FMCG Marketers: Destination for FMCG Marketing

MarkOUT - Detailed Services (Marketing Outsourcing in India)

2010-07-11T14:44:00.002+05:30

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

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

Stages in developing business

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

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

MarkOUT - "Marketing Outsourcing in India"

2010-07-05T22:55:00.004+05:30

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

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

MarkOUT Services
More than BRICKs to make a HOTEL

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

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

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

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

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

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

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

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

Feb '09 Stimulus - FMCG Sector indifferent

2009-02-25T17:59:00.004+05:30

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

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

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

Marketing strategies for fast-moving consumer goods: UK Perspective

2009-02-10T20:47:00.005+05:30

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Impact of Slowdown and Inflation and Changing Strategies in FMCG Sector

2008-12-02T16:23:00.003+05:30

Published on India Infoline on 2nd Dec, 2008

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

Impact on FMCG Sector

Post liberalization, because of the entry of a number of MNCs in India, the FMCG sales went up. But soon between 2000 and 2004, FMCG sector got hit, attributed to agricultural crisis and industrial slowdown. The crisis of declining FMCG markets was also driven by new avenues of expenditure for growing consumer income such as consumer durables, entertainment, mobiles, motorbikes etc. Indian population was all set to experience the new basket of products, but with cut-down on FMCG products. This lead to low share of FMCG spends in the consumer’s wallet.

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

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

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

1. Marginal Slowdown in products with low perceived value

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

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

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

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

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

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

2. Rural FMCG Sales: The growth engine

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

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

Changing Strategies in FMCG Sector

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

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

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

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

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

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

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

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

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

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

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

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

Outcome: FMCG sales & profit unaffected despite mayhem

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

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

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

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

References

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

Corporates using sports events to promote their products

2008-11-28T16:58:00.001+05:30

Whether it’s building brands, driving sales, or launching a new product, corporate brands the world over are always trying to come up with ’new‘ and innovative ways to promote themselves. The use of major sports events is a well-explored avenue with mega sports events such as – English Premier League, Australian Open Tennis Championship, Formula 1, etc, commanding high levels of sponsorship.

Like their counterparts in the west, Indian corporate brands are fast on the heels of using sports events to leverage themselves. While quite a few still embrace the standard marketing initiatives, more corporates are exploring other platforms in the hope of extending visibility. Enter sports. With more sporting events gaining prominence in the Indian sporting calendar there are an increasing number of opportunities for brands to showcase themselves.

The launch of the IPL last year, which saw numerous Indian brands and personalities bidding for players, is a case in point. Vijay Mallya of Kingfisher owning his own Formula1 race team, another example. A more recent example, albeit on a more humble scale, is the Delhi half marathon that happened on November 9th. Gaining prominence in its own right, this event saw various ‘big’ brands take the traditional sponsorship titles route – title sponsors, official aid care provider, refreshments et al. However other corporate brands opted instead to showcase themselves by creating costumes for the 7km Delhi Fun Run race.

Indian quick service restaurant chain Nirula’s used the half marathon as a pre-launch platform for the Nutribyte Burger®, a first of the Nutribyte range of nutrilicious fast food – product child of Nirula’s partnership with US weight management firm Nutritionvista. Tying in, [appropriately] with the spirit of the half marathon, healthy lifestyle through exercise and responsible nutrition, Nirula’s felt it a natural fit to introduce its latest initiative – healthier fast food options for Indian youth (Link)

To view Nirulas pictures of Delhi Half Marathon, please click here.

About Nirula’s:
Nirula’s, a reputed name in the hospitality industry, is a pioneer in the family style restaurant business in India having set up the first outlet in Connaught Circus, New Delhi in 1934. Nirula’s operates restaurants under the brand name Nirula’s, casual dining outlets called Nirula’s Potpourri and two hotels. The Group is present almost in 60 locations across Delhi and NCR, Uttar Pradesh, Uttaranchal, Haryana, Rajasthan, Punjab and Chandigarh. In June 2006, Navis Capital Partners and Managing Director, Samir Kuckreja acquired the Nirula’s Group of Companies. Navis is private equity fund based in Malaysia, which manages US$ 2 billion in capital commitments. Samir Kuckreja is a respected hospitality and retail professional with varied experience in some of the best-known companies in the world.

About Nutrition Vista
Nutrition Vista was founded on the basic premise that for most working adults access to healthy eating and weight management is not only time consuming but also unreliable.
To meet this unmet need, Nutrition Vista offers a convergence of both online and off-line tools built around the services of their well-trained dietitians who are certified by the Indian and/or American Dietetic Associations (IDA, ADA) respectively. A US based company now with an Indian presence, Nutrition Vista brings the latest in health assessments and innovative tools that will help consumers get better guidance, training and support on nutrition and related health issues.

For further information please contact:
Kanika Berry
kberry@perfectrelations.com
+91 9818225569

Indian FMCG Sector Trends - 2008

2008-11-18T11:21:00.000+05:30

In this post i have covered multiple trends happening in the Indian FMCG sector.

1. Focus on Health
Companies are widening their health food portfolio to cash in on the rich, urban, health conscious Indian. In recent we have seen flurry of products in this segment. Have a look of some of them:
1.1) Sugar free Chywanprash
1.2) Organic spices/ pulses
1.3) Multi grain pastas/ Biscuits
1.4) Processed foods particularly juices
1.5) Probiotic Ice Creams
1.6) Butter Lite (Nutralite)
1.7) Corn Flakes/ Oats
1.8) Lays (40% less saturated fats) – Snack Smart
1.9) Low Calorie Sweetners

2. Impact of Inflation: The expenditure of FMCG in the consumer's wallet is coming down year on year. This is leading to low sensitivity with price increases. ALmost a decade back people use to downtrade from expensive brands to value for money ones. But now the trend is changing. Consumer are not switching to cheaper substitutes. Rather companies have come with lower quantity SKUs and make consumers switch from higher to lower SKUs and not from premium to popular brands (like Dove to Lux International). Just to give you an example, Henkel instead of increasing the price of their Henkwl detergent from Rs. 46 to Rs. 50, they have launched a new SKU of 400gms for Rs. 40. During the time of inflation, people shift to sachets of their brands. Sales numbers of FMCG companies are quite robust.
FMCG spend now comprises a smaller share of consumer’s wallet

3. Micro Segmentation/ Niches: Its interesting and funny to see that companies are not leaving any opportunity to micro segment the market. I can forsee that we are here to see further segments in different categories. Here are some examples:
Age
a) Junior Horlicks
b) Junior Chyawanprash
c) Pepsodent Barbie for Kids/ Colgate Strawberry
Sex
a) Women’s Horlicks
b) Male fairness cream
Specialized Household Cleaners
a) Kitchen Cleaner: Mr. Muscle
b) Power Cleaner (Rust): Easy Off Bang

4. Low value SKUs - Sachetization: You name the category it has a sachet !! We all know that it all started in 1980's with shampoos. I think Nano is an interesting example of an automobile sachet. Here is a small list of sachets:
4.1) Shampoos
4.2) Butter (Munna Pack)
4.3) Hair Oils (Navratan – Thanda Thanda Cool Cool)
4.4) Noodles (Chotu Maggi)
4.5) Ketchup (Pichko)
4.6) Toilet Cleaner (Harpic)

5. Jet Age Consumer Products: Becasue of changing lifestyles, busy jobs etc marketers are coming up with Jet Age consumer products.
Ready to Eat
a) Con Flakes/ Oats
b) Pastas
c) Biscuits
d) Noodles
e) Pizzas
f) Burgers
Ready to Drink
a) Energy Drinks
b) Non-Cola Drinks (Juices)
Ready to Cook
a) Cut Vegetables
b) Soups
c) Paranthas/ Rotis
d) Snacks

6. Mainstream Penetrated Growth Categories: The high penetrated categories like Hair Oils, Washing Detergents, Detergent Cakes, Soaps etc are expected to grow at a healthy rate of 10%, attributed to price increases (not much impact of inflation - explained in point 2) and low volume growth.

7. Under-penetrated Growth Categories: Barring few main mainstream categories as mentioned above, there are number of FMCG categories with low penetration and are expected to grow by 20% during 2008-2009. Have a look of that list:
7.1) Men’s grooming products
7.2) Skin care & Cosmetics
7.3) skin/fairness cream
7.4) Anti-aging solution
7.5) Shampoos
7.6) Toothpaste
7.7) Hair Colour
7.8) Deodorants
There lies a huge potential in these categories.

8. Low Per Capita Consumption: Currently we are nowhere near to other developing countries in terms of per capita consumption. Be it Laundary, Skin Care, Shampoos or deodarants. Marketers have put in efforts to increase the consumption frequency or quantum of consumption per occasion. Colgate started the "twice a day" campaign few years back. Recently we have Good Night coming up with Double power pack. Per Re1 increase in per capita consumption of a category will lead to growth of more than 100 crores (with a popular base of more than 1 Billion)

9) Evolved Product Forms: 20 years back consumers had limited choices to pick from. The days of Tortoise Mosquito repellent coils are gone. This is the age of aerosols with value added functionality. I have picked up some examples, were we have seen a change in the product forms. Here is the list:
Dish Wash: Powder to Bar to Liquid
Shaving: Creams to Foams/ Gels
Repellents: Coils to Aerosols/ Body Creams/ Gels
Air Freshners: Sprays to Electric
Toilet Cleaner: Acid to Harpic to In-Cistern

Indian FMCG Journey So Far !!

2008-11-13T16:19:00.002+05:30

FMCG sector in India has seen some ups and downs in the last half decade. The intension of this post is to give you a flavor of the journey after independence till date. I have split it into five stages:

A) “LACKLUSTER” STAGE – 1950’s to 1970’s

Post independence (During 1950's to 1970's), there was not much happening in the FMCG sector in India. The business was limited to the upper segment of the society, as the purchasing power was low. Companies like HLL were purely focused on the urban areas and never bothered to enter the rural hinterland of India. The investment in the sector was low, with few FMCG companies selling their products. Also, the government’s emphasis was more on the small-scale sector.

There was never a doubt in the potential of the sector, with such a big base of consumers residing in India.

B) “RURAL SENSITIZATION” STAGE – 1970’s to 1990’s

Let me two examples, which changed the rules of the game, and brought focus to the rural markets.

NIRMA
In the early 1970s, when Nirma washing powder was introduced in the low-income market, Hindustan Lever Limited reacted in a way typical of many multinational companies. Senior executives were dismissive of the new product and never considered the potential and opportunity. But very soon, Nirma’s success in the detergents market convinced HLL that it really needed to take a closer look at the low-income market.

At the time, the focus of the organised players like HLL was largely urbane. There too, the consumers had limited choices. However, Nirma’s entry changed the whole Indian FMCG scene. The company focused on the ‘value for money’ plank and made FMCG products like detergents very affordable even to the lower strata of the society. Nirma became a great success story and laid the roadmap for others to follow. MNC’s like HLL, which were sitting pretty till then, woke up to new market realities and noticed the latent rural potential of India.

CAVINKARE
1983, C K Ranganathan started selling shampoos in a sachet with an investment of Rs 15,000 and dared to take on the multinationals, Lever and P&G, the unquestioned leaders in that segment.

Ranganathan took the then shampoo market by storm, selling his Chik brand of shampoo at a much lower price than other shampoo sachets which were selling at Rs 2. He targeted rural and small-town consumers who used soaps to wash their hair. He introduced the sachet at 90 paise and then reduced it to 50-paise. And that’s when the multinationals sat up and noticed him.

But what really worked was the ‘bring empty sachets and take shampoo sachets in return’ offer. Sales zoomed from 35,000 sachets to 12 lakhs. Initally they took any sachet, but after three months they restricted to Chik sachets.

C) “LIBERLIZATION BOOM and STABLIZATION” STAGE - Post Liberalisation (1991 - 2000)

Post liberalisation not only saw higher number of domestic choices, but also imported products. The lowering of the trade barriers encouraged MNC’s to come and invest in India to cater to 1bn Indians’ needs. Rising standards of living urban areas coupled with the purchasing power of rural India saw companies introduce products targeting both rural and urban markets with value for money and value added offers. Companies started investing in increasing the distribution depth, upgrade existing consumers to value added premium products and increase usage of existing product ranges.

As an outcome of increased choices to the consumers and positive euphoria post liberalization, many of the affluent consumers who always had the money but limited choices, started splurging.

So you could see all companies be it HLL, Godrej Consumer, Marico, Henkel, Reckitt Benckiser and Colgate, trying to outdo each other in getting to the rural consumer first. Each of them has seen a significant expansion in the retail reach in mid-sized towns and villages. Some who could not do it on their own, have piggy backed on other FMCG major’s distribution network (P&G-Marico).

The Sales boom was observed for first 4 to 5 years and then it stabilized.

D) “DROP” STAGE – (2000 – 2005)

2000 was a rather uneventful year for manufacturers and marketers of fast moving consumer goods (FMCGs). The growth rate of FMCG categories was torpid to say the least and the marketing environment was such that, even veterans like Hindustan Lever Ltd (HLL) and Procter & Gamble (P&G) found it difficult to hold on to their market share. The market grew more crowded, what with the entry of new brands entering categories which were virtually the bastions of HLL, Colgate or P&G.

Even in 2001 prominent, high penetration categories such as toilet soaps and detergent bars were very badly affected, actually shrinking in real value terms. Categories with a comparatively lower reach in terms of market penetration, such as shampoos and skin creams too slowed although to a lesser extent. The explanation for this could be that categories with high penetration levels, such as detergents and soaps also depend to a great extent on rural demand. The probable cause is a combination of both industrial slowdown as well as the almost-crisis in the agricultural sector which forced consumers to cut back on spending.

Buyers moved from higher-end products to low-end products in an effort to reduce monthly grocery expenditure. Mid-priced and low-priced segments in soaps and detergents registered robust growth rates, while the premium segment faltered. Impulse products suffered while essentials managed higher rates of growth. Despite the slowdown, staple foods such as atta and salt managed to recorded superior growth rates, higher than those of supposed luxury products such as chocolates and ice creams. Low unit packs saw robust volume growth. Most FMCG marketers offered smaller versions of their products at affordable price points and these drew in new consumers.

The crisis of declining FMCG markets was also driven by new avenues of expenditure for growing consumer income such as consumer durables, entertainment, mobiles, motorbikes etc. Now, as many consumers have already upgraded, their income is being directed towards pampering themselves. Indian population was all set to experience the new basket of products, but with cut-down on FMCG.

E) “BOOM REVISTED” STAGE: 2005 onwards

Everything turned positive thereafter.

2006 was a different story altogether though. The FMCGs seem to have gotten a new lease of life 2005 onwards. Be it hair care products to sunscreen, they were flying off the shop-shelves. In fact sale of white goods dipped while toiletries registered an increase. Such a sharp rebound was, however, unexpected. AC Nielsen's retail sales audit numbers for August 2006, show that sales growth was sound, recording a 24%. Not so long ago, in July 2005 most firms were unable to pass on even basic cost increases and growth had plunged to under 3 per cent.

The key reasons look like the following (please refer my previous post – Indian FMCG Growth Drivers and Category Trends):

a) Increased disposable income
b) Organized Retail Boom
c) Increased Rural Penetration

Also the new basket of products mentioned above (like mobile phones etc) were now affordable (because of cheaper products and EMI culture) to the Indian consumers and therefore revisited and upgraded to FMCG products.

SOME FUTURE PREDICTIONS ??

1. Increased Competition: In last few years, we have seen large number of companies expanding their portfolio into other categories, which is leading to fragmentation of market. This will lead to cut throat competition from regional/ national companies, giving the ultimate benefit to the consumers. In this environment, only the innovators will survive. Focus will be the key to profitability
2. Micro Segmentation: In recent past we have seen companies developing products targeting niche segments, by addressing specific needs. Some time it looks logical and sometimes absolutely silly!! Lets look at few examples. Marketers are segmenting Horlicks into Women and Junior Horlicks. Fairness cream for men. Pepsodent Barbie Toothpaste for Kids. I think this is just the start!! I think many marketers are ready for further segmentation of many FMCG categories.
3. Growth of Under-penetrated Categories: There is huge scope in lot of under-penetrated categories like Household Cleaners, Deodorants, Skin Creams, Shampoos, Coffee etc
4. Consumer will move from the status of KING to GOD: Undoubtedly, all this is good for the consumers, who can now choose a variety of products, from a number of companies, at different price points.
5. Organized Retail: The modern retail format will slowly occupy a bigger share. This will lead to change in shopping behavior and growth in FMCG sector

FMCG Business Expansion - Stage by Stage Approach

2008-09-23T11:10:00.002+05:30

Have written this post specifically for regional FMCG companies and FMCG manufacturers who are planning to extend their footprints in different geographies in different markets.

Let me explain this stage by stage:
1. Category Feasibility: Before you decide on the markets to expand, it is critical to analyze the category construct and trends. Let me start with some examples. In dish wash category, there are 3 key segments - Powder, Bar and Liquid, dominated by Bar sub-category. Now here the first step is to see the trends in each sub-category. In this case, Powder is a dying category, Liquid is an upcoming & fastest growing category and Bar is already established. Bar
is dominated by Vim with a market share of 70%. Liquid was dominated by Pril, but Vim Liquid is also catching up. Post this contribution analysis is required, where i will compare all three sub-categories and may conclude that Liquid is more profitable. Also as the urban lifestyles are changing and are moving towards evolved products. With this you will also do an exhaustive competition analysis. At the end, you may decide to expand with Liquid Dish Wash Category.

2. Differentiation/ Innovation: Once you freeze on the category to enter, the next step is to do a positioning mapping of all brands in the category (What do they all stand for in the consumers mind? What are their key proposition?) Rather than making a me-too product, it is also advisable to provide differentiation in the product. The differention may be in form of product improvements/ benefits etc or may be packaging innovation, which comes from some
consumer insights. At the end, the consumer should find some value addition in the product. Last year, Dabur enterted into floor cleaning category with Dazzl, which has a unique ‘Dirt Trap Technology’, which ensures that the muddy solution settles down in the bucket, offering a clear solution every time for mopping. This is something, which consumers may find different from other products. The differentiation may be marginal or exponential. But its paramount.
Otherwise the brand will die its natural death.

3. Distribution: Once you are confident of your Offer, the next step is to increase the increase your distribution depth. There can be multiple approaches to it. First is to roll-out pan India in all markets. But here you should have strong distribution network, which is possible for big FMCG companies like HUL, ITC etc. Second is to identify the right markets for the category. The right markets can be the top markets for the category. Lets take an example of aerated
drinks. The biggest selling market is North, especially the prosperous towns like Ludhiana etc. Here even if you capture a market share of 5%, you can have big volumes, as compared to 20% market share in Kolkata. I think the best indicator to look at is the sale per outlet per month. The volumes in a town may be high because of the geographical spread (No. of target outlets), which is not the right indicator. The sales per outlet per month in Ludhiana is much higher than Kolkata. So logically, i should enter into Ludhiana. But thats not all. You also need to look at other things like competition, consumer experimentativeness etc. So the point i want to make here is that, before increasing your footprint, you need to assess the right markets to enter.

MARK APPROACH to RURAL MARKETING

2008-08-25T17:41:00.004+05:30

Rural India has problems quite unique in nature. The major error people make while marketing to the rural market is that they apply the same theories as learned from the urban context. The underlying myth among the marketers that the rural consumer is similar to an urban consumer except for the constraint of money has been proved wrong. It is in this regard that we have identified ‘MARK’ (Money, Acceptability, Reach and Knowledge) as the major challenges faced by a rural marketer. Each of these factors has been discussed in detail.

1) Money
Products need to be within the affordable range. Sachetisation (selling in sachets) was used to overcome this barrier and thereby sell to the rural consumer. This strategy backfired and was found that sachet’s have in fact cannibalized the sales of the larger volume packaged products manufactured by the same company.

2) Acceptability
There is a need to offer products that suit the rural market. Customizing products to suit the needs of the rural folk will help it gain wider acceptability and thereby lead to increased penetration within these rural markets. E.g. A rural consumer will never be willing to accept Kellogg’s cornflakes as a substitute to his breakfast of Paratha and curd but if the Kellogg’s is able to communicate the message that Kellogg’s since it is full of nutrients vital to a growing child the can be used to supplement his child’s daily meal then he would be ready to buy Kellogg’s for his child.

3) Reach
The first step towards gaining sales within the rural space is to see to it that the reach of the product be wide enough. Unless the product is available there is no point whether we overcome the other challenges or not as we will not finally derive any sales at all. Marketers must trade off the distribution cost with incremental market penetration. Over the years, MNC’s have tried out various tactics to reach out to the rural markets from using auto rickshaws, bullock-carts and even boats in the backwaters of Kerala. Over the years the hub and spoke distribution model has evolved as the one most suited to reach out to the rural villages.

4) Knowledge
Knowledge or awareness about the product depends on how effective market communication is. It is extremely important to choose the right channel for market communication. It is a commonly held misconception by marketers and ad-agencies that TV is the best medium to communicate to these rural masses. TV reaches 36% only and there is a substantial media dark area of 2405 million in Bihar, Orissa, East UP, MP and Rajasthan. Another important factor from the rural point of view is that during sowing and harvest time there is electricity for agriculture but no time to watch TV, after the harvest when farmers are free, electricity otherwise given to them is now diverted to the industry.

Apart from MARK there is yet another aspect which is unique to the Indian market, they are culture specific traits. This factor is more prominent in the rural areas than in the urban. The scenario now becomes even more complex not only do we have to address both the urban and the rural markets separately but will also have to customize our plans to suit each specific culture.

Indian FMCG Sector Growth Drivers and Category Trends: 2008-09

2008-07-30T19:23:00.001+05:30

The fourth largest sector in the Indian economy is all set for 16% growth during 2008-09, from a base of Rs. 85470 crores, as predicted by FICCI. Going forward, as anticipated by CRISIL, FMCG sector will touch around Rs. 140000 crores by 2015 (33.4B$).

This post will through some pointers for growth in FMCG Sector and update with the contemporary category trends.

Growth Drivers: FMCG Sector

1. Disposable Income: There is increase in disposable income, observed in both rural and urban consumers, which is giving opportunity to many rural consumers to shift from traditional unorganized unbranded products to branded FMCG products and urban fraternity to splurge on value added and lifestyle products. The increasing salaries, along with rising trend of perks in the corporate sector at regular intervals, have increased people’s spending power. As per some research, there is a high correlation between Disposable per capita and HPC per capita.
2. Organized Retail: The emergence of organized retail have lead to more variety with ease in browsing, opportunity to compare with different products in a category, one stop destination (entertainment, food and shopping) etc, which is playing an important role in bringing boom in the Indian FMCG market. Currently the modern trade is capturing 5% of the total retail space, which will increase to 10% and 25% in 2010 and 2025 respectively. Also, as the credit card and organized retail trend picks up, people won’t think much while buying and buy more.
3. Distribution Depth - Rural Penetration: There are 5500 towns and 6.38 Lacs villages with 2.5Mln and 5Mln outlets respectively. Due to saturation and cut throat competition in urban India, many FMCG companies are devising strategies for targeting rural consumers in a big way. Many FMCG companies are focusing on increasing their distribution network to penetrate with a step by step plan. This is the reason that FMCG urban market size has dropped from 50% to 29% in last 5 years. The FMCG market size for semi-urban and rural segment was 19% and 52% respectively for the year 2006-07. As per FICCI, the FMCG market size for urban, semi-urban and rural for year 2007-08 was expected to be 57%, 21% and 22%, which clearly shows that rural market is the growth engine for FMCG growth. Though the urban markets are growing too, the incremental addition in consumer’s households is much more in rural space as compared to urban markets. The planned development of roads, ports, railways and airports, will increase FMCG penetration in the long term. 180 million rural and semi-urban people’s attention has already been diverted towards FMCG products, according to latest estimates released by industry chamber, Assocham in 2008. The estimated number of households using FMCG products in rural India has grown from 131 million in 2004 to 140 million in 2007, according to market research company IMRB. Over 70% sale of FMCG products is made to middle class households and over 50% of middle class is in rural India.
4. Buying Pattern Shift: The crisis of declining FMCG markets during 2001-04 was driven by new avenues of expenditure for growing consumer income such as consumer durables, entertainment, mobiles, motorbikes etc. Now, as many consumers have already upgraded, their income is being directed towards pampering themselves.
5. Favorable Indian Economy & Demographics: 45% people in India are under 20 years of age. Per capita disposable income has increased from $550 to $600 in 2007 (9% increase). GDP is growing at a CAGR between 8 to 9%.In the next five years, affluent and aspirers as a total will supersede strivers and will be dominated by aspirers, as per NCAER.

FMCG Category Trends

1. Underpenetrated Growth Categories: Within the Indian FMCG industry, there are few categories that will grow more than 20% during 2008-2009, like shaving cream, skin/fairness cream, shampoos, skin care & cosmetics, tooth powder. Some other growth categories will be hair colour, skin care, anti-aging solution, deodorants and men’s products. Most of these categories are under penetrated and there is a huge scope for growth.
2. Penetrated Growth Categories: Even mainstream categories with high penetration levels such as washing detergents, soaps and hair oils have shown strong underlying volume growth, despite sharp inflation led price increases in FY08. This is partly related to the growth in organised retail (3-5% of turnover for most FMCG players) that gives more visibility to national brands with strong brand equity.
3. Anand Shah, an FMCG research analyst at Angel Broking, says most FMCG companies are responding to the new demand by concentrating on developing a big theme and building a portfolio around it. Nestle, for example, has identified 'health and wellness' as its focus area, while Dabur is positioning itself around ayurvedic (a traditional Indian system of healthcare), natural and herbal products. At the higher price end, companies are leveraging health and wellness trends by focusing on providing 'experiential' and 'higher order' benefits rather than purely functional ones.
4. Health Food Categories: FMCG majors are widening their health food portfolio to cash in on the rich, urban, health conscious Indian. Sugar free Chywanprash, organic spices and multi grain pastas and biscuits are few examples. Urban India is high on health and FMCG majors are cashing in on the opportunity. Processed foods particularly juices that are based on the health platform would see stronger growth. Also, with the Indian consumer becoming increasingly health conscious, the demand for juices has witnessed rapid growth.
5. Impact of inflation in 2008: Even if consumers don't switch to cheaper substitutes during inflation, they normally switch from higher SKUs to lower SKUs of the same product. This is the reason the companies have come up with smaller SKUs. In line with this trend, Henkel has withdrawn its 500gm pack washing powder which was priced at Rs.46 and has replaced it with a new 400gm pack that costs INR40. A couple of months back, Amul introduced 25gm packs of butter. Not surprisingly, this pack is fetching more sales than 100gm and 500gm packs.

In the first 10 months of 2007, there were 251 product launches, including 28 new brands, compared with 191 for the same period of 2006. Snacks and foodstuffs remain the category leaders, with recent launches of several health and beauty products, particularly in urban markets.

