Corporates using sports events to promote their products

Whether it’s building brands, driving sales, or launching a new product, corporate brands the world over are always trying to come up with ’new‘ and innovative ways to promote themselves. The use of major sports events is a well-explored avenue with mega sports events such as – English Premier League, Australian Open Tennis Championship, Formula 1, etc, commanding high levels of sponsorship.

Like their counterparts in the west, Indian corporate brands are fast on the heels of using sports events to leverage themselves. While quite a few still embrace the standard marketing initiatives, more corporates are exploring other platforms in the hope of extending visibility. Enter sports. With more sporting events gaining prominence in the Indian sporting calendar there are an increasing number of opportunities for brands to showcase themselves.

The launch of the IPL last year, which saw numerous Indian brands and personalities bidding for players, is a case in point. Vijay Mallya of Kingfisher owning his own Formula1 race team, another example. A more recent example, albeit on a more humble scale, is the Delhi half marathon that happened on November 9th. Gaining prominence in its own right, this event saw various ‘big’ brands take the traditional sponsorship titles route – title sponsors, official aid care provider, refreshments et al. However other corporate brands opted instead to showcase themselves by creating costumes for the 7km Delhi Fun Run race.

Indian quick service restaurant chain Nirula’s used the half marathon as a pre-launch platform for the Nutribyte Burger®, a first of the Nutribyte range of nutrilicious fast food – product child of Nirula’s partnership with US weight management firm Nutritionvista. Tying in, [appropriately] with the spirit of the half marathon, healthy lifestyle through exercise and responsible nutrition, Nirula’s felt it a natural fit to introduce its latest initiative – healthier fast food options for Indian youth (Link)

To view Nirulas pictures of Delhi Half Marathon, please click here.

About Nirula’s:
Nirula’s, a reputed name in the hospitality industry, is a pioneer in the family style restaurant business in India having set up the first outlet in Connaught Circus, New Delhi in 1934. Nirula’s operates restaurants under the brand name Nirula’s, casual dining outlets called Nirula’s Potpourri and two hotels. The Group is present almost in 60 locations across Delhi and NCR, Uttar Pradesh, Uttaranchal, Haryana, Rajasthan, Punjab and Chandigarh. In June 2006, Navis Capital Partners and Managing Director, Samir Kuckreja acquired the Nirula’s Group of Companies. Navis is private equity fund based in Malaysia, which manages US$ 2 billion in capital commitments. Samir Kuckreja is a respected hospitality and retail professional with varied experience in some of the best-known companies in the world.

About Nutrition Vista
Nutrition Vista was founded on the basic premise that for most working adults access to healthy eating and weight management is not only time consuming but also unreliable.
To meet this unmet need, Nutrition Vista offers a convergence of both online and off-line tools built around the services of their well-trained dietitians who are certified by the Indian and/or American Dietetic Associations (IDA, ADA) respectively. A US based company now with an Indian presence, Nutrition Vista brings the latest in health assessments and innovative tools that will help consumers get better guidance, training and support on nutrition and related health issues.

For further information please contact:
Kanika Berry
kberry@perfectrelations.com
+91 9818225569

Indian FMCG Sector Trends - 2008

In this post i have covered multiple trends happening in the Indian FMCG sector.

1. Focus on Health
Companies are widening their health food portfolio to cash in on the rich, urban, health conscious Indian. In recent we have seen flurry of products in this segment. Have a look of some of them:
1.1) Sugar free Chywanprash
1.2) Organic spices/ pulses
1.3) Multi grain pastas/ Biscuits
1.4) Processed foods particularly juices
1.5) Probiotic Ice Creams
1.6) Butter Lite (Nutralite)
1.7) Corn Flakes/ Oats
1.8) Lays (40% less saturated fats) – Snack Smart
1.9) Low Calorie Sweetners

2. Impact of Inflation: The expenditure of FMCG in the consumer's wallet is coming down year on year. This is leading to low sensitivity with price increases. ALmost a decade back people use to downtrade from expensive brands to value for money ones. But now the trend is changing. Consumer are not switching to cheaper substitutes. Rather companies have come with lower quantity SKUs and make consumers switch from higher to lower SKUs and not from premium to popular brands (like Dove to Lux International). Just to give you an example, Henkel instead of increasing the price of their Henkwl detergent from Rs. 46 to Rs. 50, they have launched a new SKU of 400gms for Rs. 40. During the time of inflation, people shift to sachets of their brands. Sales numbers of FMCG companies are quite robust.
FMCG spend now comprises a smaller share of consumer’s wallet

3. Micro Segmentation/ Niches: Its interesting and funny to see that companies are not leaving any opportunity to micro segment the market. I can forsee that we are here to see further segments in different categories. Here are some examples:
Age
a) Junior Horlicks
b) Junior Chyawanprash
c) Pepsodent Barbie for Kids/ Colgate Strawberry
Sex
a) Women’s Horlicks
b) Male fairness cream
Specialized Household Cleaners
a) Kitchen Cleaner: Mr. Muscle
b) Power Cleaner (Rust): Easy Off Bang

