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TABLE OF CONTENTS

Executive Summary Research Objective Research Methodology Introduction Industry Category and Products Growth Prospects History SWOT Analysis Consumer Sales Promotional Activities Key Findings Data Analysis and Interpretation Hypothesis Conclusions Recommendations Annexure Bibliography

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EXECUTIVE SUMMARY
Products 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 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 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. Indias FMCG sector is the fourth largest sector in the economy and creates employment for 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. The Rs 85,000-crore Indian FMCG industry is expected to register a healthy growth in the third quarter of 2008-09 despite the economic downturn. The industry is expected to register a 15% growth in Q3 2008-09 as compared to the corresponding period last ye ar. Unlike other sectors, the FMCG industry did not slow down since Q2 2008. the industry is doing pretty well, bucking the trend. As it is meeting the every-day demands of consumers, it will continue to grow. In the last two months, input costs have come down and this will reflect in Q3 and Q4 results. 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 by innovations and strong distribution.

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RESEARCH OBJECTIVE
OBJECTIVES OF THE STUDY

To profile the cherry pickers. To study the cherry picking sales pattern. To find out whether Cherry pickers increases the basket size. To find out whether cherry pickers increase the retail turnover. To understand the demand pattern of FMCG products in the rural market. To understand the image of products in the eyes of the consumers. Heavy launch costs on new products on launch advertisements, free samples and product promotions.

Majority of the product classes require very low investment in fixed assets Existence of contract manufacturing Marketing assumes a significant place in the brand building process Extensive distribution networks and logistics are key to achieving a high level of penetration in both the urban and rural markets

Factors like low entry barriers in terms of low capital investment, fiscal incentives from government and low brand awareness in rural areas have led to the mushrooming of the unorganised sector.

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RESEARCH METHODOLOGY
TYPE OF RESEARCH DESIGN
Descriptive research was used for the project.

QUANTITATIVE RESEARCH A survey of customers leaving Big Bazaar was done so that all details of the shopping trip were fresh in their minds and hence accurate price data could be collected. The survey was done by questionnaire which comprised of closed ended questions.

SOURCES OF DATA
Primary data was collected through survey of customers at Big Bazaar. Secondary data was collected from previous research by various authors on this topic, retail biz magazine and articles and reports on the internet.

METHODOLOGY
The method used for survey was structured questionnaire.

RESEARCH TOOL Questionnaire

QUESTIONNAIRE DESIGN The questionnaire comprised of closed ended questions.

SAMPLE DESIGN
SAMPLE SIZE: 100 samples SAMPLING TECHNIQUE: Convenience sampling.

PILOT STUDY
A pilot survey of 5 customers at Big Bazaar had been done to ensure that the questionnaire is correct and relevant of research objectives.

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SURVEY
Once pilot study is over, actual survey will be conducted.

DATA ANALYSIS
The researcher has used inferential statistics (through SPSS) in order to draw a conclusion. Result of the study has been put in tables and graphs for easy understanding of the findings of the research.

EXPECTED CONTRIBUTION OF THE STUDY


This project will help in giving a fresh insight on this topic on which research has been done very rarely in India. It will help to understand the overall pattern of this activity and its impact on the marketing strategies of various FMCG products. Also the profiling of this set of consumers can help in framing the strategies accordingly.

REASON FOR TAKING UP THE PROJECT


The researcher has done his BBA and currently pursuing his MBA. This topic has not been researched upon extensively in India and hence promises unique exposure and experience to the researcher and hence this project has been undertaken.

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INTRODUCTION

Fast-moving consumer goods (FMCG) or consumer packaged goods (CPG) are products that are sold quickly and at relatively low cost. Examples include non-durable goods such as soft drinks, toiletries, and grocery items. Though the absolute profit made on FMCG products is relatively small, they are generally sold in large quantities, and so the cumulative profit on such products can be substantial. Fast-moving consumer electronics are a type of FMCG and are typically low priced generic or easily substitutable consumer electronics, including lower end mobile phones, MP3 players, game players, and digital cameras, which have a short usage life, typically a year or less, and as such are disposable. Cheap FMCG electronics are often retained even after immediate failure, as the purchaser rationalizes the decision to not return the goods on the basis that the goods were cheap to begin with, and that the cost of return relative to the low cost of purchase is high. Thus low-quality electronic FMCG goods can be highly profitable for the vendors. The term FMCGs refers to those retail goods that are generally replaced or fully used up over a short period of days, weeks, or months, and within one year. This contrasts with durable goods or major appliances such as kitchen appliances, which are generally replaced over a period of several years. FMCG have a short shelf life, either as a result of high consumer demand or because the product deteriorates rapidly. Some FMCGssuch as meat, fruits and vegetables, dairy products, and baked goodsare highly perishable. Other goods such as alcohol, toiletries, pre-packaged foods, soft drinks, and cleaning products have high turnover rates. An excellent example is a newspaperevery day's newspaper carries different content, making one useless just one day later, necessitating a new purchase every day.

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

The Rs 85,000-crore Indian FMCG industry is expected to register a healthy growth in the third quarter of 2008-09 despite the economic downturn. The industry is expected to register a 15% growth in Q3 2008-09 as compared to the corresponding period last year. Unlike other sectors, the FMCG industry did not slow down since Q2 2008. the industry is doing pretty well, bucking the trend. 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 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 semiurban and rural markets.

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The following are the main characteristics of FMCGs:

From the consumers' perspective:


o o

Frequent purchase Low involvement (little or no effort to choose the item products with strong brand loyalty are exceptions to this rule) Low price

From the marketers' angle:


o o o o

High volumes Low contribution margins Extensive distribution networks High stock turnover

ISIC definition The retail market for FMCGs includes businesses in the following International Standard Industrial Classification (ISIC) (Revision 3) categories :

ISIC 5211 retail sales in non-specialized stores ISIC 5219 other retail sale in non-specialized stores ISIC 5220 retail sale of food, beverages and tobacco in specialized stores ISIC 5231 retail sale of pharmaceutical and medical goods, cosmetic and toilet articles

ISIC 5251 retail sale via mail order houses ISIC 5252 retail sale via stalls and markets ISIC 5259 whole sale goods

Supplier industries for FMCGs include


1511 meat and meat products 1512 fish and fish products 1513 fruit and vegetables 1514 vegetable and animal oils and fats
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1520 dairy products 1531 grain mill products 1532 starches and starch products 1533 animal feeds 1541 bakery products 1542 sugar 1543 cocoa, chocolate and sugar confectionery 1544 macaroni, noodles, couscous 1549 other food products 1551 spirits; ethyl alcohol 1552 wines 1553 malt liquors and malt 1554 soft drinks, mineral waters 1600 tobacco products 2101 pulp, paper and paperboard 2102 corrugated paper, containers 2109 other articles of paper and paperboard 2424 soap and detergents, cleaning preparations, perfumes.like the big supermarkets

FMCG sector in India


The fast-moving consumer goods (FMCG) sector in India is the fourth largest sector in the economy. It also called the consumer packaged goods sector. The FMCG sector in India has market size in excess of US$ 13.1 billion as of the year 2012. The FMCG sector in India had a growth rate of 15% in the year 2011.

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FMCG companies in India The following is a list of FMCG companies in India:


Hindustan Unilever Ltd. Colgate-Palmolive (India) Ltd. ITC Limited SABMiller, India Britannia Industries Ltd. Marico Industries Ltd. Nestl India Godrej Group Tata Global Beverages Parle Agro Nirma Bovonto Cavin Kare Grove limited Wipro GCMMF (AMUL) Reckitt Benckiser Cadburys India Procter & Gamble Hygiene and Health Care Gillette India Ltd. Godfrey Phillips Henkel Spic Johnson & Johnson Himalaya Herbal Healthcare Modi Revlon
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Industry Category and Products


Household Care
Personal Wash:The market size of personal wash is estimated to be around Rs. 8,300 Cr. The personal wash can be segregated into three segments: Premium, Economy and Popular. The penetration level of soaps is ~92 per cent. It is available in 5 million retail stores, out of which, 75 per cent are in the rural areas. HUL is the leader with market share of ~53 per cent; Godrej occupies second position with market share of ~10 per cent. With increase in disposable incomes, growth in rural demand is expected to increase because consumers are moving up towards premium products. However, in the recent past there has not been much change in the volume of premium soaps in proportion to economy soaps, because increase in prices has led some consumers to look for cheaper substitutes. Detergents:The size of the detergent market is estimated to be Rs. 12,000 Cr. Household care segment is characterized by high degree of competition and high level of penetration. With rapid urbanization, emergence of small pack size and sachets, the demand for the household care products is flourishing. The demand for detergents has been growing but the regional and small unorganized players account for a major share of the total volume of the detergent market. In washing powder HUL is the leader with ~38 per cent of market share. Other major players are Nirma, Henkel and Proctor & Gamble.

Personal Care Skin Care:The total skin care market is estimated to be around Rs. 3,400 Cr. The skin care market is at a primary stage in India. The penetration level of this segment in India is around 20 per cent. With changing life styles, increase in disposable incomes, greater product choice and availability, people are becoming aware about personal grooming. The major players in this segment are Hindustan Unilever with a market share of ~54 per cent, fol-lowed by CavinKare with a market share of ~12 per cent and Godrej with a market share of ~3 per cent. Page | 12

Hair Care:The hair care market in India is estimated at around Rs. 3,800 Cr. The hair care market can be segmented into hair oils, shampoos, hair colorants & conditioners, and hair gels. Marico is the leader in Hair Oil segment with market share of ~ 33 per cent; Dabur occu-pies second position at ~17 per cent.

Shampoos:The Indian shampoo market is estimated to be around Rs. 2,700 Cr. It has the penetration level of only 13 per cent in India. Sachet makes up to 40 per cent of the total shampoo sale. It has low penetration level even in metros. 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. Antidandruff segment constitutes around 15 per cent of the total shampoo market. The market is further expected to increase due to increased marketing by players and availability of shampoos in affordable sachets.

Oral Care:The oral care market can be segmented into toothpaste - 60 per cent; toothpowder - 23 per cent; toothbrushes - 17 per cent. The total toothpaste market is estimated to be around Rs. 3,500 Cr. The penetration level of toothpowder/toothpaste in urban areas is three times that of rural areas. This segment is dominated by Colgate-Palmolive with market share of ~49 per cent, while HUL occupies second position with market share of ~30 per cent. In toothpowders market, Colgate and Dabur are the major players. The oral care market, es-pecially toothpastes, remains under penetrated in India with penetration level ~50 per cent.

Food & Beverages Food Segment :The foods category in FMCG is gaining popularity with a swing of launches by HUL, ITC, Godrej, and others. This category has 18 major brands aggregating Rs. 4,600 Cr. Nestle and Amul slug it out in the powders segment. The food category has also seen innovations like softies in ice creams, ready to eat rice by HUL and pizzas by both GCMMF and Godrej Pillsbury.

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Tea :The major share of tea market is dominated by unorganized players. More than 50 per cent of the market share is capture by unorganized players. Leading branded tea players are HUL and Tata Tea.

Coffee :The Indian beverage industry faces over supply in segments like coffee and tea. However, more than 50 per cent of the market share is in unpacked or loose form. The major players in this segment are Nestl, HUL and Tata Tea.

