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Proposal BUYER BEHAVIOUR ON FAST MOVING CONSUMER GOODS

Buyer behavior: Our economy gets stronger depending upon the wealth of goods and services produced within the country. A huge number of alternative suppliers are present for almost all the products today: substitute products are available to consumers, who make decision to buy products. Therefore the main objective of the seller is please the consumer at all times. In order to be successful, sellers need to identify the customer, what they buy, when they buy, why they buy and how they buy. A buyer making a purchase of a particular product or a particular brand can be termed as product buying motives and the reason behind the purchase from a particular seller is known as patronage motives When a person gets his pay packet, and if he is educated, along with his wife he prepares a family budget, by appropriating the amount to different needs. It may happen that after a trip to the market, they could have purchased some items, which were not in the budget, and thus there arises a deviation from the budgeted items and expenditure. All these behavioural changes within human beings during the period of purchasing can be termed as buyer behaviour. FMCG Fast moving consumer goods are the goods purchased by the consurers for their own use and purchased repeatedly. They buy these products on daily or weekly basis in small quantity. The price of such products per unit is low. The consumption of such products is very high due to requirement of every one and large in number of consumers. Indian population is a huge population over 120 crorers. A separate sector called FMCG sector is well established in India. India has always been a country with a big chunk of world population, be it the 1950s or the twenty first century. In that sense, the FMCG market potential has always been very big. However, from the 1950s to the 80s investments in the 1

FMCG industries were very limited due to low purchasing power and the governments favouring of the small-scale sector. Fast Moving Consumer Goods sector (FMCG) or Consumer Packaged Goods sector(CPG) refers to sectors that satisfies the elementary needs of a consumer other than grocery, ranging from packaged foodstuff, dairy products, cooking oil, bread, butter, cereals, beverages like tea coffee, pharmaceuticals, confectionery, biscuits, glassware, stationary items, watches, toiletries, detergents, shampoos, skin care products, cosmetics, toothpaste, dish washing liquid, shaving cream, razor, batteries, shoe polish, energy drinks, soft drinks, clothing, furniture and household accessories to electronic goods like cell phones, laptops, computers, digital cameras etc. These are usually categorized as Fast Moving Consumer Electronics or FMCEs. We know that a major part of a consumers monthly budget is spent on these goods. FMCG sector in India has grown in a phenomenal pace experiencing the changes in the taste and preference of the consumers during the last decade owing an increase in their incomes. Large scale and low cost production, modern retailing strategies, branding and maintenance of intense distribution network have given FMCGs an edge over others in raising hovering revenues. At present Indian FMCG sector is worth Rs. 1300 billion and expected to be around a whopping value of Rs. 4000 to Rs. 6000 billion by 2020. Thus we can see a huge job opportunities in the field of FMCG and its closest rival retailing sector in the field of marketing, retailing, operations, advertising, supply chain, logistics, human resources, product packaging and development, finance, operations, general management, supervising and so on. Scope of the sector The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector in the economy. A well-established distribution network, intense competition between the organized and unorganized segments characterize the sector. FMCG Sector is expected to grow by over 60% by 2010. 2

That will translate into an annual growth of 10% over a 5-year period. It has been estimated that FMCG sector will rise from around Rs 56,500 crores in 2006 to Rs 92,100 crores in 2010. Hair care, household care, male grooming, female hygiene, and the chocolates and confectionery categories are estimated to be the fastest growing segments, says an HSBC report. Though the sector witnessed a slower growth in 2002-2004, it has been able 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 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 2008, 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 that processed foods, bakery, and dairy are long-term growth categories in both rural and urban areas. 3