% of the growth in branded cornflakes– 42% of the growth in noodles comes from
small towns!
• However snacking (chips and colas) remains largely a metro phenomenon
Source: The Economic Times 16/07/2003
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Small is DangerousTobacco - Gutkha
• Turnover of close to Rs 25,000 crore
• 46.5% men
• 13.8% women use tobacco
• 250 million people use tobacco products – 16% cigarettes smokers – 44% bidis– rest use gutkha, mishri (roasted black
tobacco powder applied to the gums)
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Small is Big - Guthka
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Manikchand
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Rajni Gandha
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Durable
• Small towns may be big in terms of their market potential and may not be as far behind the big metros as we think
• Non-metros are fast catching up with metros in penetration of– 'basic' durables
• Colour television, • Refrigerator
Source: NRS
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High-end durables catch small towns' fancy
• According to ORG-GFK estimates,
– Towns with a population < 1 lakh
Source: The Economic Times 16/03/2005
Product Name Towns Contribution in %
Product Category Growth in %
Flat TV 33 214
Frost Free Refrigerator 28 31
Fully Auto. Wash. Mach.
20 54
•Growing disposable incomes in smaller towns•Small price packs the most evident ploy to achieve these•Pick-up in demand from smaller markets and rural areas
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Nano Samsung AC
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One Time Use – Pooja Samagri
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Hospitality – Ginger Hotel
• Smart Basics™ – Signifies simplicity– Convenience– Informality– Style– Warmth– Modernity– Affordability A Tata Enterprise
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Hospitality
• One time use – Soap– Shampoo– After save lotion– Body lotion cream– Toothpaste– Shaving cream– Face wash– Hair oil– Sugar– Milk powder– Tea– Coffee
According to a report by HVS International, a total of 1,02,000 rooms will be added in the next five years in the Indian hotel industry
Currently, India has some 1,975 hotels with over one lakh rooms
Source: The Economic Times 2/4/07
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Small requirements inAviation Industry
• Small mineral water• Toffee• Chocolate• Mouth pick• Salt• Sugar• Jam• Milk powder• Tea• Coffee• Butter
Three years ago, there were 130 commercial aircraft, and the number has now swelled to 350 The sector is poised to attract an investment of $200 billion. Increased fleet will enable approximately 2,000 commercial flights every day by 2020.
Source: Business Line 22/11/07
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Small is Beautiful – Mass Market
Nano by Tata– 1 lakh– Milestone for auto industry– Aspirations of India’s rising middle class– Solution to urban transport problems
• Congestion• Environmental impact
• Bajaj - Renault• Electric car by Field Marshal Group,
Rajkot• Rs. 99,000
Tata
Bajaj - Renault
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Small Size - Maruti
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SAS Tractor 30hp
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Engine/Lubricant Oil
• Key players– Castrol India Ltd– Indian Oil Corporation– Bharat Petroleum Corporation Ltd– Hindustan Petroleum Corporation
• Petrol Pumps keep the engine oil not to lose the customer
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Lubricant
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Cricket
• Test match – five days
• One Day Cricket– 50:50 over
• Three hours– 20:20 over
• Cricketor– Sunil Gavaskar– Sachin Tendulkar
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IT - Wave of Miniaturisation
• Intel Corporation– Latest brand of mini microprocessor chip
• Intel Atom• Intel Centrino Atom
– Low-cost classmates PC will begin using the Intel Atom
• Apple iPod nano
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World’s Smallest Gadgets
• Homes are becoming king size but lifestyle gadgets can be fitted into a doll’s house
• Gadgets fit into palm, briefcase and handbags
• Price factor makes people smile– Cheapest laptop
• MiLeap X Rs. 13,990
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World’s Smallest Gadgets
• Worlds Smallest Digital Camera– Qualia 016(69 x 16.8 x 24 mm)– Two mega pixel images– Zoom facility– Store images on its memory stick– Flash– Four picture in rapid succession and
combine into one image– Doesn’t require a manual instruction
Sony
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Conclusion
Small is smart
Small is future
Small is for penetration and growth
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Thank You
E-mail: [email protected] Prof.AtulTandan
Mobile: +91-98250-70915 Director, MICA
18/03/2008