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GROWTH PROSPECT
Large Market India has a population of more than 1.150 Billions which is just behind China. According to the estimates, by 2030 India population will be around 1.450 Billion and will surpass China to become the World largest in terms of population. FMCG Industry which is directly related to the population is expected to maintain a robust growth rate.

Spending Pattern An increase is spending pattern has been witnessed in Indian FMCG market. There is an upward trend in urban as well as rural market and also an increase in spending in organ-ized retail sector. An increase in disposable income, of household mainly because of in-crease in nuclear family where both the husband and wife are earning, has leads to growth rate in FMCG goods.

Changing Profile and Mind Set of Consumer People are becoming conscious about health and hygienic. There is a change in the mind set of the Consumer and now looking at Money for Value rather than Value for Money. We have seen willingness in consumers to move to evolved products/ brands, because of changing lifestyles, rising disposable income etc. Consumers are Page | 15

switching from economy to premium product even we have witnessed a sharp increase in the sales of packaged water and water purifier. Findings according to a recent survey by A. C. Nielsen shows about 71 per cent of Indian take notice of packaged goods labels containing nutritional information compared to two years ago which was only 59 per cent.

Sources: Naukri Hub, IBEF, Chennai Online

Sources: Statistical Outline of India (2001-02), NCAER

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Advantages To The Sector


Governmental Policy Indian Government has enacted policies aimed at attaining international

competitiveness through lifting of the quantitative restrictions, reducing excise duties, automatic foreign in-vestment and food laws resulting in an environment that fosters growth. 100 per cent ex-port oriented units can be set up by government approval and use of foreign brand names is now freely permitted.

Central & State Initiatives Recently Government has announced a cut of 4 per cent in excise duty to fight with the slowdown of the Economy. This announcement has a positive impact on the industry. But the benefit from the 4 per cent reduction in excise duty is not likely to be uniform across FMCG categories or players. The changes in excise duty do not impact cigarettes (ITC, Godfrey Phillips), biscuits (Britannia Industries, ITC) or ready-to-eat foods, as these prod-ucts are either subject to specific duty or are exempt from excise. Even players with manu-facturing facilities located mainly in tax-free zones will also not see material excise duty savings. Only large FMCG-makers may be the key ones to bet and gain on excise cut.

Foreign Direct Investment (FDI) Automatic investment approval (including foreign technology agreements within specified norms), up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies (OCBs) investment, is allowed for most of the food

processing sector except malted food, alcoholic beverages and those reserved for small scale industries (SSI). There is a continuous growth in net FDI Inflow. There is an increase of about 150 per cent in Net Inflow for Vegetable Oils & Vanaspati for the year 2008.

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As their incomes and standards of living improve, Indian customers for FMCGs are shifting towards higher lifestyle categories like skin care, hair care, deodorants, convenience foods, health foods etc.

In fact, skin care, hair care, deodorants, convenience foods, and health foods are expected to experience notably higher growth than others in the near term, spurring various types of MNC investments to improve their lifestyle products businesses. For personal care lifestyle products, consumers are becoming increasingly willing to pay premium prices for them. This trend has compelled some companies to raise

prices and even create products aimed at the premium segment. In fact, deodorants, hair dyes and shampoos alone helped the FMCG industry to grow by 16% in 2007-08 (April-February), and 15% in the same period in 2006-079.

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Market Opportunities

Vast Rural Market Rural India accounts for more than 700 Million consumers, or ~70 per cent of the Indian population and accounts for ~50 per cent of the total FMCG market. The working rural population is approximately 400 Millions. And an average citizen in rural India has less then half of the purchasing power as compare to his urban counterpart. Still there is an untapped market and most of the FMCG Companies are taking different steps to capture rural market share. The market for FMCG products in rural India is esti-mated ~ 52 per cent and is projected to touch ~ 60 per cent within a year. Hindustan Unilever Ltd is the largest player in the industry and has the widest market coverage.

Export - Leveraging the Cost Advantage Cheap labor and quality product & services have helped India to represent as a cost advantage over other Countries. Even the Government has offered zero import duty on capital goods and raw material for 100% export oriented units. Multi National Companies out-source its product requirements from its Indian company to have a cost advantage. India is the largest producer of livestock, milk, sugarcane, coconut, spices and cashew apart from being the second largest producer of rice, wheat, fruits & vegetables. It adds a cost advantage as well as easily available raw materials.

Sectoral Opportunities Major Key Sectoral opportunities for Indian FMCG Sector are mentioned below:

Dairy Based Products India is the largest milk producer in the world, yet only around 15 per cent of the milk is processed. The organized liquid milk business is in its infancy and also has large long-term growth potential. Even investment opportunities exist products like desserts, puddings etc. in value-added

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Packaged Food Only about 10-12 per cent of output is processed and consumed in packaged form, thus highlighting the huge potential for expansion of this industry.

Oral Care The oral care industry, especially toothpastes, remains under penetrated in India with penetration rates around 50 per cent. With rise in per capita incomes and awareness of oral hygiene, the growth potential is huge. Lower price and smaller packs are also likely to drive potential up trading.

Beverages Indian tea market is dominated by unorganized players. More than 50% of the market share is capture by unorganized players highlighting high potential for organized players.

The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterised by a wellestablished 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. 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.

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Large domestic market


India is one of the largest emerging markets, with a population of over one billion. India is one of the largest economies in the world in terms of purchasing power and has a strong middle class base of 300 million.

Rural and urban potential


Rural-urban profile

Population 2001-02 (mn household) Population 2009-10 (mn household) % Distribution (2001-02) Market (Towns/Villages) Universe of Outlets (mn)

53 69 28 3,768 1

135 153 72 6,27,000 3.3

Source: Statistical Outline of India (2001-02), NCAER

Around 70 per cent of the total households in India (188 million) resides in the rural areas. The total number of rural households are expected to rise from 135 million in 2001-02 to 153 million in 2009-10. This presents the largest potential market in the world. The annual size of the rural FMCG market was estimated at around US$ 10.5 billion in 2001-02. With growing incomes at both the rural and the urban level, the market potential is expected to expand further.

India - a large consumer goods spender An average Indian spends around 40 per cent of his income on grocery and 8 per cent on personal care products. The large share of fast moving consumer goods (FMCG) in total individual spending along with the large population base is another factor that makes India one of the largest FMCG markets.

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Consumption pie:

Source: KSA Technopak Consumer Outlook 2004.

Source: Euro monitor.

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Change in the Indian consumer profile:

Source: Statistical Outline of India (2002-03).

Rapid urbanisation, 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 the young population is set to rise further. Aspiration levels in this age group have been fuelled by greater media exposure, unleashing a latent demand with more money and a new mindset.

Demand-supply gap
Currently, only a small percentage of the raw materials in India are processed into value added products even as the demand for processed and convenience food is on the rise. This demand supply gap indicates an untapped opportunity in areas such as packaged form, convenience food and drinks, milk products etc. In the personal care segment, the low penetration rate in both the rural and urban areas indicates a market potential.

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INDIA COMPETITIVENESS AND COMPARISON WITH THE WORLD MARKETS

Materials availability
India has a diverse agro-climatic condition due to which there exists a wide-ranging and large raw material base suitable for food processing industries. India is the largest producer of livestock, milk, sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat and fruits & vegetables. India also has an ample supply of caustic soda and soda ash, the raw materials in the production of soaps and detergents India produced 1.6 million tonnes of caustic soda in 2003-04. Tata Chemicals, one of the largest producers of synthetic soda ash in the world is located in India. The availability of these raw materials gives India the locational advantage.

Source: DIPP.

Apart from the advantage in terms of ample raw material availability, existence of lowcost labour force also works in favour of India. Labour cost in India is amongst the lowest in Asian countries. Easy raw material availability and low labour costs have resulted in a lower cost of production. Many multi-nationals have set up large low cost production bases in India to outsource for domestic as well as export markets. Penetration and per capita consumption Rural - urban penetration (2002) Page | 24

Source: HLL, Indian Readership Survey.

Penetration level in most product categories like jams, tooth paste, skin care, hair wash etc in India is low. The contrast is particularly striking between the rural and urban Page | 25

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 categories.

Household income distribution 2003

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Household income distribution 2015

Demand for FMCG products is set to boom by almost 60 per cent by 2007 and more than 100 per cent by 2015. This will be driven by the rise in share of middle class (defined as the climbers and consuming class) from 67 per cent in 2003 to 88 per cent in 2015. The boom in various consumer categories, further, indicates a latent demand for various product segments. For example, the upper end of very rich and a part of the consuming class indicate a small but rapidly growing segment for branded products. The middle segment, on the other hand, indicates a large market for the mass end products.

The BRICs report indicates that India's per capita disposable income, currently at US$ 556 per annum, will rise to US$ 1150 by 2015 - another FMCG demand driver. Spurt in the industrial and services sector growth is also likely to boost the urban consumption demand.

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Rise in Indian disposable income (US$/annum)

MARKET OPPORTUNITIES FOR INVESTMENT

Source: HH Panel data Page | 28

HISTORY
The Indian FMCG sector is the fourth largest sector in the economy with an estimated size of Rs.1,300 billion. The sector has shown an average annual growth of about 11% per annum over the last decade. Unlike the developed markets, which are prominently dominated by few large players, Indias FMCG market is highly fragmented and a considerable part of the market comprises of unorganized players selling unbranded and unpackaged products. There are approximately 12-13 million retail stores in India, out of which 9 million are FMCG kirana stores. India FMCG sectors significant characteristics can be listed as strong MNC presence, well established distribution network, intense competition between the organised and unorganised players and low operational cost. Easy availability of important raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. Products which have a swift turnover and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG items are those which generally get replaced within a year. Examples of FMCG commonly include a wide range of repeatedly purchased consumer products such as toiletries, soap, cosmetics, oral care products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products etc. Penetration level and per capita consumption in many product categories is very low compared to world average standards representing the unexploited market potential. Mushrooming Indian population, particularly the middle class and the rural segments, presents the huge untapped opportunity to FMCG players. Growth is also likely to come from consumer 'upgrading' in the matured product categories like processed and packaged food, mouth wash etc. A distinct

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feature of the FMCG industry is the presence of international players through their subsidiaries (HLL, P&G, Nestle), which ensures innovative product launches in the market from their parent's portfolio. 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. India is the one of the major producer of livestock, milk, sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat and fruits & vegetables. Similarly, 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. The accessibility of these raw materials gives India the locational advantage.

MAJOR SEGMENTS OF THE FMCG INDUSTRY: 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. 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,
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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 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 second position with market share of ~30 per cent. In toothpowders market, Colgate and Dabur 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. Mjaor players in food segment are HUL, ITC, Godrej, Nestle and Amul.

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Manufacturer, exporter and supplier of Fast Moving Consumer Goods. We have special infrasture for marketing of pre expiry date fmcg products (min 6 months earlier) direct to consumer & actual user with special scheme of buy one & get one free. We also have coverage for special retail & outlets including super markets and departmental stores coverage for promotions launching of new fmcg products in prime locations in mumbai.

