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ECONOMICS PROBLEMS FACED BY FMCG COMPANIES (SUPPORTED BY DATA) WITH THE LIKELY SOLUTION AND BUSINESS STRATEGY TO OVER COME THESE PROBLEM
MR. CHANDRASHEKHAR DOGRA
RAJNISH SINGH MBA (regular) SEC- RR1902 ROLL NO.-RR1902A11 REG. NO-10901327
I am thankful to MR. CHANDRASHEKAR DOGRA for providing me the task of preparing the term paper on ECONOMIC PROBLEMS FACED BY FMCG COMPANIES (SUPPORTED BY DATA) WITH THE LIKELY SOLUTIONS AND BUSINESS STRATEGIES TO OVER COME THESE PROBLEMS. We at lovely in taking challenges and term paper provided me the opportunity to tackle a practical challenge in the subject of ECONOMICS. This term paper tested my patience at every step of preparation but the courage provided by my teacher helped me to swim against the tide and move against the wind. I am also thankful to my friends and parents for providing me help at every step of the preparation of the term paper. RAJNISH SINGH
INDEX INTRODUCTION 1FAST MOVING CONSUMER GOODS (FMCG) HISTORY OF FMCG COMPANIES IN INDIA CURENT SITUATION OVER VIEW OF INDIAN FMCG MARKET PROBLEM OF FMCG COMPANIS ANALYSIS OF FMCG SECTORS 1 STRENGTHS 2 WEAKNESSES 3 OPPORTUNITIES 4 THREATS STRUCTURAL ANALYSIS OF FMCG INDUSTRY 1DESIGN AND MANUFACTURING 2MARKETING AND DISTRIBUTION FORCOSTING OF FMCG COMPANIES STRATEGY OF FMCG COMPANIES 1COMPETITIVE STRATEGIES ALLOWED BY FMCG COMPANIS IN INDIA 2POWER BRANDS THE NEW FMCG MANTRA TOP 10 FMCG COMPANIES IN INDIA SOLUTION OF FMCG COMPANIES 1WHAT SHOULD THE FMCG PLAYERS DO NOW 2DISTRIBUTION BRAND MANAGERS TO BUSINESS MANAGERS REFRENCE .
shaving products. cosmetics. tissue paper. such as buckets. The main segments of this sector are personal care (oral care. Pepsi and Believe. soaps. soft drinks. Examples of FMCGs are soft drinks. The category may include pharmaceuticals. at relatively low cost and don't require a lot of thought. paper products and plastic goods. The margin of profit on every individual FMCG product is less. consumer electronics and packaged food products and drinks. household care (fabric wash and household cleaners). teeth cleaning products. detergents. and toiletries). hair care. cereals. and chocolate bars. cosmetics. UNILEVER AND PROCTER & GAMBLE. chocolates. However the huge number of goods sold is what makes the difference. batteries. branded and packaged food. although these are often categorized separately. bakery products) and tobacco.INTRODUCTION Fast Moving Consumer Goods (FMCG) FMCG are products that have a quick shelf turnover.’ Fast Moving’ is in opposition to consumer durables such as kitchen appliances that are generally replaced less than once a year. time and financial investment to purchase. and other non-durables such as glassware. beverages (health beverages. Examples of FMCG brands are Coca-Cola. bulbs. Fast Moving Consumer Goods is a classification that refers to a wide range of frequently purchased consumer products including: toiletries. soaps. The term Consumer Packaged Goods (CPG) is used interchangeably with Fast Moving Consumer Goods (FMCG). The FMCG sector represents consumer goods required for daily or frequent use. Hence profit in FMCG goods always translates to number of goods sold. Kleenex. dairy products. . staples.Three of the largest and best known examples of Fast Moving Consumer Goods companies are NESTLÉ.
