Unit 3
Rural Marketing of FMCG
Q1) What is Indian FMCG industry?
A1) India has the most attractive FMCG market in the world. It is the fourth largest market of Indian economy. The market size for FMCG in India is estimated to grow from US$30 billion in 2011 to US$74 billion in 2018. Food Products is the leading segment accounting for 43 percent of the overall market. Personal care 22 percent and fabric care (12 percent) comes next in terms of market share. Easier access, growing awareness and changing lifestyles have been the key growth drivers for the sector.
Q2) How market size affects Indian FMCG industry?
A2) FMCG sector in India is one of the largest sectors in the Indian economy. As the consumption in India grows at an unprecedented rate, the FMCG industry remains a key sector for investors. The Government of India has undertaken various initiatives to promote the sector. The minimum capitalization for foreign FMCG companies to invest in India is $100mn. Even the implementation of GST in India has had far-reaching consequences as for the sector as the highest-selling FMCG products in India such as soap, toothpaste and hair oil come under the 18% tax bracket which was earlier under the bracket of 23%.
Q3) What are the Government initiatives affect Indian FMCG INDUSTRY?
A3) Some of the major initiatives taken by the government to promote FMCG sector in India are as follows.
The government of India has approved 100 percent FDI in the cash and carry segment and in the single-brand retail along with 51 percent FDI in multi-brand retail.
The GST is expected to transform the logistics in the FMCG sector into a modern and efficient model as all major corporations are remodelling their operations into larger logistics and warehousing.
Q4) What are the investments in FMCG Industry?
A4) Favourable demand drivers such as rising income levels and growing urbanisation, among others, have recently encouraged major and diverse investments in the FMCG sector in India. While top FMCG companies are expanding their capacity to feed the growing domestic demand, homegrown brands have ventured into international markets. Some of them are
Patanjali: The success of Patanjali has caused the brand to expand into the international market, with plans to set up a 100% export-oriented manufacturing unit in Milan SEZ, Nagpur.
Rp Sanjiv Goenka Group has created a venture capital fund of $14.74 Mn to invest in FMCG groups.
Q5) What are the achievements in Indian FMCG industry?
A5) The number of mega food parks increased from 2 between 2008-14 to 13 between 2014-18. Preservation and processing capacity increased from 308,000 during 2008-14 to 1.41 million during 2014-2018. The number of food labs increased from 31 from 2008-14 to 42 during 2014-2018. The number of food labs increased from 31 from 2008-2014 to 42 during 2014-2018.
Q6) Explain the road ahead under Indian FMCG industry.
A6) FMCG products would need to focus on R&D and innovation as a means of growth. Companies that continue to do well would be the ones that have a culture that promotes using customer insights to create either the next generation of products or in some cases new product categories.
One area we see the local and the global FMCG brands investing more is in health and wellness. Health and wellness are the megatrends shaping consumer preferences and shopping habits. Leading global and Indian food and beverage brands have embraced this trend and are focused on creating new emerging brands in health and wellness.
Q7) What are the characteristics of Indian FMGC sector from the consumer perspective?
A7) The characteristics of Indian FMCG Sector from the consumer perspective are-
High availability: FMCG products are usually widely available and sold in several stores and supermarkets worldwide. This allows consumers to purchase these products easily without too much trouble.
Purchased frequently: FMCGs include products that consumers frequently require, usually daily or near-daily. For example, breads and coffee are generally bought at least once a week.
Low buying effort: FMCGs are usually low effort purchases for the consumer. For example, with shampoo, most people know that they prefer a particular brand or type without testing it. This means that most people enter the store knowing exactly what they want and buy it straight away.
Low cost: FMCGs are usually inexpensive compared to other products on the market, therefore taking up a smaller proportion of consumers’ income.
Rapid consumption: The time between buying the product and consuming it is very short, often only a number of hours. For example, a loaf of bread might be purchased in the morning and consumed at lunchtime that same day.
Q8) What are the characteristics of Indian FMGC sector from the retailer perspective?
A8) The characteristics of Indian FMGC sector from the retailer perspective are-
High turnover rate: FMCG sales are higher than other product types’ sales as they are purchased frequently by consumers. This means that retailers can keep inventory for these products for shorter periods of time, which ultimately reduces costs.
Highly distributed: Since these goods have high demand and low cost, they usually need to be widely available and distributed across different locations and regions. For instance, there might be several different supermarkets in a town that all sell the same bread brand.
Low unit cost: As FMCGs have a high demand and low cost, they usually have a low unit price for consumers. This means that retailers can sell these products at a low price and still retain the same profit margin. This is different from luxury items that usually have a high unit cost but lower demand, meaning that they must be sold at a higher price to maintain the retailer’s desired level of profit.
Non-durability: FMCGs are not built to last. This is because they have a short time span from production until consumption. They are also required in large quantities so manufacturers do not need to preserve them for long periods of time, which allows them to be sold at lower prices.
Consistency in form, size, colour and price: FMCGs are standardised, which allows them to be produced cheaply in bulk quantities. For example, if a manufacturer produces packets of shampoo, they are all the same size and contain the same amount of liquid. This means that when one purchases a packet of shampoo from their local store, they know exactly what they are getting.
Q9) What is Rural marketing of consumer durables?
A9) Indian rural market has always been complexing to forecast and consists of special uniqueness. The concept of rural market in India is still in the evolving stage. However, many companies were successful in entering the Indian rural market. They proved with proper understanding of the market and implementation of innovative marketing strategies. It is possible to explore and conquer the Indian rural market. It is very difficult for the companies to overlook the opportunities they could exploit from rural market. As two thirds of Indian population live in rural areas, this huge potential and booming market cannot be ignored by any marketer. They have to overcome certain challenges, converting them as opportunities and to become successful.
Q10) Give a case study of rural marketing of financial services.
A10) Indian rural market has always been complexing to forecast and consists of special uniqueness. The concept of rural market in India is still in the evolving stage. However, many companies were successful in entering the Indian rural market. They proved with proper understanding of the market and implementation of innovative marketing strategies. It is possible to explore and conquer the Indian rural market. It is very difficult for the companies to overlook the opportunities they could exploit from rural market. As two thirds of Indian population live in rural areas, this huge potential and booming market cannot be ignored by any marketer. They have to overcome certain challenges, converting them as opportunities and to become successful.
Q11) Explain rural marketing of FMCG.
A11) A combination of changing lifestyles, higher disposable income, greater product awareness and affordable pricing have been instrumental in changing the pattern and amount of consumer expenditure leading to robust growth of consumer durables industry. A flurry of hi-technology durables is expected to be introduced in the US$ 4.09 billion Indian durables market in 2009. Samsung, LG, Haier and Videocon are among companies planning new product launches in the coming months. Air conditioner (AC) and refrigerator sales spiked 30-35 per cent in April compared to April 2008. Durable goods are those which don’t wear out quickly, yielding utility over time rather than at once. Examples of consumer durable goods include electronic equipment, home furnishings and fixtures, photographic equipment, leisure equipment and kitchen appliances. They can be further classified as either white goods, such as refrigerators, washing machines and air conditioners or brown goods such as blenders, cooking ranges and microwaves or consumer electronics such as televisions and DVD players. Such big-ticket items typically continue to be serviceable for three years at least and are characterized by long inter-purchase times.
Q12) Give a case study of Rural marketing of consumer durables of FMCG.
A12) With energy generated from renewable sources predicted to be among the major sources of power in the next decade, a company in the Philippines is tackling the challenge head-on and turning trash into a highly prized commodity. Biopower is constructing three biomass power stations on Negros, the fourth largest island of the Philippines, with the aim of producing a total of 72 megawatts of green baseload power to feed into the local grid as well as for export to surrounding islands. The key to this clean, green energy is the waste products from the harvest of the local sugarcane crop. The trash that would previously have been left on the ground once the sugarcane was taken from the fields, the collection of this waste is a crucial part of Biopower’s operation and one they’ve entrusted to Case IH, one of the world’s leading agricultural machinery brands. “The cane farmers leave the trash after the harvest, and we move into the field with our equipment and collect it, taking it to the power station for burning in a controlled environment to produce electricity,” said Paul Coveny, Vice-President Biomass Operations and Materials Management for Biopower. Tractors and other associated machinery need to collect the trash and get it to the power station as quickly and efficiently as possible, Paul said, and Case IH is delivering on every one of these requirements.
Paul said when looking for an equipment supplier, they recognised Case IH’s position as a leading provider of technology solutions, with a state-of-the-art machinery line-up that assisted Biopower in sustaining the fuel supply necessary for their electricity obligations.
The company has purchased over 100 Case IH machines including Farmlift telehandlers and Farmall, Maxxum and Puma tractors through Filholland, the distributor of Case IH machinery in the Philippines.
“Our operation has a very small window to do what we need to do, so we needed reliable tractors that could operate continuously, 24 hours a day,” Paul said.
“The technology in these Case IH tractors has given us that reliability, and along with the support of Filholland, they deliver what we need in the short time we have.”
For the Biopower staff who operate the fleet of Case IH tractors, there’s no doubting their satisfaction with the machines. Paul said the operators regularly commented on the ease of operation, power and speed of the tractors, and the technology features that made their job easier. Staff also had high praise for the training offered by Filholland on the tractors and telehandlers.
Biopower has also been able to install GPS-trackers and data loggers into the tractor fleet that identify each machine’s location and provide detailed information on what they’re doing and how they’re doing it at any given time—it basically provides a live, real-time overview of the entire operation.
The Case IH Farmall JX is one of the models used in the Biopower operation, a small tractor designed with manoeuvrability, visibility and handling top of mind. Powered by an upgraded 8000 Series, Tier 3 turbo-charged engine to provide optimum fuel efficiency and maximum power, the Farmall JX also offers logically-positioned controls with clear, concise instrumentation that make tasks less arduous when in the field all day.
Paul said the performance of the Case IH tractors and telehandlers had been everything they had expected and this, coupled with the 24-hour service and support, service updates and training provided by Filholland, confirmed they had made the right choice.
When it came to running a high-pressure, round-the-clock operation like that of Biopower, Paul said, it was reassuring to have the peace of mind of reliable machinery, and support and assistance when and where it was needed.
“My experience in the sugar industry in Australia means I have seen a lot of Case IH equipment, and know the reputation of their tractors and harvesters, so I had the confidence in the brand to introduce it here onto Negros,” Paul said.
“Case IH is well-known worldwide, and with a good partner like Filholland I would have no hesitation in recommending their products to anyone in the Philippines.
“The brand has a great support network, it’s a quality product and that’s important when you’re running any business.”
Q13) What are the challenges of Retail Execution in FMCG industry?