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FMCG Products

We Buy & Sell FMCG Products like all soaps, detergents, personal products, tooth paste, shampoos, vaseline, etc. We also buy odd lots of damaged & non moving stocks from fmcg sector for total reprocessing. We have special infrasture for marketing of pre expiry date FMCG Products (Min 6 Months earlier) direct to consumer & actual user with special scheme of buy one & get one free. We also have coverage for Special Retail & Outlets including super markets and departmental stores coverage for promotions launching of New FMCG Products in prime locations in Mumbai. Marketing & special price shops with attractive offers display also home to home supply arrangements.

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Top 10 Fast Moving Consumer Goods


FMCG (fast moving consumer goods) is a term that is used to refer to those goods which are sold through retail stores. These goods have a short period of shelf life and as such are used up within days, weeks, or months. At the most it lasts for a year. However there are also durable goods which people replace after using the same for many years. For example we can cite kitchen or other household appliances. Some FMCG products perish within a short time while others have a shelf life of more than a year. Nevertheless the turnover rates for both these categories are very high depending on customer demand and brand loyalty. FMCG products are made by companies that also make other products as well. Therefore to determine the best selling brands of fast moving consumer goods one has to look into the performance of FMCG companies which manufacture these products. For this market analysts apply different standard evaluations until they conclude on their findings. Every year the global market analyst Forbes Global 2000 releases the list of top ranking companies that make FMCG products and based on the sales and consumer demand of the respective products the top 10 products are determined. So here we present the top 10 FMCG companies with their highest selling product.

1. Proctor & Gamble:


Headquartered at Cincinnati in Ohio, United States, Procter and Gamble is a Fortune 500 American multinational company. It was founded in October 31 1837 by William Procter and James Gamble. Its flagship and best selling brand is Ariel laundry detergent which was launched in 1967. This detergent is available in different variants. The company also manufactures other best selling products that are highly popular around the world.
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2. Nestl:
Nestle is a Swiss multinational engaged in the production of different food products. It has its presence in more than 100 countries. It produces several top selling products in different food categories. Some of its best selling products are Lean Cuisine, Maggi, Boost, Kit Kat, Friskies, and Nescafe etc.

3. Anheuser-Busch:
Anheuser-Busch which is an American brewing firm is based in Belgium. Some of the best known beers of the world are manufactured by this company. The best selling brands of Anheuser-Busch are Budweiser, Natural Light, Bud Light (Americas best selling beer) and Bacardi etc.

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4. Unilever:
Unilever is a multinational engaged in the manufacture of different products like foods, personal grooming products, detergents and beverages etc. This British-Dutch company is the owner of over 400 leading brands in the world out of which 13 are billion dollar brands. One of its top products is Aviance which is a beauty product for women. This product is sold in many countries of Asia, Latin America and the Middle East.

5. Coca-Cola:
Coca-Cola Company which is based in Atlanta in Georgia manufactures the worlds most popular soft drink Coca Cola. It was Dr. John S. Pemberton who created this drink in 1886. Coca Cola touched base in every part of the US by 1895. The company began its franchisee operations in 1899 and gradually it opened up bottling plants in every corner of the globe. The universal popularity of Coca Cola is undisputed. The Coca Cola syrup mixed with carbonated water created ripples everywhere and today you can get a Coke in any part of the world.
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6. PepsiCo:
PepsiCo was created out of the amalgamation of two companies named Pepsi Cola and Frito Lay. The company which was formed in 1965 has its headquarters at Purchase in Harrison New York. It is a Fortune 500 company. PepsiCo is engaged in the manufacture of snack foods (grain based), beverages and other similar products. One of its best known brands is the cola beverage Pepsi-Cola. Created in 1893 its former name was Brads Drink.

7. Kraft Foods:
Boasting of brands that are over a century old Kraft Foods is a US based multinational having its presence in over 155 countries. The company is engaged in the manufacture of confectioneries, food products and beverages. It had gone for several acquisitions which has helped the company to increase its product list with several top notch brands. Kraft Foods is known worldwide for products like Cadbury, Jacobs, Kraft Dinner (in Canada), Oscar Mayer, Oreo etc. All the products are available in several continents.
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8. Philip Morris International: Philip Morris International is one of the best known tobacco companies of the world. This tobacco multinational sells its products in more than 160 countries. Some of its best known cigarette brands are Marlboro, Philip Morris, Chesterfield, Virginia Slims etc.

9. British American Tobacco:


Another multinational tobacco major is the British American Tobacco company which is the worlds second largest tobacco company. It sells its tobacco products in several top markets across the globe. Many world-famous cigarette brands are manufactured by BAT. One of its top selling cigarette brands is Pall Mall. Some other leading cigarette brands manufactured by the company are Dunhill, Kent, Lucky Strike and Vogue.

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10. Nokia: Nokia is a Finnish multinational engaged primarily in the manufacture of mobile telephones. The company has its headquarters at Keilaniemi, Espoo which is near Helsinki, the capital of Finland. This mobile communication giant is the largest manufacturer of mobile telephones in the world. Its products are sold in every part of the world. Nokia has launched many innovative mobile systems and almost all its products have been hot sellers.

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SWOT ANALYSIS

Strengths:
Low operational costs Presence of established distribution networks in both urban and rural areas Presence of well-known brands in FMCG sector Favorable governmental Policy: Indian Government has passed the policies aimed at attaining international competitiveness through lifting of the quantitative

restrictions, reducing excise duties, 100 per cent export oriented units can be set up by government approval and use of foreign brand names etc. Foreign Direct Investment (FDI): Automatic investment approval up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies investment is allowed for most of the food processing sector except malted food, alcoholic beverages and those reserved for small scale industries (SSI).

Weaknesses:
Lower scope of investing in technology and achieving economies of scale, especially in small sectors Low exports levels

Opportunities:
Untapped rural market, changing life style Rising income levels, i.e. increase in purchasing power of consumers Large domestic market with more population of median age 25 High consumer goods spending

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India is the largest milk producer in the world, yet only around 15 per cent of the milk is processed. The organized liquid milk business is in its infancy and also has large long-term growth potential. Even investment opportunities exist in value-added products like desserts, puddings etc. Only about 10-12 per cent of output is processed and consumed in packaged form, thus highlighting the huge potential. India is under penetrated in many FMCG categories as shown in below diagram. With rise in per capita incomes and awareness, the growth potential is huge. Lower price and smaller packs are also likely to drive potential up trading for major FMCG products

Threats:
Removal of import restrictions resulting in replacing of domestic brands Tax and regulatory structure Rural demand is cyclical in nature and also depends upon monsoon.

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CONSUMER SALES PROMOTINAL ACTIVITIES

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. The study here pertains to consumers perceptions regarding sales promotion. Some past researches have suggested that promotion itself has an effect on the perceived value of the brand. This is because promotions provide utilitarian benefits such as monetary savings, added value, increased quality and convenience as well as hedonic benefits such as entertainment, exploration and self-expression. Broadly speaking most of the companies using Marketing Mix which includes

Price Place (Channel of Distribution) Product Promotion

These are the four basic pillar of marketing mix. Most of the marketing strategies are built on the basis of these criteria.

Promotion is one of the important elements of marketing mix. There are so many elements of promotion such as

Advertising Direct Marketing Public Relations Sales Promotion

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Traditionally, sales Promotions have been used by marketer to increase sales in the short term. However, in the last few decades this communication tool has evolved and now is considered from a strategic point of view. For this reason, it is necessary to realize new studies in this area and study how consumers evaluate sales promotions.

Sales promotions have grown in both importance and frequency over the past few decades. Although an accurate estimate for total sales promotions expenditures does not exist, we can be sure that the trend is up.

Sales promotion serves three essential roles: It informs, persuades and reminds prospective customers about a company and its products. Even the most useful product or brand will be a failure if no one knows that it is available. As we know, channels of distribution take more time in creating awareness because a product has to pass through many hands between a producer and consumers.

Therefore, a producer has to inform channel members as well as ultimate consumers about the attributes and availability of his products. The second purpose of promotion is persuasion. The cut throat competition among different products puts tremendous pressure on their manufacturers and they are compelled to undertake sales promotion activities. The third purpose of promotion is reminding consumers about products availability and its potential to satisfy their needs.

From these elements Sales Promotion is the element which is in the focus of this project. Further Sales Promotion is quite broad term it includes

Trade Oriented Sales Promotion:

Trade Oriented Sales Promotion aimed to motivate channel member of the company and to encourage them to push companys product. Trade Oriented Sales Promotion includes dealer contest and incentives, trade allowances. Point-of-purchase displays, sales training programs, trade shows, cooperative advertising, and other programs designed to motivate distributors and retailers to carry a product and make an extra effort to push it to their customers

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Consumer Oriented Sales Promotion:

Consumer Oriented Sales Promotion is the main topic of this project. Here emphasize is given to motivate consumer to increase sales. Consumer Oriented Sales Promotion includes Sampling, Couponing, Premiums, Contest, Refunds, Rebates, Bonus Packs, Price-off, Event marketing etc.

Definition:

For the purpose of this study, following definitions of sales promotion were kept in mind. Kotler defines sales promotion as: Sales promotion consists of a diverse collection of incentive tools, mostly short-term designed to stimulate quicker and/or greater purchase of particular products/services by consumers or the trade. Roger Strang has given a more simplistic definition i.e. sales promotions are short term incentives to encourage purchase or sales of a product or service.

Hence, any forms of incentives (price cut or value added nature) offered for short period either to trade or consumers are considered as sales promotion activities.

Marketers uses consumer oriented sales promotion tools for the following reasons:

To increase short term sales To induce trial To reduce inventory To establish a brand name To make cross selling To cope up with competition To avoid advertising clutter

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Tools of Consumer Oriented Sales Promotion:

There are so many tools or technique available to the marketers for achieving objective of sales promotion. These tools should be used considering all other factors affecting such as cost, time, competitors, availability of goods etc. These tools are as under

1. Sampling 2. Couponing 3. Price-Off 4. Premium 5. Contest 6. Bonus Pack Lets have look at each tool

1. Sampling:

Sampling is an important and very frequently used sales promotion tool. In sampling consumers are given some quantity of a product for no charge to induce trial. Sampling is the most effective way to generate trial, at the same time it is most expensive tools. Sampling is also used for established product. Marketers of packaged-goods products such as food, health care items, cosmetics, and toiletries are heavy users of sampling.

Benefits of Sampling:

From the consumers point of view Sampling is risk free way to try new product. With the help of sampling scheme consumer can experience directly which is not possible in any kind of advertisement. Sampling is best way to induce trial when product feature are very difficult to describe through advertisement.

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Limitation of Sampling: The main drawback of sampling is of cost. While giving free sample it requires financial soundness because otherwise company cant afford it. While giving free sample it is necessary that brand have some unique quality. There is some product which requires long time to show result due to that it is possible that the sampling scheme may not give benefit as expected. E.g. Skin cream requires time to show result in this case it is possible that customer might not respond when there is no such scheme.

Distribution of Samples:

Door-to-door sampling: Here product is directly delivered to the prospects residence. This distribution method is very expensive because of labour cost. But it can be cost effective if marketer has exact information of target market.

Sampling through the mail: This method can be used when product is comparable small, lightweight, and nonperishable. In this method marketer has control over where and when the product will be distributed. The main drawback is of postal restrictions and increasing postal rates.

