FMCG Marketing

Market Applications & Practices Session 2

Sonal Dabke

MARKETS are changing and so

marketing must also change. As the days
of mass marketing draws to an end,
marketing needs to move from a
command and control to a connect and
collaborate mindset that relies on
customer engagement, dialogue and
collaboration.

Fast Moving Consumer Goods

(FMCG)
Alternatively called as CPG (Consumer
packaged goods) industry
Products that are sold quickly at relatively
low cost.
Generally sell in large quantities
Absolute profit may be small but cumulative
profit can be large.
Replaced or fully used up over a short
duration

Fast Moving Consumer

Electronics (FMCE)
Innovative
electronic
products
Replaced
more
frequently than other
electronic products
Mobile phones, MP3
players,
digital
cameras,
GPS
Systems, and laptop
computers

Neutraceuticals The New

age Fast Moving Health care Goods
(FMHG)
Essentially
foodproducts
and derivatives which have
a health promoting or
medicinal value
Functional Foods, dietary
suppliments,
sports
&
energy products etc.
Positioned as strong line of
defence against lifestyle
illnesses and ailments

Neutraceuticals
1989 Dr. Stephen Defelice
Founder & Chairman of the
foundation for innovation in
medicine
Traditionally available in
forms similar to other
pharmaceutical products
New
generation
Neutraceutical
productsprobiotic drinks & yoghurts
available in supermarkets

Neutraceuticals
Main
ingredients
are
Neutrients, herbal products
and dietry supplements

Neutraceuticals
Genetically engineered foods
oxidents
Herbal & organically grown foods

with

anti

Foods for vitality; sports and energy products

Food with medicinal value
Dietary suppliments & vitamins

Neutraceutical manufacturing

companies
Raptacos Brett & Co Ltd Mumbai :Threptin
Biscuit
Pfizer Ltd : Protinex
Dabur India : Chawan Prash
Himalaya Herbal health care
Amway
Wockhardt

Common FMCG products

Food and dairy products
Glassware
Paper products
Pharmaceuticals
Consumer electronics
packaged food products

Common FMCG products

Plastic goods
Printing and stationery
Household products
Photography
drinks etc.
Confectionaries

Leading

FMCG

companies &
Brands

FMCG industry economy

FMCG
industry
is
regarded as the fourth
largest sector in India
with total market size of
Rs 450 Bn (2006)
FMCG Sector in India is
estimated to grow 60%
by 2010. (Report by
HSBC)

FMCG Industry Economy

Per capita consumption is the lowest in
the world
Demand for new generation products at
reasonable & affordable prices
Changing
Lifestyles
and
higher
disposable income will fuel the demand
for branded products

Source India Today - R K Swamy BBDO Guide to Urban Markets

Rank

Towns

1
2
3
4
5
6
7
8
9
10

Chandigarh
Greater Mumbai
Chennai
Ahmedabad
Vadodara
Pune
Coimbatore
Ludhiana
Faridabad
Hyderabad

Average Monthly Spending

on FMCG Products* in Rs.
3,418
2,955
2,886
2,869
2,816
2,804
2,684
2,674
2,596
2,533

Growth Drivers

Growth witnessed in both

rural as well as urban areas

Business aquisitions & focus

on efficiencies along with
strong demand will drive the
growth

Rapid
urbanization,
increased literacy levels, and
rising per capita income.

Growth Prospects

12.2%
of
the
world
population in the villages of
India

Increased focus on farm

sector will boost rural
incomes

Better
infrastructure
facilities will improve their
supply chain

Low
per
consumption

capita

Growth Prospects
Urban India

Rural India

66% of total FMCG

consumption,
Home and personal
care category,
including skin care,
household care and
feminine hygiene

34% of total FMCG

consumption,
More
than
40%
consumption in major
FMCG categories such
as personal care, fabric
care,
and
hot
beverages.

Go Rural !!!

70% of Indian population

in 627,000 villages
Two big Indian companies
HUL & ITC
Toothpaste, hairoils &
shampoos are the highest
growing categories
Growth of shampoos was
30.8% in rural India vis a
vis 11% in urban India
Drastically
lower
penetration levels

ITC's Agri Business Division

Choupal Saagar

Choupal Fresh
Choupal Pradarshan Khet

Innovation !!!

Innovation and not price war will be the key

driver

Innovation in product, distribution, marketing

and creating brand names e.g. ITC e-choupal
network

Hiking add spends

Rationalizing brand portfolios

Pricing strategies

High decibel promotional campaigns

Innovations by Marico
Parachute Advanced Revitalizing
Hot Oil.
Cooling Hair Oil under the Nihar
& Parashute Brand
Extend the Saffola brand into
functional foods category
Low sodium salt
Saffola Rice (Low GI
Index)
Saffola Zest (Baked
Snax)
Saffola Atta Mix

Acquisition!!!
Dabur acquired Balsara, Fem Care
P&G Acquired Gillette
HULs Acquisitions of BrookBond, Quality, Kissan etc
Godrej Bought Keylines Brands (UK)
Marico acquired Nihar from HUL, Code 10 (Colgate)
Wipro acquired Chandrika Soap
Godrej eyeing Sara Lee stake
Kraft and Nestle are eyeing Cadburys
Emami in talks with Godrej Hersheys (Jumpin & XS)
Emami , WIpro, Marico & GCPL want to acquire
Simple Skin Care Brand (UK)

Why ...?
Cheap exercise
Time Constraints
Diversification of Portfolio or
complementing current portfolio

Why ?
Size or Scale related

Increased turnover
Increased market share
Increased market capitalization
Presence on the world map

Enhanced Distribution
Economies of scale

Some areas of concern.

