FAST MOVING CONSUMER GOODS (FMCG) Products which have a quick turnover and relatively low cost are

e known as FMCG. FMCG products are those which get replaced within a year. General categories of FMCG Industry are Household care, Personal care, Food & Beverages. Major Players HUL,ITC,Nestle,Amul,Dabur,Cadbury,P&G,Britannia etc General Characteristics of FMCG industry in India Strong MNC presence Well established distribution Network. Intense competition between the Organized and Un organized sectors. Low Operational cost. Availability of key raw material Cheaper labour cost and presence across entire labour chain.

FMCG facts and figures in India Size of the Indian FMCG industry is estimated at around Rs 2.5 lakh crore. Represents nearly 2.5% of countries GDP. Tippled in size in last 10 years and has grown at an approximately 17% compounded annual growth rate in the last five years. Key Growth drivers for FMCG in India Rising income levels Strong rural demand favorable demographic trends low levels of penetration and per capita usage in India

Porters 5 Forces Model Threat of New Entrants - Moderate Low regulatory barriers. High competitive intensity requires large investment which deters small players. Bargaining Power of Suppliers Moderate Prices are generally governed by international commodity markets, making most FMCG companies price takers. Due to the long term relationships with suppliers etc., FMCG companies negotiate better rates during times of high input cost inflation Bargaining Power of Customers/Buyers - Low High brand loyalty for some products, thereby discouraging customers product shift. Low switching costs. Aggressive marketing strategies induce customers to switch between products. Threat of Substitute High Multiple brands positioned with narrow product differentiation. Companies entering a category /trying to gain market share compete on pricing which increases product substitution. Intensity of Competition High More MNCs entering the country Advertising spends continue to grow and marketing budgets as well as strategies are becoming more aggressive

ITC-Rapid Scale up of FMCG Business

8000

Sales in Rs crs
7000

7012

6000

5545

5000

4482 3642 3014

4000

3000

2511
1704 1013 563

2000

1000

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

Source: ITC

Core Competency

Operational Excellence

Research & Development

Core Competencies

Distribution Network

Rich Human Capital

ITC FMCG Strategy Secure long-term growth by synergising and blending the diverse pool of competencies residing in its various businesses to exploit emerging opportunities in the FMCG sector. Use Company's institutional strengths - deep understanding of the Indian consumer, strong trademarks, deep and wide distribution network, agrisourcing skills, packaging know-how and cuisine expertise - continue to be effectively leveraged to rapidly grow the new FMCG businesses. ITC believes in starting off by catering to the highly aspirational middle class that forms the bulk of Indias consuming demographic, instead of looking for opportunities at the lower end of the market. Targeting those customers who has penchant for stuff that appears to have an exotic, preferably foreign and somewhat snooty element to it- even if its just the name (read Essenza Di Wills, Fiama Di Wills, Vivel Di Wills, and Bruce Di Willis- should be worth a short). Instead of the bottom of the pyramid route, it would rather create space for itself at the top end with prices that are high enough to avoid the mass market tag while being low enough to attract the middle/lower middle consumer, whose ranks can only be expected to swell as India moves into the growth trajectory. Not projecting its primary USP in selling the cheapest version of soap available, as it can cause difficulty in getting people to take ITC seriously as a high-end player.

Overall Strategy Comparison-ITC vs HUL

ITC
ITC isnt a pure play FMCG Co. It has diversified into non-tobacco such as foods, personal, paper, hotels etc. ITC focuses on delivering value at competitive prices It has tremendous reach with extensive distribution channel ha s been competitive advantage. E-Choupal model for direct procurement whereby it partners with 100,000 farmers ITCs backward integration to cut down supply & procurement cost Investment in new sectors & varies product mix.