Household Cleaner Market in India

2008-07-08T18:04:00.002+05:30

Household cleaner market in India is mainly split into:

Toilet Cleaners: Toilet Cleaner are further split into Liquid Cleaners, Drain Cleaner and In - Cisterns.
Surface Cleaners: Surface Cleaners are split into Floor Cleaner, Multi purpose and specialized Cleaners. The specialized cleaners are further split, based on their application areas

Market Statistics

The cleaning solutions market (both surface and toilet cleaner segments) is estimated at Rs 373 crore (2008 Data)
The total surface cleaning market in India is estimated to be around Rs 350 crores (including toilet cleaners and floor cleaners) (2006-07 Data)
The household cleaner market is estimated to be around 400 crore and the phenyl market is around 200 crore (2005-06 Data)
The toilet cleaners segment, which is divided into liquid cleaners and in-cistern blocks, is a Rs 150-crore category. This segment is registering a overall growth of 35 per cent. Liquid cleaners is the dominant category in the segment with 93 per cent share. However, in-cistern blocks is growing at a faster pace (2008 Data). Liquid segment is dominated by Harpic which has a market share of more than 70%, which makes it more than a 100 crore brand.
Toilet cleaning market is traditionally dominated by the unbranded Phenols
Only 3% of the households use floor cleaners. 97 % use proxy products which are the combination of phenyl, detergents , acids and bleaching powders
Liquid toilet cleaners are essentially an urban phenomenon with the top 23 metros accounting for 52 per cent and the top six metros accounting for 37 per cent. The segment is growing at 35 per cent annually in value (2005 – 06 Data)
Studies show that the penetration of toilet cleaners is about nine per cent among urban households and a large number of customers use low-grade alternatives such as acids, bleaches and phenyls (2005 – 06 Data)
In the last four years, the industry has shown a CAGR of 24%. Market penetration of toilet cleaners is under 10% in the country, but is growing fast (2008 Data)
Colin, the glass-cleaning brand, was acquired way back in the '90s have 93 per cent of the market
Market leader Lizol from Reckitt is estimated at Rs 35 crore while HUL’s Domex is roughly a Rs 25-crore brand (2008 Data)
Surface cleaner segment is growing at 18 per cent in the country (2007-08)

Companies & Brands

HUL - Domex
Reckitt Benckiser - Lizol, Harpic, Easy Off Bang
Dabur Balsara - Sanifresh, Dazzl
Cavinkare - Tex
Henkel - Pril, Bref
Sara Lee - Kiwi Kleen
S C Johnson - Mr. Muscle

Brands in Toiler Cleaner Segment

Harpic
Kiwi
Bref
Sanifresh
DeepClean (Local Brand in Kolkata)
Domex

Brands in Toilet In-Cistern

Harpic
Bref
Kiwi Kleen

Brands in Toilet In-Cistern: Kiwi Kleen

Brands in Floor Cleaning

Lysol
Domex Phenolic Cleaner

Brands in Specialized Cleaners

Glass & Household Cleaner: Collin, Pril
Only Glass Cleaner: Mr. Muscle
Power Cleaner: Easy Off Bang
Kitchen Cleaner: Mr. Muscle
Degreaser: Pril Multi Degreaser

Marketing Activities

Domex launched a direct to customer initiative named "phenyl Khallas" to educate the consumers about the virtue of using Domex comparing it with local phenyl
Harpic also initiated a co branding initiative with Parryware to get into consumer mindset early even when he is completing his house
Harpic has done about 65 million household knocks (to promote the brand house-to-house)
After domex launched the white toilet cleaner, Harpic was forced to come with Harpic Plus Bleach Toilet Cleaner, which is white in color

Consumer Trends

During 1990's the Harpic product came out with a unique nozzle which ensured better reach
Harpic also introduced a Flushomatic variant in line with the changing preference of consumers towards European closets and Flushes
Harpic bottle design has been adapted to the relatively smaller hands of Indian women
There are phenols, detergents, acids and so on but thanks to property prices going where they are, a person who's buying a Rs 50-lakh house is not going to allow the bathroom to be looking yucky. That's the evolution of what you might call upgrading of consumer life

Market Trends

Only 3% of the households use floor cleaners. 97 % use proxy products which are the combination of phenyl, detergents ,acids and bleaching powders
While the local floor cleaners such as phenyl form 50 per cent of the market, speciality cleaners has been driving the growth for the category over the last few years

Product Innovation

Domex launched a Domex + phenyl variant to capture this segment
During 1990's the Harpic product came out with a unique nozzle which ensured better reach
Harpic also introduced a Flushomatic variant in line with the changing preference of consumers towards European closets and Flushes
The advantage of the Bref power cleaner is that it is available in foam form and can even be applied on vertical surfaces
Dazzl disinfectant floor cleaner, on the other hand, has unique ‘Dirt Trap Technology’. It also ensures that the muddy solution settles down in the bucket, offering a clear solution every time for mopping
Dazzl’s well-researched and unique formulation with ‘SQL Activ’ removes grease, oil and food stains across all kitchen surfaces like Gas Stoves, Kitchen Platform

Some Positioning Platforms

Domex: 100% Germ Protection
Harpic: Triple benefit: Stain removing, freshness and germfree (Celebrity like Aman varma entering a house and cleaning the toilet)
Easy Off Bang - Cleans the tough stains, rust, hardwater build up (tough stain remover)

Punch Lines

Easy Off Bang: Bang... And Dirt is Gone
Harpic: Ready for the Challenge?

Chocolate Market in India

2007-12-26T21:12:00.000+05:30

Facts & Figures
1. Chocolate market is estimated to be around 1500 crores (ACNielson) growing at 18-20% per annum
2. Cadbury is the market leader with 72% market share
3. The per capita consumption of chocolate in India is 300 gram compared with 1.9 kilograms in developed markets such as the United Kingdom
4. Over 70 per cent of the consumption takes place in the urban markets
5. Margins in the chocolate industry range between 10 and 20 per cent, depending on the price point at which the product is placed
6. Chocolate sales have risen by 15% in 2007 to reach 36000 tonnes according to one estimate. Another estimate puts the figure at 25000 tonnes
7. The chocolate wafer market (Ulta Perk etc) is around 35 % of the total chocolate market and has been growing at around 13% annually
8. As per Euromonitor study, Indian candy market is currently valued at around USD 664 million, with about 70%, or USD 461 million, in sugar confectionery and the remaining 30%, or USD 203 million, in chocolate confectionery
9. Entire Celebrations range marketshare is 6.5%
10. The global chocolate market is worth $75 billion annually

Companies
1. The chocolate market in India has only three big players, Cadbury, Nestle and Amul
2. New brands such as Sweet World, Candico and Chocolatiers are present in several malls
3. The largest target segment for Cadbury is youth
4. Delhi-based Chocolatiers, started with a small shop in south Delhi’s Chittaranjan Park and has now ventured into malls and multiplexes in NCR, Mumbai and Bangalore, with focus on high-end or designer chocolates, a niche market of their own
5. Candico India is aiming for 400 locations across malls and multiplexes in the country by 2010.
Companies & Brands
1. Cadbury - Cadbury, 5 Star, Bytes (chocolate snack), Celebration, Dairy Milk, Gems, Perk
2. Nestle - Bar One, Kit Kat, Milkybar, Munch, Nestle
3. Amul - Amul (Chocozoo, Chocomines)
4. Dairy Milk is the market leader
5. 5 Star (heritage brand which came to India in 1969) has a marketshare of over 14%

Consumer Trends
1. Mithai- the traditional Indian sweats is getting substituted by chocolates among upwardly mobile Indians. Instead of buying sweats on Raksha Bandhan, sisters prefer offering chocolates to their brothers. This is the reason for sudden spurt in advertisement between July & Sep by most of the companies
2. The range and variety of chocolates available in malls seems to be growing day by day, which leads to lot of impulse sales for chocolate companies
3. Chocolates which use to be unaffordable, is now considered mid-priced. Convenience over Mithai in terms of packaging and shelf life in making both middle class and rich Indians opt for chocolates
4. Designer chocolates have become status symbols. They are linked to one’s aspiration and lifestyle and malls are perfect points of sale as people usually are happy and gay at these destinations
5. Cadbury initial communication for Celebrations was concentrated on occasions like Diwali and Rakshabandhan. Over the last seven to eight years, the brand emerged as a good gift proposition for occasions and enabled people to come closer. Research done by Cadbury suggested that they should extend the plank of occasion-based gifting to social gifting i.e. all-year-round gifting options
6. Consumers can choose from wide range of chocolates, which initially was limited to Milk chocolates like DairyMilk and MilkyBar. In past few years we have seen so many SKUs with almonds, raisins and all sort of nuts. And how can we forget latest 5 star crunchy and Ulta Perk, which has opened new windows for consumers
7. In past, consumers had negligible inclination for dark chocolates. But now we have seen a change in the Indian palate, which is increasing the base of this sub-segment

Advertisement Trends (AdEx - division of TAM Media Research)
1. Chocolate advertising rose by 30 per cent during January-November 2007 compared to January-November 2006
2. Maximum chocolate advertising was during Raksha Bandhan across 2005 and 2006 and January-November 2007
3. As expected chocolate advertising skewed towards kids channels and regional GEC took the second position
4. Cadbury India Ltd rules chocolate advertising on television
5. 17 per cent more advertising during third quarter 2007 (Raksha Bandhan festival) compared to first quarter 2007
6. Regional GEC took the second place with a 21 per cent share ad volumes of chocolates, followed by Hindi movie with 13 per cent share during January-November 2007
7. Among regional GEC, maximum advertising of chocolates was on Malayalam and Bengali channels
8. Cadbury India Ltd was way ahead of its peers with 66 per cent share followed by Nestle India Ltd and Parle Products Pvt Ltd during January-November 2007
9. During January-November 2007 the number of new chocolate brands advertised decreased to seven from 12 during 2006
10. Nestle Munch Pop Chocolate led the chart of new chocolate brands advertised on television during January-November 2007

Some BTL Activities
1. Cadbury India has tied up with leading coffee chain Café Coffee Day for direct sampling of the product in top cities

External Environment
1. The prices of cocoa and milk, the chief ingredients used in chocolates, have gone up by 50 per cent, while the price of sugar, another important raw material, has come down. The overall input costs have gone up by 20 per cent. If the prices of these commodities keep increasing, companies will be forced to increase the prices. India imports most of its cocoa requirements. The prices of cocoa have risen globally due to unavailability of the commodity
2. US-based chocolate-maker Hersheys is mulling a foray into the Indian chocolate market through its joint venture with Godrej

Shoe Polish market in India

2007-12-21T10:59:00.000+05:30

Shoe polish Cherry Blossom was launched in the UK in 1906 by Chiswick Soap Company, a part of Reckitt & Coleman (now Reckitt Benckiser).Its one of the few brands which have survived with a leadership for 100 years.

Kiwi has a history that dates back from 1906 when William Ramsay developed an unusually fine boot polish. He put the Brand name as Kiwi since his wife is a native of Newzealand. The brand grew so big that in 1967, the products were used worldwide under the banner Kiwi nternational. In 1984, it became the part of Sara Lee Corporation. Kiwi was an active player in the shoe care market from 1994 onwards. The brand was owned by Sara Lee corporation. In India, Sara Lee started as a joint venture with TTK corporation. In 2002, it became an independent venture. Now SaraLee has tied up with Godrej to market its products.

Facts & Figures

1. Penetration of Shoe Polish is more than 30% in rural India

2. Cherry Blosson was 75 crore in 2006, 60-70% market share in Rs 110-120 crore shoe polish market

3. Shoe care market in India is small. This market was dominated by Cherry Blossom from Reckitt and Benckiser which earlier had a market share of 80%. Kiwi was the challenger brand and enjoys a market share of 24% in 2006 (ACNielsen) anfd Cherry's market share decline to around 60%

4. Wax polishes constitutes 70% of the market while liquid polish constitutes 20%

Consumer Insights

1. Shoe polishes are infrequently purchased products with very less involvement from the customer

2. Cherry Blossom had a generic brand status in the market

3. Today in this hectic rush , seldom do we get time to polish our shoes every day. Understanding this Consumer insight, Kiwi launched Express shoe polish which can be used to shine shoes when you are in a rush. These innovations surely helped the brand to create a market for itself

In order to displace the leader, Kiwi banked on Innovation strategy which the market leader failed to anticipate. Kiwi was the first one to bring International standard Liquid shoe polish in India .It also pioneered the Shoe shine sponge which was a blockbuster. Kiwi was also the first brand to launch Suede and Nubuck range.While Kiwi talked about quality shoe care, Cherry Blossom was stuck with Poor " Charlie Chaplin look alike " ads. Most of the new product launches of Kiwi was in line with the changing consumer preferences. When the consumers opted for semi casual Suede and nubuck shoes, Kiwi was quick to launch Shoe care products for that category.

Cherry Blossom has stuck to its old association with Charlie Chaplin. Chaplin theme has proved so intrinsic to Cherry Blossom brand recall that Reckitt brought it back out of hibernation a couple of years ago. There were some interesting commercials in 2006 to celerbrate 100 years of Cherry. The commercial begins with a silent movie-style text cards that say "100 years of making perfect gentlemen..." and "...inspire us to introduce new anti-ageing shoe polish".
The "movie" then begins with Chaplin and his arch-rival Fatty buying shoes.As he turns to go, Chaplin picks up a tin of Cherry Blossom shoe polish from the display on the counter. Six months later: Chaplin returns to the store, buys a pair of shoelaces and tosses a coin to the shop-owner. Fatty's back, too. Only, he grabs the salesman and drags him over the counter to look at his completely worn-out shoes, while Chaplin's are still gleaming. Chaplin smiles nervously and leaves, and Fatty is befuddled. Fatty peers through a keyhole and sees Chaplin polishing his shoes with Cherry Blossom. Jealous, he throws the door open and rushes towards Chaplin, who moves aside and kicks him through the open window. The ad ends with a simpering Chaplin and product shots.

Their value proposition was very simple & straightforward: a shoe polish that prevents normal ageing symptoms like wrinkling, and makes shoes look new longer. Charlie Chaplin became almost synonymous with Cherry Blossom thanks to ad guru Alyque Padamsee, who helped create the first series of ads in the early 1980s. The focus then was on the "perfect gentleman" and the "perfect shine" on his shoes.

Stablization of Cherry Blossom

Between 2000 and 2003, the company stopped advertising completely to focus on sales promotion activities. "The competition was aggressive on such spends and we were simply trying to match it," recalls Vishal Gupta, marketing manager, Reckitt Benckiser. The results were disastrous: from over 73 per cent in 1999, Cherry Blossom's share of the polish market dropped to 61 per cent in end -2002. Euro RSCG was commissioned and with Illusion Films in tow, the first new Chaplin ad was beamed in March 2004. That showed Chaplin winning over Fatty, who was using another brand of shoe polish, to Cherry Blossom.

But Reckitt's focus was on offering customers newer ways to make their shoes sparkle: product innovations are on a high at the company, and the ads have to reflect that. After exploring various options, the Euro RSCG team finally hit on the "anti-ageing" theme, which dovetails neatly with the 100-year milestone ("still looks new") - as mentioned above. Speaking of the brief the company gave the agency, Singh says it was relatively simple. "This is a new product,
just announce it in the most interesting and effecting manner. And use Chaplin."

The Chaplin ads do seem to have added a sheen to Cherry Blossom's market share. It's climbed from 62 per cent in 2003 to close to 68 per cent at present (nowhere close to its earlier monopolistic position of 73 per cent, but still decent)

OTC Market in India: Marketing the FMCG Way

2007-12-20T11:39:00.000+05:30

Over-the-counter (OTC) drugs are medicines that may be sold without a prescription, in contrast to prescription drugs. These items can be found on the shelves of grocery/ cosmetic stores and bought like any other packaged product in some countries or in others may be bought "over the counter" from the pharmacy, while prescription drugs are sold at a pharmacy counter.

In 2005 the Indian OTC segment was Rs 4500 crore it could be considered as Rest 17000 crores if cosmeceuticals & neutraceuticals are also included. The CAGR for Indian OTC markets is currently hovering between 12 and 15% and this is much faster than OTC market growth of most development countries.The OTC Market in India in 2007 will be around Rs. 6000 & 20000 crores. As per Euro RSCG India,OTC market is hovering around Rs. 2800 crores.

The global OTC market is projected to be USD 75 billion with a cumulative annual growth rate (CAGR) of 4.5%, which will make it 82 B$ in 2007.

There are different categories under OTC, out of which here is a list of categories which have spent maximum in brand building through on TV are as follows:

1. Rubs/ Balm - Moov, Iodex, Himani Fast Relief, Emami Mentho Plus, Amrujanjan Joint Ache Cream

2. Analgesic/ Cold Tablet - Dcold, Stopache, Crocin, Disprin

3. Digestives - Eno, Hajmola, Pudin Hara, Dabur Hingoli

4. Medicated Skin Treatment - Itch Guard, Krack, Ringguard, Clearasil

5. Cough Lozenges - Strepsils, Halls

6. Vitamin/ Tonic/ Heath Suppliments - Horlicks, Complan, Boost, Chawanprash - Dabur, Sona Chandi, Himalaya, Calcium Sandoz, Jeevanprash

7. Antiseptic Cream/ Liquids - Borosoft, Boroplus, Dettol

'Cipla I-Pill' a new brand was the most advertised brand on TV during January-September 2007.

12 per cent growth was observed in the advertising volumes of OTC (Over the Counter) sector on TV during January - September 2007 over January-September
2006 (AdEx - division of TAM Media Research). 'Rubs/Balms' had the largest share of overall OTC advertising pie.

Challenges for OTC Market & Inhibitions for branding

1. There is no clear definition of what constitutes an OTC pharma product. The healthcare segment in India has to mature enough for OTC expansion. The Drugs Technical Advisory Board has resisted approval of shift of molecules from prescription to OTC. So, that is the real challenge, not that OTC companies have not invested enough in brand building

2. There are a number of drugs such as Ranitidine (a digestive drug) which are sold in supermarkets in the West under various brand names. But the regulatory authority in India allows Ranitidine to be sold only through the prescription route

3. As per the regulations, one cannot sample OTC products directly to consumers. It has to be at the pharma shop level

4. The Indians always prefer home remedies to a prescription drug - Dadi Maa Recipes

5. Huge expense a brand may incur to advertise. The brands' turnovers are not large; many brands wonder whether spending 5-6 per cent of their turnover would give them enough returns

6. Invest in branding also has a fear of getting alienated by the community of doctors. Most brands consider the prescription route to be much safer

7. Consistent brand bulding is required over a period of time - Brands such as Coldarin have collapsed due to lack of consistency not only in spends but also positioning

The challenge for the pharma industry is to reach the fragmented target population of end-users while maintaining their traditional relationship with doctors.

Some players are already investing money in brand building. Benadryl, for instance, has spent Rs 7.5 crore on a brand turnover of Rs 35 crore, while Glycodin has spent Rs 4.5 crore on a brand turnover of Rs 18 crore.

Let me also enumerate some unconventional ways of marketing by OTC companies:

1. In-film & Event branding: Boots Piramal Healthcare started an initiative in Salaam Namaste where actress Preity Zinta attributes her clear voice to Strepsils. Second, for the Strepsils-Sa Re Ga Ma tie-up to release 12 music albums (twin CD packs) comprising retro originals. The Sa Re Ga Ma tie-up is a unique brand exercise to leverage the brand's identity of a clear voice by associating it with public figures such as Asha Bhosle and Kishore Kumar

2. Says Adarsh Somani, Director of Kopran which launched the Smyle Sore Throat Reliever in 2003, "The Reliever was not well received initially due to its gargle-and-gulp process. It took us some time to establish this product. We invested a lot in advertising and in building up the concept." A trend-setter in its ads constructed around Kaun Banega Crorepati, the Smyle campaign became the talk of ad circles. The advertisement presented a child actor answering a
question, "Which is the best cough syrup?" The question was asked by a voice resembling that of Amitabh Bachchan on KBC. The child's answer, "Smyle Sore Throat Reliever," wins him a crore of rupees. The ad helped make the product a national brand

3. FMCG major Procter and Gamble (P&G) India has emerged as a winner in the OTC category by implementing various promotion programmes for Vicks (Vaporub, cough drops and Vicks Action 500). Their Mass Consumer Contact programme was a first-of-its-kind initiative that not only displayed the product but also allowed consumers to experience its effect first hand at small towns and villages, stores and cinema halls. Recalls Rahul Malhotra, the company's Head of
Marketing, "Regulations do not permit marketers to sample allopathic drugs outside a drug store. In the early eighties our company hit upon a unique mass sampling idea. We released an ad in leading dailies which had a tear-off coupon at the bottom. Readers could exchange the coupon for two free Vicks Action 500 (VA500) caplets from the chemist store. This single initiative helped VA500 generate mass trials overnight."

4. P&G also conceptualised the House of Vicks, a counter display for chemists to store Vicks products so as to increase product visibility. Converting Vicks Inhalers into trinket key-chains proved a good campaign for the brand too

5. In 1999, Kopran had put up a 2 km-long banner starting from Nariman Point up to the Marine Drive Flyover in Mumbai. The publicity event, which was timed to coincide with the one-day cricket match nearby, gave the company an additional audience of 6,000 people. The event also received appropriate coverage in a few newspapers as Kopran had also provided TV screens on the pavement for cricket-lovers who could not get tickets into the stadium.

6. Then in 2003 Strepsils launched a Clear Speak column on the front page of The Indian Express. This 10 column centimetre (cc) fully-coloured column consisted of 5cc of Strepsils branding and another 5cc of an interesting comment from a commentator, cricketer or coach

This clearly shows that lot of branding efforts have been put in past despite lot of challenges in this category. Also with the fast moving life, people are shifting from Doctor prescription to OTC products (driven by marketing efforts); definately makes OTC a big segment in future.

Indian Dish Wash Category

2007-09-06T16:27:00.000+05:30

Market Snapshot

Rs 400 to 450 crores branded dishwash category
As per latest reports, dish care category is estimated to be around Rs. 1200, while the branded dishwash market is roughly 40%
The percapita consumption of this category (value terms) in India is hardly Rs 4 while in UK it is Rs 150. There is long way to go for this category
Dishwash bar category is huge: it's more than Rs 300-crore market churning out more than 1.2 lakh tonnes a year and growing at a CAGR of 20 per cent in the last five years. The dishwash powders market, however, is shrinking — it has fallen by 50 per cent from 3 lakh tonnes five years ago (2003 data)
As per CII - The total size of the dish wash market, estimated at Rs 4.4 bn has recorded a negative growth of 3 per cent in 2003-04. Over 60 per cent of the market is dominated by bars, while dish wash powders accounts for 32 per cent. The penetration levels are, however, still very low.

Product Categories

Powder – outdated category. The players in this category are Vim, Sabena, Odopic
Bar – largest category (60 to 70%). Vim has created the dishwash bar category in 1993. Till that time urban households used dishwash powders. The bar offered many advantages to the homemaker over the powder which was messy and uneconomical. Since then Vim Bar ruled the dishwash market. The other brands present in this category are Nirma Clean Dish Wash, Nima Bartan Bar, Odopic, Exo, Private Labels (Spencer’s DishWash Bar etc)
Liquid (Dish Wash Concentrate) – evolving category, with Pril being the leader. Other players are Vim, Godrej Dish Wash, Godrej Glossy, Teepol, Private Labels (Spencer’s etc), some imported brands Good Maid
Dish Washing Paste (packed in a cup) – Axion and some imported brands like Budget (from the portfolio of Good Maid corp. SDN. BHD, Malasia)

Market/ Consumer Trends

The trend has shifted from Powder to Bars and now its moving to Liquid dishwash
The emerging category in dishwash market is the liquid dishwash. Pril from Henkel commands this market with a share of 70%. The other players are Vim, Teepol, Godrej
Marketers beleive that over a period of time, consumers will shift to Liquid since it offers more economy and convenience. But there is a problem with this category: Liquid dishwash is targeted at urban upper middle class home makers and here the users are home maids rather than home makers. It will be difficult to teach house maids to use the liquid efficiently. But if you see recently there was a article in Business Line – Influence Sells, where Henkel has targeted the maids as they are influencer like a mechanic for car spare parts. Henkel undertook an intensive study, which involved talking to housewives about their dish-washing patterns and learnt that as products like Pril were expensive, they were reluctant to give it to maid servants to use and preferred scourers with an abrasive action
While dishwash liquids do work efficiently against grease, consumers prefer scourers with an abrasive action to clean grease
There is high sale of 400gm Vim in first week as compared to rest of weeks, as the wife has disposable income at the start of the monthly. Subsequently she may go for 200 or 100 gm as per requirement

Brand Details

Vim Journey

Vim was initially positioned on the lemon content in the bar. The brand using its ingredients positioned itself on its Stain Removing benefit. The positioning was consistent through these years
The brand changed its form, added new features and expanded the market to stay on the growth path. To reinforce the stain removing property , the brand repositioned in 2003 by introducing the Stain Cutter feature
The company was trying to extend the brand from "Dish wash" to Kitchen Care market. The brand also created much inroads into the market with its Vim Challenge campaign which directly compared the brand with competition.
Although Vim has launched its own variant, it failed to create an impact and was withdrawn in 2003
2006 saw a relaunch of Vim drop with Actor Madhavan endorsing the brand.
To stay on top of this highly competitive market, Vim has invested not only in promotion but also in product improvements. In 2005, the brand took on the most problematic aspect of this category i.e the dishwash bar getting soggy. The reason is that these bars are kept near the sink and is always in contact with water and with in days, the bar gets messy. Vim then launched one of the most customer centric innovation at that time: Poly coated Vim bar. The coating prevented the bar from becoming soggy and hence the brand became more economical. This innovation is a testimony to HLL's ability to understand Indian consumer and translate that to product improvements
Vim bar is strong in Maharashtra, Punjab, Delhi, Kolkata and Kerala

Pril

HENKEL Spic India Ltd extended its dishwash liquid brand, Pril, the market leader in the category, to a dishwash bar in 2003
2006 saw a relaunch of Vim drop with Actor Madhavan endorsing the brand. Pril has countered the campaign using Shobana as the brand ambassador
The bar has been designed with rounded edges so that use of the bar from its centre does not form a "mini pit" during use. Pril has been launched in three variants —vinegar + lime, vinegar + orange, vinegar + wildberry
Henkel roped in Chef Sanjeev Kapoor to endorse the brand in past

Exo

Exo brand has effectively differentiated itself by using its anti-bacterial property and uses the ingredient Trichlozene to reinforce the germ fighting positioning
South centric
Exo Dish Wash is also available as a liquid cleaner. Exo Dish Wash Liquid is the only anti bacterial dish wash liquid with Cyclozan as the active ingredient. Convenient and handy, this is ideal for stainless steel, crockery, cutlery and non-stick kitchen ware

Sabena

The powder segment is dominated by Sabeena brand from ECOF. Sabena is very strong in the southern market and has a market share of over 65%
The brand, which claims a market share of 65 per cent in the South, sells 4,800 tonnes of Sabena a month. One kg of powder sells for Rs 10 – strong in south only in 75000 retail outlets in South

Glossy: Specialized liquid cleaner for expensive and special utensils like glassware, non-stick ware, crockery, etc. It is meant to be used for the special kitchenware that requires gentle care. Glossy, with 'shine advancers' gives a sparkling shine to the utensils after cleaning, increasing its appeal on kitchen shelves. The formulation also ensures that there is no damage to the kitchenware

Category Substitute: In rural areas, Ash is used to clean utensils and the biggest hurdle in rural penetration of this category is to educate the rural folks to use Soap instead of ash. Still the penetration of branded dishwash category is low and has a high scope

Promotional Schemes in Past in Dish Wash Category

Buy Vim bar and see under its wrapper. You could win a car, a house and some such great unbelievable prices, something that is unbelievable. And when one see the wrapper, there was an offer of 50 paisa off on next Vim bar you purchase
Vim Gold Bar – Gold Free
45 g Meswak toothpaste free on purchase of 2 Odopic bars of 400 g
25000 wroth of insurance for maids

Pricing

Bars are typically for Rs. 4 for 100 gm
Liquid Dish Wash for Rs. 45 to 55 for 500ml (Private Labels are cheaper and run attractive schemes like 2+1 with MRP of Rs. 45). But there are some imported brands like Good Maid Bio is for Rs. 150 for 1000ml. Vim liquid comes in 150 and 225 gms for Rs. 15 and 25 respectively
Vim powder is for Rs. 25 for 1Kg
In dish washing paste, Budget is Rs. 50 for 400gm and Axion is for Rs. 24 for 200 gms (approx Rs. 12 per 100 gms). This category is priced premium to regular Dishwash bars

Manufacturing Facilities

Axion is manufactured by Henkel India in Pondicherry (though it’s a trademark of colgate Palmolive)
Budget is manufactured in Malasia (imported in India)
Pril is from Henkel and is manufactured in Chennai
Teepol is manufactured by Reckit Benkiser in Baddi, Solan
Spencer Liquid is also manufactured in Chennai
Vim is manufactured in Mumbai

Indian Ice Cream Market

2007-09-05T19:22:00.000+05:30

Industry Snapshot

Market Size - 800 Crores
Ice Cream market is growing at 10 to 12%
Ice creams traditionally are a low volume business

Players

Amul - Market Leader with share of 36%
HLL - Kwality Walls - 2nd biggest player
Mother Diary
Arun - Chennai Based Hatsun Agro Product
Metro Daily - Kolkata based
Aavin - Tamil Nadu based

Recent Happenings

1. HLL's Moo (Nutritional Ice Cream) - targeted at Kids

2. As Mother Dairy has competency cold chain distribution as they have Safal brand ( frozen peas, corn, juices and mixed vegetables) under their portfolio, they have expanded from Delhi to Bangalore, Hyderabad, Chennai, Punjab, Rajasthan, UP & Uttaranchal. Due to this and other brand extensions in the pipeline, Mother Diary expects their turnover by 20% this year over their present size of Rs. 2800 Rs. Cr.