A13) Retail execution is the most difficult challenge for most consumer-packaged goods (CPG)/fast-moving consumer goods (FMCG) companies. In fact, the average CPG/FMCG company loses more than 20% of total sales opportunity and is at the highest risk of having products removed from retail due to retail execution issues.
Q14) What are the challenges of eCommerce in FMGC industry?
A14) Even before the pandemic, the retail industry as a whole was shifting to an online-first business model. Even established FMCG brands with thousands of stores across the country were forced to increase their online presence through popular marketplaces or direct eCommerce stores. This became a nightmare for distributors because they had to manage orders coming in from various channels and ensure that the required stock was available at the nearest sales point, a last-mile delivery partner, or a local store near the customer's residence.
Q15) What are the challenges of Big Data in FMGC industry?
A15) The ability to acquire, store and process data is improving at an exponential rate, resulting in a data explosion. Weekly consumer sales, brand tracking, consumer panels, shopper data from friendly and well-compensated retailers, and a few hundred other metrics already existed in the FMCG world, depending on which data/analytics organization you spoke with.
95% of data generated and sold to eager marketers and analysts is useless. Smarter organizations will purchase only relevant data (manage information costs), deduce the correct linkages to consumer behaviour, and effectively use it to develop products, manage trade, and communicate effectively with consumers.
Q16) What are the challenges of the internet in FMGC industry?
A16) Information now travels at breakneck speed. A tweet, Facebook post, or YouTube video can go viral in a matter of hours. An organization can no longer sell a product that was unsellable in a developed market due to health concerns in another developing market because regulations had not caught up.
Regulations will take time to catch up, but consumer information is easily accessible through a Google search. There will be no place to hide when it comes to information dissemination. Smarter brands will use innovative methods to effectively use this to reach a global audience while limiting brand communication costs.
Q17) What are the challenges of Environment and Sustainability in FMGC industry?
A17) Consumer bonding scores will be higher for organizations that can demonstrate sustainability across their entire ecosystem. However, the ability to charge a premium to cover increased costs will be limited because consumers will increasingly see sustainability as a given rather than a luxury afforded to a select few. The Tesla of the FMCG industry has yet to be created, utilizing new innovations and technologies.
Q18) What are the challenges of Ageing in FMGC industry?
A18) What would a supermarket's product range look like if everyone who shopped there was 50 or older? Fresh foods, fish (salmon), whole grains, and a few premium sweet offerings are available, as is a large aisle of health supplements. This demographic is wealthier and places a higher value on food quality. The challenge for brands will be to appear relevant to this aging demographic while remaining 'cool' enough to attract younger customers.
Q19) What are the issues related to consumer durables in the Rural market?
A19) The issues related to consumer durables in the Rural market are-
1.Underdeveloped people and underdeveloped markets
The technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.
2.Lack of proper physical communication facilities
Nearly 50 percent of the villages in the country do not have all weather roads. Physical communication to these villages is highly expensive. Even today, most villages in eastern part of the country are inaccessible during monsoon season.
3. Inadequate Media coverage for rural communication
A large number of rural families in own radios and television sets there were also community radio and T.V sets. These have been used to diffuse agricultural technology to rural areas. However, the coverage relating to marketing is inadequate
4. Many languages and Dialects
The number of languages and dialects vary from state-to-state region to region This type of distribution of population warrants appropriate strategies to decide the extent of coverage of rural market.
5. Market organization and staff
The size of the market organization and staff is very important, to manage market system effective control. However, the existing organizational setup particularly at district and block level needs to be strengthened in order make the services on various aspects available to the farmers timely and also easily accessible to them.
Q20) How underdeveloped people and market is an issue in the rural market?
A20) The technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.
Unit 3
Rural Marketing of FMCG
Q1) What is Indian FMCG industry?
A1) India has the most attractive FMCG market in the world. It is the fourth largest market of Indian economy. The market size for FMCG in India is estimated to grow from US$30 billion in 2011 to US$74 billion in 2018. Food Products is the leading segment accounting for 43 percent of the overall market. Personal care 22 percent and fabric care (12 percent) comes next in terms of market share. Easier access, growing awareness and changing lifestyles have been the key growth drivers for the sector.
Q2) How market size affects Indian FMCG industry?
A2) FMCG sector in India is one of the largest sectors in the Indian economy. As the consumption in India grows at an unprecedented rate, the FMCG industry remains a key sector for investors. The Government of India has undertaken various initiatives to promote the sector. The minimum capitalization for foreign FMCG companies to invest in India is $100mn. Even the implementation of GST in India has had far-reaching consequences as for the sector as the highest-selling FMCG products in India such as soap, toothpaste and hair oil come under the 18% tax bracket which was earlier under the bracket of 23%.
Q3) What are the Government initiatives affect Indian FMCG INDUSTRY?
A3) Some of the major initiatives taken by the government to promote FMCG sector in India are as follows.
The government of India has approved 100 percent FDI in the cash and carry segment and in the single-brand retail along with 51 percent FDI in multi-brand retail.
The GST is expected to transform the logistics in the FMCG sector into a modern and efficient model as all major corporations are remodelling their operations into larger logistics and warehousing.
Q4) What are the investments in FMCG Industry?
A4) Favourable demand drivers such as rising income levels and growing urbanisation, among others, have recently encouraged major and diverse investments in the FMCG sector in India. While top FMCG companies are expanding their capacity to feed the growing domestic demand, homegrown brands have ventured into international markets. Some of them are
Patanjali: The success of Patanjali has caused the brand to expand into the international market, with plans to set up a 100% export-oriented manufacturing unit in Milan SEZ, Nagpur.
Rp Sanjiv Goenka Group has created a venture capital fund of $14.74 Mn to invest in FMCG groups.
Q5) What are the achievements in Indian FMCG industry?
A5) The number of mega food parks increased from 2 between 2008-14 to 13 between 2014-18. Preservation and processing capacity increased from 308,000 during 2008-14 to 1.41 million during 2014-2018. The number of food labs increased from 31 from 2008-14 to 42 during 2014-2018. The number of food labs increased from 31 from 2008-2014 to 42 during 2014-2018.
Q6) Explain the road ahead under Indian FMCG industry.
A6) FMCG products would need to focus on R&D and innovation as a means of growth. Companies that continue to do well would be the ones that have a culture that promotes using customer insights to create either the next generation of products or in some cases new product categories.
One area we see the local and the global FMCG brands investing more is in health and wellness. Health and wellness are the megatrends shaping consumer preferences and shopping habits. Leading global and Indian food and beverage brands have embraced this trend and are focused on creating new emerging brands in health and wellness.
Q7) What are the characteristics of Indian FMGC sector from the consumer perspective?
A7) The characteristics of Indian FMCG Sector from the consumer perspective are-
High availability: FMCG products are usually widely available and sold in several stores and supermarkets worldwide. This allows consumers to purchase these products easily without too much trouble.
Purchased frequently: FMCGs include products that consumers frequently require, usually daily or near-daily. For example, breads and coffee are generally bought at least once a week.
Low buying effort: FMCGs are usually low effort purchases for the consumer. For example, with shampoo, most people know that they prefer a particular brand or type without testing it. This means that most people enter the store knowing exactly what they want and buy it straight away.
Low cost: FMCGs are usually inexpensive compared to other products on the market, therefore taking up a smaller proportion of consumers’ income.
Rapid consumption: The time between buying the product and consuming it is very short, often only a number of hours. For example, a loaf of bread might be purchased in the morning and consumed at lunchtime that same day.
Q8) What are the characteristics of Indian FMGC sector from the retailer perspective?
A8) The characteristics of Indian FMGC sector from the retailer perspective are-
High turnover rate: FMCG sales are higher than other product types’ sales as they are purchased frequently by consumers. This means that retailers can keep inventory for these products for shorter periods of time, which ultimately reduces costs.
Highly distributed: Since these goods have high demand and low cost, they usually need to be widely available and distributed across different locations and regions. For instance, there might be several different supermarkets in a town that all sell the same bread brand.
Low unit cost: As FMCGs have a high demand and low cost, they usually have a low unit price for consumers. This means that retailers can sell these products at a low price and still retain the same profit margin. This is different from luxury items that usually have a high unit cost but lower demand, meaning that they must be sold at a higher price to maintain the retailer’s desired level of profit.
Non-durability: FMCGs are not built to last. This is because they have a short time span from production until consumption. They are also required in large quantities so manufacturers do not need to preserve them for long periods of time, which allows them to be sold at lower prices.
Consistency in form, size, colour and price: FMCGs are standardised, which allows them to be produced cheaply in bulk quantities. For example, if a manufacturer produces packets of shampoo, they are all the same size and contain the same amount of liquid. This means that when one purchases a packet of shampoo from their local store, they know exactly what they are getting.
Q9) What is Rural marketing of consumer durables?
A9) Indian rural market has always been complexing to forecast and consists of special uniqueness. The concept of rural market in India is still in the evolving stage. However, many companies were successful in entering the Indian rural market. They proved with proper understanding of the market and implementation of innovative marketing strategies. It is possible to explore and conquer the Indian rural market. It is very difficult for the companies to overlook the opportunities they could exploit from rural market. As two thirds of Indian population live in rural areas, this huge potential and booming market cannot be ignored by any marketer. They have to overcome certain challenges, converting them as opportunities and to become successful.
Q10) Give a case study of rural marketing of financial services.
A10) Indian rural market has always been complexing to forecast and consists of special uniqueness. The concept of rural market in India is still in the evolving stage. However, many companies were successful in entering the Indian rural market. They proved with proper understanding of the market and implementation of innovative marketing strategies. It is possible to explore and conquer the Indian rural market. It is very difficult for the companies to overlook the opportunities they could exploit from rural market. As two thirds of Indian population live in rural areas, this huge potential and booming market cannot be ignored by any marketer. They have to overcome certain challenges, converting them as opportunities and to become successful.
Q11) Explain rural marketing of FMCG.
A11) A combination of changing lifestyles, higher disposable income, greater product awareness and affordable pricing have been instrumental in changing the pattern and amount of consumer expenditure leading to robust growth of consumer durables industry. A flurry of hi-technology durables is expected to be introduced in the US$ 4.09 billion Indian durables market in 2009. Samsung, LG, Haier and Videocon are among companies planning new product launches in the coming months. Air conditioner (AC) and refrigerator sales spiked 30-35 per cent in April compared to April 2008. Durable goods are those which don’t wear out quickly, yielding utility over time rather than at once. Examples of consumer durable goods include electronic equipment, home furnishings and fixtures, photographic equipment, leisure equipment and kitchen appliances. They can be further classified as either white goods, such as refrigerators, washing machines and air conditioners or brown goods such as blenders, cooking ranges and microwaves or consumer electronics such as televisions and DVD players. Such big-ticket items typically continue to be serviceable for three years at least and are characterized by long inter-purchase times.
