This action might not be possible to undo. Are you sure you want to continue?
EXAMINING PRODUCT LIFE CYCLE & MARKETING STARTEGIES ADOPTED BY PROMINENT FMCG PLAYERS IN INDIA AS WELL AS ABROAD
Nearly twenty years ago the Indian government undertook a series of policies that would change the face of the country. The government opened up a tottering socialist economy to the greater world and liberalized its policies for industry. The critics to this step were numerous and one point in particular always figured in the arguments that they made. The critics were nearly unanimous that the insular Indian industry, nurtured on licences and trade quotas would soon be overwhelmed by the advent of the free market. And one industry in particular was big on this list i.e. the Indian FMCG industry. It was widely expected that the advent of global FMCG majors with their expertise, international brands and experience of competing in the world markets would sound the death knell for the nascent Indian FMCG industry. But the Indian FMCG players seem intent on proving all these predictions wrong. For twenty years they held on even as the major markets were taken over by the likes of P&G & Coca-cola. They took the time to understand the dynamics of competition in this new era and changed their strategies and processes to be more relevant to the Indian consumer and now they seem to be intent on taking back their lost turf. From processed foods to milk products to soaps the Indian players seem to be on a comeback trail. This cover story attempts to chronicle the rise of this new brave breed of Indian FMCGs from the viewpoint of three companies that seem to be on the forefront of this revolution. The interesting part of this entire story is that these companies have followed entirely different strategies to counter the bigger players. Players like Marico have successfully utilized the blue ocean strategy to establish a first mover advantage in fields like skin care via the Kaya skin clinics while Godrej has successfully leveraged its brand name and distribution strength to play itself into a position of strength in the rural market for soaps. One thing in common seems to be a new found understanding of the Indian consumer. The Indian companies are putting great emphasis on understanding the needs of the Indian consumers and tailoring their products to those needs. This has helped some of them to discover niches in the market that have been untapped by the MNCs and have helped them to avoid competition. For example Emami’s ayurvedic formulations for its products like Fair and Handsome have helped to stand out in the marketplace and differentiate itself. If the avoidance of completion by finding new differentiation strategies seems to be the forte of some of the players others like GCPL and Dabur are competing with the global majors head-on. Dabur particularly is in a difficult industry with its oral care products with the market leader i.e. Colgate commanding a huge market share of 53 percent compared to Dabur’s 13
The Indian players seem to have stolen a march over their bigger rivals with their unique understanding of the Indian consumer and different positioning but it will not be long before the bigger players react to this challenge. Product maturity and finally Product decline. 1. Product growth. It has managed to capture a significant percentage of the fast growing rural market by basing its positioning on herbal strategy. PRODUCT DEVELOPMENT PHASE Product development phase begins when a company finds and develops a new product idea. The next four years can prove to be a trial by fire for these Indian majors as they fight to sustain the gains they have made and capture markets that have been fortresses of the multinationals. These phases exist and are applicable to all products or services from a certain make of automobile to a multimillion-dollar lithography tool to a one-cent capacitor.percent. This involves translating various pieces of information and incorporating them into a new product. Product introduction. before it is exposed . A product is usually undergoing several changes involving a lot of money and time during development. These are exciting times in the FMCG industry.period usually consists of five major steps or phases: Product development. These phases can be split up into smaller ones depending on the product and must be considered when a new product is to be introduced into a market since they dictate the product’s sales performance. PRODUCT LIFE CYCLE The product’s life cycle .
