FAST MOVING CONSUMER GOODS (FMCG)

Presented byY165308: BINDU GODAVARTHI

INTRODUCTION: The Indian FMCG industry witnessed significant changes through 1990s. By

the time of 20th century, Indian FMCG industries have changed significantly with the liberalization and growth of economy. The realization of the customer’s growing interests and the need to meet changing life style required the FMCG producing companies to formulate customer-centric strategies. These changes have positive impact, leading to the rapid growth in the FMCG industry. The FMCG industry plays a significant role in shaping a country’s economy and development. This sector can drive growth, enhance quality of life, create jobs and support penetration of technology.

The short term liquidity implies the capacity of the firm to repay the debt of a short term creditor and trade payables. Long term solvency implies the capacity of the firm to pay off the claims of debenture holders, preference shareholders and other long term creditors.

NATURE OF INDUSTRY: FMCG SECTOR generally deals with FMCG products or

‘Fast Moving Consumer Goods’ FMCG products have a quick turnover and relatively low cost India’s FMCG sector is 4th largest sector in the economy and

contribute to around 3million employment opportunities FMCG market is in excess of Rs. 85,000 Cr It includes household care, personal care, food & beverages FMCG Industry is characterized by a well established

distribution network, low operating cost, lower per capital consumption and intense competition between the organized and unorganized seg ments.

PLAYERS OF FMCG INDUSTRY:

Top 3 FMCG Industry:1. Hindustan unilever ltd2. ITC (Indian Tobacco Company)3. Nestle India Bottom 3 FMCG Industry:1. Britannia Industries ltd2. Procter & Gamble Hygiene & health care3. Marico Industries ltd

HINDUSTAN UNILEVER LTD: It is India’s largest consumer goods company based in Mumbai, Maharashtra. It is owned by the British - Dutch company unilever which controls 52%

majority stake in HUL. HUL was formed in 1933. Its products include foods, beverages, cleaning agents and personal care

products. Revenue 22,116 Cr Net income 2,691 Cr Employees more than 16,500 Hindustan Unilever’s distribution covers over 2 million retail outlets across india

directly and its products are available in over 6.4 million outlets in the country. As per Nielsen market research data, two out of three Indians use HUL products.

In 2012, HUL was recognised as one of the world’s most innovative companies bye forbes. With a ranking of number 6, it was the highest ranked FMCG company.

ITC (Indian Tobacco Company): It was formed in 1970 by Henry Overton wills and Yogesh Chander

Deveshwar ,(Chairman). Headquarters in Kolkata, West Bengal, India. In FMCG, ITC has a strong presence in: Cigarettes: W.D. & H.O. wills, gold flake kings, gold flake premium, navy

cut, insignia, india kings, classic (Verve, Menthol, Menthol Rush, Regular, Citric Twist, Mild & Ultra Mild), 555, Benson & Hedges, Silk cut, Scissors, Capstan, Berkeley, Bristol, Lucky Strike, Players &flake.

Foods: (Kitchen of india; Aashirvaad, minto, sunfeast, candyman, bingo, yippee, sunfeast pasta brands in ready to eat, staples, biscuits, confectionery, noodles &snack foods).

Apparel: (Wills lifestyle and john players brands) Personal care: (Fiama di wills; Vivel ; Essenza di wills; Superia; Vivel di

wills brands of products in perfumes, hair care and skin care) Stationery: (Classmate and PaperCraft brands) Safety Matches and Agarbattis: (Ship; Mangaldeep; Aim brands)

NESTLE INDIA : It is a multinational nutritional and health-releated consumer goods

company headquartered in Vevey, Switzerland. It is the largest food company in the world measured by revenues.

Nestle was listed No. 1 in the fortune global 500 as the world’s most profitable corporation.

Nestle’s products include baby foods, bottled water, breakfast cereals, coffee, confectionery, dairy products, ice cream, pet foods and snacks.

