A Project Report On Role of sales promotions in FMCG, A case study at Nirma Ltd. At Nirma ltd.

EXECUTIVE SUMMARY
FMCG sector which includes all the products which are useful in day-to-day life. It is one of the fastest growing markets of India. But, last year its growth rate was negative for majority of the FMCG products except skin care industry. Major players in this industry are mainly, HLL, NIRMA, GODREJ, P&G, etc. out of these players HLL is the market leader in majority of the industries with broader product line. But last few years data are showing threat from NIRMA as well as from other players. Example: nirma is market leader in rural segment of detergent industry, where as p&g is giving a better fight in hair care with its brand H&S shampoo.

FMCG Concept and Definition:

The term FMCG (fast moving consumer goods), although popular and frequently used does not have a standard definition and is generally used in India to refer to products of everyday use. Conceptually, however, the term refers to relatively fast moving items that are used directly by the consumer. Thus, a significant gap exists between the general use and the conceptual meaning of the term FMCG. A successful brand commands premium over non-branded products. According to a recent A&M-ORG-MARG study, the share of branded goods is high for a number of daily used products. Branded goods comprise of 65% of sales in villages. Of late, there has been a decline in the share of non-branded products, according to the said study. This all indicates that the coming days will witness more fierce battles for a pie in the lucrative rural market segment. With domestic consumption close to Rs 80,000 crore, the FMCG sector today is one of the largest in the country. One of the biggest challenges facing the Indian FMCG industry is to get to the next level of innovation, besides presence of a huge unorganized market. "Nirma Consumer Care Ltd." is the fast growing corporation with the broad product line in the FMCG category. Nirma is the Rs.17 billion Detergents, Soaps and Personal Care Products Brand, a market leader in the Indian detergent market and second largest in bathing soaps. The brand NIRMA being one of the world's biggest in it's segment... a result of it's mission to provide 'Better Products, Better Value, Better Living'.

Product List
Detergent Powders, Detergent Cakes, Bathing Soaps, Other Products, Industrial Products Nirma's philosophy of providing quality products at the best prices has led to investment in the latest technologies for their multi-locational manufacturing facilities, with full-scale integrated complexes at Mandali - Mehsana, Ahmedabad, Baroda, Bhavnagar, Kanpur and Indore. And in next few years it will be expanded to all the states of India.

Survey summary
The survey was conducted in different areas of Ahmedabad, Baroda, Surat & Valsad through a questionnaire to know the effect of promotion on detergent powder and bathing soaps at the time of purchase. We surveyed 100 households and 100 retailers. In households we talked to housewives as well as service women in all the four cities 25 in each city. In the same manner we surveyed the retailers and provision storeowners who are mainly selling FMCG and other goods necessary in day-to-day life.

RESEARCH METHODOLOGY
Research Objectives:

 To study the FMCG sector. To study the effect of sales promotions in FMCG sector esp. in soaps and detergent industry. Organization study of Nirma. To study consumer behaviour in purchase of soaps and detergent. Limitations Of The Study

Reluctance on the part of the respondents to provide exact details. Lack of sufficient funds to cover the whole universe as sample. Time constraint as stipulated by university norms and by project guide. Limited coverage area for survey, it was restricted to four cities of Gujarat state viz. Ahmedabad, Baroda, Surat, and Valsad. Product categories under study DETERGENTS: Washing Powder for Clothes TOILETERIES Soaps Research Design: (a) Primary Data Collection Method: Survey method was used for primary data collection. We used questionnaire as an instrument for survey method. Structured questionnaire. Type of questionnaire: Open ended and closed ended.

(b) Secondary Data Collection method:

Computer packages. Reference books. Internet. News Papers Sample size: The sample size for this project was 100 households and 100 retailers. In four cities viz. Ahmedabad, Baroda, Surat, & Valsad.

Assumptions
1) The cities selected are assumed to represent whole universe of Indian FMCG market 2) Data collected are assumed to be bias free from side of respondents, interviewer or any other mediaries. 3) Whole research and analysis part based on data collected is carried out under unbiased environment and without any influence of any factor which can lead to deviation in result. Duration of the Project: The duration of the project was 2 months.

INTRODUCTION TO

FMCG

Introduction:

FMCG Concept and Definition:

The term FMCG (fast moving consumer goods), although popular and frequently used does not have a standard definition and is generally used in India to refer to products of everyday use. Conceptually, however, the term refers to relatively fast moving items that are used directly by the consumer. Thus, a significant gap exists between the general use and the conceptual meaning of the term FMCG.

Further, difficulties crop up when attempts to devise a definition for FMCG. The problem arises because the concept has a retail orientation and distinguishes between consumer products on the basis of how quickly they move at the retailers shelves. The moot question therefore, is what industry turnaround threshold should be for the item to qualify as an FMCG. Should the turnaround happen daily, weekly, or monthly? One of the factors on which the turnaround depends is the purchase cycle. However, the purchase cycle for the same product tend to vary across population segments. Many lowincome households are forced to buy certain products more frequently because of lack of liquidity and storage space while relatively high-income households buy the same products more infrequently. Similarly, the purchase cycle also tends to vary because of cultural factors. Most Indians, typically, prefer fresh food articles and therefore to buy relatively small quantities more frequently. This is in sharp contrast with what happens in most western countries, where the practice of buying and socking foods for relatively longer period is more prevalent. Thus, should the inventory turnaround threshold be universal, or should it allow for income, cultural and behavioral nuances?

Characteristics Of FMCG Products:

Individual items are of small value. But all FMCG products put together account

for a significant part of the consumer's budget. The consumer keeps limited inventory of these products and prefers to purchase

them frequently, as and when required. Many of these products are perishable. The consumer spends little time on the purchase decision. Rarely does he/she look

for technical specifications (in contrast to industrial goods). Brand loyalties or recommendations of reliable retailer/dealer drive purchase decisions. Trial of a new product i.e. brand switching is often induced by heavy

advertisement, recommendation of the retailer or neighbors/friends. These products cater to necessities, comforts as well as luxuries. They meet the

demands of the entire cross section of population. Price and income elasticity of demand varies across products and consumers.

FMCG Sector:
The FMCG industry is a low-margin business. Volumes hold the key to success in this industry. That is why the industry players put so much emphasis on marketing and distribution. Brands are the key determinants of success in the market place. However, the unorganized segment has continued to play spoilsport and has benefited mainly due to their strategy of "low price, high volumes". To add to the woes of the organized players, the unorganized players have benefited without spending even single penny on advertising and brand building. In the organized segment, FMCG players fight out in the marketplace to reach out to the masses and compete with brands in similar product categories. Brand perception influences purchase decisions here and so building that perception is critical. Little surprising then that FMCG majors opt for high-decibel advertising in a bid to build and reinforce the notion of perceived superiority, and convert that notion finally into sales volumes. For new brands, spending more on advertising is all the more crucial. Product launches entail large initial investments in advertising and sales promotion. Launch costs are known to climb as high as 100 percent of sales revenue during the first year of the launch.

A successful brand commands premium over non-branded products. According to a recent A&M-ORG-MARG study, the share of branded goods is high for a number of daily used products. Branded goods comprise of 65% of sales in villages. Of late, there has been a decline in the share of non-branded products, according to the said study. This all indicates that the coming days will witness more fierce battles for a pie in the lucrative rural market segment. With domestic consumption close to Rs 80,000 crore, the FMCG sector today is one of the largest in the country. One of the biggest challenges facing the Indian FMCG industry is to get to the next level of innovation, besides presence of a huge unorganized market. The key characteristics of the Indian FMCG market are as follows: Heavy launch costs Companies incur huge costs on the launch of new products. The entire launch process goes through a series of processes such as product development, market research, test marketing. All this requires huge cash outflow. Further, in order to build brand awareness and develop franchise for a new brand initial expenditure is incurred on launch advertisements, free samples and product promotions. Launch costs are as high as 50-100% of revenue in the first year and these costs progressively reduce as the brand matures, gains consumer acceptance and turnover rises. For established brands, advertisement expenditure varies from 5 - 12% depending on the categories. It is common to give occasional push by relaunches, which involves repositioning of brands with sizable marketing support.

