A Study on Marketing Strategies in Fmcg in Relation With Hidustan Unilever Limited. Research Report

8/10/2019 A Study on Marketing Strategies in Fmcg in Relation With Hidustan Unilever Limited. Research Report

http://slidepdf.com/reader/full/a-study-on-marketing-strategies-in-fmcg-in-relation-with-hidustan-unilever 1/82

-

0



-

PREFACE

This study gives the comprehensive view of the Indian FMCG Sector. The FMCG

sector being the fourth argest sector in the economy has the tota mar!et si"e of #S$

%&.% biion. It is set to trebe from #S$ %%.' biion in (00& to #S$ &&.) biion in

(0%*. This sector is characteri"ed by products of day-to-day use+ products which are

generay treated as ow invovement products but sti they attract high advertising

spend because of the !ind of intense competition among the industry payers.

The Indian FMCG industry has e,perienced a maor sowdown and has been on a

recovery path since the past coupe of years. This study e,pains the changingdynamics in the FMCG sector+ which has forced the FMCG maors i!e #/ to

revamp their product+ mar!eting+ distribution formats to meet the changing customer

reuirements or preferences.

The recovery in the FMCG sector in India is uite broad-based+ covering most

product categories and companies+ athough the degree of recovery differs.

Importanty+ most companies are aso demonstrating renewed optimism in the sector

by increasing ad spend and investment in new initiatives. The mar!et is not fuyappreciative of the sustainabiity of the recovery and hence wi i!ey be positivey

surprised.

The Toiet soap industry+ which is one of the odest Fast Moving Consumer Goods

1FMCG2 industries in India+ is among the highest penetrated category within FMCG

sector reaching an estimated 3*4 urban and 564 of the rura househods. 7part from

that+ this segment has witnessed an outburst of saes promotion scheme and the

tremendous 7d spends as compared to other segments of the FMCG industry. This

study aso accesses the perceptions of the consumers on these new strategies adopted

by various FMCG companies.

%



-

ACKNOWLEDGEMENT

Through this report+ I ta!e the opportunity to e,press my sincere gratitude and

than!funess to a those who have heped me in ma!ing my dissertation report.

First of a I woud i!e to than! J.I.E.I+ for having such a system in pace+ where

students are given opportunities to earn about their areas of interest.

I woud i!e to than! Mr. Prashant Tiwari (Facult! for providing with his abe

guidance and visionary support to me without which this proect woud not been

possibe.

(RAJAT "ING# TOMAR!

(



-

TA$LE OF CONTENT"

Chapter - %

Introduction

8bective

Scope

9esearch Methodoogy

/imitations

Chapter - (

Company :rofie

;ata 7naysis

Concusion

Chapter -&

9ecommendations

<ibiography

7ppendi,

&



-

C#APTER % &INTROD'CTION

O$JECTIE

"COPE

RE"EARC# MET#ODOLOG)

LIMITATION"

)



-

INTROD'CTION

MARKET OERIEW

The overa picture of the corporate sector emerging after the first uarter resut shows

that the tempo of the Indian economy=s integrating into the goba economy is

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

the Information Technoogy 1IT2 and IT-based service sectors+ growth in e,port-

import trade and in goba acuisitions.

9apid urbani"ation+ increased iteracy and rising per capita income+ have a caused

rapid growth and change in demand patterns+ eading to an e,posion of new

opportunities. Consumption demand for consumer is increasing which can be seen

from the improvement in the performance of the fast moving consumer goods

1FMCG2 companies.

FMCG IND'"TR) * TREND" AND PLA)ER"

TREND"+

>stimated at around #S$ %).* biion 1appro,imatey 9s.'*+ 000 crores2 in (00*+

India=s fast moving consumer goods 1FMCG2 sector is the fourth argest industriasector in the country=s e,panding economy. It has a strong M?C presence and is

characterised by a we estabished distribution networ!+ intense competition between

the organised and unorganised segments and ow operationa cost. 7vaiabiity of !ey

raw materias+ cheaper abour costs and presence across the entire vaue chain gives

India a competitive advantage.

*



-

The FMCG mar!et is set to trebe from #S$ %%.' biion in (00& to #S$ &&.) biion

in (0%*. :enetration eve as we as per capita consumption in most product

categories i!e ams+ toothpaste+ s!in care+ hair wash etc in India is ow indicating the

untapped mar!et potentia. <urgeoning Indian popuation+ particuary the midde

cass and the rura segments+ presents an opportunity to ma!ers of branded products to

convert consumers to branded products. Growth is aso i!ey to come from consumer

@upgrading@ in the matured product categories.

7nother is the stri!ing contrast between the rura and urban segments - the average

consumption by rura househods is much ower than their urban counterparts. /ow

penetration indicates the e,istence of unsaturated mar!ets+ which are i!ey to e,pand

as the income eves rise. This provides an e,ceent opportunity for the industry

payers in the form of a vasty untapped mar!et. Moreover+ per capita consumption in

most of the FMCG categories 1incuding the high penetration categories2 in India is

ow as compared to both the deveoped mar!ets and other emerging economies. 7 rise

in per capita consumption+ with improvement in incomes and affordabiity and change

in tastes and preferences+ is further e,pected to boost FMCG demand. Growth is aso

i!ey to come from consumer AupgradingA+ especiay in the matured product

categories. Most Indian FMCG companies focus on urban mar!ets for vaue and rura

mar!ets for voumes. The tota mar!et has e,panded from #S$ %6.' biion in %33(-

3& to #S$ (( biion in %335-33 at current prices. 9ura demand constituted around

*(.* per cent of the tota demand in %335-33. ence+ rura mar!eting has become a

critica factor in boosting bottomines. 7s a resut+ most companies@ have offered ow

price products in convenient pac!aging. These contribute the maority of the saes

voume. In comparison+ the urban eite consume a proportionatey higher vaue of

FMCGs+ but not voume.

'



-

PLA)ER"+

7 distinct feature of the FMCG industry in India is the presence of domestic as we as

goba payers through their subsidiaries 1#/+ :BG+ and ?este2.

D,-stic Plars

Britannia India Ltd (BIL)

<ritannia India /td was incorporated in %3%5 as <ritannia <iscuit Co /td and

currenty the Groupe ;anone 1G;2 of France 1a goba maor in the food processing

business2 and the ?usi adia Group hod a )*.& per cent euity sta!e in <I/ through

7I< /td 1a *0D*0 oint venture2. <I/ is a dominant payer in the Indian biscuit

industry+ with maor brands such as Tiger gucose+ Marie god+ Fifty-Fifty+ Good ;ay+

:ure Magic+ <ourbon etc. The company hods a )0 per cent mar!et share in the

overa organi"ed biscuit mar!et and has a capacity of &00+000 tonne per annum.

Currenty+ the ba!ery product business accounts for 33.% per cent of <I/@s turnover.

The company reported net saes of #S$ (50 miion in (00(-0&. <ritannia Industries

/td 1<I/2 pans to increase its manufacturing capacity through outsourced contract

manufacturing and a Greenfied pant in #ttarancha to e,pand its share in the

domestic biscuit and confectionery mar!et.

D a/ur In0ia Lt0

>stabished in %55)+ ;abur India /td is the argest Indian FMCG and ayurvedic

products company. The group comprises ;abur Finance+ ;abur ?epa :vt /td+ ;abur

>gypt /td+ ;abur 8verseas /td and ;abur Internationa /td. The product portfoio of

the company incudes heath care+ food products+ natura gums B aied chemicas+

6



-

pharma+ and veterinary products. Some of its eading brands are ;abur 7ma+ ;abur

Chyawanprash+ Eati!a+ amoa+ /a ;ant Manan+ :udin ara and the 9ea range of

fruit uices. The company reported net saes of #S$ (%5 miion in (00&-0). ;abur

has firmed up pans to restructure its saes and distribution structure and focus on its

core businesses of fast-moving consumer good products and over-the-counter drugs.

#nder the restructured set-up+ the company pans to increase direct coverage to gap

outets and gap towns where ;abur is not present. 7 roadmap is aso being prepared to

rationaise the stoc!ists@ networ! in different regions between various products and

divisions.

In0ian T,/acc, C,r1,rati,n Lt0 (ITCL!

Indian Tobacco Corporation /td is an associate of <ritish 7merican Tobacco with a

&6 per cent sta!e. In %3%0 the company@s operations were restricted to trading in

imported cigarettes. The company changed its name to ITC /imited in the mid

seventies when it diversified into other businesses. ITC is one of India@s foremost

private sector companies with a turnover of #S$ (.' biion. hie ITC is an

outstanding mar!et eader in its traditiona

businesses of cigarettes+ hotes+ paperboards+ pac!aging and agrie,ports+ it is rapidy

gaining mar!et share even in its nascent businesses of branded appare+ greeting cards

and pac!aged foods and confectionary. 7fter the merger of ITC otes with ITC /td+

the company wi ramp up its growth pans by strengthening its aiance with Sheraton

and through focus on internationa proects in ;ubai and the Far >ast. ITC@s

subsidiary+ Internationa Trave ouse 1IT2 aso aims to aunch new products and

services by way of boutiues that wi provide compete trave services.