HUL
Its a pure play FMCG Co. with widest portfolio of products. HUL believes in Consumer friendly product & emphasis on low cost leveraging on scale & capabilities of parent co. Currently the portfolio is being tweaked to include premium offering Ponds age miracle etc. Project Shakti to penetrate Rural Market. New Product with brand extensions, brand building & increasing market share HUL streamlining business operations , in line with the One Unilever philosophy.

ITCs Non Cigarette FMCG Portfolio Foods and Beverages -Aashirvaad, Sunfeast, Bingo!, Kitchens of India, minto, Candyman and Yippee

Personal Care - 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel', "Engage" and 'Superia'
Life style retailing - Wills Lifestyle & John Players.

Education & stationery - Classmate , Colour crew, Papercraft

Matches - Aim & i Kno Inscense Sticks - Mangaldeep

Foods and Beverages ITC's Branded Packaged Foods business is one of the fastest growing foods businesses in India, driven by the market standing and consumer franchise of its seven popular brands - Aashirvaad, Sunfeast, Bingo!, Kitchens of India, mint-o, Candyman and Yippee. Major Highlights ITC's Sunfeast has gained the numerouno position in the Rs 4,600-crore cream biscuit market ITCs gains in cream biscuits to its relentless focus on portfolio enrichment through innovations like Sunfeast Dark Fantasy Choco Fills and Choco Meltz and Sunfeast Dream Cream range.

Increasing Sales of Top FMCG-ITC

During FY 13, ITCs net sales increased USD847 mn to USD775 -Growth of 9% in comparison to its rival firms GCPL Dabur Marico HUL (F&B) ITC(Foods) 0 200 400 600 2013
Source: IBEF Aug 13

1011

1177

1131 1102 844 827 824 829 847

774

800 2012

1000

1200

1400

Sales in USD million

Strategic Group : Price Vs Quality (Biscuits) High Price

Hide & seek

Sunfeast

Bourbon

Orea

Little Hearts

Mid Price
20-20

Marigold

Low Price

Parle Glucose Low Quality Mid Quality High Quality

Recommendations for Food & Beverage Category ITC can launch biscuits in health snack segment similar to Britanias Nutri choise and Parles Actifit, also in snakcs in compition with Parle Cheeseling and Parle Sixer could be launched. Biscuits could be made available in refill packs (may be larger than usal quatity) which would come handy for later use. Steps should be taken for relating its products with ITC so that people would recognize its products as more reliable brand. Provide better benefits for the outlets so that they can provide better product visibility for the company and people would buy more of that product. A catchier tagline which would improve the Brand recall. More flavours could be introduced in the noodles category as at present Yippie has only two flavors where as major competitor Nestle Maggi has lot of new flavors. Free samples in the school should provided so that kids would know about their products. More promotions like giving gifts with products or starting new campign like collect 5 wrappers and get free gift. Etc Brighter and a little less sophisticated packaging to attract rural public as they should not perceive the product to be more expensive or out of reach. Outlets under loyalty Program should be given preference.

Personal Care ITC's Personal Care portfolio under the 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel', "Engage" and 'Superia' brands has received encouraging consumer response and is being progressively extended nationally. Major Highlights Within a few months of launch, Engage has turned out to be the leading deo brand in a metro like Kolkata Engage is pitted against established brands such as HUL's Axe and Raymond's Park Avenue. Unlike soaps, the deo category is smaller but has more brands. "According to data from Nielsen, there are 1,863 deo brands and almost 259 variants. ITC would be facing competition from big brands such as Axe and Wild Stone," Premium brand of Fiama Di Wills gel bars is the fastest growing brand in portfolio while mass brands such as Vivel and Superia continue to be the largest selling.

