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Submitted in partial fulfilment of the requirements For the award of the degree of
Master of Business Administration in Software Enterprise Management
Under the guidance of DECLARATION Mr. Amit kumar gupta (ERP consultant)
Centre for Development of Advanced Computing, Noida
I hereby declare that this Project Report entitled ” Sales Promotional activities used in FMCG sector” submitted by me to the GGSIPU Delhi, is a bonafide work undertaken by me and it is not submitted to any other University or Institution for the award of any degree diploma / certificate or published any time before.
Signature of the Student
My seminar and progress report title is “Sales Promotional Activities used in FMCG sector”. In today‟s intensely competitive, rapidly changing and highly complex environment characterize by diminishing customer loyalty, the need to be market –focused and customer centric is more critical than any other time in past. It is highly imperative for every organization to retain and use valuable information about their customer to enhance their business strategies and product and service offerings. Today, the key focus area of much organization is identification of a link between customer satisfaction and performance. This report will be totally focusing on the consumer preferences towards different sales Promotion techniques means which sales promotion technique is mostly preferred by the Customer. As the sales promotion techniques are used for the marketing of the product so the research will be done in the area of marketing. These techniques are used in the marketing of product in the FMCG sector. Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars. Through “Sales promotional Activities used in FMCG sector”, we will be able to know how sales promotion helps to shape the buying patterns, attract new customers, or increase sales‟
It gives me pleasure to present this project report, which is an outcome of the study. “Study and implementation of Various Sales Promotional Activities used in NPIL and mapping it in SAP”.
Completing a task is a never a one-man effort. It is often the result of valuable contribution of a number of individuals in a direct or indirect manner that helps on shaping and achieving an objective.
I am grateful to my faculty guide Mr. Amit kumar gupta for their regular guidance without which my project report would not have been completed. I also like to thank our Head Dr. R.K.Singh, who promoted us to do seminar and project work. I also like to thank all our faculties who have taught us and have shared their experience with us which has helped us in doing our project.
CHAPTER 1 INTRODUCTION
In today‟s intensely competitive, rapidly changing and highly complex environment characterize by diminishing customer loyalty, the need to be market –focused and customer centric is more critical than any other time in past. As the sales promotion techniques are used for the marketing of the product so the research will be done in the area of marketing. Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG).Fast Moving Consumer Goods (FMCG) goods 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, toothpaste. A major portion of the monthly budget of each household is reserved for FMCG products. 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. Some of the prime activities of FMCG industry are selling, marketing, financing, purchasing, etc. The industry also engaged in operations, supply chain, production and general management.
To study the sales promotional activities which are used in FMCG sector.
1.3 SCOPE OF WORK
The Scope includes: To study the various sales promotional activities used in FMCG sector. To study about the sales promotional strategies. To study about how to create sales promotion. How to use sales promotion.
1.4 RESEARCH METHODOLOGY
Data Collection Method: Secondary Data Sources Literature Review Internet Newspaper: Internet provides a rich source of information regarding various companies of FMCG sector. Newspaper plays a vital role in disseminating the information to millions of people. In Newspapers, one can see the various sales promotional activities which is used by the FMCG companies.
I did SWOT analysis for finding the strength, weakness, opportunities and threats. The SWOT-model was chosen because it gives an understanding for the internal strength and weaknesses of the company and its competitors. The SWOT-model also shows External factors from the market. Analysis is also done in terms of case studies.
CHAPTER 2 LITERATURE REVIEW
2.1 FMCG Sector
Fast Moving Consumer Goods (FMCG) goods 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, toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories and extends to certain electronic goods. These items are meant for daily of frequent consumption and have a high return. A major portion of the monthly budget of each household is reserved for FMCG products. The volume of money circulated in the economy against FMCG products is very high, as the number of products the consumer use is very high. Competition in the 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.
2.2 What are Fast Moving Consumer Goods (FMCG)?
Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as
other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars.
A subset of FMCGs is Fast Moving Consumer Electronics which include innovative electronic products such as mobile phones, MP3 players, digital cameras, GPS Systems and Laptops. These are replaced more frequently than other electronic products. White goods in FMCG refer to household electronic items such as Refrigerators, T.Vs, Music Systems, etc.