In-store sampling: This method requires great support from retailers. This method is more used in product like food, perfume, etc. Here table or booth set-up in the store. In this method consumer can directly taste and than can purchase.

On-package sampling: In this method free sample is attached to another product. This is cost effective method but it is also not free from drawback as it is distributed only to consumers who purchase the item to which it is attached the sample will not reach nonusers of the carrier brand.

Other Methods: To distribute free sample, methods like newspaper, magazine are used. Send sample to those who call tall free number. Thorough internet free sample can be distributed like film clip. Page | 48

2. Couponing:

Couponing is the oldest and most widely used way of sales promotion. Coupons have been used since 1895. It is mostly used by packaged goods. It is worthwhile to use coupon as a promotion tool because data shows that market for packaged goods increased from 16 billion in 1968 to 310 billion in 1994. To boost up the sales not only manufacturer but retailers personally can also used. Benefits of Couponing: Couponing leads to price reductions so as to encourage price sensitive customers. Non users can try a product which may leads to regular sales. Reduction in price reduces the consumers perceived risk associated with new product such as financial risk, social risk, psychological risk etc. Coupons can be used not only for newly launched product but it can also use for already established brand. Limitations of Couponing: It is very difficult to estimate number of buyers. Cost of coupon and reduction given as per scheme leads to reduction in over all profit of the firm. It may to target towards actual buyers, some other may got benefit of it who are actually not interested. It can be manipulated by retailers and company may not get the result expected. Distribution of coupons: The use of newspaper and magazine as a vehicle for distributing coupon was used quite freely. Newspaper and magazine gives advantage of market selectivity, shorter lead time and cost efficiency. But now a day these media is not so much effective. Very widely used method for distributing coupon is placing coupons either inside or on the outside of the package. Distribution through newspaper freestanding inserts is by far the most popular method for delivering coupons to consumers. Page | 49

3. Price-off:

A price-off is simply a reduction in the price of the product to increase sales and is very often used when introduction a new product. A reduction in price always increases sales but the use of this technique should be carefully considered in the current market situation.

Price-off is the most preferred sales promotion technique because consumers response very positively to this scheme. Not only that but it also cause large increase in sales volume. Price-off reductions are typically offered tight on the package through specially marked price packs. E.g. Krack Jack offers 30% Price-off.

Generally Price-offs given from 10 to 50 percent of the regular price. Here reduction is coming out from manufacturers profit margin, and not the retailers.

Benefits of Price-off: Since marketers bare the probable reduction in price at cost of his own profit so he can control over the price-off scheme. Price-off can be a strong influence at the point of purchase when price comparisons are being made. Price-off promotion can also encourage consumers to purchase larger quantities. Limitation of Price-off: 4. Premium: Premium is an offer of an item either free or at a low price .With consumer spending more, companies will look to incentive programs as a way to maintain customer loyalty and capture a greater share of the market. Creative and will-constructed premium promotions are known delivering brand enhancing and sales building results. Retailers may create pricing and inventory problems because retailers will not accept packages with a specific price shown. To the company it is very expensive tool of sales promotion

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Currently marketers ask themselves how to select a premium. There are some guidelines for choosing a premium: Offer a brand that enhances your brand, and capitalize on the equity of the brands logo by incorporating it into the premium item. Two basic type of premium:

1. Free Premium: Free premiums are small gifts included in the product package or sent to consumers who mail in a request along with a proof or purchase. Free Premium includes toys, balls, trading card or other items. Free premium have high impulse value and can provide an extra incentive to buy the product. Even though it is also facing some problems like cost factor, which results from the premium itself as well as from extra packaging that may be needed. Again retailers can manipulate with customer and with the free premium scheme.

2. Self-Liquidating Premiums: In Self-Liquidating Premiums consumers are requires to pay some or all of the cost of the premium plus handling and mailing costs. This tool is more useful to the retailers to gain extra profit as he can purchase from manufacturer and than can sale it to final user at lower cost. Here the aim is not to make profit on the premium item but rather just to cover costs and offer a value to the consumer. Offering values to consumers through the premium products can create interest in the brand and goodwill that enhances the brands image.

Self-Liquidating Premiums also has some limitation. It has very low redemption rate. Consumers are not always responds to this type of sales promotion scheme.

5. Contest:

A contest is a promotion where consumers compete for prizes or money on the basis of skills or ability. To the customers contest is more attractive because they have mentality that they can win big prizes being offered. Contest usually provide

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a purchase incentive by requiring a proof of purchase to enter or an entry form that is available from a dealer or advertisement; some contest require consumers to read an ad or package or visit a store display to gather information needed to enter. Marketers must be careful not to make their contests too difficult to enter, as doing so might discourage participation among key prospects in the targets audience. There is another term called Sweepstakes which is promotion where winners are determined purely by chance; it does not require a proof of purchase as condition for entry. Entrants need only submit their names for the prize drawing. It is easier to enter thats why sweepstakes more customers than contest.

Benefits of Contest: Contest and sweepstakes can get the customers involved with a brand by making the promotion product relevant. Marketers can use contests and sweepstakes to build brand equity by connecting the prizes to the lifestyle, needs or interests of the target audience. Consumers can know more about the product as well as about company as direct involvement increases.

Limitation of Contest: In contest and sweepstakes winners are given prizes randomly so customers reluctant to pay more attention towards it. Marketers have cut back the uses of these promotional tools due to its lower effectiveness and fears that consumers might become dependent on them. A major problem in contest and sweepstakes is that of participation by professionals or hobbyists who submit many entries but have no intention of purchasing the product. Further, for marketers it increases so many other activities like managing all the entries and selecting winner from them and delivering prize to them which also requires so many time and it also increase cost. Page | 52

6. Bonus Pack:

Bonus packs offer the consumer an extra amount of a product at the regular price by providing larger containers or extra units. Bonus is also frequently used sales promotion tool because consumer response towards bonus pack is very positive. The additional value of a bonus pack is generally obvious to the consumer and can have a strong impact on the purchase decision at the time of purchase.

Benefits from Bonus Pack: It gives a direct way to provide extra value without having to get involved with complicated coupons or refund offers. Bonus can be a good answer to competitors promotion or introduction of a new brand. Bonus packs result in larger purchase orders and favorable display space in the store if the relationships with retailers are good.

Limitation of Bonus Pack: It requires additional space so retailers or distributors may create problem if the relation with distributors are not good as it does not give any extra benefit to them. Another problem is that bonus packs may appeal primarily to current users who probably would have purchase the brand anyway or to promotion sensitive consumers who may not become loyal to the brand. A common limitation is of cost. As marketers giving extra quantity it makes cost to the company.

These are the main consumer oriented sales promotion tools Marketers use any of them or more then one at a time depending on the sales promotion strategy. There are some other sales promotion tools like Refunds and Rebates, Frequency Programs, Event Marketing etc to name a few, but these tools are used very less compared to earlier noted main tools.

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Factors Influencing Consumer Oriented sales promotion:

Mainly four factors should be taken into account while determining the sales promotion programme.

> Target market > Nature of product > Stage of product life cycle > Budget available for promotion

1. Target Market:

While doing sales promotion, marketer must know who their target market is, otherwise there is no use of all effort because it leads to no where. A target market can be in any of the stages of buying hierarchy i.e. awareness, knowledge, liking, preferences, conviction and purchase. Each stage defines a possible goal of promotion.

2. Nature of the product:

There are various product attributes which influence sales promotional strategy. When the unit price is low the manufacturer as well as the customer has low risk but he can get the benefit of mass marketing. Therefore, mass marketing requires mass sales promotion schemes. Sales promotion scheme differ for products like its durability, perishable goods etc.

3. Stage of product Life Cycle:

Sales promotion strategies are influenced by the life cycle of a product. When a new product introduced, prospective buyers must be informed about its existence and its benefits and middlemen must be convinced to stock it. Later, if a product becomes successful, competition intensifies and more emphasis is placed on sales promotion to increase its sales.

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4. Budget Available for Promotion:

The funds available for promotion are the ultimate determinant of the promotional programme. A business with ample funds can make more effective use of sales promotion programme than a firm with limited financial resources. The budget for sales promotion can be prepared by the following methods

Percentage of Sales Fixed funds available for sales promotion Following the competition, and Budgeting by objective.

Why do Sales promotion schemes affect sales?

There are three mechanisms behind these facts. It is Purchase quantity, Brand switching and Category expansion.

First, consumer can increase the quantity they buy just because the product is on sale.

Second, consumers are inducing to purchase another brand different from the one they would have purchased when there is no promotional incentive. Finally, consumers total consumption of the product category is increased by the promotion. However, in the long term this positive effect may be diluted because a promotional campaign has no permanent effect in the sales of the firm

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Sales Promotion Strategy:

Sales are the lifeblood of a business, without sales there would be no business in the first place; therefore it is very important that if a business wants to succeed, it should have a sales promotion strategy in mind. The primary objective of a sales promotion is to improve a companys sales by predicting and modifying your target customers purchasing behavior and patterns. Sales promotion is very important as it not only helps to boost sales but it also helps a business to draw new customers while at the same time retaining older ones. There are a variety of sales promotional strategies that a business can use to increase their sales, however it is important that we first understand what a sales promotion strategy actually is and why it is so important. A sales promotion strategy is an activity that is designed to help boost the sales of a product or service. This can be done through an advertising campaign, public relation activities, a free sampling campaign, a free gift campaign, a trading stamps campaign, through demonstrations and exhibitions, through prize giving competitions, through temporary price cuts, and through door-to-door sales, telemarketing, personal sales letters, and emails. The importance of a sales promotion strategy cannot be underestimated. This is because a sales promotion strategy is important to a business boosting its sales. When developing a sales promotion strategy for your business, it is important that you keep the following points in mind.

Consumer attitudes and buying patterns Your brand strategy Your competitive strategy Your advertising strategy Other external factors that can influence products availability and pricing.

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There are three types of sales promotion strategies:


A push strategy A pull strategy or A combination of the two

A Push Strategy: A push sales promotion strategy involves pushing distributors and retailers to sell your products and services to the consumer by offering various kinds of promotions and personal selling efforts. What happens here is that a company promotes their product/services to a reseller who in turn promotes it to another reseller or to the consumer. The basic objective of this strategy is to persuade retailers, wholesalers and distributors to carry your brand, give it shelf space, promote it by advertising, and ultimately push it forward to the consumer. Typical push sales promotion strategies include; buy-back guarantees, free trials, contests, discounts, and specialty advertising items. A Pull Strategy: A pull sales promotion strategy focuses more on the consumer instead of the reseller or distributor. This strategy involves getting the consumer to pull or purchase the product/services directly from the company itself. This strategy targets its marketing efforts directly on the consumers with the hope that it will stimulate interest and demand for the product. This pull strategy is often used when distributors are reluctant to carry or distribute a product. Typical pull sales promotion strategies include; samples, coupons, cash refunds or rebates, loyalty programs and rewards, contests, sweepstakes, games, and point-of-purchase displays. A Combination of Two Strategies: A combination sales promotion strategy is just that; it is a combination of a push and a pull strategy. It focuses both on the distributor as well as the consumers, targeting both parties directly. It offers consumer incentives side by side with dealer discounts.

