Executive Summary

The Fast Moving Consumer Goods (FMCG) sector is a corner stone of the Indian
economy. This sector touches every aspect of human life.

The report is based on the impact of fast moving consumer goods in India. The main
objective of this research was to determine the consumer buying behaviour of FMCG
products in India

The FMCG producer realizes that there is a lot of opportunity for them to enter into the
rural market. The sector is excited about the rural population whose incomes are rising
and the lifestyles are changing. There are as many middle income households in the rural
areas as there are in the urban. Thus the rural marketing has been growing steadily over
the years and is now bigger than the urban market for FMCGs.

Globally, the FMCG sector has been successful in selling products to the lower and
middle income groups and the same is true in India. Over 70% of sales is made to middle
class households today and over 50% of the middle class is in rural India.

The report is conducted with help of a review of the findings of various researchers and
the panoramic view regarding the buying behaviour of Fast moving consumer goods.
The report is analyzed with the data which is collected by a questionnaire and concluded
with the findings of the survey. Finally, few suggestions & recommendations regarding
the topic have been given

1
 Introduction

There was a time when the FMCG companies ignored rural market, they took no interest
to produced or sell products in rural areas. As time passed on, the strategy and marketing
style of FMCG companies had been changed.

The rural market is the one of the best opportunity for the FMCG sector in the India. It is
wider and less competitive market for the FMCG. As the income level of the rural
consumers increasing, the demand of FMCG is increasing continuously.

Fast moving consumer goods (FMCG) are popularly named as consumer packaged goods.
Items in this category include all consumables (other than groceries/pulses) people buy at
regular intervals. The most common in the list are toilet soaps, detergents, shampoos,
tooth paste, shaving products, shoe polish, packaged food stuff, household accessories,
extends to certain electronic goods. These items are meant for daily or frequent
consumption & have a high return.

A major portion of the monthly budget of each household is reserved for FMCG
products. The volume of products circulated in the economy against FMCG products is
very high, as the number of products the consumer uses, is comparatively very high.
Competition in FMCG sector is very high resulting in high pressure on margins.

FMCG companies maintain intense distribution network. Companies spend a large

portion of their budget on maintaining distribution networks. New entrants who wish to
bring their products in the national level need to invest huge sums of money on promoting
brands. A recent phenomenon in the sector was entry of multinationals and cheaper
imports.

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 Overview of FMCG Sector

FMCG is an acronym for Fast Moving Consumer Goods, which refer to things that we
buy from local supermarkets on daily basis, the things that have high turnover & are
relatively cheaper.

FMCG Products and Categories

Personal Care
 Oral Care
 Hair Care
 Skin Care
 Personal Wash (soaps)
Cosmetics and toiletries
 Deodorants
 Perfumes
 Feminine hygiene
 Paper products
Household care fabric wash including laundry soaps and synthetic detergents
 Household cleaners such as dish/utensil cleaners, floor cleaners, toilet cleaners, air
fresheners, insecticides and mosquito repellents, metal polish and furniture polish

3
 Top Players in FMCG Sector

1. Hindustan lever limited (HLL)

2. ITC (Indian Tobacco Company)
3. Nestle India
4. GCMMF (AMUL)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene & Health Care
10. Marico Industries

Secondary Players

1. Colgate-Palmolive (India) Ltd.

2. Godrej Consumers Product Ltd.
3. Nirma Ltd.
4. Tata Tea Ltd.
5. Parle Agro
6. H. J. Heinz

4
 FMCG in 2006

After four years of poor performance in both revenues & profits, FMCG sector has now,
i.e., since 2005, gained the momentum, principally because of the smaller companies that
have substantially improved their market shares at the cost of larger players, & in some
cases, the regional players.

If we carefully observe the FMCG index & BSE index, we would realize that the
returns on money invested in FMCG index are much lower than the returns in benchmark
index. The FMCG sector has under performed the benchmark BSE sensex in 2006.
Though both the indices were close to each other till august 2006, however, in the later
part of the year the sensex surpassed the FMCG index by a reasonable margin.

Comparison of 2006 and 2005

After two years of sinking performance of FMCG sector, the year 2005 has
witnessed the FMCG’s demand growing. Strong growth was seen across various
segments in FY06. With the rise in disposable income and the economy in good health,
the urban consumers continued with their shopping spree. The rural demand grew at
around 11%, while both the urban and rural sector together registered a growth of around
8%. Packets and sachets contributed to the highest growth in rural areas. Growth in
FMCG depends on two factors:

• Increase in penetration and consumption in rural areas

• Change in aspirations and tastes of the urban population

Both these factors contributed to growth in 2006. Besides demand, prices also
increased, because of which only the selected consumers moved up in the value chain.
The large format retail stores in metros also stimulated sales, even if on a very small base.
Some companies absorbed higher input prices, while others were able to pass on the cost
to the consumers.

5
 FMCG sector in 2009

A recent boom in FMCG sector-Indian context FMCG sector is one of the booming
sectors in Indian economy.
The FMCG sector comprises of a market size of 13.1 billion US$ and is the forth largest
in the economy. With the help of well-established distribution channels, intense
competition between the organized and unorganized segments it is expected to grow by
over 60% by 2010.which leads to an annual growth of 10% over a five year period.
It has also been estimated that there will be a rise from around Rs 56,500 crores in 2005 to
Rs 92,100 crores in 2010 in the FMCG sector.
FMCG sector is also likely to benefit from growing demand in the market. Because of the
low per capita consumption for almost all the products in the country, FMCG companies
have immense possibilities for growth. And if the companies are able to change the
mindset of the consumers, i.e. if they are able to take the consumers to branded products
and offer new generation products, they would be able to generate higher growth in the
near future. It is expected that the rural income will rise in 2010, boosting purchasing
power in the countryside.
However, the demand in urban areas would be the key growth driver over the long term.
Also, increase in the urban population, along with increase in income levels and the
availability of new categories, would help the urban areas maintain their position in terms
of consumption. At present, urban India accounts for 66% of total FMCG consumption,
with rural India accounting for the remaining 34%. However, rural India accounts for
more than 40% consumption in major FMCG categories such as personal care, fabric
care, and hot beverages. In urban areas, home and personal care category, including skin
care, household care and feminine hygiene, will keep growing at relatively attractive
rates. Within the foods segment, it is estimated that processed foods, bakery, and dairy are
long-term growth categories in both rural and urban areas.

6
 Analysis of FMCG Sector

Strengths:

1. Low operational costs

2. Presence of established distribution networks in both urban and rural areas
3. Presence of well-known brands in FMCG sector

Weaknesses:

1. Lower scope of investing in technology and achieving economies of scale, especially in

small sectors
2. Low exports levels
3. "Me-too" products, which illegally mimic the labels of the established brands. These
products narrow the scope of FMCG products in rural and semi-urban market.

Opportunities:

1. Untapped rural market

2. Rising income levels i.e. increase in purchasing power of consumers
3. Large domestic market- a population of over one billion.
4. Export potential
5. High consumer goods spending

Threats:

1. Removal of import restrictions resulting in replacing of domestic brands

2. Slowdown in rural demand

7
 Sector’s Outlook

FMCG is the fourth largest sector in the Indian Economy with a total market size of
Rs.60,000 crores. FMCG sector generates 5% of total factory employment in the country
and is creating employment for three million people, especially in small towns and rural
India.

According to a CII – A T Kearney Report, the FMCG sector in India is expected to grow
at a compounded growth rate (CAGR) of 9% to a size of Rs.1,43,000 crores by 2010 from
Rs. 93,000 crores at present.