Less capital intensive

The sector is not so capital intensive as majority of the product classes require very low investment in fixed assets. The sector is also characterized by high turnover to investment ratio; turnover is typically five to eight times the investment made in a Greenfield plant at full capacity. Another reason for the sector being less capital intensive is that bulk of sales from manufacturers takes place on a cash basis. Contract Manufacturing Manufacturing of products by third party vendors is quite common. In order to keep a check on costs and hence increase affordability of their products, companies in many cases prefer to go for contract manufacturing by third party. Marketing Drive Marketing assumes a significant place in the brand building process of the industry players. This helps in reaching out to a large consumer base and fight with the existing brands. Even for an existing brand it requires constant marketing efforts to keep the demand alive and kicking. Market Research Before the launch of any new product, conducting market research to gauge the consumers' reaction is very important. This is because consumers' purchase decisions are based on perceptions about brands and which keep on changing with fashion, income and changes in lifestyle. Also in case of consumer goods it is difficult to differentiate products on technical or functional grounds, unlike in the case of industrial products. Now with increasing competition, there is tremendous pressure on the companies to do extensive market research, test market it before coming out with any new product.

Presence of a large unorganized market

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A huge unorganized market characterizes the FMCG sector. Factors like low entry barriers in terms of low capital investment, fiscal incentives from government, low brand awareness, especially in rural areas led to the mushrooming of the unorganized sector. Other features In urban areas, the population strata logically and practically break up the consumption dispersion i.e. the Town Class. The urban elite, or the people living in metros, consumes a proportionately higher value of FMCGs. This has an effect on the retailing structure also, as the retailer varies his stocking pattern and his basket of services, according to the needs and the purchasing habits of the consumer on the one hand and his own desire to differentiate from other such service providers on the other. The key to success in the Indian FMCG industry lies in: cutting costs, investing in brand building in the form of marketing, advertisements and promos, providing good price points and aggressive pricing, offering products such as packaged atta and milk that add value and convenience and protecting their human talents from poachers. Alongside, FMCG players need to go in for new initiatives. Consider HLL for instance. The company has made it clear that Internet is going be its key delivery vehicle, which would expedite its distribution and sales efforts. Sure, Internet is going to change the way FMCG companies strategize and do business. With reasons. Internet presents vast opportunities to FMCG companies in the areas of logistics interface with consumers and value chain. Building a solid distribution network calls for massive investments. Indian FMCG players, unlike their foreign counterparts, could not take chances with new brands, just in case they failed. But more than their financial handicaps, it was a mindset that was responsible for the laid back attitude: they were complacent, anti-change and anti-growth. This mindset clouded their vision and strategy. Dabur has been a slow-changer to date. Some of the McKinsey recommendations such as exiting from non-core businesses met with strong objections from some members of the promoter family. Family feuds, so typical of Indian corporate, left domestic FMCG majors with little time for marketplace battles and strategizing.

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Major Indian consumer product companies have a very strong presence through their strong brands. These companies make considerable investment in R&D to sharpen and maintain their edge in the business. Diversified portfolios, wide distribution networks and scale economies of these companies deter new players from entering. Brand equity, therefore, is an extremely important factor in FMCG industry. One of the other most critical factors is the ability to build, develop, and maintain a robust distribution network. The major issues that new MNC entrants face are low income levels, non-existence of super markets in India, an incredible 5 million retail outlets, and a typically slow moving low consumer demand resulting in dealers/retailers being reluctant to allocate their resources and time. The Pace Of Competition MNCs had both good product propositions and deep pockets to back them. Their parents' wide product portfolios ensured that new products kept hitting the Indian market. Players such as Cadbury redefined the basic tenets of the chocolate confectionery industry. It not only launched new varieties and flavors, but in fact helped to change the consumption patterns. Consider the case of Cadbury's exercise in positioning its chocolate as a snack food. Others such as Procter & Gamble (P&G) and SmithKline Beecham chose to be different. They decided to introduce new products through their 100 per cent subsidiaries instead of their already existing Indian subsidiaries. In P&G's case, though the move was aimed at shielding it from high costs of product launches and brand building, it might deprive the Indian arm the opportunities of leveraging P&G's global brands and high growth areas. For long, Indian FMCG players have remained low-decibel advertisers. It was only Nirma, which was a deliberate low-decibel advertiser. It still is. Such has been its corporate philosophy. It does not even figure in the 1999 top-ten list of advertisers, which had Dabur at number two, and Marico at four. When practically everybody else have hiked their adbudgets, Nirma continues to gain volumes by passing on the cost-benefits to consumers. Nirma has proved that ultimately what matters is understanding the consumer. Which is

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more a positioning than a marketing ploy. Another Indian major to have reaped hefty benefits from its innovative positioning is Dabur. Value for money Ever since the global recession of 1991-94, which hit consumer spending hard, value-formoney has become the buzzword for FMCG companies globally. These FMCG companies embarked upon major restructuring and cost rationalization exercises as business continued to become fiercely competitive. Several packaging innovations were also resorted to. India was no different. There was a paradigm shift towards value-for-money products and, to some extent, towards the rural market. What Nirma did all these years suddenly became the buzzword for many FMCG players. Price cuts became inevitable to keep the market share from shrinking. Sometimes, the cuts touched ridiculous levels. Economic recession hit the urban pockets badly and forced companies to train their guns on rural India, which was witnessing a major change in its aspiration and lifestyles and even had an income that translated into increasing volumes. Companies such as HLL, Colgate and Britannia who already had a strong rural focus, stepped up the gas further. HLL unleashed its "Operation Bharat". Britannia pushed its Tiger biscuits to every nook and corner of the country, while Colgate went about wooing the rural masses by offering low-priced products in convenient packaging. Those who could not do it on their own went piggyback on somebody else. P&G, whose distribution is largely urban, chose to leverage Marico's retail reach. P&G and SmithKline Beecham, nonetheless, are interesting cases. With small product portfolios like theirs, they have been able to achieve what others could not and proved that what you need is a good product, marketed effectively and sold at the right price.

Acquisitions all the way

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Of late, an interesting trend in the Indian FMCG sector has been brand acquisitions. This represents a growing awareness among the FMCG players are talking today more and more of product "fits" while discussing brand acquisitions. It is not just acquiring anything and everything as it was in the past. Forget brands, protect those who make them. Yes, though there will be some amount of brand acquisition, the real worry of the domestic FMCG players is to protect the makers of their brands from poachers. The real challenge for all FMCG players, however, is in holding on to the human talent that makes brands rather than the brands themselves. FMCG marketers are known to be the best marketers globally and have takers in industry as distinct as telecom and cellular, even insurance. HLL has learnt it the hard way. Consider Internet's role in logistics. FMCG players can leverage Internet to extend their logistics network beyond the traditional expensive EDI-based solutions. This would start from connections between the factory and C&F and then move on to more complex networks reaching out to key urban distributors and wholesalers. And over time, even to rural wholesalers and retailers. As far as interface with consumers is concerned, Internet can work wonders here. Over time, successful e-marketers can leverage the Internet to develop user-communities, which are invaluable in creating loyalty and in testing products. What more, FMCG companies can come together to form e-purchasing portals and increase their purchasing power and ability to find smaller suppliers. All these call for a productive partnership between the FMCG industry and the government. Experts see this as an emerging opportunity. A partnership between the government, which wants to drive Internet penetration into smaller towns, and FMCG companies who want to ride off a shared infrastructure network to enable superior logistics and drive product communications. Such a partnership can jointly drive the Internet network deeper into the Indian heartland. It seems the excitement is just beginning in the Indian FMCG industry. Rural marketing has become the latest marketing mantra of most FMCG majors. True, rural India is vast with unlimited opportunities. All waiting to be tapped by FMCGs. Not surprising that the Indian FMCG sector is busy putting in place a parallel rural marketing strategy. Among the FMCG majors, Hindustan Lever, Marico Industries, Colgate-

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Palmolive and Britannia Industries are only a few of the FMCG majors who have been gung-ho about rural marketing. Indias agrarian economy is fundamentally strong. Rural India accounts for as much as 70 per cent of the nations population. That means rural India can bring in the much needed volumes and help FMCG companies to log in volume-driven growth. That should be music to FMCGs who have already hit saturation points in urban India. Certainly, rural marketing holds the key to success of FMCG companies, which are desperate to find ways out to gain deeper penetration. Not just the rural population is numerically large, it is growing richer by the day. Of late, there has been a phenomenal improvement in rural incomes and rural spending power. Successive good monsoon has led to dramatic boost in crop yields. Consider this statistics: food grain production touched 200 million tones during fiscal 1999 against 176 million tones logged during fiscal 1991. Not just improved crop yields; tax-exemption on rural income too has been responsible for this enhanced rural purchasing power.

