Marketing Mix in FMCG Sector

Marketing Mix in FMCG Sector

CLASS: MBA (MARKETING)

Submitted to: Ms. Gagandeep Nagra

Marketing Mix in FMCG Sector

Name

Roll No:

1. Ashish Y Singh 2. Kamlesh Pandey 3. Chirag Jain 4. Rohan Naik 5. Chandan Kumar 6. Ganesh Sawant

011188 011161 011192 011179 011148 011178

Marketing Mix in FMCG Sector

DECLARATION

We are the student of Padmashree Dr. D.Y. Patil Universitys Department of Business Management (III Sem). Here by assure that, we have completed this project on Marketing Mix in FMGC Sector in the academic year 20122013, the information submitted is true to the best of our knowledge.

Marketing Mix in FMCG Sector

ACKNOWLEDGEMENT
A compendium is never the work of one individual more a combination of ideas, suggestion and contribution involving many hands. Our debts are too numerous to be acknowledge individually. A large number of individuals have contributed directly and indirectly in the completion of this project. We are immerse thankful to Ms. GAGANDEEP. N. It is pleasure to express our gratitude for the assistance received from them. Hence we would like to take this opportunity to thank them wholehearted for helping us in preparing this project.

Marketing Mix in FMCG Sector

TABLE OF CONTENT
SR NO. PAGE

TITLE
FMCG Concept and Definition

NO.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

5-6 7 8-10 11-12 13-15 16 17-18 19-21 22-23 24 25-26

Characteristics of FMCG Products FMCG Sector in India BRANDING STRATEGY Role of Sales Promotion in FMCG Sector SWOT Analysis of FMCG Sector Current Scenario NESTLE in India Products offered for sale in India (NESTLE) Proctor and Gamble (Company Profile) Example (ARIEL P & G)

Marketing Mix in FMCG Sector

FMCG Concept and Definition

The term FMCG (fast moving consumer goods), although popular and frequently used does not have a standard definition and is generally used in India to refer to products of everyday use. Conceptually, however, the term refers to relatively fast moving items that are used directly by the consumer. Thus, a significant gap exists between the general use and the conceptual meaning of the term FMCG. Further, difficulties crop up when attempts to devise a definition for FMCG. The problem arises because the concept has a retail orientation and distinguishes between consumer products on the basis of how quickly they move at the retailers shelves. The moot question therefore, is what industry turnaround threshold should be for the item to qualify as an FMCG. Should the turnaround happen daily, weekly, or monthly? One of the factors on which the turnaround depends is the purchase cycle. However, the purchase cycle for the same product tend to vary across population segments. Many low-income households are forced to buy certain products more frequently because of lack of liquidity and storage space while relatively high-income households buy the same products more infrequently. Similarly, the purchase cycle also

Marketing Mix in FMCG Sector tends to vary because of cultural factors. Most Indians, typically, prefer fresh food articles and therefore to buy relatively small quantities more frequently. This is in sharp contrast with what happens in most western countries, where the practice of buying and socking foods for relatively longer period is more prevalent. Thus, should the inventory turnaround threshold be universal, or should it allow for income, cultural and behavioral nuances?

Marketing Mix in FMCG Sector

Characteristics of FMCG Products:

Individual items are of small value. But all FMCG products put together account for a significant part of the consumer's budget. The consumer keeps limited inventory of these products and prefers to purchase them frequently, as and when required. Many of these products are perishable. The consumer spends little time on the purchase decision. Rarely does he/she look for technical specifications (in contrast to industrial goods). Brand loyalties or recommendations of reliable retailer/dealer drive purchase decisions. Trial of a new product i.e. brand switching is often induced by heavy advertisement, recommendation of the retailer or neighbors/friends. These products cater to necessities, comforts as well as luxuries. They meet the demands of the entire cross section of population. Price and income elasticity of demand varies across products and consumers.

Marketing Mix in FMCG Sector

FMCG Sector in India

The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well established distribution network, intense competition between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the foodprocessing industry. Around 70 per cent of the total households in India (188 million) reside in the rural areas. This presents the largest potential market in the world. With growing incomes at both the rural

Marketing Mix in FMCG Sector and the urban level, the market potential is expected to expand further. An average Indian spends around 40 per cent of his income on grocery and 8 per cent on personal care products. The large share of fast moving consumer goods (FMCG) in total individual spending along with the large population base is another factor that makes India one of the largest FMCG markets. Rapid urbanization, increased literacy and rising per capita income, have all caused rapid growth and change in demand patterns, leading to an explosion of new opportunities. Around 45 per cent of the population in India is below 20 years of age and the young population is set to rise further. Aspiration levels in this age group have been fuelled by greater media exposure, unleashing a latent demand with more money and a new mindset. A distinct feature of the FMCG industry is the presence of most global players through their subsidiaries (HLL, P&G, Nestle, Heinz, TATA), which ensures new product launches in the Indian market from the parent's portfolio. Availability of key raw materials and cheap labor costs give India a competitive edge. Rural and semi-urban markets will drive the FMCG business in the country to a compounded annual growth of 50% for the next six years. A good number of malls, nearly 220 in the country, would come up in the next four to five years in

Marketing Mix in FMCG Sector semi-urban areas that would lead to an increase in the demand for the products. The Indian FMCG sector is an important contributor to the country's GDP. It is responsible for 5% of the total factory employment in India.