4. Low value SKUs - Sachetization: You name the category it has a sachet !! We all know that it all started in 1980's with shampoos. I think Nano is an interesting example of an automobile sachet. Here is a small list of sachets:
4.1) Shampoos
4.2) Butter (Munna Pack)
4.3) Hair Oils (Navratan – Thanda Thanda Cool Cool)
4.4) Noodles (Chotu Maggi)
4.5) Ketchup (Pichko)
4.6) Toilet Cleaner (Harpic)

5. Jet Age Consumer Products: Becasue of changing lifestyles, busy jobs etc marketers are coming up with Jet Age consumer products.
Ready to Eat
a) Con Flakes/ Oats
b) Pastas
c) Biscuits
d) Noodles
e) Pizzas
f) Burgers
Ready to Drink
a) Energy Drinks
b) Non-Cola Drinks (Juices)
Ready to Cook
a) Cut Vegetables
b) Soups
c) Paranthas/ Rotis
d) Snacks

6. Mainstream Penetrated Growth Categories: The high penetrated categories like Hair Oils, Washing Detergents, Detergent Cakes, Soaps etc are expected to grow at a healthy rate of 10%, attributed to price increases (not much impact of inflation - explained in point 2) and low volume growth.

7. Under-penetrated Growth Categories: Barring few main mainstream categories as mentioned above, there are number of FMCG categories with low penetration and are expected to grow by 20% during 2008-2009. Have a look of that list:
7.1) Men’s grooming products
7.2) Skin care & Cosmetics
7.3) skin/fairness cream
7.4) Anti-aging solution
7.5) Shampoos
7.6) Toothpaste
7.7) Hair Colour
7.8) Deodorants
There lies a huge potential in these categories.

8. Low Per Capita Consumption: Currently we are nowhere near to other developing countries in terms of per capita consumption. Be it Laundary, Skin Care, Shampoos or deodarants. Marketers have put in efforts to increase the consumption frequency or quantum of consumption per occasion. Colgate started the "twice a day" campaign few years back. Recently we have Good Night coming up with Double power pack. Per Re1 increase in per capita consumption of a category will lead to growth of more than 100 crores (with a popular base of more than 1 Billion)

9) Evolved Product Forms: 20 years back consumers had limited choices to pick from. The days of Tortoise Mosquito repellent coils are gone. This is the age of aerosols with value added functionality. I have picked up some examples, were we have seen a change in the product forms. Here is the list:
Dish Wash: Powder to Bar to Liquid
Shaving: Creams to Foams/ Gels
Repellents: Coils to Aerosols/ Body Creams/ Gels
Air Freshners: Sprays to Electric
Toilet Cleaner: Acid to Harpic to In-Cistern

Indian FMCG Journey So Far !!

FMCG sector in India has seen some ups and downs in the last half decade. The intension of this post is to give you a flavor of the journey after independence till date. I have split it into five stages:

A) “LACKLUSTER” STAGE – 1950’s to 1970’s

Post independence (During 1950's to 1970's), there was not much happening in the FMCG sector in India. The business was limited to the upper segment of the society, as the purchasing power was low. Companies like HLL were purely focused on the urban areas and never bothered to enter the rural hinterland of India. The investment in the sector was low, with few FMCG companies selling their products. Also, the government’s emphasis was more on the small-scale sector.

There was never a doubt in the potential of the sector, with such a big base of consumers residing in India.

B) “RURAL SENSITIZATION” STAGE – 1970’s to 1990’s

Let me two examples, which changed the rules of the game, and brought focus to the rural markets.

NIRMA
In the early 1970s, when Nirma washing powder was introduced in the low-income market, Hindustan Lever Limited reacted in a way typical of many multinational companies. Senior executives were dismissive of the new product and never considered the potential and opportunity. But very soon, Nirma’s success in the detergents market convinced HLL that it really needed to take a closer look at the low-income market.

At the time, the focus of the organised players like HLL was largely urbane. There too, the consumers had limited choices. However, Nirma’s entry changed the whole Indian FMCG scene. The company focused on the ‘value for money’ plank and made FMCG products like detergents very affordable even to the lower strata of the society. Nirma became a great success story and laid the roadmap for others to follow. MNC’s like HLL, which were sitting pretty till then, woke up to new market realities and noticed the latent rural potential of India.

CAVINKARE
1983, C K Ranganathan started selling shampoos in a sachet with an investment of Rs 15,000 and dared to take on the multinationals, Lever and P&G, the unquestioned leaders in that segment.

Ranganathan took the then shampoo market by storm, selling his Chik brand of shampoo at a much lower price than other shampoo sachets which were selling at Rs 2. He targeted rural and small-town consumers who used soaps to wash their hair. He introduced the sachet at 90 paise and then reduced it to 50-paise. And that’s when the multinationals sat up and noticed him.

But what really worked was the ‘bring empty sachets and take shampoo sachets in return’ offer. Sales zoomed from 35,000 sachets to 12 lakhs. Initally they took any sachet, but after three months they restricted to Chik sachets.