Maric,

5



-

Marico is a eading Indian Group incorporated in %330 and operating in consumer

products+ aesthetics services and goba ayurvedic businesses. The company aso

mar!ets food products and distributes third party products. Marico owns we-!nown

brands such as :arachute+ Saffoa+ Swee!ar+ Shanti 7ma+ air B Care+ 9evive+

Medi!er+ 8i of Maabar and the Si range of processed foods. It has si, factories+ and

sub-contract faciities for production. In (00&-0)+ the company reported a turnover of

#S$ (00 miion. The overseas saes franchise of Marico@s branded FMCG products is

one of the argest amongst Indian companies. It is aso the argest Indian FMCG

company in <angadesh. The company pans to capture growth through constant

reaignment of portfoio aong higher margin ines and focus on voume growth+

consoidation of mar!et shares+ strengthening fagship brands and new product

offerings 1(-& new product aunches are e,pected in (00)-0*2. It aso pans to e,pand

its internationa business to :a!istan.

Nir-a Li-it0

?irma /td+ promoted by arsanbhai :ate+ is a homegrown FMCG maor with a

presence in the detergent and soap mar!ets. It was incorporated in %350 as a private

company and was isted in fisca %33). 7ssociate companies@ ?irma ;etergents+ Shiva

Soaps and ;etergents+ ?irma Soaps and ;etergents and ?inita Chemicas were

merged with ?irma in %33'-%336. The company has aso set up a whoy owned

subsidiary ?irma Consumer Care /td+ which is the soe mar!eting icensee of the

?irma brand in India. ?irma aso ma!es afa oefin+ fatty acid and gycerine. ?irma is

one of the most successfu brands in the rura mar!ets with e,tremey ow priced

offerings. ?irma has pants ocated in Guarat+ Madhya :radesh and #ttar :radesh. Its

new /7< pant is ocated in <aroda and the soda ash compe, is ocated in Guarat.

3



-

?irma has strong distributor strength of )00 and a retai reach of over % miion

outets. The company reported gross saes of #S$ *'% miion in (00&-0). It pans to

continue to target the mid and mass segments for future growth.

F,ri2n 1lars

Ca0/ur In0ia Lt0 (CIL!

Cadbury Indian /td is a 3&.* per cent subsidiary of Cadbury Schweppes :c+ #+ a

goba maor in the chocoate and sugar confectionery industry. CI/ was set up as a

trading concern in %3)6 and subseuenty began its operations with the sma scae

processing of imported chocoates and food drin!s. CI/ is currenty the argest payer

in the chocoate industry in India with a 60 per cent mar!et share. The company is

aso a !ey payer in the mated foods+ cocoa powder+ drin!ing chocoate+ mat e,tract

food and sugar confectionery segment. The company had aso entered the soft drin!s

mar!et with brands i!e @Canada ;ry@ and @Crush@+ which were subseuenty sod toCoca Coa in %333. >stabished brands incude ;airy Mi!+ :er!+ Crac!e+ * Star+

cairs+ Gems+ Fructus+ <ournvita etc. The company reported net saes of #S$ %'0

miion in (00&. The company pans to increase the number of retai outets for future

growth and mar!et e,pansion.

Car2ill

Cargi Inc is one of the word@s eading agri-business companies with a strong

presence in processing and merchandising+ industria production and financia

services. Its products and geographic diversity 1over )0 product ines with a direct

presence in over '* countries and business activities in about %&0 countries2 as we as

its vast communication and transportation networ! hep optimi"e commodity

%0



-

movements and provide competitive advantage. Cargi India was incorporated in

7pri %33' as a %00 per cent subsidiary of Cargi Inc of the #S. It is engaged in

trading in soyabean meas+ wheat+ edibe ois+ fertiisers and other agricutura

commodities besides mar!eting branded pac!aged foods. It has aso set up its own

anchorage faciities at 9osy near Hamnagar in Guarat for efficient handing of its

import and e,port consignments.

%%



-

C,ca C,la

Coca-Coa started its India operations in %33&. The Coca-Coa system in India

comprises (6 whoy company-owned botting operations and another %6 franchisee-

owned botting operations. 7 networ! of (3 contract-pac!ers aso manufacture a range

of products for the company. /eading Indian brands Thums #p+ /imca+ Maa"a+ Citra

and God Spot e,ist in the Company@s internationa famiy of brands aong with Coca-

Coa+ ;iet Co!e+ iney+ Sprite and Fanta+ pus the Schweppes product range. ;uring

the past decade+ the Coca-Coa system has invested more than #S$ % biion in India.

In (00&+ Coca-Coa India pedged to invest a further #S$ %00 miion in its

operations. Cogate-:amoive India Cogate :amoive India is a *% per cent

subsidiary of Cogate :amoive Company+ #S7. It is the mar!et eader in the Indian

ora care mar!et+ with a *% per cent mar!et share in the toothpaste segment+ )5 per

cent mar!et share in the toothpowder mar!et and a &0 per cent share in the toothbrush

mar!et. The company aso has a presence in the premium toiet soap segment and in

shaving products+ which are sod under the :amoive brand. 8ther we!nown

consumer brands incude Charmis s!in cream and 7,ion dish wash. The company

reported saes of #S$ ((' miion in (00&-0). The company@s strategy is to focus on

growing voumes by improving penetration through aggressive campaigning and

consumer promotions. The company pans to aunch new products in ora and

persona care segments and is prepared to continue spending on advertising and

mar!eting to gain mar!et share. Margin gains are being targeted through efficient

suppy chain management and bringing down cost of operations.

%(



-

# J #in3 C,

7 #S$ 5.) biion 7merican food maor+ H ein" Co comprises )+000 strong brand

buffet in infant food+ sauces and condiments. The company was the first to commence

manufacturing and botting of tomato !etchup in %56'. In India+ ein" has a presence

through its %00 per cent subsidiary ein" India :vt /td. ein" acuired the consumer

products division of pharmaceutica maor Ga,o in %33). ein"@s product range in

India consists of Compan mi! beverage+ heath drin! Gucon-;+ infant food Fare,

and ?yci pric!y heat powder+ besides the ein" !etchup range.

%&



-

#in0ustan 'nil4r Lt0 (#'L!

industan #niever /td is a *% per cent owned subsidiary of the 7ngo-;utch giant

#niever+ which has been e,panding the scope of its operations in India since %555. It

is the country@s biggest consumer goods company with net saes of #S$ (.) biion in

(00&. #/ is amongst the top five e,porters of the country and aso the biggest

e,porter of tea and castor oi. The product portfoio of the company incudes

househod and persona care products i!e soaps+

detergents+ shampoos+ s!in care products+ coour cosmetics+ deodorants and

fragrances. It is aso the mar!et eader in tea+ processed coffee+ branded wheat four+

tomato products+ ice cream+ ams and suashes. #/ enoys a formidabe distribution

networ! covering over &+)00 distributors and %' miion outets. In the future+ the

company pans to concentrate on its herba heath care portfoio 17yush2 and

confectionary business 1Ma,2. Its strategy to grow

incudes focussing on the power brands@ growth through consumer reevant

information+ cross category e,tensions+ everaging channe opportunities and

increased focus on rura growth.

Nstl In0ia Lt0 (NIL!

?este India /td a *3.5 per cent subsidiary of ?este S7+ Swit"erand+ is a eading

manufacturer of food products in India. Its products incude soube coffee+ coffee

bends and teas+ condensed mi!+ noodes 15% per cent mar!et share2+ infant mi!

powders 16* per cent mar!et share2 and cereas 150 per cent mar!et share2. ?este has

aso estabished its presence in chocoates+ confectioneries and other processed foods.

Soube beverages and

%)



-

mi! products are the maor contributors to ?este@s tota saes. Some of ?este@s

popuar brands are ?escafe+ Mi!maid+ Maggi and Cereac. The company has entered

the chied dairy segment with the aunch of ?este ;ahi and ?este <utter. ?este has

aso made a

foray in non-carbonated cod beverages segment through pacement of ?estea iced tea

and ?escafe Frappe vending machines. >,ports contribute to (& per cent of its

turnover and the company reported net saes of #S$ ))0 miion in (00&.

P1siC,

:epsiCo is a word eader in convenient foods and beverages+ with revenues of about

#S$ (6 biion. :epsiCo brands are avaiabe in neary (00 mar!ets across the word.

The company has an e,tremey positive outoo! for India. A8utside ?orth 7merica

two of our argest and fastest growing businesses are in India and China+ which

incude more than a third of the word@s popuationA 1:epsico@s annua report2.

:epsiCo entered India in %353 and is concentrating on three focus areas - soft drin!

concentrate+ snac! foods and vegetabe and food processing. :epsiCo@s success is the

resut of superior products+ high standards of performance and distinctive competitive

strategies.

Pr,ctr 5 Ga-/l #2in an0 #alth Car Li-it0

9ichardson industan /imited 19/2+ manufacturer of the Eic!s range of products+

was rechristened @:rocter B Gambe India@ in 8ctober %35*+ foowing its affiiation to

the @:rocter B Gambe Company@+ #S7. :rocter B Gambe ygiene and eath Care

/imited 1:GC/2 acuired its current name in %335+ refecting the two !ey

segments of its business. :BG+ #S7 has a '* per cent sta!e in :GC/. The parent

aso has a %00 per cent subsidiary+ :rocter B Gambe ome :roducts 1:G:2. The

overa portfoio of the company incudes heathcare feminine-care hair care and

fabric care businesses. :G operates in ust two business segments J Eic!s range of

cough B cod remedies and hisper range of feminine

%*



-

hygiene. The detergent and shampoo business has been reocated gobay to Eietnam.