A customer can tell a company what features of the product are appealing and what are the characteristics that should not appear on the product. A good example of such a launch is the launch of “Windows XP” by Microsoft Corporation. pricing. Pricing is something else for a company to consider during this phase. 3. This period can be described as a money sinkhole compared to the maturity phase of a product. A marketing mix may also help in terms of defining the targeted audience during promotion and advertising of the product in the introduction phase. Customer requirements on design. In this phase distribution arrangements are introduced. A frequent modification process of the product is an effective policy to discourage competitors from gaining market share by copying or . A company must be prepared to spent a lot of money and get only a small proportion of that back. sales are zero and revenues are negative. During the product development phase. He will describe the ways of how the product will become handy and useful. Product pricing usually follows one or two well structured strategies. This is the appropriate timing to focus on increasing the market share.to target customers via test markets. Large expenditure on promotion and advertising is common. These actions are included in the formulation of the marketing strategy. Those products that survive the test market are then introduced into a real marketplace and the introduction phase of the product begins. If the product has been introduced first into the market. and quick but costly service requirements are introduced. Later the pricing policy should be more aggressive so that the product can become competitive. Another strategy is that of a pre-set price believed to be the right one to maximize sales. This however demands a very good knowledge of the market and of what a customer is willing to pay for a newly introduced product. This is accomplished during product development by the use of market research. This has the benefit of testing an important marketing tool such as outsourcing. It is the time of spending with absolute no return. GROWTH PHASE The growth phase offers the satisfaction of seeing the product take-off in the marketplace. INTRODUCTION PHASE The introduction phase of a product includes the product launch with its requirements to getting it launch in such a way so that it will have maximum impact at the moment of sale. So in this way a company will know before its product is introduced to a market what to expect from the customers and competitors. Having the product in every counter is very important and is regarded as an impossible challenge. The company must show all the products offerings and try to differentiate them from the competitors ones. servicing and packaging are invaluable to the formation of a product design. Some companies avoid this stress by hiring external contractors or outsourcing the entire distribution arrangement. 2. A new growing market alerts the competition’s attention. Early customers will pay a lot for something new and this will help a bit to minimize that sinkhole that was mentioned earlier. A successful product introduction phase may also result from actions taken by the company prior to the introduction of the product to the market. (introduction into a “virgin”market or into an existing market) then it is in a position to gain market share relatively easily.
brand. must reconsider its marketing positioning into the marketplace. pricing moves up and down accordingly with the competitors one and sales and coupons are introduced in the case of consumer products. Dilemmas such as maintenance. Companies sometimes are consuming much more effort into the production process. This period is the period of the highest returns from the product. A company must not make the mistake of over committing.e. A company that has achieved its market share goal enjoys the most profitable period. Accurate estimations in forecasting customer needs will provide essential input into production planning process. Cost efficiency and time-to-market and pricing and discount policy are major factors in gaining customer confidence. model). 4. spare part availability. During this period new brands are introduced even when they compete with the company’s existing product and model changes are more frequent (product. and all competitors are represented in terms of an alternative product. In this phase market share growth is at the expense of someone else’s business. service competitions reaction in filling the market gap are some issues that increase the complexity of the decision process to withdraw a product from the market. overestimating their market position. product complexity and low availability of product components. DECLINE PHASE The decision for withdrawing a product seems to be a complex task and there a lot of issues to be resolved before with decide to move it out of the market. which has grown old. MATURITY PHASE When the market becomes saturated with variations of the basic product. Pricing and discount policies are often changed in relation to the competition policies i. to the scope of product differentiation in terms of quality and reliability. The battle of distribution continues using multi distribution channels. Often companies retain a high price . A good practice is the use of external promotional contractors.offering similar products. and it is still growing. A good example of this is “Tide” washing powder. This period is the time to develop efficiencies and improve product availability and service. rather than the growth of the market itself. but not in the extent that was in the introductory phase and it is oriented to the task of market leadership and not in raising product awareness. 5. This is the time to extend the product’s life. while a company that falls behind its market share goal. Promotion and advertising continues. Managing the growth stage is essential. This will result into losing customers not finding the product “on the self”. It is pointless to increase customer expectations and product demand without having arranged for relative production capacity. Other barriers are licenses and copyrights. Promotion and advertising relocates from the scope of getting new customers. Good coverage in all marketplaces is worthwhile goal throughout the growth phase. the maturity phase arrives.product maturity phase is extended beyond anyone’s timely expectations. A successful .