Key Issues for FMCG Sector:

It's a volume-value game. Most Indian FMCG majors know this well. That is why FMCG companies such as Marico Industries are gearing up for bigger advertisement and sales promotion campaigns aimed at the rural buyer. Maricos high-pitch rural marketing exercise involves repositioning brands, repackaging products and re-pricing them, all with an eye on the rural wallets. The company has been working constantly on extending its parallel rural sales and distribution networks, which already finds a place among the industrys top three. Concerns abound over the inability of rural markets to meet the soaring rural ambitions of the Indian FMCG majors. Is the perception that industry majors such as Hindustan Lever are on the verge of diluting their rural focus true? Does the urban consumer featured on the cover of Hindustan Levers 1998 annual report reflect this shifting focus? It is a tactical shift, just a trade-off between value and volume, between the urban market and the rural market". For, focusing all out on one of these markets at the cost of the other could be suicidal. That is why a few FMCG companies are not putting in

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concerted efforts to tap the rural market. Consider the case of Cadbury. The company has clarified that the rural market is not for it, at least for now. Meanwhile, Marico is trying hard to get into the premium-end hair-oil market. What do all these portend? Rural marketing could open the doors of opportunities, but the path is paved with thorns. One major limitation here is this: most FMCG players just do not have the critical size for going all out for rural marketing. That is why most FMCG players are expected to concentrate both on rural and urban marketing: focus on urban markets for value and focus on rural markets for volumes. One result-oriented marketing strategy here is this: offer valueadditions to existing lines to lure the urban consumer and alongside offer the rural consumer wide-ranging choices within a single product category in a bid to generate high volumes. There are more problems in rural marketing. Success in rural marketing calls for a sound network and a thorough understanding of the rural psyche. Rural consumers pricesensitivity is something the FMCG players should be alive to. Rural income-levels are largely determined by the vagaries of monsoon and thus rural demand is not a steady horse to ride on. This makes rural marketing a gamble. It is more than a gamble for FMCG minors who do not have a clutch of strong brands across product segments. These FMCG minors are not able to cross-subsidize their products and go for product experimentation. The result: FMCG minors have a limited reach, are not able to erect entry barriers and have no ways to minimize the impact from loss of sale opportunities. The vast and diverse rural market calls for multi-tiered distribution networks, efficient logistics and friendly infrastructure. Another issue is the stark difference in the characteristics of the consumers. The consumers stand apart as two different markets as is evident from their current consumption baskets, and their attitude towards essential and luxury items. In addition, although the evolution is towards a better lifestyle therefore product and brand choice is there in both these markets, the rate of evolution is highly different. The real test still lies ahead. One major hurdle in rural marketing is: whether an FMCG player will be able to offer the best price and aspiration values to the rural consumer who

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has a peculiar tendency to mimic his urban counterpart. So, what should the FMCG players do now? They should not only price their products competitively, but also offer their rural prospects maximum value for money spent. Certainly, reaching out to 3.33 million retail outlets is an uphill task. The only way out for Indian FMCG players: put in place an aggressive cost structure, which would enable them to offer low-price and value-for-money products. But then, FMCG is a low-margin business with a high cost of raw materials. Consider the case of Marico: its material cost works out to a high of 59 per cent on sales. Therein lies the rural marketing paradox. However, customer-centric and market-savvy FMCG companies have always chased prospects when they perceive there is a latent demand. For instance, Hindustan Levers Rin, Surf and Lux are available even in Indias most obscure villages. Hindustan Lever had given shape to its rural strategy a few years ago when it perceived that its urban market was shrinking due to an industrial slowdown. Its Operation Bharat that focused on personal care products made the most out of surging rural incomes. The result was there for all to see. The company has been able to clock in double-digit profits every three years and log in double-digit revenues every four years. Britannia with its Tiger brand of biscuits and Colgate-Palmolive with its low-priced and conveniently packaged products designed for the rural masses have been other pioneers in rural marketing. Thus, Britannia and Colgate-Palmolive have been able to derive more than 30 percent of their revenues from rural markets. Sure, there is a lot of money in rural India. But, there are obstacles. The biggest obstacle is that the rural consumer is still evolving. Only FMCGs with deeper pockets, unflinching rural commitment and staying power can play this rural game. Cost of setting up a huge retail network has saw many casualties, the notable being the P&G which abandoned its plan to fight the likes of Lever in the rural segment on its own. Instead, it is aiming to piggyback on the Marico Industries, which has got a strong presence in these markets through its flagship brand "Parachute". The FMCG stalwart Hindustan Lever has started its ambitious project "Project Shakti", a five-month old marketing initiative involving women belonging to micro-credit self-help groups (SHGs) in the Nalgonda district of Andhra Pradesh, similar to the highly successful experiment Bangladesh's Grameen Bank used in rural areas of the country.

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Future Outlook: Domestic market is witnessing a structural shift in terms of demand with rural markets beginning to show increased demand for FMCG products. This is happening at a time when the urban market is showing signs of saturation. However, the low level of penetration in the rural areas is a cause of concern. For a number of consumer expendables the penetration levels are extremely low, but are expected to increase with the passage of time and rise in income levels. For instance, for toilet soap, the average expenditure per user household for low-income households is Rs. 237, while it has increased to Rs. 706 for high-income groups. Rural market at a staggering 122 million, five times the urban market, is hard to ignore for anyone. This on the other hand also provides an excellent opportunity for the industry players in the form of a vastly untapped market. However, to propel the demand in the rural areas, issues like taxes and costs would be very crucial, given the cost-conscious nature of the consumers there. Recent Budget hike in FMCG products like toothpastes do not bode well for the companys efforts to focus on spreading awareness about oral care in these areas and the increased usage of oral care products there. Another area, which offers immense growth opportunities, is unbranded segment. However, cost will again be the determining factor for success here. The increased inflow of imported consumer goods in the country, especially from China, as a result of lifting of the QRs (Quantitative Restrictions) by the government, is also expected to give the domestic players a run for their money. In recent times, the markets have been seeing a veritable war over the retail shelf, which promises to intensify in the foreseeable future. Lifting of the quantitative restrictions and dereservation of several items, which were earlier reserved for SSIs, are expected to lead to intense competition in the market place. In the wake of such developments, the crucial success factor will be the distribution strength a company would be able to have or develop. However, in the wired world that alone won't be enough as a entry barrier. Internet is fast emerging as a strong distribution channel and the new players are finding it easier to launch assaults through this medium

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very effectively. That is why we are seeing web initiatives from market majors like HLL, Godrej etc. which want to pre-empt competitors in that space. And, it won't be an exaggeration to say that the next FMCG war will be fought on the wired turf. Brand building will be another key issue. There has been a spurt in promotional activities, which has resulted in an increasing fight for the customer's attention at the point of purchase. This has made brand differentiation at the retail level extremely difficult. This has been further aggravated by brand extension strategies adopted by the companies. One good example is the Hindustan Lever. The company, in some of the product categories like soaps, has relied heavily on brand extensions. In case of Lifebuoy, a toilet soap, so many variants have flooded the shelves, however this could also mean diluted focus, on part of the company and confusion for the consumers. HLL has recently planned to trim its product portfolio and concentrate on key brands only. It is expected to withdraw from the markets variants of its toothpaste brand "Close Up" such as Close Up Renew and Close Up Oxyfresh. Companies will be increasingly reviewing the quantity versus quality equation, as well as distribution synergies, to try and leverage for the best possible distribution at the least possible cost. This could be a crucial factor in deciding the fate of players. The key factors that are expected to trigger future growth for the FMCG industry include reduction in excise duties, relaxation of licensing restrictions and reduced dominance of unorganized sector due to creation of level playing field. The growing reach of advertising medias like satellite and cable TV too is expected to give a boost to the market penetration initiatives of the industry players. The results of a survey done by National Council of Applied Research (NCAER) suggest that Indian FMCG space is all set to enter a new growth phase, sample this: the study says that the lower income group is expected to shrink from over 60 percent (1996) to 20 per cent by 2007 and the higher income group is expected to rise by more than 100 per cent. It looks; the industry is all set for a fast-paced race ahead.