The company imports and mar!ets most of the products from South >ast 7sian

countries and China+ whie manufacturing+ mar!eting and e,port of Eic!s and sanitary

nap!ins has been retained in India. The company reported saes of #S$ 3% miion in

(00(-0&. The parent company has announced its pan to e,pore further e,terna

coaborations in India to meet its goba innovation and !nowedge needs.

%'



-

PE"T ANAL)"I" OF FMCG "ECTOR

%6



-

&.& P,litical

ecoogicaKenvironmenta issues

current egisation home mar!et

future egisation

>uropeanKinternationa egisation

reguatory bodies and processes

government poicies

government term and change

trading poicies

funding+ grants and initiatives

home mar!et obbyingKpressure groups

internationa pressure groups

&.6 Ec,n,-ic

home economy situation

home economy trendsoverseas economies and trends

genera ta,ation issues

ta,ation specific to productKservices

seasonaityKweather issues

mar!et and trade cyces

specific industry factors

mar!et routes and distributiontrends

customerKend-user drivers

interest and e,change rates

&.7 ",cial

ifestye trends

demographics

consumer attitudes and opinions

media views

aw changes affecting socia factors

brand+ company+ technoogy image

consumer buying patterns

fashion and roe modes

maor events and infuences

buying access and trends

ethnicKreigious factors

advertising and pubicity

&.8 Tchn,l,2ical

competing technoogydeveopment

research funding

associatedKdependenttechnoogies

repacementtechnoogyKsoutions

maturity of technoogy

manufacturing maturity andcapacity

information andcommunications

consumer buyingmechanismsKtechnoogy

technoogy egisation

%5



-

innovation potentia

technoogy access+ icencing.

%3



-

DEMAND ANAL)"I"

The Indian FMCG sector is the fourth argest sector in the economy and the demand

for FMCG products is set to boom by amost '0 per cent by (006 and more than %00

per cent by (0%*.

9apid urbani"ation+ increased iteracy and rising per capita income+ have a caused

rapid growth and change in demand patterns+ eading to an e,posion of new

opportunities. This wi be driven by the rise in share of midde cass 1defined as the

cimbers and consuming cass2 from '6 per cent in (00& to 55 per cent in (0%*. The

boom in various consumer categories+ further+ indicates a atent demand for various

product segments. For e,ampe+ the upper end of very rich and a part of the

consuming cass indicate a sma but rapidy growing segment for branded products.

The midde segment+ on the other hand+ indicates a arge mar!et for the mass end

products. India@s per capita disposabe income+ currenty at #S$ **' per annum+ wi

raise to #S$ %%*0 by (0%* - another FMCG demand driver.

;emand 7naysis of various segments of the FMCG industry is done beowD

The personal care and detergents segment in India has grown at a C7G9 of 6-5 per

cent in the past & years. hie the premium products of the industry+ consisting of

cosmetics+ s!in care products+ fragrances+ deodorants and antiperspirants+ and shaving products+ are growing at above %0 per cent due to ow penetration eves+ the mass

mar!et segments i!e detergents+ ora care products+ hair care products and toiet

soaps have aready achieved high penetration eves and are registering a sowdown in

demand growth. The atter segments aso compete with the price- competitive

unorganised segment+ which aso restricts vaue growth.

(0



-

The oral care market + which grew by %0 per cent in the past+ has sowed down in

recent years+ due to high penetration eves. ;emand in this segment is e,pected to

grow at about 5 per cent+ driven by rura demand. Eaue growth is i!ey to be under

pressure due to penetrative pricing for the rura mar!et and sow growth in urban

demand.

The hair care industry+ which was growing at 5-3 percent+ is aso e,pected to register

a sower growth of '-6 per cent in future+ due to high penetration eves and

competition from unbranded hair ois. Eaue growth in the segment is e,pected to be

derived argey through the sae of vaue-added products.

The demand for toilet soaps wi be restricted to * per cent over the medium term+ as

current penetration eves are aready high. owever+ since the growth wi occur on a

higher base+ the uantum of increase wi remain stabe. Eaue growth in the industry

is i!ey to be driven by the migration of consumers from ow-end products to upper

segments.

The demand growth for detergents has sowed down in the past few years from

historic eves of 6-5 per cent+ due to high penetration rate. Future demand growth is

estimated at )-* per cent. owever+ since the growth woud occur on a higher base+

the uantum of increase woud remain stabe. Eaue growth is i!ey to be driven by

the migration of consumers from ower-end products to the upper segments.

The Chairman of industan #niever+ after the resuts announcement for F%(K00+

outined to the investment community his pans for the company and the path for

Lsustainabe profitabe growth=. Two things ceary emerged from his ta!D

%. 7 greater focus on e,isting businesses rather than new businesses

(%



-

(. :rofit growth rather than top ine growth is i!ey to drive future management

action

A chan2 in "trat2

The ast few years of #/=s growth was driven inorganicay through acuisitions and

venture into new businesses. The much harped about Miennium Growth :an of the

company was aso based on the same path of growth through e,pansion. <ut in sharp

contrast to his predecessor ;adiseth+ <anga=s growth pan appears to be based on

LContraction= rather than L>,pansion. For once there was no mention of new brand

aunches.

Thrust ,n a 9w /ran0s will -an /ttr 2r,wth an0 hi2hr

1r,9ita/ilit

The &0 brands have that been identified cover a !ey categories and a segments in

each category. The seected brands account for more than (K&rd of tota FMCG brand

saes of the company. 7nd what is more important is that the profit contribution of

these brands is even greater.

So a scenario is created where one wi see a greater resource aocation J be it

mar!eting+ innovation or peope support towards these &0 brands. The advertising and

mar!eting support spread over fewer brands is i!ey to be more efficient+ and wi

drive voume growth. 7nd stronger growth in the more profitabe brand portfoio wi

aid margin e,pansion.

((



-

M,r 99icint utili3ati,n ,9 rs,urcs

<esides rationai"ation+ a few brands woud be migrated+ i.e. these brands woud

receive a regiona rather than a nationa support+ in its specific region of strength.

here the brands can neither be mi!ed nor migrated+ the company is aso open at the

option of divesting the same. So+ industan #niever is ta!ing of divesting rather

than acuiring brands

Nw 1r,0uct initiati4s 1ut ,n th /ac:/urnr

The management did not even discuss+ unti as!ed+ the status on the nine growth

engines that had been previousy identified as growth drivers. 7ready the

management has brought down to five the viabe options from the nine identified

earier. These are in the areas of Confectionery+ Consumer eathcare+ Minera ater+

;irect-To-ome 1;T2 distribution and a uniue distribution mode for rura

mar!ets. <ut the management is sti testing and is going rather sow on the new

initiatives. The fina decision on the entry into these categories wi be ta!en ony after

rigorous testing of waters throughout the current year. This essentiay means that one

is uni!ey to see the company venturing into these areas in the very immediate term.

To sum up <anga=s words+ the focus wi be on ATo do what you !now bestA. 7nd that

probaby is what is reuired for the company in the current scenario+ where

competition is at its hees in every segment of operation. 9ather than divert resources

towards new areas+ it ma!es sense to focus on e,isting businesses+ grow them and

ma!e them profitabe. 7nd that is what is going to be #/=s three pronged thrust in

the coming year.

(&



-

Grow the FMCG business - by e,panding the mar!et itsef+ by growing the company=s

share in the mar!et+ by generating demand though innovating new channes of

consumption+ by everage on e,isting brand euity by offering services to the

customer.

or! towards ma!ing the foods business profitabe - uge investments have been

made in deveoping new food categories and setting up a distribution infrastructure in

pace for the foods business. ?ow that the base for the business has been aid+ the

company e,pects to drive the profitabiity of these businesses. <esides the traditiona

beverages and ois and fats business+ the new categories of stape foods+ cuinary

products and ba!ery products 1acuired through Modern Foods2 are i!ey to

contribute to the growth.

Strengthen the non-FMCG business by acuiring technoogy support -The non-

FMCG product categories incude chemicas+ fragrances B favours+ speciaty

chemicas+ thermometers+ etc The company is ta!ing steps to secure word cass

technoogy support in these areas for future growth. This coud mean a divestment of

these businesses to a separate oint venture in the ong term.

ANAL)"I" ;F T#E "TRATEG)+

i this strategy wor!N

The outined strategy is a significant deviation from the path foowed by the

company in the past. 9ather than grow in breadth at a fast pace+ the new strategy

appears to be focusing on consoidation of the aready e,panded businesses+ before

moving on. 7nd this appears appropriate given the current economic and competitive

environment. The overa mar!et demand growth is i!ey to be constrained by

()



-

adverse economic factors such as poor agricutura and industria growth. 8n the other

hand+ #/ faces stiff competition from both M?C=s at the premium end and the oca

ow cost producers at the popuar end. The proposed measures are i!ey to ead to the

foowing gainsD

%. 7 greater mar!eting and management focus on rationai"ed product portfoio woud

ead to better growth rates for those brands

(. The contribution to profit of the &0 brands being higher+ overa profitabiity woud

rise+ as these brands grow at a faster pace.