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Sales Promotion and different theories:

There are certain theories which can be considered by the marketers while deciding sales promotion strategies. It should be noted that these theories are not final conclusion but it helps in making better decisions. Here I will try to elaborate on two theory i.e. theory of attitude and theory of prospects.

Sales Promotion and theory of Attitude: Multi attribute models of attitude (Fishbein and Ajzen, 1975) depict the consumers decision to perform a specific behavior as the logical consequence of beliefs, attitudes and intentions with regard to the behavior. As per this model, a consumers intention to buy a brand may be based on positive/negative attitudes towards a promotion.

Attitude Model: Behavior Reward or Punishment Purchase Not Purchase

It is found that the impact of three attitudinal dimensions price consciousness, time value and satisfaction/pride on consumers decision to use coupons. Results of their study showed that there was a positive relationship between coupon usage and consumer price consciousness. There was a significant

negative relationship between coupon usage and perceived value of time indicating that the more a consumer valued his or her time, the lesser was the tendency to use coupons. The authors found that coupon usage increased when the consumer perceived higher satisfaction and pride with the use of coupons. Some marketers applied the theory of reasoned action to understand consumers decision to use coupons. As per the model, behavior towards coupons would be influenced by consumer intentions to use coupons. Consumers intention to use coupons would be determined by their attitudes and subjective norms. Consumers attitudes would be formed through their beliefs in the rewards and costs of using coupons while subjective norms would be formed through consumers perception of Page | 58

whether important others think they should expend the effort to clip, save and use coupons. It is found that beliefs in the rewards of using coupons had high positive correlation with attitude while inconveniences and encumbrances had weak negative correlation with attitude

Although attitude models provide important insights into the consumer decisionmaking process, researchers have found discrepancies between stated attitudes and actual behavior. in several studies (Perry and Gillespie, 1976; Keesling and Kaynama, 2003). Studies in different contexts have shown that attitudes are actually poor predictors of behavior. This possibly accounts for the limited application of attitude models to examine consumer response to sales promotions.

Sales Promotion and Prospect Theory: This theory proposes that people perceive outcomes of a choice as perceived losses and Gains relative to a subjective reference point/price. As per this theory of sales promotions it is stated that consumers perception of promotion as a loss or gain is a function of the type of the promotion. They proposed that non price promotions such as premium offers which segregate the

promotional gain from the purchase price will be viewed as gains. On the other hand, price promotions such as price off, which integrate the promotional gain with the purchase price will be viewed as reduced losses. The impact of price versus non price promotions on a consumers reference price reasoned that price promotions would be integrated with the purchase price of the product and lead to a reduction of internal reference price. While non price promotions would be segregated from the purchase price of a product and not lead to a reduction of internal reference price. Results showed that price promotions led to a lower internal reference price while non price promotions did not affect internal reference price.

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Sales promotion from the retailers point of view:

Perceptions on Scheme Preference

It was found that retailer perceived price offs as a better form of sales promotion activity. Price offs in their opinion had relatively a greater impact compared to any other form of sales promotion activity like Bonus packs, Premium, Contests etc. Retailers preferred price offs the most, then bonus pack, premium, contests, in order of importance.

Perceptions about Buying Roles

Retailers viewed that the person who came to the shop (who may be a maid, son, daughter, daughter-in-law and child) was the decider of a toilet soap brand and not the Income provider (e.g. head of the family). It could be inferred that visibility of information about the sales promotion activity at the point of purchase could result into the purchase of a promoted brand.

Perceptions about their role in decision-making

Retailer had relatively very low influence in affecting choice. It could be inferred that visibility and awareness about the scheme were the critical success factors so that pull could be created.

Perceptions about Response to Sales Promotion Offers

They believed that younger age-groups were more experimental in nature, amenable to trying new brands, and sought/looked for or asked whether there were any) sales promotion schemes running on any toilet soap at the time of purchase.

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Perceptions about Communications of Sales Promotion Schemes

Retailers perceived that role of word of mouth and television advertising played an important part in providing information inputs to consumers regarding sales promotion activities.

Variations in Information Flow Smaller (non-supermarket, small format store) retailers received relatively less support compared to supermarkets in terms of servicing, margins, information about sales promotion activities from the dealers. Many a times small retailers were only informed verbally about sales promotion schemes by the dealer salesmen during the scheduled weekly visits.

Dealer-Retailer Dynamics

At the time of sales promotion activities, dealers had tendency to push unwanted stocks onto the smaller retailers. In fact these retailers preferred to stock variety of brands and wanted payment for shelf and window display to increase traffic into their store. However, supermarkets and big retailers were pampered and given special services and given better margins and better allowances.

Margins It was found that in sales promotion schemes margins varied from 6 to15% depending of the size of the retail outlet, bargaining power of a retailer, quantity ordered by him etc. Mostly margins were linked to size of the volumes that were ordered. Perceptions about terms and conditions

Retailers were not found to be happy with sales promotion schemes where their margins were cut on the pretext of just fast movement of inventory of the brand being promoted. Also if additional incentive was offered it was subject to minimum performance requirement.

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Nature of POP

Retailers indicated that most of the POP (Point of Purchase) materials were meant for brand advertisement and not for giving information regarding the schemes. Thus it could be inferred that companys follow up was not adequate.

Servicing during duration of Scheme

In stock-out situation during the running of the sales promotion schemes, smaller retailers had to wait for replenishment of stocks till the next scheduled weekly visit by the dealer salesman but big retailers were serviced on telephonic request for replenishment of stocks. This clearly indicated the disparity in treatment.

Problem of left-over

A leftover stock at the end of any scheme was required to be sold by the retailers before they ordered fresh stocks. In case of bonus packs scheme, leftover stock was often dismantled (cut open buy one get one free) and sold them individually as a regular soap. This approach of the company leads to misappropriation which in turn could result in adverse brand image.

Gifts for Retailer motivation

Companies at times were rewarding retailers by giving free gifts like thermos flasks or clocks if they sold more than certain quantity in a given period. Companies were making a half-hearted effort to motivate retailers.

Perceptions about mass media announcements

Retailers viewed that whenever sales promotion scheme was announced on TV, it created pull and they were more than willing to stock such brands. For example Medimix and Dettol contest was not advertised on TV, hence there was very little awareness leading to unsold stock till 6 months. While Lux Gold Star which was heavily promoted on T.V. is recalled even today. Page | 62

Sales Promotion from the Consumers point of view:

Willingness to buy on sales promotion offer

Sixty per cent of the sample did not show willingness to buy a brand due to promotion while 30% showed willingness and 10% were not sure. This indicates that when 30% showed willingness and 10% consumers who were not sure, these groups might be lured through innovative and lucrative sales promotion offer.

Ability to induce trial Forty per cent of the respondents had said that sales promotion had the ability to induce trial which reinforces the above inference.

Long-term impact In order to understand ability of the promotions to increase long-term sales, respondents were asked about continuity of purchase of a brand after the withdrawal of promotion. Eighty per cent of the respondents indicated that they would not continue. But 20% said they would. Thus, it could be inferred that promotions in this category (low involvement products) might encourage trial and brand switching but not long term loyalty.

Preference of Schemes: Price off was the most preferred type of scheme. Maximum customers ranked price-offs as number one or two.

Perceived Quality: Majority of respondents had a perception that the quality of the promoted brands remained the same during promotion, while some of them felt that it was inferior than before. It can be inferred that promotions were not leading to negative brand quality perceptions. It is found that some customer strongly preferred to buy their regular brand and said that sales promotion would not weaken their loyalty towards the brand.

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Perceptions regarding underlying company motivations On tapping perceptions regarding underlying company motivations for sales promotion, to increase sales was ranked highest followed by to attract switchers and to sell excess stocks. While providing value to customers and to reinforce company image were ranked lowest. This indicates that consumers believed that companies were undertaking such activities only for their own benefit and not for the benefit of consumers.

Findings from retailer and consumer perception studies, it is evident that there was a matching of perceptions regarding nature of scheme (price offs as most preferred type of scheme mentioned by consumers and retailers perceptions about consumer preferences). Since retailers observe consumers in store behaviour were frequently and directly, their perceptions regarding providing consumer behaviour are likely to be accurate. Such inputs from the retailers would be useful to companies.

The retailers had the perception that those schemes which were announced through mass media had better response. This was reinforced by the consumer survey which showed that recall in case of heavily promoted schemes on TV was found to be very high. Retailers prediction of companies motivation for offering sales promotion were matching with the consumer perception regarding the same. Thus both viewed that companies were using sales promotion activities mainly to increase short term sales or encourage switching or selling excess stock and not really to give value benefit or enhance/reinforce brand/company image.

Page | 64

KEY FINDINGS

Page | 65

Q.1 Do you purchase the same brand every time?

Statistics HOUSE PACKED SOAP N Valid Missing 80 22 TOOTHPASTE 60 42 MASALA 45 57 PICKLE 35 67 MOSQUITO REPELLENT 30 72 CLEANING PRODUCTS 65 37

Frequency Table
SOAP Cumulative Frequency Valid yes no Total Missing .00 System Total Total 20 60 80 20 2 22 102 Percent 19.6 58.8 78.4 19.6 2.0 21.6 100.0 Valid Percent 25.0 75.0 100.0 Percent 25.0 100.0

TOOTHPASTE Cumulative Frequency Valid yes no Total Missing .00 System Total Total 35 25 60 40 2 42 102 Percent 34.3 24.5 58.8 39.2 2.0 41.2 100.0 Valid Percent 58.3 41.7 100.0 Percent 58.3 100.0

Page | 66

PACKED MASALA Cumulative Frequency Valid yes no Total Missing .00 System Total Total 20 25 45 55 2 57 102 Percent 19.6 24.5 44.1 53.9 2.0 55.9 100.0 Valid Percent 44.4 55.6 100.0 Percent 44.4 100.0

PICKLE Cumulative Frequency Valid yes no Total Missing Total .00 20 15 35 65 100 Percent 20.0 15.0 35.0 65.0 100.0 Valid Percent 57.1 42.9 100.0 Percent 57.1 100.0

MOSQUITO REPELLENT Cumulative Frequency Valid yes no Total Missing .00 System Total Total 25 5 30 70 2 72 102 Percent 24.5 4.9 29.4 68.6 2.0 70.6 100.0 Valid Percent 83.3 16.7 100.0 Percent 83.3 100.0

Page | 67

HOUSE CLEANING PRODUCTS Cumulative Frequency Valid yes no Total Missing .00 System Total Total 30 35 65 35 2 37 102 Percent 29.4 34.3 63.7 34.3 2.0 36.3 100.0 Valid Percent 46.2 53.8 100.0 Percent 46.2 100.0

48% 52%

YES NO

Page | 68

INTERPRETATION:
Soap: 75% of the respondents said that they do not purchase the same brand every time while 25 % said that they do purchase the same brand every time.

Toothpaste: 41.7% of the respondents said that they do not purchase the same brand every time while 58.3 % said that they do purchase the same brand every time.

Packed Masala: 55.1% of the respondents said that they do not purchase the same brand every time while 44.9 % said that they do purchase the same brand every time.

Pickle: 42.9% of the respondents said that they do not purchase the same brand every time while 57.1 % said that they do purchase the same brand every time.

Mosquito Repellent: 16.7% of the respondents said that they do not purchase the same brand every time while 83.3 % said that they do purchase the same brand every time.