The prices must be kept competitive and promotion should be pulled back at a level that will make the product presence visible and at the same time retain the “loyal” customer. This must be done carefully since it is not often apparent which product variation brings in the revenues. since marketing departments are usually too optimistic due to big product success coming from the maturity phase. a 0800 telephone line with shipment by a reliable delivery company. paid by the customer is worth keeping. For an example. Distribution is narrowed. Strategies of each product life cycle phase . The basic channel is should be kept efficient but alternative channels should be abandoned. Such an example is telegraph submission over facsimile or email.policy for the declining products that increase the profit margin and gradually discourage the “few” loyal remaining customers from buying it. This is the time to start withdrawing variations of the product from the market that are weak in their market position. Sometimes it is difficult for a company to conceptualize the decline signals of a product. Usually a product decline is accompanied with a decline of market sales. Its recognition is sometimes hard to be realized.
MARKETING STRATEGIES OF FMCG COMPANIES Marketing research. advertising and promotion are now considered some fundamental processes that every company has to conduct in order to .
000 plus villages and 8000 small towns. the company has ensured that almost half its revenues come from the rural areas of the country. especially the rural consumer base deserves special mention. GCPL . GODREJ CONSUMER PRODUCTS LTD. Innovative promotions: GCPL innovated and customized its Communication and promotional strategies in accordance with its goal. communicate and deliver a portfolio of value brands to the huge segment of cost conscious customers. Its Godrej No:1 brand is the best selling soap in the Grade-1 category. fabric care. it made perfect sense to influence the influencer. GCPL decided to promote its offerings on Doordarshan.1 billion Godrej group is well and truly making it big in the FMCG space. Even in times of recession the company decided not to raise prices and successfully managed rising commodity prices through efficient cost management and squeezing out efficiencies from its supply chain. GCPL depended more on word of mouth publicity. and introduced them at price points that the customers could afford. Since most people turn to their hair dresser for advice. Beefing up an enviable distribution network that spans 50. Godrej aims at innovation. Shunning satellite channels. local publications and regional TV channels.000 barbers spread across 9 states in a Co-branding exercise. It engaged around 50. The Core competency of Godrej has been its ability to successfully create. the consumer products wing of the $2. Apart from this. Hair dyes and Hennas which were once considered luxuries in rural households are everyday products now. The company provides variety in the brands like cosmetics. baby care. International Strategy: . it’s impressive array of Brands also include Cinthol and a host of exciting Hair care products. And GCPL has been instrumental in bringing about this metamorphosis through its ambitious rural expansion project Dharti. household care and many others. GCPL is second only to Hindustan Unilever (HUL) in manufacturing bath soaps. It tailored the size of the offering and not the product as such. It deals in fast moving consumer goods and operates in India and other cities across the globe. The Adi Godrej headed company operates primarily in the Home care and personal hygiene categories. The top marketing companies of India offer the best integrated marketing solution covering a wide range of services including marketing strategy on the objectives and goals. All India Radio. which was launched in early 2009. Noted among the top Indian marketing companies. hair care.cement their position in this competitive market. Rural focus: GCPL’s efficient penetration of the Indian Market. For its hair colour products. target client and expected growth. GCPL provided them with grooming kits in exchange for prominent display of its logos in the saloons. toiletries.