&. hie the overa e,penditure on branding and saes promotions be ower as the

number of brands supported decine aso more efficient brands woud receive greater

support

). Cost cutting initiatives e,tended across the suppy chain as we as a conscious

effort towards owering fi,ed overheads woud aid margin e,pansion.

*. 7 sowdown in investments in new businesses+ and improved profitabiity in

e,isting businesses woud mean that 98C> growth woud be faster.

e fee that given the economic and competitive environment. #/ stands a much

better chance of improving its operating and financia performance with the outined

strategy. 7t the current price of 9s(%'+ the stoc! trades at &', F%(K00 earnings. 7 (*4

growth in profitabiity appears achievabe as the portfoio rationai"ation wi drive

margin e,pansion. /ower restructuring costs woud aso aid higher net profit growth.

8n an estimated F%(K0% >:S of 9s6.)+ we set a one-year price target of 9s(3'+ which

woud yied a &64 return.

(*



-

DEMAND PROJECTION

Fast Moving Consumer Goods 1FMCG2 sector wi witness more than *0 per cent

growth in rura and semi-urban India by (0%0+ according to an anaysis carried out by

the 7ssociated Chambers of Commerce and Industry of India.

In totaity+ it is proected to grow at a C7G9 1compounded annua growth rate2 of %0

per cent and increase its mar!et si"e to 9s %00+000 crore from the present eve of 9s

)5+000 crore.

The growing penchant of rura and semi-urban fo!s for FMCG products wi be

mainy responsibe for this deveopment+ as manufacturers wi have to deepen their

concentration for higher saes voumes.

In the rura and semi-urban areas+ FMCG mar!et penetration is currenty ess than %

per cent in genera as against its tota growth rate of about '.( per cent.

The anaysis is based on the feedbac! obtained from various district industry centres

a over the country on the future demand-suppy situation of FMCG products.

Indian rura mar!et with its vast si"e and demand base offered a huge opportunity that

FMCG companies cannot afford to ignore. ith %(5 miion househods+ the rura

popuation is neary three times the urban. Though the rura and semi-urban demand

of FMCG products wi grow+ it wi put a severe pressure on the margins of

manufacturers of FMCG products due to cut-throat competition+ finds the anaysis.

Companies in the sector to benefit wi incude !nown names such as ?irma+ #/+

;abur+ ITC+ Godre+ <ritannia+ Coca-Coa+ :epsi+ among others. 9ura mar!et may be

auring but it is not without probems such as ow per capita disposabe incomes and

arge number of daiy wage earners.

Some of the other probems associated with rura mar!ets are acute dependence on the

vagaries of the monsoon+ seasona consumption in!ed to harvests+ festivas and

specia occasions+ poor roads and power probems.

('



-

The other difficuty that FMCG companies are i!ey to face is that of ogistics. India@s

'(6+000 viages are spread over &.( miion s !m. ;eivering products to the 6*0

miion Indians iving in rura areas wi be a tough tas!.

The net profit of #/ for the fu year fe to 9s %+%36.&' crore 19s %%.36 biion2

from 9s%66%.63 19s %6.6% biion2 ast year.

(6



-

O$JECTIE

%. To evauate current consumer saes promotion schemes in toiet soap mar!et.

(. To get an insight into retaiers= views regarding the schemes being offered in toietsoap category and consumer perceptions

&. To study consumer perceptions regarding various promotion schemes in this

category and responses toward them.

(5



-

"COPE OF RE"EARC# +%

My scope is restricted to consumer perceptions and retaier view>s regarding variousschemes

(3



-

RE"EARC# MET#ODOLOG)

Research Type: >,poratory 9esearch

Data Collection Tool: Ouestionnaire

In-depth interview

Research Area: Gha"iabad

Sampling Plan

Sample type: #sers of the Toiet Soap.

Sample SizeD %00 peope between the age of (0-)0 years.

Primary Data: The primary data is coected through uestionnaires and in-depth

interview.

Secondary Data: The sources of secondary data are various researches conducted by

#/+ business maga"ines and internet.

Ras,n 9,r ,1tin2 this T,1ic

The Indian FMCG sector is the fourth argest sector in the economy with a tota

mar!et si"e in e,cess of #S$ %&.% biion. It has a strong M?C presence and is

characteri"ed by a we estabished distribution networ!+ intense competition between

the organi"ed and unorgani"ed segments and ow operationa cost. 7vaiabiity of !ey

raw materias+ cheaper abour costs and presence across the entire vaue chain gives

India a competitive advantage. The FMCG mar!et is set to trebe from #S$ %%.'

biion in (00& to #S$ &&.) biion in (0%*. :enetration eve as we as per capita

consumption in most product categories i!e ams+ toothpaste+ s!in care+ hair wash etc

in India is ow indicating the untapped mar!et potentia. <urgeoning Indian

popuation+ particuary the midde cass and the rura segments+ presents an

opportunity to ma!ers of branded products to convert consumers to branded products.

The sow growth rate witnessed through the years (000 to (00) by the FMCG sector was revived in FP=0*+ registering a growth rate of about '4. The growth was mainy

&0



-

driven by improved performance of persona care products such as shampoos+

deodorant+ hair dyes+ soap+ toietries+ etc and penetration into the rura and semi-urban

areas of India. 9ura mar!eting has become a critica factor in boosting bottom ines.

This study wi give the detaied insight of FMCG sector in India and how it has

surmounted the downturn faced in the past. ow the companies i!e #/ has

changed their mar!eting strategies to overcome their shrin!ing profit margins and

beat competition.

RE"EARC# AND "'RE) MET#ODOLOG)

The research study entaied two maor phases.

I. :re- fied Study

a. #nstructured in-depth interviews were conducted to create the initia uestionnaire

1the instrument2

b. >,pert opinions on the uestionnaire were coected and further improvements were

made to the uestionnaire.

II. Fied Study

a. 7 structured uestionnaire was prepared and the survey was conducted by

e,paining the purpose of the research to the respondents and administering the

uestionnaire.

b. 7 spit pane test was aso conducted to test certain uestions that were fet to be

inadeuate in their design+ to evo!e responses from the respondents and to test the

effect of changing the structure of these uestions. Most of the uestions in the survey

are not disguised but to assess certain non-factua variabes disguised uestions are

used. For e,ampe+ there are some uestions pertaining to the effectiveness of emai+

internet etc. which measure the attitudes of the respondent and we ta!e these data as

the pro,y for that of the organi"ation as a whoe. The rationa behind this is that the

respondents are typicay top management personne in the Information Technoogy

department of the organi"ation and they are in a position to assess the impact of these

&%



-

technoogies on their organi"ation. In some cases+ to test the reevance of hypotheses

and to assess the impact of the uestionnaire on the respondent+ persona interviews

were combined with the competion of the uestionnaire.

<oth the panes received identica treatment. The uestionnaire version was changed

but the mode of administration etc. remained the same to preserve the integrity of the

comparisons. >vauation of the spit pane tests was done aong with the anaysis of

the origina uestionnaire. The techniues incuded comparison of response

distributions and e,amination of item non-response data.

Modifications in some uestionsK items used in the uestions were made to increase

the response rate and effectiveness of the uestionnaire.

Some of the respondents had reservations about some uestions in the initia

uestionnaire+ due to the sensitive nature of the topics addressed. This necessitated

some changes in the ater versions of the uestionnaire.

RE"PONDENT" AND DATA COLLECTION

The popuation addressed by the survey comprises of those+ who use various toietry

items. The main respondents were the genera pubic as toietry soaps are used by a

the peope.

Its main obective is to !now about the buying behavior and the i!es and disi!es of

the consumers. <asicay the research was done to !now what the consumer thin!s

before buying the product+ what they thin! about the product and what they want from

the product i.e. their need.

&(



-

E<PLORATIE RE"EARC# ")"TEM

The mar!eting research process adopted by us is as foowsD

Define the problem and research objectives: The obective of this research is to studythe past and current mar!eting and demand trends. The research highights various

mar!eting and demand concerns faced by #/ in the soap category.

Develop the research plan: This incudesD

:rimary data

Focus-group research

Ouestionnaires

Samping panD #rban peope of the midde cass. <oth mae and femae

between the age of (0 to )0.

Samping Si"eD &*

INFERENCE" ON IMPLICATIE RE"EARC#

Foowing are the inferences made from the research which cosey matches with the

S8T 7naysis of #/.

"OME FACT" O$"ERED FROM T#E RE"'LT" "O

O$TAINED+

/#Q sti rues the soap mar!et with substantia mar!et share. 8thers which

incude ;8E> aso have some share in higher cass thus it serves as the

ST79S for #/.

Most of the customers are satisfied with the product they are using and theyare i!ey to retain the same product again.

Most of the customers thin! that the #/ soaps are good with respect to other

brands in the mar!et.

owever there is a cose tie between the peope who wi recommend #/=s

product to others to the peope who wi probaby not recommend it. This may

be a concern for #/ but due to there recent attac!ing mar!eting 1S9 I?

/#Q 7;2 strategy they are trying to regain there mar!et share.

&&



-

LIMITATION" OF T#E "T'D)

%. The study was confined to Gha"iabad city ony and differences in perception and

profie may e,ist for other parts of the country.

(. The samping was based on convenience that coud have given rise to errors.

&. These resut may not be appropriate for the whoe popuation 1 i.e universe2.

