FMCG Market Analysis

FMCG securities industry compendEXECUTIVE SUMMARYThe FMCG market is set to treble from US$ 11.6 meg in cc3 to US$ 33.4 billion in 2015. Penetration aim as headspring as per capita exercise in c suffer to mathematical merchandise categories like jams, toothpaste, skin c be, hair wash etc in India is economic crisis indicating the untapped market potential. Burgeoning Indian population, especially the pump class and the rude segments, attests an opportunity to makers of bladeed harvest-tides to alter consumers to blemished products. fruit is excessively promising to convey sex from consumer upgrading in the matured product categories. With 200 million people expected to shift to processed and expressaged food by 2010, India needs around US$ 28 billion of investment in the food-processing industry.Rapid urbanization, increased literacy and insurrection per capita income, fool all caused rapid growth and change in demand patterns, tether to an explosion of you ng opportunities. Around 45 per cent of the population in India is below 20 geezerhood of age and the young population is set to climbing elevate. Aspiration levels in this age base live been fuelled by greater media exposure, unleashing a latentdemand with to a greater extent(prenominal) m wizardy and a new mindset.The wideness of consumer sales forward motion in the merchandising mix of the degraded moving consumer goods (FMCG) category finishedout the world has increased. Companies spend considerable time in grooming much(prenominal) activities. However, in order to put forward the effectiveness of these activities, manufacturers should understand consumer and retailer interpretations of their promotional activities so that appropriate specialization cig bet be used.Retailers stated that fibre of word of mouth and telecasting ad was actually master(prenominal) in providing information inputs to the consumers regarding sales promotion activities. This percept ion of retailers was supported by the consumer unaided refund of sales promotion schemes which were widely advertised.The investigate concludes with the discussion of the results, managerial implications limitation of the record and future research directions.CHAPTER 1 introI. ABOUT THE DISSERTATIONINTRODUCTIONAdvertisements convey patsy polariation and this whitethorn be important in several categories, which consist of several home runs. In FMCG products like tea, coffee and detergents, disparateiation cognizance tummy be performd by television denote, precisely in certain categories on that point may be a need to demonstrate the effectiveness of scores. preeminence with which consumers rump non connect may ingest a negative implication and if a brand connects consumers with its differentiation, it is belike to excessively differentiate itself in terms of furbish upting identify with the consumer. A detergent or a washing machine, which find outs low water consumption has to demonstrate this claim at a retail outlet curiously given the fact that the quality of water varies crossways argonas even in a unique(predicate) geographical region. It is to a fault essential that a good differentiation proposition result in a positive word-of-mouth.In a certain situation, the company may have cardinal cracks in a product-line and at that place is a need to differentiate them all the way depending on the target segments involved. This is a complex situation where differentiation decides the growth of the brand and the perceived residue in the midst of the offerings. An added layer to the complexity is the uniform brand name cosmos used for the offerings. Fairness cream is a category in which the public assistance is the fairness of the complexion. A brand like Fair and adorable built over the years still has a strong association with the category just now under ugly pressure from competitive brands and the nearly important criter ia which these brands is the herb tea touch associated with them. Herbal ingredients are becoming popular with consumers in several categories and personal care in India has a strong tradition of herbal care. Fair and Lovely had to launch its herbal variant (it used the same brand probably because of the brand right built up over the years). The elicit fact is the differentiation being conveyed by publicize. The original version uses an aspiration route in which the brands ultimate bene fit is success through confidence.Estimates point of viewd on Chinas current per capita Consumption, the Indian FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. The dominance of Indian markets by unbranded products, change in eating habits and the increased affordability of the growing Indian population presents an opportunity to makers of branded products, who can convertconsumers to branded products.Penetration level in most product categories like jams, toothpaste, skin care, hair wash etc in India is low. The contrast is particularly smasher between the rural and urban segments the honest consumption by rural house bounds is much lower than their urban counterparts. Low acuteness indicates the liveence of unsaturated markets, which are likely to expand as the income levels rise. This provides an sensitive opportunity for the industry players in the form of a vastly untapped market. Moreover, per capita consumption in most of the FMCG categories(including the high perspicacity categories) in India is low as compared to two the developed markets and other emerging economies. A rise in per capita consumption, with improvement in incomes and affordability and change in tastes and preferences, is further expected to boost FMCG demand. Growth is in addition likely to come from consumer upgrading, especially in the matured product categories.CHAPTER 2I. LITERATURE REVIEWImpact of world-beaterful Advertisement on Consumer Att itude Dr. F.R. black lovage Pravin DuraiBy going through this article I have come across some points which you should look upon. If you extremity to read the article it is present in the appendix. Following are some points-Advertising is the only if direct method which helps to make masses of potential buyers. Advertising, being dynamic, changes with changing methods of distribution and consumption.In the present era of information explosion and media capture, these advertizements playa major role in changing the settled perception or thinking, which is other called attitude, of the consumer and also the consumption pattern of the ships company in general. Thus, the impress leads to cultural and companionable changes to a great extent.Why is there a need of advertising? Advertising is a focussing of communication information to the consumer which modifys him or her to compare and choose from the products and services available. Advertising is the most economical direct ion by which a manufacturer or an Institutional ashes can communicate to an audience whether to sell a product or promote a cause of social welfare.Essentials of Effective Advertisement-the writer thinks that there are 4 important things for an advertisement to be effective. They are importance of claim, believable, uniqueness and repetition.The advertiser must constantly prize the situation to choose the right environment and ideal time for