FMCG industry, alternatively called as CPG (Consumer packaged goods) industry primarily deals with the production, distribution and marketing of consumer packaged goods. The Fast Moving Consumer Goods (FMCG) are those consumables which are normally consumed by the consumers at a regular interval. Some of the prime activities of FMCG industry are selling, marketing, financing, purchasing, etc. The industry also engaged in operations, supply chain , production and general management.
2.3 FMCG industry economy
FMCG industry provides a wide range of consumables and accordingly the amount of money circulated against FMCG products is also very high. The competition among FMCG manufacturers is also growing and as a result of this, investment in FMCG industry is also increasing, specifically in India, where FMCG industry is regarded as the fourth largest sector.
Common FMCG products Some common FMCG product categories include food and dairy products, glassware, paper products, pharmaceuticals, consumer electronics, packaged food products, plastic goods, printing and stationery, household products, photography, drinks etc. and some of the examples of FMCG products are coffee, tea, dry cells, greeting cards, gifts, detergents, tobacco and cigarettes, watches, soaps etc.
Market potentiality of FMCG industry Some of the merits of FMCG industry, which made this industry as a potential one are low operational cost, strong distribution networks, presence of renowned FMCG companies. Population growth is another factor which is responsible behind the success of this industry.
2.4 THE TOP 10 COMPANIES IN FMCG SECTOR
S. NO. 1. 2. 3. 4. 5. 6. Hindustan Unilever Ltd. ITC (Indian Tobacco Company) Nestlé India GCMMF (AMUL) Dabur India Asian Paints (India) Companies
7. 8. 9.
Cadbury India Britannia Industries Procter & Gamble Hygiene and Health Care
Outlook There is a huge growth potential for all the FMCG companies as the per capita consumption of almost all products in the country is amongst the lowest in the world. Again the demand or prospect could be increased further if these companies can change the consumer's mindset and offer new generation products. Earlier, Indian consumers were using non-branded apparel, but today, clothes of different brands are available and the same consumers are willing to pay more for branded quality clothes. It's the quality, promotion and innovation of products, which can drive many sectors.
The performance of the industry was inconsistent in terms of sales and growth for over 4 years. The investors in the sector were not gainers at par with other booming sectors. After two years of sinking performance of FMCG sector, the year 2008 has witnessed the FMCGs demand growing. Strong growth was seen across various segments in FY09. With the rise in disposable income and the economy in good health, the urban consumers continued with their shopping spree. There are a variety of sales promotional strategies that a business can use to increase their sales, however it is important that we first understand what a sales promotion strategy actually is and why it is so important.
A sales promotion is a tool used to get customers to buy a product or try a service. Sales promotions can come in the form of coupons, rebates, sweepstakes, contests, discounted pricing, point-of-purchase displays, trade shows, demonstrations, premiums and sampling. Typically, before a sales promotion is put into action, a company evaluates its market. If a sales promotion is warranted, the company comes up with a clear, measurable objective they'd like to accomplish through the promotion. Goal Sales promotion goals vary depending on the product or service being promoted. Some common goals are to increase sales or awareness, remind customers about a product or service, introduce a new use for a product or service and change customer's attitude/opinion. Using a combination of goals is useful depending on the research a company gathers initially regarding their market. The most important thing is to select a goal that is measurable; otherwise, it's hard to gauge the effectiveness of a promotional campaign. Inform A sales promotion constructed to inform customers about a new product might include an advertisement in a local paper explaining the product and inviting customers to visit a Web site for a coupon offer. An activity like this can be measured by tracking the number of people who receive the paper, the number of people who visit the Web site, the number of people who download the coupon and the number of people who actually use the coupon.
Remind Reminding customers about a product or service is just as important as an initial product introduction. Something as simple as setting up an in-store display with coupons or having
customers complete a survey to indicate how often they use the product keeps brands fresh in consumers' minds. Information gathered from the survey can expose how often customers use a product, how familiar they are with a product and if they plan to use it more in the future. Couple this with a discount coupon and you can even track the number of people who make a purchase after completing the survey. A follow-up survey can assess things like customer satisfaction and likelihood for a repeat purchase.