&)



-

C#APTER * 6

COMPAN) PROFILE

DATA ANAL)"I"

CONCL'"ION

&*



-

#in0ustan 'nil4r Li-it0

eeting !veryday "eeds of People !very#here

&'



-

COMPAN) PROFILE

Intr,0ucti,n

industan #niever /imited 1#/2+ a *%4-owned subsidiary of 7ngo-;utch giant

#niever+ has been prying its way into India since %555. India@s argest consumer

goods company+ / mar!ets products such as beverages+ food+ and home and

persona care goods. Its brands incude waity a@s ice cream+ /ifebuoy soap+

/ipton tea+ :epsodent toothpaste+ and Surf aundry detergent. #/ mar!ets atta 1a

type of mea2+ mai"e+ rice+ sat+ and speciaty chemicas+ and its e,port division ships

castor oi and fish. The company aso ses botted water and over-the-counter

heathcare products.

industan #niever /imited 1#/2 is India@s argest fast moving consumer goods

company+ with eadership in ome B :ersona Care :roducts and Foods B

<everages. #/@s brands+ spread across (0 distinct consumer categories+ touch the

ives of two out of three Indians. They endow the company with a scae of combined

voumes of about ) miion tonnes and saes of 9s.%0+000 crores.

The vision that inspires #/@s &(+)00 empoyees 1)0+000 incuding Group

Companies2+ incuding about %+)(* managers+ is to Rmeet everyday needs of peope

everywhere - to anticipate the aspirations of our consumers and customers and to

respond creativey and competitivey with branded products and services which raise

the uaity of ife. This obective is achieved through the brands that the company

mar!ets.

&6



-

$usinss natur

#/ is India@s argest mar!eter of Soaps+ ;etergents and ome Care products. It has

the country=s argest :ersona :roducts business+ eading in Shampoos+ S!in Care

:roducts+ Coour Cosmetics+ and ;eodorants. #/ is aso the mar!et eader in Tea+

:rocessed Coffee+ branded heat Four+ Tomato :roducts+ Ice cream+ Soups+ Hams

and Suashes.

#/ is aso one of the country@s biggest e,porters and has been recogni"ed as a

Goden Super Star Trading ouse by the Government of India it is a net foreigne,change earner. #/ is India@s argest e,porter of branded fast moving consumer

goods. The company@s >,ports portfoio incudes #/@s brands of Soaps and

;etergents+ :ersona :roducts+ ome Care :roducts+ Tea and Coffe

Mar:t la0in2 /ran0s

#/=s brands have become househod names. The company=s strategy is to

concentrate its resources on &0 nationa power brands+ and %0 other brands which are

strong in certain regions. The top five brands together account for saes of over

9s.&000 crores.

Some of the big brands in Soaps and ;etergents are Li9/u,= Lu>= Liril= #a-a-=

$r3= D,4= 1a soaps2+ Surf >,ce+ Surf+ 9in+ hee 1the number one detergent

brand in India+ and #/@s argest2+ *0%+ Sunight 1a detergents2. #/ aso mar!ets

the Eim and ;ome, range of ome Care :roducts.

In the :ersona :roducts business+ #/@s air Care franchises are Cinic+ Sunsi! and

/u, shampoos the company mar!ets ?ihar oi. In 8ra Care+ the portfoio comprises

Cose-up and :epsodent toothpastes and toothbrushes. In S!in Care+ #/ mar!ets

&5



-

Fair B /ovey S!in Cream and /otion+ the argest seing S!in Care :roduct in India

a brand deveoped in India+ it is now e,ported to over &0 countries. It has been

e,tended as an 7yurvedic cream+ an under-eye cream+ a soap and a tac+ in ine with

the strategy to ta!e brands across reevant categories. The other maor S!in Care

franchises are :ond=s+ Easeine+ /a!me and :ears. In Coour Cosmetics+ #/ mar!ets

the /a!me and >e-%5 ranges. In ;eodorants+ the !ey brands are 9e,ona+ 7,e+

;enim and :ond@s+ whie the Tac brands are :ond@s+ /iri+ Fair B /ovey+ Easeine

and /ifebuoy. 7,e and ;enim are #/=s franchises for Men=s toietries.

&3



-

"WOT ANAL)"I" OF #'L

"TRENGT#"+

strong brand portfoio consumer understanding

9B; abiity

distribution reach

high uaity manpower

WEAKNE""E"+

Increased consumer spends on education+ consumer durabe+ entertainment+trave+ etc resuting in ower share of waet for FMCG

imited success in changing the eating habits of peope

compe, suppy chain configuration and unwiedy number of stoc! !eeping

units 1S#s2 with dispersed manufacturing ocations

price positioning in some categories that aows for ow price competition and

high socia costs in the pantation business.

OPPORT'NITIE"+

mar!et and brand growth through increased penetration especiay in rura

areas

<rand growth through increased consumption depth and freuency of usage

across a categories.

#pgrading consumers through innovation to new eves of uaity and

performance.

>merging modern trade to be effectivey used for introduction of more upscae

persona care products.

Growing consumption in out of home categories.

)0



-

:ositioning #/ as a sourcing hub for #niever companies esewhere and

everaging the atest IT technoogies.

T#REAT"+

ow-priced competition now being present in a categories

grey imports

Changes in fisca benefits and unfavorabe prices in ois+ tea commodity+ etc.

)%



-

TOILET "OAP IND'"TR) IN INDIA * $mplicative Study

Toiet soap industry is one of the odest Fast Moving Consumer Goods 1FMCG2

industries in India. It is among the highest penetrated category within FMCG sector

reaching an estimated 3*4 urban and 564 of the rura househods. In vaue terms the

industry is worth 9s.)*000 miion and in voume terms it is worth .*& miion 1in

(00% as reported by 8perations 9esearch Group 189G2 Survey2. The main

characteristic of the industry was severe competition and high eve of brand

proiferation. The industry witnessed 64 decine in vaue in year (00%.

There were )* eading nationa brands. ?one of the nationa brands had more than *4

mar!et share and many more regiona and unorgani"ed sectorKoca brands. industan

#niever was the mar!et eader with about &0 1number2 of toiet soap brands with a

tota mar!et share of '64 in (000-(003 in organi"ed sector as seen from Tabe beow+

which gives the ead payers and their respective mar!et share

)(



-

The eading brands in the mar!et are ;ove+ :ears+ /u,+ ;etto+ /iri+ 9e,ona+

/ifebouy+ ?irma+ :amoive and amam. The industry had witnessed many

innovative saes promotion activities in the recent past. ?umerous factors were

responsibe for such a phenomenon. The reasons areD

The mar!et being suggish+ companies were trying to increase mar!et share in

stagnant to decining 1voume terms2 mar!et in order to retain consumers+ to

encourage switching+ to induce trias and iuidate e,cessive inventories.ith the presence of so many brands the competition had increased severay

eading to fight for mar!et share and shef space.

ence+ saes promotion activities in toiet soap industry posed a very interesting

study and consumer and retaier perceptions thereof.

The brands in popuar segments were found to be freuenty promoted as there was

intensive price competition in this segment. The brands coud aso be cassified based

on medicina benefits+ cosmetic benefits+ perfumes+ naturaKherba properties.

7fter posting a modest singe digit growth in %336-(000+ figures for the first seven

months of this year suggest that the mar!et for toiet soaps has actuay shrun!.

)&



-

>stimates about the e,tent of the decine of mar!et si"e vary. industan #niever+

which straddes the category with a *3.3 per cent mar!et share by vaue+ says the

mar!et shran! by ).) per cent in vaue terms in the first haf of (00%.

The Indian Soaps and Toietries Manufacturers 7ssociation+ puts the decine at % per

cent. 8ther industry sources suggest that the e,tent of de-growth@ in the first eight

months of (00% coud be as high as 6 per cent.

This is despite the fact that this usuay seepy category has seen a spate of new

payers debut new offerings in recent times. 8ver the past coupe of years+ ?irma has

aunched a sew of ow-priced soaps under the banner of ?ima and ?irma <eauty.

Godre Consumer+ a ong-standing payer+ has reaunched od brands such as Cintho+

apart from new ones such as FairGow+ 7care+ and ?i!har.

<ut if the shrin!ing mar!et si"e suggests that Indian consumers have actuay been

cutting bac! on their use of toiet soaps+ this is not reay the case. In voume terms+

the mar!et for toiet soaps has continued to show a growth of ' per cent in the first

eight months of (00%.

The maor payers have certainy managed to se more toiet soaps by voume. <ut

price competition in the segment and a sew of promotiona campaigns have reduced

the effective reaisations per unit sod. This has probaby neutraised the gains from

voume e,pansion. Theories about the reasons for the shrin!ing the mar!et si"e vary.

L,w%1ric0 /ran0s

Industry payers commony attribute the de-growth@ in the soap mar!et to

downtrading. Toiet soaps are among the highest penetrated products within the

))



-

FMCG mar!et+ reaching an estimated 3* per cent of the urban and 56 per cent of the

rura househods. The fairy high contribution from the rura mar!et ma!es this

category sensitive to the fortunes of the agricutura economy.

The proonged drought in the ?orth and est of the country 1unti (0002 and the

sharp fa in farm disposabe incomes 1brought on by faing farm product prices2 has

probaby persuaded ow-income househods to downtrade+ that is+ switch from high-

to ow-priced brands.