Revenue Source of FMCG Sector:

120000 100000 45 40 30 25 20 15 10 5 0 Food & Beverages Personal Care Segment Home Care 35

80000 60000 40000 20000 0

% Of Total Sales

Sales In Million

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Marketing Mix in FMCG Sector

BRANDING STRATEGY
your brand is more than your logo, name or slogan its the entire experience your prospects and customers have with your company, produce or service. Its what you stand for, a promise you make, and the personality you convey. And while it includes your logo, color palette and slogan, those are only creative elements that convey your brand. Instead, your brand lives in every day-to-day interaction you have with your market:

The images you convey The messages you deliver on your website, proposals and campaigns The way your employees interact with customers A customers opinion of you versus your competition.

BRANDING STRATEGY FOR FMCG PRODUCT

FMCG outcomes include an easier, faster path to trial and brand adoption. Special proprietary (pre-launch) new product pre-launch assessment tool almost eliminates the chance of a product launch not going to plan; advanced market segmentation methods give you a competitive 'edge'.

1. Product packaging - The right packaging decisions can make or

break a brand just ask industry leaders like Lever & Kitchen, Mars Inc, or Proctor & Gamble.

Fmcg companies should use psychological trigger possible to get the 'right' message to the 'right' target prospect. Fmcg companies considered ramifications of the 'total product' (core, actual, augmented, & future) to meet consumer expectations

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Marketing Mix in FMCG Sector

Fmcg companies considered logistics, distribution channels and trade partners in your design.this are some of the thing which could provide company with certain sedge

2.Product sampling - Properly done, product sampling is the single

most powerful way to generate awareness, free trials creates brand loyalty in fast moving consumer goods (FMCG). Product sampling has a powerful motivational influence on consumers, touching core beliefs, values, and attitudes so as to inspire a strong bond and morale obligation. The psychology cuts to the very nature of human behaviour.

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Marketing Mix in FMCG Sector

Role of Sales Promotion in FMCG Sector

The importance of consumer sales promotion in the marketing mix of the fast moving consumer goods (FMCG) category throughout the world has increased. Companies spend considerable time in planning such activities. However, in order to enhance the effectiveness of these activities, manufacturers should understand consumer and retailer interpretations of their promotional activities. The study here pertains to consumers perceptions regarding sales promotion. Some past researches have suggested that promotion itself has an effect on the perceived value of the brand. This is because promotions provide utilitarian benefits such as monetary savings, added value, increased quality and convenience as well as hedonic benefits such as entertainment, exploration and self-expression. Broadly speaking most of the companies using Marketing Mix which includes Price Place (Channel of Distribution) Product Promotion

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Marketing Mix in FMCG Sector These are the four basic pillar of marketing mix. Most of the marketing strategies are built on the basis of these criteria. Promotion is one of the important elements of marketing mix. There are so many elements of promotion such as o Advertising o Direct Marketing o Public Relations o Sales Promotion Traditionally, sales Promotions have been used by marketer to increase sales in the short term. However, in the last few decades this communication tool has evolved and now is considered from a strategic point of view. For this reason, it is necessary to realize new studies in this area and study how consumers evaluate sales promotions. Sales promotions have grown in both importance and frequency over the past few decades. Although an accurate estimate for total sales promotions expenditures does not exist, we can be sure that the trend is up. Sales promotion serves three essential roles: It informs, persuades and reminds prospective customers about a company and its products. Even the most useful product or brand will be a failure if no one knows

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Marketing Mix in FMCG Sector that it is available. As we know, channels of distribution take more time in creating awareness because a product has to pass through many hands between a producer and consumers. Therefore, a producer has to inform channel members as well as ultimate consumers about the attributes and availability of his products. The second purpose of promotion is persuasion. The cut throat competition among different products puts tremendous pressure on their manufacturers and they are compelled to undertake sales promotion activities. The third purpose of promotion is reminding consumers about products availability and its potential to satisfy their needs. From these elements Sales Promotion is the element which is in the focus of this project. Further Sales Promotion is quite broad term it includes

o Consumer Oriented Sales Promotion o Trade Oriented Sales Promotion

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Marketing Mix in FMCG Sector

SWOT Analysis of FMCG Sector

Strengths:

Well-established distribution network extending to rural areas. Strong brands in the FMCG sector. Low cost operations.

