MarkOUT - Detailed Services (Marketing Outsourcing in India)

A new organization has to go through different stages from Conceptualization of the product to the launch of the product. It doesn’t end there. The company will always like to expand their business by entering in new products, increasing the distribution footprint, increasing the sellout by effective marketing techniques/ activities. Some of you may be in the stage of launching new products. Some of you may have existing products, but have still not marketed. Some of you may have ideas, but need inputs on execution.

We have got experienced people with us, who have seen all these stages, done it and are ready to work with you to offer our set of services.

Stages in developing business

1. Differentiated Product Concept
2. Product Development
a. Creating Product Differentiation
b. Product Specifications: Product ingredients, Nutritional facts
c. Patent: Scope for patenting a product concept
3. Manufacturing: Manufacturing process/ competence with respect to the product
4. Packaging Development
a. Packaging specifications as per packaging and Commodities Act
b. Packaging structures for your product
c. Packaging graphics/ aesthetics for your brand
5. Branding Strategy
a. Brand Name Identification
b. Brand Concepts to create differentiation in the mind of the consumers
6. Business Planning (Will get revised at different stages)
a. Detail Business Plan after considering all costs (fixed and variable) and other investments
b. Finalize the markets to launch as per profitability (basis on potential business)
7. Channel/ Distribution Development
a. Distributor Identification: We will identify the right distributors for your target markets. We have a team of people in different markets.
b. Wholesaler/ Retailer Identification
8. Marketing Strategy
a. Consumer Activities/ Promotions
b. In-store merchandising for your brand
9. “Sharper the Saw”: Ongoing Marketing Interventions required after your brand is in the market. It may be expanding your distribution, availability drives, consumer excitement, increasing your product portfolio, to grow your business

We at MarkOUT, strive to identify the relevant marketing interventions at different stages (as mentioned above) for your growth. You can share with us your product/ service details along with the MARKETING NEEDS to markoutindia@gmail.com. We will get back to you.

MarkOUT - "Marketing Outsourcing in India"

So far we have heard of IT services getting outsourced; Manufacturing getting outsourced; Human resources getting outsourced. But have we even heard of marketing getting outsourced. This is a new platform where Small and Medium Enterprises can come and post there marketing challenges/ objectives for growth. The need for the platform has arrived from the simple fact being, many SMEs have got the right set of products and services, but doesn’t have full fledged & skilled marketing department. We at “MarkOUT: Marketing Outsourcing in India”, brings with us wisdom of experience to understand your business needs and provide you with the right marketing interventions at different stages.

As this is a new venture, we are starting with services free of cost. So, don’t miss this opportunity and send the following details to markoutindia@gmail.com:
1. Company Details
a. Existing products/ services – with images
b. Targets consumers/ markets
2. Marketing objectives/ challenges

MarkOUT Services
More than BRICKs to make a HOTEL

Building a Hotel not just need bricks; or mere standing walls with roof. It is journey of meticulous planning by involving different experts like the architect, builder, interior designer etc for different stages of the project. We draw this analogy to offer you the relevant services at different stages.

Stage 1 (Product Development with differentiation): Detailed discussions with the architect on site planning, structural drawings, finally leading to a prototype. The critical attribute in the whole process is product differentiation, which will attract customers. The differentiation may be in form of huge balcony facing the swimming pool.

Stage 2 (Manufacturing): After the specifications are freezed, the construction will start by the builder. The construction has to match with prototype.

Stage 3 (Brand Development – Name, Aesthetics, Packaging): After the product is ready, it is high time to differentiate the Hotel in the mind of the consumers. But before we do, it should be very clear who the target consumer is. Is it for business travellers, Foods lovers looking for a comfortable stay. After target is clear, the next step is the right positioning. The positioning can be a destination for people, who are Punjabi by Heart. So all the interiors, utensils, room décor will be customized accordingly.