an advertisement to be launched. Some of the situations are as follows-When there is a favorable get-gohand demand of particular product.When there is a distinctive product differentiation from other competitive brands.When mass market is penetrated.In order to see that the advertisements reach the target consumers in a most effective way and gets right response from them, it has to be ensuring that such advertisements are presented in the right way. The undermentioned move on the part of the consumer may ensure that the advertisements are on the right track.Getting attracted towards the advertisements.Listening and observing the contents of the advertisements in full.Continuous watching of the same over a period.Comparing the advertisements of akin products.Making a trial purchase as follow up activity.Assessing the level of utility of the product individually.Ascertaining the level of utility derived with other correspondent consumers.In the article Dr. Alexander Told about a model which exemplifies the attitude or response of a consumer to an advertisement.Techniques of advertising for unbendable Moving Consumer GoodsDr. Archi Mathur- Assistant lecturer, Department of instruction Studies, National Law University, Jodhpur Dr. HK Bedi- Professor, Dean, Department of Management Studies, National Law University, JodhpurThis article shows how an advertiser can use different techniques of advertisements to show FMCG products. The techniques are as followsValue added ads- In addition to providing information about the product Value-added advertising transforms a product into something more charitable to consumers than the visible object produced in the factory. in that respectfore, it is a missing link between brand attributes and the customer perception, between product features and need fulfillment, .between benefits and values.Comparative ads- the advertiser compares the 2 brands of the same product category. The ad can be copied as the Pepsi and sprite example in the case. They have used the same story but both have them had a different approach.Informative ads- these ads are used to provide information to the consumer about different products and services.Health and Hygiene ads- these ads show that the product is taking care of the consumers health. It is emphasizing of the physical attribute of the product. What does the product do? How does it help you? The ad tells you all. These are some of the techniques.Lifestyle ads- Another way to. nave an impact on the consumers mind is port raying the life-style of a successful person.Humorous ads- Humor in the advertisement is normally kept in order to create a light, jovial and likely human body of an atmosphereDemographic ads- these ads are meant for different segments establish on age, sex etc. Farex Cereal Food for infants is an advertisement targeted directly towards the infants, as it comprises a lusty food for them. It is also targeted indirectly towards the mother.Packaging ads- Advertisement is toilsome to lure the customers to buy their products on the basis of the way they are brought in front of the consumers look ie. Packaging. Dabur has brought in different flavors in the market of fruit juice. E.g. Mango, Pineapple, Orange, Mixed Fruit Jete. all these are in different packages, i.e. 50 ml, 1000 ml, etc. They claim that unlike other juices, which have preservatives in them, these products are without preservatives. Hence, the punch line is Real Fruit Juice.Price ads- Marketers also lure the custome rs by showing in an advertisement that a product is available at a less(prenominal)er price without any compromise on the standard. Cadbury India advertised the 5-Star chocolate by offering 30% more chocolate in its 5-Star bar for the same price.Celebrity ads- Celebrities are mainly used in the advertisement either to lure the rural people in buying a particular product or in forcing the young generation to buy the products. This is also called endorsement advertising.,t is also used in portraying that a particular product is best inqtJality because a person who is also very well k n proclaim in his/her flying field endorses it. The impact of these stars in advertisements enables the company to increase its sale.CHAPTER 3I. RESEARCH methodologyII. RESEARCH OBJECTIVEThe main objectives of the study are1. To assess current consumer sales promotion schemes in the market2. To assess how consumers differentiate the products based on advertisements3. To get an insight into retailers vi ews regarding the schemes being offered in toilet soap category, and consumer perceptions4. To study consumer perceptions regarding dissimilar schemes in this category and responses toward them.5. To study the various methods of differentiation.6. To analyze the methodology adopted by companies to target end consumers.7. To breed basic business questions likeDo companies have the right product/service to offer?How companies reach their customers?How the buying power can be created?To order new business strategiesRESEARCH METHODOLOGYMethodologyTechnique used for the survey is questionnaires, focus group discussions and audiences. In order to cope the above questions an alpha study was conducted. The idea was to probe and get deeper insight into sales promotion scenario in toilet soap market and to tap perceptions of retailers and consumers. In order to address above mentioned objectives (i) study of secondary sources was carried out, 10(ii) in-depth interview of six retailers wa s underinterpreted and 11(iii) structured questionnaire was designed to seek consumer responses. Convenience sampling was used for both retailers as well as consumer studies. Six retailers ranging from small kirana store to supermarket were approached. All the retailers were located in the Noida. The respondents for consumer study were postgraduate students in the age group of 19-24 belonging to middle and upper middle and upper class. The total respondents were 30 in number. They were residing in hostel or as PG hence sole decision-makers for this category. Also this age-group being more experimental and likely to be more deal prone, so their perceptions, preferences would give some insights to companies planning sales promotions targeted at them.Scope and LimitationsThe geographical scope of the study was restricted to the NOIDA urban center due to time and resource constraints. The study being exploratory in nature, the sample size was restricted to 30 consumers (student group) and 6 retailers. Focus being mainly on in-depth probing, the generalizations drawn are only indicative and not conclusive.CHAPTER 3I. FMCG AN INTRODUCTIONII. Indian CONTEXTIII. mart OPPORTUNITIESIV. EVOLUTION AND CHARECTERSTICSFMCG -FAST MOVING CONSUMER GOODSBRIEF DECRIPTION OF INDIA FMCG MARKETMARKET OPPORTUNITIES IN FMCGAccording to Estimates based on Chinas current per capita Consumption, the Indian FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. The dominance of Indian markets by unbranded products, change in eating habits and the increased affordability of the growing Indian population presents an opportunity to makers of branded products, who can convertconsumers to branded products.Penetration level in most product categories like jams, toothpaste, skin care, hair