#/+ too appears to endorse the phenomenon of downtrading. There has been an

inter-sectora shift in the soap mar!et+ with consumers downtrading from premium

and popuar to discount soaps@@+ e,pains the company@s spo!esperson.

owever+ Mr oshedar . :ress+ Godre Consumer Care+ begs to differ. e thin!

consumers have aready pre-committed their incomes for instaments on durabes. The

substitution of soap with shampoos for hair wash has aso impacted growth@@+ he said.

$ttr ?ualit

The crowded mar!et pace has aso brought a few benefits to the consumer as

mar!eters of soap have tried to woo consumers through upgraded offerings and better

uaity soaps. 7ided by ow input prices+ the mar!eters of toiet soaps have increased

the TFM 1tota fatty matter2 content in their brands+ to offer better uaity soaps at a

ower price. Industry watchers say that the TFM content on some brands has moved

up from the *0-'0 per cent earier to over 60 per cent of ate.

)*



-

Therefore+ per unit reaisations on soaps have decined+ the mar!eters of soaps have

actuay sacrificed a part of their margins on hi!ing the TFM content.

Tough times ahead

ith competitive pressures on the rise and a arger number of brands osting for

consumer attention in a suggish mar!et+ the soap mar!et is i!ey to remain a difficut

one for most payers. Smaer payers such as Godre Consumer and en!e S:IC

have been in a position to report robust saes growth in the category over the past year

despite the bruising competition.

owever+ this is party due to a reativey sma base of comparison. #ness the

mar!et e,pands+ the frenetic promotiona activity may soon te on the growth rate of

the payers. 7nd when it comes to sustaining a high decibe promotiona campaign+

#/@s si"e certainy gives it the wherewitha to do it.

9ura reviva -- 7 wid card

It appears that a genuine boost to the mar!et si"e for toiet soaps wi sti have to

come from a reviva in rura demand. >vidence from the past does appear to suggest

that a sharp rise in rura incomes woud have a cascading effect on FMCG demand.

The pic!-up in voume growth in the soap mar!et in %333+ after a year of suggish

growth in %335+ demonstrated that a recovery in agricutura output does have an

indirect impact on saes voumes of FMCG products.

This year+ reports of a good monsoon in the northern and western parts of the country

have spar!ed off specuation about a reviva in FMCG growth rates. The fact these

two regions account for ** per cent of the demand for FMCG products strengthens

)'



-

this argument. owever+ it appears to be a bit eary in the day to ca it a reviva. For

one+ whie the northern and western regions have received satisfactory rains+ southern

India has been the victim of a very erratic monsoon. Second+ given that the good

monsoon in the current year succeeds two or three consecutive years of drought in

some regions+ there coud be a substantia time ag before higher rura incomes

transate into better FMCG demand.

Third+ the !ey crisis in agricuture over the past year has been that farm product prices

have dropped sharpy in response to a buid up of surpus foodgrain stoc!s. Therefore+

even if a good monsoon transates into a higher agricutura output+ there is the

uestion of whether this wi actuay e,pand or shrin! farm incomes.

These factors suggest that it may be premature to ta!e investment e,posures in

companies focussed on toiet soaps in the hope of a reviva. It may be better to wait

for concrete signs of a pic!-up in rura demand+ which is certainy some way off.

T#E FO'R COMPONENT" OF T#E MARKETING MI<

In toiet soap mar!et #/ has '&4 mar!et share. This is the product segment where

#/ has seen growth over ast year but the growth is not as high as there is e,pansion

in the mar!et for toiet soaps. The cash cows for #/ incude /ife boy+ /u,+ /iri+

9e,ona and <ree"e. The company@s premium soap incude ;ove+ :ears. The company

has come up with a new product offering i.e. Fair B /ovey soap. The strategy for

(00'-06 woud be to increase the mar!et share from e,isting '&4 to 604. The

strategic changes ta!ing ) :@s into consideration woud beD

Pr,0uct+ #/ woud continue with the e,isting portfoio of the products and woud

concentrate on coming with new fragrances on different soaps than aunching new

)6



-

soaps. It woud position ;ove and /u, Internationa soap very urban rich women who

are e,tra conscious for their compe,ion. :ears+ /u, Internationa woud be

positioned for the urban and rura rich. For the consuming urban cass+ /iri+ 9e,ona+

:ears and /ifebouy Internationa woud be positioned. It woud aso come up with

)0gm pac!aging for different products. It wi aso be thin!ing of e,tending popuar

brands of cosmetics in the toiet soap segment by that decision woud be based on the

popuarity and acceptance of that particuar brand 1<rand >,tension2.

Pric+ #/ woud be trying to customi"e the pac!aging of various products on the

basis of price points. e.g. it wi come up with the pricing of 9s *+ 9s %0 and 9s %* for

different products. It woud try to e,periment it with the products positioned for

consuming cass.

Pr,-,ti,n+ For promotion+ apart from continuing the e,isting strategy of

concentrating on T.E. channes+ #/ woud try to focus on the promotiona campaign

in rura sector. It woud aso concentrate on promoting through radio and sponsoring

the programs e.g. Lrishi ;arshan@ and L7ap !a Swasthaya@ programs that have greater

number of audience. The advertising for them woud have a pastora and cutura

oo!s. It woud cha! out the rura promotion scheme for those areas where the cabe

T.E. has not reached. #nder this scheme It woud try to incude LGram :anchayat@+

LSwasthaya :arishad@ and other oca bodies by offering !nowedge for using good

and anti-germ products.

Plac+ 7s the mar!eting channes of the company are aready estabished #/ woud

try to increase the penetration in the rura sector to the e,treme remote areas which

are not touched ti now. It woud try to reduce the deivery time of the products by

choosing and increasing the strategic ocations of warehouses. It woud aso trac! the

)5



-

distribution path of the whoesaers in sma cities through mar!eting team and woud

estabish a patform or team at a "ona eve for a the whoesaers and woud try to

ta!e their feedbac! on the mar!et deveopments.

These !inds of congregations coud aso increase the brand oyaty in the whoesaers

and they woud be motivated to push #/ products.

Th Ral Challn2+ %ridging the gap bet#een Philip &otler and

Countryside $ndia

Mar!eting in deveoping countries i!e India have often been borrowed from the

western word. Concepts i!e <rand identity+ Customer reationship management+ )

:=s of the mar!eting mi,+ Consumer behavior process Segmentation+ targeting and

positioning etc. have often been ifted straight from the mar!eting inteigentsia

abroad and adopted in Indian conditions+ often with minima success. Ras,n lis n,t

in th 9ault ,9 such c,nc1ts= /ut thir int2rati,n with th In0ian th,s an0

cultur. The rura India offers a tremendous mar!et potentia. ?eary two-thirds of a

midde income househods in the country are in rura India and represents haf of

India=s buying potentia. ;espite+ the strong potentia the rura mar!ets are by and

arge ess e,poited.

'() %ridging the *ap by !+tending ,P-s .f the arketing i+ to the / P-s And 0

!-s

#/ has modified ) :=s of the mar!eting mi, by incuding an additiona : i.e.

:ac!aging. Further to ensure the sustainabiity of the mar!eting mi, two >=s i.e.

>ducation and >mpowerment have to be at the core as they hep in generating

widespread participation from the rura cient by enhancing their standard of iving.

)3



-

PACKAGING+

The reason for putting pac!aging out of the product as a specia focus area is that due

to ow iteracy eves the importance of symbos and pac!aging become more

important in having a high brand reca.Thus+ after the ) p of mar!eting+ it is *th :

which is pac!aging going to pay a !ey roe in rura mar!ets. 7so since the rura

customers are usuay daiy wage earners and they don=t have monthy incomes i!e

the ones in the urban areas have. So the pac!aging is in smaer units and esser-priced

pac!s that they can afford given their !ind of income streams.

T#E CORE * 6E@"

The two biggest probems that the rura India faces are Iiteracy and #nempoyment.

To integrate them in one=s Mar!eting mi, ensures that the product or service offered

ensures wider participation and better chances of success. ence+ it gives the rise to

the concept of two >=sD >ducation and >mpowerment at the core of our improvedMar!eting Mi,. This concept presents an opportunity to improve the ife of rura

Indians and thus+ ensure that they activey patroni"e the company=s products.

%.2 >ducationD Since vast maority of rura India ac!s even basic education eves and

modern outoo!+ it is important that the company introducing a new product shoud

oo! at buiding category and not ust seing products. It is important to consistentydrive home the point that the customer=s ife is going to be enhanced because of

product=s consumption.

(.2 >mpowermentD <ecause of huge disguised unempoyment eves in agricuture and

ac! of empoyment opportunities in other sectors+ any concept which uses any scope

*0



-

for income generation woud be favored more than the traditiona mar!eting mi,

concepts.

#/ runs the program of Sef-ep Groups 1SG2+ which operate i!e direct-to-home

distributors. The mode consists of groups of 1%*-(02

viagers beow the poverty ine 19s.6*0 per month2 ta!ing micro-credit from ban!s+

and using that to buy #/ products+ which they wi then directy se to consumers.