Nestle’s India’s first production facility was set up in1961 at moga(Punjab)

The nestle india head office is located at Gurgaon along with other branch offices in Delhi, Mumbai, Chennai, and Kolkata.

It has 2,50,000 employees, 500 factories and 8000 range of products across the globe.

BRITANNIA INDUSTRIES LTD: It is an Indian food-products corporation based in Kolkata, india. It is famous for its Britannia and tiger brands of biscuit, which are

popular throughout India. Britannia has an estimated 38% market share in biscuit segment. Products: Bakery products, including biscuits, bread, cakes and rusk,

and dairy products, including milk, butter, cheese, ghee and dhai. The company was established in 1892, with an investment of Rs.295. The brand names of biscuits include VitamarieGold, Tiger,

Nutrichoice junior, Good day, 50-50, Treat, Pure magic, Milk bikis, Good morning, Bourbon, Thin arrowroot, Nice, Little hearts and many more.

Revenue 4,670 Cr . Profit 134 Cr.

PROCTER & GAMBLE HYGINE & HEALTH CARE: P&G is one of the largest and amongst the fastest growing consumer

goods companies in india. Established in 1964 P&G india now serves over 650 million consumers across india. Its presence pans across the beauty & grooming segments, the

household care segment as well as the health & well being segments These includes Vicks, Ariel, Tide, Olay, Gillette, Ambipur, Pampers,

Pantene, Oral-B, Head & Shoulders, Wella and Duracell. P&G operates under three entities in india – two listed entities

“Procter & Gamble Hygiene and Health care Limited” and ‘Gillette India Limited’, as well as one 100% subsidiary of the parent company in the U.S. called ‘Procter & Gamble Home Products’.

MARICO INDUSTRIES LTD: Marico is an Indian consumer goods company providing

consumer products and services in the areas of Health and Beauty based in Mumbai.

Founded in 1987 and Headquarters is at Bandar, Mumbai, India.

The organisation holds a number of brands including Parachute, Saffola, Hair&care, Nihar, Mediker, Revive, Manjal, Kaya skin clinic, Aromatic, Fiancee, Hair Code, Eclipse, Xmen, Hercules, Caivil, Code 78 and Black chic.

Revenue4,008.3Cr Parachute is the flagship brand of marico which consists of

edible grade coconut oil.

MARKET SHARES OF FMCG INDUSTRY:COMPANY MARKET

SHARESHindustan unilever ltd.

36.4%

Indian tobacco company

30%

Nestle 8.2%

Britannia 6%

Others 19.4%

shares

HUL

ITC

NESTLE

BRITANNIA

OTHERS

THE FMCG MARKET HAS THREE MAIN SEGMENTS:

1. Food & beverages (18%)2. Health care (32%)3. Household and Personal care (50%)

MARKETING STRATEGY PROCESS:

Understand customer Analyze market Analyze competition Research distribution Define marketing mix Financial analysis Review and revise

GEOGRAPHICAL SPREAD: FMCG is the fourth largest sector in the Indian economy Household and personal care is the leading segment,

accounting for 50% of the overall market. Health care (32%) and Food & Beverages (18%) comes next in terms of market share

Growing awareness, easier access, and changing lifestyle have been the key growth drivers for the sector

Retail market in India is estimated to reach USD1 trillion by 2020 from USD600 billion in 2015, with modern trade expected to grow at 20% per annum this is likely to boost revenues of FMCG companies.

STRONG GROWTH IN THE INDIAN FMCG SECTOR:

The FMCG sector in india generated revenues worth USD 47.3 billion in 2015

Over 20012-16f, the sector is expected to post CAGR of 11.9% in revenues

In 2017, revenues for FMCG sector is expected to reach USD50 billion

2012 2013 2014 2015 2016 2017 20200

20

40

60

80

100

120

Growth

Growth

BRANDING STRATEGIES: Some of the major strategies adopted by FMCG companies for

making their brands outstanding compared to competitions are as follows:

1. Multi brand strategy2. Product flanking3. Brand extensions4. Building product lines5. New product development6. Product life cycle strategy7. Taking advantages of wide distribution8. Sales promotion

POSITIONING & DIFFERENTIATION STRATAGIES: P&D strategies can be conceived and developed in a variety of

ways. It an be derived from the object attributes, competition, application, the types of consumer involved, or the characteristics of the product class.

