fmcg marketing .ppt
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marktng ppt on fmcg i.e fasat moving consumer goods..TRANSCRIPT
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 products- probiotic 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 Chandigarh 3,4182 Greater Mumbai 2,9553 Chennai 2,8864 Ahmedabad 2,8695 Vadodara 2,8166 Pune 2,8047 Coimbatore 2,6848 Ludhiana 2,6749 Faridabad 2,59610 Hyderabad 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 capita consumption
Growth Prospects
Urban India
66% of total FMCG consumption,Home and personal care category, including skin care, household care and feminine hygiene
Rural India
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
• HUL’s Acquisitions of BrookBond, Quality, Kissan etc
• Godrej Bought Keyline’s 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 Hershey’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
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 across value chain – Amul supplies milk as well
as dairy products like cheese, butter, etc.
Top 10 FMCG Companies
Hindustan Unilever Ltd.
ITC (Indian Tobacco Company)
Nestlé India
GCMMF (AMUL)
Dabur India
Asian Paints (India)
Cadbury India
Britannia Industries
Procter & Gamble Hygiene and Health Care
Marico Industries
Scenario Change since 1991
Market Share in %
MNCs 1992 2004 1992 2004
2 25 100 0 52 48
6 35 100 0 37 63
40 570 98 2 51 49TV 630 3030 97 3 49 51
Market Size in $ million
Indian Companies
Indian Companies MNCs
Breakfast cereals Wafers, potato chips
Washing Machines
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 one
billion.
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
"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
Threats
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
Indian consumer class can be classified according to the following criteria:
1. Income
2. Socio-Economic status
3. Age demographics
4. Geographical dispersion
The Indian Consumer
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
Does not represent a real scenario for an international business
Income Classification
Purchasing power of currencies differs significantly.
Consumption and ownership trends in the economy do not completely depend on the income
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 Classification
Consumer Classes 1996 2001 2007 Change
The Rich 1.2 2 6.2 416.00%
The Consuming Class 32.5 54.6 90.9 179.00%The Climbers Rs. 22-45,000 54.1 71.6 74.1 37.00%The Aspirants Rs. 16-22,000 44 28.1 15.3 -65.00%
The Destitute 33 23.4 12.8 -61.00%
Total 164.8 180.7 21.00%
Annual Income in Rs.
Rs. 215,000 and more
Rs 45- 215,000
Below Rs. 16,000
199.
2
Factors responsible for choice of FMCG Products
Pepsodent 36%
Colgate 33%
Close up 27%
Dabur Lal 4%Others 1%
Awareness of Different Brands of Tooth Paste
Factors responsible for choice of FMCG Products
Pepsodent 37%
Colgate 34%
Close up 25%
Dabur Lal 2%Others 2%
Present Brands Being used
Factors responsible for choice of FMCG Products
Tv Advt 63%
Peer Group 14%
Others 14%
Internet 2%News Paper 7%
Source of Brand Knowledge
Factors responsible for choice of FMCG Products
Regular 30%
Gel 41%
Both 29%
Preference of Flavours
Case Study published in Indian Journal of Marketing – August 2009
Inference...........
3 main factors Total Dental Care
Decay Protection, Stronger teeth, Fight germs, fresher breath, health gums, white teeth
Product Features 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
Creating Winning Brands – Brand Mantra & Positioning
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
Marketing Strategies
Marico Industries
with the lady’s bag. Her husband runs after the stealer but soon gets exhausted.
The film opens on a couple walking along a road when a man comes and runs away...
An old man sitting nearby sympathizes with the man’s stamina. Gasping for breath.
...our man tells his wife, “bach gaya mere haath se. Haath aa jata toh main… Lootere!”
TVO: “Waqt hai Saffola Gold...
...apnane ka. Yeh cholestrol ghatane mein madad kare. Saffola Gold. Dil ko rakhiye jawaan.”
Brand: Saffola Gold
Agency: McCann-Erickson (India) Ltd.
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
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 dependence on the company’s brands.
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
Branding Strategies
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 eg Tiger glucose
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
Advantages:• Wide coverage of local
markets
• Frequency
• Geographic flexibility
• Impact
• Ability to create awareness
• Avoiding zipping & Zapping
Out-of Home Advertising
Advantages:• Wide coverage of local
markets
• Frequency
• Geographic flexibility
• Impact
• Ability to create awareness
• Avoiding zipping & Zapping
Out-of Home Advertising
Dis -advantages:• 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…… 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