Marketing in Fmcg Sector

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Project reportOn

MARKETING IN FMCG SECTORSubmitted for the partial fulfillment of the awardOf

Master of Business AdministrationDEGREE

(Session 2011-2013)

SUBMITTED BY:Anurag kumar

ROLL No. 1103270028

. UNDER THE GUIDANCE OFMrs. Amrita Singh

School of ManagementABES ENGINEERING COLLEGE

GHAZIABAD

AFFILIATED TMAHAMAYA TECHNICAL UNIVERSITY, NOIDA


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Candidates Declaration /Certificate

I Anurag Kumar declare that the work is being presented in this report entitledsMarketingin FMCG Sector is an Authentic record of my work carried out under the supervision ofMrs Amrita Singh.

The matter embodied in this report has been submitted by me for the award of any Otherdegree.

Dated: ANURAG KUMAR

MBA Department

This is certifying that the above statement made by the candidate are correct to the best of my

knowledge .

PROF.RAKESH PASSI Ms. Amrita Singh

(Head of Department) Designation: Assistant professor

Date Department: MBA

Date..


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ACKNOWLEDGEMENT

I express my sincere gratitude to my external guide Mr. Amit Kumar Pandey and for his guidance,

continuous support and cooperation throughout my project without which my project would not

have been possible.

I pay my deep regards to my parents whose blessings have made this project a success.

I am extremely thankful to my respectable Prof. Rakesh Passi (HEAD OF

DEPARTMENT) MBA, ABES Engineering College, Ghaziabad for allowing me to do

summer training so that I could use my theoretical knowledge that I learned in classroom into

practical knowledge.

I would like to express my heartfelt gratitude & thank to Mr. Alok Singh (Asstt.Professor)

MBA Department, ABES Engineering College, Ghaziabad for her proper guidance and

supportthroughout this training project.

I would like to thank each & every member of airtel family for making me feel comfortable

& helping me in every possible manner.

I would also like to express my gratitude to every faculty member and all staff of my MBA

department to provide me proper guidance from time to time to complete my Summer Training

Project.

DATE:

PLACE: Anurag Kumar


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CONTENT

PART I

PageNo.

Chapter I

Introduction 1-20 Need of study 21-22 Scope of study 23-24 Objective of study 25-26

PART II

Chapter II

Research methodology 27-31 Limitation 32-33Chapter III

Descriptive study on subtopic of the study 34-45Chapter IV

Data analysis & interpretation 46-68Chapter V

Conclusions & Suggestion 69-72Chapter VI

Bibliography 73-77Chapter VII

Appendices 78-84


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PART


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INTRODUCTIONProducts which have a quick turnover, and relatively low cost are known as Fast Moving

Consumer Goods (FMCG). FMCG products are those that get replaced within a year.Examples include a wide range of frequently purchased consumer products such as toiletries,

soap, cosmetics, tooth cleaning products and detergents, as well as other non-durables such as

glassware, bulbs, batteries, paper products, and plastic goods.

Indias FMCG sector is the fourth largest sector in the economy and creates employment for

more than three million people in downstream activities and 14 million in total. The sub

sectors of FMCG sector are Household Care, Personal Care and Food & Beverages. On the

basis of price, FMCG goods are divided into three segments- low priced, mid-priced/ mass orpopular and high-priced/ premium end. Typically the lower segments of the market drive

volumes. The premium segment is less price-sensitive and more brand conscious.The total

FMCG market is in excess of $ 28 billion. FMCG sector is growing at double digit growth

rate of 15.4 per cent and is expected to maintain a high growth rate. FMCG is characterized

by a well-established distribution network, low penetration levels, low operating cost, lower

per capita consumption and intense competition between the organized and unorganized

segments.

Unlike other sectors, the FMCG industry did not slow down during recent recession. As it is

meeting the every-day demands of consumers, it will continue to grow. Market share

movements indicate that companies such as Marico Ltd and Nestle India Ltd, with

domination in their key categories, have improved their market shares and outperformed

peers in the FMCG sector. This has been also aided by the lack of competition in the

respective categories. Single product leaders such as Colgate Palmolive India Ltd and

Britannia Industries Ltd have also witnessed strength in their respective categories, aided byinnovations and strong distribution. Strong players in the economy segment like Godrej

Consumer Products Ltd in soaps and Dabur in toothpastes have also posted market share

improvement, with revived growth in semi-urban and rural markets.