Q12) Give a case study of Rural marketing of consumer durables of FMCG.
A12) With energy generated from renewable sources predicted to be among the major sources of power in the next decade, a company in the Philippines is tackling the challenge head-on and turning trash into a highly prized commodity. Biopower is constructing three biomass power stations on Negros, the fourth largest island of the Philippines, with the aim of producing a total of 72 megawatts of green baseload power to feed into the local grid as well as for export to surrounding islands. The key to this clean, green energy is the waste products from the harvest of the local sugarcane crop. The trash that would previously have been left on the ground once the sugarcane was taken from the fields, the collection of this waste is a crucial part of Biopower’s operation and one they’ve entrusted to Case IH, one of the world’s leading agricultural machinery brands. “The cane farmers leave the trash after the harvest, and we move into the field with our equipment and collect it, taking it to the power station for burning in a controlled environment to produce electricity,” said Paul Coveny, Vice-President Biomass Operations and Materials Management for Biopower. Tractors and other associated machinery need to collect the trash and get it to the power station as quickly and efficiently as possible, Paul said, and Case IH is delivering on every one of these requirements.
Paul said when looking for an equipment supplier, they recognised Case IH’s position as a leading provider of technology solutions, with a state-of-the-art machinery line-up that assisted Biopower in sustaining the fuel supply necessary for their electricity obligations.
The company has purchased over 100 Case IH machines including Farmlift telehandlers and Farmall, Maxxum and Puma tractors through Filholland, the distributor of Case IH machinery in the Philippines.
“Our operation has a very small window to do what we need to do, so we needed reliable tractors that could operate continuously, 24 hours a day,” Paul said.
“The technology in these Case IH tractors has given us that reliability, and along with the support of Filholland, they deliver what we need in the short time we have.”
For the Biopower staff who operate the fleet of Case IH tractors, there’s no doubting their satisfaction with the machines. Paul said the operators regularly commented on the ease of operation, power and speed of the tractors, and the technology features that made their job easier. Staff also had high praise for the training offered by Filholland on the tractors and telehandlers.
Biopower has also been able to install GPS-trackers and data loggers into the tractor fleet that identify each machine’s location and provide detailed information on what they’re doing and how they’re doing it at any given time—it basically provides a live, real-time overview of the entire operation.
The Case IH Farmall JX is one of the models used in the Biopower operation, a small tractor designed with manoeuvrability, visibility and handling top of mind. Powered by an upgraded 8000 Series, Tier 3 turbo-charged engine to provide optimum fuel efficiency and maximum power, the Farmall JX also offers logically-positioned controls with clear, concise instrumentation that make tasks less arduous when in the field all day.
Paul said the performance of the Case IH tractors and telehandlers had been everything they had expected and this, coupled with the 24-hour service and support, service updates and training provided by Filholland, confirmed they had made the right choice.
When it came to running a high-pressure, round-the-clock operation like that of Biopower, Paul said, it was reassuring to have the peace of mind of reliable machinery, and support and assistance when and where it was needed.
“My experience in the sugar industry in Australia means I have seen a lot of Case IH equipment, and know the reputation of their tractors and harvesters, so I had the confidence in the brand to introduce it here onto Negros,” Paul said.
“Case IH is well-known worldwide, and with a good partner like Filholland I would have no hesitation in recommending their products to anyone in the Philippines.
“The brand has a great support network, it’s a quality product and that’s important when you’re running any business.”
Q13) What are the challenges of Retail Execution in FMCG industry?
A13) Retail execution is the most difficult challenge for most consumer-packaged goods (CPG)/fast-moving consumer goods (FMCG) companies. In fact, the average CPG/FMCG company loses more than 20% of total sales opportunity and is at the highest risk of having products removed from retail due to retail execution issues.
Q14) What are the challenges of eCommerce in FMGC industry?
A14) Even before the pandemic, the retail industry as a whole was shifting to an online-first business model. Even established FMCG brands with thousands of stores across the country were forced to increase their online presence through popular marketplaces or direct eCommerce stores. This became a nightmare for distributors because they had to manage orders coming in from various channels and ensure that the required stock was available at the nearest sales point, a last-mile delivery partner, or a local store near the customer's residence.
Q15) What are the challenges of Big Data in FMGC industry?
A15) The ability to acquire, store and process data is improving at an exponential rate, resulting in a data explosion. Weekly consumer sales, brand tracking, consumer panels, shopper data from friendly and well-compensated retailers, and a few hundred other metrics already existed in the FMCG world, depending on which data/analytics organization you spoke with.
95% of data generated and sold to eager marketers and analysts is useless. Smarter organizations will purchase only relevant data (manage information costs), deduce the correct linkages to consumer behaviour, and effectively use it to develop products, manage trade, and communicate effectively with consumers.
Q16) What are the challenges of the internet in FMGC industry?
A16) Information now travels at breakneck speed. A tweet, Facebook post, or YouTube video can go viral in a matter of hours. An organization can no longer sell a product that was unsellable in a developed market due to health concerns in another developing market because regulations had not caught up.
Regulations will take time to catch up, but consumer information is easily accessible through a Google search. There will be no place to hide when it comes to information dissemination. Smarter brands will use innovative methods to effectively use this to reach a global audience while limiting brand communication costs.
Q17) What are the challenges of Environment and Sustainability in FMGC industry?
A17) Consumer bonding scores will be higher for organizations that can demonstrate sustainability across their entire ecosystem. However, the ability to charge a premium to cover increased costs will be limited because consumers will increasingly see sustainability as a given rather than a luxury afforded to a select few. The Tesla of the FMCG industry has yet to be created, utilizing new innovations and technologies.
Q18) What are the challenges of Ageing in FMGC industry?
A18) What would a supermarket's product range look like if everyone who shopped there was 50 or older? Fresh foods, fish (salmon), whole grains, and a few premium sweet offerings are available, as is a large aisle of health supplements. This demographic is wealthier and places a higher value on food quality. The challenge for brands will be to appear relevant to this aging demographic while remaining 'cool' enough to attract younger customers.
Q19) What are the issues related to consumer durables in the Rural market?
A19) The issues related to consumer durables in the Rural market are-
1.Underdeveloped people and underdeveloped markets
The technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.
2.Lack of proper physical communication facilities
Nearly 50 percent of the villages in the country do not have all weather roads. Physical communication to these villages is highly expensive. Even today, most villages in eastern part of the country are inaccessible during monsoon season.
3. Inadequate Media coverage for rural communication
A large number of rural families in own radios and television sets there were also community radio and T.V sets. These have been used to diffuse agricultural technology to rural areas. However, the coverage relating to marketing is inadequate
4. Many languages and Dialects
The number of languages and dialects vary from state-to-state region to region This type of distribution of population warrants appropriate strategies to decide the extent of coverage of rural market.
5. Market organization and staff
The size of the market organization and staff is very important, to manage market system effective control. However, the existing organizational setup particularly at district and block level needs to be strengthened in order make the services on various aspects available to the farmers timely and also easily accessible to them.
Q20) How underdeveloped people and market is an issue in the rural market?
A20) The technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.
Unit 3
Rural Marketing of FMCG
Q1) What is Indian FMCG industry?
A1) India has the most attractive FMCG market in the world. It is the fourth largest market of Indian economy. The market size for FMCG in India is estimated to grow from US$30 billion in 2011 to US$74 billion in 2018. Food Products is the leading segment accounting for 43 percent of the overall market. Personal care 22 percent and fabric care (12 percent) comes next in terms of market share. Easier access, growing awareness and changing lifestyles have been the key growth drivers for the sector.
Q2) How market size affects Indian FMCG industry?
A2) FMCG sector in India is one of the largest sectors in the Indian economy. As the consumption in India grows at an unprecedented rate, the FMCG industry remains a key sector for investors. The Government of India has undertaken various initiatives to promote the sector. The minimum capitalization for foreign FMCG companies to invest in India is $100mn. Even the implementation of GST in India has had far-reaching consequences as for the sector as the highest-selling FMCG products in India such as soap, toothpaste and hair oil come under the 18% tax bracket which was earlier under the bracket of 23%.
Q3) What are the Government initiatives affect Indian FMCG INDUSTRY?
A3) Some of the major initiatives taken by the government to promote FMCG sector in India are as follows.
The government of India has approved 100 percent FDI in the cash and carry segment and in the single-brand retail along with 51 percent FDI in multi-brand retail.
The GST is expected to transform the logistics in the FMCG sector into a modern and efficient model as all major corporations are remodelling their operations into larger logistics and warehousing.
Q4) What are the investments in FMCG Industry?
A4) Favourable demand drivers such as rising income levels and growing urbanisation, among others, have recently encouraged major and diverse investments in the FMCG sector in India. While top FMCG companies are expanding their capacity to feed the growing domestic demand, homegrown brands have ventured into international markets. Some of them are
Patanjali: The success of Patanjali has caused the brand to expand into the international market, with plans to set up a 100% export-oriented manufacturing unit in Milan SEZ, Nagpur.
Rp Sanjiv Goenka Group has created a venture capital fund of $14.74 Mn to invest in FMCG groups.
Q5) What are the achievements in Indian FMCG industry?
A5) The number of mega food parks increased from 2 between 2008-14 to 13 between 2014-18. Preservation and processing capacity increased from 308,000 during 2008-14 to 1.41 million during 2014-2018. The number of food labs increased from 31 from 2008-14 to 42 during 2014-2018. The number of food labs increased from 31 from 2008-2014 to 42 during 2014-2018.
Q6) Explain the road ahead under Indian FMCG industry.
A6) FMCG products would need to focus on R&D and innovation as a means of growth. Companies that continue to do well would be the ones that have a culture that promotes using customer insights to create either the next generation of products or in some cases new product categories.
One area we see the local and the global FMCG brands investing more is in health and wellness. Health and wellness are the megatrends shaping consumer preferences and shopping habits. Leading global and Indian food and beverage brands have embraced this trend and are focused on creating new emerging brands in health and wellness.
Q7) What are the characteristics of Indian FMGC sector from the consumer perspective?
A7) The characteristics of Indian FMCG Sector from the consumer perspective are-
High availability: FMCG products are usually widely available and sold in several stores and supermarkets worldwide. This allows consumers to purchase these products easily without too much trouble.
Purchased frequently: FMCGs include products that consumers frequently require, usually daily or near-daily. For example, breads and coffee are generally bought at least once a week.
Low buying effort: FMCGs are usually low effort purchases for the consumer. For example, with shampoo, most people know that they prefer a particular brand or type without testing it. This means that most people enter the store knowing exactly what they want and buy it straight away.