There are seven approaches to P&D strategies:1. Using product characteristics2. Pricing as a positioning strategy3. Positioning strategy based on use or application4. Positioning strategy based on product process5. Positioning strategy based on product class6. Positioning strategy based on cultural symbols7. Positioning strategy based on competitors

PRICING POLICIES: Price is the exchange value of the product. It is the amount

of money needed to acquire a product/ service. Pricing is the most important strategy in rural marketing. Pricing must be compatible with the marketing strategy, including target market selection and positioning. This should have a balance between quality on offer and price.

1. Customer segment pricing2. Product form pricing3. Economy pricing4. Value pricing5. Differential pricing

TOTAL CAPACITY OF INDUSTRIES: In 2015, revenue from

consumer durables sector in india stood at US$ 9.7 billion, which further increased to US$ 12.5 billion in FY16.

Consumer durable market expected to grow at CAGR of 13% from FY05 to FY20.

Around two third of the total revenue is generated from urban population and rest is generated from rural population.

FY11 FY12 FY13 FY14 FY15 FY16 FY200

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10

15

20

25

CAPACITY

CAPACITY

FUTURE PROSPECT: The only threats to this strong growth trajectory remain the

high portion of unorganised trade, the limited distribution network of new entrants and the pressure on profit margins due to increasing competition.

But these are likely to be of diminished importance as proportion of organized trade increases and players invest in improving distribution.

Going forward, the industry prospects remain attractive, and new graduates can hope to leverage the training and on-the-job learning at the leading players in various functional roles, across the metros as well as the interior heartlands on india.

PORTER’S FIVE FORCES MODEL:

Industry Competitors

Potential Entrants

Buyers

Substitute

Suppliers

CONSTRAINTS: IDENTIFY the System’s Constraint As per Dr. Goldratt , “Until the consumer has bought, nobody has

really sold... The system constraints found is in market demand or the No of

Consumers willing to buy Decide how to EXPLOIT the System’s Constraint “Exploiting the System Constraint” means “Having the Right SKU, at

the right place(in the downstream supply chain) and right time (when consumer is willing to buy).

What conditions block better exploitation? Shortages of products already stocked by the downstream supply chain

members. Unavailability of products that sell elsewhere but which is not stocked due to shelf-space constraints(occupied by Surpluses).

PROFESSIONAL TRADE BODIES OF THE INDUSRTY:

The Indian FMCG sector is the fourth largest sector in the economy with a total market size of US$18 billion.

FMCG industry is expected to maintain a robust growth rate as the population is increasing.

The organised sector is account to 14-18% of the shares. However, it witnessed phenomenal growth rate in the

next half of the decade. Overall, the FMCG industry is expected to increase at a

compound annual growth rate at 14.7%, with a rural FMCG market expected to increase at 17.7%.

SWOT ANALYSIS:

STRENGTHS 1.Low operational cost2.well established distribution network3.Strong brand & large market

WEAKNESS 1.High advertisement cost2.low export level3.Lower scope of investing in technology

OPPORTUNITES 1.Large domestic market2.Rising income level3.online social network

THREAT 1.Tax and regulatory structure2.Rural demand is cyclical in nature3.Different monsoon

CONCLUSION: It is high risk area but with the promise of a

large customer fallowing as the prize for those who succeed.

The key to reducing the risk is to understand the market the consumer need and behaviour.

The consumer groups differs by occupations ,income, social and cultural grouping.

More and more people these days have started involving themselves in this field as it creates tremendous job opportunities for them.

THANKU YOU….