Major Segments Of The FMCG Industry


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Household Care:

The detergents segment is growing at an annual growth rate of 10 to 11 per cent during the

past five years. The local and unorganized players account for a major share of the total

volume of the detergent market. The preference is given to detergents in urban area compared

to bars. Household care segment is featured by intense competition and high level of

penetration. With rapid urbanization, emergence of small pack size and sachets, the demand

for the household care products is booming. In washing powder segment, HUL is the leader

with ~38 per cent of market share. Other major players are Nirma, Henkel and Proctor &

Gamble.

India has an abundant supply of caustic soda and soda ash, the chief raw materials required in

the production of soaps and detergents, which enables the household section of the industry

to excel and grow.

Personal Care

Personal care segment includes personal wash products, hair care products, oral care

products, cosmetics etc. The Indian skin care and cosmetics market is valued at $274 million

and is dominated by HUL, Colgate Palmolive, Gillette India and Godrej. The coconut oil

market accounts for 72 per cent share in the hair oil market. The hair care market can be

segmented into hair oils, shampoos, hair colorants & conditioners, and hair gels. In the

branded coconut hair oil market, Marico (with Parachute) and Dabur are the leading players.

Sachet makes up to 40 per cent of the total shampoo sale. Again the market is dominated by

HUL with around 47 per cent market share; P&G occupies second position with market share

of around 23 per cent.Personal wash can be further segregated into three segments namely

Premium, Economy and Popular. Here also, HUL is the leader with market share of 53 per

cent; Godrej occupies second position with market share of 10 per cent. Swelling disposable

Food and

Beverages53%

Personal Care

20%

Tobacco

15%

Household

Care

10%

Lighting

2%


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incomes of the Indian consumers, growth in rural demand and upgrading to the premium

products are the key drivers for future demand growth in major FMCG categories.

The skin care market is at a primary stage in India. With the change in life styles, increase in

disposable incomes, greater product choice and availability, people are becoming more alert

about personal grooming. The major players in this segment are Hindustan Unilever with a

market share of 54 per cent, followed by CavinKare with a market share of 12 per cent and

Godrej with a market share of 3 per cent.

The oral care market can be segmented into toothpaste - 60 per cent; toothpowder - 23 per

cent; toothbrushes - 17 per cent. This segment is dominated by Colgate-Palmolive with

market share of 49 per cent, while HUL occupies secondDabur are the major players.

Food and Beverages

This segment comprises of the food processing industry, health beverage industry, bread and

biscuits, chocolates & confectionery, Mineral Water and ice creams. The three largest

consumed categories of packaged foods are packed tea, biscuits and soft drinks. Indian hot

beverage market is a tea dominant market. The major share of tea market is dominated by

unorganized players. Leading branded tea players are HUL and Tata Tea. Major players in

food segment are HUL, ITC, Godrej, Nestle and Amul.

Our country has a varied agro-climatic condition which enables to offer extended raw

material base suitable for many FMCG sub sections like food processing industries etc.

Structure and Characteristic of FMCG Industry

Competition: The market of FMCG is very competitive and manufacturers are coming

forward with the latest ideas and techniques to beat the competition and remain on the top. .

There are top business giants taking lead and several hundred emerging companies trying

hard to come forward and stand with leading FMCG producers. The easing of the trade

barriers encouraged the MNCs to invest in the Indian market to cater to the needs of the

consumers. The living standards rose in the urban sector due to high disposable income along

with the rise in the purchasing power of the rural families which increased the sales volume

of variousmanufacturers of the FMCG products in India. The large-scale companies such as

HLL, Godrej Consumer, Marico, Henkel, Reckitt Benckiser and Colgate have targeted the


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rural consumers and have also expanded their retail chain in the mid-sized towns and

villages. On the contrary to this, Nestle has always targeted the market of urban India and

focuses largely upon the value added products for the elite class or upper middle class

population.

Branding: Creating strong brands is important for FMCG companies and they devote

considerable money and effort in developing bands. With differentiation on functional

attributes being difficult to achieve in this competitive market, branding results in consumer

loyalty and sales growth. Leading FMCG firms like HUL, ITC, Nestle, Procter & Gamble

and GlaxoSmithKline Healthcarewhich account for almost 70 per cent of FMCG revenues

in the country spend almost 10 per cent of their turnover on advertising and brand

promotion. The promotion strategy includes tying up with top actors and other celebrity

brand ambassadors, besides going in for high-profile launches at leading retail mall and

outlets.

