Buying Behaviour of FMCG Products

Fast
Moving
Consumer
Goods
(FMCG)
1
Dissertation Report On
Buying Behavior of
FMCG Products
Submitted To:
Submitted By:
Prof. R.P.Singh
Vandana Chandra
Director (ABS) MBA
(Agri-Business)
AMITY University
AMITY University
Lucknow Campus
Lucknow Campus
2
Under the supervision of:
Mr. Ashish Chandra
Faculty Guide (ABS)
AMITY University
Lucknow Campus
Acknowledgement
I consider my proud privilege to express deep sense of
gratitude to Prof. R.P.Singh for his admirable and valuable
guidance, keen interest, encouragement and constructive
suggestions during the course of the project.
I would also like to express my hearty gratitude
to my faculty guides, Dr. Arun Bhadauria and Mr. Ashish
Chandra of Amity University, Lucknow for their valuable
guidance and sincere cooperation, which helped me in
completing this summer project.
I would also like to thank my mother Mrs. Usha Rani
and my father Mr. Ramesh Chandra, for their inspiration
and moral support received in completing this work.
Last, but not the least, I sincerely thank all the
members of my department for their immense support and
assistance extended during the course of this project and in
making it a valuable experience.
Vandana Chandra
3
MBA (Agri - Business)
IVth Semester
Table of Content
1. Executive summary
1-1
2. Introduction
2-3
3. Overview of FMCG
3
4. FMCG in 2006
4
5. Comparison between FMCG in 2005 & 2006
4-5
6. Sector’s outlook
5-7
7. Scope of FMCG
8
8. Growth prospects
8-11
4
9. Top players in FMCG sector
11
10. Secondary players
12
11. Review of literature
12-14
12. Research objectives
15
13. Research methodology
16-19
14. Panoramic View
20-22
15. Income based classification
23-24
16. Socio – economic classification
25-28
17. Age demographics
28-29
18. Geographical dispersion
30
19. Analysis
31-60
20. Conclusion
61-62
21. Suggestions & recommendations
63
5
22. References
64-65
23. Questionnaire
66-68
Executive Summary
In this research the researcher has put an effort to
understand the buying behavior of the consumers towards
FMCG products.
1. In this report, the researcher has first of all given a
brief review about FMCG sector as a whole.
2. Then she has given a review of the findings of some of
the researches that has already been conducted by
various researchers.
3. Then she has enumerated her research objectives.
4. Then she has given the panoramic view regarding the
topic.
5. Then she has described her research methodology i.e.,
the sample unit, sample size, sampling region,

sampling procedure that she has used in her report.
6. She has used stratified random sampling as her
sampling procedure.
7. Then she has analyzed the data which was collected
by a questionnaire.
8. Then she has concluded the findings of the survey.
9. Then finally, she has given few suggestions &
recommendations regarding the topic.
6
Introduction
There was a time when the FMCG companies
ignores rural market, they took no any interest to produced
or sell products in rural market in India. It was the initial
stage of FMCG companies in India. As per as the time had
passed, the strategy and marketing style of FMCG
companies had been changed.
The rural market is the one of the best opportunity for the
FMCG sector in the India. It is wider and less competitive
market for the FMCG. As the income level of the rural
consumers increasing, the demand of FMCG is increasing
continuously.
Fast moving consumer goods (FMCG) are popularly named
as consumer packaged goods. Items in this category include
all consumables (other than groceries/pulses) people buy at
regular intervals. The most common in the list are toilet
soaps, detergents, shampoos, tooth paste, shaving products,
shoe polish, packaged food stuff, household accessories,
extends to certain electronic goods. These items are meant
for daily or frequent consumption & have a high return.
7
A major portion of the monthly budget of each household is
reserved for FMCG products. The volume of products
circulated in the economy against FMCG products is very
high, as the number of products the consumer uses, is
comparatively very high. Competition in FMCG sector is very
high resulting in high pressure on margins.
FMCG companies maintain intense distribution network.
Companies spend a large portion of their budget on
maintaining distribution networks. New entrants who wish to
bring their products in the national level need to invest huge
sums of money on promoting brands. Manufacturing can be
outsourced. A recent phenomenon in the sector was entry of
multinationals and cheaper imports. Also the market is more
pressurized with presence of local players in rural areas and
state brands.
Overview of FMCG Sector
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 & are relatively cheaper.
After 4 years of dull performance in both revenues
& profits, FMCG sector has now, i.e., since 2005, gained the
momentum, principally because of the smaller companies
8
that have substantially improved their market shares at the
cost of larger players, & in some cases, the regional players.
If we carefully observe the FMCG index & BSE index, we
would realize that the returns on money invested in FMCG
index are much lower than the returns in benchmark index.
The FMCG sector has under performed the benchmark BSE
sensex in 2006. Though both the indices were close to each
other till august 2006, however, in the later part of the year
the sensex surpassed the FMCG index by a reasonable
margin.
Comparison of 2006 and 2005

After two years of sinking performance of
FMCG sector, the year 2005 has witnessed the FMCG’s
demand growing. Strong growth was seen across various
segments in FY06. With the rise in disposable income and
the economy in good health, the urban consumers continued
with their shopping spree. The rural demand grew at around
11%, while both the urban and rural sector together
registered a growth of around 8%. Packets and sachets
contributed to the highest growth in rural areas. Growth
in FMCG depends on two factors:
• Increase in penetration and consumption in rural areas