Overlap / Sales
Cannibalization
More Brands less
power.
HUL has decided to
divest
and
concentrate on 30
Super Brands

Indian Competitiveness and Comparison with

the World Markets

Availability of raw materials

Labor cost comparison
Presence
chain

across

value

Amul supplies milk as well

as dairy products like
cheese, butter, etc.

Top 10 FMCG Companies

Hindustan Unilever Ltd.

Asian Paints (India)

ITC (Indian Tobacco

Company)

Cadbury India

Nestl India

Britannia Industries

GCMMF (AMUL)

Procter & Gamble Hygiene

and Health Care

Dabur India

Marico Industries

The Secondary Players

Scenario Change since 1991

Market Size in $
million

Breakfast
cereals
Wafers,
potato
chips
Washing
Machines
TV

Market Share in %
Indian
Indian
Compani
Compani
es
MNCs es
MNCs
1992
2004

1992

2004

25

100

52

48

35

100

37

63

40
630

570
3030

98
97

2
3

51
49

49
51

1992 $=30 rupees 2004 $=45 rupeesSource: Center

for Monitoring Indian Economy (CMIE)

Analysis of FMCG Sector

Strengths
Low operational costs
Presence of established distribution
networks in both urban and rural areas
Presence of well-known brands in
FMCG

sector

Analysis of FMCG Sector

Weaknesses
Lower scope of investing in technology and
achieving economies of scale, especially in small
sectors
Low exports levels
Limited exposure to oversees markets

Analysis of FMCG Sector

Opportunities:
Untapped rural market
Rising income levels, i.e. increase in
purchasing power of consumers
By 2015, Indians under 20 are estimated to
make up 55% of the population
Large domestic market- a population of over
billion.

one

Analysis of FMCG Sector

Opportunities:
Export potential
High consumer goods spending
Highly fragmented market with roughly half the
market going to unbranded, unpackaged home
made products.

Analysis of FMCG Sector

Threats:
Removal of import restrictions resulting in
replacing of domestic brands
Dependence on agriculture and monsoon for rural
demand
The increased scale of operations of retailers is shifting
the bargaining power from FMCG companies to retailers.

Analysis of FMCG Sector

Threats
"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.
The growing adoption of private labels in the
household care segment

Think of it ................
Most commodities in the retail market such as
milk, salt, water, atta have made their mark in
the market due to their brand names. But it is
a wonder that sugar has not taken any
packaged format till now........
Shagun Triveni Engineering
Originale -Modi Sugars
Trust -Simbhaoli Sugars

Indian Consumer Class

Dealing with many small markets at one time
High distinctiveness in demand
Different social customs and food habits
Several religious and personal beliefs

Indian Consumer Class

Youngest population amongst the major countries
Different income categories.
15 official languages
population of over 1 billion and 4 climatic zones

The Indian Consumer

Indian consumer class can
be classified according to
the following criteria:
1. Income
2. Socio-Economic status
3. Age demographics
4. Geographical dispersion

Income
5 groups on the basis of
annual household income
1. Higher income
2. Upper middle income
3. Middle middle income
4. Lower middle income
5. Lower income

Income Classification
Does not represent a real scenario for an
international business
Purchasing power of currencies
differs significantly.
Consumption and ownership
trends in the economy do not
completely depend on the
income

Consumer Classification
National Council of Applied Economic
Research (NCAER) there are 5
consumer classes
The Rich
The Consuming Class
The Climbers
The Aspirants
The Destitute

Consumer Classification

Consumer Classes
The Rich
The Consuming Class
The Climbers
The Aspirants
The Destitute
Total

Annual
Income in Rs.
Rs. 215,000
and more
Rs 45215,000
Rs. 22-45,000
Rs. 16-22,000
Below Rs.
16,000

1996

2001 2007 Change

1.2

6.2 416.00%

32.5
54.1
44

54.6
71.6
28.1

90.9 179.00%
74.1 37.00%
15.3 -65.00%

33

23.4

164.8

180.7

12.8 -61.00%
199.
2 21.00%

Factors responsible for

choice of FMCG Products

Others 1%
Pepsodent 36%

Dabur Lal 4%
Close up 27%

Colgate 33%

Awareness of Different Brands of Tooth Paste

Factors responsible for choice

of FMCG Products

Others 2%

Dabur Lal 2%

Pepsodent 37% Close up 25%

Colgate 34%

Present Brands Being used

Factors responsible for

choice of FMCG Products

News Paper 7%

Internet 2%

Others 14%

Tv Advt 63%

Peer Group 14%

Source of Brand Knowledge

Factors responsible for choice

of FMCG Products

Regular 30%

Both 29%

Gel 41%

Preference of Flavours
Case Study published in Indian Journal of Marketing August 2009

Inference...........
3 main factors

Total Dental Care

Product Features

Decay Protection, Stronger teeth, Fight germs,

fresher breath, health gums, white teeth
Taste, flavor, color, foam

Price Consciousness

Price, scheme, packaging

Points to be addressed .....