Stage 4 (Marketing): Now the product is differentiated, the brand is differentiated. It’s the right time to market it to people and get good money for the services. It will entail set of marketing activities – direct marketing, hoardings etc. Choosing the cost effective marketing techniques is the key to success.

Stage 5 (Continuous Marketing): Now you have started getting consumers to your Hotel. The most critical step is to customize the services as per changing consumer need and to create excitement for the consumer to give repeat business.

We at MarkOUT, will strive to identify the relevant marketing interventions at different stages for your growth. You can share with us your product/ service details, with respect to the different stages mentioned above.

For Details visit: http://marketingoutsourcingindia.blogspot.com

Feb '09 Stimulus - FMCG Sector indifferent

The Government has come up with a third and last stimulus on 24th Feb '09 – set of tax measures that seek to alleviate cost pressures for India and give a phillip to demand for goods and services.

Measures Announced
1> Extension of the 4 per cent Cenvat rate cut (announced in December 2008) beyond March 31 2009
2> 2 per cent across-the-board reduction in service tax
3> Further 2 per cent cut in excise duty for products that are at the 10 per cent slab
4> Reduction of excise duty levied on bulk cement

With most large FMCG categories (soaps, detergents, personal products, hair care products) currently at the 10 per cent Cenvat slab, makers of FMCGs may reap selective benefits from the extension of lower Cenvat rates and a further 2 per cent cut in the Cenvat rate. The benefits, however, may not be uniform across players. Players such as Dabur, Marico, Britannia and Emami presently suffer very low excise duty incidence having located their manufacturing facilities in tax-free zones. They may see limited savings from these concessions. Players such as Hindustan Unilever, GlaxoSmithkline Consumer, Henkel and Colgate (excise amounting to 5-8 per cent of sales) may see more sizeable excise savings. Its looks unlikely that many of the FMCG companies will increase the prices of their products.

Marketing strategies for fast-moving consumer goods: UK Perspective

By Jan-Benedict E.M. Steenkamp & Marnik G. Dekimpe

The current recession is the most brutal economic downturn in a lifetime. One industry where the consequences of the recession are felt particularly hard is the fast-moving consumer goods (FMCG) industry. In the past, this industry was dominated by such well-known manufacturer brands as Ariel detergent, Nescafé coffee, Philadelphia cream cheese, Flora margarine, and Pampers nappies. However, in recent decades, so-called private labels or store brands – brands owned by retail giants such as Wal-Mart, Tesco, Carrefour and Aldi – have made huge inroads, especially in western Europe and the US. Today they control 20 per cent of the US FMCG market, 35 per cent in Germany, and more than 40 per cent in the UK Much of the loss of market share of manufacturer brands is initiated in economic downturns. Faced with a pressing need to save money, shoppers turn to (cheaper) store brands. They discover that the quality is good and, consequently, many stick with the brand when the economy improves again.

Our research, spanning several decades of purchasing behaviour and multiple recessions in countries across the globe, shows that the growth of private labels in recessions leaves permanent scars on manufacturer brands. Will it be any different this time? It is possible, but this will depend on how brand managers respond to the current downturn. Brands that take a proactive stance and treat the recession as an opportunity are likely to come out of the recession stronger than before. In this article, we describe what they should do. Two issues drive the outcome of how brands make it through the recession: their equity at the onset of the recession; and investments in the brand during the recession.

Brand equity
How strong is your brand? Is it a brand with many loyal buyers that people know and trust and are willing to pay a price premium for? Or is it a weak brand, commanding little loyalty and esteem? In sum, is your brand equity high or low? Strong brands enter the recession in a much more favourable position than weak brands. They are on the shelves of more retailers, have more shelf space and have a larger and more committed customer base. Marketing budgets for stronger brands also tend to be higher.