much of which is disbursed in small towns and rural India. the margins were also on the higher side. In this context. FMCG companies have been forced to fight for a market share. urbanization. Rural markets account for 56% of the total domestic FMCG demand. Cadbury and Nestle have been a dominant force in the FMCG sector well supported by relatively less competition and high entry barriers (import duty was high). These companies were. companies like ITC. the unorganized and regional players have witnessed erosion in market share. the sector meets the every day needs of the masses. With the gradual opening up of the economy over the last decade. more so in the last six years (FMCG . the boom has also been fuelled by the reduction in excise duties. This has been due to liberalization. de-reservation from the small-scale sector and the concerted efforts of personal care companies to attract the burgeoning affluent segment in the middleclass through product and packaging innovations. HLL. As a result. HISTORY OF FMCG COMPANIES IN INDIA In India. But in the last ten years. able to charge a premium for their products. Furthermore. in reality. In the process. The lower-middle income group accounts for over 60% of the sector's sales. many of the smaller rung Indian FMCG companies have gained in scale. The industry also creates employment for 3 m people in downstream activities. Many of the global FMCG majors have been present in the country for many decades. It is the fourth largest sector in the economy and is responsible for 5% of the total factory employment in India. Colgate. Unlike the perception that the FMCG sector is a producer of luxury items targeted at the elite. This industry has witnessed strong growth in the past decade. therefore. increase in the disposable incomes and altered lifestyle. margins have been compromised.The Indian FMCG sector is an important contributor to the country's GDP.
. industry estimates suggest that the industry could triple in value by 2015 (by some estimates. In this backdrop. organized retailing accounts for just 3% of total retail sales and is likely to touch 10% over the next 3-5 years. almost 40% and 8% was accounted by groceries and personal care products respectively. Trent. Around 45% of the population in India is below 20 years of age and the proportion of the young population is expected to increase in the next five years. CURRENT SITUATION The growth potential for FMCG companies looks promising over the long-term horizon. Aspiration levels in this age group have been fuelled by greater media exposure. As per the Consumer Survey by KSA-Technopak. organized retailing results in discounted prices. Although companies like HLL and ITC have dedicated initiatives targeted at the rural market. these are still at a relatively nascent stage. unleashing a latent demand with more money and a new mindset. In our view. The bottlenecks of the conventional distribution system are likely to be removed once organized retailing gains in scale. as the per-capita consumption of almost all products in the country is amongst the lowest in the world. testing times for the FMCG sector are over and driving rural penetration will be the key going forward. Shopper’s Stop and Shoprite. Currently.sector witnessed decline in demand). increased literacy and rising per capita income are the key growth drivers for the sector. of the total consumption expenditure. we are confident that the FMCG sector has a bright future. In our view. companies were unable to grow faster. Rapid urbanization. the industry could double in size by 2010). forced-buying by offering many choices and also opens up new avenues for growth for the FMCG sector. Given the aggressive expansion plans of players like Pantaloon. Due to infrastructure constraints (this influences the cost-effectiveness of the supply chain).
7 10.3 8. India offers a vibrant market of youth and vigor with 54% of population below the age of 25 years. A.0 CR HINDUSTANUNILEVER 8703 DABUR INDIA MARICO GLAXOSMITHKLINE CONSUMER COLGATE POLMOLIVE 955 INDIA GODREJCONSUMER EMAMI ARGO TECH FOODS JYOTHY LABS 1014 400 305 250 1591 1389 964 OVER VIEW OF INDIAN FMCG MARKET India offers a large and growing market of 1 billion people of which 300 million are middle class consumers.5 10.1 17. It has been ranked second in a Global Retail Development Index of 30 developing countries drawn up by A T Kearney.7 9.5 1.7 12.1 5.7 16. These young people work harder. The number of households with "high income" is expected to increase by 60% in the next four years to 44 million households.9 11.3 2.5 AGO 8. India is rated as the fifth most attractive emerging retail market.0 14. making India a dynamic and inspirational society. Domestic demand is expected to double over the ten-year period from 1998 to 2007.9 12.3 18. Kearney has estimated India's total retail .2 14.1 13. earn more. spend more and demand more from the market.T.APR-SEP 2009 COMPANY SALES RS A&P SPENDRSCR 1132 234 176 156 141 94 75 31 14 A&P/SALES% APR-SEP 3YRS 2009 13.