• Change in aspirations and tastes of the urban
population
9
Both these factors contributed to growth in 2006.
Besides demand, prices also increased, because of which
only the selected consumers moved up in the value chain.
The large format retail stores in metros also stimulated
sales, even if on a very small base. Some companies
absorbed higher input prices, while others were able to pass
on the cost to the consumers.
Sector’s Outlook
FMCG is the fourth largest sector in the Indian Economy with

a total market size of Rs.60,000 crores. FMCG sector
generates 5% of total factory employment in the country and
is creating employment for three million people, especially in
small towns and rural India.
According to a CII – A T Kearney Report, the FMCG sector in

India is expected to grow at a compounded growth rate
(CAGR) of 9% to a size of Rs.1,43,000 crores by 2010 from
Rs. 93,000 crores at present.
With a growth of 52.5%, the BSE FMCG index has, during the
last 1 year outperformed the sensex, which could manage a
growth of 41% only. A well established distribution network,
intense competition between the organized & unorganized
10
segments, low operating costs, strong branding
characterizes the market.
The large consumer base, particularly in rural sector, and the

growing middle class open up huge opportunities to FMCG
companies to take the consumers to branded products and
offer new generation products.
The sector's lack-luster performance in the last few years

was due to price competition and increase in raw materials
cost. However, in the FY06, the sector has witnessed a
double-digit growth in profits and revenues. The sector has
registered an up trend in growth across categories, such as
health supplement, shampoo, toothpaste, hair oils, and
mosquito repellant, as shown in table below:
11
Sales Value Growth %
Categories 2004-2005 2005-2006 Apr.2006-

Sept. 2006
Health -5% 0% 23%
Supplement
(Chyawanprash)
Shampoo 10% 23% 19%
Toothpaste 5% 6% 16%
Hair Oils 9% 18% 23%
Mosquito 13% 10% 29%
Repellant
Source: CII – A T Kearney Report, (2000)
Sector Financials In millions

31-03-2006 31-03-2005 31-03-2004
Net Sales 164,196 148,241 145,380
Sales Growth 10.8% 2.0% -

Profit after
19,595 17,001 21,008
Tax
16.6% -24.2% -
PAT Growth
Market
74,746 65,810 63,072
Capitalization
Enterprise
662,540 645,477 551,971
Value
Return on
Capital
47.1% 51.0% 45.5%
Employed
(ROCE)
P/E Ratio 26.7% 27.1% 21.0%
12
Source: CII – A T Kearney Report, (2000)
Scope of the FMCG Sector
The Indian FMCG sector has a market size of US $13.1

billion. FMCG sector is expected to grow by over 60% by
2010. That will translate into an annual growth of 10% over a
period of 5 years. It has been estimated that FMCG sector
will rise from around Rs. 56,500 crores in 2005 to Rs. 92,100
crores in 2010. Hair care, household care, male grooming,
female hygiene, & the chocolates & confectionary categories
are estimated to be the fastest growing segments, says an
HSBC Report. Though the sector witnessed a slower growth
in 2002 – 04, it has been to make a fine recovery since then.
For example, Hindustan Levers Limited (HLL) has shown a

healthy growth in the last quarter. An estimated double-digit
growth over the next few years shows that the good times
are likely to continue.
Growth Prospects
With the presence of 12.2% of the world population in the

villages of India, the Indian rural FMCG market is something
13
no one can overlook. Increased focus on farm sector will
boost rural incomes, hence providing better growth
prospects to the FMCG companies. Better infrastructure
facilities will improve their supply chain. FMCG sector is also
likely to benefit from growing demand in the market.
Because of the low per capita consumption for almost all the
products in the country, FMCG companies have immense
possibilities for growth. And if the companies are able to
change the mindset of the consumers, i.e. if they are able to
take the consumers to branded products and offer new
generation products, they would be able to generate higher
growth in the near future. It is expected that the rural
income will rise in 2007, boosting purchasing power in the
countryside. However, the demand in urban areas would be
the key growth driver over the long term. Also, increase in
the urban population, along with increase in income levels
and the availability of new categories, would help the urban
areas maintain their position in terms of consumption. At
present, urban India accounts for 66% of total FMCG
consumption, with rural India accounting for the remaining
34%. However, rural India accounts for more than 40%
consumption in major FMCG categories such as personal
care, fabric care, and hot beverages. In urban areas, home
and personal care category, including skin care, household
care and feminine hygiene, will keep growing at relatively
attractive rates. Within the foods segment, it is estimated
14
that processed foods, bakery, and dairy are long-term
growth categories in both rural and urban areas.
Indian Competitiveness and Comparison with the World

Markets:
The following factors make India a competitive player in

FMCG sector:
1. Availability of raw materials

Because of the diverse agro-climatic conditions in India,
there is a large raw material base suitable for food
processing industries. India is the largest producer of
livestock, milk, sugarcane, coconut, spices and cashew and
is the second largest producer of rice, wheat and fruits
&vegetables. India also produces caustic soda and soda ash,
which are required for the production of soaps and
detergents. The availability of these raw materials gives
India the location advantage.
2. Labor cost comparison
15
Low cost labor gives India a competitive advantage. India's
labor cost is amongst the lowest in the world, after China &
Indonesia. Low labor costs give the advantage of low cost of
production. Many MNC's have established their plants in
India to outsource for domestic and export markets.
3. Presence across value chain

Indian companies have their presence across the value chain
of FMCG sector, right from the supply of raw materials to
packaged goods in the food-processing sector. This brings
India a more cost competitive advantage. For example, Amul
16
supplies milk as well as dairy products like cheese, butter,
etc.
Top Players in FMCG Sector