With a growth of 52.5%, the BSE FMCG index has, during the last 1 year outperformed
the sensex, which could manage a growth of 41% only. A well established distribution
network, intense competition between the organized & unorganized segments, low
operating costs, strong branding characterizes the market.

The large consumer base, particularly in rural sector, and the growing middle class open
up huge opportunities to FMCG companies to take the consumers to branded products and
offer new generation products.

The sector's lack-luster performance in the last few years was due to price competition
and increase in raw materials cost. However, in the FY06, the sector has witnessed a
double-digit growth in profits and revenues. The sector has registered an up trend in
growth across categories, such as health supplement, shampoo, toothpaste, hair oils, and
mosquito repellant, as shown in table below:

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Sales Value Growth %

Categories 2004-2005 2005-2006 Apr.2006-Sept. 2006

Health Supplement -5% 0% 23%
(Chyawanprash)
Shampoo 10% 23% 19%
Toothpaste 5% 6% 16%
Hair Oils 9% 18% 23%
Mosquito Repellant 13% 10% 29%

Source: CII – A T Kearney Report, (2000)

Sector Financials In millions

31-03-2006 31-03-2005 31-03-2004
Net Sales 164,196 148,241 145,380

Sales Growth 10.8% 2.0% -

Profit after Tax 19,595 17,001 21,008

PAT Growth 16.6% -24.2% -

Market
74,746 65,810 63,072
Capitalization
Enterprise Value 662,540 645,477 551,971
Return on Capital
47.1% 51.0% 45.5%
Employed (ROCE)
P/E Ratio 26.7% 27.1% 21.0%
Source: CII – A T Kearney Report, (2000)

Consumer Behavior

9
Consumer behavior is the study of how individuals, groups, and organizations select, buy,
use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.
Successful marketing requires that companies fully connect with their customers.

Adapting a holistic marketing orientation means understanding customers, gaining a 360-

degree view of both their daily lives and the changes that occur during their lifetime so
that the right products are marketed to the right customers in the right way.

Studying consumers provides clues for improving or introducing products or services,

setting prices, devising channels, creating messages and developing other marketing
activities. To implement marketing strategy, marketers examine-what, where, when and
how consumers buy

Consumer Markets

Consumer markets are the markets for products and services bought by individuals for
their own or family use. Goods bought in the consumer market can be categorized in
several ways such as:

Fast-Moving Consumer Goods (FMCG’s) – these are high volume, low unit value but
with fast purchase e.g. ready meals, newspapers, soap, and cooking oil

Consumer Durables – these have low volume but high unit value e.g. cars,
fridges/freezers, cookers, television sets, washing machines, computers etc.

Soft Goods – these are similar to consumer durables except that they wear out more
quickly and therefore have shorter replacement cycle e.g. clothes, shoes etc.

Consumer Marketing

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Consumer Marketing refers to the marketing of the above goods and services for personal
consumption. However, there could be exceptions whereby Cars are bought for both
personal and organizational use.

Characteristics Affecting Consumer Behavior

1. Cultural Factor

Culture – Culture is the fundamental determinant of a person’s wants and behaviour. The
growing child acquires a set of values, perceptions, preferences and the behaviour through
his or her family and other key institutions. A child grown in USA is exposed to the
following values: achievements and success, efficiency and practicality, progress,
material comfort, individualism, freedom and youthfulness. What about a child grown in
Ghana?

Subculture – Each culture consists of smaller group (subculture) of people with shared
value systems based on common life experiences and situations. These subcultures can be
ethnic, religious, racial or regional groups as well as those that form around music groups.
Nestle Gh Ltd (MaggieHomowoCooking contest) Guinness & MTN have been exploiting
our festivals to promote and build their brands and Corporate Image.

Social Class – Virtually all human societies exhibit social stratification. It is a relatively
homogeneous and enduring division in a society, which is hierarchically ordered and
whose members share similar values, interests, and behaviors. Social classes reflect not
only income but also other indicators such as occupation, area of residence, education,
and wealth. Social classes show distinct product and brand preferences in many areas,
including clothing, home furnishing, and leisure activities, automobiles, and media
consumption

2. Social Factors

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Group Membership: Anyone who has ever “gone along with the crowd" knows that
people act differently in groups than they do on their own. Since many of the things we
buy are consumed in the presence of others, group behaviors are important to marketers

Primary Groups: A person has continuous /informal interaction including family

members, friends, neighbors, and co-workers with these groups.

Reference Group: These are groups that have direct/face-to-face or indirect influence on
a person’s attitudes and behaviors. A set of people a consumer wants to please or imitate.
Consumers refer to these groups in evaluating their behavior i.e. what they wear, where
they go and what brands they buy

Secondary Group: A person has formal relations and less continuous interaction
including religious organizations, professional associations, and trade unions with these
groups.

Opinion Leader: Is a person who influences others' attitudes or behaviour because others
perceive him/ her as possessing expertise about the product. Opinion leaders are often
among the first to buy new products, so they absorb much of the risk, reducing
uncertainty for others who are not as courageous. Marketers try to reach opinion leaders
by identifying demographic and psychographic characteristics associated with them and
coaxing them especially the celebrities to use their products sometimes before they are
launched.

The Family: This is probably the most important consumer buying organization in
society. Family members constitute the most influential primary reference group.
Marketers are interested in the roles and relative influence of the husband, wife, and
children in the purchase of a large variety of products and services.

3. Psychological Factors

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Psychology helps marketers understand the ‘why” and “how” of consumer behaviour. In
the psychological situation, consumer buying behaviour is influenced by four factors
including: Motivation, Perception, Learning, and Beliefs & Attitudes.

a. Motivation

Motivation is an inner state that energizes, activates, moves or channels behaviour

towards certain goals (Assael). Motivation arises from perceived needs. These can be
grouped into biogenic and psychogenic needs:

The theory helps marketers understand how various products fit into the plans, goals, and
lives of consumers.

b. Perception

A motivated person is ready to act. How the motivated person actually acts is influenced
by his or her perception of the situation. Perception is the process by which an individual
selects, organizes, and interprets information inputs to create a meaningful image of a
situation.

Selective Attention- Listeners select part of the message that interests them. Sexual
attraction are used to attract attention

Selection distortion- here receivers distort the information they receive if the information
does not agree with their existing beliefs, opinions

Amplification- the receiver adds things to the message that are not there.

Different people in the same motivated and objective situation may act quite differently
because each perceives the situation differently. For example, one person might perceive
a fast talking sales person as aggressive and insincere, another as intelligent and helpful.
People can emerge with different perceptions of the same object because of three
perceptual processes: selective distortion, selective attention, and selective retention. In
marketing, people's perception are important than the reality.

