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ROUGH DRAFT


A Study On
Fast Moving Consumer Goods (FMCG)


Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods
(CPG), are products that are sold quickly at relatively low cost. Though the absolute
profit made on FMCG products is relatively small, they generally sell in large
quantities, so the cumulative profit on such products can be large.

Examples of FMCG generally include a wide range of frequently purchased consumer
products such as toiletries, soap, cosmetics, teeth cleaning products, shaving
products and detergents, as well as other non-durables such as glassware, light bulbs,
batteries, paper products and plastic goods. FMCG may also include pharmaceuticals,
consumer electronics, packaged food products and drinks, although these are often
categorized separately.

FMCG have a short shelf life, either as a result of high consumer demand or because
the product deteriorates rapidly. Some FMCGssuch as meat, fruits and vegetables,
dairy products, and baked goodsare highly perishable. Other goods such as alcohol,
toiletries, pre-packaged foods, soft drinks, and cleaning products have high turnover
rates. An excellent example is a newspaperevery day's newspaper carries different
content, making one useless just one day later, necessitating a new purchase every
day.

Main characteristics of FMCGs:
From the consumers' perspective:
o Frequent purchase
o Low involvement (little or no effort to choose the item products with
strong brand loyalty are exceptions to this rule)
o Low price
From the marketers' angle:
o High volumes
o Low contribution margins
o Extensive distribution networks
o High stock turnover

Scope of FMCG Industry In India-
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FMCG Sector in India is one of the four largest sectors in Indian economy. The FMCG
(Fast Moving Consumer Goods) companies have faced tough competition among
themselves over the years which is continuously increasing. This is due to the increase
in per capita income among individuals and also various developments in rural
economy. The FMCG sector has changed its strategies and has opted for a more well-
planned marketing of the products to penetrate both the rural and urban markets. To
execute these tasks, the FMCG companies are hiring more and more people which has
led to an increase in the job prospects in this sector. Thus, FMCG sector is creating
massive employment with good career prospects. Marketing, retail, sales, services and
supply are the key areas which generates maximum career scopes in FMCG Industry
in India.




Prospects in the FMCG Sector in India-
FMCG sector in the Indian rural market is one of the most booming sectors in Indian
economy. The villages of India account for 12.2% of the world's population. The farm
sector has been one of the significant sectors which boosted the rural economy
resulting in the higher consumption of FMCG products. The consumers in both rural
and urban sectors can afford high-priced branded products nowadays with the high
disposable income.

The FMCG sector in India has grown significantly in the year 2007 and this gave rise
to huge prospects in the sector. The rural and urban sectors fared equally well in the
processed food items in the year 2007. The rural market separately performed well in
the personal care, fabric care, and hot beverages while the urban market did well in
home care, personal care, bakery, dairy products, and the like.

FMCG Brands in India - Overview
The burgeoning middle class Indian population, as well as the rural sector, present a
huge potential for this sector. The FMCG sector in India is at present, the fourth
largest sector with a total market size in excess of USD 13 billion as of 2012. This
sector is expected to grow to a USD 33 billion industry by 2015 and to a whooping
USD 100 billion by the year 2025.
This sector is characterized by strong MNC presence and a well established
distribution network. In India the easy availability of raw materials as well as cheap
labour makes it an ideal destination for this sector. There is also intense competition
between the organised and unorganised segments and the fight to keep operational
costs low.
Factors that will drive growth in this sector:
Increasing rate of urbanization, expected to see major growth in coming years.
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Rise in disposable incomes, resulting in premium brands having faster growth
and deeper penetration.
Innovative and stronger channels of distribution to the rural segment, leading
to deeper penetration into this segment.
Increase in rural non-agricultural income and benefits from government welfare
programmes.
Investment in stock markets of FMCG companies, which are expected to grow
constantly.
Some of the challenges this sector is likely to face are:
Increasing rate of inflation, which is likely to lead to higher cost of raw
materials.
The standardization of packaging norms that is likely to be implemented by the
Government by Jan 2013 is expected to increase cost of beverages, cereals,
edible oil, detergent, flour, salt, aerated drinks and mineral water.
Steadily rising fuel costs, leading to increased distribution costs.
The present slow-down in the economy may lower demand of FMCG products,
particularly in the premium sector, leading to reduced volumes.
The declining value of rupee against other currencies may reduce margins of
many companies, as Marico, Godrej Consumer Products, Colgate, Dabur, etc
who import raw materials.
FMCG Brands in India - Major Companies
1. Hindustan Unilever Ltd. - Lux, Lifeboy, Brookebond, Kawality Walls, Surf Excel,
Pepsodent, Close Up, Vaseline, and many more

2. ITC (Indian Tobacco Company)- W. D. & H. O. Wills, Insignia, India Kings, Classic,
Gold Flake, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake

3. Nestl India - Kitkat, Milkmaid, Milky Bar, Maggie, Nescafe, Nestle Slim Milk,
Barone, And Nestea

4. GCMMF (AMUL) - Amul Kool, Masti Butter Milk, Kool Cafe, Amul's sugar-free Pro-
Biotic Ice-cream, etc.

5. Dabur India - Hajmola, Real, Vatika, Nature Care, Lal Dantmanjan, Chyawanprash,
Pudin Hara, Amla, Etc.

6. Asian Paints (India)

7. Cadbury India - Gems, 5 Star, Perk, Celebrations, Eclairs, And Dairy Milk

8. Britannia Industries - Tiger, good day, 50-50, treat, milk bar, and nutra choice
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9. Procter & Gamble Hygiene and Health Care - Vicks Action 500+, Vicks VapoRub,
Vicks Cough Drops, Vicks Formula 44 Cough Syrup and Vicks Inhaler

10. Marico Industries - Parachute, Saffola, Mediker, Silk-n-Shine, Revive, Hair & Care,
Sweekar, Nihar, Manjal, etc

Top 10 FMCG Companies in India 2013-14
1) ITC Ltd. - Market Cap (Rs.Cr): 151,078.