Sales Besides just handing out coupons, another great sales promotion technique is price discounting. Whether its 50 percent off, buy-one-get-one-free or taking 10 percent off, reducing cost is a sure way to motivate customers to buy. To track the effectiveness of this type of promotion, sales can be tracked based on the number of units sold and the total sales. You can even track how customers in certain areas buy compared to others.
Warnings Sales promotions are a great way to inform and remind customers about your products. Ultimately, the main objective of these activities is to increase revenue. Weigh the cost of your promotional sales campaign against the total revenue you expect to receive. Consider that many companies are spending up to 60 percent of advertising budgets on sales promotions. Be sure that your promotional campaign is both cost-effective and profitable.
2.5 Sales Promotion
Sales promotion - Sales promotions are short-term incentives to encourage the purchase or sale of a product or service.
Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase. Examples of devices used in sales promotion include coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes.
Examples of coupons, free trials, and rebates.
2.6 Sales Promotion Strategies
There are three types of sales promotion strategies: Push, Pull, or a combination of the two.
A push strategy involves convincing trade intermediary channel members to "push" the product through the distribution channels to the ultimate consumer via promotions and personal selling efforts. The company promotes the product through a reseller who in turn promotes it to yet another reseller or the final consumer. Trade-promotion objectives are to persuade retailers or wholesalers to carry a brand, give a brand shelf space, promote a brand in advertising, and/or push a brand to final consumers. Typical tactics employed in push strategy are: allowances, buyback guarantees, free trials, contests, specialty advertising items, discounts, displays, and premiums.
A pull strategy attempts to get consumers to "pull" the product from the manufacturer through the marketing channel. The company focuses its marketing communications efforts on consumers in the hope that it stimulates interest and demand for the product at the end-user level. This strategy is often employed if distributors are reluctant to carry a product because it gets as many consumers as possible to go to retail outlets and request the product, thus pulling it through the channel. Consumer-promotion objectives are to entice consumers to try a new product, lure customers away from competitors‟ products, get consumers to "load up" on a mature product, hold & reward loyal customers, and build consumer relationships. Typical tactics employed in pull strategy are: samples, coupons, cash refunds and rebates, premiums, advertising specialties, loyalty programs/patronage rewards, contests, sweepstakes, games, and point-of-purchase (POP) displays.
Car dealers often provide a good example of a combination strategy. If you pay attention to car dealers' advertising, you will often hear them speak of cash-back offers and dealer incentives.
2.7 How to create a sales promotion
Sales promotion is as old as the hills. Who can forget the creation of the first ever sales promotion when God offered Adam a „Free woman for one rib‟ deal? With the second ever promotion (on apples), God created promotional terms and conditions which quickly resulted in the first case of mal-redemption when Adam ignored them. Sales promotion generates sales by using specific strategies which influence the consumer when they are just about to make their purchase decision. Something that advertising (or above the line as it loftily calls itself) can only dream of. At worst these are short term tactical sales drivers, at best they engage the consumer, encourage product trial and influence future behaviour for a longlasting relationship with the brand.
Through the use of the right offering, communication and brand-positioning, sales promotion can underpin or enhance the message of ATL and literally bring the personality of a brand to life.
Techniques to choose from
Each method is designed to achieve different things, but they can broadly be categorized as follows: ● Reduce the risk of product trial ● Incentivise product purchase ● Reward repeat purchase Which one you choose depends, to a greater or lesser degree, on where your product is in it's life cycle.