Low cost: FMCGs are usually inexpensive compared to other products on the market, therefore taking up a smaller proportion of consumers’ income.
Rapid consumption: The time between buying the product and consuming it is very short, often only a number of hours. For example, a loaf of bread might be purchased in the morning and consumed at lunchtime that same day.
Q8) What are the characteristics of Indian FMGC sector from the retailer perspective?
A8) The characteristics of Indian FMGC sector from the retailer perspective are-
High turnover rate: FMCG sales are higher than other product types’ sales as they are purchased frequently by consumers. This means that retailers can keep inventory for these products for shorter periods of time, which ultimately reduces costs.
Highly distributed: Since these goods have high demand and low cost, they usually need to be widely available and distributed across different locations and regions. For instance, there might be several different supermarkets in a town that all sell the same bread brand.
Low unit cost: As FMCGs have a high demand and low cost, they usually have a low unit price for consumers. This means that retailers can sell these products at a low price and still retain the same profit margin. This is different from luxury items that usually have a high unit cost but lower demand, meaning that they must be sold at a higher price to maintain the retailer’s desired level of profit.
Non-durability: FMCGs are not built to last. This is because they have a short time span from production until consumption. They are also required in large quantities so manufacturers do not need to preserve them for long periods of time, which allows them to be sold at lower prices.
Consistency in form, size, colour and price: FMCGs are standardised, which allows them to be produced cheaply in bulk quantities. For example, if a manufacturer produces packets of shampoo, they are all the same size and contain the same amount of liquid. This means that when one purchases a packet of shampoo from their local store, they know exactly what they are getting.
Q9) What is Rural marketing of consumer durables?
A9) Indian rural market has always been complexing to forecast and consists of special uniqueness. The concept of rural market in India is still in the evolving stage. However, many companies were successful in entering the Indian rural market. They proved with proper understanding of the market and implementation of innovative marketing strategies. It is possible to explore and conquer the Indian rural market. It is very difficult for the companies to overlook the opportunities they could exploit from rural market. As two thirds of Indian population live in rural areas, this huge potential and booming market cannot be ignored by any marketer. They have to overcome certain challenges, converting them as opportunities and to become successful.
Q10) Give a case study of rural marketing of financial services.
A10) Indian rural market has always been complexing to forecast and consists of special uniqueness. The concept of rural market in India is still in the evolving stage. However, many companies were successful in entering the Indian rural market. They proved with proper understanding of the market and implementation of innovative marketing strategies. It is possible to explore and conquer the Indian rural market. It is very difficult for the companies to overlook the opportunities they could exploit from rural market. As two thirds of Indian population live in rural areas, this huge potential and booming market cannot be ignored by any marketer. They have to overcome certain challenges, converting them as opportunities and to become successful.
Q11) Explain rural marketing of FMCG.
A11) A combination of changing lifestyles, higher disposable income, greater product awareness and affordable pricing have been instrumental in changing the pattern and amount of consumer expenditure leading to robust growth of consumer durables industry. A flurry of hi-technology durables is expected to be introduced in the US$ 4.09 billion Indian durables market in 2009. Samsung, LG, Haier and Videocon are among companies planning new product launches in the coming months. Air conditioner (AC) and refrigerator sales spiked 30-35 per cent in April compared to April 2008. Durable goods are those which don’t wear out quickly, yielding utility over time rather than at once. Examples of consumer durable goods include electronic equipment, home furnishings and fixtures, photographic equipment, leisure equipment and kitchen appliances. They can be further classified as either white goods, such as refrigerators, washing machines and air conditioners or brown goods such as blenders, cooking ranges and microwaves or consumer electronics such as televisions and DVD players. Such big-ticket items typically continue to be serviceable for three years at least and are characterized by long inter-purchase times.
Q12) Give a case study of Rural marketing of consumer durables of FMCG.
A12) With energy generated from renewable sources predicted to be among the major sources of power in the next decade, a company in the Philippines is tackling the challenge head-on and turning trash into a highly prized commodity. Biopower is constructing three biomass power stations on Negros, the fourth largest island of the Philippines, with the aim of producing a total of 72 megawatts of green baseload power to feed into the local grid as well as for export to surrounding islands. The key to this clean, green energy is the waste products from the harvest of the local sugarcane crop. The trash that would previously have been left on the ground once the sugarcane was taken from the fields, the collection of this waste is a crucial part of Biopower’s operation and one they’ve entrusted to Case IH, one of the world’s leading agricultural machinery brands. “The cane farmers leave the trash after the harvest, and we move into the field with our equipment and collect it, taking it to the power station for burning in a controlled environment to produce electricity,” said Paul Coveny, Vice-President Biomass Operations and Materials Management for Biopower. Tractors and other associated machinery need to collect the trash and get it to the power station as quickly and efficiently as possible, Paul said, and Case IH is delivering on every one of these requirements.
Paul said when looking for an equipment supplier, they recognised Case IH’s position as a leading provider of technology solutions, with a state-of-the-art machinery line-up that assisted Biopower in sustaining the fuel supply necessary for their electricity obligations.
The company has purchased over 100 Case IH machines including Farmlift telehandlers and Farmall, Maxxum and Puma tractors through Filholland, the distributor of Case IH machinery in the Philippines.
“Our operation has a very small window to do what we need to do, so we needed reliable tractors that could operate continuously, 24 hours a day,” Paul said.
“The technology in these Case IH tractors has given us that reliability, and along with the support of Filholland, they deliver what we need in the short time we have.”
For the Biopower staff who operate the fleet of Case IH tractors, there’s no doubting their satisfaction with the machines. Paul said the operators regularly commented on the ease of operation, power and speed of the tractors, and the technology features that made their job easier. Staff also had high praise for the training offered by Filholland on the tractors and telehandlers.
Biopower has also been able to install GPS-trackers and data loggers into the tractor fleet that identify each machine’s location and provide detailed information on what they’re doing and how they’re doing it at any given time—it basically provides a live, real-time overview of the entire operation.
The Case IH Farmall JX is one of the models used in the Biopower operation, a small tractor designed with manoeuvrability, visibility and handling top of mind. Powered by an upgraded 8000 Series, Tier 3 turbo-charged engine to provide optimum fuel efficiency and maximum power, the Farmall JX also offers logically-positioned controls with clear, concise instrumentation that make tasks less arduous when in the field all day.
Paul said the performance of the Case IH tractors and telehandlers had been everything they had expected and this, coupled with the 24-hour service and support, service updates and training provided by Filholland, confirmed they had made the right choice.
When it came to running a high-pressure, round-the-clock operation like that of Biopower, Paul said, it was reassuring to have the peace of mind of reliable machinery, and support and assistance when and where it was needed.
“My experience in the sugar industry in Australia means I have seen a lot of Case IH equipment, and know the reputation of their tractors and harvesters, so I had the confidence in the brand to introduce it here onto Negros,” Paul said.
“Case IH is well-known worldwide, and with a good partner like Filholland I would have no hesitation in recommending their products to anyone in the Philippines.
“The brand has a great support network, it’s a quality product and that’s important when you’re running any business.”
Q13) What are the challenges of Retail Execution in FMCG industry?
A13) Retail execution is the most difficult challenge for most consumer-packaged goods (CPG)/fast-moving consumer goods (FMCG) companies. In fact, the average CPG/FMCG company loses more than 20% of total sales opportunity and is at the highest risk of having products removed from retail due to retail execution issues.
Q14) What are the challenges of eCommerce in FMGC industry?
A14) Even before the pandemic, the retail industry as a whole was shifting to an online-first business model. Even established FMCG brands with thousands of stores across the country were forced to increase their online presence through popular marketplaces or direct eCommerce stores. This became a nightmare for distributors because they had to manage orders coming in from various channels and ensure that the required stock was available at the nearest sales point, a last-mile delivery partner, or a local store near the customer's residence.
Q15) What are the challenges of Big Data in FMGC industry?
A15) The ability to acquire, store and process data is improving at an exponential rate, resulting in a data explosion. Weekly consumer sales, brand tracking, consumer panels, shopper data from friendly and well-compensated retailers, and a few hundred other metrics already existed in the FMCG world, depending on which data/analytics organization you spoke with.
95% of data generated and sold to eager marketers and analysts is useless. Smarter organizations will purchase only relevant data (manage information costs), deduce the correct linkages to consumer behaviour, and effectively use it to develop products, manage trade, and communicate effectively with consumers.
Q16) What are the challenges of the internet in FMGC industry?
A16) Information now travels at breakneck speed. A tweet, Facebook post, or YouTube video can go viral in a matter of hours. An organization can no longer sell a product that was unsellable in a developed market due to health concerns in another developing market because regulations had not caught up.
Regulations will take time to catch up, but consumer information is easily accessible through a Google search. There will be no place to hide when it comes to information dissemination. Smarter brands will use innovative methods to effectively use this to reach a global audience while limiting brand communication costs.
Q17) What are the challenges of Environment and Sustainability in FMGC industry?
A17) Consumer bonding scores will be higher for organizations that can demonstrate sustainability across their entire ecosystem. However, the ability to charge a premium to cover increased costs will be limited because consumers will increasingly see sustainability as a given rather than a luxury afforded to a select few. The Tesla of the FMCG industry has yet to be created, utilizing new innovations and technologies.
Q18) What are the challenges of Ageing in FMGC industry?
A18) What would a supermarket's product range look like if everyone who shopped there was 50 or older? Fresh foods, fish (salmon), whole grains, and a few premium sweet offerings are available, as is a large aisle of health supplements. This demographic is wealthier and places a higher value on food quality. The challenge for brands will be to appear relevant to this aging demographic while remaining 'cool' enough to attract younger customers.
Q19) What are the issues related to consumer durables in the Rural market?
A19) The issues related to consumer durables in the Rural market are-
1.Underdeveloped people and underdeveloped markets
The technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.
2.Lack of proper physical communication facilities
Nearly 50 percent of the villages in the country do not have all weather roads. Physical communication to these villages is highly expensive. Even today, most villages in eastern part of the country are inaccessible during monsoon season.
3. Inadequate Media coverage for rural communication
A large number of rural families in own radios and television sets there were also community radio and T.V sets. These have been used to diffuse agricultural technology to rural areas. However, the coverage relating to marketing is inadequate
4. Many languages and Dialects
The number of languages and dialects vary from state-to-state region to region This type of distribution of population warrants appropriate strategies to decide the extent of coverage of rural market.
5. Market organization and staff
The size of the market organization and staff is very important, to manage market system effective control. However, the existing organizational setup particularly at district and block level needs to be strengthened in order make the services on various aspects available to the farmers timely and also easily accessible to them.
Q20) How underdeveloped people and market is an issue in the rural market?
A20) The technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.