In recessions, retailers across the world devote more shelf space to their own brands (especially since they also command a higher margin). For example, to cater to the increased price sensitivity of UK consumers in the wake of the economic downturn, Tesco launched on September 17 2008, its fourth line of private labels, called “Discount Brands at Tesco.” Sales of Tesco’s discount and value ranges are up 65 per cent on last year, and one in four shoppers now purchases these ranges. This puts a pressure on the number of national brands the retailer still carries. Retailers are less likely to kill brands with a strong and loyal customer base.

High-equity brands are also better insulated against the switching to private labels behaviour that is ubiquitous in recessions, if only because loyal customers incur higher switching costs when buying non-preferred items. High-equity brands are known to suffer less, and to recover faster, following a product-harm crisis. The same holds true when faced with an economic crisis.

Brand investments in recessions
In recessions, shoppers have a natural tendency to switch to private labels in order to save money. The logical thing for brands to do is to counter this tendency by either lowering their own price, or by offering sufficient non-price reasons to consumers to buy their brand. Our research, spanning more than two decades of actual marketing behaviour, reveals that most brands do exactly the opposite. First, brands can counter the price advantage of private labels by ramping up their own price promotions (temporary price reductions). Consumers are more price-sensitive in recessions, so offering more price promotions makes a lot of sense. Surprisingly, price promotion activity for most brands actually decreases in recessionary times.

Second, the brand can counter the price advantage of private labels by increasing its investments in advertising or new product activity. Both provide non-price reasons to purchase the manufacturer brand – image and improved functional performance, respectively. However, our research shows that advertising and innovation activity decreases in recessions.

Marketing research is also one of the first victims in a recession. These outlays are discretionary, and offer an easy way to reduce costs. Unfortunately, in bad economic times, it is more difficult to convince consumers to buy your higher-priced brand. Optimal matching of your brand with consumer needs is even more necessary in difficult times, but evidence shows that brand manufacturers prefer to operate without this crucial guidance during recessions.

Why do companies manage brands in such a counterproductive way? After all, their brands are their most valuable assets. Cutting back in recessions on price promotions, innovation activity and advertising saves money in the short term, but undermines the long-term equity of brands. We believe that it is due to a toxic combination of short-term perspective that characterises the decision-making of many managers and the tremendous pressure on the bottom line in recessionary times. The easiest way out is to cut costs, and since price promotions, advertising, new product introductions and marketing research are largely discretionary costs, they can easily be cut in the short term.

However, this behaviour weakens the equity of brands and negatively impacts on shareholder value. We studied the stock price performance of 26 global companies over a 25-year period and found that annual growth in shareholder value for companies that do not tie their advertising investments to the business cycle is 1.3 per cent higher compared with companies that do let their advertising investments depend on the business cycle. This translates into billions of dollars of shareholder value that are destroyed annually by adopting this erroneous practice.

In sum, companies often do the wrong thing by reducing marketing expenditure despite compelling evidence that it pays to not follow the general trend of cutting back during a recession. Put differently, one should start to treat those marketing expenses as strategic investments, rather than as short-run costs that can easily be cut when the going gets tough. Note that “going against the trend” can be in absolute terms (strong form) or in relative terms (weak form). Indeed, by holding brand expenditures at pre-recessionary levels, while other brands spend less, one may still increase one’s share of total market communications.

Four scenarios
By combining two dimensions of brand equity at the onset of the recession and brand investments in the recession, we get four scenarios.

1> Brand Equity (High), Reduction in brand investments: High Loss Potential
2> Brand Equity (High), No reduction/increase in brand investments: Recession is opportunity
3> Brand Equity (Low), Reduction in brand investments: Survival game
4> Brand Equity (Low), No reduction/increase in brand investments: Double or nothing

Brands in cell (1) run the distinct danger that their equity will be significantly eroded in the current recession. They start from a favourable position, but their behaviour will lead to a significant weakening of their position vis-à-vis private labels and the brands in cell (2). Managerial decision-making for these brands is overly cautious and focused on the short-term. These brands should emphasise activities that keep their customers satisfied (and, hence, retain them), rather than focus on cost-saving activities. Indeed, customers lost during the recession may never come back, even when the economy’s outlook improves again.