Distribution Network: Given the fragmented nature of the Indian retailing industry and the

problems of infrastructure, FMCG companies need to develop extensive distribution

networks to achieve a high level of penetration in both the urban and rural markets. Once

they are able to create a strong distribution network, it gives them significant advantages overtheir competitors. The supply chain of products in the FMCG market in India is one of the

longest supply chains an industry could really have. What has been observed is that even

though these FMCG companies are big multinationals and Indian but face a major challenge

of making their products available in the market in the right quantities and in the right time.

This is simply because these companies dont really have a wide network of sales agents and

other force which is required and is ideal for catering their products to the markets. This

aspect is taken over by distributors, wholesalers and retailer whose margins on these products

actually double the price of these products when a final consumer buys it. The products in

this industry are transported from manufacturing units via c & f agencies or warehouse to

distributors who further sell the same to wholesalers or stockiest who finally sell it to the

retailers in the market.

Contract manufacturing: As FMCG companies concentrate on brand building, product

development and creating distribution networks, they are at the same time outsourcing their

production requirements to third party manufacturers. Moreover, with several items reservedfor the small scale industry and with these SSI units enjoying tax incentives, the contract


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manufacturing route has grown in importance and popularity.

Large unorganized sector: The unorganized sector has a presence in most product

categories of the FMCG sector. Small companies from this sector have used their

geographical advantages and regional presence to reach out to remote areas where large

consumer products have only limited presence. Their low cost structure also gives them an

advantage.


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NEED OF THE STUDY

Every organization has to achieve its organization goals. For this it is very essential for an

organization to know about the view of consumers and their competitive products. This survey

research may be also aimed as to estimate potential buyer for the product. The need of the study is

as under:-

To study the market share of fmcg sector. To study customer buying behavior and factors which influence the purchase

decision Process.

To know how the company has been successful in aggressive marketing. To suggest various measures of increasing the market share. To study the level of consumer satisfaction in fmcg product. To study the consumer preferences.


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SCOPE OF THE STUDY

To conduct this research the target population was the mobile users, Who are using GSMtechnology.

Targeted geographic area of Delhi/ NCR. Sample size of 50 persons was taken. To these 50 people a questionnaire was given, the questionnaire was a combination of both

open ended and closed ended questions.

The date during which questionnaires were filled. Some dealers were also interviewed to know their prospective. Interviews with the

managers of GSM service providers were also conducted.

Finally the collected data and information was analyzed and compiled to arrive at theconclusion and recommendations given

Sources of secondary data

Used to obtain information on, Vodafone & Bhartis history, current issues, policies Procedure and

whatever required.

Magazine Journals internet


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OBJECTIVE OF STUDY

A study on various product offer by diffrent fmcg copanies and consumer respond toward these

product

OBJECTIVE:

1. How people of different age group respond to Advertisement.

2. Positioning strategies use by fmcg companies and their impact on Customer.

3. To find out relative customer perception.

4. To find out which fmcg company have good product and what type of product customer like.

5. Role of fmcg goods on the buying behavior of the customer.

6. To Study the share fmcg sector

7. To study the marketing strategy of fmcg sector

8.To study the distribution channel used by the fmcg sector


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RESEARCH METHODOLOGY

Achieving accuracy in any research requires a deep study regarding the subject. The prime objective

of the research project is to know the marketing in fmcg sector .

The research methodology adopted is basically based on primary data via which the most recent and

accurate piece of first hand information could be collected. Secondary data has been used to support

primary data wherever needed.

Primary data was collected using the following techniques

Questionnaire Method Direct Interview Method and Observation Method

The main tool used was, the questionnaire method. Further direct interview method, where a

face-to-face formal interview was taken. Lastly observation method has been continuous with

the questionnaire method, as one continuously observes the surrounding environment he

works

TYPE OF REARCH METHODOLOGY

EXPLORATORY:

Type of Research carried out was Exploratory in nature. The objective of such research is to

determine the approximate area where the drawback of the company lies and also to identify the

course of action to solve it for the purpose the information provide useful for giving right suggestion

to the company


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DATA COLLECTION METHOD

There are two types of methods of Data Collection:-

PRIMARY DATA SECONDARY DATA


Questionnaire Method Direct Interview Method and Observation Method

The main tool used was, the questionnaire method. Further direct interview method, where a face-

to-face formal interview was taken. Lastly observation method has been continuous with the

questionnaire method, as one continuously observes the surrounding environment he works in.