and effective brand building. Over time. Their business motive is to create multiple drivers from corporate strategies. It has envisioned a three-by-three strategy for its international operations: targeting the three continents of the developing world . GCPL’s decision to venture into emerging markets may be a small step for the company. In the past few months. the remaining shares of Godrej Sara Lee. ethics. it is well positioned to ride the growth wave.5 billion. and the Latin American based groups Issue and Argencos. Also the acquisitions provide GCPL an opportunity to indulge in cross pollination of brands.and in three categories . L’Oreal and Procter & Gamble don’t have a domineering presence which provides ample scope for the regional brands to grow. The company has a market capitalization of about $19 billion and turnover of more than $1. agri-business. superior brand-building capabilities. The strong commitment that GCPL has to the Godrej Group's core values. great supply chain management. They have peerless distribution reach. . Even though concerns may arise with regards to GCPL’s exposure to currency risk and its ability to ensure an appropriate cultural fit of acquired brands. and branded apparel. ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach. but it may well provide the fodder for Indian FMCG companies to take a giant leap in the near future. An additional incentive to invest in these markets can also be traced down to the fact that multinationals like Unilever.Africa. bringing some brands into India and taking some brands to these markets. GCPL has announced 5 acquisitions: Indonesia-based Megasari Makmur group and its subsidiary.Another striking aspect of GCPL’s success story has been its aggressive acquisition drive. FMCG products. Also by bringing in GCPL. ITC The ITC is undoubtedly one among the premier marketing companies of India. Godrej Hershey and Godrej Sara Lee operationally into a single fold they can expect to achieve distribution synergies and develop pioneering supply chain solutions. The increased scale of operations would fuel the pace of innovation in the existing portfolio and help leverage branding opportunities. It specializes in hotels. These three continents are now on a growth trajectory and the opportunities that they provide for the consumer products business are too lucrative to be missed. effective supply chain management and acknowledged service skills in hotelier. home care and hair care. Asia and Latin America . It is also rated among the world's best big companies. Nigeria-based Tura Group.personal wash. The Road Ahead The emerging market centric acquisition focus has strengthened GCPL’s brand portfolio by roping in strong brands like Good Knight and HIT which are among the fastest growing FMCG categories. employees and consumers will be instrumental for its success. the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in India. personal care. The decision to target emerging markets stems from the fact that they have demographic and behavioural profiles that are similar to that of India.
From showing the concept of handpicking coconuts from Kerala. It enjoys over 21% share of the 3000 crore hair oil segment (composed of coconut hair oil. amla. Parle and Brisk farm. or the starching process branded and eased by Revive. to their ‘gorgeous hamesha’ concept of celebrating womanhood. The innovative packaging helps .The company's reliable distribution network also ensures superior inventory turnover. Led by Harish Mariwala. has brought about radical results for the company.In another promotional scheme for Biscuits a particular number of cases is given freely to the distributors according to the amount of sale they make.e. the ban on advertisements is likely to work in favour of ITC thanks to the recall factor. light. off them a certain part is reserved for the retailers and customer if they buy a certain level of biscuit quantity. and their pricing are competitive with respect to other players like Britannia. stay consumer centric and sustain a firm hold in the market space. the introduction of heart care with Saffola in the edible oil market. Be it the convenient packaging for Parachute from the erstwhile tin cans of coconut oil.viz. Fabric Care etc. the brand has taken numerous leaps. this was a drop down promotion i. Anti-lice Treatment. In the coconut oil market. Hair Oils. the cost function and the competitors’ price. it give its suggestion to the District office and that is forwarded to the Head Quarter in Kolkata. The pricing of the company is such that it caters to the need of all income groups of people but special provision has been kept for Low and middle income group. Marico holds more than 50% market share in the branded hair oil segment. the local promotion scheme is decided by the Area Sales Manages. the Company enjoys leadership positions in most of the markets it is present in. The firm chooses pricing more or less the same as Market leader. Marico’s innovation has helped it be the pioneer. Hair Oil market: With Parachute and Nihar.The company follows the Going rate pricing that is the price of the product depends upon the competitors price. ITC Promotional activities A particular budget is allocated for the promotion of the products. ITC Distribution Buoyed by a strong distribution network ITC is likely to retain its market share in the cigarettes business. Parachute itself controls about 50% share of the market. In the coconut hair oil market they have capitalised on the fact that consumers test quality based on the oil’s aroma. Premium Refined Edible Oils. Coconut Oil. of the number of free cases that a particular distributors gets.ITC Pricing strategy: The pricing of the ITC food division depends upon the Customers’ demand schedule. Marico The uncommon sense that Marico believes in. cooling and tonics and gels).