Industry Segments:
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The main segments of the FMCG sector are:

Personal Care: oral care; hair care; skin care; personal wash (soaps); cosmetics and toiletries; deodorants; perfumes; paper products (tissues, diapers, sanitary); shoe care. Major companies active in this segment include Hindustan Lever; Godrej Soaps, Colgate-Palmolive, Marico, Dabur and Procter & Gamble.

Household Care: fabric wash (laundry soaps and synthetic detergents); household cleaners (dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito repellants, metal polish and furniture polish). Major companies active in this segment include Hindustan Lever, Nirma and Reckitt & Colman.

Branded and Packaged Food and Beverages: health beverages; soft drinks; staples/cereals; bakery products (biscuits, bread, cakes); snack food; chocolates; ice cream; tea; coffee; processed fruits, vegetables and meat; dairy products; bottled water; branded flour; branded rice; branded sugar; juices etc. Major companies active in this segment include Hindustan Lever, Nestle, Cadbury and Dabur.

Spirits and Tobacco Major companies active in this segment include ITC, Godfrey Philips, UB and Shaw Wallace.

SWOT Analysis of FMCG Sector Strengths:

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Well-established distribution network extending to rural areas. Strong brands in the FMCG sector. Low cost operations.

Weaknesses:

Low export levels. Small-scale sector reservations limit ability to invest in technology and achieve economies of scale. Several "me-too products.

Opportunities:

Large domestic market. Export potential. Increasing income levels will result in faster revenue growth..

Threats:

Imports. Tax and regulatory structure. Slowdown in rural demand.

Major Players in Indian FMCG Sector:

Hindustan Lever Limited:

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Hindustan Lever Limited (HLL) is India's largest fast moving consumer goods company, with leadership in Home & Personal Care Products and Foods & Beverages. The leading business magazine, Forbes Global, has rated Hindustan Lever as the best consumer household products company worldwide. Far Eastern Economic Review has rated HLL as Indias most respected company. Asiamoney has rated HLL as one of Indias best-managed companies. Leading national publications, like The Economic Times, have also rated HLL as one of Indias most respected companies. HLL has received the Motilal Oswal Largest Wealth Creator Award for the period 1996-2001. The vision that inspires HLL's 32,400 employees (41,400 including group companies), including about 1,480 managers, is to meet everyday needs of people everywhere - to anticipate the aspirations of our consumers and customers and to respond creatively and competitively with branded products and services which raise the quality of life. This objective is achieved through the brands that the company markets. HLL is India's largest marketer of Soaps, Detergents and Home Care products. It has the countrys largest Personal Products business, leading in Shampoos, Skin Care Products, Colour Cosmetics, Deodorants and Fragrances. HLL is also the market leader in Tea, Processed Coffee, branded Wheat Flour, branded Iodized Salt, Tomato Products, Ice cream, Soups, Jams and Squashes. HLL is also one of the country's biggest exporters and has been recognized as a Golden Super Star Trading House by the Government of India; it is a net foreign exchange earner. The company's Exports portfolio includes branded Soaps and Detergents, Personal Products, Home Care Products, Tea and Coffee, Marine Products, Basmati Rice, Castor Oil and its Derivatives and Leather Footwear.

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HLL is India's largest exporter of branded fast moving consumer goods. It is India's largest exporter of Tea and Marine Products, and one of the largest global players in castor. About 80% of HLL export goes to General Currency Areas. Competitive position: HLL is the market leader in the detergent and soap industry. Nirma is a close competitor in detergents and has been slowly gaining ground in toilet soaps too. The other significant competitor in detergents is P&G. Despite being the global leader in this segment, has been unable to achieve a critical mass in India due to premium pricing strategy. In oral care segment, HLL has emerged as a strong No 2 player, giving stiff competition to the market leader Colgate. In the hair care segment, HLL dominates the shampoo market and is the No 2 player in hair oils. In the skin care market, besides competition from leading global players, HLL has also been losing share to south based player Cavincare Ltd. In the foods business, Tata Tea in packet tea, Nestle in coffee and culinary products, GCMMF (Amul) in ice creams, and Godrej Pillsbury in staple food are the main competitors. Market leading brands HLLs brands have become household names in the country. The companys strategy is to concentrate its resources on 30 national power brands, and 10 other brands, which are strong in certain regions. Some of the big brands in Soaps and Detergents are Lifebuoy, Lux, Liril, Hamam, Rexona, Breeze, Dove, (all soaps), International Surf Excel, Surf, Rin, Wheel, Sunlight (all detergents). HLL also markets the Vim and Domex range of Home Care Products. In the Personal Products business, HLL's Hair Care franchises are Clinic, Sunsilk and Lux shampoos and Nihar oil. In Oral Care, the HLL portfolio comprises Close-up and Pepsodent toothpastes, toothbrushes and toothpowder. In Skin Care, HLL markets Fair & Lovely Skin Cream and Lotion, the largest selling Skin Care Product in India; a brand developed in India, it is now exported to over 30 countries. It has been extended as fairness soap, in line with the strategy to take brands across relevant categories. The other major Skin Care franchises are Ponds, Vaseline, Lakme and Pears. In Colour Cosmetics, HLL markets the Lakme and Elle23

18 ranges. In Deodorants and Fragrances, the key brands are Rexona and Axe. Denim is HLLs franchise for Mens toiletries. HLL also has Aviance, a customized Skin Care and Beauty Cosmetics portfolio, sold through trained consultants. HLL has recently launched franchised Lakme Beauty Salons, offering standardized services, in line with the strategy to add a service dimension to relevant brands. HLL is the worlds largest packet Tea marketer. HLL Tea brands Taj Mahal, Yellow Label, Red Label, Taaza, A1, and 3Roses - are among the top brands in the country. The coffee business comprises Bru Instant Coffee and Deluxe Green Label Roast & Ground Coffee. The Kissan and Knorr range of Culinary Products comprises Jams, Squashes, Tomato Ketchup, Sauces, Puree, and Soups. Popular Foods, like Wheat Flour and Iodized Edible Salt, under the Annapurna brand name, have met with remarkable success. The innovative offerings are changing consumer habits into using processed, hygienic, healthy and convenient products. The Kwality-Wall's range comprises popular Impulse segment Ice-cream brands like the Max range for children, and Cornetto and Feast for teenagers and young adults, and Soft Ice Cream. The company has also introduced some of the worlds most popular ice-creams and desserts from the Unilever portfolio including Magnum, the worlds largest selling icecream, and Viennetta. Max was extended in 2001 as sugar confectioneries, because children are a key consumer segment in confectioneries too. This is among the new businesses HLL has chosen to enter. The Cooking Oils business includes such time-tested brands like Dalda Vanaspati, Dalda Refined Groundnut Oil, Flora Refined Sunflower Oil and Masterline Bakery Fats. An innovative cooking medium, Dalda Active, the first of its kind, has also been launched.