3. Aavin, the cooperative sector milk and dairy products marketer in Tamil Nadu, has launched a low sugar variant of ice creams in the market. According to an official press release, the ice cream `without added sugar' is ideal for diabetics and safe for children and mothers-to-be. This variant has just 80 calories and has 16 mg of sweetener against 8,000 mg of sugar in the traditional ice creams. The ice cream conforms to the US and domestic food regulations,
the release said

4. GCMMF launched its pro-biotic ice creams that have live beneficial culture that confer beneficial health effects such as improving immunity and digestion and strengthening bones. It also introduced a sugar-free ice cream range and is planning a Web site on ice creams. There two ranges are - Amul Prolife and Amul Sugarfree. According to Mr. R.S. Sodhi, GM Marketing, Amul, Amul hopes to build the pro-biotic range into a Rs 100- crore brand within the next two-
three years. While Amul had earlier tested this market segment through the launch of an isabgol-enriched ice cream, this is company's first full-fledged attempt at capturing a good share of the pro-biotic enriched foods market in India. Both the brands are available in 125 ml (Rs 15), 500 ml and 1.25 litre (Rs 120) packs in five flavours, vanilla with chocolate sauce, strawberry, chocolate, shahi anjir and fresh litchi. On the retail front, it intends to hike its Amul parlours from 600 to 10,000 by 2010

5. Arun Ice Creams, the ice cream brand from Hatsun Agro Product Ltd, is launching a new range of ice cream outlets, Arun Ice Creams Unlimited. Hatsun Agro, which is the largest private dairy in India, plans to make available its range of dairy products at the conventional Arun ice cream outlets operated through franchisees. This network will also be expanded. The new range of outlets will sell ice cream by the scoop, `aggressively priced' at Rs 20 a scoop of 100 gm, Mr Chandramogan said. A feature of these parlours will be the wide selection of flavours, over 25 flavours with five new substituted for the existing ones
each month to ensure more variety. The company is investing over Rs 15 lakh in each of these outlets.

Few Brands/ Target Consumers

1. YOuth Centric - Chillz

2. Kids - Moo

3. Teenagers - Cornetto

4. Health COnscious - Amul Sugarfree & ProLife

This summer mother diary targeted children with the baseline — `Jagaye Andar ka Bandar' while it is luring adults with the message `Give In'.

Interesting piece of information: Hawking is not allowed in Mumbai which makes 1/3rd of business for HLL. Rest is contributed by retail outlets

Future of Ice Cream Market in India

Ice Cream market will expand with increase in number of malls - HLL has been increasing their ice cream outlets - Swirl. Few years consumers use to go out for walk after dinner and use to buy ice creams from hawkers. But now consumer who often visit malls for entertainment
prefer to buy ice creams during different times of the day as it is visible upfront and feel like spending Rs. 50 for that tasty chocolate swirl with cake and nuts. As marketers are understanding the different needs of consumers, be it health conscious people, kids, youngsters, young etc, and coming up with products specific for them... with portfolio of flavors, consumer today has plethora of options at hand to choose from and therefore high probability of buying one more scoop of ice cream. Also with increasing wallet size and innovative modern retail formats, it has definately given a philip to the ice cream industry in India.

FMCG Marketers Ice Cream Survey - Which Ice Cream do you consume & Why?

INDIAN SKIN CARE & ANTI AGEING CATEGORY: LAUNCH of P&G’s OLAY

2007-09-01T03:44:00.000+05:30

Market Size

Indian skincare market ~ Rs 2,100 crore
Skincare moisturiser market ~ Rs 1,600 crore
Premium Skincare Market ~ 450 crore
Skincare market has been steadily growing at 16 per cent as of last year
Anti-Ageing Market ~ 60 crore

Trends

Anti-ageing solutions are nascent but gaining ground
Fastest growing segment in the skincare market (approximately 3 per cent of the overall skin category, it has doubled in the last three years)
Development of the skincare category in India
Growing consumer awareness

Brands & Companies

HUL – Pond’s Age Miracle Range
P&G – Olay Total Effects: Fighting the ‘7 signs of ageing’ (lines and wrinkles, sagging, uneven skin tone, age spots, pores, dullness and dryness). Olay is a $2-billion brand.
L’Oreal
Garnier: In India from last decade

Target Consumer: Indian Women - looking for one product that will help her stay young and beautiful

P&G’s Strategy: Launching Olay in this Anti-Ageing category is a strategy to tap into the premium segment before its goes mass with its Olay brand. With the launch of the Olay range in India, P&G enters the skincare category. Apart from anti-ageing, Olay will make its presence felt in the whitening, moisturising, and cleansing products segments as well. According to Mr. Vohra, P&G has a large portfolio of brands globally and is constantly evaluating the right propositions for the Indian consumer. Currently P&G is focusing on existing categories and with the launch of the Olay range, P&G will continue to stay committed to meeting unmet consumer needs in India by bringing in the right brands and the right technologies from across the globe

Globally P&G’s personal care market is around $20 billion, of which $2 billion is contributed by Olay

Barriers: It is the working woman who is more conscious of the way she looks rather than the woman who stays at home. And in India that segment is still small, unlike the Chinese market where there is a high population of working women. To that extent, the brand might have its limitations in India

Brand Ambassadors: Apart from Sushmita Sen, other brand endorsers during the launch of the brand included successful professional women who have excelled in their respective fields. These were women such as Roopa Purshottam, Economist & Head, Future Trends (Future Group), fashion designer Anita Dongre and Tisca Chopra, TV anchor and actor, among other ‘real’ beauty icons who were roped in by P&G to speak about the virtues of the Olay brand during the launch.

Manufacturing: Just like the rest of the P&G brands, it will import Olay from its manufacturing unit in Thailand, which supplies to many other countries besides India. Although the brand is present in over 55 countries across the world, in the SAARC countries, Olay is not marketed by P&G.

Olay’s Market & Distribution: In India, the brand has been distributed and has been available in the grey market all this while. Now countering the grey market should be the top priority for the company. Building quick distribution to ensure availability of the brand will help in moving the products away from the grey market. As per Mr. Vohra, a part of the Olay range was available in select outlets through third party distributors or through the grey market. Today, with the launch of Olay, P&G will be offering the Indian consumer a full Olay experience and bringing in a range to meet her needs, which will now be widely and easily available at all nearby chemists and stores.

Pricing: Rs 599 for a 50 gm pump jar

Consumer Activation: Olay counters at cosmetics stores with counselling by expert beauty consultants at departmental stores and large modern retail outlets and further education on skincare and Olay

Source: Hindu Business Line - 30th Aug, 2007

Want to work with FMCG Marketers?

2007-08-26T02:42:00.000+05:30

FMCG Marketers is starting a new venture. We want a team of passionate FMCG marketers who can explore different FMCG categories by covering the following points:

Market Potential/ Size
Market Trends
Existing Segments
Details of companies, brands and SKUs and the respective segments they are in
Marketing Activities
Marketing and Branding strategy
Media Strategy
Distribution Strategy
Legal and Regulatory Environment
Future of this category
And any other relevant issues

We have a ready list of all the categories and want interested people to pick one each in which they are working/ interested. You can choose from the following:

Agarbathi, Air Freshner, Atta, Bath Gels, Biscuits, Branded Noodles, Breakfast Meal, Chocolate, Chyawanprash, Coffee, Soft Drink, Confectionary, COsmetics, Creams (all possible ones), Dates, Deo, Detergents, Diapers, Dish Wash (Powder, Bar and Liquid), Edible Oil, Energy Drink, Eye Drops, Skin Care, Hair Care (Cleaneser, Colorant, Conditioner, Cream, Gel, Oil, Removal etc), Hand Wash Liquid, Instant Mix, Jams, Ketchup, Masala (Chilly, coriander etc), Milk Products, Mosquito Repellents, OTC, Perfumes, Pickles, Ready to Drink and Eat, Salt, Sanitary Napkins, Shampoos, Shaving Creams, Snack Foods (Chips, Namkeen and others), Soaps, Soups, Squashes, Talcum Powder, Tea, Toilet Care, Toothpaste, Fruit Juices, Branded Water etc

The selected entries will be published on this blog and will be given certificate of Appreciation from FMCG Marketers. If you are keen in working with us, please comment on this post and call us on this number - 09831055237. We will let you know the details.

Please mail your report to nitin.blogger@gmail.com

Corporate Identity Makeover

2007-07-25T16:16:00.000+05:30

New Avtar of HLL - Hindustan Unilever Limited

Hindustan Lever Ltd has formally introduced a new corporate logo and changed its name to Hindustan Unilever Ltd.

Whats the purpose?

leverage the global scale of the company and at the same time keep its Indian identity intact with its new name
Maintaining a fine balance between its Indian identity and global heritage

India is an exception to have its name as a suffix unlike the rest of its subsidiaries where it prefixes its name with the name of the country. According to HLL, retaining the name "Hindustan" as the first word in its name reflects the company's continued commitment to local economy, consumers, partners and employees.

What does the symbol signify?

company's mission of `adding vitality to life'
comprises 25 different icons representing the organisation, its brands and the idea of vitality
Each of the icons, which make up the U, represent broadly product categories the group is in - for example, a tiny spoon in the logo is a symbol of nutrition, taste and cooking, while a chilli indicates spice and flavours and lips represent beauty, looking good and great taste
Mr Doug Baillie, CEO, Hindustan Lever Ltd, said: "The identity symbolises the benefits we bring to our consumers and the communities we work in. Our mission is full of promise for the future, opening up exciting opportunities where we have competitive advantage for developing our business and our new identity will help us confidently position ourselves in every aspect of our business."

Bajaj Auto

Auto unveiled the new corporate identity on the 15th of January at the Auto Expo 2004, New Delhi. The white and blue reverse hexagonal symbol with Bajaj Auto in small lettering, which stood in good stead for Bajaj Auto for many decades, finally paved way for a refreshing new look symbol with the Bajaj logotype in capital letters. The new identity arrives at a time when Bajaj Auto has successfully metamorphosed into a major motorcycle manufacturer with proven credentials in award winning Pulsar twins and also proved its technological capability with the introduction the revolutionary Digital Twin Spark Ignition (DTSi) technology.
The new visual identity of Bajaj Auto emanates from the confirmation of core values, which Bajaj has identified as its brand values. The Brand essence for the new Bajaj has been defined as "Excitement". Excitement engineering will deliver and inspire confidence in to various stakeholders like Bajaj has traditionally done. Bajaj promises to live its essence thru a set of five Brand Values of Learning, Innovation, Perfection, Speed and Transparency.

The change in Identity is a part of the ongoing changes happening at Bajaj. At a time when Bajaj has state of the art manufacturing infrastructure, has an enviable distribution and service network, has created a benchmark R&D facility and at a time when the customer has changed in terms of its exposure to quality and style, the change in Identity will help invite a paradigm shift in consumer perception of the company.

The traditional hexagonal symbol has been replaced by an open abstract form of stylized B, the "flying B" as it has been named represents style and technology. Italso has a strong association with the heritage of Bajaj since the external form has a hint of hexagon. "Flying B" form denotes speed and open form denotes the transparency.

The new Logotype is all capital BAJAJ, representing precision engineering and perfection. The logo is all confident bold stylistic lettering, which is very global in its outlook.

Bajaj has adopted a new brandline of "Inspiring Confidence". In whatever the company does it seeks to inspire confidence in its audience. Bajaj has traditionally enjoyed tremendous consumer support and plans to consolidate and move ahead on this. The Brandline appears below the Logotype in a script font.This font is to represent learning values at Bajaj and that Bajaj as a brand moves closer to customer.

The Identity has a fresh new Blue colour. This Blue represents stability and strength of Bajaj. Blue also represents high technology and precision engineering.The new Identity presents a futuristic face of the new global Bajaj. Elephant Design has been working with Bajaj on creating and implementing the new Bajajidentity. The new brand will manifest in all consumer and employee interfaces.Says Rajiv Bajaj, Joint Managing Director, BAL, "Bajaj is on the cusp of a revolution brewing on various fronts, be it, exports, design, R&D, new models and marketing. The company thus needed a new identity that would present the new philosophy. The sweeping changes happening at Bajaj Auto required a more dynamic, vibrant and exciting identity, which would also showcase inspiration and confidence through excitement engineering. The change in identity is expected to present an easier interface for the world to understand the new Bajaj with the same trustworthy values."

Hutch - Orange to Pink

Dabur - Towards Tree

Keep watching this article.

Acquisitions of companies and brands – FMCG Sector

2007-07-23T17:54:00.001+05:30

Published on India Infoline on 5th May, 2006.

“Growth is Life” is not just a punch line of Reliance, but it’s what every business/ sector/ company strives for. And FMCG sector/ companies are no exception to this.

The sector saw a slump between ’02 and ’04 but has made a quick recovery. We have seen a transformation in the percentage growth of FMCG sector from single to double digit growth. This definitely shows us signs of good times. Let me give you some statistics.

According to latest HSBC Report (ET – March 10, 2006), FMCG is projected to grow by over 60 per cent till 2010
Total size of the FMCG sector will rise from around Rs 56,500 crore in ’05 to Rs 92,100 crore in ’10.

What is running this sector in the past few years? There exist only two growth paths– Organic (Innovation) or Inorganic.

We have seen FMCG behemoths like Proctor & Gamble to be proponent of organic growth. Recently (April 27, 2006), global CEO of Proctor & Gamble AG Lafley said “Organic growth is more valuable because it comes from your core competencies. Organic growth exercises your innovation muscle. It is a muscle. If you use it, it gets stronger.”

On the other hand, in 2005 Dabur India announced the acquisition of Balsara Hygeine and Home Care businesses. The CEO, Sunil Duggal mentioned that Balsara's acquisition is certainly not the last one and there may be more strategic takeovers in future. And now after one year, I see a new article in economic times on April 26, 2006 – “Dabur India eyes acquisitions”.

So after briefly hearing the different viewpoints from the CEOs of FMCG majors, can there be a unique strategy for FMCG companies to grow. Obviously, the answer is No. But in recent past we have seen a skewed trend towards acquisition of companies and brands by FMCG companies and opting for the inorganic route. In this paper I will give reasons with several case studies to why these companies are following this path.

Download full Research Paper - "Acquisitions of companies and brands – FMCG Sector"

Sachet Revolution is Back

2007-07-17T10:23:00.000+05:30

In continuation to - “C K Ranganathan, CEO of CavinKare: Rags-to-riches!!”

Today economic times - “Small is big again: FMCGs bring back sachet culture”

Let me first enumerate few latest sachet examples:

1. Amul after becoming 1b$ organization to come up with
1.1. 25 gms “munna” butter packs in retail market
1.2. Small milk packs in select markets including Pune
2. Kellogg’s recently launched small packs of corn flakes to attract non-consumers
3. Piramyd Retail too is promoting small packs in its private labels in select Tru Mart stores
4. Telecom pre paid connections
5. Tata Sky different packages

This is not a new concept in India, as it was started in early eighties by Caninkare in form of their Chic shampoo and after that has shifted its gears to almost all possible categories like detergents, soaps, toothpaste, sauces, maggi chotu packs, Atta, mineral water, toiletries and the list goes on.

Let us know look into the reasons for this revolution:

1. Affordably priced product
2. Less investment
3. Reduced risk of buying
4. Use and throw – single serve packs

FMCG organizations would like 1B population of India to atleast try their products and convert them from non-user of products/ brands to trial consumers and finally the endeavor to make them repeat consumers. How can we miss here Mr. C K Prahalad – who wrote in his book “Bottom of Pyramid” that the volumes lie in rural India and sachetization is one key to it. The other big advantage for them is to address different consumer segments and get feedback from them as well.

Now for a marketer it is very important to understand the target consumer and the geographies where this concept is successful. If you see the buying behavior of a housewife, she would like to buy detergents, food items like – Atta, sauces etc in bulk, mainly because she is responsible for 4 people in the family, she would not like to revisit the shop again and again, and lastly and most important is that she get good schemes which keep running.

Now have a look of a kitchen of a bachelor, who is not in a situation to cook proper food, would like to have small bottle of ketchup, small hair oil bottle, half litre or even a small pack of milk to prepare tea, compact liquid shoe polish, ready to eat packs for a single person for single serving. These bachelors who are working in IT, BPO, Sales etc makes a huge population of consumers who are ready to pay money, but for smaller packs and lie in different pockets of India.

1. Gurgaon – Professional bachelors
2. Pune – students in different colleges
3. Kota – students preparing for IIT
4. Chandigarh - coaching centers

Very interesting example of sachetization is the tiffin system. The local housewife aunty in the vicinity will prepare 2 vegetables and will pack into small foil bowls with rice/ chapattis. It is pure unbranded sachet revolution. I sometime think why the FMCG companies don’t test this in some markets and see a response. When Amul can make Amul Pizza, why don’t they make Amul Lunch Thali/ Amul Dinner Thali. I understand that supply chain will be in issues, but still something can be worked out.

So it’s important for FMCG companies to take a region-centric look and look for segments which are large and profitable enough to serve.

Brand Identity Prism - some examples

2007-07-16T15:04:00.000+05:30

Brand Identity Prism

As per Kapferer, Brand identity can be defined by six parameters:
1.Personality
2.Physique
3.Culture
4.Relationship
5.Self Image
6.Reflection

Out of which, Personality, Culture & Self Image is an internal identity, which an organization looks at. The rest, Physique, Relationship and the Reflection is an external identity, with respect to a consumer. Lets go into each of them one by one:

1. Personality
a. Personification of brand
b. What kind of person it would be, if it were a human being
c. Examples: Confident, Social, Flamboyant, Arrogant, Energetic etc
Kingfisher & Virgin Airlines brand personality may be that of flamboyant or rich

2. Physique
a. Mentions physical facets – tangible things
b. It will include packaging, product look and feel
c. Examples: Packaging color, product features etc
Apple I-pod browsing physique will include its dial capabilities, the screen, and its connectivity with musical devices

3. Culture
a. Set of values feeding the brand’s inspiration
b. Rules governing the brand in its outward signs like product and communication
c. Examples: Indian, Western, Contemporary, Narcissist, Urban
“Kitchens of India” takes its culture from the Indian cuisines made and packed for the consumers

4. Relationship
a. Transactions between people
b. Examples: Trust, Energy, Strong bonding
Jet Airways – Servicing their customers to the best

5. Self-Image
a. Through out attitude towards certain brands, we develop certain type of inner relationship with ourselves and brand image we want to project
b. Which an organization wants its customers to perceive
c. Example: Masculine, Progressive, Self Belief
Paras’s Set Wet Gel – targeted towards males have a self image of masculinity

6. Reflection
a. What target consumer thinks & perceives the product to be
b. Factor for strong and good brand image
c. Companies should control the reflection and should try to make it better
d. Example: Royal, Dynamic, Energetic, Confident
HSBC – consumer clearly sees that every individual has specific need therefore customized service

FMCG WIZARDS CONTEST: Future of FMCG in India (5 years from now)

2007-03-29T20:11:00.000+05:30

Welcome to India's first FMCG Wisdom Website

I am rolling out a contest on FMCG sector in form of a Reaserch Paper. As many people in FMCG marketers community are interested in doing projects in FMCG sector, i am starting this Contest - FMCG WIZARDS.

CONTEXT
There are different FMCG categories existing in India. At a macro level there are mainly four categories – Home & Personal Care, Foods & Beverages, Cigarettes and Alcohol and at a micro we sub categories under HPC and F&B. Some of them are quite established in India. Just to name a few, the established ones are Soaps, Shampoos, Biscuits, Confectionary, Cigarettes, Salt, Snack Foods(Chips & Namkeens) are more than 1000 Cr. categories. Other FMCG categories are in nascent stage like Ready to Eat, Breakfast Meals, which are well within 100 Cr.

There are some categories like Chips & Namkeens, which today has a huge market of 2000 Cr. and was miniscule 6 years back. One thing is very important to understand here is that the smaller FMCG categories today will be more than 1000 Cr. and will contribute a considerable percentage in the portfolio of FMCG categories. Apart from the already existing categories in India, there are many other niche FMCG categories, which are non-existent in India but are well established in developed nations. But gradually India will experience those categories in India.

The deliverables of the research paper are:

1. List of all FMCG categories and their current potential in Crores. Do refer: http://fmcgmarketers.blogspot.com/2006/09/fmcg-product-categories.html
2. Split the categories into established and nascent categories
3. List of untapped categories in India which are prevalent in other nations
4. Viewpoints on the scope/ potential of nascent and untapped product categories in India in next the 5 years, looking into the changing consumer behavior
5. Lastly, what all FMCG companies in India should enter into these categories

The essence, which should come out from the project are the budding FMCG categories, which has a huge potential in India in next 5 years.

DATE OF SUBMISSION
Please mail the research papers by 16th April, 2007 on nitin.blogger@gmail.com with details of the team members (maximum 2) and your backgrounds.

FMCG WIZARDS WINNERS
I will shortlist 2 teams. The papers will be published on FMCG Marketers.

Put in your best to come out with interested insights, which can be useful for the FMCG fraternity.

Best of Luck.

Budgets Implications on FMCG Sector

2007-03-27T12:02:00.000+05:30

The Budget gives more focus on the agricultural/farm sector that will boost the rural income thus providing better growth prospects to the FMCG companies. With 12.2% of the world population living in the villages of India, the Indian rural FMCG market is something no one can overlook. Better infrastructure facilities will improve their supply chain. Also, with rising income and growing consumerism, FMCG sectors are likely to benefit. Growth potential for all the FMCG companies is huge as the per capita consumption of almost all products in the country is amongst the lowest in the world. Further, if these companies can change consumer's mindset and offer new generation products, they would be able to generate higher growth in the future.

Points to remember

Farm sector has been given the top priority. Agriculture investments to go up to 2% of GDP
Duty on edible oil has been reduced
Excise duty exempted for all food mixes and biscuits
Custom duty on Sunflower oil (crude and refined) reduced by 15 per cent while exempted from additional CV duty of 4 per cent Customs duty on food processing machinery and their parts is being reduced from 7.5% to 5%
Excise duty has been fully exempted on biscuits of per kilogram
Excise duty on food mixes, including instant food mixes, has been reduced from 16% or 8% to Nil
Free samples and displays are exempt from the purview of FBT
Footwear - Excise duty on parts of footwear reduced from 16% to 8%
Venture capital investing in dairy industry will get a pass through status
Better rural infrastructure development to be an area of focus
Increase in dividend distribution tax from 12.5% to 15%
1% higher education cess to charged
The dividend distribution tax on dividends paid by money market mutual funds and liquid mutual funds increased to 25 % for all investors
No implementation of value-added tax (VAT) on cigarettes
Specific excise duty on cigarettes increased by about 5%

CHANGES EXPECTED

The focus in agriculture will benefit rural income that in turn will help FMCG companies Thrust on Increased investment in agricultural activities and rural infrastructure would be positive for the sector
Increase in spending towards upliftment of rural populace to lead to increased demand for durables in the long term
CST reduction expected to lower manufacturing costs of FMCG players
Reduction of excise on food mixes is beneficial to ITC, as this segment is a new growth area
FMCG companies spend a lot of money on advertising and brand building. Exclusion of samples and displays from FBT will help them in promoting their products
Better infrastructure will help better access and more distribution network to the FMCG companies. It will help them improve the supply chain
Companies have huge investments in the liquid funds, the higher tax on dividend distribution will reduce their other income. The impact of higher tax (cess) on the industry is likely to lower net margins, albeit marginally. Also all the FMCG companies will benefit from the infrastructure development funds that will boost to rural income

HLL, Marico, Dabur and ITC will benefit out of it.

Britannia and ITC are likely to benefit due to reduction in excise on biscuits
ITC will also benefit from the reduction of excise duty on instant mixes
Duty reduction on edible is a positive for companies like Marico
Positive for footwear companies like Bata, Liberty Shoes and Mirza International

Source: Indian Budget 2007-08 - Part I - Fast Moving Consumer Goods (FMCG)

Thanks Mr. Finance Minister for this hygienic budget for FMCG Sector !!