Clearly at product launch, you are more likely to want to encourage product trial, whilst appearing to reduce the risk to the consumer. Reduce the risk of Product Trial ● Free samples ● Satisfaction Guarantee / Comparison / Money back guarantees ● Couponing and introductory discounts
Incentivise product purchase ● Multibuy discount, extra free or straight discount (big yawn and erodes margin) ● Third party discount partners ● Competition prizes ● Gift with purchase ● Self-liquidating promotion * It‟s like a gift with purchase, only the consumer has to pay a contribution which, in theory, covers the cost of the premium if enough are redeemed. Reward repeat purchase ● Collector scheme Collect tokens, codes, wrappers etc off pack and redeem on-line, by post or direct to receive a reward. This would take the form of third party offers or cleverly themed premiums. Legal and above board The last thing you want to do if you are spending a small fortune on your promotion is to go live and find out that you‟re on the wrong side of sales promotion law. That‟s where our good friends at the Institute of Sales Promotion come in. For a modest outlay, they will scour your terms and conditions to cover the UK and beyond, to ensure that your promotion is watertight. Measure of success It‟s all very well launching a promotional campaign, but how are you going to know if it has worked? From the outset you need to decide what you are trying to achieve, how you are going to measure the achievement and what level of achievement would constitute a success. Typically
this takes a two-pronged approach - did it achieve it‟s sales / marketing objective and how many customers did we engage with. Support the campaign coincidentally in these ever more environmentally conscious times, sales promotion is rife with recycled ideas. No offence meant to any creative out there, but there are very few, if any, new sales promotion ideas. The cleverness lies in how the campaign is themed, the content, the creative, the execution, the experience.
2. 8How to use Sales Promotions
Sales promotions are a great way to boost sales for a period of time for a specific product or service. You can also rotate through different sales promotions to always have a sales promotion going on. They key to a sales promotion is to position a product as "a good value". Know what you are selling. Make sure you and your sales associates can accurately articulate the company's product line, in words everyone can understand. Choose one product or package of products to promote. Be specific about what you are about to offer your customers, and be clear about what customers need to do to qualify for the promotion. Make sure all sales associates are on the same page with this. Make sure the total price tag for the promotion is lower than it would be was it not being specially promoted. Alternatively, make sure the total value of the services is higher than normal. Either way, the customer is getting a deal.
Advance the promotion to the forefront of your advertising strategies. You need to get the maximum return on your promotion. To do that, you need to make it among your top three messages during the promotion (the other two being brand and image). To engender trust on the part of the consumer, stay true to your word about the promotion. Give them everything you promised. Charge exactly what you asked for in the beginning. If you have advertised the promotion as a "limited time" offer, you must end the promotion when you said you would. This will prove to the customer that you mean it when you say "limited time". This will encourage customers to act fast the next time you use a deadline on a promotion. Rotate through different products, markets and regions. Adjust your marketing campaign accordingly as you go. The marketing, advertising, and promotions of a business need to be synchronized. As master political propagandist Karl Rove says, "Stay on message." This maxim applies to all businesses.
2.9 How to Start a Sales Promotion
Step 1 Sales promotions begin with a product that you would like to promote and offer to your customers or clients. That‟s especially true of one-time marketing concepts, such as you might use to start or expand your business or to boost your short-term revenues. Your ideal promotional offer should be something that offers value to your customers, and is very relevant to your business. It should also be very pertinent to your competitive edge. Sometimes, the easiest promotional offer is a discount, but there are usually more creative ideas that you can come up
with through brainstorming with your peers or business associates. What does your "competitive edge" consist of? It's basically something that sets you apart from your competition. Step 2 How can your promotion outshine your competitive edge? Other common promotions can include bonus products and/or services. Such promotional tools will not only bring in additional business, but it will give your customers a chance to “sample” your other products or services that you have made available to them. Step 3 Once you have your promotional offer set in motion, you must begin to promote your sales promotion! This is where many businesses fall short in their advertising and marketing efforts. This failure happens in two ways: First, they don‟t promote their promotion to their existing or potential customers; or they communicate the wrong marketing message. When it comes to business marketing, the first thought is usually advertising; but advertising adds expense. Between the cost of buying advertising media and the cost of the promotion itself, you may find that your returns don‟t justify the expense. In addition, advertising for a promotion tends to attract price-sensitive shoppers who may not return. Step 4 There are definitely smarter and cheaper ways to begin promoting your sales promotion. If you own a store, you can do an in-store promotion--place in-store signs at appropriate places like at the entry, near relevant sale products and at the checkout counters. Have your employees mention the promotion to all the customers that come in. A great way to advertise with little to no money is to have your employee‟s wear buttons, tags or stickers that promote the product you are trying to sell. Another way is to place promotional flyers in the bags at check-out counters.