24

In 2000, HLL acquired a 74% equity in Modern Food Industries (India) Limited, entering the bread market. Modern Foods was the first Public Sector Undertaking to be disinvested. Besides upgrading the existing Modern products, HLL has launched new products, like Milk Classic Bread. The Institutional Business in Foods and Beverages, the Lever Food Service, also has a significant presence, with Tea and Coffee, the Masterline range of Bakery Fats and Dipy's Food Service comprising Tomato Paste, Puree and Sauces.

25

Colgate-Palmolive India: From a modest start in 1937, when hand-carts were used to distribute Colgate Dental Cream, Colgate-Palmolive India today has one of the widest distribution networks in India - a logistical marvel that spans 2.7 retail outlets across the country, of which the Company services 8,00,000 outlets directly. The Company has grown to a Rs. 1100 crore plus "blue chip" with an outstanding record of enhancing value for its 220,000 loyal shareholders. Colgate's tight focus in Oral Care in India while building its Personal Care business coupled with a simple, but forceful worldwide financial strategy, has helped deliver consistent shareholder value. Colgate consistently increases gross margin while at the same time reducing overhead expenses as a percentage to sales. The increase in gross margin and the reduction in overhead expenses provide the money to invest in advertising to support the launch of new products, while at the same time increasing operating profit. Today, Colgate is a household name in India with one out of two consumers using a Colgate toothpaste. Consistently superior quality and value for money products resulting from advanced technology inputs have enabled Colgate maintain its undisputed leadership and emerge as India's No. 1 brand across all categories for eight out of nine years since 1992 in the top brands survey conducted by Taylor Nelson Sofres - Mode for A&M. It is indeed a brand which evokes confidence, commands loyalty and guarantees satisfaction. Across millions of households, Colgate is synonymous with trust.

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Godrej: The Godrej Group was established in 1897 and has since grown into a $1.1 billion conglomerate with a workforce of 20,000. Inseparable from daily life in India, the Godrej name has been built on a spirit of innovation that has made it one of the country's most remarkable industrial corporations. The Godrej label has come to mean different things to different people across the length and breadth of India. Companies operating under the group umbrella are involved in a wide range of businesses -- from locks and safes to typewriters and word processors, from refrigerators and furniture to machine tools and process equipment, from engineering workstations to cosmetics and detergents, from edible oils and chemicals to agro products. The corporation had its beginning in India's freedom struggle. Its founder, Ardeshir Godrej, was a staunch nationalist and believed that the country's economic degradation was even worse than its political subjugation, and that freedom could not be won unless it became self-reliant. Beginning with security equipment and soaps, the group diversified into a wide variety of consumer goods and services, all constructed on the strength of the Godrej brand. The Godrej story is not limited to industrial excellence and enlightened concerns. It is also a human chronicle of determined men and women, gifted with vision and uncommon talents, who built a powerful and unique business. Key Godrej Brands are: Cinthol Regular, Cinthol International, FairGlow, Godrej No.1, Godrej Hair Dye - Liquid, Powder, ColourSoft, Nupur, Kesh Kala, Kali Mehndi, Ezee, Ezee, FairGlow.

Procter & Gamble:

27

In historical terms Procter & Gamble's relationship with India dates back to when Vicks Product Inc. India, a branch of Vicks Product Inc. USA established in 1951, was engaged in the manufacture (under loan license) and sale of what is today India's Number One Health Care brand - the famous range of VICKS products. Procter & Gamble operates two companies in India: Procter & Gamble Hygiene and Health Care Limited - 35% Indian shareholders, 65% Shareholding of the Procter & Gamble Company, USA and P&G Home Products Limited 100% Shareholding of Procter & Gamble Company, USA. Popular brands of P&G are: Ariel Total Compact, Ariel Front-O-Mat, Tide, Whisper, Pantene Pro V, Head & Shoulders, Vicks VapoRub, Vicks Inhaler, Vicks Formula 44, Vicks Cough Drops, Vicks Action 500+.

28

Sales Promotion

Sales Promotion:

29

Sales Promotion has been defined as a direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with primary objective of creating an immediate sale. Certain points are to be kept in mind while describing sales promotion: Firstly, sales promotion involves some type of inducement that provides an extra incentive to buy. This incentive is usually the key element in a promotional program. Secondly, sales promotion is essentially an acceleration tool, designed to speed up the selling process and maximize sales volume. By providing an extra incentive, sales promotion techniques can motivate consumers to purchase a larger quantity of a brand or shorten the purchasing cycle of the trade or consumers by encouraging them to take more immediate action. Finally, sales promotion activities can be targeted to different parties in the marketing channel. Types of Sales Promotion: Sales promotion is generally broken into two major categories: Consumer-Oriented. Trade-Oriented.

Consumer-oriented sales promotion is targeted to the ultimate user of a product or service and includes couponing, price offs, freebies, scratch cards, lucky draws, and various point-of purchase materials. These promotional tools encourage consumers to make immediate purchase decision and thus can stimulate short-term sales. As the use of sales promotion techniques continues to increase, companies must consider what they hope to accomplish through their consumer promotions and how they interact with other promotional activities such as advertising, direct marketing, and personal selling. The major objectives of consumer-oriented sales promotion are: Obtaining trial and repurchase. Increasing consumption of an established brand. Defending current customers. Targeting a specific market segment.

30

Enhancing Integrated Marketing Communications and building brand equity.

Trade-oriented sales promotion is targeted towards marketing intermediaries such as wholesalers, distributors, and retailers. It includes dealer contests and incentives, trade allowances, point-of purchase displays, sales training programs, trade shows, co-operative advertising, and other such programs to motivate the distributors and retailers to carry a product and make an extra effort to push it to their customers. Like consumer-oriented promotions, sales promotion programs targeted to the trade should be based on well-defined objectives and measurable goals and a consideration of what the marketer want to accomplish. The main objectives of trade-oriented promotions are: Obtain distribution for new products. Maintain trade support for established brands. Encourage retailers to display established brands. Build retail inventories.

Reasons for Increase in Sales Promotions: A number of factors have led to the shift in marketing spending to sales promotion from media advertisements. Among them the following are the most important ones: The Growing Power of Retailers:

One reason for the increase in sales promotion is the power shift in the marketplace from manufacturers to the retailers. For many years the manufacturers of national brands had the power and influence; retailers were just passive distributors of their products. Consumer product manufacturers created demand for their brands by using heavy advertising and some consumer-oriented promotions, such as samples, coupons, and premiums, and exerted pressure on retailers to carry the products. Retailers did very little research and sales analysis; they relied on the manufacturers for information regarding the sales performance of individual brands. In recent years, however several developments have helped to transfer power from the manufacturers to the retailers. With the advent of optical checkout scanners and sophisticated in-store computer systems, retailers gained access to the data concerning

31

how quickly products turn over, which sales promotions are working, and which products make money. Retailers use this information to analyze sales of manufacturers products and the demand discounts and other promotional support from manufactures of lagging brands. Companies that fail to comply with the retailers demands for more trade support often have their shelf space reduced or even their product dropped. Another factor that has increased the power of the retailers is the consolidation of the grocery store industry, which has resulted in larger chains with greater buying power and clout. These large chains have become accustomed to trade promotions and can manufactures to provide deals, discounts, and allowances. Consolidation has also given large retailers more money for advancing already strong private label initiatives and sale promotion in the next step in the marketing evolution of the private brands. Declining Brand Loyalty: Another major reason for the increase in sales promotions is that the consumers have become less brand loyal and are purchasing more on the basis of price, value, and convenience. Some consumers are always willing to buy their preferred brand at full price without any type of promotional offer. However, many consumers are loyal coupon users and/or are conditioned to look for deals when they shop. They may switch back and forth among a set of brands they view as essentially equal. These brands are perceived as being satisfactory and interchangeable, and consumers purchase whatever brand is on special or for which they have coupon. Increased Promotional Sensitivity: Marketer are making greater use of sales promotion in their marketing programs because consumers respond favorably to the incentive it provides. An obvious reason for consumers increased sensitivity to sales promotion offers is that they save money. Another reason is that consumers who are increasingly time-sensitive and facing too many choices make purchase decisions at the point of purchase. Buying brand that is on special or being displayed can simplify the decision-making process and solve the problem of overchoice.