1. Hindustan lever limited (HLL)
2. ITC (Indian Tobacco Company)
3. Nestle India
4. GCMMF (AMUL)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene & Health Care
10. Marico Industries
Secondary Players
1. Colgate-Palmolive (India) Ltd.
2. Godrej Consumers Product Ltd.
3. Nirma Ltd.
4. Tata Tea Ltd.
17
5. Parle Agro
6. H. J. Heinz
Review of Literature
Rural market is one of the best

opportunities for the FMCG sector. In some sense we can say
that rural market is future of FMCG.
1. Basu Purba (2004), suggested that the lifestyle of
rural consumers is changing. Rural Indian market and the
marketing strategy have become the latest marketing
buzzword for most of the FMCG majors. She added the
strategies of different FMCG companies for capturing rural
market like Titan’s Sonata watches, Coco Cola’s 200ml
bottle, different strategies of HUL and Marico etc. She takes
into consideration the study of National Council for Applied
Economic Research (NCAER). According to the NCAER
projections, the number of middle and high-income
households in rural area is expected to grow from 140
million to 190 million by 2007. In urban India, the same is
expected to grow from 65 million to 79 million. Thus, the
absolute size of rural India is expected to be double that of
urban India.
18
2. Tognatta Pradeep (2003), suggested that, the
economic growth in India's agricultural sector in last year
was over 10%, compared with 8.5% in the industrial sector.
This implies a huge market potentiality for the marketer to
meet up increasing demand. Factors such as village psyche,
strong distribution network and market awareness are few
prerequisites for making a dent in the rural markets. The
model is of the stolid Anglo-Dutch conglomerate Unilever
Group, which has enjoyed a century-long presence in India
through its subsidiary Hindustan Lever Ltd. It was Hindustan
Lever that several years ago popularized the idea of selling
its products in tiny packages. Its sachets of detergent and
shampoo are in great demand in Indian villages. Britannia
with its low priced Tiger brand biscuits has become some of
the success story in rural marketing.
3. Aithal, K Rajesh (2004), suggested that rural

markets are an important and growing market for most
products and services including telecom. The characteristics
of the market in terms of low and spread out population and
limited purchasing power make it a difficult market to
capture. The Bottom of the pyramid marketing strategies
and the 4 A's model of Availability, Affordability,
Acceptability and Awareness provide us with a means of
developing appropriate strategies to tackle the marketing
issues for marketing telecom services in rural areas.
19
Successful cases like the Grameen Phone in Bangladesh and
Smart Communications Inc in Philippines also provide us with
some guidelines to tackling the issue.
As per my concern of the research, it is a

detail study of different FMCG products used by rural
consumers. It will provide detail information about consumer
preferences towards a good number of FMCG products which
is too unique and different from those above researches.
Research objectives
20
• To understand the demand pattern of FMCG products in
the rural market.
• To know the amount of household income spent on the

consumption of FMCG products.
• To understand the image of the products in the eyes of

the consumers.
Research methodology
21
Data collection
Sample unit:
1. working people (including men & women)
2. college students
3. school students
4. senior citizens
Sample size:
1. working people: 32%
2. college students: 29%
3. school students: 23%
4. senior citizens: 16%
Sampling region:
1. The researcher has selected LUCKNOW, the Capital city
of Uttar Pradesh as her area of study.
2. She has chosen GOMTI NAGAR, MAHANAGAR, ALIGANJ

as her areas of research. In these areas she can easily
meet working people (both male & female), school
students, college students & senior citizens.
The population status of these areas can be shown in a

tabulated manner, which is given as follows:
22
Area Population
Gomti Nagar 12,97,570
Mahanagar 8,12,230
Aliganj 8,75,640
Population is in approximate figures.

Source:
http://www.upgov.nic.in/upinfo/census01/cen01-1.htm
Note: As the examiner can see that the population of

areas (areas that are chosen by the researcher) is very
large, therefore the researcher has stratified the area. She
has chosen various areas that come under these areas.
The areas covered by the researcher in Gomti Nagar are
Viram Khand, Vinamr Khand, Vibhuti Khand . the
population level of these areas are:
Area Population
Vishwas Khand 2,83,563
Vipul Khand 3,93,768
Vivek Khand 2,86,786
Source: Lucknow Development Authority

Note: the researcher took these areas because these
areas are near to various school & colleges. The
researcher took school & college students as her sample
unit.
The areas covered by the researcher in Maha Nagar are

Chandra Lok & Mahanagar Colony. The population
statuses of these areas are:
23
Area Population
Chandra Lok 2,34,863
Mahanagar Colony 3,84,683

Note: The researcher took these areas because there are
various schools & institutes nearby these places.
The areas covered by the researcher in ALIGANJ are

Jankipuram & Sahara City. The population statuses of
these areas are:
Area Population
Jankipuram 2,78,675
Sahara City 1,89,986