DATA USED FOR THE RESEARCH WORK WAS PRIMARY IN NATURE.

PRIMARY DATA:

Primary data is that which is collected for the first time and thus happen to be originated in

character.

QUESTIONNAIRE SURVEY:

In the studies a questionnaire is prepared. The Questionnaire consists of 15 Questions.

SECONDARY DATA

Secondary data refer to the data that has been already collected. The secondary data which has

been used to carry out this study are as follows:


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Books, Journals, Magazines, Newspaper.

Industry report

Companys Internet Sites.

some other relevant study material and Websites.

SAMPLE UNIT: -Raj nagar, Sanjaynagar, Navyug Market in Ghaziabad

The Research process was done by interacting with number of customer during the activities

performed which included Market cold calling, Canopies, etc. Sample design consists of Random

Sampling.

SAMPLE SIZE: - 50 PEOPLE


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LIMITATION

The following were the limitation that were during the cource of the study

limited time period less number respondent


1. questionnaire method2. direct interview method3. Observation methodThe main tool used was ,the questionnaire method ,further direct interview method wherea face to face formal interview was taken lastly observation method has been continuouswith the questionnaire method as one continuously observes the sourcing environment thework in.


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DESCRIPTIVE WORK ON SUBTOPIC

OF STUDY

MARKET OVERVIEW

The overall picture of the corporate sector emerging after the first quarter result shows that

the tempo of the Indian economys integrating into the global economy is gathering

momentum at a rapid pace. This can be seen from the rise in outsourcing in the Information

Technology (IT) and IT-based service sectors, growth in export-import trade and in global

acquisitions.

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.

Consumption demand for consumer is increasing which can be seen from the improvement in

the performance of the fast moving consumer goods (FMCG) companies.

FMCG Industry Trends and Players:-

Trends:-Estimated at around US$ 14.5 billion (approximately Rs.69, 000 crores) in 2011, Indias fast

moving consumer goods (FMCG) sector is the fourth largest industrial sector in the countrys

expanding economy. It has a strong MNC presence and is characterised by a well established

distribution network, intense competition between the organised and unorganised segments

and low operational cost. Availability of key raw materials, cheaper labour costs and

presence across the entire value chain gives India a competitive advantage.

The 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.

Another is the striking contrast between the rural and urban segments - the averageconsumption by rural households is much lower than their urban counterparts. Low


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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 categories. Most Indian FMCG companies focus on urban

markets for value and rural markets for volumes. The total market has expanded from US$

17.6 billion in 1992-93 to US$ 22 billion in 1998-99 at current prices. Rural demand

constituted around 52.5 per cent of the total demand in 1998-99. Hence, rural marketing has

become a critical factor in boosting bottomlines. As a result, most companies' have offered

low price products in convenient packaging. These contribute the majority of the sales

volume. In comparison, the urban elite consume a proportionately higher value of FMCGs,

but not volume.

PLAYERS:

A distinct feature of the FMCG industry in India is the presence of domestic as well as global

players through their subsidiaries (HUL, P&G, and Nestle).

Domestic Players:-

Britannia India Ltd (BIL):-

Britannia India Ltd was incorporated in 1918 as Britannia Biscuit Co Ltd and currently the

Groupe Danone (GD) of France (a global major in the food processing business) and the

Nusli Wadia Group hold a 45.3 per cent equity stake in BIL through AIBH Ltd (a 50:50 jointventure). BIL is a dominant player in the Indian biscuit industry, with major brands such as

Tiger glucose, Marie gold, Fifty-Fifty, Good Day, Pure Magic, Bourbon etc. The company

holds a 40 per cent market share in the overall organized biscuit market and has a capacity of

300,000 tonne per annum. Currently, the bakery product business accounts for 99.1 per cent

of BIL's turnover. The company reported net sales of US$ 280 million in 2002-03. Britannia

Industries Ltd (BIL) plans to increase its manufacturing capacity through outsourced contract

manufacturing and a Greenfield plant in Uttaranchal to expand its share in the domestic

biscuit and confectionery market.