ROSS - Return on Shelf Space

2007-03-24T20:24:00.000+05:30

Lets take an example of Biscuits. The different brands are:
1. Sunfeast
2. Britannia
3. Parle
4. Priya Gold

There will be a space for these brands in biscuit category. When i talk about space it is the area which is visible to the consumer. Suppose it is 10X Sq. ft and is divided into 3X, 2X, 2X, 3X.

Now there will be some sale of this brands in that mall.

So you will get a variable ROSS= (Sales in a month)/Sq. Feet

This variale will vary from brand to brand .... More the ROSS, more is the benefit for the retailer ... If ROSS for a particular brand is more, retailer can give more space to that brand.

This anlaysis will give you how fast moving the brand is and other things when you get into it.

Exercise for guys interested in FMCG/ Retail: Visit few Malls... and see ROSS values for different brands in different malls ... and do an analysis which is the best ...

Ideally the more selling the brand is ... more space should a retailer give to that brand. All this what i have writtten is SPACE MANAGEMENT and there is something called CATEGORY MANAGEMENT ... which say that All marie biscuits be together in a shelf... Diapers to be with Beer Cans (This also come out marketing analytical techniques)

In US, as modern trade is more prevalent, they give lot of weightage to space in a key account, as every Sq. Ft cost many pennies.

This also lead to something called PLANNOGRAMMING Principles. This says that the consumer view a particular shelf from left to right; some SKUs are sold more that the other;

So should we have more display of packets of a fast moving SKUs or give equal space for SKUs. As India Retail construct is changing to modern formats ... our Mall owners and the concerned organizations are becoming SPACE CONSCIOUS.

SAVE the SPACE.

Innovations in FMCG sphere: India

2007-03-11T17:21:00.000+05:30

There are two types of innovations - Evolutionary and Revolutionary

A) Evolutionary: Its just an addition to some innovation/ launch etc done in past. Just take the example of Colgate Maxfresh. Its just an addition of a new attribute to the existing portfolio.

B) Revolutionary: It is something out of box - alltogether new where nobody has entered so far. Lets take an example of Lays Kukure where they did some innovation with Snack Foods category in FMCG. Other example is Salt Toothpaste - its exactly not revolutionary, but its really a different value propositions which consumers never thought of. This was possible after lot of R&D done in area of dental

Now think of weird innovations - some liquid which when applied on hands will remove all the germs and make your hand absolutely clean without even using water. It has an awesome utility - its is revolutionary. But here the important point is whether this is launched in right time to the right markets for set of consumers.

But definately there are untapped innovations which FMCG Marketers keep exploring to increase their business and move up the value chain.

DO you have some innovation in your mind. Do comment!!

Lavazza eys on Barista

2007-03-11T14:18:00.000+05:30

One more acquisition!! This time its that of the leading coffee chain in India by Italian coffee chain, Lavazza.

This all started with the visit of an official/ owner of Lavazza who visited a Barista outlet few weeks back and made his mind to take Barista in their international portfolio.

Italy's largest coffee company Lavazza is taking over Barista (Owner: NRI C Sivasankaran) and Fresh and Honest Café Ltd. (FHCL). The transaction would be completed over the next 4 weeks. With their plush looks, ambience and range of coffees, the two chains enjoy a mainly young clientele that Lavazza would inherit.

Lavazza’s entrance would preclude the US coffee major Starbucks that has been in talks with various companies for their foray into India. Lavazza owns the exclusive coffee chain Lavazza BLUE, and has a range of served as well as off the shelf products including Bevanda Bianca and Ciocolatto.

Barista has over 150 Espresso Bars and Barista ‘Crème’ outlets in over 29 locations in India. Besides India, Barista also has cafes in locations across Srilanka, Oman and the UAE.

FHCL operates in the freshly-brewed coffee vending business in India. FHCL has an installed base of 2500 Swiss, fully Automatic Vending Machines (AVMs) across the country. FHCL's client list includes 5-Star Hotels, high-end restaurants, large corporations, railway stations, airports & hospitals.

Both companies are owned by Sterling Infotech, that took over the operations from the Tata Group in December 2004, when Tatas exited their final 10 per cent stake in the company.
Commenting on the deal, Mr. Alberto Lavazza, CEO of Lavazza Group said : "We are delighted to enter the rapidly growing Indian market through Barista and FHCL. The acquisition allows us to take a leading position in coffee shops."

Lavazza has annual revenues of over $ 1.2 billion and operates in over 80 countries in both out of home (café chains and coffee vending) and retail businesses.

Few months back Barista added illy (new flavour from Italy) in their portfolio and now an Italian company is set to buy Barsita.

Now the point to understand here is that what value added will Lavazza make to the old sexy Barista. I am a loyal customer Barsita and spend around Rs. 1500 a month and wont make any difference to me Lavazza taking over Barista.

In past we use to have CCD and Barista and now we have recently seen the entry of Costa Coffee. And the Starbucks of world will be soon making a foray to India. Now the interesting question is whether we have this much consumer who will give business to these chains. Definately we have consumers varying from Tribes in Andaman & Nicobar Islands to the Hap crowd of Mumbai - a pure heterogenous market, but i am really doubtful of the number of consumers who spend Rs. 30 for a Cappachino cup of Coffee in Barsita, CCD or Barista.

Lets wait and watch and see whether these chains will actually be successful in India in short or long term. Best of Luck Lavazza!!

Trade Schemes for different FMCG Categories

2007-02-27T12:02:00.000+05:30

Different FMCG categories should have different trade schemes. Lets take few categories.

1. Atta: Quantity Purchase Scheme will work here. This will have different slabs and will have higher encentive for higher slabs. Eg. On buy of 10 tonnes of Atta for a period of 2 months, 5 % additional discount will be given and a washing machine will be given

2. Salt: Its more of a wholesale driven category, where price is a crucial dimension. Just by cutting 30 paisa on a Kg of Salt, respective companies can increase their sales

3. biscuits: Here trade schemes are in form of some discount if they clear the bill on time. Its called CD - Cash Discount - normally companies give 1% CD. but its very important to understand that its more of a consumer pull category and trade push dosent work here

4. Soft Drinnks: QPS works here as well.

More discussion on this topic on FMCG Marketers.

Super Value Stores - Modern Retail Format

2006-11-12T15:29:00.000+05:30

This is the most effective and widely used form of merchandising practices adopted by HLL to enhance their visibility in the form of window paid displays.

5 visibility aids for SVS
Ø Glow sign boards
Ø Boards should be cleaned and maintained on each visit
Ø Boards should be lit
Ø HLL planogram must be there
Ø Board backing sheet

Criteria
Ø The uppermost display window must not be 8 ft above the ground level of the outlet.
Ø Ideally all the display windows should be between 4-8 ft from the floor
Ø Criteria for an outlet to qualify for SVS is must have 8 window displays
Ø Out of 8 windows 6 windows signify product portfolio and 2 windows denote news corner
Ø News corner windows are hired and changed every 21-30 of the month and give information about new product inventions and offerings
Ø News corner windows should be ideally 1-2 ft above the counter top of the outlet.
Ø 3 % CD is given to SVS on fulfillment of all the criteria desired and accordingly points are given after a comprehensive survey of the existing SVS by the supervisors and the company personnel on a monthly basis
Ø Glow sign should be lit
Ø A table top listing offers and new product introductions should be there on the counter tops
Ø Four hanger displays of shampoo and detergents should be ideally there
Ø Backing sheet must be present
Ø Presence of POP, POSM, Danglers need to there
Ø Shelf strips to support the displays
Ø Cut outs to enhance the effectiveness of window displays (Girl cut outs, women cut outs as in the case of Clinic Plus)

Products are displayed according to the templates designed by the brand team every month and a copy of the same is sent to the respective distributors and merchandisers accordingly. From 1-20 of each month windows across the territory are maintained and supervised by the merchandisers and the company personnel.

FMCG Wholesale Industry

2006-10-31T22:19:00.000+05:30

One of member of FMCG Marketers, Gaurav asked me put some insights on Wholesale industry in India, its operation, key factors etc. Let me give you some pointers which may help you guys.

For any product category which is high selling will have wholesalers. Take the case of biggest FMCG product category - cigarettes or the next family of product categories - Personal products, all have a combination of wholesale and Retail Sale. The only difference between the two is the offtake levels, financial capacity and sometimes infrastructure to deliver to retailers.

Normally the rates for wholesale is cheaper than retail, as it is in bulk. This sometimes lead to price cutting in market. Both retail and wholesale have a role to play. Its always good to have high retail thruput (Total Retail Sales/ Total Sales) to have higher control of organization over the retailers. This will help the organization to launch new brands in future, increase visibility at the outlets, which is just because of relationship of organization saleman with Trade.

At the other end, in case of insufficient supply from factories or C&F, there will be sufficient stock to deliver to outlets to serve the conserve. Also, there are many markets which is practically and financially not possible for many organization to cover like less than 10K narkets, Here these small retailers in smaller markets get the stock from these wholesalers which are located at some distance from them.

Its really interesting to see wholesale mandis in some pockets in different areas.

Sunfeast foray into Biscuits

2006-10-08T19:20:00.000+05:30

Major players in biscuits who dominated the industry long back were Parle and Britannia. With that there were smaller brands in various regions. Instead of all this ITC took a bold step to hit on these biscuit mammoths making 82% of industry (in 2004)

Now the important question at hand is the reason why ITC entered into this product category. Let me enumerate some reason:

Food segment is Rs. 550,000 crores (112 b$)
6% is FMCG (Branded and packaged) – Rs. 33000 crores
In developing markets, the above percentage is as high as 95%. So looking into future, India’s will have more organized and branded food product categories. It will lead to dual effect: Increase in base of biscuit segment and Increase in % of branded food categories
ITC has a great scope to be a branded player
Branded Biscuits industry come out to be around Rs. 4000 crores
Increasing at the rate of 12 to 14% yoy
Synergies with ITC core competencies (value addition to wheat with Aashirwad Atta brand)
Biscuits as a segment positively effects the bottom line

Threats for ITC: Behemoths like HLL tried their hand in this segment but unsuccessful (Max brand exit in 2005)

Reason for Entry into Biscuits

Innovation: Research revealed that the category had gaps which ITC could settle into. Findings revealed that consumers wished to taste new and innovative products. That was precisely what the competition had not done in a big way. Glucose was Glucose and same is the case with Marie. The company decided that this could be its biggest point of attack. In 2003, ITC launched Sunfeast with six ranges. But it was a calculated risk. ITC stuck to category favourites like Glucose, Marie and Bourbon cream. Along with that, it also launched innovations such as orange-flavoured Marie, Marie light and butterscotch-flavoured cream biscuits. In 2004, Sunfeast followed this up with the launch of Sunfeast Milky Magic. More recently, it also has launched the Sunfeast Snacky and Sunfeast Golden Bakes. The biscuits industry had not witnessed any major product innovation in years. Consumers were just waiting for something new, something fresh, when Sunfeast happened
Distribution: Distribution is the key for FMCG products. In biscuit category, distribution and visibility is extremely important as it's partly an impulse purchase product. Priya Gold, which entered the western region in 2000, is struggling to find its feet even five years later. However, in this regard, Sunfeast did not stumble. The main credit goes tobacco business – its understanding and deep grasp in distribution. But it was not limited to just panwaris, but looked at the grocery stores and other retail formats. The company says the brand is now available in nearly 1.8 million outlets. Britannia claims it has a superior distribution clout with its presence in nearly 3.3 million outlets. Parle, the seasoned player itself, says it is available in 1.5 million outlets. Sunfeast's next step was to step up its branding and promotion
Promotion: In August 2003, a month after its launch, the company undertook a major sampling exercise to promote the product. For two years then, the brand did all the usual rounds - riding behind buses, blocking television spots, corner space in newspapers P
Pricing: The biscuits industry now has two clear models. Parle products plays the low price game at all varieties of biscuits from glucose to cream. Parle plays a high volume, low margin game. But Britannia and Sunfeast look at a two-pronged strategy. High margins in cream variants and volumes from the Marie and Glucose segments. For instance, cream biscuits from both Britannia and Sunfeast cost Rs 10 for 100 grams. Parle, however, only charges Rs 5 for its cream variants. Except for Hide & Seek, all of Parle's products lie in the price range between Rs 4 and Rs 6 for 100 gram packs. Biscuit consumer is willing to pay more only when he sees a clearly differentiated product. Hence companies have little choice in terms of pricing. No wonder all the Glucose and Marie variants straddle price points of Rs 4-6 (for 100 grams)

Results
1. Volumes: In March 2006

Britannia's shares have dropped from 35.8 per cent in 2004-05 to 30.5 per cent in May 2006
Parle's shares have also dropped from 42.2 to 38.4 per cent in the same period
Priya Gold has seen a minor dip from 6.4 per cent to 5 per cent
ITC's Sunfeast has been a big gainer with its share increasing from 2.7 to 6.7 per cent

2. Value

Britannia leads the market with 37 per cent market share
Parle's 31.3 per cent
ITC's 6.3 per cent

Definately a long journey for ITC. Lets wait and watch ITC reaching the peak in next set of years.

Distribution Model in HLL

2006-09-27T20:21:00.000+05:30

As mentioned in one of my post - i mentioned about distrubution model of ITC. Now its time to tell you guys the model for the second biggest FMCG in India, HLL.

Starting with Factory, then to C&F and finally to the Distributors. In HLL they are called RS - Redistribution. For rural markets, the distributors are called Streamline RS.

Lets start with RS. They supply stock to Wholesalers, Retailers and IDC (Indirect Coverage). IDC is something like a RBD (Rural Brand Distributor) in ITC. Now in case of Rural Distributor (Streamline RS), they supply stock to Star Sellers (in different towns). The Star Sellers covers markets between 2 and 50 K. They are like SCPs (Stock Carrying Point) in ITC.

Apart from that, they also have Shakti in place (Women Empowerment and Selling).

FMCG Product Categories

2006-09-25T19:50:00.000+05:30

There are mainly 4 product categories in FMCG:

Home and Personal Care (Home Care and Personal Care)
Foods and Beverages
Cigarettes
Alcohol

These categories can be divided in sub categories. Lets take one by one:

1a. Household Care: It can be divided into the following categories

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

1b. Personal Care: It can be divided into the following categories

Oral Care - Toothpaste
Skin Care - Creams, Lotions, Gellies
Hair Care - Hair Oil, Shampoos
Personal Wash - Soaps
Cosmetic & Toiletries
Talcums
Deodorants
Perfumes
Paper Products - (tissues, diapers, sanitary)
Shoe care

2a. Foods

Confectionary
Staples/ Cereals
Bakery products - Biscuits, bread, cakes
Snack food
Chocolates
Ice cream
Processed fruits
Vegetables
Meat
Dairy products
Branded flour, rice, sugar

2b. Beverages

Tea
Coffee
Juices
Bottled water
Health beverages
Soft drinks

Fascination for FMCG - Part 1

2006-09-22T18:06:00.000+05:30

A mother's feed is paramount for a newborn. But gradually, mother has to rely on nutritious food for the better health of her baby. Now, she is ready for a branded diet - a Ceralac. This is one of the first few experiences with FMCG which may have had happened to us.

At very stage of life, one is in constant touch with one or other FMCG brands. The first instance with FMCG in daily routine is a visit to bathroom to brush ones teeth. One is ready for a Colgate wash with an Oral-B brush. Other looking for freshness buy a Close Up. Now is time for my face, to remove a day long beard. Ready to wet the face, zip off the shaving kit to have access to Park Avenue shaving Cream & Gillette blades, to have a smooth shave.

Mother as her kid to use dettol soap to fight against the unwanted germs. The kid ask for a Horlicks in south India and Bournvita in North, before he sets off for a hectic day. Here the bells rings and everyone of them are set for Maggi Noodles Recess break or a Sunfeast biscuit. Now is the time for a Thanda break in summers. Some adventure freak guys love mountain Dew and others game for much like Coke. Standing in front of them are set of faculty members prefer an adult drink (non-bacha drink) - Thumps Up, taste the thunder. Here comes a lady faculty willing to consume not more than 1 calorie, goes for Diet Coke.

The experiences and touchpoints with FMCG brands end with an All Out or a Good Night - a ,mosquito repellent.

Everyone of us are linked with a portfolio of brands, which we consume every month. Consciously or unconsciously, we use these brands as vocabulary in our discussions. A few instances:

1. Confirming packets of Lays before leaving for an expedition
2. Comparison of Aashirwad and Shakto Bhog Atta (discussion in Kitis)
3. Royal Challenge vs Seagrams Scotch
4. Two smokers convincing each other their set of brands - Is Wills Classic superior than Gold Flake Filter Kings?

And the list is endless. Throughout the days we are connected to all these lovely brands.

EXERCISE
Just while reading this book, have a look in your surroundings and observe the portfolio of brands. Just make a list of FMCG brands. Now move in your surroundings and observe more closely - roads, gardens etc and make a new list.

After making this many of you will find that its actually difficult live without them. THATS THE POWER OF FMCG.

Tracking Freshness ... a Concern

2006-07-11T13:59:00.000+05:30

Have you even checked the expiry date of the product you consume everyday. Most of you dont do ... I must bet. But is it the responsibility of consumers?

Now think of a scenario - "Total removal of expired stocks from retailers by all the companies". Then the consumers will never bother to check the expiry dates. Now the next question arise is that whether the companies track the outdated stocks. I have personally seen many expired products in the markets, which the retailer keep selling. This is unethical at the part of both retailers and more on the organization.

There should ideally be a supervisor to track the outlets in different markets for the freshness. Now lets look at how this problem arise. The main reason is the inefficient estimate of the stock at the wholesalers and the retailer level. So in a utopian state of perfect estimates, there wont be any damage. But that will always happen. So the companies role should be to come up right estimates if not perfect, which will increase the fressness level of products.

Its not only business ... but something else as well !!

Market Research/ data Analytics in FMCG

2006-07-10T09:22:00.000+05:30

Many of you reading this blog may have read the first few chapters of Kotler - Marketing Management, mentioning the importance of need for the consumer. There are mainly two types of needs:

Unfulfilled Needs
Unidentified Needs

Now take a snacks business where players like Haldiram, Frito-Lays and many other local brands are present. Lets Analyze. Are they able to satisfy the needs of the consumer. Remember one thing guys - Till this materialistic world exist, the needs will never be fulfilled. So marketers need to innovate and do lots of data crunching to identify NEEDS.

Lets take the example of Kurkure. They did a market research where they got the insight that people want something extra from just Kurkure. They must have analyzed the eating habits of consumers and found that they like eating with some onions, ketchup/ lemon or something else which add something new. Also that indian consumers like chats, rajcachoris and other chatka-bhatka stuff. So Kurkure invented - "KURKURE SHAKE"

But sometimes even the day-to-day data in an organization can give wonderful insights. On the basis of data, one can get general consumer insights - how their consumer behavior is changing. There can be some switching happening within the brand portfolio of an organization with some changes either in price points, value propositions etc. Lets take the example of MARUTI - 800 and Alto. The data clearly show that after the lauch of Alto, the sales of 800 has dropped. The reasons are:

AC is more effective
Change from the normal routine
The value for an extra charge of money is more
Imagery created via different advertisements

Now coming to FMCG example - there is GBytes of data from the bottom most level to the country level. You have data points at the retailer and the wholesaler level. HLL can easily analyze the performance of Liril vs Lux by effeciently analyzing the data. But what is happening is that Indian FMCG companies are not upto the mark in analyze this google of data.

I have one recommendation for every fmcg company to have a dedicated team in every branch to work on data analytics and come up with implementable insights to fulfill the NEEDS.

May the needs get fulfilled !!

Merchandising ... Mantra to increase visibility

2006-07-08T12:54:00.000+05:30

Just remember the last time you visited a Mall, nearby Grocery outlet and local Convenience shops (Panwaris). Some products catches the eye of consumers - as they are in the vicinity of eye contact and others in the nook which are never observed.

Lets take different situations where merchandizing will increase the visibilty and then the Brand Salience.

Brands near billing counter: People who go to Big Bazaar must have noticed that Lays/ Bytes Packets are kept near the billing counter before they have finalized the other brands. Now, its not only display but the schemes on the Brands - 1 Lays Rs. 20 packet with buy of 3 Packs of Lays. It comes out to be Rs. 15 packet. Most of the consumers will put 4 of Lays in their basket.
Brands in one product categories: Lets take the example of Biscuits in Big Bazaar again. There is different height for different brands on the rack. Kids prefer Sunfeast Cream biscuits - which make ITC to place their cream variant a little lower (around 3 to 4 feet) and Seet N Salt a little higher (5 to 5.5 feet). But every brand cannot command a position on the shelf or a place in general in a Mall or any outlet per se. It all depends on the Relationship and financial capacity of the respective company. Britannia may have a higher say than PriyaGold biscuits. But once you get the right area for your brand you are all set for higher visibilty and definately higher topline.
Frontal Attack: Just think of a situation - A consumer entering a mall and the first thing which he observe is a good looking retail display - a stacking unit to keep cigarettes. Here smokers will get an opportunity to buy ITC cigarettes brands and at the same time it will reinforce the image of ITCs Brands. Other big international player - Malbaro has also set up these displays in different malls.
Company Area: Big FMCG companies like P&G, ITC, Nestle who have the financial muscle take the whole area in a strategic location inside a mall to display all the Brands. Just think of a space where Aashirwad Aata & Namak, Sunfeast Biscuits and Mangaldeep Agarbattis are kept. People loyal to ITC products will directly go to that area and buy.

There can be many more creative use of merchandizing to increase the visibility.

ROLE of IT in FMCG Organization

2006-07-06T15:34:00.000+05:30

Just think of a situation: "Delivery of right stock to wholesaler/ distributor once/ twice a week"

Lets not go into National level delivery and try our hands with State first. Lets take Uttar Pradesh with number of Wholesalers/ Distributors (WDs)

We all know that India market in general is heterogenous and also the states. Even a city like Lucknow will have diverse people with different disposable incomes, lifestyles etc. Lets divide into Lucknow city into different small markets. Some market will smoke Wills Classic and others are extremely loyal to CAPSTON.

So its not toy handling to first of all estimate the demand for different regions. Lets assume even if you the right estimates for all markets for the next month (which actually is idealistic), how will you decide how much to deliver to different WDs every next few days. Lets go to some basics:

1. WD has a constraint of stock capacity which make him impossible to stock for the whole month, also it may lead to expiry of the products.
2. WD dont have the financial capacity to buy stock for a month, which make him appropriate to stock for few days.

SO there are huge calcuations required to come up with a DELIVERY SCHEDULE for a particular month. Here comes the ROLE OF IT - Information Technology. ITC has done it right by implementing SAP R/3. Let me mention few of its benefits:

Provide real time Stock on Hand
Brand wise pipeline is maintained
Analyze the data to get the trends in the sales and other variables

Now think of a situation 5 years back when there was no IT and all this written above was done manually, must have been a nightmare for all these guys to come up with right Deliveries to the WDs.

But i must mention here one thing that FMCG companeis have still not fully leveraged IT to futher benefit in terms of operational efficiencies. There is a huge scope left. Do you guys have ideas?

Role of Distribution in launching new Brands

2006-07-04T19:05:00.000+05:30

As mentioned in the last few posts, distribution is the key in FMCG sector. So lets start with some stats.

ITC cover 2 million outlets directly and 4 m indirectly
HLL cover 3 to 3.5 million outlets indirectly
India has 6 million outlets

Does this presence of ITC and HLL will help them to launch new Brands? Lets look at some points:

Brand ITC/ HLL
Established relationship of with the outlets
Outlets dependent on the companies for other brands in Demand in Market
Attractive Trade Promotions
Retail Outlets also need a variety, be it biscuits or soap, to satisfy different needs of the consumers

A combo of Branding Expertise and Distribution Capabilities is required.

Lets take few examples:

STAR Cigarette: With ITC's deep penetration and right relationship with the outlet owners, they were able to launch a new brand in Bingo category. Just think of the numerous rules & regulations in tobacco industry which make any cigarette company almost impossible to lauch a new name. But nothing is impossible with ITC
Sweet N Salt: With ITC's umbrella biscuit brand - Sunfeast and deep touch in the market, ITC was successful in launching a new brand few weeks ago - Sunfeast Sweet N Salt

So all FMCG companies out there build Distribution Expertise !!

Product/ Brand reaching the end consumer

2006-07-04T10:40:00.000+05:30

Just think of Rs. 1800 crore confectionary market in India.

Now think of any grocery and convenience outlet in your vicinity. Do you see one of Mint-O, candyman etc. You guys must be thinking how they reach the end outlet. I must tell you - ITS NOT EASY. Covering millions of outlets everyday/ weekly is a monumental task.

Let me give you some insights. There are different levels in the supply chain which make the stock reach the end consumer. They are:

1) Factory: Production is done in few factories in India.
2) Warehouse service provider: Using all the fundas of Supply Chain Management - mainly operation optimization - or route optimization. So there are number of WSPs at strategic locations. I am not going deep into it.
3) Wholesalers/ Distributers: Now every section/ circle will have different distributors. This guy must have the financial capacity to buy the stock from the company without any credit and must have the manpower to sell the stock in a particular market.
4) Secondary Wholesalers/ Distributors/ Retailers: They have warehouse space to cover the smaller towns nearby ... to lessen the task of WDs.

So either the Sales Guys of WD or the SWD will send the product/ brands to the retailers which is the closest point to consumer in the supply chain.

The stock can take around 3 to 4 weeks to reach to the retailer from the production @ Factory.

Role of People skills in FMCG sector

2006-07-03T18:55:00.000+05:30

Just think of a fresh graduate, 23 years old, entering into FMCG company like ITC, HLL, Nestle etc. What type of responsibilities can you expect? Most of us think that in sales in FMCG, its going to the outlets under the sun, sweat out etc. Thats not wrong !!

Its just for a induction period mainly, because any manager should be sensitized with the working of different people in the hierarchy as mentioned in my last post - "Hierarchy in FMCG organization". Its approximate half a year. But once you learn the hard realities, you have to manage the above mentioned people.

Lets take a role of a manager at the entry level. He has around 4 circle heads, with each of them having 4 section heads. That means around 20 people. Apart from that you a huge sales force of around 500 people and 100 supervisor (Figures are mentioned just to give you an idea).

Dont you require people skills?

Hierarchy in a FMCG Organization

2006-07-03T14:01:00.000+05:30

All the people who are interested in FMCG sector know one important thing - "Distribution is the key". But the big question here is that - "How the hell my products reach the grocery and the convenience guys?"

Let me give you some insights on that. Lets start with person lowest in the hierarchy.