wash etc in India is low. The contrast is particularly striking between the rural and urban segments the average consumption by rural house leases is much lower than their u rban counterparts. Low penetration indicates the existence of unsaturated markets, which are likely to expand as the income levels rise. This provides an excellent opportunity for the industry players in the form of a vastly untapped market. Moreover, per capita consumption in most of the FMCG categories(including the high penetration categories) in India is low as compared to both the developed markets and other emerging economies. A rise in per capita consumption, with improvement in incomes and affordability and change in tastes and preferences, is further expected to boost FMCG demand. Growth is also likely to come from consumer upgrading, especially in the matured product categoriesEVOLUTION 1950s-80s Low Investment in the sectorLow purchasing powerGovts emphasis on small scale sectorHLL and other companys urbane focus Post liberalization opening of MNCsFocus shifted to get to rural consumer firstOthers, like come on, remained with the urban populationLatest fad to hit the m arket is the sachet bug. Mushrooming of regional brandsNirma enters and changes the focus to Value for specie in the 70sPost liberalization, Jyothi Laboratories, Ghari Detergent and fix toothpaste giving the nation-wide brands a rove for their money.CHARECTERSTICSFORECAST 2010 Rural and semi-urban 128 million population thrice the urban Market size growth from 48k to 100k Crores (Growth of 50% at 10%CAGR) Increase penetration from the current less than 1% Problems in the rural sector* Low per capita disposable incomes* magnanimous number of daily wage earners* lancinating dependence on vagaries of monsoon* Seasonal consumption* Poor infrastructure roads and power supply Urban Market 16.5k to 35k Crores (Growth of 100% at 20%CAGR) smart competition severe pressure on margins Focus on newer products, such as fruit juicesSource Assocham herald Future Prospects of FMCGCHAPTER 5I. collar DIFFRENTIATIONII. TYPES OF DIFFRENTIATIONIII. THE INDIAN CONTEXTI.II. UNDERSTANDING DIFFER ENTIATIONDifferentiation is the process of adding a set of meaningful and valued remnants that distinguish a companys offering from those of its competitors. Differentiation is strongest when it satisfies all of the pursuance criteria1. Important the difference delivers a highly valued benefit to a sufficient number of buyers2. Distinctive the difference can be delivered in a clear way3. Superior the difference is a better way of obtaining a benefit4. Pre-emptive the difference cannot be easily copied5. Affordable the buyer can afford to pay for the difference6. Profitable the company will earn a return by maintaining the differenceBRAND truth in fast moving consumer goods categories is a topical issue, with several brands resorting to price cuts across categories. More importantly, price cuts or sales promotion by themselves do not take care to have done much for brands in terms of sustaining brand dedication. They may attract consumers in the short run consumers may stock the brands and consumers new to the brand may try it. But over a period of time, a brands value may get thin in consumers psyche, and will eventually lose a strong base of consumers. The following are some aspects of marketing mix elements and consumer behavior which could contribute to brand loyalty.Product differentiationIf the products are tell in their characteristics and this difference is perceivable, there are chances of brand loyalty being formed based on merriment with greater performance or fit of product with needs. In this case, loyalty is driven by working(a) or typic benefits. Functional benefits would be specific tangible features of the product whereas symbolic benefits would be intangibles such as brand personality and hedonistic value of purchase.Price differentiationIf the price differentiation in the market is perceivable, price-led loyalty might exist in the market. Price-led loyalty is practised by supermarkets, airline companies and FMCG brands, which come o ut with frequent sales promotions based on freebies. Alternatively, price might be taken as an indicator of brand quality, and the customer might go in for high priced options. Price-led loyalty has to be conservatively considered with other marketing mix elements and the consumer should never perceive dilution, especially in low-priced bands. Hence, lower prices should create a sense of value through the product offerings as well as through communication. mark activityIf the category is organized and there is branding activity, there will be greater loyalty than there would have been if the category were unorganized. Branding activities can differentiate between brands on name, symbol, images and associations. Branding activity in this context refers to creating strong associations which will influence the consumers not only with regard to functional attributes but also with symbolism. Hamam soaps portrayal of its pure ingredients with the child and mother imagery is a good examp le of one of these dimensions.Branding activities in a patient of sense could range from advertising to sales promotion and public relations involving several aspects.III. The Indian contextThe following were the observations from the literature survey and the examples chosen from the Indian context.The factors indicate that there will be a large segment of consumers for whom price-led loyalty will dominate. Hence there will be strong behavioral loyalty in the segment and only weak attitudinal loyalty. in that location is thus spurious loyalty in this sector.There is a moderate level of symbolic and functional differentiation which has been exploited by strong brands to build a loyal following. Examples of this include brands such as Dove, Ponds Dreamflower talcum powder, opulent Flake, Wills Navy Cut, Amul and Cadbury. These brands have probably built strong attitudinal loyalty through their brand personality and other brand building efforts.In the FMCG sector, brand habit is h igh whereas attitudinal loyalty is low. As creating attitudinal loyalty based on functional differentiation is difficult, symbolic differentiation is the key. Building strong brand personalities and associated symbolic benefits is important for crafting customer loyalty.The factors discussed cannot be treated in isolation they are to provide a synergy to result in brand loyalty. The junto of these factors and the timing of the combination is the topical gainsay which marketers face in an environment where loyalty is slowly eroding.Local challengersSome of the most successful FMCG brands in 2002 came, not from the stables of a Hindustan Lever and a Colgate, but from obscure regional players such as Kaleesuwari Refineries, Parakh Foods, Anchor Switchboards and Kanpur Detergents. Over the past couple of years, brands such as Gold Winner and Gemini in clarified oils, Anchor White in toothpastes and Ghari in detergents have managed to sustain double digit growth rates, even as the mar ket leaders have struggled to hold on to single digit growth rates for their brands.Yes, the comparison is unfair, as the local anaesthetic brands had a minuscule base to