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Dabur India Ltd. :-

Established in 1884, Dabur India Ltd is the largest Indian FMCG and ayurvedic products

company. The group comprises Dabur Finance, Dabur Nepal Pvt Ltd, Dabur Egypt Ltd,

Dabur Overseas Ltd and Dabur International Ltd. The product portfolio of the company

includes health care, food products, natural gums & allied chemicals, pharma, and veterinary

products. Some of its leading brands are Dabur Amla, Dabur Chyawanprash, Vatika,

Hajmola, Lal Dant Manjan, Pudin Hara and the Real range of fruit juices. The company

reported net sales of US$ 218 million in 2003-04. Dabur has firmed up plans to restructure its

sales and distribution structure and focus on its core businesses of fast-moving consumer

good products and over-the-counter drugs. Under the restructured set-up, the company plans

to increase direct coverage to gap outlets and gap towns where Dabur is not present. Aroadmap is also being prepared to rationalise the stockists' network in different regions

between various products and divisions.

Indian Tobacco Corporation Ltd (ITCL);-

Indian Tobacco Corporation Ltd is an associate of British American Tobacco with a 37 per

cent stake. In 1910 the company's operations were restricted to trading in imported cigarettes.

The company changed its name to ITC Limited in the mid seventies when it diversified intoother businesses. ITC is one of India's foremost private sector companies with a turnover of

US$ 2.6 billion. While ITC is an outstanding market leader in its traditional.

Businesses of cigarettes, hotels, paperboards, packaging and agriexports, it is rapidly gaining

market share even in its nascent businesses of branded apparel, greeting cards and packaged

foods and confectionary. After the merger of ITC Hotels with ITC Ltd, the company will

ramp up its growth plans by strengthening its alliance with Sheraton and through focus on

international projects in Dubai and the Far East. ITC's subsidiary, International Travel House

(ITH) also aims to launch new products and services by way of boutiques that will provide

complete travel services.

Marico

Marico is a leading Indian Group incorporated in 1990 and operating in consumer products,

aesthetics services and global ayurvedic businesses. The company also markets food products and

distributes third party products. Marico owns well-known brands such as Parachute, Saffola,


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Sweekar, Shanti Amla, Hair & Care, Revive, Mediker, Oil of Malabar and the Sil range of

processed foods. It has six factories, and sub-contract facilities for production. In 2003-04,

the company reported a turnover of US$ 200 million. The overseas sales franchise of

Marico's branded FMCG products is one of the largest amongst Indian companies. It is alsothe largest Indian FMCG company in Bangladesh. The company plans to capture growth

through constant realignment of portfolio along higher margin lines and focus on volume

growth, consolidation of market shares, strengthening flagship brands and new product

offerings (2-3 new product launches are expected in 2004-05). It also plans to expand its

international business to Pakistan.

Nirma Limited

Nirma Ltd, promoted by Karsanbhai Patel, is a homegrown FMCG major with a presence in

the detergent and soap markets. It was incorporated in 1980 as a private company and was

listed in fiscal 1994. Associate companies' Nirma Detergents, Shiva Soaps and Detergents,

Nirma Soaps and Detergents and Nilnita Chemicals were merged with Nirma in 1996-1997.

The company has also set up a wholly owned subsidiary Nirma Consumer Care Ltd, which is

the sole marketing licensee of the Nirma brand in India. Nirma also makes alfa olefin, fatty

acid and glycerine. Nirma is one of the most successful brands in the rural markets withextremely low priced offerings. Nirma has plants located in Gujarat, Madhya Pradesh and

Uttar Pradesh. Its new LAB plant is located in Baroda and the soda ash complex is located in

Gujarat. Nirma has strong distributor strength of 400 and a retail reach of over 1 million

outlets. The company reported gross sales of US$ 561 million in 2003-04. It plans to continue

to target the mid and mass segments for future growth.

Foreign players;-

Cadbury India Ltd (CIL):-

Cadbury Indian Ltd is a 93.5 per cent subsidiary of Cadbury Schweppes Plc, UK, a global

major in the chocolate and sugar confectionery industry. CIL was set up as a trading concern

in 1947 and subsequently began its operations with the small scale processing of imported

chocolates and food drinks. CIL is currently the largest player in the chocolate industry in

India with a 70 per cent market share. The company is also a key player in the malted foods,

cocoa powder, drinking chocolate, malt extract food and sugar confectionery segment. The


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company had also entered the soft drinks market with brands like 'Canada Dry' and 'Crush',

which were subsequently sold to Coca Cola in 1999. Established brands include Dairy Milk,

Perk, Crackle, 5 Star, clairs, Gems, Fructus, Bournvita etc. The company reported net sales of

US$ 160 million in 2003. The company plans to increase the number of retail outlets for future

growth and market expansion.