Step 5 Another great way to promote your business is through the Internet. If your company has a website, highlight your promotions on your website's main page. Go as far as to create a web page about your promotion, and then create a link that you can place on other websites. Collect email addresses from your customers and send them your promotional offers. Other than a few moments of your time, this is a great way to advertise without spending a cent. Step 6 Another cost-effective way to advertise and promote your business is to have your employees mention the promotion to incoming callers throughout the sales day. Also, change your voicemail message to reflect the sales promotion. If you have to place your customers on hold for any reason, have your on-hold message speak about the current promotion within your business. And finally, have your employees call your existing customers to inform them of your current and upcoming promotions. Step 7 Another very good marketing tool is to send out a press release promoting the promotion. Postcards can be a cost-effective way to get the word out to your existing or potential customers, for little to no money. If you have developed business relationships with your competitors, see if you can do a joint promotion. It can be very cost effective and promote unity within the business community. The there is always the "standard" type of promoting your business, and that is through your local newspaper and pennysaver. Step 8 If you are the "hands-on" type, get involved within your local community. If you haven't already, join your local Chamber of Commerce. Find out what's going on within your local community. Are there any trade shows or fairs coming up? See if you can't sponsor a booth by advertising your business. There are many networking breakfasts and luncheons within the local business community that can help promote and market your business, plus find out who
your competition is, especially if you are a new start up business. This, too, can be a very costeffective way to advertise. Step 9 Don't be afraid to be very creative with your campaign! Come up with a catchy slogan. Don't be concerned if it sounds irritating or a little "off the wall." Remember that it is the "squeaky wheel" that always gets the grease! Have fun with it! Make it interesting! Build your existing or potential customers' curiosity up so much that they have to come in and see what all the ruckus is about! Offer free samples to the first 100 customers who enter the store. The possibilities are endless! Step 10 Finally, plan ahead. Advertise during the seasons where sales are normally slow. Find out why this part of the season is slow. Are folks on vacation? Are the parents getting their kids ready to go back to school? Do you have a product or service that flourishes during the holiday season, or does your business become stifled? If you sell a product or service that most of your existing or potential customers would purchase during the holiday season anyway, it may be wise to structure the majority of your advertising budget towards your slower seasons of the year. Why waste advertising dollars, even if it is the holidays, if you know your customers are coming in anyway? Don't do as your competitors do and spend endless wasted effort and dollars going from one promotion to another!
Sales Promotion evaluation tools
What is the resulting value of a specific sales promotion? Which element is successful and what's more important, 'which element is ineffective'? Historical numerical data about the effect of sales promotions in FMCG are no guarantee for the
success rate of subsequent promotions. One moment a promotion yields 500 display locations and a subsequent promotion doesn't even acquire half of these. Causes are unclear. And what's remarkable: even retailers with all their quantitative scanning data have great difficulties estimating the right promotional volumes. Even experienced players in retail have their glitches in sales forecasting. Retail is a complicated line of business. But manufacturers have a world to win, just by observing the retailer's targets and logistics with a critical eye.
Advertising And Promotion Plan
Essentially the Advertising and Promotion section of the marketing plan describes how you're going to deliver your Unique Selling Proposition to your prospective customers. While there are literally thousands of different promotion avenues available to you, what distinguishes a successful Advertising and Promotion Plan from an unsuccessful one is focus - and that's what your Unique Selling Proposition provides.
So think first of the message that you want to send to your targeted audience. Then look at these promotion possibilities and decide which to emphasize in your marketing plan:
Advertising - The best approach to advertising is to think of it in terms of media and which media will be most effective in reaching your target market. Then you can make decisions about how much of your annual advertising budget you're going to spend on each medium.
What percentage of your annual advertising budget will you invest in each of the following?
television radio newspapers magazines telephone books/directories billboards bench/bus/subway ads direct mail cooperative advertising with wholesalers, retailers or other businesses?
Include not only the cost of the advertising but your projections about how much business the advertising will bring in.
Sales Promotion - If it's appropriate to your business, you may want to incorporate sales promotion activities into your advertising and promotion plan, such as:
offering free samples coupons point of purchase displays product demonstrations
Marketing Materials - Every business will include some of these in their promotion plans. The most common marketing material is the business card, but brochures, pamphlets and service sheets are also common.