1 billion. Small-scale sector reservations limit ability to invest in technology and quality up gradation to achieve economies of scale. Burgeoning Indian population. The outlook in the short term does not appear to be very positive for the sector. There is significant potential for increasing exports but there are certain factors inhibiting this. The growth of imports constitutes another problem area and while so far imports in this sector have been confined to the premium segment. hair wash etc in India is low indicating the untapped market potential. however the rate of growth has slowed down and the sector has recorded sales growth of just five per cent in the last four quarters. FMCG . Penetration level as well as per capita consumption in most product categories like jams. India is one of the world’s largest producers for a number of FMCG products but its FMCG exports are languishing at around Rs 1. skin care. Moreover. Over the last one year.6 billion. The FMCG market is set to treble from US$ 11. too. The FMCG sector has traditionally grown at a very fast rate and has generally out performed the rest of the industry.market at $202. is expected to grow at a compounded 30 per cent over the next five years. toothpaste. The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13. the general slowdown in the economy is also likely to have an adverse impact on disposable income and purchasing power as a whole. is unlikely to help matters.4 billion in 2015.6 billion in 2003 to US$ 33. presents an opportunity to makers of branded products to convert consumers to branded products. Poor monsoon in some states. The share of modern retail is likely to grow from its current 2 per cent to 15-20 percent over the next decade. Rural demand is on the decline and the Centre for Monitoring Indian Economy (CMIE) has already downs called its projection for agriculture growth in the current fiscal. particularly the middle class and the rural segments. Moreover. lower volume of higher value added products reduce scope for export to developing countries. analysts feel.000 crore only.
as there is very little avenue to drive price growth. most of the companies are concentrating on cost reduction and supply chain management. which have understood that . the industry will be forced to push volume growth. the FMCG industry will now have to do without this critical factor which has been contributing to almost half of the industry’s growth. The high burden of local taxes is another reason attributed for the slowdown in the industry At the same time. The profile of major leading FMCG Market Players is as follows: PROBLEM OF FMCG COMPANIES The fast-moving consumer goods (FMCG) companies are faced with a peculiar challenge of maintaining profitable growths in the backdrop of a low inflation rate. there could be a pressure on margins. “Many companies. The number of units sold will be an important metric. To tackle the problem there needs to be a relentless focus on cost-cutting. Give the large market and the requirement for continuous repurchase of these products.” said MS Banga. in his keynote address at the 2nd National FMCG Conclave organized by the Confederation of Indian Industry (CII). the long term outlook for revenue growth is positive. FMCG companies should continue to do well in the long run. As against a growth in profitability. Since volume will be the key determinant of growth. for those companies which hitherto relied on price increase as an easy way to enhance profitability. chairman. This should yield positive results for them.companies estimate they have already cornered a four to six per cent market share. As against the high inflation of the early 90s — the peak growth season for all FMCG companies — the ensuing period of a lower inflation rate dares companies to now play the volume game. Moreover. “Volumes will play a critical role now. Hindustan Lever Ltd (HLL). which came with price increase in line with the rising inflation. Hence.
“Volume growth and no price reduction is good for FMCG. He denied that HLL was cutting down upon its advertising spends. Banga said the only way out was branding. FMCG companies have been hit hard. was only on a quarter-on-quarter basis. . Banga. Along with the rural employment guarantee scheme.” said Mr.74 crore during the third quarter ended September 30. said Mr. from traditional. the year holds a lot of promise.” Mr. said fresh investments were critical for sustained growth in the economy.80 crore. is consumer promotions where freebies are threatening to lead to the commoditization of the industry. As to how HLL. According to Mahesh Vyas.” added Mr. if growth is good and inflation is lower. One of the reasons is the fact that the Conditional Cash Transfer scheme (CCT) is gathering support as a replacement for myriad welfare schemes. will benefit. Banga added.e. With urban consumption in decline or stagnating because of the economic slowdown. would boost its volumes and maintain its margins. He. which is a leading FMCG company. executive director.volumes will be critical. the Centre for Monitoring Indian Economy (CMIE). 2003. “I believe that the industry must take a serious note of it. It is threatening the very premise on which the FMCG industry stands today (i. the CCT could solve the FMCG’s problem of unpredictability of agricultural income and the associated fall in market demand. branding). Another serious challenge which the industry is faced with. it will certainly boost demand in the current recession. from Rs 217. The idea is to give a ‘choice’ to the rural customer to shift to branded products. Banga. The total advertising expenditure for HLL declined to Rs 182. The mainstay of the rural thrust of FMCG companies is based on the hope that there are ‘disposable incomes’ lying untapped in the hinterland: if the rural population spends some of this. which he said. however. loan waivers and increase in prices at which agricultural products are bought. Mr. Vyas.