Note: The researcher took Aliganj as one of the areas for
her study because she lives in jankipuram & it was quite
easy for her to conduct the survey in that particular place.
Sampling procedure:
The researcher will take stratified random sampling as

the sampling procedure.
24
Data collection method:
1. Primary data: it will be collected with the help

of a self administered questionnaire. This questionnaire
aims to gather information related to various Branded
products.
2. Secondary data: it will be collected with the

help of books, research papers, magazines, news
papers, journals, internet, etc.
Research instruments:
Questionnaire design:
As the questionnaire is self administrated one, the survey is
kept simple and user friendly. Words used in questionnaire
are readily understandable to all respondent. Also technical
jargons are avoided to ensure that there is no confusion for
respondents.
Panoramic View
25
India has a population of over 1 billion & 4 climatic
Zones. Several religious & personal beliefs, 15 languages,
different social customs & food habits categorize Indian
consumer class. Besides this, India is also different in culture
if compared with other Asian countries. Therefore, India has
high distinctiveness in demand and the companies in India
can get lot of market opportunities for various classes of
consumers. Consumer goods marketers’ experience that
dealing with India is like dealing with many small markets at
the same time.
Indian consumer goods market is expected to

reach $400 billion by 2010. India has the youngest
population amongst the major countries. There are a lot of
young people in India in different income categories.
Consumer goods marketers are often faced with a

dilemma regarding the choice of appropriate market
segment.
In India they do not have to face this dilemma

largely because rapid urbanization, increase in demand,
presence of large number of young population, any number
of opportunities is available. The bottom line is that Indian
market is changing rapidly and is showing unprecedented
26
consumer business opportunity.
As the restrictions on foreign investments were relaxed in

1991, Multi-National Companies have been entering India
since then.
Market
Market Share
Size in $
in %
million
Indian Indian
15 Compan MNCs Compan MNCs
ies ies
1992 2004 1992 2004
Breakfa
st 2 25 100 0 52 48
cereals
Wafers,
potato 6 35 100 0 37 63
chips
Washin
g
40 570 98 2 51 49
Machin
es
3,03
TV 630 97 3 49 51
0
1992 $=30 rupees

2004 $=45 rupees
Source: Center for Monitoring Indian Economy (CMIE)
27
With a population of 1 billion people,
India is a big market for FMCG companies. Around 70% of
the total households in India reside in the rural areas. The
total number of rural households is expected to rise from
135 m in 2002 to 153 m in 2010, which represents the
largest potential market in the world.
Rural and urban potential
Urb
Rural
an
Population 2001-02 (m
53 135
household)
Population 2009-10 (m
69 153
household)
% Distribution (2001-02) 28 72
3,76 627,0
Market (Towns/Villages)
8 00
Source: Statistical Outline of India (2001-02), NCAER

Indian consumer class can be classified
according to the following criteria:
1. Income
2. Socio-Economic status
3. Age demographics
4. Geographical dispersion
28
Income based classification
India has a population of 1.095 billion people,

comprising of 1/6th of the world population. India's
population can be divided into 5 groups on the basis of
annual household income. These groups are:
1. Higher income
2. Upper middle income
3. Middle middle income
4. Lower middle income
5. Lower income
The income classification does not represent a real

scenario for an international business because the
purchasing power of currencies differs significantly. The real
29
purchasing power of Indian rupee is higher than the
international exchange value.
In addition to that, income classification is not

an effective tool to ascertain consumption and ownership
trends in the economy.
Consumer Classification
According to National Council of Applied Economic Research
(NCAER) there are 5 consumer classes that differ in their
ownership patterns and consumption behavior across
various segments of goods.
Consumer Annual 199 200

2001 Change
Classes Income in Rs. 6 7
Rs. 215,000
The Rich 1.2 2.0 6.2 416%
and more
The
Rs 45-
Consuming 32.5 54.6 90.9 179%
215,000
Class
The Rs. 22-
54.1 71.6 74.1 37%
Climbers 45,000
The Rs. 16-
44 28.1 15.3 -65%
Aspirants 22,000
The Below Rs.
33 23.4 12.8 -61%
Destitute 16,000
Total 164. 180.7 199. 21%
30
8 2
Source: NCAER
The 5 classes of consumer households

(consumer classification) show the economic development
across the country based on consumption trends.
Socio economic classification

In addition to income classification and
consumer classification, Indian households can also be
segmented according to the occupation and education levels
of the chief earner of the household (the person who
contributes most to the household expenses). This is called
as Socio-economic Classification (SEC), which is mainly used
by market planners to target market before launching their
new products. SEC is made to understand the purchase
behavior and the consumption pattern of the households.
The urban area is segregated into: A1, A2, B1, B2, C, D, E1,
E2
31
Socio-Economic Classification
Occupati
Education
on
Less
5-9
than Som
yrs School Post-
Illitera 4 yrs e Gradu
of certific gradu
te in colle ate
scho ate ate
scho ge
ol
ol
Skilled E2 E1 D C C B2 B2
Unskilled E2 E2 E1 D D D D
Shop
D D C B2 B2 A2 A2
owner
Petty
E2 D D C C B2 B2
trader
Employer of-
Above B1 B1 A2 A2 A1 A1 A1
32
10
persons
Below 10
C B2 B2 B1 A2 A1 A1
persons
None D C B2 B1 A2 A1 A1
Clerk D D D C B2 B1 B1
Supervis
D D C C B2 B1 A2
or
Professi
D D D B2 B1 A2 A1
onal
Senior
executiv B1 B1 B1 B1 A2 A1 A1
e
Junior
executiv C C C B2 B1 A2 A2
e
Source: Indian readership survey (IRS)