House Cleaning Products: 53.8% of the respondents said that they do not purchase the same brand every time while 46.2 % said that they do purchase the same brand every time.

Overall: 52% of the respondents said that they do not purchase the same brand every time while 48 % said that they do purchase the same brand every time.

Page | 69

The consumer behaviour related to brand switching varies a lot across different products with 75 % of consumers in the soap category agreeing that they switch brands regularly while only 16.7% of consumers in the mosquito repellent category agreed that they switch brands regularly. Overall, to get a fair idea an average of these responses show that 52% of the consumers switch brands for one or the other reasons while 48% of the consumers stick to the same brand.

Q.2 Why do you change your brand?

Case Processing Summary Cases Valid N Why change soap * income Why change toothpaste * income 75 60 Percent 73.5% 58.8% N 25 40 Missing Percent 26.5% 41.2% N 100 100 Total Percent 100.0% 100.0%

Why change packed masala * income Why change pickle * income Why change mosquito repellent * income

46

45.1%

54

54.9%

100

100.0%

35 30

34.3% 29.4%

65 70

65.7% 70.6%

100 100

100.0% 100.0%

Why change cleaning products * income

65

63.7%

35

36.3%

100

100.0%

Page | 70

Why change soap * income Cross tabulation Count income less than 25000 26000-50000 51000-75000 more than 75000 Total Why change soap schemes trial better quality Total 10 0 10 20 10 0 15 25 4 0 11 15 5 0 10 15 29 5 41 75

Page | 71

Why change toothpaste * income Cross tabulation

income less than 25000 26000-50000 51000-75000 more than 75000 Total whychangetoothpaste schemes trial better quality Total 6 0 4 10 18 3 4 25 1 3 11 15 0 0 10 10 25 6 29 60

Page | 72

PACKED MASALA * income Cross tabulation Count income less than 25000 26000-50000 51000-75000 more than 75000 Total PACKED MASALA schemes trial better quality Total 11 7 2 20 3 0 3 6 4 0 6 10 0 5 5 10 18 12 16 46

Page | 73

PICKLE * income Crosstabulation Count income less than 25000 26000-50000 51000-75000 more than 75000 Total PICKLE schemes trial better quality Total 10 3 2 15 5 0 5 10 1 0 4 5 0 0 5 5 16 3 16 35

Page | 74

Why change mosquito repellent * income Cross tabulation Count income less than 25000 26000-50000 51000-75000 Total whychangemosquito trial better quality Total 5 10 15 0 10 10 0 5 5 5 25 30

Page | 75

Why change cleaning * income Cross tabulation Count income less than 25000 26000-50000 51000-75000 more than 75000 Total whychangecleaning schemes trial better quality Total 10 10 5 25 5 0 5 10 15 0 0 15 0 5 10 15 30 15 20 65

Page | 76

INTERPRETATION:
Soap: The cross tabulation of the reason of changing a brand with the income of the respondent in the soap category shows that there is a change in the reason with increasing income of the respondent. 6 out of 10 respondents of income less than 25,000 say the they change brand due to the promotional schemes while only 5 out of 15 respondents of more than 75,000 category claim so.

Toothpaste: The cross tabulation of the reason of changing a brand with the income of the respondent in the toothpaste category shows that there is a change in the reason with increasing income of the respondent. 6 out of 10 respondents of income less than 25,000 say the they change brand due to the promotional schemes while only 0 out of 10 respondents of more than 75,000 category claim so.

Packed Masala: The cross tabulation of the reason of changing a brand with the income of the respondent in the packed masala category shows that there is a change in the reason with increasing income of the respondent. 11 out of 20 respondents of income less than 25,000 say the they change brand due to the promotional schemes while only 0 out of 10 respondents of more than 75,000 category claim so.

Pickle: The cross tabulation of the reason of changing a brand with the income of the respondent in the pickle category shows that there is a change in the reason with increasing income of the respondent. 10 out of 15 respondents of income less than

Page | 77

25,000 say the they change brand due to the promotional schemes while only 0 out of 5 respondents of more than 75,000 category claim so.

Mosquito Repellent: The cross tabulation of the reason of changing a brand with the income of the respondent in the mosquito repellent category shows that there is a change in the reason with increasing income of the respondent. 10 out of 15 respondents of income less than 25,000 say the they change brand due to the better quality while all 5 respondents of more than 75,000 category claim so.

House Cleaning Products: The cross tabulation of the reason of changing a brand with the income of the respondent in the house cleaning products category shows that there is a change in the reason with increasing income of the respondent. 10 out of 25 respondents of income less than 25,000 say the they change brand due to the promotional schemes while only 0 out of 15 respondents of more than 75,000 category claim so.

Hence, a gradual shift towards better quality rather than promotional schemes as a reason for changing a brand is seen as the income slab increases. Though the shift varies from product to product but a general trend towards better quality is seen as income increases.

Page | 78

Q.3 Was there any promotional scheme with this brand?


Frequencies

Statistics HOUSE PACKED SOAP N Valid Missing 80 22 TOOTHPASTE 60 42 MASALA 45 57 PICKLE 35 67 MOSQUITO REPELLENT 30 72 CLEANING PRODUCTS 65 37

Frequency Table

SOAP Cumulative Frequency Valid yes no Total Missing .00 System Total Total 60 20 80 20 2 22 102 Percent 58.8 19.6 78.4 19.6 2.0 21.6 100.0 Valid Percent 75.0 25.0 100.0 Percent 75.0 100.0

TOOTHPASTE Cumulative Frequency Valid Missing yes .00 System Total Total 60 40 2 42 102 Percent 58.8 39.2 2.0 41.2 100.0 Valid Percent 100.0 Percent 100.0

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PACKED MASALA Cumulative Frequency Valid yes no Total Missing .00 System Total Total 30 15 45 55 2 57 102 Percent 29.4 14.7 44.1 53.9 2.0 55.9 100.0 Valid Percent 66.7 33.3 100.0 Percent 66.7 100.0

PICKLE Cumulative Frequency Valid yes no Total Missing .00 System Total Total 20 15 35 65 2 67 102 Percent 19.6 14.7 34.3 63.7 2.0 65.7 100.0 Valid Percent 57.1 42.9 100.0 Percent 57.1 100.0

MOSQUITO REPELLENT Cumulative Frequency Valid yes no Total Missing .00 System Total Total 15 15 30 70 2 72 102 Percent 14.7 14.7 29.4 68.6 2.0 70.6 100.0 Valid Percent 50.0 50.0 100.0 Percent 50.0 100.0

Page | 80

HOUSE CLEANING PRODUCTS Cumulative Frequency Valid yes no Total Missing .00 System Total Total 60 5 65 35 2 37 102 Percent 58.8 4.9 63.7 34.3 2.0 36.3 100.0 Valid Percent 92.3 7.7 100.0 Percent 92.3 100.0

22%

YES NO

78%

Page | 81

INTERPRETATION:
Soap: 75% of the respondents agreed that there was a promotional scheme for the brand they bought while 25 % of the respondents did not.

Toothpaste: 100% of the respondents agreed that there was a promotional scheme for the brand they bought.

Packed Masala: 66.7 % of the respondents agreed that there was a promotional scheme for the brand they bought while 33.3 % of the respondents did not.

Pickle: 57.1% of the respondents agreed that there was a promotional scheme for the brand they bought while 42.9 % of the respondents did not.

Mosquito Repellent: 50% of the respondents agreed that there was a promotional scheme for the brand they bought while 50 % of the respondents did not.

House Cleaning Products: 92.3% of the respondents agreed that there was a promotional scheme for the brand they bought while 7.7 % of the respondents did not.

Overall: 78 % of the respondents agreed that there was a promotional scheme for the brand they bought while 22 % of the respondents did not.

Page | 82

Q.4 If, yes which one?


Frequencies
Statistics HOUSE PACKED SOAP N Valid Missing 60 42 TOOTHPASTE 60 42 MASALA 30 72 PICKLE 20 82 MOSQUITO REPELLENT 15 87 CLEANING PRODUCTS 60 42

Frequency Table
SOAP Cumulative Frequency Valid Missing price promotion .00 System Total Total 60 40 2 42 102 Percent 58.8 39.2 2.0 41.2 100.0 Valid Percent 100.0 Percent 100.0

TOOTHPASTE Cumulative Frequency Valid price promotion free gifts Total Missing .00 System Total Total 40 20 60 40 2 42 102 Percent 39.2 19.6 58.8 39.2 2.0 41.2 100.0 Valid Percent 66.7 33.3 100.0 Percent 66.7 100.0

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PACKED MASALA Cumulative Frequency Valid Missing price promotion .00 System Total Total 30 70 2 72 102 Percent 29.4 68.6 2.0 70.6 100.0 Valid Percent 100.0 Percent 100.0

PICKLE Cumulative Frequency Valid Missing price promotion .00 System Total Total 20 80 2 82 102 Percent 19.6 78.4 2.0 80.4 100.0 Valid Percent 100.0 Percent 100.0

MOSQUITO REPELLENT Cumulative Frequency Valid Missing price promotion .00 System Total Total 15 85 2 87 102 Percent 14.7 83.3 2.0 85.3 100.0 Valid Percent 100.0 Percent 100.0

Page | 84

HOUSE CLEANING PRODUCTS Cumulative Frequency Valid Missing price promotion .00 System Total Total 60 40 2 42 102 Percent 58.8 39.2 2.0 41.2 100.0 Valid Percent 100.0 Percent 100.0

6%

PRICE PROMOTION COUPONS FREE GIFTS REFUNDS LOYALTY INCENTIVE 94%

Page | 85

INTERPRETATION:
Soap: 100 % of the respondents bought the brand with which there was a price promotion scheme.

Toothpaste: 66.7 % of the respondents bought the brand with which there was a price promotion scheme while 33.3 % of the respondents bought the brand which had free gifts scheme.

Packed Masala: 100 % of the respondents bought the brand with which there was a price promotion scheme.

Pickle: 100 % of the respondents bought the brand with which there was a price promotion scheme.

Mosquito Repellent: 100 % of the respondents bought the brand with which there was a price promotion scheme.

House Cleaning Products: 100 % of the respondents bought the brand with which there was a price promotion scheme.

Overall: 94 % of the respondents bought the brand with which there was a price promotion scheme while 6 % of the respondents bought the brand which had free gifts scheme.

Page | 86

Q.5 How much did you save by availing this scheme?