In times of recession.7 percent. The Centre continued to provide short-term crop loans at 7 percent interest up to Rs 3 lakh. rural citizens’ incomes are relatively better preserved from market fluctuations and real estate shocks. no electricity. It’s estimated that rural markets hold 55 percent of total LIC policies. fuel and rent is negligible. on average. THE ECONOMIC SURVEY 2007-08 says rural India spends. education and health. water or finance facilities. Announced in the season ahead of the general election. absence of storage services. ideally. the MSP.6 million farmers and made them eligible to fund the next crop. Added to this was the election-inspired increase in minimum support prices (MSP) in 2008-09. An upturn in agriculture was seen in the UPA’s interim budget of 2009-10. Add to that the fact that. keen on spending on consumer goods. the MSP for paddy (Rs 550 per quintal in 2003-04) rose to Rs 900. Rural India constitutes over 60 percent of the country’s total consumer base. 55 percent on food and 45 percent on non-food items like clothing. That level of spending on regular consumables is good news for FMCG manufacturers. The Rs 65. 50 percent of the market for televisions.unbranded merchandise from the nonorganised sector. fans. rose to Rs 1. commuting. It also led to massive procurement of food grains this year. for wheat. the problems appear .080. have created ‘disposable incomes’ which the rural consumers should be. consumer durables. bicycles and wristwatches — and a massive 70 percent of the market for toilet soap consumption. unlike their urban counterparts. Factors like this. For corporate. Rama Bijapurkar.000 crore debt waivers announced last year helped 3.” says India’s top marketing head. which was Rs 630 per quintal. “The growth is in rural. the rural hinterland had earlier meant high investment because of poor infrastructure. And its spend on urban costs of living such as electricity. where the annual growth rate of agriculture was posted at 3. according to analysts.
boost in demand.’’ are the reasons for this projection. It’s in this context that the gathering support for the conditional cash transfers (CCT) scheme should be seen — it proposes that the government deposit an amount in the account of beneficiaries identified according to poverty criteria. rising consumerism and better penetration of FMCG products. healthy agricultural growth. ANALYSIS OF FMCG SECTOR . It’s expected that catching the villages’ fancy should be far easier than that of the info-fatigued urban buyer. If only they could have the same impact on the monsoon: any weakening or failure there will considerably affect the purchasing power of villagers and volumes of FMCG products. which announced early this year that the FMCG sector is pegged to grow at 40 percent in the rural market. Farmers are spending more than ever to cultivate. It would be interesting to watch if the ‘disposable income’ left after such subsidies will be used for consumption. The rural market already accounts for 50 percent of FMCG products like pressure cookers. a director with Coca-Cola India: “The rural thrust in India today is huge. The amount is deposited in the name of the woman member of the household and accessed only if children go to school or attend the health centre.surmountable. In many ways. The government hopes to bring the National Food Security Bill that provides monthly 25kg to BPL families at Rs 3 per kg. tea.” Among the few things that the FMCG companies are seeking from this budget is that the taxes and duties that have been reduced by the government to promote the sector should not be revoked. I would say it is the main driver for the markets. “rising rural incomes. Agrees Deepak Jolly. According to ASSOCHAM. villagers are spending more than ever to buy food. Companies expect to increase market share and to add products to the rural portfolio. branded salt and tooth powder.