C) “LIBERLIZATION BOOM and STABLIZATION” STAGE - Post Liberalisation (1991 - 2000)

Post liberalisation not only saw higher number of domestic choices, but also imported products. The lowering of the trade barriers encouraged MNC’s to come and invest in India to cater to 1bn Indians’ needs. Rising standards of living urban areas coupled with the purchasing power of rural India saw companies introduce products targeting both rural and urban markets with value for money and value added offers. Companies started investing in increasing the distribution depth, upgrade existing consumers to value added premium products and increase usage of existing product ranges.

As an outcome of increased choices to the consumers and positive euphoria post liberalization, many of the affluent consumers who always had the money but limited choices, started splurging.

So you could see all companies be it HLL, Godrej Consumer, Marico, Henkel, Reckitt Benckiser and Colgate, trying to outdo each other in getting to the rural consumer first. Each of them has seen a significant expansion in the retail reach in mid-sized towns and villages. Some who could not do it on their own, have piggy backed on other FMCG major’s distribution network (P&G-Marico).

The Sales boom was observed for first 4 to 5 years and then it stabilized.

D) “DROP” STAGE – (2000 – 2005)

2000 was a rather uneventful year for manufacturers and marketers of fast moving consumer goods (FMCGs). The growth rate of FMCG categories was torpid to say the least and the marketing environment was such that, even veterans like Hindustan Lever Ltd (HLL) and Procter & Gamble (P&G) found it difficult to hold on to their market share. The market grew more crowded, what with the entry of new brands entering categories which were virtually the bastions of HLL, Colgate or P&G.

Even in 2001 prominent, high penetration categories such as toilet soaps and detergent bars were very badly affected, actually shrinking in real value terms. Categories with a comparatively lower reach in terms of market penetration, such as shampoos and skin creams too slowed although to a lesser extent. The explanation for this could be that categories with high penetration levels, such as detergents and soaps also depend to a great extent on rural demand. The probable cause is a combination of both industrial slowdown as well as the almost-crisis in the agricultural sector which forced consumers to cut back on spending.

Buyers moved from higher-end products to low-end products in an effort to reduce monthly grocery expenditure. Mid-priced and low-priced segments in soaps and detergents registered robust growth rates, while the premium segment faltered. Impulse products suffered while essentials managed higher rates of growth. Despite the slowdown, staple foods such as atta and salt managed to recorded superior growth rates, higher than those of supposed luxury products such as chocolates and ice creams. Low unit packs saw robust volume growth. Most FMCG marketers offered smaller versions of their products at affordable price points and these drew in new consumers.

The crisis of declining FMCG markets was also driven by new avenues of expenditure for growing consumer income such as consumer durables, entertainment, mobiles, motorbikes etc. Now, as many consumers have already upgraded, their income is being directed towards pampering themselves. Indian population was all set to experience the new basket of products, but with cut-down on FMCG.

E) “BOOM REVISTED” STAGE: 2005 onwards

Everything turned positive thereafter.

2006 was a different story altogether though. The FMCGs seem to have gotten a new lease of life 2005 onwards. Be it hair care products to sunscreen, they were flying off the shop-shelves. In fact sale of white goods dipped while toiletries registered an increase. Such a sharp rebound was, however, unexpected. AC Nielsen's retail sales audit numbers for August 2006, show that sales growth was sound, recording a 24%. Not so long ago, in July 2005 most firms were unable to pass on even basic cost increases and growth had plunged to under 3 per cent.

The key reasons look like the following (please refer my previous post – Indian FMCG Growth Drivers and Category Trends):

a) Increased disposable income
b) Organized Retail Boom
c) Increased Rural Penetration

Also the new basket of products mentioned above (like mobile phones etc) were now affordable (because of cheaper products and EMI culture) to the Indian consumers and therefore revisited and upgraded to FMCG products.

SOME FUTURE PREDICTIONS ??

1. Increased Competition: In last few years, we have seen large number of companies expanding their portfolio into other categories, which is leading to fragmentation of market. This will lead to cut throat competition from regional/ national companies, giving the ultimate benefit to the consumers. In this environment, only the innovators will survive. Focus will be the key to profitability
2. Micro Segmentation: In recent past we have seen companies developing products targeting niche segments, by addressing specific needs. Some time it looks logical and sometimes absolutely silly!! Lets look at few examples. Marketers are segmenting Horlicks into Women and Junior Horlicks. Fairness cream for men. Pepsodent Barbie Toothpaste for Kids. I think this is just the start!! I think many marketers are ready for further segmentation of many FMCG categories.
3. Growth of Under-penetrated Categories: There is huge scope in lot of under-penetrated categories like Household Cleaners, Deodorants, Skin Creams, Shampoos, Coffee etc
4. Consumer will move from the status of KING to GOD: Undoubtedly, all this is good for the consumers, who can now choose a variety of products, from a number of companies, at different price points.
5. Organized Retail: The modern retail format will slowly occupy a bigger share. This will lead to change in shopping behavior and growth in FMCG sector