start with. But these brands have present it is not impossible for a new challenger to break into the traditional bastion of one or two large FMCG players. Traditionally, large FMCG categories in India have been dominated by just one or two players, who rule the roost by dint of their sheer monetary muscle and distribution reach. But, of late, successful regional brands have been finding chinks in their armour. And howAggressive pricingIn the edible oils market, as national players were forced to hiking their selling prices in response to rising commodity prices, both Gemini and Gold Winner have used aggressive pricing to woo consumers international from the national brands. Packed tea too, has seen similar trends. The limited differentiation in grocery and the flexibility offered by a restricted area of opera tions have stood these companies in good stead. Anchor White, among the fewer debutants in the toothpaste market to garner asignificant share, first wooed the retail trade with high distribution margins, and because used rock-bottom prices to lure consumers into trying the product. Though none of these companies can match the market leaders in adspend, they have used focused regional and local advertising to draw consumers forethought to their brands.The mushrooming of local and regional media has undoubtedly helped the local players milk the most from their ad budgets.Banking on power brandsWhile the local brands have been adding to their brand portfolios, the market leaders have largely stayed off new product launches.In keeping with its power brand strategy, Hindustan Levers marketing strategies in 2002 turn around rejigging and relaunching established brands such as Lifebuoy, Rin, Surf and Vim. The company phased out brands such as Sunlight in detergents, and Jai in toilet s oaps, so as to focus better on its 30 power brands.The strategy appears to have worked, as brands such as Lifebuoy and Rin have moved into a higher growth trajectory after the relaunch.In fact, HLLs power brand strategy has found a few followers in the FMCG market, with companies such as Godrej Consumer also announcing plans to focus on a clasp of key brands.Streamlining and spendWhile the power brand strategy has helped the leading players put their marketing prowess rat their most important brands, it has not really helped them save on ad spend. For most FMCG companies, advertising and promotion spends in 2002 grew faster than their sales. In high penetration categories such as soaps, detergents and toothpastes, marketing efforts of the players revolved around persuading existing consumers to use more of the product or to upgrade toa higher-priced brand. The slew of 100 gm free for every 150 gm offers in toothpastes and the series of promos on the 2 kg packs of premium detergent s were both intended to induce existing consumers of a product to pep up their customs of the brand.Companies operating in relatively low-penetration categories such as chocolates, shampoos and skin creams tailored their marketing strategies to bringing in new users, through scaled-down versions of their brands in affordable pack sizes. The low-priced Chocostik, a liquid chocolate in a small-sized pack, launched by Nestle India, has helped pep up the companys topline and is now a large contributor to the companys revenues. Nestle India is now trying out a similar small-sized Rs 5 pack for Maggi noodles.Shampoos have been among the few FMCG categories to register a positive growth rate in 2002, and growth in this category has been driven mainly by sachet packs and by scaled-down 50 ml bottles priced at less than Rs 10.Overall, the FMCG slowdown of the past three years has served a useful purpose. At one level, it has made sure that the dominant players in the market no interminable enjoy unlimited pricing power, as they have in the past. There now appears to be a greater effort on the part of the players to hold selling prices and look at their own operations to save on cost. At another level, the emergence of the regional challengers has made sure that consumers of FMCG products have a few more choices in their purchases of essentials. Is selling soap the same as selling a TV?It isnt. The difference is how the particular product is sold and more importantly, how is it distributed. India is a unique market, where the manufacturers who deliver products at the doorstep, which is the ideal way to deliver anything, spoil our consumers. We have an extremely evolved distribution mechanism for most products. Different products are sent to the consumer differently. Depending on the number, the price of the product and the complexity of the selling process,they may vary from direct selling to selling through a get that may have as many an(prenominal) asfour levels b etween the manufacturer and the consumer. A look at a few of them will show what it means to be a sales person of that product.Most FMCG (fast moving consumer goods) products are not hard-sold to the end consumers. Sales are built up largely by pull a technique use advertising and consumer promotion. The sell-in happens to the trade i.e. to various members of the distribution channel the CarryingForwarding/Super-stockist, the distributor, the wholesaler and most importantly the retailer, who is the interface with the end-consumer. This chain forms the most important link in getting the product economically to the consumers doorstep.A large MNC in the FMCG industry may be covering as many as 1 million outlets across the country with the help of thousands of distributors. Even a mid-sized company covers at the least 1 lakh outlets. Factoring in the vagaries of operating in more than 25 different states, each with its own sales tax complexities, different consumer needs, differences in the distribution structure, not forgetting differing octroi structures within a state, distribution is extremely complex in India. If the sell-in does not happen to this channel for whatever reason or is sub- optimal, a product is likely to fail.CHAPTER 3I. UNDERSTANDING ADVERTISEMENTII. UNDERSTANDING SALES- PROMOTIONIII. CREATING DIFFRENTIATION through with(predicate) ADVERTISEMENTIV. PROBLEMS FACED BY MARKETERSI. UNDERSTANDING ADVERTISEMENTSWhether it is a serial in a regional satellite channel or a One daytime International cricket match, there is a non-stop stream of advertisements, which clutter the commercial break. Well-established brands attempt to sustain brand deny while new ones try appealing to prospective consumers to get into their consideration set. There are ads for children, housewives and youth. With advertising expenditure in the order of Rs. 8000 Crores per annum in the modern times and the proliferation of brands across categories, there is a strong need to consider the effectiveness of these advertisements. The idea is not to cease advertising but to consider how considering decisions would have to be considered with non-advertising alternatives. These non-advertising alternatives may also enable a brand to create and sustain consistent associations, which may be desirable in terms of long-run implications. A contemporary approach that creates a synergy between various aspects of a promotional mix (advertising included) provides a refreshing approach