toilet soaps. especially in small sectors 2. Slowdown in rural demand. confectioneries. and cigarettes. Presence of established distribution networks in both urban and rural areas 3. Large domestic market .STRENGTHS: 1. a consumer buys these goods at least once a month. Low operational costs 2. Rising income levels i. OPPORTUNITIES: 1. narrow the scope of FMCG products in rural and semi-urban market. 3. food products. increase in purchasing power of consumers 3. The sector covers a wide gamut of products such as detergents. "Me-too" products. Export potential 5. Low exports levels 3.a population of over one billion 4. toothpaste. shampoos. beverages. Untapped rural market 2. creams. which illegally mimic the labels of the established brands. High consumer goods spending THREATS: 1. Tax and regulatory structure STRUCTURAL ANALYSIS OF FMCG INDUSTRY Typically. powders. Typical characteristics of FMCG products are: - . Lower scope of investing in technology and achieving economies of scale.e. Presence of well-known brands in FMCG sector WEAKNESSES: 1. Removal of import restrictions resulting in replacing of domestic brands 2.
Modifications and improvements rarely change the basic process.1. Also.sometimes it’s essential to get certain products manufactured near the market. Third-party Manufacturing . the business has low working capital intensity as bulk of sales from manufacturing take place on a cash basis. recommendation of the retailer or word of mouth. 3. 5.Most product categories in FMCG require relatively minor investment in plan and machinery and other fixed assets. and (3) logistics . Technology . comfort. Low Capital Intensity . The consumer spends little time on the purchase decision. Brand switching is often induced by heavy advertisement. Benefits associated with third party manufacturing include (1) flexibility in production and inventory planning. technology for most products has been fairly stable. . Brand loyalties or recommendations of reliable retailer/ dealer drive purchase decisions. They meet the demands of the entire cross section of population. 3. DESIGN AND MANUFACTURING 1.Basic technology for manufacturing is easily available. 2. (2) flexibility in controlling labor costs.Manufacturing of products by third party vendors is quite common. Price and income elasticity of demand varies across products and consumers. as and when required. luxury. Also. Limited inventory of these products (many of which are perishable) are kept by consumer and prefers to purchase them frequently. 2. 4. Individual items are of small value (small SKU's) although all FMCG products put together account for a significant part of the consumer's budget. The products often cater to 3 very distinct but usually wanted for aspects necessity. He seldom ever looks at the technical specifications.
High Initial Launch Cost . This makes logistics particularly for new players extremely difficult. 3. including 2 million in 5. advertisement expenditure varies from 5 12% depending on the categories.MARKETING AND DISTRIBUTION Marketing function is sacrosanct in case of FMCG companies. Launch costs are as high as 50-100% of revenue in the first year.New products require a large front-ended investment in product development. market research.The challenge associated with the launch and/or brand-building initiatives is that few no mass media options. video vehicles. TV reaches 67% of urban consumers and 35% of rural consumers. Creating awareness and develop franchise for a new brand requires enormous initial expenditure on launch advertisements.160 towns and four million in 627. Major features of the marketing function include the following: 1. Limited Mass Media Options . test marketing and launch.000 villages. . Alternatives like wall paintings. theatres.India is home to six million retail outlets. free samples and product promotions. Super markets virtually do not exist in India. For established brands. special packaging and consumer promotions become an expensive but required activity associated with a successful FMCG. 2. Huge Distribution Network .
they wielded INR 14000 Cr worth of discretionary income. By 2015.FORCOSTING OF FMCG COMPANIES Markets all over the world have been on a roll in 2003 and the Indian bourses are no exception having gained almost 60% in 2003. This presents a tremendous opportunity for . During this period. Unlike the U. which is dominated by a handful of global players. and teenagers among them numbered about 160 million. and their families spent an additional INR 18500 Cr on them every year. Means. FMCG registered gains of just 33% on the BSE FMCG Index last year. the former has varied between a two-player-scenario to a multi-player one.and wield proportionately higher spending power. At the macro level. unpackaged home made products. while there are sectors that have outperformed this benchmark index. Recent survey conducted by a leading business weekly. While the latter has been crowded by a large number of local players. there are also sectors that have under performed. The Indian FMCG market has been divided for a long time between the organized sector and the unorganized sector. competing on margins. Together. The economic growth would impact large proportions of the population thus leading to more money in the hands of the consumer. India's Rs. market for fast moving consumer goods (FMCG).S. approximately 47 per cent of India's 1 + billion people were under the age of 20. Indians under 20 are estimated to make up 55% of the population . Indian economy is poised to remained buoyant and grow at more than 7%. companies that are able to influence and excite such consumers would be those that win in the market place.460 billion FMCG market remains highly fragmented with roughly half the market going to unbranded. Changes in demographic composition of the population and thus the market would also continue to impact the FMCG industry.