Frequencies

Statistics PACKED SOAP TOOTHPASTE N Valid Missing 60 42 60 42 MASALA 30 72 PICKLE 20 82 MOSQUITO REPELLENT 20 82 HOUSE CLEANING PRODUCTS 60 42

Frequency Table
SOAP Cumulative Frequency Valid 10-15 more than20 Total Missing .00 System Total Total 10 50 60 40 2 42 102 Percent 9.8 49.0 58.8 39.2 2.0 41.2 100.0 Valid Percent 16.7 83.3 100.0 Percent 16.7 100.0

TOOTHPASTE Cumulative Frequency Valid 10-15 more than20 Total Missing .00 System Total Total 50 10 60 40 2 42 102 Percent 49.0 9.8 58.8 39.2 2.0 41.2 100.0 Valid Percent 83.3 16.7 100.0 Percent 83.3 100.0

Page | 87

PACKED MASALA Cumulative Frequency Valid 15-20 more than20 Total Missing .00 System Total Total 10 20 30 70 2 72 102 Percent 9.8 19.6 29.4 68.6 2.0 70.6 100.0 Valid Percent 33.3 66.7 100.0 Percent 33.3 100.0

PICKLE Cumulative Frequency Valid 15-20 more than20 Total Missing .00 System Total Total 10 10 20 80 2 82 102 Percent 9.8 9.8 19.6 78.4 2.0 80.4 100.0 Valid Percent 50.0 50.0 100.0 Percent 50.0 100.0

MOSQUITO REPELLENT Cumulative Frequency Valid 0-5 15-20 more than20 Total Missing .00 System Total Total 5 5 10 20 80 2 82 102 Percent 4.9 4.9 9.8 19.6 78.4 2.0 80.4 100.0 Valid Percent 25.0 25.0 50.0 100.0 Percent 25.0 50.0 100.0

Page | 88

HOUSE CLEANING PRODUCTS Cumulative Frequency Valid 5-10 10-15 15-20 more than20 Total Missing .00 System Total Total 5 10 5 40 60 40 2 42 102 Percent 4.9 9.8 4.9 39.2 58.8 39.2 2.0 41.2 100.0 Valid Percent 8.3 16.7 8.3 66.7 100.0 Percent 8.3 25.0 33.3 100.0

2%

2%

28%

RS 0-5 RS 5-10 RS 10-15

56% 12%

RS 15-20 MORE THAN 20

AMOUNT SAVED (IN RS) RS 0-5 RS 5-10 RS 10-15 RS 15-20 MORE THAN 20

NO OF RESPONSES 5 5 67 30 138

INTERPRETATION:
Page | 89

Soap: 16.7 % of the respondents said that they saved Rs.10-15 by availing the scheme with the product while 83.3 % of the respondents said that they save more that Rs.20 by availing the scheme. Toothpaste: 83.3 % of the respondents said that they saved Rs.10-15 by availing the scheme with the product while 16.7 % of the respondents said that they save more that Rs.20 by availing the scheme. Packed Masala: 33.3 % of the respondents said that they saved Rs.15-20 by availing the scheme with the product while 66.7% of the respondents said that they save more that Rs.20 by availing the scheme. Pickle: 50 % of the respondents said that they saved Rs.15-20 by availing the scheme with the product while 50 % of the respondents said that they save more that Rs.20 by availing the scheme. Mosquito Repellent: 25% of the respondents said that they saved Rs.0-5, 25 % of the respondents said that they saved Rs.15-20 by availing the scheme with the product while 50 % of the respondents said that they save more that Rs.20 by availing the scheme. House Cleaning Products: 8.3 % of the respondents said that they saved Rs.5-10, 16.7 % of the respondents said that they saved Rs.10-15 by availing the scheme with the product while 8.3 % of the respondents said that they save more that Rs.15-20 by availing the scheme.66.7 % of the respondents said that they save more than Rs.20 by availing he scheme. Overall: 2 % of the respondents said that they saved Rs.0-5, 2 % of the respondents said that they saved Rs.5-10, 28 % of the respondents said that they saved Rs.10-15 by availing the scheme with the product while 12 % of the respondents said that they save more that Rs.15-20 by availing the scheme.56 % of the respondents said that they save more than Rs.20 by availing he scheme.

Page | 90

Q.6 Did you have to buy more qty than intended to avail the scheme?
Frequencies

Statistics HOUSE PACKED SOAP N Valid Missing 55 47 TOOTHPASTE 65 37 MASALA 30 72 PICKLE 15 87 MOSQUITO REPELLENT 15 87 CLEANING PRODUCTS 65 37

Frequency Table

SOAP Cumulative Frequency Valid Missing yes .00 System Total Total 55 45 2 47 102 Percent 53.9 44.1 2.0 46.1 100.0 Valid Percent 100.0 Percent 100.0

TOOTHPASTE Cumulative Frequency Valid yes no Total Missing .00 System Total Total 20 45 65 35 2 37 102 Percent 19.6 44.1 63.7 34.3 2.0 36.3 100.0 Valid Percent 30.8 69.2 100.0 Percent 30.8 100.0

Page | 91

PACKED MASALA Cumulative Frequency Valid yes no Total Missing .00 System Total Total 5 25 30 70 2 72 102 Percent 4.9 24.5 29.4 68.6 2.0 70.6 100.0 Valid Percent 16.7 83.3 100.0 Percent 16.7 100.0

PICKLE Cumulative Frequency Valid Missing no .00 System Total Total 15 85 2 87 102 Percent 14.7 83.3 2.0 85.3 100.0 Valid Percent 100.0 Percent 100.0

MOSQUITO REPELLENT Cumulative Frequency Valid Missing no .00 System Total Total 15 85 2 87 102 Percent 14.7 83.3 2.0 85.3 100.0 Valid Percent 100.0 Percent 100.0

Page | 92

HOUSE CLEANING PRODUCTS Cumulative Frequency Valid yes no Total Missing .00 System Total Total 5 60 65 35 2 37 102 Percent 4.9 58.8 63.7 34.3 2.0 36.3 100.0 Valid Percent 7.7 92.3 100.0 Percent 7.7 100.0

34% YES NO 66%

Page | 93

INTERPRETATION:
Soap: 100 % of the respondents said that they had to buy more than intended to avail the scheme.

Toothpaste: 30.8 % of the respondents said that they has to buy more than intended to avail the scheme while 69.2% of the respondents said that they did not have to buy more to avail the scheme.

Packed Masala: 16.7 % of the respondents said that they has to buy more than intended to avail the scheme while 83.3% of the respondents said that they did not have to buy more to avail the scheme.

Pickle: 100 % of the respondents said that they had to buy more than intended to avail the scheme.

Mosquito Repellent: 100 % of the respondents said that they had to buy more than intended to avail the scheme.

House Cleaning Products: 7.7 % of the respondents said that they has to buy more than intended to avail the scheme while 92.3% of the respondents said that they did not have to buy more to avail the scheme.

Overall: 34 % of the respondents said that they has to buy more than intended to avail the scheme while 66% of the respondents said that they did not have to buy more to avail the scheme. Page | 94

Q.7 Did you spend more than intended to avail the scheme?

Frequencies

Statistics HOUSE PACKED SOAP N Valid Missing 55 47 TOOTHPASTE 60 42 MASALA 35 67 PICKLE 15 87 MOSQUITO REPELLENT 15 87 CLEANING PRODUCTS 60 42

Frequency Table

SOAP Cumulative Frequency Valid Missing yes .00 System Total Total 55 45 2 47 102 Percent 53.9 44.1 2.0 46.1 100.0 Valid Percent 100.0 Percent 100.0

TOOTHPASTE Cumulative Frequency Valid yes no Total Missing .00 System Total Total 20 40 60 40 2 42 102 Percent 19.6 39.2 58.8 39.2 2.0 41.2 100.0 Valid Percent 33.3 66.7 100.0 Percent 33.3 100.0

Page | 95

PACKED MASALA Cumulative Frequency Valid yes no Total Missing .00 System Total Total 5 30 35 65 2 67 102 Percent 4.9 29.4 34.3 63.7 2.0 65.7 100.0 Valid Percent 14.3 85.7 100.0 Percent 14.3 100.0

PICKLE Cumulative Frequency Valid Missing no .00 System Total Total 15 85 2 87 102 Percent 14.7 83.3 2.0 85.3 100.0 Valid Percent 100.0 Percent 100.0

MOSQUITO REPELLENT Cumulative Frequency Valid Missing no .00 System Total Total 15 85 2 87 102 Percent 14.7 83.3 2.0 85.3 100.0 Valid Percent 100.0 Percent 100.0

Page | 96

HOUSE CLEANING PRODUCTS Cumulative Frequency Valid Missing no .00 System Total Total 60 40 2 42 102 Percent 58.8 39.2 2.0 41.2 100.0 Valid Percent 100.0 Percent 100.0

33% YES NO 67%

Page | 97

INTERPRETATION:
Soap: 100 % of the respondents said that they had to spend more than intended to avail the scheme.

Toothpaste: 33.3 % of the respondents said that they had to spend more than intended to avail the scheme while rest 66.7 % said that they did not have to spend more than intended to avail the scheme.

Packed Masala: 14.3 % of the respondents said that they had to spend more than intended to avail the scheme while rest 85.7 % said that they did not have to spend more than intended to avail the scheme.

Pickle: 100 % of the respondents said that they had to spend more than intended to avail the scheme.

Mosquito Repellent: 100 % of the respondents said that they had to spend more than intended to avail the scheme.

House Cleaning Products: 100 % of the respondents said that they had to spend more than intended to avail the scheme.

Overall: 33 % of the respondents said that they had to spend more than intended to avail the scheme while rest 67 % said that they did not have to spend more than intended to avail the scheme.

Page | 98

Q.8 If yes how much?


Frequencies

Statistics HOUSE PACKED SOAP N Valid Missing 60 42 TOOTHPASTE 20 82 MASALA 5 97 PICKLE 0 102 MOSQUITO REPELLENT 0 102 CLEANING PRODUCTS 0 102

Frequency Table

SOAP Cumulative Frequency Valid 15-20 more than20 Total Missing .00 System Total Total 10 50 60 40 2 42 102 Percent 9.8 49.0 58.8 39.2 2.0 41.2 100.0 Valid Percent 16.7 83.3 100.0 Percent 16.7 100.0

TOOTHPASTE Cumulative Frequency Valid Missing more than20 .00 System Total Total 20 80 2 82 102 Percent 19.6 78.4 2.0 80.4 100.0 Valid Percent 100.0 Percent 100.0

Page | 99

PACKED MASALA Cumulative Frequency Valid Missing more than20 .00 System Total Total 5 95 2 97 102 Percent 4.9 93.1 2.0 95.1 100.0 Valid Percent 100.0 Percent 100.0

PICKLE Frequency Missing .00 100 Percent 100.0

Total

100

100.0

MOSQUITO REPELLENT Frequency Missing .00 100 Percent 100.0

Total

100

100.0

HOUSE CLEANING PRODUCTS Frequency Missing .00 100 Percent 100.0

Total

100

100.0

Page | 100

12% RS 0-5 RS 5-10 RS 10-15 RS 15-20 MORE THAN 20 88%

AMOUNT SPENT MORE RS 0-5 RS 5-10 RS 10-15 RS 15-20 MORE THAN 20

NO OF RESPONSES 0 0 0 10 73

Page | 101

INTERPRETATION:
Soap: 16.7 % of the respondents said that they had to spend Rs.15-20 to availing the scheme with the product while 83.3 % of the respondents said that they had to spend Rs.20 more to availing the scheme.

Toothpaste: 100% of the respondents said that they had to spend Rs.20 more to availing the scheme.

Packed Masala: 100% of the respondents said that they had to spend Rs.20 more to availing the scheme.

Pickle: 100% of the respondents said that they had to spend Rs.0 more to availing the scheme.

Mosquito Repellent: 100% of the respondents said that they had to spend Rs.0 more to availing the scheme.

House Cleaning Products: 100% of the respondents said that they had to spend Rs.0 more to availing the scheme.