towards marketing communications. There may be several objectives of advertising and a promotional mix could be used in an innovative manner to address each of these objectives depending on the product category and target segment.Creating-brand-awarenessWhen a new brand enters a category or creates a new to the market offering, it needs to create brand awareness. This would depend on whether the product is a consumable or a durable. The involvement level in a speciFMCG Market Analysi sFMCG Market AnalysisEXECUTIVE SUMMARYThe FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer upgrading in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the food-processing industry.Rapid urbanization, increased literacy and rising per capita income, have all caused rapid growth and change in demand patterns, leading to an explosion of new opportunities. Around 45 per cent of the population in India is below 20 years of age and t he young population is set to rise further. Aspiration levels in this age group have been fuelled by greater media exposure, unleashing a latentdemand with more money and a new mindset.The importance of consumer sales promotion in the marketing mix of the fast moving consumer goods (FMCG) category throughout the world has increased. Companies spend considerable time in planning such activities. However, in order to enhance the effectiveness of these activities, manufacturers should understand consumer and retailer interpretations of their promotional activities so that appropriate differentiation can be used.Retailers stated that role of word of mouth and television advertising was very important in providing information inputs to the consumers regarding sales promotion activities. This perception of retailers was supported by the consumer unaided recall of sales promotion schemes which were widely advertised.The research concludes with the discussion of the results, managerial impl ications limitation of the study and future research directions.CHAPTER 1INTRODUCTIONI. ABOUT THE DISSERTATIONINTRODUCTIONAdvertisements convey brand differentiation and this may be important in several categories, which consist of several brands. In FMCG products like tea, coffee and detergents, differentiation awareness can be created by television advertising, but in certain categories there may be a need to demonstrate the effectiveness of brands. Differentiation with which consumers cannot connect may have a negative implication and if a brand connects consumers with its differentiation, it is likely to also differentiate itself in terms of getting identified with the consumer. A detergent or a washing machine, which claims low water consumption has to demonstrate this claim at a retail outlet especially given the fact that the quality of water varies across areas even in a specific geographical region. It is also essential that a good differentiation proposition result in a po sitive word-of-mouth.In a certain situation, the company may have two offerings in a product-line and there is a need to differentiate them clearly depending on the target segments involved. This is a complex situation where differentiation decides the growth of the brand and the perceived difference between the offerings. An added layer to the complexity is the same brand name being used for the offerings. Fairness cream is a category in which the benefit is the fairness of the complexion. A brand like Fair and Lovely built over the years still has a strong association with the category but under tremendous pressure from competitive brands and the most important criteria which these brands is the herbal touch associated with them. Herbal ingredients are becoming popular with consumers in several categories and personal care in India has a strong tradition of herbal care. Fair and Lovely had to launch its herbal variant (it used the same brand probably because of the brand equity bu ilt up over the years). The interesting fact is the differentiation being conveyed by advertising. The original version uses an aspiration route in which the brands ultimate benefit is success through confidence.Estimates based on Chinas current per capita Consumption, the Indian FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. The dominance of Indian markets by unbranded products, change in eating habits and the increased affordability of the growing Indian population presents an opportunity to makers of branded products, who can convertconsumers to branded products.Penetration level in most product categories like jams, toothpaste, skin care, hair wash etc in India is low. The contrast is particularly striking between the rural and urban segments the average consumption by rural households is much lower than their urban counterparts. Low penetration indicates the existence of unsaturated markets, which are likely to expand as the income leve ls rise. This provides an excellent opportunity for the industry players in the form of a vastly untapped market. Moreover, per capita consumption in most of the FMCG categories(including the high penetration categories) in India is low as compared to both the developed markets and other emerging economies. A rise in per capita consumption, with improvement in incomes and affordability and change in tastes and preferences, is further expected to boost FMCG demand. Growth is also likely to come from consumer upgrading, especially in the matured product categories.CHAPTER 2I. LITERATURE REVIEWImpact of Effective Advertisement on Consumer Attitude Dr. F.R. Alexander Pravin DuraiBy going through this article I have come across some points which you should look upon. If you want to read the article it is present in the appendix. Following are some points-Advertising is the only direct method which helps to reach masses of potential buyers. Advertising, being dynamic, changes with changin g methods of distribution and consumption.In the present era of information explosion and media influence, these advertisements playa major role in changing the settled perception or thinking, which is otherwise called attitude, of the consumer and also the consumption pattern of the society in general. Thus, the impact leads to cultural and social changes to a great extent.Why is there a need of advertising? Advertising is a way of communicating information to the consumer which enables him or her to compare and choose from the products and services available. Advertising is the most economical means by which a manufacturer or an Institutional body can communicate to an audience whether to sell a product or promote a cause of social welfare.Essentials of Effective Advertisement-the writer thinks that there are 4 important things for an advertisement to be effective. They are importance of claim, believable, uniqueness and repetition.The advertiser must constantly assess the situati on to choose the right environment and ideal time for an advertisement to be launched. Some of the situations are as follows-When there is a favorable primary demand of particular product.When there is a distinctive product differentiation from other competitive brands.When mass market is penetrated.In order to ensure that the advertisements reach the target consumers in a most effective way and gets right