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c. Learning

Learning involves changes in an individual’s behaviour arising from experience. Most

human behaviour is learned. Learning theorists believe that learning is produced through:

Drive: Strong internal stimulus that compels a person to act in a particular way (motive)
e.g. thirst, hunger, discomfort etc

Response: Action taken as a result of the cue, e.g. purchase of beer, soft drink or air-
conditioner

Reinforcement: If experience (from using the beer, soft drink, or air-conditioner) is

rewarding /satisfying, the person will continue to take same action anytime he feels
thirsty/uncomfortable. Habit is then formed which may result in brand loyalty.

d. Beliefs & Attitudes

Through doing and learning, people acquire beliefs and attitudes and these in turn
influence buying behavior. A person’s belief is the descriptive thought that he/she holds
about something. His attitude is his/her enduring favorable or unfavorable evaluation,
emotional feeling and action tendencies toward some object (product/service) or idea, e.g.
attitudes towards religion, politics, music which may be positive or negative. Marketers
need to decide which part of an attitude is the most important driver of consumer
preferences e.g. ( Diet coke/Pepsi in blind/branded
test)

Lifestyle: Is a pattern of living that determines how people choose to spend their time,
money, and energy and that reflects their values, tastes, and preferences Consumers often
choose goods, services and activities that are associated with a certain lifestyle. Analysis
of consumer lifestyles (i.e. psychographics) is important in producing insights into
consumer behaviour. For instance, lifestyle analysis is useful in segmenting and targeting
consumer markets

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Personality: Each person has personality characteristics that influence his or her buying
behaviour, By personality, we mean a set of distinguishing human psychological traits
that lead to relatively consistent and enduring responses to environmental stimuli.
Personality is often described in terms of such traits as self-confidence, dominance,
autonomy, deference, sociability, defensiveness, aggression, and compliance.

Personality can be a useful variable in analyzing consumer brand choices. The idea is that
brands also have personalities, and that consumers are likely to choose brands whose
personality matches their own. We define Brand Personality as the specific mix of human
traits that may be attributed to a particular brand.

Self-Concept: Is an individual’s self-image that is composed of a mixture of beliefs,

observations, and feelings about personal attributes. Self-image is how a person thinks of
himself or he thinks others think of him.

4. Situational Factors

Some important situational cues are;

The Physical Environment: Marketers are aware that factors such as decor, smells,
lighting, music, crowding, and even temperature can significantly influence many
purchases. Many retailers are focusing on adequate packing, cyber-hangout and in-store
display to influence the consumer decision-making process.

Time: Marketers know that the time of day, the season of the year, and how much time
one has to make a purchase affect decision-making. Time is one of consumers' most
limited resources. The sense of time poverty makes consumers responsive to marketing
innovation that allow them to save time including such services as drive-through lanes at
fast food restaurants and ordering products on the web.

Social Surrounding: Including the other people present when the purchase decision is
made, may affect what is actually purchased. Thus, a playboy who went to a pharmacy to

15
buy condoms late in the night ended up buying a bottle of tricilicate when he came face to
face with an elderly man he had woken up from sleep.

Purchase Task: Is the reason underlying the consumer’s decision to buy which may be as
a gift or for the buyer’s own consumption or consumption by the members of the
household

The Consumer Decision Process

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 Stages

Five stages comprise the consumer buying decision process: problem recognition,
information search, alternative evaluation, purchase decision and post-purchase behavior.
Each of these stages can be a deliberate action such as researching product options or a
subconscious thought like recognizing the juice in the refrigerator has almost run out. A
merchant or business must understand the steps a customer goes through to make a
purchase. A merchant can influence a customer's purchase by providing targeted
information, advertisements or guidance.

17
Problem Recognition

Consumers recognize a problem based on physical cues, stimulus response or a need. For
example, a customer could smell fresh bread and realize she is hungry or she could have a
broken pair of glasses and know she needs a new pair. Visual clues trigger problem
recognition. For example, a beverage in a clear container shows when it is getting low, or
a sticker in a car window reminds customers when it is time for an oil change.

Information Search

Customers in the information search stage of the buying process look for solutions to their
problems or needs. They remember what types of purchases solved a similar problem in
the past. Customers also discuss their needs with friends and relatives to see what
solutions they may suggest. For more expensive purchases, customers may read reviews,
look through newspapers or research the product online.

Alternative Evaluation

Consumers evaluate their purchase options based on product attributes, such as technical
specifications, through subjective factors, such as brands, and through personal
experience, such as sampling or testing products. Consumer and company reviews can
influence a consumer's product evaluation.

18
Purchase Decision

A consumer's decision to purchase something includes where to buy, when to buy and
whether to buy. For routine goods such as groceries, consumers may simply go to their
favorite grocery store, but for electronic purchases, they may browse multiple stores.
They will evaluate each merchant based on prior experience with the store, special offers
and whether they can return the product easily. A store that's visually appealing, has
helpful sales associates and offers specials and discounts influences a buyer.

Post-Purchase Behavior

After making a purchase, a consumer mentally ranks her purchase satisfaction. She will
evaluate if she liked the store, if she enjoys the product and the quality of the product.
This evaluation determines whether the customer will purchase the product or brand again
and whether it would be from the same store. Customers who are happy with their
purchases and feel they received a quality product at a good price, will become repeat
customers and will tell others about their experience.

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 The rise of Indian Customer

India is a growing economic super power. Though the raging fire of global economic
slowdown has engulfed almost all the nations, India, a country of 28 states, with over one
billion people, has somewhat escaped the scare.

India is a big country that consists of various segments of consumers, based on income,
class and status. The most recent and crucial development in India that is rising
consumerism story is the birth of the rural market for basic consumer goods. For the
starters, more than half of India’s populations reside in rural areas, who contribute to the
national income, in a big way. The Indian rural population is scattered all across India in
nearly 0.6 million villages.

India is a profitable market though the per capita income is low. And it remains a huge
market even for expensive items.

Salient features of The Indian Consumer Behavior

Indians are known to be, one of the shrewdest customers in the world. The ‘value factor’
very much intertwined with their lives, so much so that even luxury brands have to devise
unique pricing strategies to inspire the great Indian consumers.

Indians are family people. The family, for instance, even includes extended family and
friends as well. Brands that endorse family values are naturally more popular and can
make easy in roads in the Indian market.

Also, Indians give more importance to nurturing, care and affection, than values like
ambition and achievement. The products that talk of such feelings find it easy to attract
the Indian consumers.

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Besides, psychology and economics, even history and traditional products have played a
crucial role in the evolution of Indian consumers. This may be one of the reasons why we
find both traditional and modern products placed alongside, at the stores.

Various fragments of Indian Consumers

The Socialites

Socialites hail from the upper class. They shop from specialty stores, visit clubs and spend
lavishly on luxurious items. Socialites are especially brand conscious and would prefer to
spend only on well-known brands.

The Conservatives

Conservatives hail from the middle class. They are the showpieces of true Indian culture.
Quite conventional in their outlook, they do calculated spending and believe in giving
more time to their families than in parties. Focus more on savings than in spending. 3.3
The Working Women

From the late nineties, there has been a rise in this class. This segment has especially
unleashed opportunities for the retailers in India. Today, she is standing shoulder to
shoulder to men. Working women have their own choices when it comes to purchasing
goods.

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India is Wealthy
It can be divided into five major categories as follows:
The wealthy
These are well-heeled, upwardly mobile people. Some of them fall in category of Double
Income No Kids (DINK) households. They spend a lot on leisure and entertainment. They
desire to achieve super-rich status.

The Super wealthy

The Super Rich primarily consists of professionals who are devoted to consumerism.
They buy many durables and are very status oriented. Less number of DINKS here.

The Ultra wealthy

The ultra-rich includes some DINK households of middle-level executives. Some are first
generation entrepreneurs; some are rich farmers, who have been rich for a long time.

The Sheer wealthy

Joint families as well as nuclear families fall in this category. Own several cars and
houses. They aspire for social status and power.

The obscenely wealthy Some of them are first-generation entrepreneurs, some are
techies. They may be equal to the rich from the developed countries.

22
Rural Consumer

More than half of India’s population resides in rural hinterlands. And with evolving
middle-class, especially in the urban cities, there is a natural spill-over effect in the rural
areas as well.