Brand Proliferation:

32

A major aspect of many firms marketing strategies over the past decade has been the development of new products. The market has become saturated with new brands, which often lack any significant advantages that can be used as the basis of an advertising campaign. Thus, companies increasingly depend on sales promotion to encourage the customers to try these brands. Fragmentation of Consumer Market: As the consumer market becomes more fragmented and traditional mass-media-based advertising less effective, marketers are turning to more segmented, highly targeted approaches. Many companies are tailoring their promotional efforts to specific regional markets. Sales promotion tools have become one of the primary vehicles for doing this, through programs tied into local flavor, themes, or events. A number of marketers also use sales promotion for targeting ethnic groups. Marketers are also shifting more of their promotional efforts o direct marketing, which often includes some form of sale promotion incentive. Many marketers use information they get from premium offers, trackable coupons, rebates, and sweepstakes to build database for future direct-marketing efforts. As marketers continue to shift from media advertising to direct marketing, promotional offers will probably be used even more to help build databases. The technology is already in place to enable marketers to communicate individually with target consumers and transform mass promotional tools into ways of doing one-to-one marketing. Short-Term Focus: Many businesspeople believe the increase in sales promotion is motivated by marketing plans and reward systems geared to short-term performance and the immediate generation of sales volume. Some think the package-goods brand management system has contributed to marketers increased dependence on sales promotions. Brand Managers use sales promotions routinely not only to introduce new products or defend against the competition but also to meet quarterly or yearly sales and market share goals. The sales force, too, may have short-term quotas or goals to meet and may also receive request from retailers and wholesalers for promotions. Thus, reps may pressurize marketing or brand managers to use promotions to help them move the products into the retailers store. 33

Increased Accountability: In addition to the pressurizing their marketing or brand managers and sales force to produce short-term results, many companies are demanding to know what they are getting for their promotional expenditures. Sales promotion is more economically accountable than advertising. In companies struggling to meet their sales and financial goals, top management is demanding to know what they are getting for their promotional expenditures. Sales promotion is more economically accountable than advertising. In companies struggling to meet their sales and financial goals, top management is demanding measurable, accountable ways to relate promotional expenditures to sales and profitability. Competition: Another factor that led to the increase in sales promotion is manufacturers reliance on trade and consumer promotions to gain and maintain competitive advantage. The markets for many products are mature and stagnant, and it is increasingly difficult to boost sales through advertising. Exiting, breakthrough creative ideas are difficult to come by, and consumers attention to mass media advertising continues to decline. Rather than allocating large amounts of money to run dull ads, many marketers have turned to sales promotions.

Concerns about Increased Role of Sales Promotion:

34

Many factors have contributed to the increased use of sales promotion by consumer product manufacturers. Marketing and advertising executives are concerned about how this shift in the allocation of the promotional budget affects brand equity. As brand equity, or consumer franchise is an intangible asset of added value or goodwill that result from consumers favorable image, impressions of differentiation, and /or strength of attachment to a brand. Some critics argue that sales promotion increase come at the expense of brand equity and every single pie that goes into promotion rather advertising devalues the brand. They say trade promotions in particular contribute to the destruction of brand franchise and equity as they encourage consumers to purchase primarily on the basis of price. Proponents of advertising argue that marketers must maintain strong franchises if they want to differentiate their brands and charge a premium price on them. They say that advertising is still the most effective way to build the long-term franchise of a brand; it in forms consumers of a brands features and benefits, creates an image, and help build and maintain brand loyalty. However, many marketers are not investing in their brands as they take monies away from the media advertising to fund short-term promotions. Marketing experts generally agree that advertising plays an important role in building and maintaining a brands image and position, which are core components of its equity. Many are concerned that if the trend towards spending more on sales promotion at the expense of media advertising continues, brands may loose the equity that advertising help to create and be forced to compete primarily on the basis of price. Many of these concerns are justified, but not all sales promotion activities detract from the value of a brand. It is important to distinguish between consumer franchise-building and nonfranchise-building promotions.

35

Nirma A Case Study

36

Introduction: Nirma is an over Rs. 17 billion brand with a leadership presence in Detergents, Soaps and Personal Care Products, offering employment to over 15,000 people. Mr. K. K. Patel introduced the Brand in 1969. Making phosphate free synthetic detergent powder by hand and selling it at Rs. 3/- per kg, when the lowest priced detergent brand was Rs. 13/-. This value-for-money plank revolutionized the industry and made fabric wash detergents available to the masses. Today, Nirma sells over 800,000 tonnes of it's detergent products annually, giving it a 35% share of the Indian market, which is the world's second largest fabric wash products market. This makes Nirma India's largest detergent marketer and one of the world's biggest detergent brands. Even though Nirma was a late entrant in 1990 in the highly competitive toilet soaps market, it is already the second largest manufacturer, selling close to 1,06,000 MT of bathing soaps in 1999-00. The brand has over the years introduced products in toiletries and personal care with soaps, shampoos and toothpaste, thus offering the consumer a complete product portfolio. Carrying on Nirma's mission of providing 'Better Products, Better Value, Better Living' to its over 300 million consumers through an efficient distribution network. Nirma's philosophy of providing quality products at the best prices has led to investment in the latest technologies for its multi-locational manufacturing facilities, with full-scale integrated complexes at Mandali - Mehsana, Ahmedabad, Baroda, Bhavnagar, Kanpur and Indore. To have a greater control on the quality and price of its raw materials, Nirma has undertaken backward integration into manufacture of Industrial Products like Soda Ash, Linear Alkyl Benzene (LAB), Alfa Olefin Sulphonates (AOS), Fatty Acid, Glycerine and Sulphuric Acid. Nirma's vision, based on it's Indian experience and aided by a professional management team, is to replicate it's leadership position internationally. Within the short span of a year, Nirma achieved commandable position in the leadership of detergent market in Bangladesh through its joint venture there, M/s. Commerce Overseas Limited.

37

Brands: Nirma is aptly considered as a marketing miracle and this is reflected in the strength of the brand. Nirma has successfully challenged and changed the conventions of detergents marketing and today leading business schools are analyzing it's strategies to demystify this miracle. Nirma's core marketing thrust revolves around prompting consumer trials by offering a good quality product at most competitive price and retaining these new consumers by continuously offering the same 'Value For Money' equation. This is borne by the fact that today Nirma can boast of a strong brand loyalty from it's 400 million consumer base. Nirma sells over 800,000 tonnes of detergent products every year and commands a 35% share of the Indian detergent market, making it one of the world's biggest detergent brands. The brand promotion efforts are complemented by Nirma's distribution reach and market penetration, through a country wide network of 400 distributors and over 2 million retail outlets, making Nirma products available from the smallest rural village to the largest metro, in a continent sized country like India. Based on the pragmatic concept of 'Umbrella Branding', Nirma has been increasingly successful in extending it's brand equity to other product categories like Premium Detergents, Premium Toilet Soaps, Shampoos, Tooth pastes and Iodised Salt, thus opening new vistas to the field of Brand Building. Nirma has followed up it's original marketing success in the economy segment of the detergent powder and cake market, with Nirma Super Cake and Nirma Super Powder in the premium segment. Nirma's entry into the soaps market was marked with the introduction of Nirma Bath, a carbolic soap, today an established brand in this segment. Close on the heels of this, was launched Nirma Beauty Soap in three variants, which in a matter of a few years has become the third largest toilet soap brand in India. This encouraging market reception has been kept going with the launch of Nirma Premium and Nirma Lime Fresh. In fact, 17 million packs of Nirma Lime Fresh were sold in the very first month of its launch and that too without any advertising support. That's the power of the Nirma Brand.