RETAILER+

;ata on rura consumer buying behavior indicates that the rura retaier infuences

&*4 of purchase occasions. Therefore+ sheer product avaiabiity can determine brand

choice+ voumes and mar!et share. So+ roe of retaier is aso very important in rura

mar!ets+ because he woud be one who provides information regarding uantity of

pac!+ promotiona schemes+ infuences of advertisement+ consumer feedbac! etc to

company. So the retaier pays a very big roe here. The rura customer goes to the

same shop aways to buy his things. 7nd there is a very strong bonding in terms of

trust between the two. The buying behavior is aso such that the customer doesn@t as!

for the things by brand but i!e %% 1paanch rupey #aala sabun dena12 ?ow it is on

the retaier to push whatever brand he wants to push as they can infuence the buyer

very easiy and very strongy on the preferences. ence+ there is the need to get hissupport through proper trade promotion activities to get more retai shef and

convincing on his side to ma!e the customer buy the brand.

*%



-

DI"TRI$'TION "TRATEGIE" OF #'L

The need for innovative and effective distribution networ! for rura areas is evident

from the fact that #/ has come up with new distribution channes to cater to rura

mar!ets.

For eg+ Pr,ct "tra-lin was conceptuai"ed to significanty enhance the contro

on the rura suppy chain+ through a networ! of rura sub-stoc!ist+ who are based in

these very viages. 7s part of the proect+ higher uaity servicing+ in terms of

freuency+ credit and fu-ine avaiabiity+ was be provided to rura trade. The pivot of

Streamine is the 9ura ;istributor 19;2+ who has %*-(0 rura sub-stoc!ists attached

to him. >ach of these sub-stoc!ists is ocated in a rura mar!et. The sub-stoc!ists then

performs the roe of driving distribution in neighboring viages using unconventiona

means of transport such as tractor+ buoc! cart+ et a. The Streamine system hase,tended direct #/ reach in these mar!ets to about &64 of India@s rura popuation

from (*4 in %33* and the number of #/ brands and S#s stoc!ed by viage

retaiers has gone up significanty.

#'L MODEL+

#/ have adopted the ) :=s in addition to % more :+ % 9 19>T7I/>92 7?; ( >=s.

So the new M79>TI?G MIQ mode adopted by #/ oo! i!eD

*(



-

*&



-

CON"'MER "ALE" PROMOTION

The importance of consumer saes promotion in the mar!eting mi, of the fast moving

consumer goods 1FMCG2 category throughout the word has increased. Companies

spend considerabe time in panning such activities. owever+ in order to enhance the

effectiveness of these activities+ manufacturers shoud understand consumer and

retaier interpretations of their promotiona activities. 7 study of these perceptions wi

revea their preferences+ their !nowedge+ and motivations.

In India fast moving consumer goods 1FMCG2 category has witnessed an outburst of

saes promotion activities in the post-iberai"ation era. This proect study though

e,poratory has considered perceptions for price as we as non-price promotions in

toiet soap category.

The reasons for the study wereD

i2 The widespread use of saes promotions in toiet soap category

ii2 istoricay+ whenever there was a downward trend in growth+ saes promotion

activities too! the front seat of promotiona mi,.

iii2 Companies panned these activities with inward oo!ing view hence it was fet that

it woud be usefu to understand the perceptions of consumers and retaiers regarding

saes promotion activities to improve the effectiveness of these activities.

LATE"T ADERTI"ING TREND"

/ast three-four years have seen a tremendous increase in the number of regiona

channes as we as the amount of advertising on it. The entire advertising scenario is

dominated by FMCG categories and more recenty+ in the ast one or two years+ by

ceuar phonesK ceuar phone service categories. FMCG categories+ which dominate

the mar!et scenario+ incude toiet soaps+ tooth pastes+ shampoos+ ready to eat food

and fairness creams. <ut out of a these categories+ the most heaviy advertised

category across the entire channe whether regiona or nationa is the toiet soaps

category.

*)



-

DATA ANAL)"I"

3 ,lu- Gr,wth ,9 ",a1sB ,n T 0urin2 Januar % Ma 6;&;.

• ;uring Hanuary -May (0%0+ advertising of SoapsU category on TE has seen arise of %3 per cent compared to same period in year (003.

N,t+ ",a1sB Cat2,r ,nl inclu0s $athin2T,ilts ",a1s an0 n,t th

Laun0rWashin2 ",a1s.

**



-

"har ,9 ariants ,9 ",a1sB ,n T 0urin2 Jan % Ma 6;&;.

• ;uring Hanuary - May (0%0+ @:rotection-7yurvedicKMedicated@ segment hadthe argest share 1i.e. )3 per cent2 of overa advertising share of SoapsU onTE+ foowed by @?ourishing-<eauty@ and @ydration-Moisturising@ Soaps with(' per cent and %& per cent share respectivey.



*'



-

T,1 A04rtisrs ,9 ",a1sB ,n T 0urin2 Jan % Ma 6;&;.

• @industan #niever /td@+ @ITC /td@ and @9ec!itt <enc!iser 1India2 /td@ werethe Top three advertisers+ contributing 6' per cent share of overa SoapsUcategory ad pie on TE during Hanuary - May (0%0.



*6



-

Nw /ran0s ,9 ",a1sBa04rtis0 ,n T 0urin2 Jan%Ma6;&;

• @Eive Satin Soft@+ @/u, Strawberry B Cream@ and @Eive ;i is Toiet Soap@were top three new SoapU brands advertised on TE during Hanuary - May(0%0.



*5



-

T,1 "tats in ",a1sB a04rtisin2 ,n T 0urin2 Jan % Ma 6;&;

• ;uring Hanuary -May (0%0+ SoapsU category advertising on 9egiona and ?ationa channes in the ratio of '%D&3.

• @Maharashtra@+ @7ndhra :radesh@ and @arnata!a@ were the top three statesaccounting for more than *0 per cent advertising share of SoapsU category on9egiona channes during Hanuary - May (0%0.



*3



-

A4ra2 a04rtisin2 9r?unc ,9 ",a1sB ,n T 0urin2

Jan%Ma6;&;

• Compared to Hanuary - May (003+ average advertising freuency of SoapsUsaw a rise of %) per cent on TE during Hanuary - May (0%0.



'0



-

Cl/rit En0,rs-nts 9,r ",a1sB ,n T 0urin2 Jan%Ma 6;&;.

• @:riyan!a Chopra@ with () per cent share eads in Ceebrity endorsement ofSoapsU on TE cosey foowed by @areena apoor@ with (& per cent shareduring Hanuary - May (0%0

• The third spot of the Ceebrity >ndorsement chart for SoapsU was occupied by@Puvra Singh@ during Hanuary - May (0%0.



'%



-

• ;uring (0%0+ TE advertising of :ersona Care sector saw a rise of (( per cent

compared to (003.

'(



-

"har ,9 Prs,nal Car Cat2,ris ,n T 0urin2 6;&;

• ;uring (0%0+ @:ersona ygiene@ category had ma,imum share i.e. )) per centof overa :ersona Care sector advertising on TE foowed by @air Care@ and@:ersona eathcare@ with (' per cent and %' per cent share respectivey.

'&



-

T,1 "u/ Cat2,ris ,9 Prs,nal Car $ran0s a04rtis0 ,n T

• @Toiet Soaps@ + @Shampoos@+ @Tooth :astes@ were the top & sub categoriescontributing &3 per cent share of overa :ersona Care sector advertising onTE during (0%0.

')



-

T,1 A04rtisrs ,9 Prs,nal Car /ran0s ,n T 0urin2 6;&;

• @industan #niever /td@+ @:rocter and Gambe@+ @9ec!itt <enc!iser 1India2 /td@were the top & advertisers+ they contributed &' per cent of overa :ersonaCare sector advertising on TE during (0%0.

'*



-

Nw $ran0s ,9 Prs,nal Car sct,r launch0 ,n T 0urin26;&;

• @/u, Strawberry and Cream@+ @7,e ;ar! Temptation@ and @Sunsi! air FaSoution@ were the top & new :ersona Care brands advertised on TE during(0%0.

• ;uring (0%0+ ) of the Top %0 new :ersona Care brands advertised on TEwere @ITC /td@ and & beonged to industan #niever /td which had occupiedthe Top & paces.

''



-

T,1 Cl/ritis n0,rsin2 Prs,nal Car $ran0s ,n T

• @:riyan!a Chopra@ was the top ceebrity endorsing :ersona Care brands on TEfoowed by @areena apoor@ and @Sushmita Sen@ during (0%0.

'6



-

T,1 &; $ran0s in th In0ian -ar:t

"T'D) ON CON"'MER PERCEPTION"+

&. Currnt usa2 ,9 t,ilt s,a1 $ran0s+

Tabe beow gives current usage of toiet soaps across different income categories

1research was conducted with &0 peope2D

'5



-

6. REA"ON" FOR "WITC#ING $RAND" +

This coud be seen from Tabe beowD

7s obvious from the above tabe+ saes promotion was not the main reason for

switching brand in this category. ?eed for variety was the predominant reason. It was

found through deeper probing that even though consumers woud have switched

brands due to saes promotion+ there was reuctance about admitting the same and

variety was given as a reason for switching. It was further found that consumers had

positive disposition towards promoted brand. 7s a resut when toiet soap brand waschanged for variety+ the brand which was promoted had higher probabiity of purchase

than non-promoted brands.

'3



-

7. RECALL OF $RAND" $EING PROMOTED+

It coud be seen from Tabe beowD

7s seen from above+ /u, 1God Star offer J most promoted and advertised brand2 had

the ma,imum reca. This brand used TE advertisement heaviy to announce saes

promotion offers.