Cargill;-

Cargill Inc is one of the world's leading agri-business companies with a strong presence in processing

and merchandising, industrial production and financial services. Its products and geographic

diversity (over 40 product lines with a direct presence in over 65 countries and business activities in

about 130 countries) as well as its vast communication and transportation network help optimize

commodity movements and provide competitive advantage. Cargill India was incorporated in April

1996 as a 100 per cent subsidiary of Cargill Inc of the US. It is engaged in trading in soyabean meals,

wheat, edible oils, fertilisers and other agricultural commodities besides marketing branded

packaged foods. It has also set up its own anchorage facilities at Rosy near Jamnagar in Gujarat for

efficient handling of its import and export consignments.

Coca Cola:-

Coca-Cola started its India operations in 1993. The Coca-Cola system in India comprises 27 wholly

company-owned bottling operations and another 17 franchisee-owned bottling operations. A

network of 29 contract-packers also manufactures a range of products for the company. Leading

Indian brands Thums Up, Limca, Maaza, Citra and Gold Spot exist in the Company's international

family of brands along with Coca-Cola, Diet Coke, Kinley, Sprite and Fanta, plus the Schweppes

product range. During the past decade, the Coca-Cola system has invested more than US$ 1 billion in

India. In 2003, Coca-Cola India pledged to invest a further US$ 100 million in its operations. Colgate-

Palmolive India Colgate Palmolive India is a 51 per cent subsidiary of Colgate Palmolive Company,

USA. It is the market leader in the Indian oral care market, with a 51 per cent market share in the

toothpaste segment, 48 per cent market share in the toothpowder market and a 30 per cent share in

the toothbrush market. The company also has a presence in the premium toilet soap segment and in

shaving products, which are sold under the Palmolive brand. Other wellknown consumer brands

include Charmis skin cream and Axion dish wash. The company reported sales of US$ 226 million in

2003-04. The company's strategy is to focus on growing volumes by improving penetration through

aggressive campaigning and consumer promotions. The company plans to launch new products in

oral and personal care segments and is prepared to continue spending on advertising and marketing


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to gain market share. Margin gains are being targeted through efficient supply chain management

and bringing down cost of operations.

H J Heinz Co. ;-

A US$ 8.4 billion American food major, H J Heinz Co comprises 4,000 strong brand buffet in infant

food, sauces and condiments. The company was the first to commence manufacturing and bottling

of tomato ketchup in 1876. In India, Heinz has a presence through its 100 per cent subsidiary Heinz

India Pvt Ltd. Heinz acquired the consumer products division of pharmaceutical major Glaxo in 1994.

Heinz's product range in India consists of Complan milk beverage, health drink Glucon-D, infant food

Farex and Nycil prickly heat powder, besides the Heinz ketchup range.

Hindustan Unilever Ltd (HUL);-

Hindustan Unilever Ltd is a 51 per cent owned subsidiary of the Anglo-Dutch giant Unilever, which

has been expanding the scope of its operations in India since 1888. It is the country's biggest

consumer goods company with net sales of US$ 2.4 billion in 2003. HUL is amongst the top five

exporters of the country and also the biggest exporter of tea and castor oil. The product portfolio of

the company includes household and personal care products like soaps,

Detergents, shampoos, skin care products, colour cosmetics, deodorants and fragrances. It is alsothe market leader in tea, processed coffee, branded wheat flour, tomato products, ice cream, jams

and squashes. HUL enjoys a formidable distribution network covering over 3,400 distributors and 16

million outlets. In the future, the company plans to concentrate on its herbal health care portfolio

(Ayush) and confectionary business (Max). Its strategy to grow

Includes focussing on the power brands' growth through consumer relevant information, cross

category extensions, leveraging channel opportunities and increased focus on rural growth.

Nestle India Ltd (NIL);-

Nestle India Ltd a 59.8 per cent subsidiary of Nestle SA, Switzerland, is a leading manufacturer of

food products in India. Its products include soluble coffee, coffee blends and teas, condensed milk,

noodles (81 per cent market share), infant milk powders (75 per cent market share) and cereals (80

per cent market share). Nestle has also established its presence in chocolates, confectioneries and

other processed foods. Soluble beverages and milk products are the major contributors to Nestle's

total sales. Some of Nestle's popular brands are Nescafe, Milkmaid, Maggi and Cerelac. The companyhas entered the chilled dairy segment with the launch of Nestle Dahi and Nestle Butter. Nestle has


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also made a foray in non-carbonated cold beverages segment through placement of Nestea iced tea

and Nescafe Frappe vending machines. Exports contribute to 23 per cent of its turnover and the

company reported net sales of US$ 440 million in 2003.