Weaknesses:

Low export levels. Small-scale sector reservations limit ability to invest in technology and achieve economies of scale.

Several "me-too products.

Opportunities:

Large domestic market. Export potential. Increasing income levels will result in faster revenue growth..

Threats:

Imports. Tax and regulatory structure. Slowdown in rural demand.

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Marketing Mix in FMCG Sector

Current Scenario
The growth potential for FMCG companies looks promising over the long-term horizon, as the per-capita consumption of almost all products in the country is amongst the lowest in the world. As per the Consumer Survey by KSA-Technopak, of the total consumption expenditure, almost 40% and 8% was accounted by groceries and personal care products respectively. Rapid urbanization, increased literacy and rising per capita income are the key growth drivers for the sector. 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. Aspiration levels in this age group have been fuelled by greater media exposure, unleashing a latent demand with more money and a new mindset. In this backdrop, industry estimates suggest that the industry could triple in value by 2015 (by some estimates, the industry could double in size by 2010). In our view, testing times for the FMCG sector are over and driving rural penetration will be the key going forward. Due to infrastructure constraints (this influences the cost-effectiveness of the supply chain), companies were unable to grow faster. Although companies like HLL and ITC have dedicated initiatives targeted at the rural market, these are still at a relatively nascent stage. The bottlenecks of the conventional distribution system are likely to be

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Marketing Mix in FMCG Sector removed once organized retailing gains in scale. Currently, organized retailing accounts for just 3% of total retail sales and is likely to touch 10% over the next 3-5 years. In our view, organized retailing results in discounted prices, 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, Trent, Shoppers Stop and Shoprite, we are confident that the FMCG sector has a bright future. Budget measures to promote FMCG 2% education cess corporation tax, excise duties and custom duties Concessional rate of 5% custom duty on tea and coffee plantation machinery

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Marketing Mix in FMCG Sector

NESTLE in India
Nestl India is a subsidiary of Nestl S.A. of Switzerland. With six factories and a large number of co-packers, Nestl India is a vibrant Company that provides consumers in India with products of global standards and is committed to long-term sustainable growth and shareholder satisfaction. The Company insists on honesty, integrity and fairness in all aspects of its business and expects the same in its relationships. This has earned it the trust and respect of every strata of society that it comes in contact with and is acknowledged amongst India's 'Most Respected Companies' and amongst the 'Top Wealth Creators of India'. Nestls relationship with India dates back to 1912, when it began trading as The Nestl Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in the Indian market.

Brief History
After Indias independence in 1947, the economic policies of the Indian Government emphazised the need for local production. Nestl responded to Indias aspirations by forming a company in India and set up its first factory in 1961 at Moga, Punjab, where the Government wanted Nestl to develop the milk economy. Progress in Moga required the introduction of Nestls Agricultural Services to educate, advise and help the farmer in a variety of aspects. From increasing the milk yield of their cows through improved dairy farming methods, to irrigation, scientific crop management practices and

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Marketing Mix in FMCG Sector helping with the procurement of bank loans. Nestl set up milk collection centres that would not only ensure prompt collection and pay fair prices, but also instil amongst the community, a confidence in the dairy business. Progress involved the creation of prosperity on an on-going and sustainable basis that has resulted in not just the transformation of Moga into a prosperous and vibrant milk district today, but a thriving hub of industrial activity, as well. For more on Nestl Agricultural Services, Nestl has been a partner in India's growth for over nine decades now and has built a very special relationship of trust and commitment with the people of India. The Company's activities in India have facilitated direct and indirect employment and provides livelihood to about one million people including farmers, suppliers of packaging materials, services and other goods. The Company continuously focuses its efforts to better understand the changing lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness through its product offerings. The culture of innovation and renovation within the Company and access to the Nestl Group's proprietary technology/Brands expertise and the extensive centralized Research and Development facilities gives it a distinct advantage in these efforts. It helps the Company to create value that can be sustained over the long term by offering consumers a wide variety of high quality, safe food products at affordable prices.

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Marketing Mix in FMCG Sector Nestl India is a responsible organization and facilitates initiatives that help to improve the quality of life in the communities where it operates. Beginning with its first investment in Moga in 1961, Nestls regular and substantial investments established that it was here to stay. In 1967, Nestl set up its next factory at Choladi (Tamil Nadu) as a pilot plant to process the tea grown in the area into soluble tea. The Nanjangud factory (Karnataka), became operational in 1989, the Samalkha factory (Haryana), in 1993 and in 1995 and 1997, Nestl commissioned two factories in Goa at Ponda and Bicholim respectively. Nestl India is now putting up the 7th factory at Pant Nagar in Uttaranchal .