Strategic Group : Price Vs Quality (Soaps) High Price

Dove

Mysor sandal

Olay

Herms

Mid Price
Superia

Vivel

Lux

Fiam d will ell

Cinthol

Low Price

Lifeboy Low Quality

Mid Quality

High Quality

Lifestyle Retailing ITC's Lifestyle Retailing Business Division has established a nationwide retailing presence through Wills Lifestyle & John Players. Major Highlights Synonymous with elegance and style that is effortless and chic, Wills Lifestyle presents a premium fashion wardrobe for men and women. Offering a tempting choice of Wills Classic formal wear, Wills Sport relaxed wear, Wills Club life evening wear and Wills Signature designer wear. John Players presents a complete wardrobe of meticulously crafted smart formals, trendy casuals, dazzling party wear, edgy denims & accessories incorporating the most contemporary trends in an exciting mix of colours, styling and fits. LRBD has won several Images Fashion Awards over the years: 2009: Most admired Fashion Brand of the year - Fashion Forward - Wills Lifestyle 2007: Most Admired Fashion Campaign - John Players

Education & stationery - Classmate , Colour crew, Papercraft ITC made its entry to the education and stationary business with its Papercraft brand in the premium segment in 2001 & later expanded into the popular segment with its Classmate brand in 2003. By 2007, Classmate became the largest Notebook brand in the country. Together, Classmate & Papercraft offer a range of products in the Education & stationary space to discerning consumer, providing unrivalled value in terms of product & price. India ha 230 million student between kindergarten & Class XII. A huge domestic market in this sector has opened up new possibilities. In Jan 2014, Classmate, the homegrown stationery brand from ITC, has just crossed Rs 1,000-crore mark by consumer spends, one of the few brands in FMCG to do so.

MARKET SHARE ANALYSIS OF ITC Vs OTHERS

In Aug, 2012 Classmate had a much higher presence in stationery stores as compared to other brands. Classmate was the market leader with highest value share.

Current marketing strategies for Market Expansion

ITCs Paperkraft is all set to capture the imagination of consumers yet again with the launch of two unique and innovative notebook series. The latest Glow in the Dark and Twin Ruling notebooks address the need for personal expressions of young professionals through cutting-edge styling and contemporary imagery. The notebooks have been launched with 13 different cover designs and are available at Landmark, Crossword and Starmark stores, and online on Flipkart and EBay at a price range of Rs. 150-250. This new range is set to delight consumers through its distinct styling and imagery. Twin Ruling notebook provides a canvas for consumers to express both rational as well as intuitive thoughts emerging from the left brain and right brain respectively. The Cover theme is carried forward to the inner pages to ensure you dont see plain white pages on the inside.

Safety Matches Aim Agarbattis- Mangaldeep

(Mega

&

Metro)

&

Kno

The Safety Matches business leverages the core strengths of ITC in marketing and distribution, brand building, supply chain management and paperboard & packaging to offer Indian consumers high quality safety matches. Aim is the largest selling brand of Safety matches in India. The acquisition of Wimco Ltd., a subsidiary of ITC has consolidated the market standing of the Company's Matches business through synergy benefits derived through combined portfolio of offerings, improved servicing of proximal markets and freight optimization.

 Indian agarbatti makers, with an Rs. 1,800 crore turnover, offer heritage fragrances as their USP. Cycle is the leader in domestic incense market, with a 15% market share. The industry is dominated by unorganised players, with ITCs market share estimated at 7-8 %. Other players include Cycle, Moksh, NR Group etc. ITCs Mangaldeep brand is one of the largest national agarbatti brands in Indias Rs. 3,000-crore agarbatti industry. ITCs Mangaldeep aims at delivering TRIPLE BOTTOM LINE
Economic-No 2 brand, impressive growth, distribution depth & Brand Building. Environmental-Livelihood for >9000 people, 6 out 15 ISO certfied vendors Social-Training programs at Munger, TN Karnataka, MoU with Govt. of Orissa Tripura

Marketing Approach
Developing brand preference Superior fragrance experience (Conforms to IFRA norms) Consistently superior product experience
Inputs for Priority Markets Attractive & differentiated packaging Fragrance locked Product Quality rating Systems Brand Health Tracker

A superior fragrance development and selection procedure

Leveraging existing Nation wide distribution of ITC