Si, out of &0 did not reca any saes promotion scheme on any brand. It coud be

inferred that

i2 hard core oyas to a particuar brand 1eg. amam2 woud never 1pay attention to

any announcements of any other toiet soap brand.

ii2 #ness saes promotion offers were propery communicated to the target audience+

reuired impact might not be created and

iii2 #ness promotiona offers were of significant vaue to a consumer+ it was i!ey to

get unnoticed andKor ignored.

60



-

8. WILLINGNE"" TO $') ON "ALE" PROMOTION OFFER

Si,ty-three per cent of the sampe did not show wiingness to buy a brand due to

promotion whie (64 showed wiingness and %04 were not sure. This indicates that

when (64 showed wiingness+ and %04 consumers who were not sure+ these groups

might be ured through innovative and ucrative saes promotion offer.

. A$ILIT) TO IND'CE TRIAL

Forty per cent of the respondents had said that saes promotion had the abiity to

induce tria which reinforces the above inference.

6%



-

CONCL'"ION+

7fter conducting the survey+ observed can be made that #/ sti rues the FMCG

mar!et. There premium cass i!e /#Q and /IF><#8P acts as the C7S C8 for

them and others i!e ;8E> is growing fast in the mar!et.

#/ is in a Rstic!y ground and finds itsef between devi and deep sea+ on one end is

oca and internationa competitors whie on other is humongous popuation in

viages . F7ST Moving Consumer Goods 1FMCG2 sector wi witness more than *0

per cent growth in rura and semi-urban India by (0%(+ according to an anaysis

carried out by the 7ssociated Chambers of Commerce and Industry of India.

#/ has earned its esson the hard way that I?;I7 is fu of vagaries in spite of the

fact that #/ has so many products in the mar!et + to cater to the whims of customer

is amost impossibe. There is very pecuiar mar!et dynamics prevaent in the rura

parts so muti nationa i!e #/ find it difficut to foow the trends here in

comparison of oca manufacturers. The rura mar!et may be auring but it is not

without probems such as ow per capita disposabe incomes and arge number of

daiy wage earners. Some of the other probems associated with rura mar!ets areacute dependence on the vagaries of the monsoon+ seasona consumption in!ed to

harvests+ festivas and specia occasions+ poor roads and power probems.

The other difficuty that FMCG companies are i!ey to face is that of ogistics. India@s

'(6+000 viages are spread over &.( miion s !m. ;eivering products to the 6*0

miion Indians iving in rura areas wi be a tough tas!.

Moreover our findings indicate that with respect to the nature of the schemes+ premiums 1free gifts2 were found to be the most freuenty used in both premium and

popuar toiet soap category+ foowed by price offs. 9etaier=s perceived price offs to

have reativey greater impact compared to any other forms of saes promotion. In ine

with the retaiers= perceptions+ the findings of consumer perceptions indicated that

price offs was the most preferred type of saes promotion. 9etaiers stated that roe of

word of mouth and teevision advertising was very important in providing information

inputs to the consumers regarding saes promotion activities. This perception of

retaiers was supported by the consumer unaided reca of saes promotion schemes

6(



-

which were widey advertised. 7s the retaier interacts and observes consumers more

freuenty and cosey than the manufacturer+ it woud be usefu for the companies to

incorporate perceptions . e beieve that younger age-groups are more e,perimenta

in nature+ amenabe to trying new brands+ and soughtKoo!ed for or as!ed whether

there were any2 saes promotion schemes running on any toiet soap at the time of

purchase. 7so the person going to the shop for the purchase of soap is the fina

decision ma!er of the brand. ence it is essentia that companies need to design

attractive+ stri!ing+ visibe :8:s for scheme announcements.

7so foowing inference can be made that #?I/IE>9 is using new innovative media

campaigns which are not ony auring customers but aso increasing brand awareness. The

theme for media campaign is amost common for #niiver but it changes the appication for e.g. R;I9T IS G88; is transformed into R;77G 7C>P 7I? in I?;I7.

6&



-

C#APTER * 7

RECOMMENDATION"

$I$LIOGRAP#)

'E"TIONNAIRE

6)



-

RECOMMENDATION"

The two point remedies for #/ through which it can recover its ost grounds areD

%. 9etaiing is the new mantra in mar!eting these days+ #/ shoud come up with its

e,cusive stores in metros and sub-urban areas. In this way it can not ony decrease

number of intermediaries but aso direct contact with the customers can be

estabished.

(. #/ shoud identify that there are two segments in Indian mar!et that have vast

potentia which are youth and rura mar!et. So+ #/ shoud introduce product

specificay to this segment+ there is specific soap in the mar!et which everages on

the youth and rura aspect of India.

The organi"ationa pressure+ tight financia contro and overa du ness ma!e the

mar!eters to su! and suee"e. <ut+ mar!eters have to be more focused ust appy

themseves. Then they can reoice that the spring wi not be too far. 7part from the

usua ):s+ its a in the recessionary &:=s+ perception+ panning and pundering of the

mar!et to find growth out of de-growth. 8ne who finds the opportunity reaps the

benefit. Some time+ sow down may be a bessing in disguise for some companies.

#pon compusions+ some companies may be forced to enter some new categories and

either !nowingy or un!nowingy they may end up having hit the ac!pot with some

niche brand winners

Customers become a rare commodity in a sow down. Increase promotions and

incentives to ure them. The Indian mar!et has become so intense that every payer+

incuding the oca brand payer has become inteigent enough to come out with

6*



-

some scheme or the other. 7s a great brand buider and with principes of strategic

mar!eting+ companies may have a tendency to give a stoic smie on the esser

mortas. It=s a trap and do not ever dare to miss the race. Its time to be an Indian in

India.

6'



-

%ibliography

Philip kotler, V.A., “Marketing management, !ir"t edition (#$$%),

&imalaya P'li"hing &o'"e, M'mai

M*onald, +.., “*iret Marketing-an Integrated Approah, !ir"t

edition (#$$), Ir/in0M1ra/ &ill

2oert", M.L., Berger, P.*., “*iret Marketing Management,

"i3th

edition (#$$), Prentie &all International In., 4SA

Shankar, 2a5i, “Ser5ie" marketing, Seond edition (#$$#),

So'th A"ia P'liation", *elhi

Sheth, .6., Mittal, B., 6e/man, B.I., “7on"'mer Beha5ior, !ir"t

edition (8999), he *ryden Pre"", 4SA

+++.eonomitime".om

+++.h'l.om

+++.;mg.om

+++.google.om

+++.ade3india.om

66

http://www.economictimes.com/

http://www.hul.com/

http://www.fmcg.com/

http://www.google.com/

http://www.adexindia.com/

http://www.economictimes.com/

http://www.hul.com/

http://www.fmcg.com/

http://www.google.com/

http://www.adexindia.com/



-

Ann>ur

65



-

'E"TIONNAIRE

Na-+

&. A2 (in )ars!+

1a2 (0-(* 1b2 &0-&*

1c2 (*-&0 1d2 7bove &*

6. Occu1ati,n+

1a2 Student

1b2 ousewife

1c2 or!ingK:rofessiona

1d2 8thers+ SpecifyVVVVVVVVVVVVVVVVVVVVV

7. Annual #,ush,l0 Inc,-+

1a2 /ess than 9s. % /a!hs

1b2 %-( /a!hs

1c2 (-& /a!hs

1d2 Greater than & /a!hs

&. Which #'L@s s,a1 0, ,u us

/u,/iri/ifebuoy9e,ona8thers 1dove+ pearsW..2

6. O4rall h,w satis9i0 ar ,u with th 1r,0uct

Eery unsatisfied#nsatisfiedSomewhat satisfied

Satisfied>,tremey satisfied

63



-

7. #,w li:l ar ,u t, us1urchas (1r,0uct! a2ain

;efinitey:robaby yes

:robaby not;efinitey not

8. #,w w,ul0 ,u rat #'L@s s,a1 with rs1ct t, ,thrs

>,ceentEery goodGood7verage:oor

. W,ul0 ,u c,ntinu /uin2 ,r start /uin2 lu> a9tr sr:@s a11aranc in

lu>@s a04rtis-nt

;efinitey:robaby yes:robaby not;efinitey not

H. W,ul0 ,u li: t, rc,--n0 th 1r,0uct t, ,thrs

;efinitey

:robaby yes:robaby not;efinitey not

. W,ul0 ,u su22st an i-1r,4-nt 9r,- th 9,ll,win2

Ouaity improvement:rice reductionMore diversified7ny other suggestionWWWWWWWWWWWWWW.

. On which 1ara-tr 0, ,u /u s,a1

Company nameSoap name:rice

?eed

. Ar ,u satis9i0 with th ?ualit ,9 #'L 1r,0ucts.

Satisfied#nsatisfied

50



-

&;. #a4 ,u 2t attract0 9r,- th /ran0 a-/assa0,r.

)s

N,

&&. #,w ,9tn 0, ,u switch t, an,thr 1r,0uctEery freuentyFreuenty9arey

?ever

&6. Wh, /us th s,a1 in ,ur 9a-il

MotherKwifeFatherKhusband

Poursef ardy matters

Documents

A Study on Marketing Strategies in Fmcg in Relation With Hidustan Unilever Limited. Research Report