The Indian rural market is apparently growing at 3-4% per annum, thereby adding more
than 1 million new consumers every year. Today it accounts for nearly 50% of the volume
consumption of fast-moving consumer goods (FMCG) in India.

Increasing knowledge of Indian Consumers

Rise in literacy rates and exposure to the west, satellite television, newspapers, foreign
magazines and newspapers have all led to the phenomenal rise of Indian consumer.
Today, more and more of Indian consumers have become choosy and demand quality
products at competitive prices. They prefer to purchase from renowned retail stores,
where accountability is evident and feedbacks are given prominence.

Marketing Strategies

E-commerce or On-line marketing

A study carried out by the Confederation of Indian Industry (CII) and the International
Trade Centre reveals that e-commerce activity in India will rise from US$ 0.10 million in
2000-01 to US$ 5.8 billion in 2005-06.

Star Power
In India, all big brands try to rope in big stars to promote their brands. Known as brand
ambassadors, these stars are said to lend personality to their products thereby building a
perpetual presence on the minds of the consumers, and with the visual media gaining
more popularity, the number of celebrities being employed in the TV media has also

23
increased like never before. Celebrities help create hot-selling headlines. Their activities
and movements are closely monitored. Whatever they endorse are picked up by the
common masses with consummate ease. So using celebrities in advertisements has
become common place. Indians love their heroes and heroines. So if a consumer finds
their lovable celebrity endorsing a particular brand, it becomes easier for them to relate to
the product and therefore will have more optimistic feelings towards the advertisement
and the brand in itself.

Quality Oriented Outlets

Indian consumers have a tendency to choose branded products that are pretty expensive,
because they feel that branded products are quality driven. While buying products, that
are not brand driven, they opt for retail outlets, because they feel that retail stores offer
quality products.

Freebies
Discounts and freebies is what attract the Indian consumer. TVs, washing machines,
refrigerators, and ready made clothes are few of the product categories in which freebies
are available. Even tooth paste, soaps, detergent, cooking oil etc. comprise of freebies. So
foreign companies planning to gain foothold in India should especially consider giving
freebies for the purchases made by the Indian consumer. Working with a local business
partner will give further insights on such promotion campaigns.

Eco-Friendly Products
Eco-friendly products seem to be the new mantra of the Indians. Indians in the future are
likely to get attracted to environment-friendly products and packages.
So, the master key for marketing could be choosing ecological responsible products and
packaging, which will be convenient for consumers, thus, complementing environmental
concerns with commercial considerations.

Changing Patterns in Indian Consumer Behavior

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Changing times have been influencing the lifestyles and the buying behavior of Indian
consumers. And with rise in salaries and increase in working urbanities, the changes in
patterns have become much more evident.

Bulk buying
The working class is more interested in fast and ready-to-serve food, rather than home-
cooked food, as they want to save themselves from the troubles of cooking and cleaning.

Bulk Purchasing seems to be the order of the day, with purchasing becoming a week-end
affair. No more fleeting visits to neighborhood stores on day to day basis. The current
trend is buy things from hyper stores and super markets.

Stylish Lifestyles
There seems to be heavy western influence on urban middle and upper class Indians.
There is a positive attitude with regards to western trends. Moreover, the Indian
consumers are much more flexible and experimental in their approaches. And via media
and Indian’s working broad, this has been spiraling growth in western trends. Increasing
number of beauty parlors in the city, eateries, designer wear, watches, hi-tech products are
a few examples which mirror these changes.

Seller’s Market Paving Way for Buyer’s market.

The seller market is slowing giving way to the buyer’s market. With economic
liberalization initiated in 1991, new products have made way into the Indian markets,
thereby increasing the product varieties. Import licensing restrictions have been abolished,
and as a result an assortment of consumer goods has been flooding Indian markets.

Indian consumers have always longed for foreign goods and with open-market policies
being practiced by the government, their longings has apparently reached a fruitful end.

25
Top class, middle class and lower class are primarily the three classes in India and each
class has its own consumption pattern.

Foreign companies planning to establish base in India should focus on capturing the
substantial middle class market having substantial disposable income

Growth Prospects

With the presence of 12.2% of the world population in the villages of India, the Indian
rural FMCG market is something no one can overlook. Increased focus on farm sector
will boost rural incomes, hence providing better growth prospects to the FMCG
companies. Better infrastructure facilities will improve their supply chain. FMCG sector
is also likely to benefit from growing demand in the market. Because of the low per capita
consumption for almost all the products in the country, FMCG companies have immense
possibilities for growth. And if the companies are able to change the mindset of the
consumers, i.e. if they are able to take the consumers to branded products and offer new
generation products, they would be able to generate higher growth in the near future. It is
expected that the rural income will rise in 2007, boosting purchasing power in the

26
countryside. However, the demand in urban areas would be the key growth driver over the
long term. Also, increase in the urban population, along with increase in income levels
and the availability of new categories, would help the urban areas maintain their position
in terms of consumption. At present, urban India accounts for 66% of total FMCG
consumption, with rural India accounting for the remaining 34%. However, rural India
accounts for more than 40% consumption in major FMCG categories such as personal
care, fabric care, and hot beverages. In urban areas, home and personal care category,
including skin care, household care and feminine hygiene, will keep growing at relatively
attractive rates. Within the foods segment, it is estimated that processed foods, bakery,
and dairy are long-term growth categories in both rural and urban areas.

Indian Competitiveness and Comparison with the

World Markets:

The following factors make India a competitive player in FMCG sector:

1. Availability of raw materials

Because of the diverse agro-climatic conditions in India, there is a large raw material base
suitable for food processing industries. India is the largest producer of livestock, milk,
sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat
and fruits &vegetables. India also produces caustic soda and soda ash, which are required

27
for the production of soaps and detergents. The availability of these raw materials gives
India the location advantage.

2. Labor cost comparison

Low cost labor gives India a competitive advantage. India's labor cost is amongst the
lowest in the world, after China & Indonesia. Low labor costs give the advantage of low
cost of production. Many MNC's have established their plants in India to outsource for
domestic and export markets.

3. Presence across value chain

Indian companies have their presence across the value chain of FMCG sector, right from
the supply of raw materials to packaged goods in the food-processing sector. This brings

28
India a more cost competitive advantage. For example, Amul supplies milk as well as
dairy products like cheese, butter, etc.

Review of Literature

Rural market is one of the best opportunities for the FMCG sector. In
some sense we can say that rural market is future of FMCG.
1. Basu Purba (2004), suggested that the lifestyle of rural consumers is changing. Rural
Indian market and the marketing strategy have become the latest marketing buzzword for
most of the FMCG majors. She added the strategies of different FMCG companies for
capturing rural market like Titan’s Sonata watches, Coco Cola’s 200ml bottle, different
strategies of HUL and Marico etc. She takes into consideration the study of National

29
Council for Applied Economic Research (NCAER). According to the NCAER
projections, the number of middle and high-income households in rural area is expected to
grow from 140 million to 190 million by 2007. In urban India, the same is expected to
grow from 65 million to 79 million. Thus, the absolute size of rural India is expected to be
double that of urban India.

2. Tognatta Pradeep (2003), suggested that, the economic growth in India's agricultural
sector in last year was over 10%, compared with 8.5% in the industrial sector. This
implies a huge market potentiality for the marketer to meet up increasing demand. Factors
such as village psyche, strong distribution network and market awareness are few
prerequisites for making a dent in the rural markets. The model is of the stolid Anglo-
Dutch conglomerate Unilever Group, which has enjoyed a century-long presence in India
through its subsidiary Hindustan Lever Ltd. It was Hindustan Lever that several years ago
popularized the idea of selling its products in tiny packages. Its sachets of detergent and
shampoo are in great demand in Indian villages. Britannia with its low priced Tiger brand
biscuits has become some of the success story in rural marketing.