Sections A & B refer to High-class- constitutes over a
quarter of urban population
Sec C refers to Middle-class-- constitutes 21% of the
urban population
Sections D & E refer to Low-class-- constitutes over
half the urban
population
To understand the table, consider an example: A trader

whose monthly household income (MHI) is more than that of
a person in section A cannot be included in this SEC because
his educational qualification or occupations do not qualify
him for inclusion.
Sec C constitutes households whose Chief Wage Earners are

employed as:
Skilled workers 33%
33
Petty traders 12%
Clerk/Supervisor 37%
Shop owners 18%
3/4th of them have studied till 10th or 12th class while the
remaining 1/4th have studied till 9th class.
Less than half of the Chief Wage Earners of households
belonging to sections D & E are unskilled workers. Petty
Traders are 18%, while Skilled Workers are about 28%.
More than 80% of the population of upper strata

consumers is living in the top 7 cities. Those top 7 cities are
Mumbai, Kolkata, Delhi, Chennai, Ahmedabad, Bangalore,
and Hyderabad. With increase in economic prosperity, this
population (upper strata consumers) is growing at 10
percent annually.
The rural area is segregated in to: R1, R2, R3, R4.
Education
of chief
Type of House
wage
earner
Semi-
Pucca Kuchcha
pucca
Profession
R1 R2 R3
al degree
Graduation R1 R2 R3
34
/ PG
College R1 R2 R3
SSC/HSC R2 R3 R3
Class 4-
R3 R3 R4
Class 9
Up to class
R3 R3 R4
4
Self-
R3 R4 R4
learning
Illiterate R4 R4 R4
Age demographics
India is a very young nation, if compared with

some advanced and developed countries. Nearly two- thirds
of its population is below the age of 35, and nearly 50 % is
below 25.
Marketers explain that the boom in the consumption level
and leisure related expenditure is because of this young
population. It will have a significant impact over the
consumer goods market. In addition to that, it is expected
that this will generate trade opportunities and continuous
investment in the economy. There is huge potential for
further consumption of goods and services due to the
increased level of disposable income. The expenditure on
essential goods and services has a higher share in
35
developing countries as compared with that of developed
countries.
Age distribution if Indian population (In Millions)
Year/ Age 2006 2001 1996

Below 4 yrs 113.5 108.5 119.5
5-14 yrs 221.2 239.1 233.2
15-19 yrs 122.4 109.0 90.7
20-34 yrs 279.1 246.8 224
35-54 yrs 239.2 207.3 178.1
55 & above 118.7 101.7 88.7
Total 1094.1 1012.4 934.2
Consumption Trends
Food Essentials 45.68%

Essential Services
(water, power, rent, and 10.1%
fuels)
Clothing 4.9%
Footwear 0.63%
Medicare 4.25%
Transport &
14.51%
Communication
Recreation, Education,
Less than 4%
and Culture
Home Goods 3.25%
Geographical dispersion
36
There is large difference in economic prosperity levels
among several states in India, linked to the wealth creation
from trade, industrial, and agricultural development. There
are poor districts in many states, classified according to their
market potential. India has 500 districts, out of which 150
districts (category A) and next 150 districts (category B)
account for 78% and 15% of the national market potential
respectively. Remaining 200 districts (category C) are
backward and account for only 7% of national market
potential. Category C districts have 40% of the geographical
share.
Analysis
37
1. Which soap u prefer to use?
The reaction of people towards various SOAP brands

can be tabulated in the following manner:
Brands Lux Dettol Lifebuoy others

Percenta
36 22 18 24
ge
In the survey that the researcher conducted, it

could easily be concluded that LUX, the product of HUL was
highly in demand. LUX, the product of HUL covers 36% of the
market share. After LUX, the other brands (EXCEPT LUX,
DETTOL, LIFEBUOY) covers 24% of the market share. This is
then followed by DETTOL, the product of RECKITT
BENCKISER with a market share of 22%, which is then
followed by LIFEBUOY, the product of HUL with a market
share of 18%.
38
This data can be graphically explained with the help of the
following bar graph:
de ma nd o f so a p bra n ds
40
35
30 lux
25
de t t o l
pe r ce nt a ge
20
life buo y
15
o t he rs
10
5
0
br a nds
2. Which pack u prefer to use?
39
In order to determine the income pattern of the
consumers, it was necessary for the researcher to
distribute the consumers on the basis of their demand for
the various packs of SOAP brands available in the market.
However, the reaction of people towards various
packs of SOAP can be tabulated in the following manner:
Family pack (3 in
Packs of soaps Single pack
1)
Percentage 56 44
In the survey that the researcher conducted, she

tried to differentiate amongst people, with below average
household income, average household income & above
household income. This classification can be done on the
basis of the daily expenditure that people make. 56%
consumers demand single pack. 44% consumers demand
family packs i.e. 3 in 1 pack.
40
This data can be graphically explained with the help
of the following bar graph:
d e m a n d o f p a c ks o f s o a p
60
50
40
p e r c e n t a3g0e s in g le p a c k
fa m ily p a c k ( 3 in 1 )
20
10
0
p a c ks pr e fe r r e d b y
customers
1. Which tea u prefer to use?
41
The reaction of people towards various TEA brands can
be tabulated in the following manner:
Brooke
Brands Tata Tea Taj Mahal Others
Bond
Percenta
32 28 18 22
ge

could easily be concluded that TATA TEA, the product of
TATA has a market share of 32%. This is followed by,
BROOKE BOND, with a market share of 28%. Followed by
other brands (EXCEPT TATA TEA, BROOKE BOND, TAJ MAHAL)
with a market share of 22%. This is finally followed by TAJ
MAHAL, the product of HUL which holds18% of the market
share.
42
dem and of tea brands
35
30
25 tata tea
20 b ro o ke bo n d
pe rce nta ge taj mahal
15
othe rs
10
5
0
bra nds
43
2. Which tea pack u prefer to use?