Sales Guy: The basis role of this person is to make sure that the company's product portfolio react the G & C retail outlets. So he may either use a cycle or a bike or a van normally for grocery. This guy has the highest touchpoint with the retailers in his route. Normally the salesman will have fixed route and even know the names of the retailers. He know the exact demand for the next visit. He is the guy with maximum insights.
Supervisor: This guy will make sure that the sales guys are working properly. He will train and motive the Sales guys.
Section Head: In a particular state, there will be different districts and group of districts will make a sector. So some employees of the FMCG organization will head that section. They also have to interact with the distributors/ wholesalers and check for the demand for next month and accrdingly design delivery schedules.
Area head: Now group of sections will make a Area, which will be headed by a Area Head.
State Head: Looks for the sales of the whole state

And the hierarchy keeps growing to District Head, Country Head - Sales / Marketing.

Innovative BTL activities for FMCG companies

2006-05-29T15:40:00.000+05:30

Terms like ATL and BTL are like helping verbs for Marketers.

ATL- Above the line
BTL- Below the line

ATL are conventional medium like TV, Print ads, Radio etc. These days we have seen a new trend of companies not spending a lot on ATL as it is very expensive. Rather they are investing on BTL - Below the line activities. These are like giving coupons, road shows, buzz marketing etc. BTL are very cheap and cost affective and we will see in future a skewness towards BTL as it is cost effective.

Let us see some innovative BTL activities for FMCG companies.

1. Road Shows/ Activities in Malls: As Pacific Mall is very near to my home in Kaushambi, i frequently visit there to have a cup of coffee either Americano or Cappuccino. But what do i observe there is these small FMCG players having there stalls in the nooks of the Mall. They were:

a) ACT II Popcorns by ConAgra Foods Snack Foods Group: They organized different games there to involve consumers in Pacific.
b) SHIEF Soap for Women: They also had several games like - hitting the dart on ordinary soap (by this they send a message that Use Shief and not Ordinary Soap), throwing soaps in a box 3 to 4 meters away.. These all games awarded all the ladies and girls with Wrapped Shief Soaps. At the end they asked all the females to repeat their punchline of "Banaye Komal, Rakhe Surakshit"

I must tell you one thing that, they got a fabulous response.

2. Screens outside the Malls: I have seen screen just outside the Metropolitan Mall in Gurgaon. They have a series of advertisements on the screen. One has to pay for a month and your ad will be for some seconds after every 5 to 10 mins. I saw an ad of Whirlpool with Kajol and Ajay Devgan there. But i think this can work for FMCG products as well.

3. Retail Displays: You must have seen SugarFree packs in front of convenience stores. So the consumer is forced to see this brand first and them EQUAL brand. This is my observation. This is at a very low level. But now if you visit Big Bazaar, you will see brands of ITC like Aashirwas Atta etc displayed at strategic locations which increase its brand value and finally sales in long term.

I wrote an article "Marketing Analytic Techniques for FMCG Marketers" We will soon see these techniques in India soon.

4. Trials in Malls: What do you see when you go out to buy vegetables in Malls? I was in PRG's Spencer Hyper Mall to buy regular Tomatos and Patatoes. There this beautiful lady asked me to try a cup of new flavour of Nestle Coffee. Its taste was worth buying, but as i was busy in buying Onions i couldnt buy one pack for me. So experience Marketing is just not in Service Industry but in FMCG as well.

Do you guys have more BTLs for FMCG companies!!

RSS & Blogs for Marketers

2006-05-28T19:48:00.000+05:30

Online Marketing is core to my heart and have done lot of research on RSS, Blogs and Wikis in Past.

These days blogs are definately over hyped ... but its justified. Go thr the following points:

1. Buzz Marketing: Recently there was camaign of Coca Cola Blak and it has already created buzz in market and people have started discussing about it. Thats the power of blog.
2. SEO: relevant blogs get higher ranks on Google and other search engine. So blogs create high visibility in SE.
3. Conference & Corporate Blogging as a Marketing Tool: Blogs were born from the need to easily publish personal voices online. Blogs, by the nature of the medium, encourage casual banter and informal language. Unlike Web sites, which are crafted and branded and carefully planned out to be "on message," the daily journal format of a blog produces more vulnerability from its authors. In marketing terms, a blog can bring a human personality to a faceless company, which can create a connection between the corporation and the client. This can lead to deeper loyalty and richer feedback.

Steps To Your Business Blog

1. Start using RSS for news, jobs or press releases
2. Thoroughly study what a blog is: You have to know blogs to be able to decide on whether or not to start one.
3. Be specific with purpose: Absolutely no one will be happy if you start a blog because you can.
4. Ask yourself, do you really need a blog? Why on would you want a blog?
5. Ask yourself, do we have the resources?
6. Co-ordinate with other communication channels
7. Who's the blogger? People working there do. You of course have to find people that wants to, that wishes nothing else but to, blog.
8. Make a decision on all aspects, features of blogs
9. Choose which tool to use
10. Make sure the blogger(s) know blogging: Blogging is a skill. Not a very unique one, but a skill 11. Launch quietly
12. Start doing subtle PR: Don't issue a press release stating you have a blog. You wouldn't be the first to do it, but it never seems appropriate. There are other means.
13. Success or failure? Decide on the future of your blog: It doesn't take more than two or three months, from my experience, to find out if a blog is good enough to deliver results.

RSS stands for really simple syndication. It was invented sometime ago by Netscape. In its simplest form, it was a news-clipping service that provided a header and few lines of text. It has evolved, however, to look, resemble, and act like email. Most major news sites (Wall Street Journal, New York Times, YahooNews, etc.) allow you to tag a section and grab an RSS feed. That way, instead of having to go visit a Web page, you can receive a feed.

No doubt, RSS is a marketing tool. I was going through a article in MarketingProfs - "RSS: What's in It for Marketers?".

The utilities are:
1. Form of communication that makes it very easy to push out information
2. Permission based email marketing
3. To have higher visibility in search engines. Google and Yahoo give preference to information having RSS feeds.
4. Dont need to open web page
5. Get updated with the latest in a particular area Right now penetration of RSS is around 4 to 8% in terms of awareness as told by Eric Frenchman.

A similar term is ATOM ... its is also XML file, which have the same functionality but normally is used for Blogs. Just visit an atom of a blog on marketing. In future you will see that most of the website will have RSS Feeds on their front page.

Few of my posts on marketingprofs are as follows:

1. http://www.marketingprofs.com/ea/qst_question.asp?qstID=13115#82592
2. http://www.marketingprofs.com/ea/qst_question.asp?qstID=12835#80524

What do you think is the future of Blogs and RSS?

HLL's Taj Mahal's Respositioning: Will it be effective?

2006-05-26T10:36:00.000+05:30

What image do you have when you see a Pack of Taj Mahal? Must be Blue package, Zakir Hussain with an old image. Dont you think HLL is just targeting the middle segment. There is not much of Youth emotional appeal.

In past we have seen HLLs competitors Tata Tea roped in Sania Mirza to target the young consumers of India.

Fearing that HLL might lose out on young consumers, Hindustan Lever is giving its 40-year-old premium tea brand Taj Mahal a facelift, overhauling brand styling for the fourth time in its lifespan so far. "The idea is to give the Taj Mahal tea a new avtaar without losing out on its brand equity and attract new consumers," said Rekha P Gulati CEO of DMA Branding, which has won the contract from HLL to reposition the brand.

Market Situation: Rs 200 crore tea brand was losing relevance among the new breed of consumers with its earlier look and hence necessitated the change. The brand has been consistently built having a unique selling proposition of being the best tea. But its look and feel did not live up to its premium pricing.

Competitive Analysis: With rivals like Tata Tea roping in youth icon Sania Mirza as brand ambassador to connect with the young consumers, HLL could not have afforded to lag behind and hence decided to give a new twist to the image associated with Zakir Hussain, the face of Taj Mahal tea.

What HLL wants?

HLL wants the target audience to be all tea drinkers
Watching Zakir Hussain playing in front of Taj Mahal there was no link on brand style. They need to change this
A madeover Taj Mahal tea in a new packaging, with a tag line "Wah Taj sabse khaas Taj ehsaas" hits the market replacing the old "Wah Taj"

Do you think that this makeover/ repositioning which actually affect the sales of Taj Mahal in future and will snatch the share from Tata Tea?

Approach to Rural Marketing

2006-05-21T11:26:00.000+05:30

We had a great discussion on Orkut - FMCG Marketers Community - on Rural Marketing. Also i was going through an article by By TARO W (Indiantelevision.com Team) - "Ten Step approach to rural marketing". I found some points really relevant.

Titled Don't Flirt with Rural Marketing, the presentation analyzed the current scenario and offered useful tips for marketers to help build their brands in rural India.

Except for a few like HLL with their Project Shakti and ITC with their E-Chaupal, which are rural initiatives with clear long term objectives, RM still means a van campaign, a few badly made commercials as commented by Anugarh Madison Advertising CMD RV Rajan.

Different organizations classify rural differently.

1. For companies into durables, it could range from places with population of less then 500,000
2. While for the FMCG industry it would imply places with populations of less than 50,000

Why companies are hesitant to go for Rural Initiatives

While many companies do commence RM initiatives, most end up with road-blocks in the pilot stage itself because of reasons ranging from operational, to inadequate budgets, for the pilots themselves - that most often what is being tested is not the final representation of what needs to be rolled out later
Only Rs 5 billion is spent annually in India towards RM as opposed to Rs 130 billion (and the number is growing year on year) allotted to mass-media, especially television. Rajan says that clients are reluctant to spend money in RM because there is no established yardstick to gauge the efficacy of RM initiatives, as is the case of TV and press which have TRP and NRS/IRS data which help in decision making. According to Rajan, the RMAAI plans to address this issue by undertaking studies to develop some guidelines in this field
Most companies have no long term strategy or RM team or RM budget, Rajan argues, because no manager is willing to stake his career by thinking long term when his survival depends on mandatory quarterly results. This has resulted in the ratio between abandoned and successful RM projects being high

Successful Regional Brands

Cavin Care Chik Shampoo
Meera Herbal Powder
Fairever Cream
Anchor (100 per cent vegetarian toothpaste)
Gadi detergent powder
Dandi Namak
Power brand soaps in the south

Reason for success of above brands

Most of them identified a segment which was vacant in terms of product and area of operation
They all started in small concentrated markets, appealing to the local ethos and aspirations of the targeted area
Their communications, be it a simple radio spot or a wall painting or a theater film, touched a chord in the target audience
Most importantly, their policies were flexible and they could adapt to the fast changing market situations

Rajan has evolved a ten step approach to counter the many myths and problems that come in the way of RM and exhorts every company that has RM plans to follow. They are:

Commitment from the top management: This must be total and management must realize that it is long haul and an investment into the future, otherwise RM will not give long term results. He sites HLL and ITC examples.
Getting a dedicated task force: Rajan says that RM requires a dedicated mindset which many urban oriented MBA's don't possess. He suggest hiring of the RM team from students from RM institutes like IIRM or students with fire in their belly about RM from second level institutes, those who have taken RM as an elective course. He also advocates treating and paying such employees well and giving them an indication of their career graphs in the company. He reverts to an old saying - You pay peanuts, you get monkeys.
Setting Clear Objectives: It is important to clearly define, in the early stages, the goals for the RM initiative and whether the initiative is a tactical effort to achieve increased sales in specific areas during specific time or build strong equity for the brand in Rural India.
Understanding the Mindset of Consumers: Understanding of the mindset of the rural customer is important for the rural specialist to come up with a customized plan of action. The Rural market is heterogeneous with traditions and cultures that vary from state to state, even region to region in some cases. Most companies equate their findings from studies based on urban India to the rural segment and initiate a strategy based on this. Rajan says that his experience shows that the attitudes, fears, expectations, aspirations, comprehensions of rural customers to products and brands are different from urban customers. Advantages of such research are manifold because they give valuable ideas for new product development to suit the market - (a case in point a refrigerator with a twelve hour battery backup to take care of the power outages in rural areas), or new methods of physically reaching out to rural folks, along with insights into the right communications strategy and delivery (media) strategy
Ensuring availability: In most cases, distribution is one of the biggest nightmares; the task of reaching products to 600,000 plus villages is a challenge. TVC's have raised the aspirations of the rural customer and makes him demand the product from the local shopkeeper, who then buys the required quantity from the nearest feeder, markets that he visits regularly for his supplies. Hence feeder markets such as towns and villages having populations of 10,000 to 15,000 initially must be provided for to start the first steps towards RM
Evolving a Comprehensive strategy: A comprehensive strategy involving multimedia (including mass media, where necessary) has better results as compared to those one-off projects with limited goals.
Involve the Region: RM is a highly regional subject, with a company's regional teams being specialists in their respective regions. Involving them from the word go to ensure ownership of the campaign by the region, and also getting their insights and inputs in the development implementation of the campaign is essential
Developing full proof plan implementation: Conducting a pilot in one taluk in one district of a state to gain insights from it, before a national roll out of a rural campaign is not realistic. To get meaningful results, both in terms of impact and sales, the pilot must cover at least as few districts' of the state, if not the whole state. The implementation plan must be as comprehensive as possible to ensure that all the elements to be checked out are included in the plan. Implementation of any rural campaign requires meticulous ground level planning and a thorough briefing and training of the field level people before execution. Sufficient time must be given to the agency to check out all the elements, before getting into the field
Provide adequate budget: A decent budget could be spelt out by a rural specialist, depending on the task and the region. If the budget is limited, it should not be spread thin by trying to look at too many markets. If a company feels that it has a bright future in rural markets or would like to target the rural markets, then it is better to invest today so that the early mover advantage is gained to reap rich rewards in the future. But miracles should not be expected overnight, neither should hope be lost
Evaluating the Results: The three areas that should be studied to understand that impact of a Rural campaign, according to Rajan are: Brand awareness, Brand Conversion, Increase in sales

Rajan concluded by saying that RM is a marriage, which to be successful needs sustained efforts and long term investment in terms of the company's resources to keep it going. If it is treated as a flirtation or a one-night stand, the results reaped will be temporary and unsustainable.

Any new Approches?

ITC bags another accolade for its IT Rural Transformation: e-Choupal

2006-05-14T11:58:00.000+05:30

ITC e-Choupal has won the prestigious Stockholm Challenge Award 2006 in the Economic Development category. The ten-year-old Stockholm Challenge Award recognises initaitives that leverage Information Technology to improve living conditions and increase economic growth in all parts of the world. It focuses on social inclusion world wide and champions ICT projects that show clear benefits to people and their communities, wide impact and sustainable business models. This year a total of 1155 entries were received from across more than 100 countries and 26 of these were shortlisted as finalists in the Economic Development category.

You can read the case study - "ITC eChoupal Case Study .. Rural Transformation "

The Award was presented on May 11, 2006 at a glittering ceremony at the Stockholm City Hall, where Nobel Prizes are awarded. This award crowns a series of global recognition for ITC e-Choupal, making it the most lauded information technology-based rural transformation model. The project has been awarded the ICC-UNDP-IBLF World Business Award in 2004 for furthering United Nations Millennium Development Goals and the Development Gateway Award in 2005 for contributing to the economic development of rural communities. It is also a case study at the Harvard Business School.

``ITC e-Choupal is playing a transformational role in turning rural communities into vibrant economic organisations -- by fostering inclusive growth and enhancing their wealth creation capability. Recognitions like the Stockholm Challenge Award provide us impetus to pursue our sustainable development goals with added vigour'', Chairman Y C Deveshwar said.

Present State: ITC e-Choupal, the largest Internet based intervention in rural India, empowers over 3.5 million farmers in 35,000 villages by enabling them to readily access crop-specific, customised information through vernacular websites.

Vision: Over the next decade, the ITC e-Choupal network aims to cover over 100,000 Indian villages, representing 1/6th of rural India, and create more than 10 million e-farmers.

More News on ITC Limited.

Thats awesome. Hats off to ITC's contribution to Rural India!!

Marketers no more target Parents: The Decesion Makers are the Kids

2006-05-13T19:06:00.000+05:30

Today i read an article in ET - "Admen handle parents with kid gloves".

An extract - "Pester power of kids: This is the new mantra of advertisers. Gone are the days when kids were targeted by FMCG companies for milk and milk products, biscuits, detergents, soaps, pens and chyawanprash. If you want the purse strings loosened, target the kids, is the new theory"

I wrote a research paper on "Ethics: Guidelines for marketing to children: How young is too young?" last year. In this i would like to list few of insights.

Factors driving marketers to target children

Fewer children per parent: As is seen in developed countries across the world and also witnessed at a much slower rate in India, we push forward towards development and the number of children per parent reduces
Postponement of having children: Adults in urban settings tend to marry later and as society moves towards greater stress on education and urbanization of towns, childbirth is being pushed further along the age line
Dual working families: With both parents working in many families, the child does not get as much attention, he isn’t ‘taught’ the ropes. He is more susceptible to messages thrown at him by marketers and the media
Changing Demographics: India has a population of 350 million below the age of 15, a whopping market equal to the whole of Eastern Europe. The size of this market is one factor which decides how attractive this market is, the other is the simple reason that kids love branding. The figure below shows a comparison of India’s demographic pyramid with that of the US.

The 6 Core Values: Tween dreams for sale

A study by BrandChild (Martin Lindstorm) reveals that there are six distinct characteristics that go to make up the most successful brands and toys worldwide. These are Fear, Fantasy, Mastery, Humour, Love and Stability but above all the brand needs to ensure that the Tween is placed in the centre of a world they admire and to which they aspire.

We have seen in past that marketers have exploited the above values to increase their sales. There should always a line drawn by legal bodies to taken care of unnecessary exploitation of kids.

Strategies marketers employ to target children and teens

A) Pester Power: “A child is the best negotiator in a family”- Gavin Kennedy, author of the book ‘Everything is negotiable.’

Today's kids have more autonomy and decision-making power within the family than in previous generations, so it follows that kids are vocal about what they want their parents to buy. "Pester power" refers to children's ability to nag their parents into purchasing items they may not otherwise buy.

B) Building brand name loyalty: Marketers plant the seeds of brand recognition in very young children, in the hopes that the seeds will grow into lifetime relationships. According to the Center for a New American Dream, babies as young as six months of age can form mental images of corporate logos and mascots.

C) Buzz or street marketing: Buzz marketing can help a company to successfully connect with the savvy and elusive teen market by using trendsetters to give their products "cool" status. Idea is to find the coolest kids in a community and have them use or wear your product in order to create a buzz around it.

D) Commercialization in education: Corporations realize the power of the school environment for promoting their name and products. Marketers are eagerly exploiting this medium in a number of ways like sponsoring educational materials, supplying schools with technology in exchange for high company visibility, advertising posted in classrooms etc.

E) The Internet: The Internet is an extremely desirable medium for marketers wanting to target children. It's part of youth culture. Kids are often online alone, without parental supervision. Sophisticated technologies make it easy to collect information from young people for marketing research, and to target individual children with personalized advertising.

F) Marketing adult entertainment to kids

Published Article on India Infoline - "The FMCG sector: Companies and brand acquisitions"

2006-05-12T11:08:00.000+05:30

You guys must have seen my recent posts on Acquisitions of companies and brands. I was writing an article for India Infoline. You can see my published article on India Infoline.

The FMCG sector: Companies and brand acquisitions.

This article is under - News & Views -> Feature

Any comments!!

FMCG in Middle East

2006-05-09T22:39:00.000+05:30

In Saudi Arabia the food industry alone was worth some US$2.9 billion last year – an 11% increase on 2004, while in Dubai the growth is equally as impressive, with trade in foodstuffs increasing 128% in the past four years to reach almost US$5.5 billion.

200 professionals from the FMCG sector gathered in Dubai in April for the inaugural Retail News Middle East Awards, which were held in association with Aujan Industries.

The Retail News Middle East Awards were for 10 product category winners, ranging from baby products to frozen foods, hot and cold beverages through to toiletry and cleaning products, to recognise the very best in fast moving consumer goods in the Arabian Gulf.

The awards acknowledged products that are best sellers, and others that are changing the shape of their market segment. They also recognised the companies behind these products – companies that are investing in the region and helping to drive the Middle East’s FMCG sector forward.

For each of the nine product award categories a shortlist of up to seven nominees was created. This was done by combining the top three selling products in a segment, according to market research from ACNielsen, and two or more ‘wild card’ entries, which were chosen for delivering something beyond just great sales in the past 12 months.

1. Best Dairy Product of the Year: Danone for Activia and Actimel yoghurts, which contain pro-biotic bacteria to aid the digestive and immune systems.
2. Best Toiletry Product of the Year: FINE for its range of luxury tissue paper.
3. Best Baby Product of the Year: Pampers
4. Best Household Cleaning Product of the Year: Dettol
5. Best Innovation of the Year: Gillette for M3Power
6. Best Hot Drink of the Year: Lipton
7. Best Cold Drink of the Year: Rani beacause of innovative packaing
8. Best Frozen Food of the Year: Americana
9. Best Canned Food of the Year: California Gardens
10. Best Confectionery Product of the Year: Galaxy
11. Best Food Producer of the Year: Al Islami
12. Best Distributor of the Year: Global Export Marketing Company
13. Best Marketing Strategy: NTDE for Lays crisps

For more details visit ITP.

Performance make Brands

2006-05-08T11:48:00.000+05:30

This world is really competitive and the one who can cross this clutter will be a big brand. Let us just look at India’s wicketkeeper-batsman Mahendra Singh Dhoni.

This 24 year lad has an average of 53 in 42 ODIs so far with highest score of 183 that too undefeated. He just debut 2 years back in a match with Bangladesh v India at Chittagong (MAA) - Dec 23, 2004.

So this all has made him a superstar, a brand who can endorse brands. There was an article in Delhi Times yesterday - http://timesofindia.indiatimes.com/articleshow/1519401.cms . If not 2 to 3 crore, this guy is getting 25 to 35 lacks. Thats not a bad start at all!!

We have seen Dhoni endorsing Reebok, Sonata watches, Mysore Sandal soap, Reliance Communication and the latest to join the Dhoni ‘brand wagon’ is the Chennai-based Sara Lee Household and Body Care, the Indian arm of $18bn Sara Lee. The company hopes to add shine to its brands such as Brylcreem and Kiwi.

Right from Farokh Engineer to Dhoni, Brylcreem has had the heritage of endorsements by eminent cricketers, says Sara Lee India managing director S Suresh.

Brand Personality: Brylcreem brand personality is confident, stylish, manly, youthful and contemporary and fits well with Dhoni’s image as a youth icon and innovative and confident player. Its a good synergy.

Sara Lee, with a brand portfolio of Kiwi, Brylcreem and Kiwi Kleen, expects to touch the Rs 100-crore turnover mark this year. The turnover of the company, following the July to June calendar, stood at around Rs 70 crore last year. Brylcreem and Kiwi brands contributed as much as 75% of the total turnover. Mr Suresh said India has been evolving as the global sourcing point for shoe care products. The first product, sourced out of India, is the instant shoeshine sponge, Kiwi Express.

To target the ‘gen next,’ Sara Lee has launched Brylcreem UV gel, which when used under psychedelic lights, will “make the hair glow.” In the Rs 150-crore household cleaning business, Kiwi Kleen brand is leveraging on Kiwi’s brand equity.

Sara lee has travelled a journey of Niche products and innovation than that of mass category.

Can you guys give more examples of people who have become celebrities/ brands via their performance? What were their Key success factors?

India is the right place to work with ...

2006-05-04T20:21:00.000+05:30

Today i read an article in Economic Times mentioning "Coke brings back Indians to head operations at home".

Coca Cola India is in the process of repatriating Indians from overseas postings, including China, Sri Lanka, Denmark and Atlanta.

1. Sumanta Datta, the current Brand Director of Coca Cola China will be joining CCI as Region Vice-President (North Operations) from June
2. Vikas Chawla (Sri Lanka): Wil be joining Coca Cola India (CCI) as Vice-President Franchise Business Operations, after relocating from Sri Lanka, where he was Managing Director of the Coke operations
3. Sanjiv Gupta (from Denmark): He has been brought to CCI as Director Revenue Growth Management and Business Planning. He was earlier working at the marketing division of Coke's Denmark operations
4. Mansoor Sidiqqui (Atlanta): the former consultant at the Coca Cola Company, Atlanta, has now joined CCI as General Manager Marketing innovation

Commenting on the influx of Indians from overseas arms, CCI Vice-President HR Adil Malia said India was becoming an extremely attractive work destination for professionals. The increased number of Indians heading for home to join here from Coke's overseas operations assumes significance as the current President and CEO of CCI Atul Singh was also moved from Coke's China division, where he was the President, East Central and South China.

Now when Indian economy is booming and especially FMCG sector India, why would anybody born in India would not love to come back... They can see the following:

1. Innovation at the peak ... every week we see press releases of new brands in new product categories - satisfying specific needs ... by line extension, brand extension etc .. There is a huge scope in India as it has a big marketer and definately several things to experiment.

2. Acquisition Of Companies and Brands in Fmcg Sector : There is a huge scope to learn the knack of mergers here in India. Few of examples are:

P&G and Gillette
Dabur acquired Balsara for 143 crores
Godrej Consumer Care bought Keyline Brands
Marico acquired HLL Nihar brand

3. Touch the Rural soil: The rural areas showed a good growth for the FMCG major. Higher government spending could be a reason for higher offtake in rural areas. There is a huge scope for marketers to experiment with new product launches in rural markets. More that 50% of FMCG market lies in Rural India.

4. Retail Boom: People working in India will get an opportunity to see an interesting journey from a meagre 3-4% organized retail to a substantial percentage in the coming decade. China's organized is around 30% ... its a long way to go.

Is there any country on this Earth, who can offer this huge opportunity to explore, learn, experiment and 100 more things.

Why would anybody be interested to go outside India??

ITC's latest step to grow food business .. long way to go!!

2006-05-04T17:25:00.000+05:30

ITC's ambitious plans of becoming No1 Food company in India by 2010 is definately achievable with the new ventures they have taken in past.

History: ITC made its entry into the branded & packaged Foods business in August 2001 with the launch of the Kitchens of India brand. Then in 2002 ITC, launched brands in present Confectionery, Staples and Snack Foods segments.

Why Foods? Its makes lot of sense to expand in Foods as they have proven strengths in the areas of hospitality and branded cuisine, contemporary packaging and sourcing of agricultural commodities. ITC has stood for quality products for over 90 years to the Indian consumer and several of its brands are today internationally benchmarked for quality. All products of ITC's Foods business available in the market today have been crafted based on consumer insights developed through extensive market research. Apart from the current portfolio of products, several new and innovative products are under development in ITC's state-of-the-art Product Development facility located at Bangalore.

Recent Step: 2 days back ITC was again in press for setting up a Rs 70 crore biscuit manufacturing unit at Haridwar in a step aimed at streamlining the company's food business segment. It will be completed by Feb, 2007, disclosed by ITC Foods chief executive, Ravi Naware.

Present Situation: All the 110 food products are outsourced.

Future: ITC would consider to build more of its own facilities for other food segments.
Reason for setting up manufacturing unit:

1. Will strike a right balance between ITC's own and outsourced capacities - risk management exercise.
2. A filip to present 8% market share in buscuit by 4-5% to have 1/8th of the market
3. To launch several new variants in the biscuit segment to strengthen its product portfolio

Naware said the company would focus on brand building, quality and manufacturing. The company, he said, would spend 25-30 per cent of the turnover in the brand building exercise.