Pepsi Co. :-

PepsiCo is a world leader in convenient foods and beverages, with revenues of about US$ 27 billion.

PepsiCo brands are available in nearly 200 markets across the world. The company has an extremely

positive outlook for India. "Outside North America two of our largest and fastest growing businesses

are in India and China, which include more than a third of the world's population" (Pepsico's annual

report). PepsiCo entered India in 1989 and is concentrating on three focus areas - soft drink

concentrate, snack foods and vegetable and food processing. PepsiCo's success is the result of

superior products, high standards of performance and distinctive competitive strategies.

Procter & Gamble Hygiene and Health Care Limited

Richardson Hindustan Limited (RHL), manufacturer of the Vicks range of products, was rechristened

'Procter & Gamble India' in October 1985, following its affiliation to the 'Procter & Gamble

Company', USA. Procter & Gamble Hygiene and Health Care Limited (PGHHCL) acquired its current

name in 1998, reflecting the two key segments of its business. P&G, USA has a 65 per cent stake in

PGHHCL. The parent also has a 100 per cent subsidiary, Procter & Gamble Home Products (PGHP).

The overall portfolio of the company includes healthcare; feminine-care; hair care and fabric care

businesses. PGHH operates in just two business segments Vicks range of cough & cold remedies

and Whisper range of feminine

Hygiene. The detergent and shampoo business has been relocated globally to Vietnam. The

company imports and markets most of the products from South East Asian countries and China,

while manufacturing, marketing and export of Vicks and sanitary napkins has been retained in India.

The company reported sales of US$ 91 million in 2002-03. The parent company has announced its

plan to explore further external collaborations in India to meet its global innovation and knowledge

needs.


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PEST ANALYSIS OF FMCG SECTOR

Political

ecological/environmental issues current legislation home market future legislation European/international legislation regulatory bodies and processes government policies government term and change trading policies funding, grants and initiatives home market lobbying/pressure groups international pressure groups

Economic

home economy situation home economy trends overseas economies and trends general taxation issues taxation specific to

product/services

seasonality/weather issues market and trade cycles specific industry factors market routes and distribution

trends

customer/end-user drivers interest and exchange rates

Social

lifestyle trends demographics consumer attitudes and opinions

media views law changes affecting social factors brand, company, technology image consumer buying patterns fashion and role models major events and influences buying access and trends ethnic/religious factors

Technological

competing technologydevelopment

research funding

associated/dependenttechnologies

replacementtechnology/solutions

maturity of technology manufacturing maturity and

capacity

information and communications


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advertising and publicity consumer buyingmechanisms/technology

technology legislation innovation potential technology access, licencing.

Growth Prospects of FMCG Sector

Rise in 2007, boosting purchasing power in the countryside. However, the demand in urban areas

would be the key growth driver over the long term. Also, increase in the urban population, along with

increase in income levels and the availability of new With the presence of 12.2% of the world

population in the villages of India, the Indian Urban FMCG market is something no one can overlook.

Increased focus on farm sector will boost Urban incomes, hence providing better growth prospects to

the FMCG companies. Better infrastructure facilities will improve their supply chain. FMCG sector is

also likely to benefit from growing demand in the market. Because of the low per capita consumption

for almost all the products in the country, FMCG companies have immense possibilities for growth.

And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the

consumers to branded products and offer new generation products, they would be able to

generate highis growth in the near future. It is expected that the Urban income will

categories, would help the urban areas maintain their position in terms of consumption. At

present, urban India accounts for 66% of total FMCG consumption, with Urban India

accounting for the remaining 34%. However, Urban India accounts for more than 40%

consumption in major FMCG categories such as personal care, fabric care, and hot beverages.

In urban areas, home and personal care category, including skin care, household care and

feminine hygiene, will keep growing at relatively attractive rates. Within the foods segment,


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it is estimated that processed foods, bakery, and dairy are long-term growth categories in both

Urban and urban areas.

Indian Competitiveness and Comparison with the World Markets:

The following factors make India a competitive player in FMCG sector:

1. Availability of raw materials Because of the diverse agro-climatic conditions in India, thise

is a large raw material base suitable for food processing industries. India is the largest

producer of livestock, milk, sugarcane, coconut, spices and cahew and is the second largest

producer of rice, wheat and fruits &vegetables. India also produces caustic soda and soda ash,

which are required for the production of soaps and hair remover s. The availability of these

raw materials gives India the location advantage.