Customer evaluates a brand based of various

factors

Customer exhibits some amount of Brand

Loyalty but why........?

Hence the need to highlight the core product

features with a value addition keeping in mind
the need of the customer while making the
product

Points to be addressed .....

Advertisement not effective unless the product

can meet the innate need of the customer

Message content needs to be strong

A new P called Perception , if strong then it

increases Brand Loyalty

Marketing Strategies
Creating Winning Brands Brand Mantra &
Positioning
Marico Industries
Saffola :
Brand Mantra :

Positioning

Good for the heart

Dil ko rakhiye jawan

www.saffolalife.com

70% rice bran oil

Dial a dietician- 1800-22-2929

30% safflower oil

Brand: Saffola Gold

Agency: McCann-Erickson (India) Ltd.

The film opens on a

couple walking along a
road when a man
comes and runs away...

with the ladys bag. Her

husband runs after the
stealer but soon gets
exhausted.

TVO: Waqt hai Saffola

Gold...

An old man sitting

nearby
sympathizes
with the mans stamina.
Gasping for breath.

...our man tells his wife,

bach gaya mere haath
se. Haath aa jata toh
main Lootere!

...apnane ka. Yeh cholestrol ghatane

mein madad kare. Saffola Gold. Dil ko
rakhiye jawaan.

Branding Strategies
Flanker Brands
A flanker brand is a Line extension by the
company

Competes in the category without damaging the

existing items market share by targeting a
different group of consumers.
Fighter branding or multi-branding
E.g. Wheel, P& G Luv Diapers, Tide Naturals,
Sweekar oil, Thums up
A companys brands should attract customers
from competing brands and not each other.

Branding Strategies
Advantages of Flanker Brands
Gain

more shelf space for the company

Increases
retailer
companys brands.

dependence

on

the

Capture brand switchers

Protects the company in case of product failure
Prevents the dilution of main Brands equity

Branding Strategies
Cause Related Branding
Not just a solution provider but also
projected in the framework of social marketing
Paras Pharma's Moov and Dermicool, Tata
tea, P& G
HUL, ITC

Cause Related Branding

Jerry Welsh, a Sr. Vice President of American
Express, first coined the phrase Cause Related
Marketing in the 1980s while raising money for
the restoration of the Statue of Liberty in New York
City. American Express pledged to donate one cent
towards the restoration of the Statue for each use of
its card and a dollar for each issue of new card. This
yielded amazing results American Express donated
$1.7 mn towards the restoration; also, there was a
28% increase in card usage by American Express
cardholders along with a 45%

Brand Revitalization Strategy

Causes
Positioning
looses
relevance eg Dalda,
Core values become
redundant eg Lifebuoy
Hackneyed Imagery eg
Liril (Karen Lunel)
Positioning of competing
brands eg Robin Blue &
Ujala

What to do?
New Brand Associations
e.g. Brylcream 'Style is for
everyone', Wheel Lemon
Fresh Brand
New Elements eg Britannia
created a new logo, new
tagline- 'Eat healthy, think
better'
New Varients
glucose

eg

Tiger

Brand Revitalization Strategy

Repositioning
Brand in the decline stage
Eg Lifebuoy- Koi Dar Nahi' was repositioned to
target a more upmarket segment
Further
enhancements
by
using
new
associations and elements eg 'neem & tulsi',
'Swine flu se darne ka nahi ladne ka'
Eg Cadbury's-Chocolates as Deepavali gift

Pricing Strategies

Psychological Pricing
Discount Pricing
Captive Product Pricing
Bundled Pricing

Marketing Strategies :
Advertising
Out-of Home Advertising

Out-of Home Advertising

Advantages:

Dis -advantages:

Wide coverage of local

markets

Short exposure time

Frequency
Geographic flexibility
Impact
Ability to create awareness
Avoiding zipping & Zapping

Quick Wear out

Measurement problems
Blind spot effect

Media/Origin: OOH / Indian

Product Group: Beverages
Brand: Horlicks

Media/Origin: OOH / IndianProduct Group:

Cosmetics | Toiletries | Personal care
Brand: Garnier

Media/Origin: OOH / Indian Product Group:

Cosmetics | Toiletries | Personal care
Brand: Fiama Di Wills

Media/Origin: OOH / Indian Product Group:

Beverages
Brand: Red Bull

FMCG The Road Ahead

Excellence in operations - through Value
Chain De-Verticalisation
Asset Light FMCG Company and an Asset
Heavy Supply Chain Company

Rural marketing Value / Volume Focus

Distributions
Reduce Intermediaries
Increase sales by driving channel width

Brand managers to Business managers

"Only the Paranoid Survive "

.........Andy Grove