Overall: 12 % of the respondents said that they had to spend Rs.15-20 to availing the scheme with the product while 88 % of the respondents said that they had to spend Rs.20 more to availing the scheme.

Page | 102

Q.9 which promotional activities do you prefer?

Descriptive Statistics N pricepromotion Valid N (listwise) 100 100 Minimum 1.00 Maximum 3.00 Mean 1.4500 Std. Deviation .67232

Descriptive Statistics N coupons Valid N (listwise) 90 90 Minimum 2.00 Maximum 4.00 Mean 3.3889 Std. Deviation .75987

Descriptive Statistics N freegifts Valid N (listwise) 100 100 Minimum 1.00 Maximum 33.00 Mean 3.5500 Std. Deviation 6.85694

Descriptive Statistics N refunds Valid N (listwise) 95 95 Minimum 2.00 Maximum 4.00 Mean 3.0526 Std. Deviation .76309

Descriptive Statistics N loyaltyincentive Valid N (listwise) 15 15 Minimum 3.00 Maximum 4.00 Mean 3.6667 Std. Deviation .48795

Page | 103

INTERPRETATION:

HEIRARCHY OF PREFERENCE OF BUYERS

FREE GIFTS COUPONS REFUNDS

LOYALTY INCENTIVE

PRICE PROMOTION

Page | 104

HYPOTHESIS
Ho: The amount spent more to avail the scheme is not dependent on the income of the buyer. H1: The amount spent more to avail the scheme is dependent on the income of the buyer.

Crosstabs

Case Processing Summary Cases Valid N SOAP * income TOOTHPASTE * income PACKED MASALA * income PICKLE * income MOSQUITO REPELLENT * income HOUSE CLEANING PRODUCTS * income 61 61.0% 39 39.0% 100 100.0% 55 60 35 16 15 Percent 55.0% 60.0% 35.0% 16.0% 15.0% N 45 40 65 84 85 Missing Percent 45.0% 40.0% 65.0% 84.0% 85.0% N 100 100 100 100 100 Total Percent 100.0% 100.0% 100.0% 100.0% 100.0%

Page | 105

SOAP * income
Crosstab Count income less than 25000 SOAP yes no Total 9 1 10 26000-50000 17 3 20 51000-75000 12 3 15 more than 75000 10 0 10 Total 48 7 55

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 2.333
a

df 3 3 1

sided) .506 .320 .631

3.507 .230 55

a. 4 cells (50.0%) have expected count less than 5. The minimum expected count is 1.27.

Page | 106

TOOTHPASTE * income
Crosstab Count income less than 25000 TOOTHPASTE Yes no Total 5 5 10 26000-50000 10 15 25 51000-75000 5 10 15 more than 75000 0 10 10 Total 20 40 60

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 6.750
a

Df 3 3 1

sided) .080 .021 .018

9.773 5.630 60

a. 2 cells (25.0%) have expected count less than 5. The minimum expected count is 3.33.

Page | 107

PACKED MASALA * income


Crosstab Count income less than 25000 PACKED MASALA Yes no Total 2 13 15 51000-75000 4 6 10 more than 75000 5 5 10 Total 11 24 35

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 4.220
a

df 2 2 1

sided) .121 .107 .043

4.471 4.085 35

a. 3 cells (50.0%) have expected count less than 5. The minimum expected count is 3.14.

Page | 108

PICKLE * income
Crosstab Count income less than 25000 PICKLE yes no Total 2 4 6 26000-50000 1 4 5 51000-75000 4 1 5 Total 7 9 16

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 4.080
a

df 2 2 1

sided) .130 .117 .150

4.284 2.069 16

a. 6 cells (100.0%) have expected count less than 5. The minimum expected count is 2.19.

Page | 109

MOSQUITO REPELLENT * income


Crosstab Count income less than 25000 MOSQUITO REPELLENT yes no Total 3 2 5 26000-50000 1 4 5 51000-75000 3 2 5 Total 7 8 15

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 2.143
a

df 2 2 1

sided) .343 .322 1.000

2.263 .000 15

a. 6 cells (100.0%) have expected count less than 5. The minimum expected count is 2.33.

Page | 110

HOUSE CLEANING PRODUCTS * income


Crosstab Count Income less than 25000 HOUSE CLEANING PRODUCTS Total yes no 2 23 25 2600050000 2 8 10 5100075000 4 11 15 more than 75000 3 8 11 Total 11 50 61

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 3.121
a

Df 3 3 1

sided) .373 .343 .096

3.336 2.776 61

a. 4 cells (50.0%) have expected count less than 5. The minimum expected count is 1.80.

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INTERPRETATION:
Soap: The significance level for the soap category for chi square test when cross tabulated with the income of the buyer is 0.306. Thus it can be inferred that there is association between the amounts spent more to avail the scheme and the income of the buyer. Toothpaste: The significance level for the soap category for chi square test when cross tabulated with the income of the buyer is 0.80. Thus it can be inferred that there is association between the amounts spent more to avail the scheme and the income of the buyer. Packed Masala: The significance level for the soap category for chi square test when cross tabulated with the income of the buyer is 0.121. Thus it can be inferred that there is association between the amounts spent more to avail the scheme and the income of the buyer.

Pickle: The significance level for the soap category for chi square test when cross tabulated with the income of the buyer is 0.130. Thus it can be inferred that there is association between the amounts spent more to avail the scheme and the income of the buyer.

Mosquito Repellent: The significance level for the soap category for chi square test when cross tabulated with the income of the buyer is 0.343. Thus it can be inferred that there is association between the amounts spent more to avail the scheme and the income of the buyer.

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House Cleaning Products: The significance level for the soap category for chi square test when cross tabulated with the income of the buyer is 0.373. Thus it can be inferred that there is association between the amounts spent more to avail the scheme and the income of the buyer.

Overall: Hence it can be inferred that the amount spent more to avail the scheme has association with the income of the buyer. We can conclude from this that the buyer spends more in accordance to his income rather than attractiveness of the scheme.

Hence Ho is rejected. Hence the amount spent more to avail the scheme is dependent on the income of the buyer.

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CONCLUSIONS

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More than half of the population of consumers switch brands of FMCG products due to some reason or the other. (52% of the consumers agreed that they switch brands regularly.)

The percentage of consumers switching brands varies across different FMCG products. (75% of respondents under soap category agreed that they switch brands regularly while only 16.7% of respondents under mosquito repellent category agreed to it.)

The reason of switching brands varies with the income of the buyer. The reason of switching brand tends towards better quality as the income of the individual increases. The reason with lower income groups being schemes and with higher income groups being better quality of the product. Though the shift varies from product to product but a general trend towards better quality is seen as income increases.

Schemes giving instant cash benefit are preferred by the consumers. Most of the buyers purchase products with price promotion schemes with 94 % of the buyers bought products with price promotion.

The buyers save big amounts by availing the scheme. 56% of the buyers save more than Rs. 20 on a single product during a single shopping trip, 28% saved Rs.10-15 on a single product while 12% save Rs.15-20 on a single product.

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The buyers in return have to buy more quantity of the product to avail the scheme and save the above mentioned amounts. 34 % of the respondents said that they had to buy more than intended to avail the scheme.

Again the quantity need to bought more to avail the scheme varies across products and the scheme offered by the brand.100% of respondents under soap category agreed that they had to buy more than intended to avail the scheme but only 7% of the respondents under house cleaning products agreed to it.

So it can be concluded that the buyer increase the basket size in the process to avail the promotional schemes and get value for money.

As the buyer needs to buy more to avail the scheme it directly affects the total amount they spent to buy the product. 88% of the buyers agreed that they had to spend more than Rs.20 to avail the scheme.

The most preferred promotional activity by the consumers is price promotion followed by loyalty incentive, free gifts, coupons and refunds being the least preferred promotional activity.

The amount spent more to avail the scheme has association with the income of the buyer. We can conclude from this that the buyer spends more in accordance to his income rather than attractiveness of the scheme.

Hence the amount spent more to avail the scheme is dependent on the income of the buyer. Page | 116

RECOMMENDATIONS

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The brands should come up with promotional activities which give instant cash benefit to the consumers as such promotions are preferred by them.

The consumers do not mind buying more quantity to avail the offers hence the brands can come up with schemes wherein the consumers need to buy more quantity to avail the schemes offered.

The amount spent more to avail schemes with FMCG has association with the income of the buyer and hence the target set of consumers should be studied before coming up with the promotions.

The reason of switching brands does tend towards better quality but even higher income groups indulge into cherry picking and hence the scope should not be limited to lower income groups.

The retailers can come up with their own promotion schemes if not offered by brands. Such schemes will increase foot falls at the store and hence the retailers sales.

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ANNEXURE

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QB No.

I No.

Date

Hello Sir/Madam, The student of GLS NRIBM is doing a Survey. It would be appreciated if you could kindly spend few minutes of your valuable time and help us in filling up the questionnaire. The data collected through this survey is purely for academic purpose only and will be kept completely confidential and not divulged to any organization for commercial use.
HOUSEHOLD PRODUCTS
MOSQUITO REPELLENT HOUSE CLEANING PRODUCTS

PERSONALCARE QUESTIONS
PARTICULARS SOAP TOOTH PASTE

PACKED FOOD
PACKED MASALA PICKLE

Which of these products did you buy today? Which brand did you buy today?

Do you purchase the same brand every time?

YES NO

Why do you change your brand?

SCHEMES TRIAL BETTER QUALITY LOWER PRICE

Was there any promotional scheme with this brand?

YES NO Price Promotio n Coupons Free Gifts Refunds Loyalty Incentive Page | 120

If , yes which one ?

How much did you save by availing this scheme ? ( IN RS.)

0-5 Rs. 5-10 Rs. 10-15 Rs. 15-20 Rs. MORE THAN 20

Did you have to buy more qty than intended to avail the scheme?

YES NO

Did you spend more than intended to avail the scheme? YES NO If yes how much ?
(IN RS.)

0-5 Rs. 5-10 Rs. 10-15 Rs. 15-20 Rs. MORE THAN 20

Which promotional activities do you prefer ? (Rank the top 4 preferred activities Rank 1 for the most preferred and 4 for least preferred)

Price Promotion Coupons Free Gifts Refunds Loyalty Incentive

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PERSONAL INFORMATION: OCCUPATION : House Wife Employed Self Employed Retired

No. of members in the family: MONTHLY INCOME: 75,000 Shopping Days : SUN < 25,000 26,000-50,000 51,000-75,000 >

MON

TUE

WED

THU

FRI

SAT

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BIBLIOGRAPHY

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BOOK Marketing Management Research Methodology Human Resource Magazine Value Line FMC Products Business World Website
http://www.inbics.co.kr/english/reference/Final_Reports/INBICS_FMCG_Report.pdf http://www.assocham.org/arb/afp/2009/AFP_Oct2009_Prospects_in_the_FMCG_secto r.pdf http://www.indiainbusiness.nic.in/business-news/news-bulletin/oct13-19%20_09.pdf http://www.moneycontrol.com/news_html_files/news_attachment/2008/FMCG%20Sec tor%20Report1.pdf http://www.fddiindia.com/publications/newsletter/2009/007/July/FDDINL_215_17.07. 2009.pdf

Phillip Kotler Kooper Aswathapa

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