Publicity - Another avenue of promotion that every business should use. Describe how you plan to generate publicity. While press releases spring to mind, that's only one way to get people spreading the word about your business. Consider:
product launches special events, including community involvement writing articles getting and using testimonials
Tradeshows - Tradeshows can be incredibly effective promotion and sales opportunities - if you pick the right ones and go equipped to put your promotion plan into action.
Other Promotion Activities
Your promotion activities are truly limited only by your imagination. If you plan to teach a course, sponsor a community event, or conduct an email campaign, you'll want to include it in your advertising and promotion plan. Remember, sporadic unconnected attempts to promote your product or service are bound to fail; your goal is to plan and carry out a sequence of focused promotion activities that will communicate with your potential customers.
While small businesses often have miniscule (or non-existent) promotion budgets, that doesn't mean that small businesses can't design and implement effective promotion plans. Visit the Business Promotion Library for a host of inexpensive ideas to get your promotion plan off the ground.
No business is too small to have a marketing plan. After all, no business is too small for customers or clients. And if you have these, you need to communicate with them about your products and/or services.
2.10 HOW DO WE PREPARE MARKETING PLAN FOR FMCG
SITUATION ANALYSIS--MARKET ANALYSIS -market needs -market trends -market potential and growth -market characteristics -market segments SITUATION ANALYSIS--COMPANY ANALYSIS -strengths -weaknesses BUSINESS ENVIRONMENT -political -economic -social -technology -opportunities -threats -competition -services
-keys to success -critical issues -channels MARKETING STRATEGIES -marketing objectives -financial objectives -target marketing -positioning -marketing strategy MARKETING MIX -products -pricing -promotion -distribution -channels -marketing research FINANCE -sales forecast -expense forecast -contribution margin. IMPLEMENTATION PLANS -milestones -time schedule
2.11 HOW DO WE ACHIEVE THE GIVEN TARGETS?
We can achieve the targets by developing strategies by developing tactics for each strategy. by developing an action plan, which includes marketing planning distribution planning sales planning promotion planning trade promotion planning consumer promotion planning marketing research All these action plans are focused towards achieving the target.
2.12 HOW DO WE SELL
1) plan the distribution.
2) deliver the products to the retailers 3) conduct promotions newspaper advertising TV advertising sales promotions consumer promotions radio advertising
4) create awareness among the people 5) inform the customers 6) explain the features of the product 7) sell the benefits 8) convince the customers 9) overcome any doubts 10) close the sale
CHAPTER 3 DATA COLLECTION
This report will be totally focusing on the FMCG companies preferences towards different sales Promotional techniques mean which sales promotion technique is mostly preferred by the
customer. As the sales promotion techniques are used for the marketing of the product so the research will be done in the area of marketing.
3.1 DATA SOURCES
The greatest challenge is not the collection of data, but rather knowing how to use it. There are two types of data, secondary and primary data. Primary data is information that is collected for the first time, generated from original sources. Primary data is specific made for the research questions.. The major advantage of primary data is that the information is specific, current and relevant. Disadvantages are the high costs and time associated with the collection of the primary data. Secondary data is information that already has been collected for other purposes and is available to the researcher. Secondary data gives an overview over the market and competitors. The major advantages of secondary data are the low costs and time associated with its collection. The disadvantage is that it is more general in nature than primary data. Secondary data is collected from the documents, via published articles and the Internet. To collect empirical information from Internet can give advantages. Internet can be used to collect information from companies, organizations and articles. It can as well be used to do questionnaires and interviews electronic. The disadvantage about Internet is the lack reliability. Information should be double-check and come from the main source to be reliable. The rule is that no primary data should be collected before secondary has have been collected. For this report I have taken secondary data sources as a data collection method.
Secondary Data Sources A) Literature Review To understand the general concept of Sales promotion and how FMCG sector is using it. What promotional strategies are used by FMCG sectors What Strategies (if any) are relevant for the possible growth of FMCG product How can these strategies be used to expected results in form of profits and company growth. B) Internet: Internet provides a rich source of information regarding various companies of FMCG Sector. C) Newspaper: Newspaper plays a vital role in disseminating the information to millions of people. In Newspapers, one can see the advertisement of various FMCG products.