Unit 3
Rural Marketing of FMCG
Q1) What is Indian FMCG industry?
A1) India has the most attractive FMCG market in the world. It is the fourth largest market of Indian economy. The market size for FMCG in India is estimated to grow from US$30 billion in 2011 to US$74 billion in 2018. Food Products is the leading segment accounting for 43 percent of the overall market. Personal care 22 percent and fabric care (12 percent) comes next in terms of market share. Easier access, growing awareness and changing lifestyles have been the key growth drivers for the sector.
Q2) How market size affects Indian FMCG industry?
A2) FMCG sector in India is one of the largest sectors in the Indian economy. As the consumption in India grows at an unprecedented rate, the FMCG industry remains a key sector for investors. The Government of India has undertaken various initiatives to promote the sector. The minimum capitalization for foreign FMCG companies to invest in India is $100mn. Even the implementation of GST in India has had far-reaching consequences as for the sector as the highest-selling FMCG products in India such as soap, toothpaste and hair oil come under the 18% tax bracket which was earlier under the bracket of 23%.
Q3) What are the Government initiatives affect Indian FMCG INDUSTRY?
A3) Some of the major initiatives taken by the government to promote FMCG sector in India are as follows.
The government of India has approved 100 percent FDI in the cash and carry segment and in the single-brand retail along with 51 percent FDI in multi-brand retail.
The GST is expected to transform the logistics in the FMCG sector into a modern and efficient model as all major corporations are remodelling their operations into larger logistics and warehousing.
Q4) What are the investments in FMCG Industry?
A4) Favourable demand drivers such as rising income levels and growing urbanisation, among others, have recently encouraged major and diverse investments in the FMCG sector in India. While top FMCG companies are expanding their capacity to feed the growing domestic demand, homegrown brands have ventured into international markets. Some of them are
Patanjali: The success of Patanjali has caused the brand to expand into the international market, with plans to set up a 100% export-oriented manufacturing unit in Milan SEZ, Nagpur.
Rp Sanjiv Goenka Group has created a venture capital fund of $14.74 Mn to invest in FMCG groups.
Q5) What are the achievements in Indian FMCG industry?
A5) The number of mega food parks increased from 2 between 2008-14 to 13 between 2014-18. Preservation and processing capacity increased from 308,000 during 2008-14 to 1.41 million during 2014-2018. The number of food labs increased from 31 from 2008-14 to 42 during 2014-2018. The number of food labs increased from 31 from 2008-2014 to 42 during 2014-2018.
Q6) Explain the road ahead under Indian FMCG industry.
A6) FMCG products would need to focus on R&D and innovation as a means of growth. Companies that continue to do well would be the ones that have a culture that promotes using customer insights to create either the next generation of products or in some cases new product categories.
One area we see the local and the global FMCG brands investing more is in health and wellness. Health and wellness are the megatrends shaping consumer preferences and shopping habits. Leading global and Indian food and beverage brands have embraced this trend and are focused on creating new emerging brands in health and wellness.
Q7) What are the characteristics of Indian FMGC sector from the consumer perspective?
A7) The characteristics of Indian FMCG Sector from the consumer perspective are-
High availability: FMCG products are usually widely available and sold in several stores and supermarkets worldwide. This allows consumers to purchase these products easily without too much trouble.
Purchased frequently: FMCGs include products that consumers frequently require, usually daily or near-daily. For example, breads and coffee are generally bought at least once a week.
Low buying effort: FMCGs are usually low effort purchases for the consumer. For example, with shampoo, most people know that they prefer a particular brand or type without testing it. This means that most people enter the store knowing exactly what they want and buy it straight away.
Low cost: FMCGs are usually inexpensive compared to other products on the market, therefore taking up a smaller proportion of consumers’ income.
Rapid consumption: The time between buying the product and consuming it is very short, often only a number of hours. For example, a loaf of bread might be purchased in the morning and consumed at lunchtime that same day.
Q8) What are the characteristics of Indian FMGC sector from the retailer perspective?
A8) The characteristics of Indian FMGC sector from the retailer perspective are-
High turnover rate: FMCG sales are higher than other product types’ sales as they are purchased frequently by consumers. This means that retailers can keep inventory for these products for shorter periods of time, which ultimately reduces costs.
Highly distributed: Since these goods have high demand and low cost, they usually need to be widely available and distributed across different locations and regions. For instance, there might be several different supermarkets in a town that all sell the same bread brand.
Low unit cost: As FMCGs have a high demand and low cost, they usually have a low unit price for consumers. This means that retailers can sell these products at a low price and still retain the same profit margin. This is different from luxury items that usually have a high unit cost but lower demand, meaning that they must be sold at a higher price to maintain the retailer’s desired level of profit.
Non-durability: FMCGs are not built to last. This is because they have a short time span from production until consumption. They are also required in large quantities so manufacturers do not need to preserve them for long periods of time, which allows them to be sold at lower prices.
Consistency in form, size, colour and price: FMCGs are standardised, which allows them to be produced cheaply in bulk quantities. For example, if a manufacturer produces packets of shampoo, they are all the same size and contain the same amount of liquid. This means that when one purchases a packet of shampoo from their local store, they know exactly what they are getting.
Q9) What is Rural marketing of consumer durables?
A9) Indian rural market has always been complexing to forecast and consists of special uniqueness. The concept of rural market in India is still in the evolving stage. However, many companies were successful in entering the Indian rural market. They proved with proper understanding of the market and implementation of innovative marketing strategies. It is possible to explore and conquer the Indian rural market. It is very difficult for the companies to overlook the opportunities they could exploit from rural market. As two thirds of Indian population live in rural areas, this huge potential and booming market cannot be ignored by any marketer. They have to overcome certain challenges, converting them as opportunities and to become successful.
Q10) Give a case study of rural marketing of financial services.
A10) Indian rural market has always been complexing to forecast and consists of special uniqueness. The concept of rural market in India is still in the evolving stage. However, many companies were successful in entering the Indian rural market. They proved with proper understanding of the market and implementation of innovative marketing strategies. It is possible to explore and conquer the Indian rural market. It is very difficult for the companies to overlook the opportunities they could exploit from rural market. As two thirds of Indian population live in rural areas, this huge potential and booming market cannot be ignored by any marketer. They have to overcome certain challenges, converting them as opportunities and to become successful.
Q11) Explain rural marketing of FMCG.
A11) A combination of changing lifestyles, higher disposable income, greater product awareness and affordable pricing have been instrumental in changing the pattern and amount of consumer expenditure leading to robust growth of consumer durables industry. A flurry of hi-technology durables is expected to be introduced in the US$ 4.09 billion Indian durables market in 2009. Samsung, LG, Haier and Videocon are among companies planning new product launches in the coming months. Air conditioner (AC) and refrigerator sales spiked 30-35 per cent in April compared to April 2008. Durable goods are those which don’t wear out quickly, yielding utility over time rather than at once. Examples of consumer durable goods include electronic equipment, home furnishings and fixtures, photographic equipment, leisure equipment and kitchen appliances. They can be further classified as either white goods, such as refrigerators, washing machines and air conditioners or brown goods such as blenders, cooking ranges and microwaves or consumer electronics such as televisions and DVD players. Such big-ticket items typically continue to be serviceable for three years at least and are characterized by long inter-purchase times.
Q12) Give a case study of Rural marketing of consumer durables of FMCG.
A12) With energy generated from renewable sources predicted to be among the major sources of power in the next decade, a company in the Philippines is tackling the challenge head-on and turning trash into a highly prized commodity. Biopower is constructing three biomass power stations on Negros, the fourth largest island of the Philippines, with the aim of producing a total of 72 megawatts of green baseload power to feed into the local grid as well as for export to surrounding islands. The key to this clean, green energy is the waste products from the harvest of the local sugarcane crop. The trash that would previously have been left on the ground once the sugarcane was taken from the fields, the collection of this waste is a crucial part of Biopower’s operation and one they’ve entrusted to Case IH, one of the world’s leading agricultural machinery brands. “The cane farmers leave the trash after the harvest, and we move into the field with our equipment and collect it, taking it to the power station for burning in a controlled environment to produce electricity,” said Paul Coveny, Vice-President Biomass Operations and Materials Management for Biopower. Tractors and other associated machinery need to collect the trash and get it to the power station as quickly and efficiently as possible, Paul said, and Case IH is delivering on every one of these requirements.
Paul said when looking for an equipment supplier, they recognised Case IH’s position as a leading provider of technology solutions, with a state-of-the-art machinery line-up that assisted Biopower in sustaining the fuel supply necessary for their electricity obligations.
The company has purchased over 100 Case IH machines including Farmlift telehandlers and Farmall, Maxxum and Puma tractors through Filholland, the distributor of Case IH machinery in the Philippines.
“Our operation has a very small window to do what we need to do, so we needed reliable tractors that could operate continuously, 24 hours a day,” Paul said.
“The technology in these Case IH tractors has given us that reliability, and along with the support of Filholland, they deliver what we need in the short time we have.”
For the Biopower staff who operate the fleet of Case IH tractors, there’s no doubting their satisfaction with the machines. Paul said the operators regularly commented on the ease of operation, power and speed of the tractors, and the technology features that made their job easier. Staff also had high praise for the training offered by Filholland on the tractors and telehandlers.
Biopower has also been able to install GPS-trackers and data loggers into the tractor fleet that identify each machine’s location and provide detailed information on what they’re doing and how they’re doing it at any given time—it basically provides a live, real-time overview of the entire operation.
The Case IH Farmall JX is one of the models used in the Biopower operation, a small tractor designed with manoeuvrability, visibility and handling top of mind. Powered by an upgraded 8000 Series, Tier 3 turbo-charged engine to provide optimum fuel efficiency and maximum power, the Farmall JX also offers logically-positioned controls with clear, concise instrumentation that make tasks less arduous when in the field all day.
Paul said the performance of the Case IH tractors and telehandlers had been everything they had expected and this, coupled with the 24-hour service and support, service updates and training provided by Filholland, confirmed they had made the right choice.
When it came to running a high-pressure, round-the-clock operation like that of Biopower, Paul said, it was reassuring to have the peace of mind of reliable machinery, and support and assistance when and where it was needed.
“My experience in the sugar industry in Australia means I have seen a lot of Case IH equipment, and know the reputation of their tractors and harvesters, so I had the confidence in the brand to introduce it here onto Negros,” Paul said.
“Case IH is well-known worldwide, and with a good partner like Filholland I would have no hesitation in recommending their products to anyone in the Philippines.
“The brand has a great support network, it’s a quality product and that’s important when you’re running any business.”
Q13) What are the challenges of Retail Execution in FMCG industry?