Innovation: The spirit of innovation coupled with the ‘uncommon sense’ in Marico is evident in its unique product designs. This covers the product idea. at the same time growing its strengths in hair creams and hair gels market. Marico’s international business has shown healthy contribution to its revenues. Way Forward .ranging from heart patients to the 30 year old man. most often. and ‘dil ka haal’ reinforced the same idea to slightly varying targets. particularly with independent trade and step up its growth momentum. In May 2010. The deal. By showcasing mild fear.8% rise over the same period a year ago. Overseas Presence In addition to its presence in the domestic market. their Kaya product range. the brand goes well with Marico SA portfolio. Kaya acquired the aesthetics business of the Singapore based Derma Rx. Marico’s Saffola faces fierce competition from Sundrop in terms of volume. Its approach is preventive. Second. a bottle heater for Parachute Hot Champi. First. while stitching together an additional turnover of about 50 crores and 37000 customers. In a similar case. Moreover. the packaging as well as the product delivery. The ‘Prayaschit’/repent ad (guilt after indulgence in food) directly targets the housewife who is. Parachute Therapie (hair fall reduction through hair oil). in January 2010. the South Africa subsidiary of Marico acquired the healthcare brand Ingwe in August 2010. Edible Oil market: In the premium refined edible oil market. Marico has been strategic in acquiring some international brands and leveraging its presence in foreign countries in two ways. and breakfast cereals with a strong health quotient. Having established Saffola as a healthcare product.it not only taps newer markets but also strengthens its existing portfolios.23% of the group's turnover in 2009-10. the buyer in this case. the international business witnessed a 29% sales growth during the June’10 quarter. rice. when its Indian sales posted a relatively meagre 6. thanks to such smart buys. Innovation and uniqueness encompasses Saffola’s range of functional foods. the Malaysian unit of Marico bought the hair styling brand ‘Code 10’ from Colgate Palmolive Company marking Marico’s entry in Malaysian hair styling market. brings with itself access to an advanced range of skin care products for Kaya. Marico continues to leverage its positioning into segments like packaged wheat flour. the acquisition strengthens the company's distribution reach. Safolla’s message has been clear. For instance. Parachute Advansed Night Repair Crème. The ‘kal se’ campaign brought a quantum leap in sales while the ‘thief’ ad. Parachute massager for the working woman. with the former holding close to 50% share. its commercials aim to introduce heart care through the edible oil. who is likely to face heart problems with the kind of lifestyle he is leading. This is complemented by access a network of suppliers of beauty products from the developed nations.the brand address changing consumer needs.
Marico plans to enter rural markets to tap their potential in a much bigger way. This shall be a 9% rise on its last year’s returns. considering the recent developments in terms of acquisitions. In the hair oil segment. it can be noted that the company is attempting to streamline its manufacturing base and at the same time market its Indian brands through the newly acquired distribution system. inspite of food inflation and weak monsoons. Marico aims to clock in Rs 2500 crore turnover for the financial year 2010. It also plans to make it bigger in the cool oil segment (over 500 crore market) through its recent launches. Marico is likely to continue with similar strategic acquisitions adding to its revenue base simultaneously. Please note: this DRAFT is in addition to the earlier draft sent. In near future. On the international front.Parachute Advanced Cooling Oil and Nihar Naturals Cooling Oil. It continues to foray beyond the prominent towns and districts.While a brand like Saffola may be priced for slightly higher income groups. . In terms of revenues. the company has attempted to tackle the unorganized segment through low-cost and small-unit packs. Maharashtra and Karnataka. not only in terms of its distribution but also to understand the rural needs and tune its portfolio to the same. It has already started adding to its distribution in areas of Madhya Pradesh. Parachute cuts across different income groups and yet has a premium appeal.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.