CHAPTER 3 ANALYSIS
4.1 SWOT ANALYSIS
The SWOT-model was chosen because it gives an understanding for the intern strength and weaknesses of the company and its competitors. The SWOT-model also shows external factors from the market . The SWOT analysis can be described as follows
Analysis of FMCG Sector
Strengths: 1. Low operational costs 2. Presence of established distribution networks in both urban and rural areas 3. Presence of well-known brands in FMCG sector Weaknesses: 1. Lower scope of investing in technology and achieving economies of scale, especially in small sectors 2. Low exports levels 3. "Me-too" products, which illegally mimic the labels of the established brands. These products narrow the scope of FMCG products in rural and semi-urban market. Opportunities: 1. Untapped rural market 2. Rising income levels i.e. increase in purchasing power of consumers 3. Large domestic market- a population of over one billion. 4. Export potential 5. High consumer goods spending
Threats: 1. Removal of import restrictions resulting in replacing of domestic brands 2. Slowdown in rural demand Tax and regulatory structure
4.2 Case Study MAGGI – “the king of noodle at home”
An important product of the nestle was launched in the market. It was launched for the first time in the market in 1980.This then ruled the market and was called the market leader for several years till the competitors started entering in the market. After facing several challenges from the competitors ,magi decided to relaunch itself with product expansion strategy in 1997.It came up with different flavors and this change was not adjustable to the target audience and Maggi‟s sales went down drastically. Many retailers stopped maintaining the product in their shops. Even after enjoying and ruling the market for more than 15 years, maggi had a tough time in the market. Their target audiences in the beginning were kids. To expand more it began extensive sales promotion like offering gifts in return of empty wrapper. This strategy helped in improving the sale of Maggi.This was followed by other promotional schemes. Some of these include advertising of Maggi during and between kids show. The punch line „Fast to cook, Good to eat‟ became a part of Indian advertising .This improved the sales of Maggi and observed a growth of 15% during that period. This improved the sales of Maggi and observed a growth of 15% during that period. By January 1994, the price of Maggi noodles was brought down from rs.7 to rs.5 for a 100gm packet of Maggi.In 2001; Maggi was
able to sustain its leadership position by introducing 50gms packs with two new flavors, tomato and curry. Ultimately Nestle, tried to extend the brand in various categories and failed many times, Maggi did rule the market in earlier phases only because of the reason that it adopted an innovative strategy in the food market.Maggi could have existed in the market in the growth stage for a longer period had it adopted the new expansion strategies in the same product.
The Kellog Company
In 1980, Peter A. Horekens, Marketing Director of Kellog Company was faced with the problem of developing a market for ready to eat cereals in the Latin American „region‟. Although Kellog had no competition in the ready to eat cereals market in this region, they also had no market. Latin Americans did not eat breakfast as the Americans did. The problem was especially prominent in Brazil. To create a market and increase sales in this region,Horekens had to clear a nutritious breakfast habit. Kellog Company, headquartered in Battlecreek, Michigan, was founded in 1906 by W.k.Kellog.The Company continued to operate successfully with sales in 1980 amounting to 2,150.9 million U.S. Dollars. The kellog company produced and marketed a wide variety of convenience foods with ready to eat cereals topping the distribution in 130 countries. The ready to eat cereals sales made up the majority of international sales. In 1980, kellog international operations accounted for 38 percent of kellog company‟s sales of more than 52.0 billion. The United Kingdom was, by far, Kellog‟s largest market. Internationally, sales in the ready –to- eat cereal market continued to increase, although in the
past few years the competition also had increased. But in Latin America, Consumption of readyto-eat cereals were negligible. The Latin American market, mainly Mexico and Brazil, showed great potential as a Kellogg‟s ready to eat cereal market. The demographics fit the ready-to-eat market; the only problem was Latin Americans did not eat the traditional breakfast. The Latin American market included a growing number of families with children. The population mix was becoming younger. The developing economy enabled consumers to spend more than their income on food.Kellog wanted to increase sales in this Latin American region, especially Bazil, but consumers had turned their backs to the American style breakfast. How was Kellog to create a nutritious breakfast habit among the Brazilians? The Company asked J.Walter Thompson (JWT), Kellogg‟s advertising agency to help instill the breakfast habit in Brazil. According to Horekens,”In general, Brazilians do what people in Novellas do.” Novellas are Brazilians‟ soap operas. Walter Thompson tried to advertise kellog kellog ready to eat cereals and instill the breakfast habit by advertising within a soap opera .The first experience of advertising within a soap opera failed; the advertising portrayed a boy eating the cereal out of a package. Kellog wanted to teach the Brazilians, how to eat a complete, a nutrition‟s breakfast, and not just Kellogg‟s cereal. The commercial did not work because it made kellog ready to eat cereal seem more like a snack than a major part of a complete breakfast.Kellog wanted to portray ready to eat cereal as a part of a complete to be eaten in a bowl with milk along with other foods to make a complete breakfast.