International Presence
ITC Foods exports ready-to-eat food products to the US, Canada, the UK and other European markets under the `Kitchens of India' brand.

Endorsements

1. Tamil actor Surya for the South Indian market
2. Bollywood star Shah Rukh Khan will continue as the brand ambassador for the company

Its looks as if soon ITC will control the reigns of Food business in India with the help of its expertise in Brand Building, experience in Foods business, Manufacturing and Distribution.

Acquisition Of Companies and Brands - Fmcg Sector

2006-04-26T15:31:00.000+05:30

Hi,

We have seen Mergers and Acquisition in FMCG sector as well as acquisition of lot individual brands. Here are few examples:

1. P&G and Gillette
2. Dabur acquired Balsara for 143 crores
3. Godrej Consumer Care bought Keyline Brands
4. Marico acquired HLL Nihar brand

I have done some research on this topic.

I want the following inputs:
a) Rationale for companies going for acquistions (strategy)
b) Please give more examples of acquisition of companies and brands
c) Do you forsee any future acquisitions in FMCG globally or in India? If yes, what is the rationale behind this?

News on this topic
1. Godrej joins other FMCG majors in shopping for cos abroad
2. Dabur India eyes acquisitions
3. Tata Tea arm to acquire Czech tea co

Please do comment. This question is also available at MarketingProfs and orkut community FMCG Marketers.

360 Branding. What all does it take?

2006-04-25T10:57:00.000+05:30

Business man/ marketers have used 360 prefix to many concepts in past, out of which one concept is 360 Branding. Others are 360 feedback etc. Now let me explain you how does a typical process of 360* brand engagement can be distilled into a clear 4-step journey:

1. Ensure that the top team know why they are embarking on the journey in the first place
2. communicate a compelling story to employees which explains the importance of the brand and its delivery
3. Help people to experience the story and understand the role they can play in making it happen
4. Reinforce it through the processes you use to manage the business

These points are taken Strategic Management.

Some organizations/ CEOs still focus of external brand buliding, cost-cutting, great customer service etc. But what about the people in the office. What percentage of this marketing budget do CEOs propose to spend internally on involving and engaging people to ensure to get a return on this investment? Meagre!!

It’s easy to get caught up in the language of brands as if they’re somehow separate from the organisations they represent. But brands are only sustainable when the things they stand for are consistently brought to life by the employee for the customer.

Attracted to the shop window by the promise created by PR and advertising, customers will naturally use that promise as the benchmark for judging the service they receive. What really matters is what happens inside the shop window. Where brand promise meets service reality. And in most markets customers will be unforgiving if the reality falls short.

Let me go back to service marketing model which consist od 3 things:
1. Internal Marketing
2. External Marketing
3. Interactive Marketing

Now most CEOs focus on external marketing to get maximux leads and attract customers. But what next? The exployees have to attend them and this is only possible through internal marketing which will lead to effective Interative Marketing.

SOme other points to keep in mind are as follows:
1. Bringing the brand to life inside an organisation demands more than just integrated marketing
2. Brand engagement cannot be conscripted - it can only be volunteered
3. CEO stands for Chief Engagement Officer
4. An engaged organisation is a talking, listening and learning organisation
5. Employees who choose to buy your products and services can be your best ambassadors

Why did Godrej bought Keyline Brands?

2006-04-24T15:58:00.000+05:30

Reasons

1. GCPL the ownership of several international brands and trademarks including Cuticura, Erasmic and Nulon in many countries
2. This acquisition represents the commencement of building a global presence in the international FMCG market
3. Access to a strong customer base that includes Boots, Sainsbury and Tesco. Supermarkets have long-term relationships with
local companies. Without this, it is difficult to penetrate markets such as the UK
4. Widen its geographical presence and access trade channels in developed markets including Europe, Jordan, Australia and
Canada
5. Keyline Brands, which has a personal care range that complements Godrej's (hair colour, talcum powder, shaving cream)
6. Learning: Dealing with modern trade, they will learn how to do business with supermarkets - the levels of discounts to offer, what to expect in return in terms of shelf space etc. GCPL also hopes to pick up important insights on planning and meeting global delivery schedules, apart from developing skill sets to introduce new products internationally

About Keyline: One of UK’s admired FMCG companies engaged in the manufacture, marketing, sales and distribution of cosmetics
and toiletries. It has a strong portfolio of brands and a well-developed customer base in numerous supermarket chains.
But why are they targeting West?
1. Bigger Market: The size of the hair colour market in India is just around Rs 500 crore (Rs 5 billion) at present. In the UK, the market is five times bigger. And hair colours as a category is special for GCPL. It contributes 35 per cent of GCPL's revenues and 65 per cent of profits.
2. While hardly 5 per cent of the FMCG offtake in India happens through this channel, the share of sales through organised retail chains is growing rapidly. To hone its skills, GCPL plans to send executives abroad to train and bring home the best practices. This also means that GCPL gains an opportunity to catch up with the multinational competition (Hindustan Lever,
Procter & Gamble), when organised retail takes off in India.

Strategy
1. GCPL is hoping to cash in on the current craze for "ethnic Indian" by introducing sandalwood and ayurvedic variants of Godrej No. 1 in British supermarkets. And it believes there will be enough takers for the hair care range: powders will be positioned at the lower end and creams at the higher end.
2. Targeting Indian Market: Indian customers are familiar with two brands from the Keyline portfolio - Erasmic shaving products and Cuticura talcum powder. But the rights for marketing Cuticura in India is with a south India-based group. If the Medimix group is willing to sell the rights for Cuticura and the price is right, GCPL is definately gonna buy it. GCPL will launch the Erasmic range for men - shaving cream and after-shave lotions. Other products will follow later.
3. At present Keyline outsources about half of its manufacturing to various units in the UK. GCPL's manufacturing costs, points out Press, are "30-40 per cent lower than those in the UK. Given these cost advantages, GCPL proposes to shift some of Keyline's production to its Vikhroli, Mumbai plant.

Any comments guys!!

Whats there in a brand name?

2006-04-24T11:42:00.000+05:30

There was a great article by Meryl K. Evans and Hank Stroll for chosing the perfect name for product company.

In this post, i will give you a flavour of examples from across the globe. Lets start with Apple. What does apple mean? Do anybody know? I think very few. But is it successful? Definately. So whats the reason.

Before moving on to that lets go back to the article and see what do the writer has to say. Consider doing these two things when searching for the perfect name:
1. Match the name with the business or product
2. Involve others to brainstorm

In point 1, when you say Play Station, it makes lot of sense. People will recognize it as video game consoles. And what about Nintendo? Ok many of you may know about it, but what does it mean?
Unless you have a HUGE advertising budget to get your meaningless but cute name (Yahoo, Google and iPod) out there, researchers find it's generally best to come up with something logical that people can relate to your company or product. The best way is to make people sit in a group and scratch their heads, and obviously the people who know something about the product or company and just start making a list of the uses, attributes and unique selling points.
Sheryl Kravitz, principal with SK Consulting, provides other suggestions:

1. Smart marketers must first seek to understand the business or industry segment and customers the name should resonate with.
2. They need to identify how the name will fit within the context of the organization
3. Third, the name should fulfill specific criteria—it must be relevant, lend a competitive edge, be easily understood and pronounced and be culturally appropriate in other languages.
4. It should be legally protected

Few more examples:

a) the name Beetle beautifully sticks to the car and to the mind. Mini became, over time, as equally cute and sweet in nature as they are in name.
b) When people think of Scorpio in India they think of the SUV from Mahindra and Mahindra
c) Nike is more famous for its logo - the tick mark
So brand elements in general matter a lot in the value chain of brand creation.

Can you give intersting stories of popular brands created in past or in the way of getting popular!!

Why Marico acquired HLL Nihar brand?

2006-04-23T17:14:00.000+05:30

Marico's Turnover: Rs. 1155 crores
Current annualised turnover of Nihar = Rs. 120 crore Catering 2 segments: coconut oil and perfumed hair oils
— this acquisition marks the first acquisition by Marico for over Rs. 100 crore
- process involved competitive bidding among select fast moving consumer goods (FMCG) companies
- transaction envisages transfer of the IPR and other rights associated with the brand in India and other parts of the world.

Locical Reasons: HLL people have a logic for this exercise, which is brand rationalisation. They will continue to operate brands other than Nihar in the value added hair oil segment. On the other hand Marico expects to reap significant synergies from Nihar. Its strengths in the East, especially its distribution reach in Bihar and Jharkhand, will provide Marico a platform for its other brands. Nihar’s regional strengths will complement Marico’s presence in this Rs 800-crore category. Harsh Mariwala, Chairman and Managing Director, Marico, said, "Nihar elegantly complements Marico's strengths in both coconut oil and perfumed hair oils."According to industry sources there will be effecient supply chain, larger scale of operations. High focus on coconut oils and hair oils will also enable Marico to drive cost advantages.

This will definately help Marico to climb the next peak of Rs. 2000 crores and may be someday cross Dabur, whose present turnover is around Rs. 1500 crores. Also, all those guys who track FMCG stocks, Marico is definately a destination to look for and reap benefits in long term.

Its really a win-win situation for both the FMCG players!!

8 days to reach top 100 marketing professionals

2006-04-22T01:41:00.000+05:30

Hi people,

Let me tell you what i have been doing from last few days. Apart from work out hard in gym to get off that extra flab i was fully into marketingprofs.com. Its a portal where there are discussions on diverse topics in marketing - Branding, adv, taglines etc.

Actually i was reading lots of articles on Marketing esp FMCG, and suddenly saw Puru's blog: Read between the Ps after a long time. And in the rightmost column there, i was a box mentioning current expert points=22000 and current international rank: 19. And at the bottom was a link for an interview in KHE news. I was perplexed and searched more about marketingprofs and came to more about it.

Briefly, as soon as you register, you are awarded 250 expert points and then you start your iternary with either asking questions in forum or get points by answering others questions. So i thought of experimenting and asked a question on Chyawanprash brand Extensions and got decent inputs on that.

But there was catch of not asking questions without earning more expert points. Suddenly my eyes stop on the right most column mentioning "top 25 experts" and Puru's name was there. So how could i resist myself of not being a part of the list. And then i started answering every open question.

I was the happiest person to have got the first congratulation letter mentioning "you earned X points" and was more than eager to check my profile for increase in the cumulative expert points cell.

Today (Night, 21st April) my score touched 4000. Thats like the fastest ever in the history of marketing profs with accepted answers within 30. But the milestone in front of me was 4108, expert points earned by an american guy, ranked 100 in the expert list. I was waiting for few more congratulation emails. At that time my score was 4098, just 10 points behind the 100th expert. And Bingo!! Got a mail for 150 points and my present score is 4248 and i am the 98th guy.

Its a great feeling to be a part of the elite group. Definately will boost anybody. And can you believe guys ... just 8 days to reach top 100 marketing professionals. And the next big milestone is to be in top 25, which ask for present more that 20,000 points, i.e. 5 times from now. I know its tough before joining ITC (1st June).

Visit top 100 experts list: http://www.marketingprofs.com/ea/top_hundred.asp and click to check my profile: http://www.marketingprofs.com/ea/profile.asp?userID=475391

I am at the top of the world!!

List of interesting and contemporary topics

2006-04-17T20:02:00.000+05:30

1. Blogs for Marketers: We have seen that 26% of CEOs in US use blogs and many marketers are using it as a powerful as mentioned in many of the articles. Is the hype justified? Can blogs ever replace TC commercials?
2. Niche Marketing: We have seen that marketers these days are targeting a specific set of people having a specific need. But they get apremium for this. Can these niche players be able to stand against mammoth players?
3. Industry Convergence: As product spaces become modularized, componentized, and compartmentalized to address the individual, customized, targeted needs of markets, the correspondent market space, and the value chains in them become more integrated. In a sense, products become disintegrated while markets become integrated. The future belongs not only to the convergence of devices, but also to divergent (i.e., specialized) devices.
4. Private labels vs Brands: Right now 1 out 5 brand sold in US is a private label. Is this ratio going to increase in future with effecient SCM by big retail giants?
5. Internet Marketing/ Email Marketing: Are marketers still spending money from their advertising budgets on it?

Which one is the most inn one?

Emami sinks its teeth into oral care !!

2006-04-16T15:25:00.000+05:30

Article from Economic Times

Emami, the Kolkata-based personal care and cosmetics major, is marking its foray into the oral care segment by launching a toothpowder called Nirog.

“We are making investments of Rs 6 crore for marketing and R&D for the tooth powder and two other products in the wellness segment — a blood purification syrup and a uterine tonic,” said Aditya Aggarwal, MD, Emami group.

The market size of the toothpowder category is Rs 250 crore approximately, of which, Emami is targeting a 10% market share in three years. It plans to grow its presence in this category to Rs 5 crore in the first year of launch. If successful with the test launch of the tooth powder — priced between Rs 12 and Rs 15 for a 50-gm pack — the company will introduce a tooth paste in the next 2-3 months. “All three categories (tooth powder, blood purification syrup and uterine tonic) are not very big, but with marketing initiatives, we plan to grow the categories along with our brands,” said Mr Aggarwal. Emami’s other brands include Boroplus antiseptic cream, Navratna oil, Fair and Handsome and Sona Chandi Chyawanprash. “The company has been growing steadily in its personal care category and faces competition from multi-national as well as domestic players. Its foray into the oral care category will help it to grow, provided the products are marketed in the right way,” said an FMCG analyst.

Analysis

I really dont understand why Emami in first place not gone for toothpaste. If Emami's strategy is to be a regional player and target the rural India, it makes lot of sense. So then it will be in the league of Dabur Red Tooth powder.

But overall i feel this is not the appropriate category to enter into at this point of time, as the growth rate os bleak and doesnt look promosing.

But it makes huge sense to enter blood purification syrup, as there are not many players known and if Emami can create a brand for itself in this category, they can reap benefits.

It looks as if Emami is getting desperate to get into any product category. No offense. I wish Emami huge success.

Brand Name For Aroma and Home Products

2006-04-15T20:41:00.000+05:30

QUERYHi, I need to find a brand name for our aroma, spa products. This brand will sell our fragrance lamps, aroma diffusers, perfume oils, candles and later we will sell other home items , like bed linens, towels..
I thought of the name "Ambroisie a la maison". From the English word "ambrosia". Meaning 1 a : the food of the Greek and Roman gods b : the ointment or perfume of the gods
2 : something extremely pleasing to taste or smell
It's in French because our fragrance oils are imported from France but then I realized, the name is kinda hard to remember and pronounce for some. Something that sounds and looks nice. Doesn't really have to be in French. The look and style we are going for is simple elegance.

SOLUTIONBefore deciding on the brand name for aroma and home products, lets see what all areas can you focus on, which will help us find the right keywords in the Brand Name.

1) You can focus on Lifestyle or generally something which pleases life. You have to come up with an emotional attribute for these type of products. So here emotional marketing is more successful and not the rational one. You have to search for intangible. You can use tip- top as a brand name, smart

2) You can focus on luxury as well. I mean in all your campaigns you lauch it for premium customers, then you can use elite word in your brand. The different keywords can be - aristocratic

3) If your products are different from that of your competitors - you can focus a lot on novelty and unconventionality

4) You can also say that we have the best spa products .. so you can use words top-notch, tops

5) As you also mentioned the brand name can be a combination of smell+taste. I would suggest that you give a value proposition to your customer that it not please one or two sense .. it please your all 5 senses. So the brand name can be fivesense, 5sense, sensory spa products.

6) You can focus of the feelings, emotions, anxiety etc

I think ambrosia wont fit for this as it focus on just one aspect and doesnt have an emotional appeal. You have to have a name which is much broader and doesnt restrict your customer and force them to visit you again and again.

Chyawanprash Brand Extensions

2006-04-14T22:59:00.000+05:30

The 250 crore chyawanprash market has seen lot of innovation happening in form brand extensions from Dabur and Emami Sona Chandi. We have seen the above companies launching Dabur Chyawanshakti and Sona Chandi Kesar Chyawanprash. Do you think that Indian market is ready for the launch of the above brands or is it too early?

This discussion is also available on MarketingProfs Portal - http://www.marketingprofs.com/ea/qst_question.asp?qstID=12785 ... Please feel free to post ur comments

Is six sigma possible in Marketing ?

2006-04-14T21:07:00.000+05:30

I am a double six sigma green belt certified from KPMG and Birlasoft Limited. My project was on reduction of load time of a webiste www.xexec.com.

I think that six sigma can be applied across different sectors and across several functional areas like Marketing, HR, Finance etc. One thing which is required is data. As most of you will be aware about DMAIC (define, measure, analyze, improve and control) ... so here if one has a data there is no issue

Just take an example of Brands .. the most popular topic in Marketing. Suppose company like ITC want to check the success of its new launch last year - May, 2005 of Sunfeast Pasta. So if Marketing manager sit with his team and analyze the steps from idea generation of sunfeast pasta to its final execution, we can get data on the different consumers behaviour like the per capita consumption of snacks - maggi, noodles and pasta ... what all attributes consumers look for before buying snacks ... why would they want to buy a branded pasta. The above is just one dimension to it. We can get data about different regions and see their consumer behavior ... and see whether the value proposition of sunfeast pasta was in syn with the consumers.

Because brands are in the mind of consumer. So here in six sigma terminology, the marketers may have undergone some defects. So now if a company like HLL want to enter into branded pasta .. they can analyze this day and remove the defects and have a successful lauch.

Shripad Nadkarni and Sharda Agarwal set-up Marketgate Consulting

2006-04-13T19:12:00.000+05:30

The exit of Coca-Cola India's VP-Marketing and Director-Marketing, Shripad Nadkarni and Sharda Agarwal, respectively, was bit of a jolt for the cola major. The two ex-colleagues then joined hands to explore the hitherto uncluttered market consultancy space. The consultancy is expanding and Nadkarni and Agarwal are ploughing in all their experience to become a trusted partner of clients and ensuring strategic marketing solutions.

With Coke India for the past four years, Nadkarni has been associated with some memorable advertising campaigns including the thanda matlab Coca Cola campaign featuring Aamir Khan. Nadkarni will continue to be with the company to co-ordinate all the advertising and marketing campaigns for this summer.

Nadkarni is also credited with having successfully integrated this punch line with the five-rupee price point strategy Coca-Cola decided to promote over the last two years, again using Aamir Khan to convey this message to its consumers.

Arvind Mediratta .. 12 years of FMCG experience

2006-04-13T18:58:00.000+05:30

Arvind Mediratta, vice-president, marketing, Whirlpool India, has spent 12-and-a-half years in the FMCG industry, his first and longest stint being with FMCG giant, Procter and Gamble (P&G). When he wanted to break free from the "structured organizational setup at P&G", Marico Industries welcomed him as marketing head. In the two years that he spent at Marico, the company improved its topline growth, with new products contributing nearly 17 per cent of the turnover in financial year 2003 (up from about 12 per cent the previous year). Whirlpool India attracted Mediratta for one very simple yet strong reason - 'consumer focus'. Mediratta's current agenda is to further the 'homemaker' partnership with the consumer by providing her relevant technology.

Interview with Arvind Mediratta and check out why he shifted to Consumer durables !!

SANGITA SINGH .. CMO, Wipro

2006-04-13T18:53:00.000+05:30

SANGITA SINGH is Chief Marketing Officer and Vice-President, Strategic Marketing, WiproTechnologies, the Wipro group's flagship IT services company. In a typical day at work, Ms. Singh will challenge her team of MBA degree holders to come up with innovative ways of selling IT outsourcing and offshoring to various clients.

She is based in Mountain View, California, said as large global clients begin to consolidate operations across locations, they look to a service provider like Wipro to meet their entire technology requirements.

Sanjay Dube

2006-04-13T18:44:00.000+05:30

Joined as direct recruit in 1993 and worked in various sales and marketing assignments. His marketing experience spans across categories including exports, personal products and fabric wash. He has also had key stints as category head of mass markets and head, market and consumer development (detergents). He was appointed vice president, sales and customer development (HPC) in May 2004.

Manvinder Singh (Vindi) Banga

2006-04-13T18:34:00.000+05:30

Manvinder Singh Banga has held a variety of positions in Unilever since he joined in 1977. He was senior vice president, Hair and Oral Care from 1998 to 2000. From 1995 to 1998, he was the director for Detergents, Hindustan Lever, as well as category leader for Soaps and Detergents for Unilever’s Central Asia and Middle East Region. In 2004 he was business group president for Unilever’s Home and Personal Care business in Asia. He is also non-executive chairman of Hindustan Lever. In April 2005, Vindi joined the newly formed Unilever executive (UEX) and was appointed president Foods.

He is actively involved on the boards and managing committees of many trade and non-trade bodies including the Confederation of Indian Industry, the Indian Institute of Management, Ahmedabad and the Indian School of Business, Hyderabad. He is also a director on the board of Maruti Udyog Ltd, India’s largest car manufacturer.

He is a gold medallist of the Indian Institute of Management where he completed his postgraduate degree in management. Before that he gained a gold medal at the Indian Institute of Technology, Delhi, where he completed his bachelor of technology (Mech Eng) in 1975.

Vindi is a keen golfer. He is married with two sons.

Career Path
1977: Joined Hindustan Lever
1979: Area Sales Manager, Detergents
1980: Area Sales Manager, Personal Products
1981: Brand Manager, Personal Products
1982: Branch Sales Manager, North
1985: Moved to Lever Bros, UK as Brand Manager, HHC
1986: Lever Bros, UK - Sr. Brand Manager, Detergents
1987: Dy. Marketing Manager, Fabrics, Hindustan Lever
1988: Branch Manager, South India
1990: Marketing Manager, Fabrics and HCC
1993: General Manager, Personal Products
1994: Div.Vice President, Personal Products
1995: Director, Personal Products
1995: Director, Detergents
1998: SVP, Hair and Oral, Unilever PLC, UK
2000: Appointed Chairman of Hindustan Lever Ltd.
2004: BGP, Home and Personal Care Asia
2005: Appointed president foods

Nitin Paranjpe ... identifying new growth engines for HLL

2006-04-13T16:51:00.000+05:30

Executive Assistant to the Chairman of Unilever, JBIMS, 1987

I joined HLL in 1987. Since then I have been through a number of assignments - each unique, personally challenging and enriching. In the last couple of years, I have been an Area Sales Manager and a Brand Manager. I have represented Central Asia on the Global Home Care Category team and I have also been the Branch Manager for South India.

Two years back, I joined the Millennium team charged with the responsibility of identifying new growth engines for HLL. At the end of that assignment I moved to London to be a part of the team responsible for recommending the reorganisation of Unilever's top management structure. Today, I assist the Chairman and ExCo of Unilever PLC, by providing them background and analysis that they would need to discharge their responsibilities effectively.

The range of experiences that HLL provides, and the thrill of setting stiff goals and beating them year after year has been an exhilarating experience. I am delighted to be a part of a team of managers who are not only the brightest, but also the most wonderful human beings. It's not often that one finds all of this in an organisation. I feel proud to be a part of HLL.

Reebok's Marketing Whiz - Muktesh Pant - quits to start yoga biz

2006-04-13T16:36:00.000+05:30

Micky Pant recently left Reebok to set up a business in the field of yoga instruction and accessories. Prior to that, Micky was the Chief Marketing Officer of the Reebok brand, the flagship division of Reebok International Ltd. Promoted to this position in November 2001, Pant oversaw the marketing of the Reebok brand globally. In the past year, he has overseen several successful marketing campaigns, including "Terry Tate, office linebacker", and the creation of "Rbk", a new urban collection of footwear.

Pant joined Reebok in 1994 as Managing Director for Reebok India. In 1996, he was named Regional Director for new markets, and in 1999 was promoted to Vice President of Global Marketing, a position based at Reebok’s corporate headquarters. He relocated to the United States and was promoted to Chief Marketing Officer. He also serves on the Board of Directors of the American College of Sports Medicine.

Prior to joining Reebok, Pant served in various marketing positions for PepsiCo and Unilever.
Pant earned his master’s degree in chemical engineering from the Indian Institute of Technology, where he also was the recipient of a national scholarship.
"Athletic shoe and clothing maker Reebok International Ltd. said on Monday that its chief marketing officer Muktesh 'Micky' Pant had resigned in order to start a yoga-related business in India and the United States .

The company said Pant had decided 'to pursue his life-long dream of establishing a business that connects him to his roots in India , a country where wellness of the mind, body and spirit is held in high regard and serves as the very essence of the Indian culture.'

Pant told Reuters that he would return to India to start his new venture, which would be built around yoga. 'Because of the growth of e-mail and voicemail and instant communications, there's a lot of growth in stress,' Pant said, 'Deadlines have shortened. People are moving faster in a direction that they don't pause to think about.'

Professionalism in Yoga is not gona take long.

Bharat Puri ... The chocolate man

2006-04-13T16:13:00.000+05:30

Cadbury Schweppes Asia Pacific has announced the appointment of Anand Kripalu as managing director of Cadbury India. He is taking over from Bharat Puri who has been appointed as commmercial strategy director for Asia Pacific, a company spokesperson said. Kripalu, an IIT-Chennai and IIM-Calcutta alumni, will take up the new assignment on October 28. Before the current assignment, Kripalu was overseeing Unilever's East Africa operations. Rajiv Wahi, president of Cadbury Asia Pacific, said: "I am delighted that Kripalu is joining us. His expertise in general management of consumer goods will be significant in taking Cadbury India to the next level of growth."

Click for details

Rajeev Bakshi ....

2006-04-13T16:04:00.000+05:30

Mr. Bakshi has a Bachelor of Arts (Economics) Honours Degree from St. Stephens College in Delhi and an MBA degree from the Indian Institute of Management, Bangalore.

At present Mr. Rajeev Bakshi is the Chairman of PepsiCo India Holdings Pvt. Ltd. in India in which position he has responsibility for the company's business in India, Nepal, Bhutan, Bangladesh and Sri Lanka.

Mr. Bakshi has served Lakme India in a range of sales, marketing and general management assignments. Also, Mr. Bakshi has successfully handled several assignments with Cadbury Schweppes Limited in the capacity of Vice-President Sales and Marketing, Cadbury India Limited, Regional Marketing Director, London, Managing Director, India/South Asia and finally Managing Director, Cadbury (Pty), South Africa.

He was Vice President (Sales & Marketing) in Cadbury from 1992-1996 and the Regional Marketing Director of Cadbury Schweppes Plc, London for a year. He was designated Managing Director of Cadbury India wef January 1998.

Comments on chocolate industry

Vibha and Sanjay Rishi ... most interesting couple !!