the various packs of TEA brands available in the market.
However, the reaction of people towards various TEA
packs can be tabulated in the following manner:
Medium
TEA packs Sachet Large pack
pack
percentage 48 32 20
In the survey that the researcher conducted,

she tried to differentiate amongst the people, with below
average household income, average household income &
above household income. This classification can be done
on the basis of the daily expenditure that people make.
However, it can be concluded that sachets are most
commonly used by the people .i.e., 48% consumers
demand sachet packs. 32% consumers demand medium
pack.20% consumers demand large pack.
44
This data can be graphically explained with the
help of the following diagram:
d e m a n d o f t e a p a c ks
50
40
sachet
30
m e d iu m p a c k
pe rcenta ge
20 la r g e p a c k
10
0
p a c ks p r e fe r r e d b y c u s t o m e r s
45
3. Which tooth paste u prefer to use?
In the initial years, the rural consumers

preferred tooth powders, datoons etc. But from the last
decade, the preference of consumers towards toothpaste
has been changed. A huge number of toothpastes of
different companies are sold in rural market.

TOOTH PASTES can be tabulated as follows:
Pepsoden
Brands Colgate Close Up Others
t
Percenta
27 35 22 16
ge
In the survey that the researcher conducted, it could

easily be seen that COLGATE, the product of COLGATE
PALMOLIVE is the market leader, which covers 35% of the
total market. After that, PEPSODENT, the product of HUL is
demanded by the customers, which covers 27% of the
market share. Followed by CLOSE – UP, the product of HUL
is demanded by the customers, which covers 22% of the
market share. Which is then followed by others brands
(EXCEPT PEPSODENT, COLGATE, CLOSE - UP), which
covers 16% of the total market share.
46
help of the following bar graph:
dem and of tooth paste
35
30
25 pepsodent
20 c o lg a t e
pe rcenta ge c lo s e u p
15
othe rs
10
5
0
bra nds
47

the various packs of TOOTH PASTE brands available in the
market.
TOOTH PASTE packs can be tabulated in the following
manner:
Tooth paste Medium

Small pack Family pack
pack pack
Percentage 34 48 18

tried to differentiate amongst the people, with below
above household income. This classification can be done on
the basis of the daily expenditure that people make.
However, it can be concluded that 34% consumers demand
small packs. 48% consumers demand medium packs. 18%
consumers demand large pack.
48
This data can be graphically explained with the help
of the following graph:
d e m a n d o f p a c ks o f to o th p a s te
50
40
s m a ll p a c k
30
m e d iu m p a c k
pe rcenta ge
20 f a m ily p a c k
10
0
49
5. Which detergent u prefer to use?
The reaction of people towards various DETERGENT

brands can be tabulated in the following manner:
Brands Surf Rin Tide Others

Percenta
27 35 22 16
ge

could be easily concluded that RIN, the product of HUL
captures 35% of the total market share. This is followed
by SURF, the product of HUL which has a market share of
27%. This is followed by TIDE, the product of PROCTER &
GAMBLE which has a market share of 27%. This is finally
followed by other brands (EXCEPT SURF, RIN, TIDE) which
captures 16% of the market share.
50
dem a nd o f deterge nts
35
30
25 surf
20 r in
pe rce nta ge t id e
15
others
10
5
0
brands
51

the various packs of DETERGENT brands available in the
market.
DETERGENT packs can be tabulated in the following
manner:
Detergent Medium
Sachet Family pack
packs pack
Percentage 43 27 30

However, 43% consumers demand sachet packs. 30%
52
consumers demand family packs. 27% consumers demand
medium packs.

53
de m a nd o f de te rge n t p a cks
45
40
35
30 sachet
25 m e d iu m p a c k
pe rcenta ge
20 f a m ily p a c k
15
10
5
0
7. Which shampoo u prefer to use?
The reaction of people towards various SHAMPOO

brands can be tabulated in the following manner:
54
Clinic Head &
Brands Sunsilk Others
plus shoulders
Percenta
33 25 28 14
ge
In the survey, that the researcher conducted it

can easily be concluded that CLINIC PLUS, the product of
HUL, captures the major portion of the market with a market
share of 33%. This is followed by HEAD & SHOULDERS, the
product of PROCTER & GAMBLE which holds 28% of the
market share. This is followed by SUNSILK, the product of
HUL which holds 25% of the market share. Finally followed
by other brands (EXCEPT CLINIC PLUS, SUNSILK, HEAD &
SHOULDERS) with a market share of 14%.

55
demand of shampoo
35
30
25 c lin ic p lu s
20 s u n s ilk
pe rce nta ge
15 h e a d & s h o u ld e r s
others
10
5
0
brands
56
the various packs of SHAMPOO brands available in the
market.
SHAMPOO packs can be tabulated in the following manner:
Shampoo Small Medium Family

sachet
packs pack pack pack
Percenta
23 32 28 17
ge

However, 32% consumers demand SMALL PACK. 28%
consumers demand medium pack. 17% consumers demand
large packs.
57
d e m a n d o f s h a m p o o p a c ks
35
30
25 sachet
20 s m a ll p a c k
pe rcenta ge m e d iu m p a c k
15
la r g e p a c k
10
5
0
58
9. Which biscuits u prefer to use?
The reaction of people towards various BISCUITS brands can