For brands in cell (2), the recession is an opportunity to pull ahead of their short-sighted competitors in cell (1). Their proactive behaviour will strengthen their (relative) position, not only in the recession period, but also in subsequent years. Brands in cell (3) are in the worst possible situation: they start weak, and their management makes the wrong decisions. They are prime candidates to be de-listed by retailers who are pushing their private labels in recessions – and many of them will. Their brand equity will decline, and many will not even survive the recession.

The brands in cell (4) have the opportunity of a lifetime to fight back. They start in an unfavourable position – their equity is low and, in normal times, it would take tremendous marketing investments to break through the competitive clutter. However, given that most brands cut back in recessions (and, hence, belong to cells (1) and (3), brands in cell (4) are able to increase their share of total market communication in the category dramatically by maintaining or – even better – increasing their marketing investments. But it is a risky strategy – if it is poorly executed, the anticipated increase in sales and profits will not materialise and the brand may be discontinued.

Conclusion
Just as slumps in the stock market offer great opportunities for courageous investors, slumps in the real economy offer great opportunities to courageous managers. All evidence indicates that a proactive strategy is associated with increased brand success and shareholder value. If you wait till the good times come back, you ignore the advice given by the legendary ice hockey player Wayne Gretzky: “I skate to where the puck is going to be, not to where it has been.” Recessions are not for the faint-hearted but who said that fair weather makes great managers?

Authors: Jan-Benedict E.M. Steenkamp (jbs@unc.edu) is C. Knox Massey Distinguished Professor of Marketing and Marketing Area Chair, University of North Carolina, Chapel Hill, U.S.A. & Executive Director of AiMark, and author (with N. Kumar) of the book Private Label Strategy: How to Meet the Store Brand Challenge. Marnik G. Dekimpe (m.g.dekimpe@uvt.nl) is Research Professor of Marketing, Tilburg University, the Netherlands and Professor of Marketing, Catholic University Leuven, Belgium

Impact of Slowdown and Inflation and Changing Strategies in FMCG Sector

Published on India Infoline on 2nd Dec, 2008

The recent financial crisis has impacted several industries across the globe. In this article I will be addressing the impact on FMCG sector in India and the changing strategies which are being considered to counter the meltdown.

Impact on FMCG Sector

Post liberalization, because of the entry of a number of MNCs in India, the FMCG sales went up. But soon between 2000 and 2004, FMCG sector got hit, attributed to agricultural crisis and industrial slowdown. 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. Indian population was all set to experience the new basket of products, but with cut-down on FMCG products. This lead to low share of FMCG spends in the consumer’s wallet.

But every year the disposable income was increasing, from $424 in 2002 to $599 in 2007. There was an inflection in 2005, when they could spend on value added/ premium products along with the new basket of products. This was the boom stage; all categories were growing at healthy double digit rates.

As the share of FMCG spend has come down over the last few years, high inflation will not have a major impact on the consumer. The incremental expenditure will not pinch. In the current slowdown and high inflation, my hypothesis is that the consumers may not reduce the expenditure on FMCG products; rather they may cut down expenditure on expensive restaurants. People may prefer local cinema halls or in-house entertainment (Movies on Demand), than multiplexes. Consumers may prefer a local transport than Taxis. They may hold their decision of buying a new car for sometime.

Having said that let me discuss what possible impact can be there on FMCG sector.

1. Marginal Slowdown in products with low perceived value

Can you think of consumers stop consuming Atta in North and Rice in South in the current scenario? Will consumers stop bathing and washing their clothes? The answer is No!! The simple reason being it’s a necessity. Now the next question is whether consumer will buy expensive/ premium detergents or the basic ones. I think that if the perceived value from the offer is high, consumers will not downtrade to cheaper brands. This means that “Value for Money” products will not be impacted. Here “Value for Money” is independent of the price. There may be products that are inexpensive, but may offer less value to the consumers. Those will get impacted.