A13) Retail execution is the most difficult challenge for most consumer-packaged goods (CPG)/fast-moving consumer goods (FMCG) companies. In fact, the average CPG/FMCG company loses more than 20% of total sales opportunity and is at the highest risk of having products removed from retail due to retail execution issues.
Q14) What are the challenges of eCommerce in FMGC industry?
A14) Even before the pandemic, the retail industry as a whole was shifting to an online-first business model. Even established FMCG brands with thousands of stores across the country were forced to increase their online presence through popular marketplaces or direct eCommerce stores. This became a nightmare for distributors because they had to manage orders coming in from various channels and ensure that the required stock was available at the nearest sales point, a last-mile delivery partner, or a local store near the customer's residence.
Q15) What are the challenges of Big Data in FMGC industry?
A15) The ability to acquire, store and process data is improving at an exponential rate, resulting in a data explosion. Weekly consumer sales, brand tracking, consumer panels, shopper data from friendly and well-compensated retailers, and a few hundred other metrics already existed in the FMCG world, depending on which data/analytics organization you spoke with.
95% of data generated and sold to eager marketers and analysts is useless. Smarter organizations will purchase only relevant data (manage information costs), deduce the correct linkages to consumer behaviour, and effectively use it to develop products, manage trade, and communicate effectively with consumers.
Q16) What are the challenges of the internet in FMGC industry?
A16) Information now travels at breakneck speed. A tweet, Facebook post, or YouTube video can go viral in a matter of hours. An organization can no longer sell a product that was unsellable in a developed market due to health concerns in another developing market because regulations had not caught up.
Regulations will take time to catch up, but consumer information is easily accessible through a Google search. There will be no place to hide when it comes to information dissemination. Smarter brands will use innovative methods to effectively use this to reach a global audience while limiting brand communication costs.
Q17) What are the challenges of Environment and Sustainability in FMGC industry?
A17) Consumer bonding scores will be higher for organizations that can demonstrate sustainability across their entire ecosystem. However, the ability to charge a premium to cover increased costs will be limited because consumers will increasingly see sustainability as a given rather than a luxury afforded to a select few. The Tesla of the FMCG industry has yet to be created, utilizing new innovations and technologies.
Q18) What are the challenges of Ageing in FMGC industry?
A18) What would a supermarket's product range look like if everyone who shopped there was 50 or older? Fresh foods, fish (salmon), whole grains, and a few premium sweet offerings are available, as is a large aisle of health supplements. This demographic is wealthier and places a higher value on food quality. The challenge for brands will be to appear relevant to this aging demographic while remaining 'cool' enough to attract younger customers.
Q19) What are the issues related to consumer durables in the Rural market?
A19) The issues related to consumer durables in the Rural market are-
1.Underdeveloped people and underdeveloped markets
The technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.
2.Lack of proper physical communication facilities
Nearly 50 percent of the villages in the country do not have all weather roads. Physical communication to these villages is highly expensive. Even today, most villages in eastern part of the country are inaccessible during monsoon season.
3. Inadequate Media coverage for rural communication
A large number of rural families in own radios and television sets there were also community radio and T.V sets. These have been used to diffuse agricultural technology to rural areas. However, the coverage relating to marketing is inadequate
4. Many languages and Dialects
The number of languages and dialects vary from state-to-state region to region This type of distribution of population warrants appropriate strategies to decide the extent of coverage of rural market.
5. Market organization and staff
The size of the market organization and staff is very important, to manage market system effective control. However, the existing organizational setup particularly at district and block level needs to be strengthened in order make the services on various aspects available to the farmers timely and also easily accessible to them.
Q20) How underdeveloped people and market is an issue in the rural market?
A20) The technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.
Unit 3
Rural Marketing of FMCG
Q1) What is Indian FMCG industry?
A1) India has the most attractive FMCG market in the world. It is the fourth largest market of Indian economy. The market size for FMCG in India is estimated to grow from US$30 billion in 2011 to US$74 billion in 2018. Food Products is the leading segment accounting for 43 percent of the overall market. Personal care 22 percent and fabric care (12 percent) comes next in terms of market share. Easier access, growing awareness and changing lifestyles have been the key growth drivers for the sector.
Q2) How market size affects Indian FMCG industry?
A2) FMCG sector in India is one of the largest sectors in the Indian economy. As the consumption in India grows at an unprecedented rate, the FMCG industry remains a key sector for investors. The Government of India has undertaken various initiatives to promote the sector. The minimum capitalization for foreign FMCG companies to invest in India is $100mn. Even the implementation of GST in India has had far-reaching consequences as for the sector as the highest-selling FMCG products in India such as soap, toothpaste and hair oil come under the 18% tax bracket which was earlier under the bracket of 23%.
Q3) What are the Government initiatives affect Indian FMCG INDUSTRY?
A3) Some of the major initiatives taken by the government to promote FMCG sector in India are as follows.
The government of India has approved 100 percent FDI in the cash and carry segment and in the single-brand retail along with 51 percent FDI in multi-brand retail.
The GST is expected to transform the logistics in the FMCG sector into a modern and efficient model as all major corporations are remodelling their operations into larger logistics and warehousing.
Q4) What are the investments in FMCG Industry?
A4) Favourable demand drivers such as rising income levels and growing urbanisation, among others, have recently encouraged major and diverse investments in the FMCG sector in India. While top FMCG companies are expanding their capacity to feed the growing domestic demand, homegrown brands have ventured into international markets. Some of them are
Patanjali: The success of Patanjali has caused the brand to expand into the international market, with plans to set up a 100% export-oriented manufacturing unit in Milan SEZ, Nagpur.
Rp Sanjiv Goenka Group has created a venture capital fund of $14.74 Mn to invest in FMCG groups.
Q5) What are the achievements in Indian FMCG industry?
A5) The number of mega food parks increased from 2 between 2008-14 to 13 between 2014-18. Preservation and processing capacity increased from 308,000 during 2008-14 to 1.41 million during 2014-2018. The number of food labs increased from 31 from 2008-14 to 42 during 2014-2018. The number of food labs increased from 31 from 2008-2014 to 42 during 2014-2018.
Q6) Explain the road ahead under Indian FMCG industry.
A6) FMCG products would need to focus on R&D and innovation as a means of growth. Companies that continue to do well would be the ones that have a culture that promotes using customer insights to create either the next generation of products or in some cases new product categories.
One area we see the local and the global FMCG brands investing more is in health and wellness. Health and wellness are the megatrends shaping consumer preferences and shopping habits. Leading global and Indian food and beverage brands have embraced this trend and are focused on creating new emerging brands in health and wellness.
Q7) What are the characteristics of Indian FMGC sector from the consumer perspective?
A7) The characteristics of Indian FMCG Sector from the consumer perspective are-
High availability: FMCG products are usually widely available and sold in several stores and supermarkets worldwide. This allows consumers to purchase these products easily without too much trouble.
Purchased frequently: FMCGs include products that consumers frequently require, usually daily or near-daily. For example, breads and coffee are generally bought at least once a week.
Low buying effort: FMCGs are usually low effort purchases for the consumer. For example, with shampoo, most people know that they prefer a particular brand or type without testing it. This means that most people enter the store knowing exactly what they want and buy it straight away.
Low cost: FMCGs are usually inexpensive compared to other products on the market, therefore taking up a smaller proportion of consumers’ income.
Rapid consumption: The time between buying the product and consuming it is very short, often only a number of hours. For example, a loaf of bread might be purchased in the morning and consumed at lunchtime that same day.
Q8) What are the characteristics of Indian FMGC sector from the retailer perspective?
A8) The characteristics of Indian FMGC sector from the retailer perspective are-
High turnover rate: FMCG sales are higher than other product types’ sales as they are purchased frequently by consumers. This means that retailers can keep inventory for these products for shorter periods of time, which ultimately reduces costs.
Highly distributed: Since these goods have high demand and low cost, they usually need to be widely available and distributed across different locations and regions. For instance, there might be several different supermarkets in a town that all sell the same bread brand.
Low unit cost: As FMCGs have a high demand and low cost, they usually have a low unit price for consumers. This means that retailers can sell these products at a low price and still retain the same profit margin. This is different from luxury items that usually have a high unit cost but lower demand, meaning that they must be sold at a higher price to maintain the retailer’s desired level of profit.
Non-durability: FMCGs are not built to last. This is because they have a short time span from production until consumption. They are also required in large quantities so manufacturers do not need to preserve them for long periods of time, which allows them to be sold at lower prices.
Consistency in form, size, colour and price: FMCGs are standardised, which allows them to be produced cheaply in bulk quantities. For example, if a manufacturer produces packets of shampoo, they are all the same size and contain the same amount of liquid. This means that when one purchases a packet of shampoo from their local store, they know exactly what they are getting.
Q9) What is Rural marketing of consumer durables?
A9) Indian rural market has always been complexing to forecast and consists of special uniqueness. The concept of rural market in India is still in the evolving stage. However, many companies were successful in entering the Indian rural market. They proved with proper understanding of the market and implementation of innovative marketing strategies. It is possible to explore and conquer the Indian rural market. It is very difficult for the companies to overlook the opportunities they could exploit from rural market. As two thirds of Indian population live in rural areas, this huge potential and booming market cannot be ignored by any marketer. They have to overcome certain challenges, converting them as opportunities and to become successful.
Q10) Give a case study of rural marketing of financial services.
A10) Indian rural market has always been complexing to forecast and consists of special uniqueness. The concept of rural market in India is still in the evolving stage. However, many companies were successful in entering the Indian rural market. They proved with proper understanding of the market and implementation of innovative marketing strategies. It is possible to explore and conquer the Indian rural market. It is very difficult for the companies to overlook the opportunities they could exploit from rural market. As two thirds of Indian population live in rural areas, this huge potential and booming market cannot be ignored by any marketer. They have to overcome certain challenges, converting them as opportunities and to become successful.
Q11) Explain rural marketing of FMCG.
A11) A combination of changing lifestyles, higher disposable income, greater product awareness and affordable pricing have been instrumental in changing the pattern and amount of consumer expenditure leading to robust growth of consumer durables industry. A flurry of hi-technology durables is expected to be introduced in the US$ 4.09 billion Indian durables market in 2009. Samsung, LG, Haier and Videocon are among companies planning new product launches in the coming months. Air conditioner (AC) and refrigerator sales spiked 30-35 per cent in April compared to April 2008. Durable goods are those which don’t wear out quickly, yielding utility over time rather than at once. Examples of consumer durable goods include electronic equipment, home furnishings and fixtures, photographic equipment, leisure equipment and kitchen appliances. They can be further classified as either white goods, such as refrigerators, washing machines and air conditioners or brown goods such as blenders, cooking ranges and microwaves or consumer electronics such as televisions and DVD players. Such big-ticket items typically continue to be serviceable for three years at least and are characterized by long inter-purchase times.