3. Aithal, K Rajesh (2004), suggested that rural markets are an important and growing
market for most products and services including telecom. The characteristics of the
market in terms of low and spread out population and limited purchasing power make it a
difficult market to capture. The Bottom of the pyramid marketing strategies and the 4 A's
model of Availability, Affordability, Acceptability and Awareness provide us with a
means of developing appropriate strategies to tackle the marketing issues for marketing
telecom services in rural areas. Successful cases like the Grameen Phone in Bangladesh
and Smart Communications Inc in Philippines also provide us with some guidelines to
tackling the issue.

As per my concern of the research, it is a detail study of different FMCG

products used by rural consumers. It will provide detail information about consumer
preferences towards a good number of FMCG products which is too unique and different
from those above researches.

30
 Research objectives

• To understand the demand pattern of FMCG products in the rural market.

• To know the amount of household income spent on the consumption of FMCG

products.

• To study the factors influencing consumer buying decision of FMCG products

31
 • To identify whether the price of the product have any influence on the consumer
buying behavior

• To study the association with brand name of the company and the consumer
buying behavior

• To study the influence of the family/friends opinions on the consumer behavior

• To study the effect of previous experience about the product on the consumers
purchase decision.

Research methodology

Data collection

Sample unit:

1. working people (including men & women)

2. college students
3. school students

32
 4. senior citizens

Sample size:

1. working people: 32%

2. college students: 29%
3. school students: 23%
4. senior citizens: 16%

Sampling procedure:

The researcher will take stratified random sampling as the sampling procedure.

Data collection method:

1. Primary data: it will be collected with the help of a self administered

questionnaire. This questionnaire aims to gather information related to various
Branded products.

33
 2. Secondary data: it will be collected with the help of books, research papers,
magazines, news papers, journals, internet, etc.

Research instruments:

Questionnaire design:

As the questionnaire is self administrated one, the survey is kept simple and user friendly.
Words used in questionnaire are readily understandable to all respondent. Also technical
jargons are avoided to ensure that there is no confusion for respondents.

Panoramic View

India has a population of over 1 billion & 4 climatic Zones. Several religious & personal
beliefs, 15 languages, different social customs & food habits categorize Indian consumer
class. Besides this, India is also different in culture if compared with other Asian
countries. Therefore, India has high distinctiveness in demand and the companies in India
can get lot of market opportunities for various classes of consumers. Consumer goods
marketers’ experience that dealing with India is like dealing with many small markets at
the same time.

34
Indian consumer goods market is expected to reach $400 billion by 2010. India has the
youngest population amongst the major countries. There are a lot of young people in India
in different income categories.

Consumer goods marketers are often faced with a dilemma regarding the choice of
appropriate market segment.

In India they do not have to face this dilemma largely because rapid urbanization, increase
in demand, presence of large number of young population, any number of opportunities is
available. The bottom line is that Indian market is changing rapidly and is showing
unprecedented consumer business opportunity.

As the restrictions on foreign investments were relaxed in 1991, Multi-National

Companies have been entering India since then.

Market Size in $
Market Share in %
million
Indian Indian
15 MNCs MNCs
Companies Companies
1992 2004 1992 2004
Breakfast
2 25 100 0 52 48
cereals
Wafers,
potato 6 35 100 0 37 63
chips
Washing 40 570 98 2 51 49

35
 Machines
TV 630 3,030 97 3 49 51

1992 $=30 rupees

2004 $=45 rupees
Source: Center for Monitoring Indian Economy (CMIE)

With a population of 1 billion people, India is a big market for FMCG

companies. Around 70% of the total households in India reside in the rural areas. The
total number of rural households is expected to rise from 135 m in 2002 to 153 m in 2010,
which represents the largest potential market in the world.

Rural and urban potential

Urban Rural
Population 2001-02 (m household) 53 135
Population 2009-10 (m household) 69 153
% Distribution (2001-02) 28 72
Market (Towns/Villages) 3,768 627,000

Source: Statistical Outline of India (2001-02), NCAER

Indian consumer class can be classified according to the following criteria:
1. Income
2. Socio-Economic status
3. Age demographics
4. Geographical dispersion

36
 Income based classification

India has a population of 1.095 billion people, comprising of 1/6th of the

world population. India's population can be divided into 5 groups on the basis of annual
household income. These groups are:

1. Higher income
2. Upper middle income
3. Middle middle income
4. Lower middle income
5. Lower income

The income classification does not represent a real scenario for an international
business because the purchasing power of currencies differs significantly. The real
purchasing power of Indian rupee is higher than the international exchange value.

37
 In addition to that, income classification is not an effective tool to ascertain
consumption and ownership trends in the economy.

Consumer Classification
According to National Council of Applied Economic Research (NCAER) there are 5
consumer classes that differ in their ownership patterns and consumption behavior across
various segments of goods.

Annual Income in
Consumer Classes 1996 2001 2007 Change
Rs.
Rs. 215,000 and
The Rich 1.2 2.0 6.2 416%
more
The Consuming
Rs 45- 215,000 32.5 54.6 90.9 179%
Class
The Climbers Rs. 22-45,000 54.1 71.6 74.1 37%
The Aspirants Rs. 16-22,000 44 28.1 15.3 -65%
The Destitute Below Rs. 16,000 33 23.4 12.8 -61%
Total 164.8 180.7 199.2 21%

Source: NCAER

38
 The 5 classes of consumer households (consumer classification) show the
economic development across the country based on consumption trends.

Socio economic classification

In addition to income classification and consumer classification, Indian households can

also be segmented according to the occupation and education levels of the chief earner of
the household (the person who contributes most to the household expenses). This is called
as Socio-economic Classification (SEC), which is mainly used by market planners to
target market before launching their new products. SEC is made to understand the
purchase behavior and the consumption pattern of the households.
The urban area is segregated into: A1, A2, B1, B2, C, D, E1, E2

39
Socio-Economic Classification

Occupation Education
Less
5-9 yrs
than 4 School Some Post-
Illiterate of Graduate
yrs in certificate college graduate
school
school
Skilled E2 E1 D C C B2 B2
Unskilled E2 E2 E1 D D D D
Shop owner D D C B2 B2 A2 A2
Petty trader E2 D D C C B2 B2
Employer of-
Above 10
B1 B1 A2 A2 A1 A1 A1
persons
Below 10
C B2 B2 B1 A2 A1 A1
persons
None D C B2 B1 A2 A1 A1
Clerk D D D C B2 B1 B1

40
 Supervisor D D C C B2 B1 A2
Professional D D D B2 B1 A2 A1
Senior
B1 B1 B1 B1 A2 A1 A1
executive
Junior
C C C B2 B1 A2 A2
executive

Source: Indian readership survey (IRS)

Sections A & B refer to High-class- constitutes over a quarter of urban population
Sec C refers to Middle-class-- constitutes 21% of the urban population
Sections D & E refer to Low-class-- constitutes over half the urban
population

To understand the table, consider an example: A trader whose monthly household income
(MHI) is more than that of a person in section A cannot be included in this SEC because
his educational qualification or occupations do not qualify him for inclusion.