Therefore, large mass FMCG segment, which deliver value, may be insulated from the vagaries of the financial market; the under-penetrated premium-end category could face the heat.

From 2005, we have seen willingness in consumers to move to evolved products/ brands, because of changing lifestyles, rising disposable income etc. This was the key reason for FMCG companies like HUL, P&G, Marico focusing lot on value-added products and premium-end products to drive their growths. We all have seen big launches of two premium Anti-Ageing brands, namely Olay and Pond's Age Miracle.

In the current scenario, there may be some hit to the premium FMCG brands, because of mainly two reasons:

1. Products which are not differentiated and have low perceived value will be impacted. Consumer may reconsider buying expensive skin care products, high-end food items.
2. Some consumers who were ready to upgrade from popular to premium brands may hold, as they may find more value in popular brands

In a nutshell, consumer will look for value and not the MRP.

2. Rural FMCG Sales: The growth engine

In last few months we have several FMCG categories like shampoos, toothpaste, hair oils etc growing faster in rural than urban markets. This is attributed to higher prices of farm produce, farm loan waiver and rising rural income. These consumers are not impacted with the global slowdown. The rural consumers are upgrading to higher end products, which is driving the volume sales of FMCG companies.

Now to understand the impact on FMCG sales, let us see the split. Rural, semi-urban and urban contributed 57%, 21% and 22% respectively in 2007-08. Rural with the highest base is growing the fastest. So even if there is marginal drop in premium and value-added products (as mentioned in the previous point), the overall sales would not be impacted much. Therefore, FICCI’s prediction of growth of FMCG sector by 16% may marginally come down, because of less than expected growth rates in the premium segments.

Changing Strategies in FMCG Sector

As mentioned in the first half of my article, the overall impact on the FMCG sales will be marginal. Heavy dependence on the agri-sector and FMCG not being very capital-intensive are among the factors that have insulated the sector from the downturn. But rising input prices, inflation and increased commoditization of products are forcing FMCG companies to adopt new strategies, to have a viable business proposition. Let me enlist few of the strategies which companies have adopted and the outcome of the same.

1. Increase in price: Due to increase in raw material prices, many companies were forced to increase their prices and pass on the cost to the consumers.

a) HUL: Hiked the price of its detergent bar Surf Excel (120 g) earlier known as Rin Supreme from Rs 13 to 15. They have also increased some of their toilet soap brands
b) Tea Companies: Tata Tea and Duncans Tea have also hiked prices for select brands in their stables. Even regional players like Royal Girnar and Soceity Tea have increased prices of their brands to compete with national players
c) Britannia: Hiked the price of its popular brand ‘Britannia NutriChoice Digestive’ from Rs 14 to 15.

Some companies have been able to maintain the prices. Parle Agro has not changed the price of Frooti in spite of upward pressure on prices.

It may be easy to increase the prices of premium products but in case of popular products, the preferred choice is between reducing grammage and maintaining the same price points or introducing another price point to suit consumer pockets.

2. Introduction of lower SKUs: To prevent down trading, the companies have introduced packs with lower SKUs so that per unit purchase does not pinch the consumer’s wallet. With that companies are sharpening their focus on the existing smaller packs and increase their availability.

a) Henkel: Introduced a new 400 gm pack of Henko washing powder at Rs 40 and withdrawn the 500 gm pack that used to sell for Rs 46. As quoted by Henkel, “A family of four requires only 400-425 gm of washing powder in a month. We withdrew the 500 gm packs as they were making consumers spend more and consume more”. They have reintroduced Pril liquid for Rs 50 (425 gm bottle), down from Rs 55 (500 gm). They recently brought out its popular Fa deodorant in 75 ml and Margo soap in 40 grams.
b) Procter & Gamble: P&G has reduced the pack size of its flagship detergent brand ‘Tide’ from 1 kilo to 850 gm while maintaining the price point at Rs 62. They have also also reduced the size of its 500 gm to 480 gm at the same price.
c) Gujarat Cooperative Milk Marketing Federation: Amul introduced 25 gm packs of butter few months back, which is now registering higher sales than the traditional 100 gm and 500 gm packs. Same has happened to their milk powder. They used to sell more of traditional packs of 200 gm, 500 gm and 1 kg, with the 500 gm packs selling the most. In the recent scenario, 25 gm and 50 gm packs are selling in higher numbers.