Marie
Brands Good Day Parle G Others
gold
Percenta
24 38 21 17
ge
In the survey, that the researcher conducted, it can

easily be concluded that GOOD DAY, the product of
BRITANNIA holds a major market share of 38%. This is
followed by MARIE GOLD, another product of BRITANNIA
which holds 24% of the market share. After that, PARLE- G,
the product of PARLE, holds 21% of the market share. This is
followed by other brands (EXCEPT MARIE GOLD, GOOD DAY,
PARLE- G) which hold a market share of 17%.
59
d e m a n d o f b is c u it s
40
35
30 m a r ie g o ld
25 good day
p e r c e n t2a0g e p a r le G
15 others
10
5
0
brands
60
10. which hair oil u prefer to use?
The reaction of people towards various HAIR OIL brands can

Parachut Dabur Dabur

Brands Others
e Amla Vatika
Percenta
37 29 19 15
ge

easily be concluded that PARACHUTE, the product of MERICO
captures 37% of the total market share. This is followed by
DABUR AMLA, the product of DABUR which captures 29% of
the total market share. This is followed by DABUR VATIKA,
another product of DABUR which captures 19% of the
market. And after that, followed by other brands (EXCEPT
PARACHUTE, DABUR AMLA, DABUR VATIKA) captures 15% of
the market share.
61
This data can be graphically explained with the help of
the following bar graph:
d e m a n d o f h a ir o il
40
35
30 parachute
25 d a b u r a m la
p e r c e n t2a0 g e d a b u r v a t ik a
15 others
10
5
0
brands
62
In order to determine the income pattern of

the consumers, it was necessary for the researcher to
the various packs of HAIR OIL brands available in the
market.
However, the reaction of people towards
various HAIR OIL packs can be tabulated in the following
manner:
Hair oil Small pack Medium Large pack

packs pack
Percentage 32 41 27

However, 41% consumers demand medium packs. After
that, 32% consumers demand small pack. 27% consumers
demand large packs.
63
d e m a n d o f p a c k s o f h a ir o il
45
40
35
30 s m a ll p a c k
25 m e d iu m p a c k
pe rcenta ge
20 la r g e p a c k
15
10
5
0
64
12. Which cream u prefer to use?
The reaction of people towards various CREAM brands can

Fair &
Brands Pond’s Ayur Others
lovely
Percenta
28 32 14 26
ge
In the survey, that I conducted, it can easily be

concluded that FAIR & LOVELY, the product of HUL, holds the
major market with a share of 32%. This is followed by,
POND’s, another product of HUL, which holds 28% of the
market share. This is followed by, other brands (EXCEPT,
POND’s, FAIR & LOVELY & AYUR), which captures 26% of the
market share. This is followed by AYUR, the brand of AYUR
ACADEMY OF NATURAL BEAUTY (AANB) which holds 14% of
the total market share.
65
66
demand of cre ams
35
30
25 ponds
20 f a ir & lo v e ly
pe rcenta ge ayur
15
others
10
5
0
brands
13. Which coffee u prefer to use?
The reaction of people towards various COFFEE brands can

67
Brands Bru Nestle Nescafe Others
Percenta
26 32 32 10
ge

be easily concluded that all the brands are facing tough
competition. NESTLE, the product of NESTLE S.A. &
NESCAFE, another product of NESTLE S.A., shares equal
market share of 32% each. This means that they are in a
very tough competition. This is followed by BRU, the product
of HUL which holds, 26% of the market share. While the
other brands hold only 10% of the market share.

68
d e m a n d o f c o ffe e
35
30
25 bru
20 n e s t le
pe rcena tge n e s c a fe
15
othe rs
10
5
0
brands
Conclusions
In this report, it can very easily be
concluded that HUL, holds major portion of the FMCG
market. It holds major shares in the soap, detergent,
69
shampoo & cream’s category. HUL’s products are mainly in
demand, because they provide these products in different
packs. They consider the fact that rural consumers do not
have that much money to be spent on these products. So,
they prefer buying the small or the medium packs. However,
large or family packs are still been bought by few
consumers, who are from a well – off families.
In the case of TEA, TATA holds a major share. In

the case of COFFEE, NESTLE & NESCAFE holds the major
share. Rural consumers favor TATA because it is an old
organization & it has gained a lot of BRAND EQUITY which
finally creates BRAND LOYALTY. In these products,
consumers do get brand loyal, because they do not want to
take a risk with their tastes. So they prefer sticking to one
brand. These organizations supply their products in various
packs (small, medium & large), considering the buying
capacity of their consumers.
As in the case of BISCUITS, BRITANNIA holds

the major market share. Rural consumers favor BRITANNIA
because it is an old organization & it has gained a lot of
BRAND EQUITY which finally creates BRAND LOYALTY. In
case of BISCUITS, consumers do get brand loyal, because
they do not want to take a risk with their tastes. So they
prefer sticking to one brand. These organizations supply
70
their products in various packs (small, medium & large),
considering the buying capacity of their consumers.
In the case of TOOTH PASTES, COLGATE

PALMOLIVE holds a major market share. Consumers are very
concerned about their health, so if any product suits them
they prefer sticking to that product. And this product is also
available in various packs, so rural consumers can use it
according to their buying capacity.
In the case of HAIR OILS, MERICO holds the

major market share. MERICO is a much known organization
& its product PARACHUTE has reached all the places. So it is
a known product, which has created a good amount of
goodwill for the organization. Consumers have confidence &
trust in their product. Therefore, they prefer buying it.
71
Suggestions & recommendations
The researcher would like to suggest the following points, so
that the organizations can easily sell their products to their
consumers:
1. However, the demand of a product is also affected by
its life cycle. If the product is in the introduction stage,