38

Today Nirma has expanded into the personal care market with Nirma Shikakai, Nirma Beauty Shampoo and Nirma Toothpaste and into products like Iodized Salt, thus providing the consumer with a more complete product portfolio. Product List: Detergent Powders:

Nirma Washing Powder Super Nirma Detergent Powder Nirma Popular Detergent Powder Green Nirma Washing Powder Nima Green Detergent Powder Nima Detergent Powder

Detergent Cakes:

Nirma Popular Detergent Cake Nirma Detergent Cake Super Nirma Detergent Cake Nima Green Detergent Cake Nima Blue Detergent Cake Nima Bartan Bar Nirma Clean

Bathing Soaps:

Nirma Beauty Soap Nirma Bath Soap (Carbolic) Nirma Premium Soap Nirma Lime Fresh Soap Nima Rose Nima Lime Nima Winner 39

Nima Sandal Nirma Rosee Nima Herbal Nirma Herbalina

Other Products:

Nirma Beauty Shampoo Nirma Shikakai Nirma Toothpaste Nirma Shudh Iodized Free Flow Salt

Industrial Products:

Linear Alkyl Benzene Sulphuric Acid Glycerine Fatty Acids Soda Ash

40

DATA ANALYSIS

41

Consumers Q1. Which brand of Soap / Detergent do you use?

Bathing -soaps Lux Hamam Lifebuoy Nima Others Respondents 64 19 23 10 50

bathing soaps
80 60 40 20 0 lux hamam lifebuoy respondents
Interpretation: The above question has been formed to know the soaps and detergents at th e top of the mind of the customers. It shows that consumers awareness and the image of that particular brand. It will help to the company to know the market scenario and the major brands in the market. Form the above result it is clear that out of 100 customers more than 60 are consumers are having the same brand as the image in their mind, whereas others category is also showing the higher graph than these 3 major players(Hamam, Lifebuoy, Nima)

nima

others

42

Detergent Powder Nirma sup Wheel Surf Ariel Othres

Respondents 21 48 41 21 14

detergent poweder
60 40 20 0 nirma sup wheel surf respondents
Interpretation: with the same objective to know about the brands in detergent industry. The graphical representation indicates wheel at the highest level among the consumers mind. As this figure indicates only the result of the survey made in Gujarats major cities as they represent the universe, the result may differ in other parts of the country as well as of the state.

ariel

othres

43

Q2. Do you always buy the same brand of Soap / Detergent?

Particulars Yes No Respondents 35 62

detergent
80 60 40 20 0 yes respondents no

Interpretation: the objective behind the formation of this question is to know the level of brand loyalty of the consumers towards the brands of soaps available in the market. The above figure shows that on 35 % of the respondents are loyal to their brands of detergent. FMCG are such a market where the level of loyalty remains low and this is because of many reasons.

44

Particulars Yes No

Respondents 30 66

bathing soaps
80 60 40 20 0 yes respondents
Interpretation: here the objective is same but it is for the bathing soap market. The result of this market is similar to the detergent market. This shows only 30% of loyalty level among the consumers in the market.

no

45

Q3. Which factors do you normally consider while purchasing a particular brand of Soap / Detergents?
Factors Fragrance Quality Company image Price Packaging Others Bathing soap 61 81 27 58 5 25 Det.powder 13 91 27 61 7 11

100 80 60 40 20 0 fragrance Packaging Company Image Price Quality Others

bathing soap

det.powder

46

Interpretation: the objective behind this question is to know the effect of influencing factors in the purchase decision of the soaps and detergent powders. It mainly contains the factors like, quality which players an important role in the purchase decision of the soaps and detergents both. If we look at the graph of the soaps it shows fragrance& quality as the most influencing factors in the purchase decision

Q4. Do you consider promotional schemes while purchasing a particular brand of Soap / Detergent?
Particulars Yes No Respondents 95 5

100 50 0 yes respondents respondents no

47

Interpretation: Answer of this question will give idea about the effect of promotional schemes in the purchase decisions. Such types of schemes always attract more and more consumers towards particular brand. Simultaneously it gives idea about the factors which consumers look most in the product before they make final decision The above graph shows that 95 out of 100 consumers are looking for such schemes before they make purchase.

Q5. Which of the following promotional schemes you have come across so far?
Promotional schemes Coupons price off Freebies scratch cards lucky draw Bundling extra qty. Respondents 14 74 43 7 17 62 83

48

100 80 60 40 20 0 price off bundling coupons freebies scratch cards lucky draw extra qty.

respondents
Interpretation: the above stated question clearly states the awareness of promotional schemes offered in the market by the marketers to attract more and more consumers. The results show that price off and extra quantity is the two main offers/schemes which consumers have came across at the time of purchase. In which more than 80% of respondents have answered extra quantity. It will help the manufacturers and marketers too how too launch their new products in the market with which schemes.

Q6. Which medium do you feel is suitable to promote the various promotional schemes?
Source Radio TV News.ppr Hoarding Respondents 5 91 68 30

49

Others

100 80 60 40 20 0 Radio TV Newsppr Hoarding respondents

Interpretation: this question gives stress on the media habit of the people and through which the product should be launch or they think it would be better than other Medias. The above result shows TV as the best media to market the product which will cover majority of the viewership. On the second place it shows news papers as the media to promote the product in the market.

Others

Q7. Is there any existing scheme on the Soap / Detergent you are currently using?

50

Particulars Yes No

Respondents 49 51

52 51 50 49 48 yes respondents
Interpretation: the answer of the respondents give idea about the awareness of the promotional schemes offered in the market on their existing soaps and detergents. In this situation majority of the people are not aware or having vague idea about the promotional schemes running into the market. It shows that people are not much aware of the schemes which continue in the market it may be because of the present stock of the product at their place.

no

51

Q8. If yes, please specify?

Particulars 3+1/Other Free Discount No idea No answer Respondents 36 4 14 46

50 40 30 20 10 0 3+1/other free discount no idea no answer

respondents
Interpretation: this question supports the above question. It enlists the answers of those customers who are aware of the present schemes offered in the market and also those schemes which are more demanded in the market. The result shows that 1+1 or 2+1 or other free schemes are more demanded and more aware schemes in the market. So manufacturers may go for the same at the tim,e of launching thair product.

52

Q9. If you get an attractive promotional offer in the product other then of your choice will you switch over?
Particulars Yes No Respondents 73 27

80 60 40 20 0 yes respondents
Interpretation: it shows the level of brand loyalty among the consumers. The result clearly shows that out of 100 ,73 people are ready to switch over to another brand if they find better promotional schemes which suits their budget maens more qyt+less cost +quality. Combination of all these schemes will run better in the market.

no

53

Q10. Give reason for the same?

Particulars Cost+qty Quality Satisfaction Brand loyal More benefit/budget Season change No answer Respondents 16 17 2 5 22 2 36

40 30 20 10 0 more benefit/bud get no answer satisfactio n cost+qty

respondents
Interpretation: this support the above question. It gives specific reasons for switching too other products. It shows that extra quantity with less or same price, more satisfaction, quality and other factors influence consumers to switch over too other brands.

54

Q11. Give suggestions about futuristic promotional schemes?

Particulars Lucky draw Coupons Bundling Other schemes No suggestions Respondents 4 1 4 11 80

55

100 80 60 40 20 0
coupens bundling no suggestions lucky draw other schemes

respondents
Interpretation: this show the consumers future expectations from the whether company to come with new schemes or continue with present one. It shows consumers demand which the manufacturers have to meet.

Retailers
Q1. Since how long are you in this business?
Particulars Respondents

56

1-5 Years 5-10 Years More than 10 years Total

24 27 49 100

60 50 40 30 20 10 0 1-5 yrs 5-10yrs respondents

Interpretation: this question gives idea about the benefit to the retailers who are on the market from long period of time and the benefits they are getting more as compare to others. It also shows their experience in the field and the services they are providing too their new and regular customers. It also gives idea about the benefits they are gaining for wholesalers and direct from the company.

>10yrs

Q2. Name the Soap / Detergent (Company) you stock for.