Sec C constitutes households whose Chief Wage Earners are employed as:

Skilled workers 33%

Petty traders 12%
Clerk/Supervisor 37%
Shop owners 18%

3/4th of them have studied till 10th or 12th class while the remaining 1/4th have studied
till 9th class.
Less than half of the Chief Wage Earners of households belonging to sections D & E are
unskilled workers. Petty Traders are 18%, while Skilled Workers are about 28%.

41
 More than 80% of the population of upper strata consumers is living in the top 7
cities. Those top 7 cities are Mumbai, Kolkata, Delhi, Chennai, Ahmedabad, Bangalore,
and Hyderabad. With increase in economic prosperity, this population (upper strata
consumers) is growing at 10 percent annually.

The rural area is segregated in to: R1, R2, R3, R4.

Education of
chief wage Type of House
earner
Pucca Semi-pucca Kuchcha
Professional
R1 R2 R3
degree
Graduation/ PG R1 R2 R3
College R1 R2 R3
SSC/HSC R2 R3 R3
Class 4-Class 9 R3 R3 R4
Up to class 4 R3 R3 R4
Self-learning R3 R4 R4
Illiterate R4 R4 R4

42
 Age demographics

India is a very young nation, if compared with some advanced and

developed countries. Nearly two- thirds of its population is below the age of 35, and
nearly 50 % is below 25.
Marketers explain that the boom in the consumption level and leisure related expenditure
is because of this young population. It will have a significant impact over the consumer
goods market. In addition to that, it is expected that this will generate trade opportunities
and continuous investment in the economy. There is huge potential for further
consumption of goods and services due to the increased level of disposable income. The
expenditure on essential goods and services has a higher share in developing countries as
compared with that of developed countries.
Age distribution if Indian population (In Millions)

Year/ Age 2006 2001 1996

Below 4 yrs 113.5 108.5 119.5
5-14 yrs 221.2 239.1 233.2
15-19 yrs 122.4 109.0 90.7
20-34 yrs 279.1 246.8 224
35-54 yrs 239.2 207.3 178.1
55 & above 118.7 101.7 88.7
Total 1094.1 1012.4 934.2

Consumption Trends

43
 Food Essentials 45.68%
Essential Services (water, power, rent,
10.1%
and fuels)
Clothing 4.9%
Footwear 0.63%
Medicare 4.25%
Transport & Communication 14.51%
Recreation, Education, and Culture Less than 4%
Home Goods 3.25%

Geographical dispersion

There is large difference in economic prosperity levels among several states in India,
linked to the wealth creation from trade, industrial, and agricultural development. There
are poor districts in many states, classified according to their market potential. India has
500 districts, out of which 150 districts (category A) and next 150 districts (category B)
account for 78% and 15% of the national market potential respectively. Remaining 200
districts (category C) are backward and account for only 7% of national market potential.
Category C districts have 40% of the geographical share.

Analysis

1. Which soap do you prefer to use?

44
 The reaction of people towards various SOAP brands can be tabulated in the
following manner:

Brands Lux Dettol Cinthol Others

Percentage 36 22 15 27

In the survey, it can easily be concluded that LUX, the product of HUL is highly in
demand and it covers 36% of the market share. DETTOL, the product of RECKITT
BENCKISER with a market share of 22%, which is then followed by LIFEBUOY, the
product of HUL with a market share of 18% .Other brands like P & G and ITC covers a
market share of 24%
This data can be graphically explained with the help of the following bar graph:

Demand of soap brands

40
35
30
25
percentage 20
15
10
5
0
Lux Dettol Cinthol Others
brands

2. Which pack of soap do you prefer to have?

In order to determine the income pattern of the consumers, it was necessary for the to
distribute the consumers on the basis of their demand for the various packs of SOAP
brands available in the market.

45
However, the reaction of people towards various packs of SOAP can be tabulated in
the following manner:
Packs of soaps Single pack Family pack (3 in 1)
Percentage 56 44

In the survey that the researcher conducted, she tried to differentiate amongst people,
with below average household income, average household income & above household
income. This classification can be done on the basis of the daily expenditure that people
make. 56% consumers demand single pack. 44% consumers demand family packs i.e. 3 in
1 pack.
This data can be graphically explained with the help of the following bar graph:

Demand of packs of soap

60
50
40
pe rcentage 30
Single pack
20
Family pack (3 in 1)
10
0
Single pack Family pack (3 in
1)
packs preferred by customers

3. Which tea do you prefer to consume?

The response of people towards various TEA brands can be tabulated in the following
manner:

46
 Brands Tata Tea Brooke Bond Taj Mahal Others
Percentage 32 28 18 22

This data can be graphically explained with the help of the following bar graph:

Demand of tea brands

35
30
25
20
percentage
15
10
5
0
Tata Tea Brooke Bond Taj Mahal Others
brands

Here, it could easily be concluded that TATA TEA, the product of TATA has a market
share of 32%. This is followed by, BROOKE BOND, with a market share of 28%.
Followed by other brands (EXCEPT TATA TEA, BROOKE BOND, TAJ MAHAL) with
a market share of 22%. TAJ MAHAL, the product of HUL which holds18% of the market
share

4. Which pack of tea do you prefer to use?

The reaction of people towards various TEA packs can be tabulated in the following
manner:

TEA packs Sachet Medium pack Large pack

47
 Percentage 48 32 20

This data can be graphically explained with the help of the following diagram:

Demand of tea packs

50
45
40
35
30
percentage 25
20
15
10
5
0
Sachet Medium pack Large pack
packs preferred by customers

In the survey it is important to differentiate amongst the people, with below average
household income, average household income & above household income. This
classification can be done on the basis of the daily expenditure that people make.
However, it can be concluded that sachets are most commonly used by the people .i.e.,
48% consumers demand sachet packs. 32% consumers demand medium pack.20%
consumers demand large pack.

5. Which tooth paste do you prefer to buy?

In the initial years, the rural consumers preferred tooth powders, datoons etc. But from
the last decade, the preference of consumers towards toothpaste has been changed. A huge
number of toothpastes of different companies are sold in rural market.
However, the reaction of people towards various TOOTH PASTES can be tabulated as
follows:

48
 Brands Pepsodent Colgate Close Up Others
Percentage 27 35 22 16

This data can be graphically explained with the help of the following bar graph:

Demand of toothpaste

35
30
25
20
percentage
15
10
5
0
Pepsodent Colgate Close Up Others
brands

It can easily be concluded that COLGATE, the product of COLGATE PALMOLIVE is

the market leader, which covers 35% of the total market. After that, PEPSODENT, the
product of HUL is demanded by the customers, which covers 27% of the market share.
Followed by CLOSE – UP, the product of HUL is demanded by the customers, which
covers 22% of the market share. Which is then followed by others brands (EXCEPT
PEPSODENT, COLGATE, CLOSE - UP), which covers 16% of the total market share

6. Which pack of toothpaste do you like to use?

The response of people towards various TOOTH PASTE packs can be tabulated in the
following manner:

Tooth paste pack Small pack Medium pack Family pack

Percentage 34 48 18

49
 This data can be graphically explained with the help of the following graph:

D e m a n d o f p a c k s o f to o th p a s te

50
45
40
35
30
p e r c e n ta2g5e
20
15
10
5
0
S m a ll p a c k M e d iu m p a c kF a m ily p a c k
p a c k s p r e fe r r e d b y c u sto m e r s

7. Which detergent do you prefer to buy?

The response of people towards various DETERGENT brands can be tabulated in the
following manner:

Brands Surf Ariel Tide Others

Percentage 30 25 27 18

50
It can be concluded that surf, the product of HUL captures 30%. ARIEL, the product of P
& G which has a market share of 25%. This is followed by TIDE, the product of
PROCTER & GAMBLE which has a market share of 27%. This is finally followed by
other brands (except surf, Ariel, tide) which capture 16% of the market share.