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Marketing Mix in FMCG Sector

Products offered for Sale in India

Product Category NESTL EVERYDAY Dairy Whitener NESTL EVERYDAY Ghee NESTL Curds NESTL CEREMEAL Milk Products NESTL Jeera Raita NESTL Fresh 'n' Natural Dahi NESTL Fruit 'N Dahi NESTL Milk NESTL Slim Milk NESCAF CLASSIC NESCAF SUNRISE Beverages NESTL MILO NESCAF 3 in 1 NESCAF Koolerz Brands

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Marketing Mix in FMCG Sector Prepared Dishes MAGGI 2-MINUTE Noodles MAGGI Healthy Soups MAGGI Dal Atta Noodles MAGGI MAGIC Cubes Chocolates & NESTL Milk Chocolate NESTL KIT KAT NESTL MUNCH NESTL MILKYBAR NESTL MILKYBAR CHOO NESTL BAR-ONE POLO NESTL Eclairs NESTL ACTI-V POLO Powermint Confectionaries

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Marketing Mix in FMCG Sector

Example of FMCG Product (ARIEL) Proctor and Gamble (Company Profile)

William Procter, a candle maker, and James Gamble, a soap maker, formed the company known as Procter & Gamble in 1837. The two men, immigrants from England and Ireland respectively, who had settled earlier in Cincinnati, might never have met had they not married sisters, Olivia and Elizabeth Norris, whose father convinced his new sons-in-law to become business partners. On October 31, 1837, as a result of Alexander Norris' suggestion, a new enterprise was born: Procter & Gamble. Procter & Gamble Co. is a global corporation based in Cincinnati, Ohio that manufactures a wide range of consumer goods. The company has annual revenue of $55.4 billion and employs 106,000 employees. Procter and Gamble has two main sectors which are P&G Hygiene and Health Care Ltd. and P&G Home Products Ltd. In the Hygiene and Health care sector they have two Strategic Business Units they are Feminine Care and Health Care. In the Home Products sector they have three SBUs which are Fabric Care, Hair Care and Baby Care.

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Marketing Mix in FMCG Sector

ARIEL (Example)
Ariel is the worlds leading detergent and epitomizes stain removal. Introduced in India in 1991, Ariel has continuously led other detergents in product innovation. It was the first to bring the compact detergent technology in India; the enzyme technology for superior and safe stain-removing power; the proprietary smart eyes technology which helps detect and remove stains better than any other detergent; and now for the first time superior cleaning in a choice of fragrances. Over the years, the brand has enjoyed endorsement from celebrities such as actress & social worker Shabana Azmi, Begum of Pataudi, successful actress and homemaker of the Pataudi family Sharmila Tagore, TVs most popular saas-bahu duo Smriti Iraani and Apara Mehta, and lakhs of homemakers in India. Ariel comes under the Fabric Care Unit. Ariel has two types of detergents the Ariel Front-O-Mat and the Ariel 2 Fragrances. Ariel Front-o-Mat is introduced in India exclusively for front load washing machines. The unique tumble wash technology of frontloading machines needs a special chemistry, which Ariel Front-o-Mat provides. Using Ariel Front-o-Mat completely eliminates the need to bucket soak and a scrub. Ariel Front-O-Mat is available in 1 kg and 1.5 kg packs. Ariel 2 Fragrances Superior cleaning in a choice of Two Fragrances Ariel Spring Clean & Ariel Fresh Clean another Breakthrough Innovation from Ariel for the Indian Family. Ever wished that your clothes could smell mesmerizing and fragrant like your perfumes? Procter & Gamble, the makers of leading international

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Marketing Mix in FMCG Sector fragrances such as Hugo Boss, Lacoste, Old Spice and Valentino now make your wish come true, with the launch of Ariel in a choice of two exciting fragrances Ariel Spring Clean with a floral fragrance, and Ariel Fresh Clean with a refreshing fragrance. The two unique fragrances of Ariel now offers Indian consumers an unbeatable combination of superior cleaning and a choice of fragrances with the launch of Ariel Spring Clean and Ariel Fresh Clean. Research conducted by Ariel on the Indian laundry market indicates that fragrance in detergents is an important factor of delight for the home-maker in her daily laundry chore. Inspired by the roses that bloom in Indian spring time, Ariel Spring Clean has a flowery fragrance. And inspired by the subtle refreshing scent of the jasmine flower, Ariel Fresh Clean has a fresh fragrance catering to the Indian consumers special fondness for mogra. Ariel contains safe ingredients for normal fabrics and skin under recommended usage conditions for laundry, and meets the Companys stringent human and environmental safety standards. Ariel in its choice of two fragrances Spring Clean and Fresh Clean, is available at all leading general and chemist stores and the price remains unchanged at Rs. 145 for 1.5kg; Rs. 99 for 1kg; Rs. 50 for 500gm; Rs. 22 for 200gm and Rs. 2 for a 20gm sachet.

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