2006-04-13T15:54:00.000+05:30

Vibha grew up in Bombay, Delhi and Corporate India. She joined the Tata Administrative Services right out of business school and became one of the nucleus group that worked on the birth of Titan Watches. She greatly enjoyed the creativity and freedom of expression as she worked on the marketing and design of the first range of watches.
Life, and baby, took her to Delhi where she joined the start up team on the Pepsi project in early 1989. A 14 year roller coaster ride later, during which Brand Pepsi became the #1 cola and Mirinda and 7UP gained leadership in their categories, she moved with her family to PepsiCo Headquarters in Purchase, NY.
Her current responsibilities include managing a clutch of PepsiCo brands internationally, primarily 7UP, Mirinda and Mountain Dew. She loves to read, garden, travel and listen to young people around the world.

Along with Vibha, her husband, Sanjay Rishi, too shifted to New York on a huge promotion: from being vice president and general manager in charge of the American Express service centres in Asia since early 2001, he has been made senior vice-president, service network partners.
In his expanded role, Rishi is directly responsible for overseeing service partners globally for American Express' US operations, while continuing to manage American Express' customer processing operations across Asia.
The list of Indian expat managers is getting longer by the week. And the trend is visible across sectors like FMCG, banking, pharmaceuticals, information technology, publishing, consulting etc.

Vibha and Sanjay have proved that a balance between personal and professional life is very much possible.

Harish Manwani ... President, Asia Africa - Unilever

2006-04-13T15:41:00.000+05:30

Harish Manwani is an honours graduate from Mumbai University and has a master's degree in management studies. He also attended the Advanced Management Program at the Harvard Business School.
He joined Hindustan Lever (HLL) in 1976, becoming a member of the HLL board 1995 as director responsible for the Personal Products business. As category leader for Personal Products, he also held regional responsibility for the Central Asia and Middle East business group.
In 2000, he moved to the UK as senior vice president, Global Hair Care and Oral Care, and in 2001 was appointed president, Home and Personal Care, Latin America business group. He also served as chairman of Unilever’s Latin America Advisory Council.
In 2004, he was appointed president and CEO of the HPC North America business group, and in April 2005 joined the Unilever Executive as president, Asia Africa. He is also non-executive chairman of Hindustan Lever and is currently a member of the Executive Board of the Indian School of Business.
Harish is married and has two daughters. He spends his leisure time with his family and enjoys playing golf and an occasional game of bridge.

Career Summary
1976: Joined Hindustan Lever
1994: Divisional vice president marketing, Detergents
1995: Joined board of Hindustan Lever Ltd; director for Personal Products
2000: Moved to UK as senior vice president Hair Care and Oral care categories; executive vice president, Latin America business group
2001: President, Home and Personal Care Latin America
2004: President, Home and Personal Care, North America
2005: Appointed president Asia & Africa

Sir, all hats off to you for ur splendid performance in last 30 years !!

Marketing Stalwarts ...

2006-04-13T12:02:00.000+05:30

1. Vindi Banga - Unilever
2. Harish Manwani - Unilever
3. Vibha Rishi - PepsiCo
4. Bharat Puri - Cadbury Schweppes Asia Pacific
5. Muktesh Pant - Reebok to Yoga
6. Nitin Paranjpe - HLL
7. Sanjay Dube - HLL
8. Sangita Singh - Wipro
9. Arvind Mediratta - Whirlpool
10. Manu Anand - PepsiCo
11. Sharda Agarwal and Shripad Nadkarni - Coca Cola to Marketgate Consulting
12. Rahul Malhotra
13. Himanshu Khanna
14. Saugata Gupta
15. C K Ranganathan - Cavinkare
16. Harish Bijoor Harish Bijoor Consults
17. Rajeev Bakshi
18. Sunil Duggal - Dabur
19. Atul Singh - Coca Cola

Why were all these above people were successful - Most had the professional aggression and the marketing acumen to get to where they are, but some attributed their success to the people around them.

I will keep posting about them in next set of posts !!

Saugata Gupta ... FMCG marketing guru

2006-04-12T16:42:00.000+05:30

Saugata Gupta, chief-marketing, Marico Industries, started his career with Cadbury’s India as a brand manager, where he was instrumental in launching the Perk brand. Later, he moved to ICICI Prudential Life Insurance. His desire for challenges made him shift back to the FMCG sector to explore new categories.

MBA: IIM B
Btech: IITK
Previous CMO at Marico: Mr Arvind Mediratta quit to join Whirpool

Click for interview (a journey from FMCG to insurance to FMCG)

FMCG stocks at all time high ... Whats there in future?

2006-04-11T22:33:00.000+05:30

If i go back 4 years, I see FMCG sector in shackles, but now the sector is back on track and is on the path to recovery. Growth is being witnessed in urban as well as rural areas.

Major Drivers: With the implementation of VAT from 1st May 2005, it was a shot in the arm for organised players, as brands will become cheaper in times to come. Owing to this, smaller and unorganised players might lose the competitive edge, which in turn will benefit larger players. Organised retailing has brought a new lease of life to the FMCG sector. With income growth prospects looking strong, FMCG demand is likely to trace GDP growth in the next three to five years.

Some stats: Index grown from 1636 to 2211 (35% growth) ... investors are bullish on it and still forsee appreciable growth

Suggestions: I think the investors to caution at current valuation levels. Investors should look at long tern i.e. three to five and should have the appetite to withstand any sharp decline in stock prices in the near future.

Competitive strengths: FMCG companies’ success is often attributed to their marketing and branding skills. Ability to continuously create successful brands and advertising which gets the message across often spells success for a company. Once a brand is successful, it easier for a company to piggyback on its initial success introduce more products and associate them with the known brand. As they say, ‘nothing succeeds like success’.

The consolidated topline in the last quarter of the top 5 FMCG major (HLL, ITC, Nestle, Britannia and Colgate) has grown by an enthusing 22% YoY, indicating that the FMCG sector is on the path to revival, with both rural and urban markets contributing to its growth. Infact, rural growth has outpaced urban growth in the past six months.

When compared to 5 smaller FMCG companies (including the likes of Godrej Consumer and Marico), the larger companies have clearly outperformed as far as the sales growth is concerned. Though the net profit growth of the smaller FMCG majors combined has outpaced the likes of HLL and Nestle, in the long-term, i believe that the FMCG sector is a volume game (market share). In a downturn, when consumers tighten their pockets, there is a possibility that consumers can be more 'pricey'. In the long-term, the challenge before FMCG players is on two fronts:
1. Increase the consumer base - Here the semi-urban and rural market is an important leg
2. Increase consumption of products per person (including upgrading existing customers to higher priced products in the same category)

Future of FMCG: HLL expects the FMCG sector to triple in value by FY10. As per NCAER estimates, consuming class will touch nearly 50% by FY08 and much of this growth will come from the rural hinterland. With the modern retail sector expanding at a faster clip, FMCG companies are most likely to benefit. Currently, only 4% of industry sales are through the organised retail chains, which is expected to touch atleast 10% in the next three to five years. However, the profit margins are likely to shrink, albeit by around 100 to 200 basis points. But again, the FMCG sector is a volume-driven game i.e. growth at margin.

So it is recommended that investors should choose those companies that have the ability to maintain market share (despite the ups and down in consumer spending) and have the ability to launch products on a continuous basis. By the way, FMCG sector/stocks are defensive in nature and therefore, returns are likely to be stable over the long-term.

Harish Bijoor .... a journey

2006-04-10T21:59:00.000+05:30

Harish Bijoor is a prolific blend of an entrepreneur, author, quizzer and brand manager, all combined in one. Harish Bijoor was in Cottons between 1974 and 1978 and belonged to Pakenham Walsh. After Cottons he joined St. Joseph’s Arts and Science College, Bangalore. Later he sat for the Civil Services examination where his rank in the UPSC was eight hundred and sixty five, thereby qualifying him for the Indian Audit and Accounts Services. As this was a rather dull option, Harish Bijoor participated in the campus recruitment of Brooke Bond-Lipton and started his career as a management trainee in the sales department. After four years, he rose to the position of Product Manager for coffee. Thereafter, he spent another three years as Senior Product Manager in charge of tea brands. After seven years at Hindustan Lever, Harish Bijoor switched to Tata Tea Ltd., joining them as General Manager – Marketing in 1993 with the chief responsibility of monitoring operations of Tata Tea’s newly acquired coffee business. Perhaps, this is where Harish Bijoor really blossomed as someone who could project a brand to its ultimate, which is his USP.

Harish Bijoor masterminded a series of memorable and innovative campaigns during his stint with Tata Tea, and later, Tata Coffee. These include printing “Tata Coorg Pure Coffee” on three million eggs, knowingly hanging banners upside down and printing “Tata Kaapi” on papads! However, his most outstanding innovation was the creation of the world’s largest coffee mug in Bangalore, which event coincided with fifty years of India’s independence.

At Tata Coffee, Harish Bijoor soared to the post of Vice President – Marketing Operations and was responsible for enhancing its brand image and revenues. However, to preempt any semblance of monotony, Harish Bijoor left Tata Coffee to assume the position of Chief Operating Officer, Zip Telecom Limited. Zip Telecom is a subsidiary of the Mauritius-based Zip Global Network. The Zip Phone, the propriety product of Zip Telecom, is a state-of-the-art pay phone device that combines the display attributes of a television with the internal functioning of a computer, and includes internet and credit card compatibility. It is perhaps the first of its kind in the world. At Zip Telecom, Harish Bijoor is responsible for the pay phone business and marketing. He is commonly regarded as being responsible for the unmistakable presence of the Zip Phone in most cities in India.

After pioneering the Tata’s foray into the coffee market, Harish Bijoor has earned an unshakable reputation as one of India’s best-known coffee marketers. With an emphasis on market study and consumer behavior coupled with instinct and intellect, Harish Bijoor is highly effective in the field of marketing. He has studied threadbare the technical aspects of growing, harvesting, roasting, grinding and packaging coffee and has made presentations at several international symposia related to coffee. Harish is reputed to be an excellent HR person as well, with a vastly personalised rapport with his employees.

Harish Bijoor models himself philosophically on Mahatma Gandhi and teaches at several institutions including Indian Institute of Management and the Indian Business Academy. He also writes regularly for columns in leading newspapers, especially on branding, and is currently authoring two books. Widely travelled, he has authored Marketing Trends, a book meant to stimulate consumer interest in marketing–specific issues. Harish Bijoor has the uncanny ability to combine technology and ground reality, and consequentially enhance the mass appeal of a brand. He intends to retire at forty, and pursue other passions such as quizzing, writing and travelling.

C K Ranganathan, CEO of CavinKare: Rags-to-riches!!

2006-04-10T17:44:00.000+05:30

C K Ranganathan, CEO of CavinKare is somebody who changed the rules of the FMCG game. He is widely regarded as the man behind the sachet revolution. The FMCG business is becoming increasingly complicated with the biggie HLL competing with regional players in various parts of India. HLL battles it out with CavinKare in most of the Southern markets. CavinKare has registered tremendous growth and has ambitious plans to expand its product portfolio. CavinKare acquired Ruchi Food Products (known more for their pickles!) about two years ago and is currently making a foray into international markets.

History: 1983, C K Ranganathan started selling shampoos in a sachet with an investment of Rs 15,000 and dared to take on the multinationals, Lever and P&G, the unquestioned leaders in that segment.

Present: This year, Ranganathan’s company, CavinKare, ended up with a turnover of a little over Rs 500 crore. Ranganathan is positive he can touch Rs 5000 crore in the next 10 years and can emerge as an Indian multinational.

So how did Ranganathan become a tycoon? His father, Chinni Krishnan, a school teacher, had an entrepreneurial streak in him. He was also an inventor of sorts. He had started a small-scale pharmaceutical packaging unit and gone on to manufacture pharmaceutical products and cosmetics. The father may not have become a big time businessman, but he had a few radical ideas about the Indian consumer. He wanted the common man to have access to what was then termed as rich man’s products. He also believed in packaging for single-time use. The sachet which was to revolutionise FMCG marketing was his creation.

When his father passed away, Ranganathan, a fresh graduate entered the family business. His brother C K Rajkumar had been the brain behind Velvette International and the successful launch of Velvette shampoo sachets in the early eighties. However, Ranganathan wanted to branch off on his own. He had clear ideas about how to do business. He started Chik India as a small partnership firm, Chik being an acronym for his father’s name. The partners were his mother and grandmother. Chik India started off by offering a single product, Chik shampoo. Ranganathan took the then shampoo market by storm, selling his Chik brand of shampoo at a much lower price than other shampoo sachets which were selling at Rs 2. He targeted rural and small-town consumers who used soaps to wash their hair. Didn’t he offer his sachets at an unbelievable price of 50 paise? How could he have made any money? Ranganathan says he didn’t start off with 50 paise pricing. He introduced the sachet at 90 paise. Only by 1998 the 50-paise pricing happened. And that’s when the multinationals sat up and noticed him. This was one regional player who was there to stay and also was giving them a good run for their money. With the volumes he had built up by then, his margins became quite healthy in spite of the low price. He would never admit to it, but his company was obviously cocking a snook at Lever when it changed its name from Beauty Cosmetics to CavinKare ( CK). The folks at Calvin Klein, a Unilever brand, were surely not amused. In an earlier interview Ranganathan has said the similarity to the original CK was coincidental though not entirely unwelcome. Says he: “It is a tribute to my father Chinni Krishnan. Also, Cavin in ancient Tamil means beauty and grace.”

From the beginning, Ranganathan was quite sure he wanted to have his own distribution network. He did not want to piggyback on some larger manufacturer’s set up. (His elder brother had burnt his fingers by tying up with Godrej). He said in an interview four years ago, “I was very clear that I did not want to mess up my focus by getting involved in production when there are highly skilled and competent people to do the job for you. My focus was to build brands, be hands-on where marketing and distribution was concerned.” He now says, “I had a basic product, the shampoo. I played around with these ideas.” How did he do that? “I introduced the concept of fragrance. Which was a revolution then. If you opened the sachet, the entire room would be filled with fragrance.” This obviously appealed to his target consumers. This was a period when the small company had no money for advertising. But understanding that the concept of fragrance worked, Ranganathan targeted the stockists. “When we went to visit them, we use to spray fragrance outside the packs. The stockists couldn’t help noticing the lingering fragrance.” They did this till Chik shampoo became an established name. But what really worked was the ‘bring empty sachets and take shampoo sachets in return’ offer. His competitors sneered. They said he was giving away sachets as charity. But Ranganathan proved his critics wrong. Sales zoomed from 35,000 sachets to 12 lakhs. “Initially we took any sachet, but after three months we restricted it to Chik sachets. But the idea had caught on, and it didn’t make any difference to the popularity of the offer.” With increasing cash flows the company finally got some funds for advertising. The next step was the introduction of floral fragrances like rose and jasmine. The sales rose to 35 lakh sachets. “From then there was no looking back,” says Ranganathan.

People who have worked with Ranganathan say that he has an intuitive understanding of the consumer and the market, particularly the South Indian consumer. Says Suguna C Swamy, a senior advertising professional who has worked on campaigns with Ranganathan, “Show him a commercial, he will know how people will react.”

Today Chik is the second largest shampoo brand after Clinic Plus.

Ranganathan then moved on to selling pickles in sachets. Now putting pickles in sachets is not as simple as it sounds. There is oil, pieces of pickle and spices — all of which have to be packed in pouches. Consistency in quality and standards has to be maintained. It can’t be allowed to leak. Ranganathan managed to create the right sachet and packaging. And he became the market leader in Tamil Nadu within a year. The next launch was Nyle herbal shampoo in 1993, which faced tough competition from the existing manufacturers. This was targeted for the middle class, and established itself within three to four years and has gained respectable market share. Then there is Meera hair wash powder, easily the market leader. As Ranganathan explains it, he looks for products which fulfill a felt need. Another launch during this period was the Fairever cream in the fairness segment. Lever’s Fair & Lovely is the market leader. CavinKare found that people were not ready to accept a new brand. There was a lot of resistance. “We did our research. We had to have a USP to promote the product. We discovered that milk and saffron worked well to lighten the skin with external application too (It’s usually thought that drinking milk with saffron makes you fair).” Today Fairever is the no. 2 brand in the fairness segment.

A lot of work was done to popularise the Indica hair colouring as well. “Actually we thought of the name Indica before the Tatas came out with their car,” he says. Again this was not an easy market to break into in 1998. Once it was decided to turn into herbal hair colouring, the sales picked up. Ranganathan has not achieved success in everything. For various reasons, his foray into perfumes and deodorants have not had the same acceptance like the other products. However, Ranganathan is not the kind who lets failures faze him.

Says Nandakumar, “He is an avid listener, he doesn’t talk much. You can tell him there are flaws in some of his ideas. He will buy it, work on it, refine it and come back”. Ranganathan gets up everyday at 5.30, sorts out his day’s activities, swims for half an hour (he is a fitness freak), spends time with his three young children and is off to work. He reads only management books, likes to watch comedies and takes short holidays with his family every three or four months. At other times, he thinks about becoming an international company. “I like challenges,” he says. Challenges are what he is looking forward to in the next few years.

A few months ago, the company launched Tex, a toilet cleaner (short for toilet expert) in, of course, a sachet. Now toilet cleaners have a corrosive base: it is near impossible to pack them into a sachet. But CavinKare has achieved this. When first packed in a sachet, the cleaner was oozing out. A lot of work went into it again to get the package right. A little known fact about CavinKare is that one of the group companies is a very modern packaging unit. It supplies to many big names in industry like P&G, Henkel, ITC, Britannia, Godrej, Kelloggs and so on. Tex is doing very well in Tamil Nadu. There are two new hair oils to hit the market soon, Meera and Nyle. Nyle is an up-market product with a very different packaging. Herbs are kept in tubes, which are placed inside the oil for constant interaction.

Going global is the next priority. CavinKare already has fully owned subsidiaries in Indonesia and Bangladesh. It is seriously looking at all the neighbouring countries, the Gulf and Egypt. Plans are being finalised to enter the US market this year. Food products will possibly become even larger than the personal care products. Then there are the exclusive CavinKare Salons, Green Trends and Lime-Lite and which have been set up already in three metros. Ranganathan feels the salons offer a tremendous opportunity. He dreams of setting up 1,000 salons in the next 10 years. They will be the vehicles for top of the line products. Will he be able to achieve all this? “My strength is I deliver on my claims,” he says gently. For more details: click here

This guy is gona create new HLL !!

Right passage to enter India ... Its not replication!! (Market Entry Strategies)

2006-04-10T13:12:00.000+05:30

India, for some time now the focal point of the global trend toward strategic offshoring, has simultaneously become appealing as a market in its own right. With GDP growth more than double that of the United States and the United Kingdom during the past decade, and with forecast continued real annual growth of almost 7 percent, India is one of the world's most promising and fastest-growing economies, and multinational companies are eagerly investing there.

Yet the performance of the multinationals that have tried to exploit this opportunity has been decidedly mixed. Many of those notable for their strong performance elsewhere have yet to achieve significant market positions (or even average industry profitability) in India, despite a significant investment of time and capital in its industries. Why? Perhaps because the market entry strategies that have worked so well for these companies elsewhere—bringing in tried and tested products and business models from other countries, leveraging capabilities and skills from core markets, and forming joint ventures to tap into local expertise and share start-up costs—are less successful in India.

Different researches (By Mckinsey) suggests that the most successful multinationals in India have been those that did not merely tailor their existing strategy to an intriguing local market but instead cut a strategy from whole cloth. In short, they have resisted the instinct to transplant to India the best of what they do elsewhere, even going so far as to treat the country as a bottom-up development opportunity.

With less of a focus on the initial entry and with a longer-term view of what a thriving Indian business would look like, the more successful companies have invested time and resources to
1. understand local consumers and business conditions
2. tailoring product offers to the entire market, from the high-end to the middle and lower-end segments
3. reengineering supply chains
4. even skipping the joint-venture route.

The reward for this effort?

Of the 50-plus multinational companies with a significant presence in India, the 9 market leaders, including British American Tobacco (BAT), Hyundai Motor, Suzuki Motor, and Unilever, have an average return on capital employed of around 48 percent. Even the next 26 have an average ROCE of 36 percent.

Getting local in India
India's per capita income is half of China's and one-fourth of Brazil's, and as much as 80 percent of Indian demand for any industry's products will be in the middle or lower segments. As a result, multinationals must resist the temptation merely to replicate their global product offerings; the products and price points that are competitive in India are often considerably different from those that work well in other countries. In particular, in India companies must reach into the middle and lower-end segments or they may end up as niche high-end players, with insignificant revenues and profits.

Multinationals that understand the Indian consumer's expectations and price sensitivities can tap into what is often a large and promising market, but they shouldn't assume that the lowest price tag will always lead it. Indian consumers, even in the lower-end segments, will pay a premium if the value of superior features and quality is seen to far outweigh their cost.

Case Study: LG Electronics, reengineered its TV product specifications in order to develop three offerings specifically for India, including a no-frills one to expand the market at the low end and a premium 21-inch flat TV for the middle segment. By keeping the price of the latter offering to within 10 percent of the price of TVs with conventional screens, LGE persuaded many consumers to buy it. These innovations have led the company to a top-three position in the country's consumer durable-goods and electronics market in a little over three years, with revenues of nearly a billion dollars in India.

Case Study: Toyota Motor captured nearly a third of the multi-utility-vehicle (MUV) market by offering a significantly superior product at a limited price premium.

Case Study: Very often, however, companies need to develop completely new products to compete at target price points set by local competitors, as Hindustan Lever Limited (HLL), a part of the multinational Unilever, did with its low-priced detergent brand, Wheel. Responding to local competition, HLL lowered the active detergent content of its existing product, decreased the oil-to-water ratio, and then launched the new detergent at a 30 percent discount to the price points of the company's more traditional detergents. Today, Wheel accounts for 45 percent of HLL's detergent business in India and for 8 percent of total HLL sales.

Case Study: companies must significantly localize their product offerings to meet Indian consumer preferences. Hyundai, for example, spent several months customizing its small-car offering, Santro. Because Indian consumers attach significant importance to lifetime ownership costs, Hyundai reduced the engine output of the Santro to keep its fuel efficiency high, priced its spare parts reasonably, and made more than a dozen changes to the product specifications to suit Indian market conditions. In contrast, other global automakers entered the market with vehicles that had low gas mileage and high repair rates and after-sales service costs.

Companies can bolster their profitability by reengineering their supply chains. Hyundai, for instance—in contrast to other global auto manufacturers in India, which source only about 60 to 70 percent of their components locally—buys 90 percent of its components from cheaper Indian suppliers rather than importing more expensive parts from its usual suppliers elsewhere. Multinational pharmaceutical companies outsource a large share of their production to third-party manufacturers within India—an uncommon practice for major pharma companies elsewhere in the world. And both Hyundai and LGE have built global-scale manufacturing facilities to capture economies, making India a global manufacturing hub that can serve other markets as the local market develops.

Using extensive third-party distribution also helps. In India, organized retail distribution systems reach less than 2 percent of the market, so there is considerable pressure to find innovative ways of reaching retail consumers. This third-party distribution system is crucial to capturing demand created by the superior price-to-value offerings available in smaller cities and rural areas, which make up a large share of the Indian market. In fact, successful multinationals—such as Castrol (acquired by BP in 2000), LG Electronics, and Unilever—have built deep third-party distribution networks that serve second-tier cities and villages. Here again, a local strategy is crucial. One multinational company, for instance, used to own its entire worldwide distribution infrastructure, including warehouses and trucks. Applying that business system in India, where large companies face high labor and overhead costs, made it impossible to attain nationwide reach. Moving to a third-party distribution system employing a network of dealers and agents proved very successful.

Finally, in contrast to companies that rotate expatriate managers in and out of the country every two or three years—often a recipe for failure—most successful multinationals, such as Citibank, GlaxoSmithKline, and Unilever, have an Indian CEO in their local operations. Given the need to tailor products, supply chains, and distribution systems to local markets, local managers tend to be more effective. If the CEO is an expatriate, combining longer postings with a strong local second in command, as in the case of the South Korean giant Hyundai, seems to be crucial to success. In addition, multinationals such as Castrol have benefited from strong local boards to counsel, challenge, and help local operations.

Skipping the joint venture
Multinationals entering new markets have traditionally struck up joint ventures with local partners for a variety of reasons, including their ability to influence public policy, to bring into the venture existing products as well as marketing and sales capabilities, and to comply with regulatory requirements when foreign participation was restricted to less than 50 percent of a business.

While joint ventures are still crucial to gaining access to privileged assets in some industries—metals and mining, for example, and oil and gas—our research shows that, where possible, multinationals are better off going it alone. Of the 25 major joint ventures established from 1993 to 2003, only 3 survive. Most foundered because the local partner couldn't invest enough resources to enlarge the business as quickly as the multinational had hoped. As a result, most of the multinationals that initially entered the market through joint ventures have exited them and pursued independent operations. Multinationals, such as Hyundai and LGE, that have achieved real success in India have bypassed joint ventures entirely, and newcomers are increasingly entering the market on their own. Even when a joint venture is unavoidable, successful multinationals ensure from the outset that they retain management control and have a clear path to eventual full ownership.

Participating in the regulatory process
Multinationals in deregulating industries often need to be flexible and patient during the natural process of regulatory evolution. Regulations governing the mobile-telephony sector, for example, have been amended several times since 1994 as it has grown; it had two licensed operators per region back then and now has as many as six. Although most multinationals left the sector when the regulations governing it changed, Hutchison Whampoa continued to invest in India. Ten years later, Hutchison Essar is one of the top three telcos in the country (as reckoned by market share), and interviews with industry experts suggest that the company enjoys strong profitability.

If regulations are a crucial factor for an industry, the CEO needs to spend a lot of time managing them. The most successful multinationals haven't relied on third-party legislation managers or joint-venture partners to address regulatory issues; instead they have invested much time and energy to identify and understand the key policy makers, to formulate robust positions for investment, and even to suggest regulatory changes. In addition, these companies have garnered support from constituencies such as state governments, which compete for investments, and industry associations that lobby for similar regulatory changes.
Clearly, any entry into a new market requires a certain degree of tailoring to its specific needs and conditions. But for some companies, the entry into India has forced a fundamental rethinking of product offers, cost structures, distribution systems, and management teams. Companies that successfully tap into the promising Indian market often ignore conventional wisdom, including the need for joint ventures.

Be careful before entering into India !!

Gyan for MBA students before you join ur summer internship organizations ..

2006-04-10T12:58:00.000+05:30

Obviosy 4Ps, 3Cs and other models will help u to have a structured approch ... but for any marketer the most important thing is to feel the market by understanding the grassroot realities ... i.e. the consumer behavior .. i mean qualitative research

The normal process is in this order ...
1. start with secondary research ... googling
2. Focused group discussion (FGD)
3. Qualitative and qualtitative research ... to get some stats
4. validate the research
5. Design Marketing Strategy/ key insights

One important thing is that sometimes researches fail ... and common sense works

The best marketer is one who is fully involved in the product/ brand !!!

Toughening up the chain .. by Susan Tsang

2006-04-10T12:38:00.000+05:30

Supply chain management (SCM), which holds the promise of reducing supply costs and raising product margins, is becoming even more of a necessity as technology develops.

SCM is the planning and execution of supply chain activities to ensure a coordinated flow both within a company and with integrated companies.