response from them, it has to be ensuring that such advertisements are presented in the right way. The following steps on the part of the consumer may ensure that the advertisements are on the right track.Getting attracted towards the advertisements.Listening and observing the contents of the advertisements in full.Continuous watching of the same over a period.Comparing the advertisements of similar products.Making a trial purchase as follow up activity.Assessing the level of utility of the product individually.Ascertaining the level of utility derived with other similar consumers .In the article Dr. Alexander Told about a model which exemplifies the attitude or response of a consumer to an advertisement.Techniques of advertising for Fast Moving Consumer GoodsDr. Archi Mathur- Assistant lecturer, Department of Management Studies, National Law University, Jodhpur Dr. HK Bedi- Professor, Dean, Department of Management Studies, National Law University, JodhpurThis article shows how an advertiser can use different techniques of advertisements to show FMCG products. The techniques are as followsValue added ads- In addition to providing information about the product Value-added advertising transforms a product into something more appealing to consumers than the physical object produced in the factory. Therefore, it is a missing link between brand attributes and the customer perception, between product features and need fulfillment, .between benefits and values.Comparative ads- the advertiser compares the 2 brands of the same product category. The ad can be copied a s the Pepsi and sprite example in the case. They have used the same story but both have them had a different approach.Informative ads- these ads are used to provide information to the consumer about different products and services.Health and Hygiene ads- these ads show that the product is taking care of the consumers health. It is emphasizing of the physical attribute of the product. What does the product do? How does it help you? The ad tells you all. These are some of the techniques.Lifestyle ads- Another way to. nave an impact on the consumers mind is portraying the life-style of a successful person.Humorous ads- Humor in the advertisement is normally kept in order to create a light, jovial and likely kind of an atmosphereDemographic ads- these ads are meant for different segments based on age, sex etc. Farex Cereal Food for infants is an advertisement targeted directly towards the infants, as it comprises a healthy food for them. It is also targeted indirectly towards the mother .Packaging ads- Advertisement is trying to lure the customers to buy their products on the basis of the way they are brought in front of the consumers eyes ie. Packaging. Dabur has brought in different flavors in the market of fruit juice. E.g. Mango, Pineapple, Orange, Mixed Fruit Jete. All these are in different packages, i.e. 50 ml, 1000 ml, etc. They claim that unlike other juices, which have preservatives in them, these products are without preservatives. Hence, the punch line is Real Fruit Juice.Price ads- Marketers also lure the customers by showing in an advertisement that a product is available at a lesser price without any compromise on the standard. Cadbury India advertised the 5-Star chocolate by offering 30% more chocolate in its 5-Star bar for the same price.Celebrity ads- Celebrities are mainly used in the advertisement either to lure the rural people in buying a particular product or in forcing the young generation to buy the products. This is also called endorsement advertising.,t is also used in portraying that a particular product is best inqtJality because a person who is also very well known in his/her field endorses it. The impact of these stars in advertisements enables the company to increase its sale.CHAPTER 3I. RESEARCH METHODOLOGYII. RESEARCH OBJECTIVEThe main objectives of the study are1. To assess current consumer sales promotion schemes in the market2. To assess how consumers differentiate the products based on advertisements3. To get an insight into retailers views regarding the schemes being offered in toilet soap category, and consumer perceptions4. To study consumer perceptions regarding various schemes in this category and responses toward them.5. To study the various methods of differentiation.6. To analyze the methodology adopted by companies to target end consumers.7. To address basic business questions likeDo companies have the right product/service to offer?How companies reach their customers?How the buying power can be created?To prepare new business strategiesRESEARCH METHODOLOGYMethodologyTechnique used for the survey is questionnaires, focus group discussions and interviews. In order to address the above questions an exploratory study was conducted. The idea was to probe and get deeper insight into sales promotion scenario in toilet soap market and to tap perceptions of retailers and consumers. In order to address above mentioned objectives (i) study of secondary sources was carried out, 10(ii) in-depth interview of six retailers was undertaken and 11(iii) structured questionnaire was designed to seek consumer responses. Convenience sampling was used for both retailers as well as consumer studies. Six retailers ranging from small kirana store to supermarket were approached. All the retailers were located in the Noida. The respondents for consumer study were postgraduate students in the age group of 19-24 belonging to middle and upper middle and upper class. The total respondents were 30 in numb er. They were residing in hostel or as PG hence sole decision-makers for this category. Also this age-group being more experimental and likely to be more deal prone, so their perceptions, preferences would give some insights to companies planning sales promotions targeted at them.Scope and LimitationsThe geographical scope of the study was restricted to the NOIDA city due to time and resource constraints. The study being exploratory in nature, the sample size was restricted to 30 consumers (student group) and 6 retailers. Focus being mainly on in-depth probing, the generalizations drawn are only indicative and not conclusive.CHAPTER 3I. FMCG AN INTRODUCTIONII. INDIAN CONTEXTIII. MARKET OPPORTUNITIESIV. EVOLUTION AND CHARECTERSTICSFMCG -FAST MOVING CONSUMER GOODSBRIEF DECRIPTION OF INDIA FMCG MARKETMARKET OPPORTUNITIES IN FMCGAccording to Estimates based on Chinas current per capita Consumption, the Indian FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. The dominance of Indian markets by unbranded products, change in eating habits and the increased affordability of the growing Indian population presents an opportunity to makers of branded products, who can convertconsumers to branded products.Penetration level in most product categories like jams, toothpaste, skin care, hair wash etc in India is low. The contrast is particularly striking between the rural and urban segments the average consumption by rural households is much lower than their urban counterparts. Low penetration indicates the existence of unsaturated markets, which are likely to expand as the income levels rise. This provides an excellent opportunity for the industry players in the form of a vastly untapped market. Moreover, per