This data can be graphically explained with the help of the following bar graph:

D em a n d o f d e terg e n ts p o w d e r

30

25

20

p e rce n ta g e15

10

0
S urf A riel Tide O thers
b ra n d s

8. Which pack of the above detergent do you prefer to buy?

The response of people towards various DETERGENT packs can be tabulated in the
following manner:
Detergent packs Sachet Medium pack Family pack
Percentage 20 50 30

This data can be graphically explained with the help of the following bar graph:

51
 D e m a n d s o f p a c k s o fd e te r g e n t p o w d e r s

50
45
40
35
30
p e r c e n ta2g5 e
20
15
10
5
0
S achet M e d iu m p a c kF a m ily p a c k
p a c k s p r e fe r r e d b y c u sto m e r s

9. Which shampoo do you prefer to buy?

The reaction of people towards various SHAMPOO brands can be tabulated in the
following manner:

Head &
Brands All Clear Sunsilk Others
shoulders
Percentage 33 25 28 14

In the survey, it can easily be concluded that All clear, the product of HUL, captures the
major portion of the market with a market share of 33%. This is followed by HEAD &

52
SHOULDERS, the product of PROCTER & GAMBLE which holds 28% of the market
share. This is followed by SUNSILK, the product of HUL which holds 25% of the market
share. Other brands (EXCEPT clinic plus, sunsilk, head & shoulders) with a market share
of 14%.

This data can be graphically explained with the help of the following bar graph:

Percentage

35

30

25

20 All Clear
Sunsilk
15
Head & shoulders
10 Others

0
All Clear Sunsilk Head & Others
shoulders

10. Which pack of the above shampoo do you use?

The response of people towards various SHAMPOO packs can be tabulated in the
following manner:
Shampoo
Sachet Small pack Medium pack Family pack
packs
Percentage 23 32 28 17

This survey is conducted to differentiate amongst the people, with below average
household income, average household income & above household income. This
classification can be done on the basis of the daily expenditure that people make.

53
However, 32% consumers demand SMALL PACK. 28% consumers demand medium
pack. 17% consumers demand large packs.
This data can be graphically explained with the help of the following bar graph:

Demand of packs of Shampoo

35
30
25
20
percentage
15
10
5
0
Sachet Small pack Medium pack Family pack
packs preferred by customers

11. Which biscuit brand does u prefer to have?

The reaction of people towards various BISCUITS brands can be tabulated in the
following manner:

Brands Britania Bisk Firm Parle Others

Percentage 42 25 21 12

This data can be graphically explained with the help of the following bar graph:

54
 D e m a n d s o f b is c u its

45
40
35
30
25
p e r c e n ta g e
20
15
10
5
0
B rita n ia B is k F irm P a rle O t h e rs
b ra n d s

This can easily be concluded BRITANNIA holds a major market share of 42%. This is
followed by Bisk Firm which holds 25% of the market share. After that, PARLE it holds
21% of the market share. And other brand holds a market share of 17%.

12. Which hair oil u prefers to use?

The response of people towards various HAIR OIL brands can be tabulated in the
following manner:

Brands Parachute Dabur Amla Dabur Vatika Others

Percentage 37 29 19 15

In this survey it can easily be concluded that PARACHUTE, the product of MARICO
captures 37% of the total market share. This is followed by DABUR AMLA, the product

55
of DABUR which captures 29% of the total market share. This is followed by DABUR
VATIKA, another product of DABUR which captures 19% of the market. Rest captures
15% of the market share.
This data can be graphically explained with the help of the following bar graph:

Demand of hair oil

40
35
30
25
pe rce nta ge 20
15
10
5
0
P arachute Dabur Amla Dabur Vatika Others
Bra nds

13. Which packs of hair oil u prefer to use?

The reaction of people towards various HAIR OIL packs can be tabulated in the following
manner:
Hair oil packs Small pack Medium pack Large pack
Percentage 32 41 27

This is conducted to differentiate amongst the people, with below average household
income, average household income & above household income. This classification can be

56
done on the basis of the daily expenditure that people make. However, 41% consumers
demand medium packs. After that, 32% consumers demand small pack. 27% consumers
demand large packs.
This data can be graphically explained with the help of the following bar graph:

D e m a n d o f p a c k s o f h a ir o il

45
40
35
30
25
p e rc e n ta g e
20
15
10
5
0
S m a ll p a c k M e d iu m p a c k L a rg e p a c k
p a c k s p re fe rre d b y c u sto m e r

14. Which cream u prefers to use?

The response of people towards various cream brands can be tabulated in the following
manner:
Brands Pond’s Fair & lovely L’Oreal Others
Percentage 28 32 14 26

In this survey, it can easily be concluded that fair & lovely, the product of HUL, holds
the major market share of 32%. This is followed by, Pond’s, another product of HUL,
which holds 28% of the market share. Other brands capture 26% of the market share.
L’Oreal holds 14% of the total market share. L’Oreal products are usually costly so low

57
income segments can not prefer the product thus its market share is less than compared to
others brands.
This data can be graphically explained with the help of the following bar graph:

D em an d s o f cream s

35
30
25
20 P ond’s
pe rce n ta ge
15 F air & lovely
10 L’O real
5 O thers
0
P ond’s Fair & L’O real O thers
lovely
Bra nd s

15. Which coffee u prefers to use?

The response of people towards various COFFEE brands can be tabulated in the following
manner:

Brands Bru Sunrise Nescafe Others

Percentage 26 30 32 12

In the survey, it can be easily concluded that all the brands are facing tough competition.
SUNRISE, the product of NESTLE S.A. & NESCAFE, another product of NESTLE S.A.,

58
almost shares equal market shares of 30% and 32% respectively. This means that they are
in a very tough competition. This is followed by BRU, the product of HUL which holds,
26% of the market share. While the other brands hold only 10% of the market share.
This data can be graphically explained with the help of the following bar graph:

Demand of Coffee

35
30
25
20
percentage
15
10
5
0
Bru Sunrise Nescafe
brands

Conclusions

In this report, it can very easily be concluded that HUL, holds major portion of the FMCG
market. It holds major market shares in the soap, detergent, shampoo & cream’s category.
HUL products are mainly in demand, because they provide these products in different
packs. They consider the fact that rural consumers do not have that much money to be
spent on these products. So, they prefer buying the small or the medium packs. However,
large or family packs are still been bought by few consumers, who are from a well – off
families.

59
In the case of TEA, TATA holds a major share. In the case of COFFEE, NESTLE &
NESCAFE holds the major share. Rural consumers favor TATA because it is an old
organization & it has gained a lot of BRAND EQUITY which finally creates BRAND
LOYALTY. In these products, consumers do get brand loyal, because they do not want to
take a risk with their tastes. So they prefer sticking to one brand. These organizations
supply their products in various packs (small, medium & large), considering the buying
capacity of their consumer

As in the case of BISCUITS, BRITANNIA holds the major market share. Rural
consumers favor BRITANNIA because it is an old organization & it has gained a lot of
BRAND EQUITY which finally creates BRAND LOYALTY. In case of BISCUITS,
consumers do get brand loyal, because they do not want to take a risk with their tastes. So
they prefer sticking to one brand. These organizations supply their products in various
packs (small, medium & large), considering the buying capacity of their consumers.