Companies Respondents

57

Nirma HLL P&G Godrej Others

96 100 90 94 68

120 100 80 60 40 20 0 nirma hll p&g Series1

Interpretation: it gives idea about the capacity of the retailers to stock the goods and also the variety of the products they are stocking. It will also make clear the demand of the goods in their stores and the selling of the product in market.

godrej

others

58

Q3. Rank the following factors that customers look for in the purchase of Soap / Detergent. (Rank from 1 to 6).
Factors
Fragrance Quality Company Image Price Packaging Others 50 72 74 82 20 50

Bathing Soap
21 71 67 83 15 41

Detergent Powder

100 80 60 40 20 0 fragrance Packaging Company Image Price Quality Others

bathing soap

det.powder

Interpretation: it gives an idea about the priority the influencing factors too the consumers and also the weight age of that factor over other factors. In the above result people are more price oriented and quality oriented. On the other hand people are also conscious about the company image. Because sometimes the consumer remembers the name of the product by the company name and also from the past performance of that company.

59

Q4. Do you suggest customers to purchase a certain brand?

Particular Yes No Respondents 28 67

80 60 40 20 0 yes respondents
Interpretation: this could be a very help question to understand the role of retailers in the purchase decision. In above graph around 30% of the retailers are suggesting the consumers to buy particular brand. There could be many reasons like, extra margin, relations with consumers and quality of the products which retailer may get the benefit of the same.

no

60

Q5. If Yes why?

Particular
High margin Quality Relationship No reason

Respondents

12 12 8 68

80 60 40 20 0 high marjin quality relationship no reason

respondents
Interpretation: it gives idea about the reasons why retailers suggest the consumers to buy particular brand. In above graph and table it is clear that for margin and of better relations with consumers and too provide quality product to consumers they suggest consumers too bye particular brand. For the company it may be helpful to target such retailers to sell their product in the market easily.

61

Q6. Do customers look for various schemes in the product?

Particular
Yes No

Respondents
99 1

120 100 80 60 40 20 0 yes respondents

Interpretation: this gives a real helpful data for checking the effect of sales promotions in the market and how seriously consumers follow the promotions before they go for purchase particular brand. The above result shows that only 1 out 0f 100 didnt go for the promotion otherwise all are looking for any type of the promotions on the product.

no

62

Q7. If yes which schemes?

Promotional Schemes
Coupons Price Off Freebies Scratch Cards Lucky Draws Bundling Offer Extra Quantity

Respondents
11 82 35 2 19 65 93

100 80 60 40 20 0 coupons freebies lucky draw extra qty.

respondents
Interpretation: the above stated results show the demand of various types of promotional schemes in the market by the consumers. Almost all types of schemes are being demanded by the consumers in the market but there are three major schemes which consumers generally look at the time of purchase or before that. 63

Price off, product bundling and extra quantity are more demanded by the consumers over others schemes.

Q8. Which Trade Promotions do various companies offer?

NIRMA Promotions Respondents Extra Margin 46 Extra Units 34 credit facility 55 gifts 24 promo. Exp. 8

NIRMA
60 40 20 0 Extra Margin Extra Units credit facility gifts promo. Exp.

NIRMA respondents

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Interpretation: the above graph shows the trade promotions offered by the NIRMA Ltd to the retailers to attract them towards stocking their goods and also stop them switching them too other major players in the market. NIRMA is mainly offering credit facility which is offered by all major players it may differ in the time limit of the credit. It is also providing extra margin, and units with occasional gift with their schemes.

Promotions Extra Margin Extra Units Credit facility Gifts Promo. Exp.

HLL Respondents 47 34 58 25 22

HLL
80 60 40 20 0 Extra Margin Extra Units credit facility gifts promo. Exp.

HLL respondents

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Interpretation: the advantage of HLL over NIRMA is that it bare promotional expenses which NIRMA is not doing. It attracts more consumers through such promotions, such as display of the product, banners, danglers etc. So this may help it to attract more retailers. It may because of its less cost of production in other segments in which nirma is not operating.

P&G Promotions Respondents Extra Margin 40 Extra Units 33 Credit facility 55 Gifts 20 Promo. Exp. 12

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P&G
60 40 20 0 Extra Margin Extra Units credit facility gifts promo. Exp.

P & G respondents
Interpretation: P&G is also a big player in the FMCG market. It is also providing all the facilities which others are providing to retailers.

GODREJ Promotions Respondents Extra Margin 46 Extra Units 32 Credit facility 57

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Gifts Promo. Exp.

19 18

Godrej
60 40 20 0 Extra Margin Extra Units credit facility gifts promo. Exp.

Goderaj respondents
Interpretation: Godrej a big player in the FMCG market. It is also providing all the facilities which others are providing to retailers. But it is lacking in bearing expenses which HLL is providing to maximum number of retailers.

OTHERS Promotions Respondents

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Extra Margin Extra Units Credit facility Gifts Promo. Exp.

30 18 38 15 7

Others
40 30 20 10 0 Extra Margin Extra Units credit facility gifts promo. Exp.

Others respondents
Interpretation: others include local players, as well as we established players like, wipro but their products are not in demand like other players but still they are providing all the facilities to retailers to attract towards stocking their products.

BIBLIOGRAPHY
Reference book: Product Management In India (2nd edition) By: Ramanuj Majmudar Websites:
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www.nirma.com www.hll.com www.google.com www.indiainfoline.com www.p&gindia.com www.itcportal.com www.domain-b.com www.findarticles.com

Newspapers: Times Of India The Economic Times

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ANNEXURE

QUESTIONNAIRE
Retailers
We are students of MBA undertaking this survey for the fulfillment of our grand project. The information collected will be used for academic purpose only. No information will be revealed to any other institution.

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Name : Address:

Q1. Since how long are you in this business? 1-5 Years 5-10 Years More than 10 years

Q2. Name the Soap / Detergent (Company) you stock for. Companies Nirma HLL P&G Godrej Others please specify Q3. Rank the following factors that customers look for in the purchase of Soap / Detergent. (Rank from 1 to 6). Factors Fragrance Quality Company Image Price Packaging Others Q4. Do you suggest customers to purchase a certain brand? Yes No Bathing Soap Detergent Powder

Q5. If Yes why? Q6. Do customers look for various schemes in the product? Yes Q7. If yes which schemes? No

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Promotional Schemes Coupons Price Off Freebies Scratch Cards Lucky Draws Bundling Offer Extra Quantity Others please specify Q8. Which Trade Promotions do various companies offer? Trade Promotions Extra Margins Extra Units Credit Facility Occasional Gifts Promotional Expenses Nirma HLL P&G Godrej Others

Q9. Give reasons for not stocking a particular brand. Q10. Any Suggestions. Thank You

Consumers
We are students of MBA undertaking this survey for the fulfillment of our grand project. The information collected will be used for academic purpose only. No information will be revealed to any other institution. Name : Address:

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Occupation: Q1. Which brand of Soap / Detergent do you use? Bathing Soap Lux Hammam Lifebuoy Nima Others Detergent Powder Nirma Super Wheel Surf Ariel Others

Q2. Do you always buy the same brand of Soap / Detergent? Yes No

Q3. Which factors do you normally consider while purchasing a particular brand of Soap / Detergents? Factors Fragrance Quality Company Image Price Packaging Others Bathing Soap Detergent Powder

Q4. Do you consider promotional schemes while purchasing a particular brand of Soap / Detergent? Yes No

Q5. Which of the following promotional schemes you have come across so far? Promotional Schemes Coupons Price Off Freebies Scratch Cards Lucky Draws Bundling Offer Extra Quantity

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Others please specify Q6. Which medium do you feel is suitable to promote the various promotional schemes? Source Radio Television Newspapers Hoardings Others Q7. Is there any existing scheme on the Soap / Detergent you are currently using? Yes No Q8. If yes, please specify? Q9. If you get an attractive promotional offer in the product other then of your choice will you switch over? Yes Q10. Give reason for the same? No

Q11. Give suggestions about futuristic promotional schemes?

Thank You

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