capita consumption in most of the FMCG categories(including the high penetration categories) in India is low as compared to both the developed markets and other emerging economies. A rise in per capita consumption, with improvement in incomes and affordability and change in tastes and preferences, is further expected to boost FMCG demand. Growth is also likely to come from consumer upgrading, especially in the matured product categoriesEVOLUTION 1950s-80s Low Investment in the sectorLow purchasing powerGovts emphasis on small scale sectorHLL and other companys urbane focus Post liberalizationEntry of MNCsFocus shifted to getting to rural consumer firstOthers, like Nestle, remained with the urban populationLatest fad to hit the market is the sachet bug. Mushrooming of regional brandsNirma enters and changes the focus to Value for Money in the 70sPost liberalization, Jyothi Laboratories, Ghari Detergent and Anchor toothpaste giving the nation-wide brands a run for their money.CHARECTERSTICSFORECAST 2010 Rural and semi-urban 128 million population thrice the urban Market size growth from 48k to 100k Crores (Growth of 50% at 10%CAGR) Increase penetration from the current less than 1% Problems in the rural sector * Low per capita disposable incomes* Large number of daily wage earners* Acute dependence on vagaries of monsoon* Seasonal consumption* Poor infrastructure roads and power supply Urban Market 16.5k to 35k Crores (Growth of 100% at 20%CAGR) Intense competition severe pressure on margins Focus on newer products, such as fruit juicesSource Assocham Report Future Prospects of FMCGCHAPTER 5I. UNDERSTANDING DIFFRENTIATIONII. TYPES OF DIFFRENTIATIONIII. THE INDIAN CONTEXTI.II. UNDERSTANDING DIFFERENTIATIONDifferentiation is the process of adding a set of meaningful and valued differences that distinguish a companys offering from those of its competitors. Differentiation is strongest when it satisfies all of the following criteria1. Important the difference delivers a highly valued benefit to a sufficient number of buyers2. Distinctive the difference can be delivered in a clear way3. Superior the difference is a better way of obtaining a benefit4. Pre-emptive the difference cannot be eas ily copied5. Affordable the buyer can afford to pay for the difference6. Profitable the company will earn a return by maintaining the differenceBRAND loyalty in fast moving consumer goods categories is a topical issue, with several brands resorting to price cuts across categories. More importantly, price cuts or sales promotion by themselves do not seem to have done much for brands in terms of sustaining brand loyalty. They may attract consumers in the short run consumers may stock the brands and consumers new to the brand may try it. But over a period of time, a brands value may get diluted in consumers psyche, and will eventually lose a strong base of consumers. The following are some aspects of marketing mix elements and consumer behavior which could contribute to brand loyalty.Product differentiationIf the products are differentiated in their characteristics and this difference is perceivable, there are chances of brand loyalty being formed based on satisfaction with greater per formance or fit of product with needs. In this case, loyalty is driven by functional or symbolic benefits. Functional benefits would be specific tangible features of the product whereas symbolic benefits would be intangibles such as brand personality and hedonistic value of purchase.Price differentiationIf the price differentiation in the market is perceivable, price-led loyalty might exist in the market. Price-led loyalty is practised by supermarkets, airline companies and FMCG brands, which come out with frequent sales promotions based on freebies. Alternatively, price might be taken as an indicator of brand quality, and the customer might go in for higher priced options. Price-led loyalty has to be carefully considered with other marketing mix elements and the consumer should never perceive dilution, especially in low-priced bands. Hence, lower prices should create a sense of value through the product offerings as well as through communication.Branding activityIf the category is organized and there is branding activity, there will be greater loyalty than there would have been if the category were unorganized. Branding activities can differentiate between brands on name, symbol, images and associations. Branding activity in this context refers to creating strong associations which will influence the consumers not only with regard to functional attributes but also with symbolism. Hamam soaps portrayal of its pure ingredients with the child and mother imagery is a good example of one of these dimensions.Branding activities in a broad sense could range from advertising to sales promotion and public relations involving several aspects.III. The Indian contextThe following were the observations from the literature survey and the examples chosen from the Indian context.The factors indicate that there will be a large segment of consumers for whom price-led loyalty will dominate. Hence there will be strong behavioural loyalty in the segment and only weak attitudinal loyalty. There is thus spurious loyalty in this sector.There is a moderate level of symbolic and functional differentiation which has been exploited by strong brands to build a loyal following. Examples of this include brands such as Dove, Ponds Dreamflower talcum powder, Gold Flake, Wills Navy Cut, Amul and Cadbury. These brands have probably built strong attitudinal loyalty through their brand personality and other brand building efforts.In the FMCG sector, brand habit is high whereas attitudinal loyalty is low. As creating attitudinal loyalty based on functional differentiation is difficult, symbolic differentiation is the key. Building strong brand personalities and associated symbolic benefits is important for crafting customer loyalty.The factors discussed cannot be treated in isolation they are to provide a synergy to result in brand loyalty. The combination of these factors and the timing of the combination is the topical challenge which marketers face in an environment wher e loyalty is slowly eroding.Local challengersSome of the most successful FMCG brands in 2002 came, not from the stables of a Hindustan Lever and a Colgate, but from obscure regional players such as Kaleesuwari Refineries, Parakh Foods, Anchor Switchboards and Kanpur Detergents. Over the past couple of years, brands such as Gold Winner and Gemini in refined oils, Anchor White in toothpastes and Ghari in detergents have managed to sustain double digit growth rates, even as the market leaders have struggled to hold on to single digit growth rates for their brands.Yes, the comparison is unfair, as the local brands had a minuscule base to start with. But these brands have demonstrated it is not impossible for a new challenger to break into the traditional bastion of one or two large FMCG players. Traditionally, large FMCG categories in India have been dominated by just one or two players, who rule the roost by dint of their sheer financial muscle and distribution reach. But, of late, suc cessful regional brands have been finding chinks in their armour. And howAggressive