2. Labor cost comparison


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Low cost labor gives India a competitive advantage. India's labor cost is amongst the lowest in the

world, after China & Indonesia. Low labor costs give the advantage of low cost of production. Many

MNC's have establihed their plants in India to outsource for domestic and export markets.

4.Presence across value chain Indian companies have their presence across the value chain

of FMCG sector, right from the supply of raw materials to packaged goods in the food-

processing sector. This bveetgs India a more cost competitive advantage. For example, Amul

supplies milk as well as dairy products like cheese, butter, etc.

Top Players in FMCG Sector

1Hindustan lever limited (HLL)

1. ITC (Indian Tobacco Company)2. Reckitt Benkiser (India)3. GCMMF (AMUL)4. Dabur India

5. Dabur India6. Asian Paints (India)7. Cadbury India8. Britannia Industries9. Procter & Gamble Hygiene & Health Care10. Marico Industries

Secondary Players

1. Colgate-Palmolive (India) Ltd.

2. Godrej Consumers Product Ltd.
http://www.naukrihub.com/india/fmcg/companies/colgate-palmolive/http://www.naukrihub.com/india/fmcg/companies/godrej/http://www.naukrihub.com/india/fmcg/companies/godrej/http://www.naukrihub.com/india/fmcg/companies/colgate-palmolive/


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3. Nirma Ltd.

4. Tata Toilet cleaner Ltd.

5. Parle Agro

6. H. J. Heinz

GROTH POTENTIOL IN FMCG


more than three million people in downstream activities. Its principal constituents are

Household Care, Personal Care and Food & Beverages. The total FMCG market is in excess

of Rs. 85,000 Crores. It is currently growing at double digit growth rate and is expected to

maintain a high growth rate. FMCG Industry is characterized by a well established

distribution network, low penetration levels, low operating cost, lower per capita

consumption and intense competition between the organized and unorganized segments.

Market share movements indicate that companies such as Marico Ltd and Nestle India Ltd,

with domination in their key categories, have improved their market shares and outperformed

peers in the FMCG sector. This has been also aided by the lack of competition in therespective categories. Singleproduct leaders such as Colgate Palmolive India Ltd and

Britannia Industries Ltd have also witnessed strength in their respective categories, aided by

innovations and strong distribution. Strong players in the economy segment like Godrej

Consumer Products Ltd in soaps and Dabur in toothpastes have

also posted market share improvement, with revived growth in semi-urban and rural markets.

Products which have a quick turnover, and relatively low cost are known as Fast MovingConsumer Goods (FMCG). FMCG products are those that get replaced within a year.

Examples and Dabur in toothpastes have also posted market share improvement, with revived

growth in semi-urban and rural market of FMCG generally include a wide range of frequently

purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products,

shaving products and detergents, as well
http://www.naukrihub.com/india/fmcg/companies/nirma/http://www.naukrihub.com/india/fmcg/companies/tata-tea/http://www.naukrihub.com/india/fmcg/companies/parle/http://www.naukrihub.com/india/fmcg/companies/heinz/http://www.naukrihub.com/india/fmcg/companies/heinz/http://www.naukrihub.com/india/fmcg/companies/parle/http://www.naukrihub.com/india/fmcg/companies/tata-tea/http://www.naukrihub.com/india/fmcg/companies/nirma/


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as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG

may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue

paper, and chocolate bars.


more than three million people in downstream activities. Its principal constituents are

Household Care, Personal Care and Food & Beverages. The total FMCG market is in excess

of Rs. 85,000 Crores. It is currently growing at double digit growth rate and is expected to

maintain a high growth rate. FMCG Industry is characterized by a well established

distribution network, low penetration levels, low operating cost, lower per capita

consumption and intense competition between the organized and unorganized segments.

Market share movements indicate that companies such as Marico Ltd and Nestle India Ltd,

with domination in their key categories, have improved their market shares and outperformed

peers in the FMCG sector. This has been also aided by the lack of competition in the

respective categories. Singleproduct leaders such as Colgate Palmolive India Ltd and

Britannia Industries

Ltd have also witnessed strength in their respective categories, aided by innovations and

strong distribution. Strong players in the economy segment like Godrej Consumer Products

Ltd in soaps


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Marketing in Fmcg Sector

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