As an outcome, companies are registering faster offtake in the mid-sized packs.

3. Cost Cutting Strategies: While companies resorted to price hike, many companies are exploring ways to cut down cost.

a) Companies are busy in strengthening their distribution and logistics, by bringing in more efficiency and innovation in the supply chain. Companies are closely monitoring their stock levels and loading patterns
b) Soap companies have shifted to cheaper options of raw materials to source their products at a competitive price.
c) Some companies have cut down their spends on advertisement

4) Mergers and Acquisitions: The turmoil in global markets seems to have a favorable impact on Indian FMCG majors’ acquisition. While many big FMCG companies find this situation an ideal opportunity to go for acquisitions, there are others who are cautious to invest in M&A. CK Ranganathan, chairman & managing director, CavinKare Pvt Ltd said that the global melt down will have a favorable impact for Indian companies’ acquisition plans. According to him, it’s an opportunity for them to acquire companies as they get good value for money. The current financial crisis may offer more opportunities because of better valuation.

5) Restructuring to leverage synergies: With the ‘power of one’ strategy, PepsiCo is aligning its beverages and snacks businesses under a common leadership. This will help them to maximize synergies of the two businesses across key functions such as procurement, agriculture and production, which will lead to production efficiencies. This will help them to minimize the price hike.

Outcome: FMCG sales & profit unaffected despite mayhem

In the June quarter, FMCG companies saw an impressive topline growth. However, rising input prices and inflation impacted their profitability. To counter the decreasing profitability, as mentioned above, companies adopted multiple strategies.

As an outcome, if we look at September quarter results, it clearly shows that the FMCG sector is not impacted, despite rise in raw material cost; credit crisis and the global meltdown. The combined net profit of 12 Bombay Stock Exchange (BSE) FMCG index companies has increased by 14% as compared to the same quarter last year. In fact, net profit of 350 BSE-500 companies increased 7% in the July-September 2008 quarter, as compared to the same period last year.

The robust net profit was boosted by a 21% increase in net sales of these 12 companies, despite the fact that raw material cost increased by 29% as compared to the same period last year. This clearly indicates that companies were able to offset the input cost hike by passing it on to the consumers as retail prices of goods in this segment increased on an average by 10-20% in the last few months. The sector is showing strong volume growth across product categories.

Vote
Has the recent increase in prices of FMCG products impacted your FMCG buying behavior?
a) Downgraded from Expensive Brands to Cheaper Ones
b) Stuck to your old brand; but moved to cheaper SKUs
c) No change in buying behavior

References

Top-end FMCG products may witness slowdown (Times of India)
FMCG cos remain unaffected despite turbulence (Financial Express)
PepsiCo to go ahead with India plans (Economic Times)
Slowdown in India won't impact growth, says Nestle (Business Standard)
FMCG: Strong volumes, margin pressure (Equitymaster)
Despite slowdown, FMCG cos put M&As on fast lane (Financial Express)
Inflation blues: FMCG prices set to rise (Financial Express)
FMCG companies push product launches despite inflation (Financial Express)
Inflation heat has not dampened FMCG offtake (Hindu Business Line)
Companies bet big on small packs to beat inflation heat (Economic Times)
Inflation: FMCG majors on a reinventing spree (Economic Times)
FMCG cos buck downtrend, may grow 17 pc (Ibef)
FMCG firms in a fix over pricing strategy (Business Standard)
FY10 should be good for FMCG: Godrej (Utvi)

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