The company believed that the growing population in this region would reinforce the importance of grains as a basic food source. The 1980, Population in Brazil was 119 million, which made it the sixth populated country in the world and the population was expected to grow to 165 million in the next few years. With this population growth was an increase in the number of women of childbearing age, which further supported Kellogg‟s potential for a successful cereal market. The structure of the population in Brazil in 1980 was Thirty seven percent of population under age 15 Forty eight percent of population under age 20 Twelve seven percent of population over age 50 Six percent of population over age 60 These figures showed that the population of Brazil better fit thee market for a ready to eat cereal consuming segments. The “Cult of the family” continued to be the most important institution in the formation of the Brazilian society. This culture ideal was reflected in the ways they conceptualized and evaluated the range of personal and social relations. This seemed to be the way kellog would have to demonstrate the importance of a nutritional breakfast – by playing up the family and its importance. Though the use of the novellas, Kellog made a second attempt to teach the Brazilians the importance of Breakfast. Most Brazilian families watched these soap operas. Composed mostly of family scenes in their commercials, kellog opted for scenes that showed the family at the breakfast table. One member of the family, usually the father, took the cereal box, poured the
cereal, and then added milk. This scene represented a complete “Kellog” breakfast in a way that Brazilians could relate to. The advertisement first on nutrition, then on flavor and finally on ease of preparation. As a result of this campaign, sales in Brazil increased Kellog controlled of 99.5 percent of the ready to eat cereal market in Brazil. However, percapita cereal consumption was less than one ounce or several spoonfuls per Brazilian annually even after advertising. Although kellog controlled the market, there was not much of a market to control. Brazilians had begun to eat breakfast, but Horekens was not sure whether sales would continue to increase. His problem was – How could kellog further convince the Brazilians of the importance of eating a nutritional breakfast in order to establish a long term market?
Results and Recommendations
Sales are the lifeblood of a business, without sales there would be no business in the first place; therefore it is very important that if a business wants to succeed, it should have a sales promotion strategy in mind. The primary objective of a sales promotion is to improve a company's sales by
predicting and modifying your target customers purchasing behavior and patterns. Sales promotion is very important as it not only helps to boost sales but it also helps a business to draw new customers while at the same time retaining older ones. There are a variety of sales promotional strategies that a business can use to increase their sales. It is very essential to study how consumers make their choices in FMCG category where there are several brands in the consideration set of a consumer. The financial risk being low consumers do not mind switching from one brand to another due to sales promotion offer. Hence it would be of interest to a marketer to learn about consumer preferences with respect to sales promotion offers; what schemes do consumers prefer for what kind of brands, which media they prefer to learn about the schemes, whether they prefer incentive immediately or at a later date. Sales promotional activities are done for sales growth and brand promotion. To retain the customer and make a good relationship with them. If a sales promotion is warranted, the company comes up with a clear, measurable objective they'd like to accomplish through the promotion. Now a day‟s maximum FMCG companies are adopting sales promotional activities to enhance their market share.
Sales Promotion: How to Create, Implement and Integrate Campaigns That Really Work 4th edition by Roddy Mullin and Julian Cummins Best Sales Promotions, Sixth Edition by William A. Robinson Cases in Marketing Management by Dr. Vishwas M. Dhekney http://ideas.repec.org/p/iim/iimawp/2005-09-08.html http://salespromotionmaterial/sales-development.htm http://sales promotion material/Effective-Sales-Promotion-0045.html http://salespromotionmaterial/how-to-create-a.html http://salespromotionmaterial/salespromotionstrategy.html http://salespromotionmaterial/Article.aspx.htm