Q12) Give a case study of Rural marketing of consumer durables of FMCG.
A12) With energy generated from renewable sources predicted to be among the major sources of power in the next decade, a company in the Philippines is tackling the challenge head-on and turning trash into a highly prized commodity. Biopower is constructing three biomass power stations on Negros, the fourth largest island of the Philippines, with the aim of producing a total of 72 megawatts of green baseload power to feed into the local grid as well as for export to surrounding islands. The key to this clean, green energy is the waste products from the harvest of the local sugarcane crop. The trash that would previously have been left on the ground once the sugarcane was taken from the fields, the collection of this waste is a crucial part of Biopower’s operation and one they’ve entrusted to Case IH, one of the world’s leading agricultural machinery brands. “The cane farmers leave the trash after the harvest, and we move into the field with our equipment and collect it, taking it to the power station for burning in a controlled environment to produce electricity,” said Paul Coveny, Vice-President Biomass Operations and Materials Management for Biopower. Tractors and other associated machinery need to collect the trash and get it to the power station as quickly and efficiently as possible, Paul said, and Case IH is delivering on every one of these requirements.
Paul said when looking for an equipment supplier, they recognised Case IH’s position as a leading provider of technology solutions, with a state-of-the-art machinery line-up that assisted Biopower in sustaining the fuel supply necessary for their electricity obligations.
The company has purchased over 100 Case IH machines including Farmlift telehandlers and Farmall, Maxxum and Puma tractors through Filholland, the distributor of Case IH machinery in the Philippines.
“Our operation has a very small window to do what we need to do, so we needed reliable tractors that could operate continuously, 24 hours a day,” Paul said.
“The technology in these Case IH tractors has given us that reliability, and along with the support of Filholland, they deliver what we need in the short time we have.”
For the Biopower staff who operate the fleet of Case IH tractors, there’s no doubting their satisfaction with the machines. Paul said the operators regularly commented on the ease of operation, power and speed of the tractors, and the technology features that made their job easier. Staff also had high praise for the training offered by Filholland on the tractors and telehandlers.
Biopower has also been able to install GPS-trackers and data loggers into the tractor fleet that identify each machine’s location and provide detailed information on what they’re doing and how they’re doing it at any given time—it basically provides a live, real-time overview of the entire operation.
The Case IH Farmall JX is one of the models used in the Biopower operation, a small tractor designed with manoeuvrability, visibility and handling top of mind. Powered by an upgraded 8000 Series, Tier 3 turbo-charged engine to provide optimum fuel efficiency and maximum power, the Farmall JX also offers logically-positioned controls with clear, concise instrumentation that make tasks less arduous when in the field all day.
Paul said the performance of the Case IH tractors and telehandlers had been everything they had expected and this, coupled with the 24-hour service and support, service updates and training provided by Filholland, confirmed they had made the right choice.
When it came to running a high-pressure, round-the-clock operation like that of Biopower, Paul said, it was reassuring to have the peace of mind of reliable machinery, and support and assistance when and where it was needed.
“My experience in the sugar industry in Australia means I have seen a lot of Case IH equipment, and know the reputation of their tractors and harvesters, so I had the confidence in the brand to introduce it here onto Negros,” Paul said.
“Case IH is well-known worldwide, and with a good partner like Filholland I would have no hesitation in recommending their products to anyone in the Philippines.
“The brand has a great support network, it’s a quality product and that’s important when you’re running any business.”
Q13) What are the challenges of Retail Execution in FMCG industry?
A13) Retail execution is the most difficult challenge for most consumer-packaged goods (CPG)/fast-moving consumer goods (FMCG) companies. In fact, the average CPG/FMCG company loses more than 20% of total sales opportunity and is at the highest risk of having products removed from retail due to retail execution issues.
Q14) What are the challenges of eCommerce in FMGC industry?
A14) Even before the pandemic, the retail industry as a whole was shifting to an online-first business model. Even established FMCG brands with thousands of stores across the country were forced to increase their online presence through popular marketplaces or direct eCommerce stores. This became a nightmare for distributors because they had to manage orders coming in from various channels and ensure that the required stock was available at the nearest sales point, a last-mile delivery partner, or a local store near the customer's residence.
Q15) What are the challenges of Big Data in FMGC industry?
A15) The ability to acquire, store and process data is improving at an exponential rate, resulting in a data explosion. Weekly consumer sales, brand tracking, consumer panels, shopper data from friendly and well-compensated retailers, and a few hundred other metrics already existed in the FMCG world, depending on which data/analytics organization you spoke with.
95% of data generated and sold to eager marketers and analysts is useless. Smarter organizations will purchase only relevant data (manage information costs), deduce the correct linkages to consumer behaviour, and effectively use it to develop products, manage trade, and communicate effectively with consumers.
Q16) What are the challenges of the internet in FMGC industry?
A16) Information now travels at breakneck speed. A tweet, Facebook post, or YouTube video can go viral in a matter of hours. An organization can no longer sell a product that was unsellable in a developed market due to health concerns in another developing market because regulations had not caught up.
Regulations will take time to catch up, but consumer information is easily accessible through a Google search. There will be no place to hide when it comes to information dissemination. Smarter brands will use innovative methods to effectively use this to reach a global audience while limiting brand communication costs.
Q17) What are the challenges of Environment and Sustainability in FMGC industry?
A17) Consumer bonding scores will be higher for organizations that can demonstrate sustainability across their entire ecosystem. However, the ability to charge a premium to cover increased costs will be limited because consumers will increasingly see sustainability as a given rather than a luxury afforded to a select few. The Tesla of the FMCG industry has yet to be created, utilizing new innovations and technologies.
Q18) What are the challenges of Ageing in FMGC industry?
A18) What would a supermarket's product range look like if everyone who shopped there was 50 or older? Fresh foods, fish (salmon), whole grains, and a few premium sweet offerings are available, as is a large aisle of health supplements. This demographic is wealthier and places a higher value on food quality. The challenge for brands will be to appear relevant to this aging demographic while remaining 'cool' enough to attract younger customers.
Q19) What are the issues related to consumer durables in the Rural market?
A19) The issues related to consumer durables in the Rural market are-
1.Underdeveloped people and underdeveloped markets
The technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.
2.Lack of proper physical communication facilities
Nearly 50 percent of the villages in the country do not have all weather roads. Physical communication to these villages is highly expensive. Even today, most villages in eastern part of the country are inaccessible during monsoon season.
3. Inadequate Media coverage for rural communication
A large number of rural families in own radios and television sets there were also community radio and T.V sets. These have been used to diffuse agricultural technology to rural areas. However, the coverage relating to marketing is inadequate
4. Many languages and Dialects
The number of languages and dialects vary from state-to-state region to region This type of distribution of population warrants appropriate strategies to decide the extent of coverage of rural market.
5. Market organization and staff
The size of the market organization and staff is very important, to manage market system effective control. However, the existing organizational setup particularly at district and block level needs to be strengthened in order make the services on various aspects available to the farmers timely and also easily accessible to them.
Q20) How underdeveloped people and market is an issue in the rural market?
A20) The technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.
Unit 3
Rural Marketing of FMCG
Q1) What is Indian FMCG industry?
A1) India has the most attractive FMCG market in the world. It is the fourth largest market of Indian economy. The market size for FMCG in India is estimated to grow from US$30 billion in 2011 to US$74 billion in 2018. Food Products is the leading segment accounting for 43 percent of the overall market. Personal care 22 percent and fabric care (12 percent) comes next in terms of market share. Easier access, growing awareness and changing lifestyles have been the key growth drivers for the sector.
Q2) How market size affects Indian FMCG industry?
A2) FMCG sector in India is one of the largest sectors in the Indian economy. As the consumption in India grows at an unprecedented rate, the FMCG industry remains a key sector for investors. The Government of India has undertaken various initiatives to promote the sector. The minimum capitalization for foreign FMCG companies to invest in India is $100mn. Even the implementation of GST in India has had far-reaching consequences as for the sector as the highest-selling FMCG products in India such as soap, toothpaste and hair oil come under the 18% tax bracket which was earlier under the bracket of 23%.
Q3) What are the Government initiatives affect Indian FMCG INDUSTRY?
A3) Some of the major initiatives taken by the government to promote FMCG sector in India are as follows.
The government of India has approved 100 percent FDI in the cash and carry segment and in the single-brand retail along with 51 percent FDI in multi-brand retail.
The GST is expected to transform the logistics in the FMCG sector into a modern and efficient model as all major corporations are remodelling their operations into larger logistics and warehousing.
Q4) What are the investments in FMCG Industry?
A4) Favourable demand drivers such as rising income levels and growing urbanisation, among others, have recently encouraged major and diverse investments in the FMCG sector in India. While top FMCG companies are expanding their capacity to feed the growing domestic demand, homegrown brands have ventured into international markets. Some of them are
Patanjali: The success of Patanjali has caused the brand to expand into the international market, with plans to set up a 100% export-oriented manufacturing unit in Milan SEZ, Nagpur.
Rp Sanjiv Goenka Group has created a venture capital fund of $14.74 Mn to invest in FMCG groups.
Q5) What are the achievements in Indian FMCG industry?
A5) The number of mega food parks increased from 2 between 2008-14 to 13 between 2014-18. Preservation and processing capacity increased from 308,000 during 2008-14 to 1.41 million during 2014-2018. The number of food labs increased from 31 from 2008-14 to 42 during 2014-2018. The number of food labs increased from 31 from 2008-2014 to 42 during 2014-2018.
Q6) Explain the road ahead under Indian FMCG industry.
A6) FMCG products would need to focus on R&D and innovation as a means of growth. Companies that continue to do well would be the ones that have a culture that promotes using customer insights to create either the next generation of products or in some cases new product categories.
One area we see the local and the global FMCG brands investing more is in health and wellness. Health and wellness are the megatrends shaping consumer preferences and shopping habits. Leading global and Indian food and beverage brands have embraced this trend and are focused on creating new emerging brands in health and wellness.
Q7) What are the characteristics of Indian FMGC sector from the consumer perspective?
A7) The characteristics of Indian FMCG Sector from the consumer perspective are-
High availability: FMCG products are usually widely available and sold in several stores and supermarkets worldwide. This allows consumers to purchase these products easily without too much trouble.
Purchased frequently: FMCGs include products that consumers frequently require, usually daily or near-daily. For example, breads and coffee are generally bought at least once a week.
Low buying effort: FMCGs are usually low effort purchases for the consumer. For example, with shampoo, most people know that they prefer a particular brand or type without testing it. This means that most people enter the store knowing exactly what they want and buy it straight away.
