Fmcg in Indian Retail Industry

8/3/2019 Fmcg in Indian Retail Industry

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Products which have a quick turnover, andrelatively low cost are known as Fast MovingConsumer Goods (FMCG). FMCG products arethose that get replaced within a year.



FMCG generally include a wide range of frequently purchased consumer productssuch as toiletries, soap, cosmetics, toothcleaning products, shaving products and

detergents, as well as other non-durablessuch as glassware, bulbs, batteries, paperproducts, and plastic goods.



FMCG may also include pharmaceuticals;consumer electronics, packaged foodproducts, soft drinks, tissue paper, andchocolate bars. A subset of FMCGs are Fast

Moving Consumer Electronics which includeinnovative electronic products such as mobilephones, MP3 players, digital cameras, GPSSystems and Laptops.



White goods in FMCG refer to householdelectronic items such as Refrigerators, T.Vs,Music Systems, etc.



Characteristics of FMCG in India :Branding, distribution Network, Contractmanufacturing and large unorganized sector.

Branding: Creating strong brands isimportant for FMCG companies and theydevote considerable money and effort indeveloping bands. With differentiation on

functional attributes being difficult to achievein this competitive market, branding resultsin consumer loyalty and sales growth.



Distribution Network: Given the fragmentednature of the Indian retailing industry and theproblems of infrastructure, FMCG companiesneed to develop extensive distribution

networks to achieve a high level of penetration in both the urban and ruralmarkets. Once they are able to create astrong distribution network, it gives themsignificant advantages over their competitors.



Contract Manufacturing: As FMCG companiesconcentrate on brand building, productdevelopment and creating distributionnetworks, they are at the same time

outsourcing their production requirements tothird party manufacturers. Moreover, withseveral items reserved for the small scaleindustry and with these SSI units enjoying taxincentives, the contract manufacturing routehas grown in importance and popularity



Large Unorganized Sector : The unorganisedsector has a presence in most productcategories of the FMCG sector. Smallcompanies from this sector have used their

locational advantages and regional presenceto reach out to remote areas where largeconsumer products have only limitedpresence. Their low cost structure also givesthem an advantage



The Indian FMCG sector is the fourth largestin the economy and has a market size of US$13.1 billion. Well-established distribution

networks, as well as intense competitionbetween the organized and unorganizedsegments are the characteristics of thissector.



It provides customer benefits It is hard for competitors to imitate

It can be leveraged widely to many productsand markets.



From the consumers' perspective:◦ Frequent purchase

◦ Low involvement (little or no effort to choose theitem -- products with strong brand loyalty are

exceptions to this rule)◦ Low price



From the marketers' angle:◦ High volumes

◦ Low contribution margins

◦ Extensive distribution networks

◦ High stock turnover



Hindustan Unilever Ltd.. ITC (Indian Tobacco Company)

Nestlé India

GCMMF (AMUL)

Dabur India

Asian Paints (India)

Cadbury India

Britannia Industries

Procter & Gamble Hygiene and Health Care

Marico Industries



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Fmcg in Indian Retail Industry