2) Hindustan Unilever - Market Cap (Rs.Cr): 67,858.

3) Nestle India - Market Cap (Rs.Cr): 39,819.

4) Dabur India - Market Cap (Rs.Cr): 18,632.

5) Godrej Consumer Products - Market Cap (Rs.Cr): 13,335.

6) Proctor and Gamble India(Includes P&G Health and Hygiene and Gillette India) -
Market Cap (Rs.Cr): 12,838.

7) Colgate-Palmolive - Combined Market Cap (Rs.Cr): 12,764.

8) Glaxosmithkline Consumer Healthcare - Market Cap (Rs.Cr): 9,842.

9) Marico - Market Cap (Rs.Cr): 9,078.

10) Emami - Market Cap (Rs.Cr): 6,836.
CLOSE UP TOOTH PASTE AS FAST MOVING CONSUMER GOODS:
Young people. The target market being Multi Brand Households where
young does not use what their parents. This particular targeting was significant
when Close Up was launched because Colgate positioning was a sort of Flip flop
between Tooth decay and Bad Breath and Colgate was going for a Broad market
constituting of all the age groups.
Sought to be perceived by the customers was Fresh Breath. The physical
appearance by the users. The Bright Red Gel synerized well with the Fresh breath
Benefit. The advertising account was handled by LINTAS which focused on Fresh
Breath that brought teenagers closer.
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By 1980 Close Up had 3% of the 16,000 tonnes toothpaste market. The
production capacity was doubled through a deal with third party manufacturer and the
Brand was taken National over the next year and a half, the Premium slashed by 30%.
Close Up countered this move by sharpening product benefits, while urging the
customers to do the HA test by blowing air on the palm, the message was that Close
Up feels a lot cooler which reiterated the basic benefit of a fresh breath.
1987 was a Probe into Problem year for HALL as Close Up was much below
expectations with only 4.5% of the 32,000 tonnes toothpaste market. They identified
two basic problems:


(1) Appearance of Toothpastes detracts prospects from its serious buyers.
(2) Commercials displayed too much of proximity between couples which was too
much for a mother, who actually purchased the Toiletries.
1998 Lever reworked 3 Ps in its Marketing mix in Tamil Nadu where people
have a strong sense of Oral Hygiene and the area has a cost effective media Reach.
The three reworked Ps are as follows:

(1) Product :
Blue mint flavour introduced.
Tangerines of Read reduced. (For serious buyers.)
Soft Squeeze lamitubes for toothpastes introduced for the first time in the
country.
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(3) Distribution
Took Brand to Sub Urban and Rural areas.
Posters and Mobile Vans arrived in areas where urban lifestyle was a matter
of aspiration. This was a purposeful move as the company did not want the Brand to
be saddled with a restrictive.
In 1991, Close Up launched Zing Green and simultaneously Lever sponsored
Close up Sangeet Muquabala targeted at the rural youth. In 1991 Close Ups market
share increased to 16% of Rs 377 crores per year market. 1991 witnessed a few
problems for Close Up Blue, which was faltering on repeat purchases as customers
did not perceive much freshness value in it. In 1992, HLL launched AQUA BLUE
with added attributes like increased Mouthwash contents and a more Minter flavour,
so that customers perceived benefit is Freshness which is Levers positioning stance.
In response Colgate introduced Red Actirinse and then Colgate Blue. People at
HLL thought to counter Colgates growth by cashing in on Medicinal appeal and
came out with Close up with Germicheck snf Mentadent G now renamed as
Close up G for Gum problems. Colgate countered this move by launching Colgate
Total as an advanced paste to fight.
Tartar, Gingivitis, and other Dental ailments. 1993 was the year when HLL tried to
woo the customers by innovative packaging. Firstly it introduced Stand Up Pump
dispensers for metros but it bombed in the market because of High price perception
as compared to benefits. Sachets formula was used by lever to break into Colgates
fort. The Close Up sachets was priced at Rs. 3 per unit and it offered 20 uses, which
means that a family of five could use it four times each. The year it sponsored zee
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Close Up Antaksharee. HLL also went in for Close Up Toothbrushes under the Brand
name Confident and launched it in Tamil Nadu.
The confident toothbrushes were taken National and most importantly HLL
advertisement account shifted from LINTAS to FTA due to
Global alignment move by Levers parent Unilever. The brief given to the new
agency was to Strengthen the Audiences perception of Brands functional values.
Close Ups formulation was reworked and the new Close Up was enriched with
Microwhiteners so that the perceived benefit by the customer be that he will have
Shining Teeth. As the ad account was handed over to HTA, the ad moved closer to the
Indian Culture, they also took note of the cultural changes which showed in their ads
like Females were now more than equal participants in Boy Girl activity as in Salim
Anarkali ad which showed her confidence by joining the Boy on the stage and saving
the day.
S1996 witnessed introduction of Close Up Liquid fresh a liquid in a carry along
squeeze can in two sizes:

30 gm Rs.
100 gm Rs.
HLL gave it a dual positioning platform of a Mouthrinse and toothpaste, like
squeeze the Gel directly into Mouth. Close Up is pushing hard for semi Urban and
Rural areas were disposable incomes are rising rapidly and in order to tap these
markets it is going for Vernacular Advertising in Eight languages. In Bengal as the
communication did not work all that work initially, HTA has contracted Anjan Dutta a
signer popular with both Young and old alike in Bengal.

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