In the case of TOOTH PASTES, COLGATE PALMOLIVE holds a major market share.
Consumers are concerned about their health, so if any product suits them they prefer
sticking to that product. And this product is also available in various packs, so rural
consumers can use it according to their buying capacity.

In the case of HAIR OILS, MARICO holds the major market share. MARICO is a much
known organization & its product PARACHUTE has reached all the places. So it is a
known product, which has created a good amount of goodwill for the organization.
Consumers have confidence & trust in their product. Therefore, they prefer buying it.

Suggestions & recommendations

1. However, the demand of a product is also affected by its life cycle. If the product
is in the introduction stage, then it will definitely take some time to capture the
market, because in the introduction stage, consumers are not much aware about

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 the product. Therefore, it’s the responsibility of the organization to create
awareness amongst the consumers.
2. Should try to connect customers to rigorous marketing strategies, in order to
sustain in the market by print and television advertisement and this is the
important factor in influencing buying decision.
3. There is immense competition in this sector. Therefore, the organizations should
try to gain competitive advantage against their competitor’s.
4. Application of 4A’s (Availability, Affordability, Acceptability, Awareness) has
also become an important task for all the organizations.
5. Efforts should be made to use distribution channel more effectively to reach the
deeper pockets of rural market. The availability of product is very important as
rural consumers are not loyal to one brand.
6. Efforts should be made to increase the distribution networks (retail outlets)
7. It is important while marketing to rural consumers that positioning of FMGC have
to connect with the rural consumers’ social status appreciation; it should give them
psychological satisfaction and should motivate them to continue with same brand.
8. While planning for rural market company should plan considering factors of
buying decision like life style, buying capacity of the buyer as they try different
products as suggested by peers and neighbors and others

References

• Kearney, A T, CII – Report, (2000)

• Purba basu, research on living style of rural consumers,

• Tognatta Pradeep, economic growth on agriculture sector

• Aithal K Rajesh, importance & growth of rural markets

• Center for Monitoring Indian Economy (CMIE)

• Statistical Outline of India (2001-02), NCAER

• National Council of Applied Economic Research (NCAER)

• Indian readership survey (IRS)

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• http://www.naukrihub.com/india/fmcg/overview/

• http://www.naukrihub.com/india/fmcg/

• http://www.naukrihub.com/india/fmcg/consumer-class/

• http://www.naukrihub.com/india/fmcg/consumer- class/income/

• http://www.naukrihub.com/india/fmcg/consumer-class/socio-economic/

• http://www.naukrihub.com/india/fmcg/consumer-class/age/

• http://www.naukrihub.com/india/fmcg/consumer-class/geography/

• http://en.wikipedia.org/wiki/Fast_moving_consumer_goods

Questionnaire

Name:
Occupation:
Monthly salary:
Less than 10,000
10,000 – 25,000
25,000 – 50,000
More than 50,000
Address:

62
 Contact no.:
1 Which soap do you prefer to use?
a. Lux
b. Dettol
c. Cinthol
d. Others
2 Which pack of soap do you prefer to have?
a. single
b. family pack ( 3 in 1)
3 Which tea do you prefer to consume?
a. Tata tea
b. Brooke bond
c. Taj mahal
d. Others
4 Which pack of tea do you prefer to use?
a. Sachet
b. Medium pack
c. Large pack

5 Which tooth paste do you prefer to buy?

a. Pepsodent
b. Colgate
c. Close – up
d. Others
6 Which pack of toothpaste do you like to use?
a. small pack
b. medium pack
c. family pack
7 Which detergent do you prefer to buy?
a. Surf
b. Ariel

63
 c. Tide
d. Others
8 Which pack of the above detergent do you prefer to buy?
a. Sachet
b. Medium pack
c. Large pack
9 Which shampoo do you prefer to buy?
a. L’Oreal
b. Sunsilk
c. Head & Shoulders
d. Others
10 Which pack of the above shampoo do you use?
a. Sachet
b. Small pack
c. Medium pack
d. Large pack

11 Which biscuit brand does u prefer to have?

a. Britania
b. Biskfirm
c. Parle
d. others
12 Which hair oil does u prefer to use?
a. Parachute
b. Dabur amla
c. Dabur vatika
d. Hair & Care
e. others
13 Which pack of hair oil does u prefer to use?
a. Small pack
b. Medium pack

64
 c. Large pack
14 Which cream does u prefer to use?
a. Ponds
b. Fair & lovely
c. L’Oreal
d. Others
15 Which coffee does u prefer to have?
a. Bru
b. Sunrise
c. Nescafe
d. others

65
Respondents

Sr. no. Name of the Customer Age Occupation

1 Shiv Kumar Sharma 52 Service

2 Akash Mity 35 Business
3 Sunita Das 32 House wife
4 Priyanka Das 23 Student
5 Rishita Das 23 Student
6 Mukul Verma 40 Service
7 Anil kumar 70 Retired
8 Isha Roy 23 Student
9 Ishita Dutta 23 Student
10 Sanju Sharma 55 Business
11 Pamela paul 34 Teacher
12 Akhil mohan 16 Student
13 Priyanka joshi 28 Housewife
14 Neha Ghai 26 Teacher
15 Annu 24 Service
15 Mr. Daljeet Singh 45 Business
16 Mr. C.P. Singh 27 Worker
17 Mr. Vikash Rawat 29 Supervisor

18 Mr. Sunil Kataria 30 Worker

19 Mr. Ravi Kishan 27 Farmer
20 Mr. A. S. Rao 29 Service
21 Mr. Gautam Kumar 20 Farmer

22 Mr. Gopal Modal 17 Fisherman

23 Mr. Hari Ram 40 Worker
24 Mrs Soma Nandi 50 House wife
25 Mrs. Sneha Dutta 22 House wife

Survey Form

Name:
Occupation:
Monthly salary:
Less than 10,000

66
 10,000 – 25,000
25,000 – 50,000
More than 50,000
Address:
Contact no.:
1. Which soap do you prefer to use?
a. Lux
b. Dettol
c. Cinthol
d. Others
2. Which pack of soap do you prefer to have?
a. single
b. family pack ( 3 in 1)
3. Which tea do you prefer to consume?
a. Tata tea
b. Brooke bond
c. Taj mahal
d. Others
4. Which pack of tea do you prefer to use?
a. Sachet
b. Medium pack
c. Large pack

5. Which tooth paste do you prefer to buy?

a. Pepsodent
b. Colgate
c. Close – up
d. Others
6. Which pack of toothpaste do you like to use?

67
 a. small pack
b. medium pack
c. family pack
7. Which detergent do you prefer to buy?
a. Surf
b. Ariel
c. Tide
d. Others
8. Which pack of the above detergent do you prefer to buy?
a. Sachet
b. Medium pack
c. Large pack
9. Which shampoo do you prefer to buy?
a. All Clear
b. Sunsilk
c. Head & Shoulders
d. Others
10. Which pack of the above shampoo do you use?
a. Sachet
b. Small pack
c. Medium pack
d. Large pack

11. Which biscuit brand does u prefer to have?

a. Britania
b. Biskfirm
c. Parle
d. others
12. Which hair oil does u prefer to use?

68
 a. Parachute
b. Dabur amla
c. Dabur vatika
d. Hair & Care
e. others
13. Which pack of hair oil does u prefer to use?
a. Small pack
b. Medium pack
c. Large pack
14. Which cream does u prefer to use?
a. Ponds
b. Fair & lovely
c. L’Oreal
d. Others
15. Which coffee does u prefer to have?
a. Bru
b. Nestle
c. Nescafe
d. others

69