Take distribution as an example. However. STRATEGY OF FMCG COMPANIES COMPETITIVE STRATEGIES FOLLOWED BY FMCG COMPANIES IN INDIA Competitive Strategy consists of move of companies in order to attract customers. increase the loyalty of customers and to beat competitors.makers of branded products who can convert consumers to branded products. Even so. The main objective of Competitive Strategy is to generate a competitive advantage. successfully launching and growing market share around a branded product in India presents tremendous challenges. This makes logistics particularly for new players extremely difficult. it is not easy to predict a single or to find a single strategy for the whole sector. With stand competitive pressures and strengthen an organization’s market position. When we come on to FMCG Sector main strategies lay . Other challenges of similar magnitude exist across the FMCG supply chain. The fact is that FMCG is a structurally unattractive industry in which to participate. the opportunity keeps FMCG makers trying. Thus. India is home to six million retail outlets and super markets virtually do not exist. Five main competitive strategies are: • Overall low cost leadership strategy • Best cost provider’s strategy • Broad differentiation strategy • Focused low cost strategy • Focused differentiation strategy Here competitive strategy varies from sector to sector and company to company.
45 Crore. Brooke bond. Lux.behind market strategies.99% higher than 31st December 2007’s Rs.2009 net turnover of company is Rs. hotels. Pepsodent. Sunlight. Ponds. 20’239. Bru. Pears. Products of HUL are: Annapurna. Stationary and Greeting Cards with the major products constitutes Cigarettes. This is India’s largest FMCG sector company with all type of household products available with it. Foods. Wheel. RELATED TO TWO COMPANIES HUL & ITC HUL (Hindustan Unilever Ltd.3% higher than previous . For the entire year ending March . cost. and quality strategies. Company mainly operates in the industry like Tobacco. and also food and Water Purifier available with it. Liril. 16 of HUL’s brands featured in AC-Nielson Brand Equity list of 100 most trusted brands in 2008 in an annual survey. Here in this report you are going to get information about such type of strategies of FMCG giants. Vaseline. HUL has largest no of brands in most trusted brands list. It is Currently headed by Yogesh Chander Deveshwar. Fair & Lovely. Axe. 2’496. Rexona. Hotels.33 Crore which is 47. packed foods. and apparels. Breeze. Hamam. Surfexcel. It has Home & Personal Care products. ITC Limited This Company was earlier known as Imperial Tobacco Company of India Ltd. 15388 Crore which is 10. Dove. For the entire year ending Mar-2009 the turnover of company is at Rs. 13675. According to Brand Equity. Clinic. Ayush. Rin. Pureit.) This Company is earlier known as Hindustan Lever Ltd.43 Crore driven mainly by dom estic FMCG’s with net profit stood at Rs.
When we compare both companies on the basis of their strategies i. personal care. detergents. It owns and markets some of the most popular brands in the country across various ITC ITC is not a pure-play FMCG company. but expensive bets in new segments and track. their competitive strategies in the present market. ANALYSIS OF BOTH COMPANIES HUL & ITC are major companies in FMCG market in India. and accounts for over 80% of its profit.53 Crore. driven mainly by robust 20% growth in non cigarette FMCG business with net profit stood at Rs. since cigarettes is its primary tobacco. FMCG segments like foods. including soaps. Despite diversification. tea and face creams. 13947. It is diversifying into non- categories. hotels and agri-business to reduce its portfolios of products sold via a strong business. Performance Performance After stagnating between 1999 and ’04.year’s Rs. paper products. 3324 Crore. In the past three years. ITC’s reliance the company is back on the growth HUL’s net sales have witnessed a CAGR of 11%. till 2008 business contributes 40% to its . . shampoos. exposure to cigarettes. This cash-generating business has enabled it to take ambitious. When we look at the present segment breakup for both of the companies then we came to know that their different products vary too much in the market.e. on cigarettes is still huge. The tobacco revenues. while net profit has posted a CAGR of 17%. HUL Hindustan Unilever (HUL) is the largest pure-play FMCG company in the country and has one of the widest distribution channel.