then it will definitely take some time to capture the
market, because in the introduction stage, consumers
are not much aware about the product. Therefore, it’s
the responsibility of the organization to create
awareness amongst the consumers.
2. They should adapt rigorous marketing strategies, in
order to sustain in the market.
3. There is immense competition in this sector. Therefore,
the organizations should try to gain competitive
advantage against their competitor’s.
4. They should try to reach as many people as possible.
5. For the organizations that are not much popular
amongst the consumers, should adopt Sales Promotion,
as their marketing strategies.
6. Application of 4A’s has also become an important task
for all the organizations.
72
(*4A= Availability, Affordability, Acceptability,
Awareness)
References
1. Kearney, A T, CII – Report, (2000)
2. Purba basu, research on living style of rural

consumers, (2004), pg. no. 5-8.
3. Tognatta Pradeep, economic growth on agriculture

sector, (2003), pg no. 6-10.
4. Aithal K Rajesh, importance & growth of rural

markets, (2004), pg no. 8-12.
5. Center for Monitoring Indian Economy (CMIE)
6. Statistical Outline of India (2001-02), NCAER

7. National Council of Applied Economic Research
(NCAER)
8. Indian readership survey (IRS)
9. http://www.upgov.nic.in/upinfo/census01/cen01-
1.htm
10. Lucknow Development Authority
11. http://www.naukrihub.com/india/fmcg/overview/
12. http://www.naukrihub.com/india/fmcg/
73
13. http://www.naukrihub.com/india/fmcg/consumer-
class/
class/income/
class/socio-economic/
class/age/
class/geography/
18. http://en.wikipedia.org/wiki/Fast_moving_consume
r_goods
19. *4A= Availability, Affordability, Acceptability,

Awareness
74
Questionnaire
1. name:
2. occupation:
3. monthly salary:
a. less than 10,000
b. 10,000 – 25,000
c. 25,000 – 50,000
d. More than 50,000
4. address:
5. phone no.:
6. which soap u prefer to use?

a. Lux
b. dettol
c. lifebuoy
d. others
7. which pack u prefer to use?

a. single
b. family pack ( 3 in 1)
8. which tea u prefer to use?

a. tata tea
b. brooke bond
c. taj mahal
d. others
75
a. sachet
b. medium pack
c. large pack
10. which tooth paste u prefer to use?

a. pepsodent
b. colgate
c. close – up
d. others

a. small pack
b. medium pack
c. family pack
12. which detergent u prefer to use?

a. surf
b. rin
c. tide
d. others

a. sachet
b. medium pack
c. large pack
14. which shampoo u prefer to use?

a. clinic plus
b. sunsilk
c. head & shoulders
d. others
76
a. sachet
b. small pack
c. medium pack
d. large pack
16. which biscuits u prefer to use?

a. marie gold
b. good day
c. parle - G
d. others
17. which hair oil u prefer to use?

a. parachute
b. dabur amla
c. dabur vatika
d. others

a. small pack
b. medium pack
c. large pack
19. which cream u prefer to use?

a. ponds
b. fair & lovely
c. ayur
d. others
20. which coffee u prefer to use?

a. bru
b. nestle
c. Nescafe
d. others
77
78

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Buying Behaviour of FMCG Products

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Fast

the sample unit, sample size, sampling region,

Overview of FMCG Sector

FMCG is an acronym for Fast Moving Consumer

Comparison of 2006 and 2005

• Increase in penetration and consumption in rural areas

FMCG is the fourth largest sector in the Indian Economy with

According to a CII – A T Kearney Report, the FMCG sector in

The large consumer base, particularly in rural sector, and the

The sector's lack-luster performance in the last few years

Categories 2004-2005 2005-2006 Apr.2006-

Source: CII – A T Kearney Report, (2000)

Sector Financials In millions

Sales Growth 10.8% 2.0% -

Scope of the FMCG Sector

The Indian FMCG sector has a market size of US $13.1

For example, Hindustan Levers Limited (HLL) has shown a

With the presence of 12.2% of the world population in the

Indian Competitiveness and Comparison with the World

The following factors make India a competitive player in

1. Availability of raw materials

2. Labor cost comparison

3. Presence across value chain

Top Players in FMCG Sector

1. Colgate-Palmolive (India) Ltd.

2. Godrej Consumers Product Ltd.

4. Tata Tea Ltd.

Rural market is one of the best

3. Aithal, K Rajesh (2004), suggested that rural

As per my concern of the research, it is a

• To know the amount of household income spent on the

• To understand the image of the products in the eyes of

2. She has chosen GOMTI NAGAR, MAHANAGAR, ALIGANJ

The population status of these areas can be shown in a

Population is in approximate figures.

Note: As the examiner can see that the population of

Source: Lucknow Development Authority

The areas covered by the researcher in Maha Nagar are

Source: Lucknow Development Authority

The areas covered by the researcher in ALIGANJ are

Source: Lucknow Development Authority

The researcher will take stratified random sampling as

1. Primary data: it will be collected with the help

2. Secondary data: it will be collected with the

Indian consumer goods market is expected to

Consumer goods marketers are often faced with a

In India they do not have to face this dilemma

As the restrictions on foreign investments were relaxed in

1992 $=30 rupees

Rural and urban potential

Source: Statistical Outline of India (2001-02), NCAER

India has a population of 1.095 billion people,

The income classification does not represent a real

In addition to that, income classification is not

Consumer Annual 199 200

The 5 classes of consumer households

Socio economic classification

Source: Indian readership survey (IRS)

To understand the table, consider an example: A trader

Sec C constitutes households whose Chief Wage Earners are

Skilled workers 33%

More than 80% of the population of upper strata

The rural area is segregated in to: R1, R2, R3, R4.