pricingIn the edible oils market, as national players were forced to hike their selling prices in response to rising commodity prices, both Gemini and Gold Winner have used aggressive pricing to woo consumers away from the national brands. Packed tea too, has seen similar trends. The limited differentiation in grocery and the flexibility offered by a restricted area of operations have stood these companies in good stead. Anchor White, among the few debutants in the toothpaste market to garner asignificant share, first wooed the retail trade with high distribution margins, and then used rock-bottom prices to lure consumers into trying the product. Though none of these companies can match the market leaders in adspend, they have used focused regional and local advertising to draw consumers attention to their brands.The mushrooming of local and regional media has undoubtedly helped the local players mil k the most from their ad budgets.Banking on power brandsWhile the local brands have been adding to their brand portfolios, the market leaders have largely stayed off new product launches.In keeping with its power brand strategy, Hindustan Levers marketing strategies in 2002 revolved around rejigging and relaunching established brands such as Lifebuoy, Rin, Surf and Vim. The company phased out brands such as Sunlight in detergents, and Jai in toilet soaps, so as to focus better on its 30 power brands.The strategy appears to have worked, as brands such as Lifebuoy and Rin have moved into a higher growth trajectory after the relaunch.In fact, HLLs power brand strategy has found a few followers in the FMCG market, with companies such as Godrej Consumer also announcing plans to focus on a clutch of key brands.Streamlining and spendWhile the power brand strategy has helped the leading players put their marketing prowess behind their most important brands, it has not really helped them sav e on ad spend. For most FMCG companies, advertising and promotion spends in 2002 grew faster than their sales. In high penetration categories such as soaps, detergents and toothpastes, marketing efforts of the players revolved around persuading existing consumers to use more of the product or to upgrade toa higher-priced brand. The slew of 100 gm free for every 150 gm offers in toothpastes and the series of promos on the 2 kg packs of premium detergents were both intended to induce existing consumers of a product to pep up their usage of the brand.Companies operating in relatively low-penetration categories such as chocolates, shampoos and skin creams tailored their marketing strategies to bringing in new users, through scaled-down versions of their brands in affordable pack sizes. The low-priced Chocostik, a liquid chocolate in a small-sized pack, launched by Nestle India, has helped pep up the companys topline and is now a large contributor to the companys revenues. Nestle India i s now trying out a similar small-sized Rs 5 pack for Maggi noodles.Shampoos have been among the few FMCG categories to register a positive growth rate in 2002, and growth in this category has been driven mainly by sachet packs and by scaled-down 50 ml bottles priced at less than Rs 10.Overall, the FMCG slowdown of the past three years has served a useful purpose. At one level, it has made sure that the dominant players in the market no longer enjoy unlimited pricing power, as they have in the past. There now appears to be a greater effort on the part of the players to hold selling prices and look at their own operations to save on cost. At another level, the emergence of the regional challengers has made sure that consumers of FMCG products have a few more choices in their purchases of essentials. Is selling soap the same as selling a TV?It isnt. The difference is how the particular product is sold and more importantly, how is it distributed. India is a unique market, where the manu facturers who deliver products at the doorstep, which is the ideal way to deliver anything, spoil our consumers. We have an extremely evolved distribution mechanism for most products. Different products are sent to the consumer differently. Depending on the number, the price of the product and the complexity of the selling process,they may vary from direct selling to selling through a channel that may have as many asfour levels between the manufacturer and the consumer. A look at a few of them will show what it means to be a sales person of that product.Most FMCG (fast moving consumer goods) products are not hard-sold to the end consumers. Sales are built up largely by pull a technique using advertising and consumer promotion. The sell-in happens to the trade i.e. to various members of the distribution channel the CarryingForwarding/Super-stockist, the distributor, the wholesaler and most importantly the retailer, who is the interface with the end-consumer. This chain forms the mo st important link in getting the product economically to the consumers doorstep.A large MNC in the FMCG industry may be covering as many as 1 million outlets across the country with the help of thousands of distributors. Even a mid-sized company covers at the least 1 lakh outlets. Factoring in the vagaries of operating in more than 25 different states, each with its own sales tax complexities, different consumer needs, differences in the distribution structure, not forgetting differing octroi structures within a state, distribution is extremely complex in India. If the sell-in does not happen to this channel for whatever reason or is sub- optimal, a product is likely to fail.CHAPTER 3I. UNDERSTANDING ADVERTISEMENTII. UNDERSTANDING SALES- PROMOTIONIII. CREATING DIFFRENTIATION THROUGH ADVERTISEMENTIV. PROBLEMS FACED BY MARKETERSI. UNDERSTANDING ADVERTISEMENTSWhether it is a serial in a regional satellite channel or a One Day International cricket match, there is a non-stop stream of a dvertisements, which clutter the commercial break. Well-established brands attempt to sustain brand recall while new ones try appealing to prospective consumers to get into their consideration set. There are ads for children, housewives and youth. With advertising expenditure in the order of Rs. 8000 Crores per annum in the recent times and the proliferation of brands across categories, there is a strong need to consider the effectiveness of these advertisements. The idea is not to cease advertising but to consider how considering decisions would have to be considered with non-advertising alternatives. These non-advertising alternatives may also enable a brand to create and sustain consistent associations, which may be desirable in terms of long-term implications. A contemporary approach that creates a synergy between various aspects of a promotional mix (advertising included) provides a refreshing approach towards marketing communications. There may be several objectives of adverti sing and a promotional mix could be used in an innovative manner to address each of these objectives depending on the product category and target segment.Creating-brand-awarenessWhen a new brand enters a category or creates a new to the market offering, it needs to create brand awareness. This would depend on whether the product is a consumable or a durable. The involvement level in a speci