ITC Segment Breakup HUL SEGMENT BREAKUP .deliver modest profit growth.
THE NEW FMCG MANTRA Three men. Asian Paints (India) 7. are these big companies in danger of overlooking the potential offered by some of the also-ran brands? It's been almost five years since these three FMCG giants opted to manage their brand portfolios on the basis of the power brand strategy. Indian fast moving consumer goods companies like HLL. 2. But in their rush to put their best brands forward. ITC (Indian Tobacco Company) 3. one voice. How have they fared? And what does the future hold? TOP 10 FMCG COMPANIES IN INDIA 1. Godrej Consumer Products Limited and Marico Industries are completely sold on the concept of "power brands". Cadbury India . Nestlé India 4.POWER BRANDS. GCMMF (AMUL) 5. Dabur India 6. Hindustan Unilever Ltd.
8. Britannia Industries 9. Procter & Gamble Hygiene and Health Care 10. Marico Industries .
Hindustan Lever's Rin. Surf and Lux are available even in India's most obscure villages. Consider the case of Marico: its material cost works out to a high of 59 per cent on sales. Britannia with its Tiger brand of biscuits and Colgate-Palmolive with its low-priced and conveniently-packaged products designed for the rural masses have been other pioneers in rural marketing. Therein lays the rural marketing paradox.SALUTION OF FMCG COMPANIES WHAT SHOULD THE FMCG PLAYERS DO NOW? They should not only price their products competitively. Certainly. However. customer-centric and market-savvy FMCG companies have always chased prospects when they perceive there is a latent demand.33 million retail outlets is an uphill task. For instance. But then. FMCG is a low-margin business with a high cost of raw materials. . It’s Operation Bharat that focused on personal care products made the most out of surging rural incomes. The only way out for Indian FMCG players: put in place an aggressive cost structure that would enable them to offer low-price and value-for-money products. reaching out to 3. Hindustan Lever had given shape to its rural strategy a few years ago when it perceived that its urban market was shrinking due to an industrial slowdown. The result was there for all to see. The company has been able to clock in double-digit profits every three years and log in doubledigit revenues every four years. but also offer their rural prospects maximum value for money spent.
Gone are the days when brands could be made to gallop with a . Few ways to reduce pain involved in this link: • Reducing supply chain costs by reducing intermediaries . • BRAND MANAGERS TO BUSINESS MANAGERS Tough market situations and a more aware and savvier demanding consumer have necessitated that yesterday's Brand Managers be transformed into Business Managers who understand consumers and can innovate and be flexible to move with the consumer. Integrating operations with your distributors and channel partners is a Herculean task. thereby offering the opportunity for a company/supplier to reduce distribution cost by reducing intermediaries such as wholesalers/distributors and supplying directly to the warehouse of retail chain.The relative share of grocers to FMCG sales has dropped from over 50% in the early 90's to 35% in the late 90's.DISTRIBUTION One of the age-old problems that FMCG has been facing not only in India but globally is that of distribution. This has been a result of both SKU's (sachets) and hardware (mini dispensers) being specifically designed to facilitate entry to these outlets and increase consumer interface.Organized retail chains have set up systems for inventory management and quick servicing. Increasing sales by driving channel width . On the other hand the contribution of chemist outlets and paan outlets has been increasing.
a generous dose of below-the-line and above-the-line activities and constant promotions and schemes in the market.hll.html .coolavenues.rediff.com/Faculty_Column/FC448/fc448. moods and behavior have rendered conventional Brand Management tools obsolete. Consumers who have become demanding yet inscrutable in terms of attitudes.php http://www.oppapers. REFERENCE http://www.insightory.com/know/mktg/competitive-strategies-2.com http://www.htm www. outlook.com www.indianmba.big budget media plan.com/money/2005/nov/15spec.itc.com www.com www.
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