FMCG Marketing Market Applications & Practices – 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.
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 bu t 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
with
anti
oxidents • Herbal & organically grown foods • 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
Average Monthly Spending on FMCG Products* in Rs.
1 2 3 4 5 6 7 8 9 10
Chandigarh Greater Mumbai Chennai Ahmedabad Vadodara Pune Coimbatore Ludhiana Faridabad Hyderabad
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, than 40% More 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 penetration levels
lower
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 • HUL’sAcquisitionsofBrookBond,Quality,Kissanetc • GodrejBoughtKeyline’sBrands(UK) • Marico acquired Nihar from HUL, Code 10 (Colgate) • Wipro acquired Chandrika Soap • Godrej eyeing Sara Lee stake • Kraft and Nestle are eyeing Cadburys • EmamiintalkswithGodrejHershey’s(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
Someareasofconcern……. •
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
across
value
chain – 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 Britannia Industries
Nestlé India 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
2
25
100
0
52
48
6
35
100
0
37
63
40 630
570 3030
98 97
2 3
51 49
49 51
1992 $=30 rupees 2004 $=45 rupeesSource: Center
Analysis of FMCG Sector
Strengths
Low operational costs
Presence
of
established
distribution
networks in both urban and rural areas
Presence
FMCG
of
sector
well-known
brands
in
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
Annual Consumer Classes
The Rich The Consuming Class The Climbers The Aspirants The Destitute Total
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
2
6.2 416.00%
32.5 54.1
54.6 71.6
90.9 179.00% 74.1 37.00%
44
28.1
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%
Dabur Lal 4%
Pepsodent 36%
Close up 27%
Colgate 33%
Awareness of Different Brands of Tooth Paste
Factors responsible for choice of FMCG Products Others 2%
Dabur Lal 2%
Close up 25%
Pepsodent 37%
Colgate 34%
Present Brands Being used
Factors responsible for choice of FMCG Products News Paper 7%
Internet 2% Others 14%
Peer Group 14% Tv Advt 63%
Source of Brand Knowledge
Factors responsible for choice of FMCG Products Both 29%
Regular 30%
Gel 41%
Preference of Flavours
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) (In dia) Ltd.
The film opens on a couple walking along a road when a man comes and runs away...
with the lady’s bag. Her An old man sitting husband runs after the nearby sympathizes stealer but soon gets with the man’s stamina. exhausted. Gasping for breath.
TVO: “Waqt hai Saffola Gold...
...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 item’s market share by targeting a different group of consumers.
Fighter branding or multi-branding multi-branding
E.g. Wheel, P& G Luv Diapers, Tide Naturals, Sweekar oil, Thums up
A
company’s 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 company’s brands. brands.
dependence
on
the
Capture “brand switchers”
Protects the company in case of product failure
Prevents
the dilution of main Brand’s 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
J erry 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 • Frequency • Geographic flexibility • Impact • Ability to create awareness • Avoiding zipping & Zapping
• Short exposure time • 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……TheRoadAhead • 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