Low cost: FMCGs are usually inexpensive compared to other products on the market, therefore taking up a smaller proportion of consumers’ income.
Rapid consumption: The time between buying the product and consuming it is very short, often only a number of hours. For example, a loaf of bread might be purchased in the morning and consumed at lunchtime that same day.
Q8) What are the characteristics of Indian FMGC sector from the retailer perspective?
A8) The characteristics of Indian FMGC sector from the retailer perspective are-
High turnover rate: FMCG sales are higher than other product types’ sales as they are purchased frequently by consumers. This means that retailers can keep inventory for these products for shorter periods of time, which ultimately reduces costs.
Highly distributed: Since these goods have high demand and low cost, they usually need to be widely available and distributed across different locations and regions. For instance, there might be several different supermarkets in a town that all sell the same bread brand.
Low unit cost: As FMCGs have a high demand and low cost, they usually have a low unit price for consumers. This means that retailers can sell these products at a low price and still retain the same profit margin. This is different from luxury items that usually have a high unit cost but lower demand, meaning that they must be sold at a higher price to maintain the retailer’s desired level of profit.
Non-durability: FMCGs are not built to last. This is because they have a short time span from production until consumption. They are also required in large quantities so manufacturers do not need to preserve them for long periods of time, which allows them to be sold at lower prices.
Consistency in form, size, colour and price: FMCGs are standardised, which allows them to be produced cheaply in bulk quantities. For example, if a manufacturer produces packets of shampoo, they are all the same size and contain the same amount of liquid. This means that when one purchases a packet of shampoo from their local store, they know exactly what they are getting.
Q9) What is Rural marketing of consumer durables?
A9) Indian rural market has always been complexing to forecast and consists of special uniqueness. The concept of rural market in India is still in the evolving stage. However, many companies were successful in entering the Indian rural market. They proved with proper understanding of the market and implementation of innovative marketing strategies. It is possible to explore and conquer the Indian rural market. It is very difficult for the companies to overlook the opportunities they could exploit from rural market. As two thirds of Indian population live in rural areas, this huge potential and booming market cannot be ignored by any marketer. They have to overcome certain challenges, converting them as opportunities and to become successful.
Q10) Give a case study of rural marketing of financial services.
A10) Indian rural market has always been complexing to forecast and consists of special uniqueness. The concept of rural market in India is still in the evolving stage. However, many companies were successful in entering the Indian rural market. They proved with proper understanding of the market and implementation of innovative marketing strategies. It is possible to explore and conquer the Indian rural market. It is very difficult for the companies to overlook the opportunities they could exploit from rural market. As two thirds of Indian population live in rural areas, this huge potential and booming market cannot be ignored by any marketer. They have to overcome certain challenges, converting them as opportunities and to become successful.
Q11) Explain rural marketing of FMCG.
A11) A combination of changing lifestyles, higher disposable income, greater product awareness and affordable pricing have been instrumental in changing the pattern and amount of consumer expenditure leading to robust growth of consumer durables industry. A flurry of hi-technology durables is expected to be introduced in the US$ 4.09 billion Indian durables market in 2009. Samsung, LG, Haier and Videocon are among companies planning new product launches in the coming months. Air conditioner (AC) and refrigerator sales spiked 30-35 per cent in April compared to April 2008. Durable goods are those which don’t wear out quickly, yielding utility over time rather than at once. Examples of consumer durable goods include electronic equipment, home furnishings and fixtures, photographic equipment, leisure equipment and kitchen appliances. They can be further classified as either white goods, such as refrigerators, washing machines and air conditioners or brown goods such as blenders, cooking ranges and microwaves or consumer electronics such as televisions and DVD players. Such big-ticket items typically continue to be serviceable for three years at least and are characterized by long inter-purchase times.
Q12) Give a case study of Rural marketing of consumer durables of FMCG.
A12) With energy generated from renewable sources predicted to be among the major sources of power in the next decade, a company in the Philippines is tackling the challenge head-on and turning trash into a highly prized commodity. Biopower is constructing three biomass power stations on Negros, the fourth largest island of the Philippines, with the aim of producing a total of 72 megawatts of green baseload power to feed into the local grid as well as for export to surrounding islands. The key to this clean, green energy is the waste products from the harvest of the local sugarcane crop. The trash that would previously have been left on the ground once the sugarcane was taken from the fields, the collection of this waste is a crucial part of Biopower’s operation and one they’ve entrusted to Case IH, one of the world’s leading agricultural machinery brands. “The cane farmers leave the trash after the harvest, and we move into the field with our equipment and collect it, taking it to the power station for burning in a controlled environment to produce electricity,” said Paul Coveny, Vice-President Biomass Operations and Materials Management for Biopower. Tractors and other associated machinery need to collect the trash and get it to the power station as quickly and efficiently as possible, Paul said, and Case IH is delivering on every one of these requirements.
Paul said when looking for an equipment supplier, they recognised Case IH’s position as a leading provider of technology solutions, with a state-of-the-art machinery line-up that assisted Biopower in sustaining the fuel supply necessary for their electricity obligations.
The company has purchased over 100 Case IH machines including Farmlift telehandlers and Farmall, Maxxum and Puma tractors through Filholland, the distributor of Case IH machinery in the Philippines.
“Our operation has a very small window to do what we need to do, so we needed reliable tractors that could operate continuously, 24 hours a day,” Paul said.
“The technology in these Case IH tractors has given us that reliability, and along with the support of Filholland, they deliver what we need in the short time we have.”
For the Biopower staff who operate the fleet of Case IH tractors, there’s no doubting their satisfaction with the machines. Paul said the operators regularly commented on the ease of operation, power and speed of the tractors, and the technology features that made their job easier. Staff also had high praise for the training offered by Filholland on the tractors and telehandlers.
Biopower has also been able to install GPS-trackers and data loggers into the tractor fleet that identify each machine’s location and provide detailed information on what they’re doing and how they’re doing it at any given time—it basically provides a live, real-time overview of the entire operation.
The Case IH Farmall JX is one of the models used in the Biopower operation, a small tractor designed with manoeuvrability, visibility and handling top of mind. Powered by an upgraded 8000 Series, Tier 3 turbo-charged engine to provide optimum fuel efficiency and maximum power, the Farmall JX also offers logically-positioned controls with clear, concise instrumentation that make tasks less arduous when in the field all day.
Paul said the performance of the Case IH tractors and telehandlers had been everything they had expected and this, coupled with the 24-hour service and support, service updates and training provided by Filholland, confirmed they had made the right choice.
When it came to running a high-pressure, round-the-clock operation like that of Biopower, Paul said, it was reassuring to have the peace of mind of reliable machinery, and support and assistance when and where it was needed.
“My experience in the sugar industry in Australia means I have seen a lot of Case IH equipment, and know the reputation of their tractors and harvesters, so I had the confidence in the brand to introduce it here onto Negros,” Paul said.
“Case IH is well-known worldwide, and with a good partner like Filholland I would have no hesitation in recommending their products to anyone in the Philippines.
“The brand has a great support network, it’s a quality product and that’s important when you’re running any business.”
Q13) What are the challenges of Retail Execution in FMCG industry?
A13) Retail execution is the most difficult challenge for most consumer-packaged goods (CPG)/fast-moving consumer goods (FMCG) companies. In fact, the average CPG/FMCG company loses more than 20% of total sales opportunity and is at the highest risk of having products removed from retail due to retail execution issues.
Q14) What are the challenges of eCommerce in FMGC industry?
A14) Even before the pandemic, the retail industry as a whole was shifting to an online-first business model. Even established FMCG brands with thousands of stores across the country were forced to increase their online presence through popular marketplaces or direct eCommerce stores. This became a nightmare for distributors because they had to manage orders coming in from various channels and ensure that the required stock was available at the nearest sales point, a last-mile delivery partner, or a local store near the customer's residence.
Q15) What are the challenges of Big Data in FMGC industry?
A15) The ability to acquire, store and process data is improving at an exponential rate, resulting in a data explosion. Weekly consumer sales, brand tracking, consumer panels, shopper data from friendly and well-compensated retailers, and a few hundred other metrics already existed in the FMCG world, depending on which data/analytics organization you spoke with.
95% of data generated and sold to eager marketers and analysts is useless. Smarter organizations will purchase only relevant data (manage information costs), deduce the correct linkages to consumer behaviour, and effectively use it to develop products, manage trade, and communicate effectively with consumers.
Q16) What are the challenges of the internet in FMGC industry?
A16) Information now travels at breakneck speed. A tweet, Facebook post, or YouTube video can go viral in a matter of hours. An organization can no longer sell a product that was unsellable in a developed market due to health concerns in another developing market because regulations had not caught up.
Regulations will take time to catch up, but consumer information is easily accessible through a Google search. There will be no place to hide when it comes to information dissemination. Smarter brands will use innovative methods to effectively use this to reach a global audience while limiting brand communication costs.
Q17) What are the challenges of Environment and Sustainability in FMGC industry?
A17) Consumer bonding scores will be higher for organizations that can demonstrate sustainability across their entire ecosystem. However, the ability to charge a premium to cover increased costs will be limited because consumers will increasingly see sustainability as a given rather than a luxury afforded to a select few. The Tesla of the FMCG industry has yet to be created, utilizing new innovations and technologies.
Q18) What are the challenges of Ageing in FMGC industry?
A18) What would a supermarket's product range look like if everyone who shopped there was 50 or older? Fresh foods, fish (salmon), whole grains, and a few premium sweet offerings are available, as is a large aisle of health supplements. This demographic is wealthier and places a higher value on food quality. The challenge for brands will be to appear relevant to this aging demographic while remaining 'cool' enough to attract younger customers.
Q19) What are the issues related to consumer durables in the Rural market?
A19) The issues related to consumer durables in the Rural market are-
1.Underdeveloped people and underdeveloped markets
The technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.
2.Lack of proper physical communication facilities
Nearly 50 percent of the villages in the country do not have all weather roads. Physical communication to these villages is highly expensive. Even today, most villages in eastern part of the country are inaccessible during monsoon season.
3. Inadequate Media coverage for rural communication
A large number of rural families in own radios and television sets there were also community radio and T.V sets. These have been used to diffuse agricultural technology to rural areas. However, the coverage relating to marketing is inadequate
4. Many languages and Dialects
The number of languages and dialects vary from state-to-state region to region This type of distribution of population warrants appropriate strategies to decide the extent of coverage of rural market.
5. Market organization and staff
The size of the market organization and staff is very important, to manage market system effective control. However, the existing organizational setup particularly at district and block level needs to be strengthened in order make the services on various aspects available to the farmers timely and also easily accessible to them.
Q20) How underdeveloped people and market is an issue in the rural market?
A20) The technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.