The advent of the digital age has powered business to Internet speed. Buyers go online to surf the world in search of what they want, at the best prices. Retailers are racing to keep up with consumers.

Manufacturers no longer have the luxury of taking years to develop, market and sell their products. For instance, mobile phone makers have seen their design cycle shrink from 18 months to just 6 in the last few years.

As customer preferences and demands shorten the lifecycle of a product, manufacturers have to produce shorter production runs to ensure minimal inventories in the supply chain to reduce product obsolescence.

Further complicating matters is the evolution of the manufacturing process itself, which is becoming more global in terms of suppliers and customers. As manufacturing becomes more diverse and spreads across countries, both from a production and distribution perspective, manufacturers require improved visibility and real-time information if they are to successfully manage the supply chain and respond rapidly to market and customer demands.

Manufacturers in the region are still adopting traditional SCM products in areas such as supply chain planning, factory scheduling, demand forecasting, transportation planning and warehouse management.

However, as they find themselves having to respond quickly and provide information in collaborative environments, manufacturers realize that improvements are needed within their own operations.

Venturing beyond traditional SCM products into new areas of:
1. supplier collaboration
2. customer collaboration
3. radio frequency identification (RFID)
4. product lifecycle management (PLM); may be in the offing.

Pranav Kumar, research director of enterprise application software, with research firm Gartner Asia Pacific, estimated that collaborative planning applications, which enable the sharing of planned demand or supply data with trading partners, will take two to five years to realize its
potential.

With RFID, where tags attached to pallets, boxes or items enable
objects to be tracked throughout the supply chain, Pranav projected that it
will take 5 to 10 years before it becomes pervasive.

A very exciting innovation for the manufacturing industry is is PLM. Such systems tie everything together, allowing engineering, manufacturing, marketing, and outside suppliers and channel partners to coordinate activities.

PRODUCT LIFECYCLE MANAGEMENT
PLM is a process that leverages product information to guide products from concept through retirement. The software makes use of product information and business analysis to support the product’s portfolio strategies, lifecycle planning, activities management, and the execution of the activities through each phase in a product’s life.

By providing a unified collaborative environment, PLM enables the collective knowledge of the extended enterprise to add value at any stage of a product’s lifecycle.

PLM allows downstream players to participate in the earliest stages, which can determine up to 80 percent of a product’s development cost. It can manage all of the intellectual capital to support the entire product lifecycle, including product, process, resource and supplier
information.

The Top 10 Most Common Mistakes that Retailers Make by Brian Azar

2006-04-10T12:26:00.000+05:30

1. No Business Plan
If you rely purely on instinct to guide your business instead of a written plan, you're headed for trouble. A plan helps you focus on where your company is, where it's going, why and how you're doing along the way. Creating a simple plan is a must.
2. No Sales Plan
Without a sales plan, there's no serious way to gage the financial growth and progress of your business. You need a realistic map for where the sales will come from, how they'll come, from whom, how often as well as: how much selling is needed daily, weekly, monthly, quarterly and annually! Included in your sales plan is a "Selling System" which gives you immediate feedback during your sales cycles, especially during your "Sales Interviews". Your "Selling System helps you keep score.
3. No Marketing Plan
A marketing plan creates the kind of attention you need to get in front of the right types of people, companies, etc. It is what attracts people to you! There may be as many as twenty five ways to market your business at no or low cost. A good marketing plan implemented effectively, efficiently, elegantly and consistently, will eliminate the need for "cold calls."
4. No Mastermind
A MasterMind is like an unpaid board of advisors who have similar, related, successful businesses, which are noncompetitive. These professionals are positive, somewhat like-minded, and open-minded. They are an excellent resource, brain trust and support system. Eventually, they can even provide introductions and endorsements to others for you. They're part of your team.
5. No Cash Reserve or Real Cash Flow
During the excitement and euphoria of starting a business, it's easy to overlook the gap between making the first few sales and banking the money. Often, the wait can be too long and without some cash reserve many companies may stall or even fail without any planned cash flow coming in.
6. Ignoring the Numbers
As an entrepreneur-business owner, your primary goal is to make a NET PROFIT! If you do not know how you are doing until all the money is in and all the bills are paid, then it may be too late! You need to know where you stand on a regular basis, especially with regard to income versus expenses! Having a timely system in which you can record the appropriate key data and quickly analyze the information, is of the utmost importance! There are software programs that can help.
7. Not Being Automated
With the low cost of personal computers today and the very positive productivity impact they can have on your business, it is essential to become automated! With a computer, modem, a fax, and access to the internet for e-mail, a wealth of information and electronic commerce, you will be keeping up with your competition and staying current.
8. Not Knowing Your Customers
Changes in your customers' preferences and your competitors' products and services can leave you in the dust unless you get to know your customers well, what they want now and will likely want in the future, what their buying patterns are, and how you can be a resource for them even if you don't have the right products or services for them now.
9. Ignoring Employees
Motivating, coaching and managing your staff is probably one of your toughest challenges as an entrepreneur/business owner today! Without your patience, persistence and "people skills", your problems can multiply quickly. Morale, productivity AND PROFITS can easily be destroyed! Be sure to get help if you assess objectively, that these are not your strengths.
10. Being a Lone Ranger
You might be the key to everything BUT you cannot DO everything and grow at the same time. Even modest success can overwhelm you unless you do the following: hire the right staff and delegate responsibility, work with a business coach or mentor, and finally, create several positive business exit options for the future to make the ultimate transition smooth and planned.

These mistakes are not only done by Retailers .. but by every business man .. So try to implement the above and thank Mr. Azar.

ITC eChoupal Case Study .. Rural Transformation

2006-01-02T23:05:00.000+05:30

Agriculture is vital to India. It produces 23% of GDP, feeds a billion people, and employs 66% of the workforce. Because of the Green Revolution, India’s agricultural productivity has improved to the point that it is both self-sufficient and a net exporter of a variety of food grains. Yet most Indian farmers have remained quite poor. The causes include remnants of scarcity-era regulation and an agricultural system based on small, inefficient landholdings. The agricultural system has traditionally been unfair to primary producers. Soybeans, for example, are an important oilseed crop that has been exempted from India’s Small Scale Industries Act to allow for processing in large, modern facilities. Yet 90% of the soybean crop is sold by farmers with small holdings to traders, who act as purchasing agents for buyers at a local, government-mandated marketplace, called a mandi. Farmers have only an approximate idea of price trends and have to accept the price offered them at auctions on the day that they bring their grain to the mandi. As a result, traders are well positioned to exploit both farmers and buyers through practices that sustain system-wide inefficiencies.

ITC is one of India’s leading private companies, with annual revenues of US$2 billion. Its International Business Division was created in 1990 as an agricultural trading company; it now generates US$150 million in revenues annually. The company has initiated an e-Choupal effort that places computers with Internet access in rural farming villages; the e-Choupals serve as both a social gathering place for exchange of information (choupal means gathering place in Hindi) and an e-commerce hub. What began as an effort to re-engineer the procurement process for soy, tobacco, wheat, shrimp, and other cropping systems in rural India has also created a highly profitable distribution and product design channel for the company—an e-commerce platform that is also a low-cost fulfillment system focused on the needs of rural India. The e-Choupal system has also catalyzed rural transformation that is helping to alleviate rural isolation, create more transparency for farmers, and improve their productivity and incomes. This case analyzes the e-Choupal initiative for soy; efforts in other cropping systems (coffee, wheat, and shrimp aquaculture), while different in detail, reflect the same general approach.

BUSINESS MODEL
A pure trading model does not require much capital investment. The e-Choupal model, in contrast, has required that ITC make significant investments to create and maintain its own IT network in rural India and to identify and train a local farmer to manage each e-Choupal. The computer, typically housed in the farmer’s house, is linked to the Internet via phone lines or, increasingly, by a VSAT connection, and serves an average of 600 farmers in 10 surrounding villages within about a five kilometer radius. Each e-Choupal costs between US$3,000 and US$6,000 to set up and about US$100 per year to maintain. Using the system costs farmers nothing, but the host farmer, called a sanchalak, incurs some operating costs and is obligated by a public oath to serve the entire community; the sanchalak benefits from increased prestige and a commission paid him for all e-Choupal transactions. The farmers can use the computer to access daily closing prices on local mandis, as well as to track global price trends or find information about new farming techniques—either directly or, because many farmers are illiterate, via the sanchalak. They also use the e-Choupal to order seed, fertilizer, and other products such as consumer goods from ITC or its partners, at prices lower than those available from village traders; the sanchalak typically aggregates the village demand for these products and transmits the order to an ITC representative. At harvest time, ITC offers to buy the crop directly from any farmer at the previous day’s closing price; the farmer then transports his crop to an ITC processing center, where the crop is weighed electronically and assessed for quality. The farmer is then paid for the crop and a transport fee. “Bonus points,” which are exchangeable for products that ITC sells, are given for crops with quality above the norm. In this way, the e-Choupal system bypasses the government-mandated trading mandis. Farmers benefit from more accurate weighing, faster processing time, and prompt payment, and from access to a wide range of information, including accurate market price knowledge, and market trends, which help them decide when, where, and at what price to sell. Farmers selling directly to ITC through an e-Choupal typically receive a higher price for their crops than they would receive through the mandi system, on average about 2.5% higher (about US$6 per ton). The total benefit to farmers includes lower prices for inputs and other goods, higher yields, and a sense of empowerment. The e-Choupal system has had a measurable impact on what farmers chose to do: in areas covered by e-Choupals, the percentage of farmers planting soy has increased dramatically, from 50 to 90% in some regions, while the volume of soy marketed through mandis has dropped as much as half. At the same time, ITC benefits from net procurement costs that are about 2.5% lower (it saves the commission fee and part of the transport costs it would otherwise pay to traders who serve as its buying agents at the mandi) and it has more direct control over the quality of what it buys. The system also provides direct access to the farmer and to information about conditions on the ground, improving planning and building relationships that increase its security of supply. The company reports that it recovers its equipment costs from an e-Choupal in the first year of operation and that the venture as a whole is profitable. In mid-2003, e-Choupal services reached more than 1 million farmers in nearly 11,000 villages, and the system is expanding rapidly. ITC gains additional benefits from using this network as a distribution channel for its products (and those of its partners) and a source of innovation for new products. For example, farmers can buy seeds, fertilizer, and some consumer goods at the ITC processing center, when they bring in their grain. Sanchalaks often aggregate village demand for some products and place a single order, lowering ITC’s logistic costs. The system is also a channel for soil testing services and for educational efforts to help farmers improve crop quality. ITC is also exploring partnering with banks to offer farmers access to credit, insurance, and other services that are not currently offered or are prohibitively expensive. Moreover, farmers are beginning to suggest—and in some cases, demand—that ITC supply new products or services or expand into additional crops, such as onions and potatoes. Thus farmers are becoming a source of product innovation for ITC.

DEVELOPMENT BENEFIT
The e-Choupal system gives farmers more control over their choices, a higher profit margin on their crops, and access to information that improves their productivity. By providing a more transparent process and empowering local people as key nodes in the system, ITC increases trust and fairness. The increased efficiencies and potential for improving crop quality contribute to making Indian agriculture more competitive. Despite difficulties from undependable phone and electric power infrastructure that sometimes limit hours of use, the system also links farmers and their families to the world. Some sanchalaks track futures prices on the Chicago Board of Trade as well as local mandi prices, and village children have used the computers for schoolwork, games, and to obtain and print out their academic test results. The result is a significant step toward rural development.

KEY LESSONS
The e-Choupal model demonstrates that a large corporation can play a major role in recognizing markets and increasing the efficiency of an agricultural system, while doing so in ways that benefit farmers and rural communities as well as shareholders. The case also shows the key role of information technology—in this case provided and maintained by a corporation, but used by local farmers—in helping bring about transparency, increased access to information, and rural transformation. Critical factors in the apparent success of the venture are ITC’s extensive knowledge of agriculture, the effort ITC has made to retain many aspects of the existing production system, including maintenance of local partners, the company’s commitment to transparency, and the respect and fairness with which both farmers and local partners are treated.

For more details visit: http://www.digitaldividend.org/pdf/echoupal_case.pdf

TOP 10 Global Leaders in Food

2005-11-17T15:54:00.000+05:30

Cadbury-Schweppes
Danone
General Mills
Heinz
Hershey
Kellogg
Kraft
Masterfoods
Nestlé
Unilever Bestfoods

CASTROL's Repositioning Excercise

2005-11-17T14:20:00.000+05:30

Changing Trends

Indian consumers today are far more passionate about their cars and bikes
They no longer look at their vehicles as a mere mode of transport but also want to maintain them well
Caring for vehicles is becoming a priority for consumers
People don't change brands easily, as they feel that by doing so, they are causing disservice to their vehicle
rise in ownership value and pride in their car or bike, consumers are also careful about the brand of lubricant they use

Castrol's Financials: Turnover of around Rs 1,500 crore last year

Castrol's brand strategy: "It's more than just oil. It's liquid engineering."
The tagline `liquid engineering' talks about the inner strength of Castrol which enables the engine to perform better

Garage Owners to Masses

Media Agency: Ogilvy & Mather - Position Castrol as a brand that goes beyond other lubricant brands, and also brings out the emotional attachment people have towards their vehicles

Other Players: Most lubricant brands focus more on the vehicle, while we've tried to talk about the engine

Other Changes

The brand also sports a new logo
Invested in creating a new packaging for its products
Previously there was not much synergy between the various packs. The packs containing truck oils looked different from the car oils. But now there is more synergy between the packs and they also bring out the brand's core proposition

Products: To fulfill the needs of a passionate biker or a car owner, the company has also rolled out a few specialised products such as Castrol Edge

Target Audience: ultra passionate consumer who wants the best for his car

Market Size: Lubricant market has registered a significant growth in value terms, but a fall in volumes. This is due to superior technology and the high-quality ingredients used in the lubricants. The market in value terms is growing by almost 7 per cent year-on-year

A truck driver who used to change the oil every 10,000 km will now do it once every 15,000 km

Promotional Campaigns

Associating the brand with a lot of youth-based TV programmes such as MTV Youth Icon and Fame Gurukul on Sony
Involved in a number of campus activities to promote its premium bike lubricant, Power One
They sponsor rock concerts, 20:20 cricket matches and speed football
They have tied up with cricketer Rahul Dravid and actor John Abraham to endorse the brand. But the initial campaigns will focus on the core proposition of the brand, which is liquid engineering

Hope Castrol will be able to realize value from the above excercise !!

Rise of Regional Brands

2005-11-16T02:26:00.000+05:30

Small and regional brands score because they are often close to the market, respond faster to changes and are willing to learn from mistakes.

HINDUSTAN Lever Ltd (HLL), India's largest FMCG company, has struggled to grow in recent times. Many of its brands are no longer the stars of the past. HLL's experience is symptomatic of the kind of challenges faced by established brands today. The new threat comes from smaller players who have embraced a different kind of business model with a different value proposition. These include regional brands and private labels.

While HLL has been struggling, the regional players seem to be doing well. For example, CavinKare has been giving HLL a run for its money in the shampoo market. Anchor, one of the fastest growing FMCG companies in recent times, is hotly challenging HLL and Colgate in the toothpaste market. Jyothi has dislodged Reckitt Benckiser's long-time leader Robin Blue with its Ujala fabric whitener.

Regional brands typically take on well-known, established brands by pursuing a flanking strategy which can be of two types - geographical or need-based.

1) In a geographical attack, the challengers identify regions where the opponent is underperforming
2) The other flanking strategy is to serve unfulfilled market needs

The essence of a flanking strategy is identifying shifts in market segments that are causing gaps to develop, moving into the gaps and developing them into strong segments. Flank attacks make excellent marketing sense and are particularly attractive to challengers with fewer resources than their opponents. This is how Nirma has become a national brand, even though no one gave it a chance when it took on HLL.

Various factors have contributed to the rapid emergence of challengers in the past decade. In many product categories, technology is easily available. It is no longer the exclusive preserve of established players. Moreover, many entrepreneurs today are qualified tech-savvy people, if not technologists themselves. They understand the importance of technology.

Earlier, resources were a constraint. So established brands created high barriers to entry. But today even if the entrepreneurs don't have money to back their plans, angel investors and venture capitalists are around to fund them.

The smaller brands have also started delivering on the quality front. No longer can national brands pose as the sole guardians of quality. Probably the biggest strength the smaller brands bring to the table is that they are often close to the market and respond to changes faster. They are typically managed by more entrepreneurial teams which are flexible and willing to learn from mistakes. Indeed, one of the main points of criticism against HLL is the management hubris, that has grown out of years of experience in brand management and the comfort level that comes when a huge parent company's backing (in this case, Unilever) is available.

Branding is a risky business. While investments are heavy, the chances of success are small. But some of the entrepreneurs behind the challenger brands are showing a healthy appetite for risk. For example, Paras Pharmaceuticals (which has brands such as Moov, Dermicool, Krack and Livon) has a Rs 10 crore-12 crore annual advertising budget. Of course, some of these brands are also well-endowed and have the support of established business houses. Anchor toothpaste has the backing of a Rs 1,000-crore business group. Parakh Foods, which shot to the top of the growth league tables with its Gemini oil, is backed by a business group with a similar turnover. Adani Wilmar's Fortune oil comes from the Rs 10,000-crore Adani Group.

Some of these business groups have assets they are willing to leverage. The Parakhs have piggybacked on the Samrat brandname, a market leader in Mumbai in processed wheat and gram flour, to launch refined oil. Bhaskar Salt has been launched by the Dainik Bhaskar newspaper group, which has its own print publications and cable TV network.

The 40-year-old Anchor group made only switches during the first 30 years. Later, it diversified into lightings and luminaries, miniature circuit breakers, PVC wires, fans, mixers and irons. Realising it had a strong retail network, Anchor decided to enter the toothpaste business. The company went about identifying a unique selling proposition (USP) and found one which would never have occurred to an MNC - vegetarian toothpaste. Some of the standard ingredients in toothpaste are obtained cheaply from animal sources. Anchor found an alternative in vegetable oils.

The vegetarian theme has paid off with the company making inroads in States such as Gujarat and Rajasthan. Anchor has now started to look beyond toothpaste. It has big plans to launch soaps, talcum powder and confectionery. It is pretty confident about repeating the toothpaste success in soaps and shampoos.

The Parakhs started with a dal-and-besan mill in 1964. In the '90s, the business reached saturation point. Sensing little scope for expansion, they looked at new commodity-based businesses. With the Samrat brand for gram flour, semolina and wheat flour already established, the company launched Samrat edible oil, keeping its price low, while maintaining quality. Soon, another brand, Gemini, was introduced for refined sunflower oil. At Rs 36 a litre, it was 30 per cent cheaper than the price of Rs 52 charged by established players.

The Adanis formed a 50:50 joint venture, Adani Wilmar Ltd (AWL), with Wilmar Trading, Singapore. Fortune became the leader in the edible oil market by December 2003, with 17.25 per cent market share (pushing Agro Tech Foods to second position with 12.9 per cent), riding mainly on its strength in soyabean oil. Though Fortune has held on to its position over the past one year, it has realised the need to get into the largest-selling oil segment: sunflower. It currently has 22 per cent of the edible oil market, followed by Parakh Foods (Gemini) with 13 per cent, Kaleesuwari Refineries (Gold Winner) with 11 per cent and Agro Tech with 10 per cent (according to a report in Business Line dated March 3, 2005.). Fortune wants to overtake Sundrop by December 2005 and become the second-best selling sunflower oil brand in the country, behind only Gold Winner. With this goal in mind, the company is holding a price-line that is on par or lower than its competition by Rs 1-1.5 a litre.

The Dainik Bhaskar group entered the salt business to leverage its strengths in distribution. Bhaskar salt has targeted housewives with its catchy advertising campaign that describes the salt as natural, free-flowing, iodised, super-refined and hygienic. Bhaskar salt's USP is "India's first taste-enhancing salt." The company's message to customers is "Bhaskar salt is the purest, whitest and most consistent salt. So when you buy Bhaskar salt, you are buying health and happiness for your family." The brand is being promoted using outdoor media, point-of-purchase displays, print ads and cable television network. In the rural areas, Bhaskar is trying to expand its market by eliminating the use of unbranded salt.

A second threat on the horizon for the established brands is the store brand or the private label. Many large retail chains are sourcing items from original manufacturers and in some cases making them on their own. They don't have to bear heavy advertising and promotional expenses. The store label signals quality and consumers are attracted by significantly lower prices. These are not regional brands in the sense that they are sometimes found all over the country. But their strategy closely resembles that of regional brands.

The store brand is not a big problem in India as yet. But it will be when the retail industry takes off. As organised retailing gains momentum, private labels can be expected to become more popular, going by the trends in developed countries. Already, brands such as Nilgiris, FoodWorld and Trinetra have started making an impact in the grocery segment.
Private labels are already a big business in the US. According to the US Private Label Manufacturers' Association (PLMA), store brands now account for one of every five items sold everyday in US supermarkets, drug chains and mass merchandisers. That works out to sales of more than $50 billion.

Private labels are less likely to work when they are competing with a lifestyle brand. But in recent times, even lifestyle brands like Coca-Cola have found themselves under threat from private labels. Wal-Mart's Sam's Choice is causing major worries for Coke. A 2-litre Sam's Choice bottle sells for 50 cents compared with $1.25 for Coke. Store brands now account for more than a quarter of soft drink sales at Wal-Mart.

The established brands cannot afford to sit idle in the face of this threat from regional brands and private labels. They need to do a lot of soul-searching and keep reinventing themselves so that they do not leave any flanks uncovered. That calls for both smartness and hard work on the part of the owners of these brands to segment markets carefully. While the upper end of the market can be targeted in the traditional way, at the lower end, they must come up with an innovative business model that can break even at much lower prices.

Obsession with mainstream markets and inadequate attention to the bottom-of-the-pyramid markets will create serious problems for today's market leaders.

The leaders need to wake up quickly if they do not want their lunch to be eaten by the challengers.

Rural Brand Map by Harish Bijoor

2005-11-16T02:03:00.000+05:30

Create brands keeping in mind rural imperatives

1.Reverse-engineered brands: Rural markets are different than the urban. Understanding is the key point. Reverse-engineer the brand quite unlike what we have done in the past. Go to the rural market and find out its wants, needs, aspirations, dreams and expectations. Go and meet up with a million villagers and create the product that is relevant to their needs. Stop depending on research numbers that run in the hundreds and a few thousands at the best! Ask the rural man what he wants. Engineer the product and the brand appeal and get back to him for a ratification. This time round as well, go back to the million hearts you reached out the first time to. Show it to him. Get it ratified. Insulate it all from the urban paradigm you have operated thus far within.

2. The name itself: Seek out the vernacular. Seek out the different. Seek out the name that is futuristic for sure, but seek it out in the ethos of the land the brand will sell within. Seek it out within the social milieu it will swim in. And don’t pass value judgment on the name that you seek out wearing tinted urban glares! And this goes for the slogan, the colour, and every component of brand appeal you will build for your brand of biscuit or bubblegum or bottle-cleaner or whatever!

3. The glitz and glamour of the advertising execution: Tread carefully here. Don’t for heaven’s sake decimate rural dress, culture, lingua franca, habit and rustic appeal. The point is to preserve and not decimate. Preserve and not clonalize! Watch out for the attitude that you covey. Look carefully for those hidden meanings that the hegemony of the urban marketer has cultivated in all of us. Take it through a thorough check and weed out the urban bias with a candour that will come more out of practice than upbringing and education. The fashion statement, the habit burr and the style-irreverence modern advertising seeks to throw at the viewer in the marketplace can on most occasions swim against the tide of social acceptance. Watch out for these signs and avoid them like the SARS!

4. Do a consciously aggressive rural job: Generations of wrong advertising and marketing norm has punctured the ego of the rural market for a while now. Go out there into the rural market with a passion to set right these wrongs. Do such an aggressive job on it that you will make rural a fashion statement even! Enough to make the urban man sit up and want to ape!! Position the rural ethos right. Position it uniquely with a yen to create a differentiation that is truly a world apart. Very few developed economies can boast a size of rural population that is multi-variegated as ours! Use it to advantage!

5.Packaging Right: Look for the ways and means that packaging will deliver freshness and maintain equity with the environment as well! The plastic revolution we witness today in urban markets is proving to be disaster! Fortunately for India, this revolution is as yet at a nascent stage in our rural markets. Imagine what would happen if the key issues of disposal were to affect three fourths a mass larger than it affects today in the country! The problem would multiply by a factor of four! Avoid this altogether and invent for the rural market forms of packaging that will be close to the environment we want to gift to our grandchildren marketers! Break away from the quality differentiation standards adopted by the modern marketer for Urban and Rural marketer. No apartheid here dear marketer! Equal money must deserve equal value!

6. The Price and Promotion Mechanics: The rural consumer has been through the throes of the games the urban marketer has played in terms of price and promotion. The rural dweller is tired really of collecting those inane sets of combs and tumblers and calendars alike. The rural consumer needs to be approached with a savvy sense of understanding his needs. Is it value that he seeks? If so what kind of value? Is it a value dictated by price? By quality? By quantity? Or by appeal? Functional or Emotional? Creating brands for rural India is a science that will require many ardent students who are willing to participate in this great big task of doing the different thing altogether in branding. It will require quite a bit of swimming against the tide of all that we have done in marketing in the past. It will require decimating many a myth. It will demand many years of hard work, something the urban marketer will find daunting. The rural market for brands is a powder keg of an opportunity waiting to be explored……not exploited! The traditional means of taking the urban brand and its appeal into the rural heartland will only destroy the fragile rural mind and milieu. I really hope the harm has not already been done! If it has, I rest my case…..a defeated soul in search of the ideal rural market!

Thanks Harsh !!

Yours Sincerely,
Nitin Kochhar

The Changing Face Of FMCG Marketing - Feb 26, 2003 by Mayank Krishna

2005-11-16T01:49:00.000+05:30

FMCG (Fast Moving Consumer Goods) marketing is no more going to be the same again! The changing consumer mindset thanks to more knowledgeable and discerning customers coupled with changing competition and saturated market is giving a tough time to the FMCG marketers. The changed scenario not only demands a new game plan with a sharp and decisive strategy but also a lot of creativity and insight. Some of the players in Indian FMCG industry have already taken a lead and are smartly moving to chart a success story for their brands. Some brands that reaped magnificent dividend from adopting a new strategy are Fairever, Ujala, Ghadi detergent, Chik, and Dandi namak. If we analyze the success story of these brands, it will be self evident that their marketing strategy is not a jargon filled new model of marketing. It is more of common sense marketing. But then, common sense is not so common!

Razor Sharp Focus
A common thread that binds the strategy adopted by these brands is razor sharp focus. They clearly see their target market. They know their customers well. They are not targeting consumers who already have built-in perceptions. They are reaching out to untapped market within a well known product category. Their primary focus is on millions of lower middle class families in small towns and rural segment. They are doing what legendry management guru C K Prahlad advocates when he says in his published paper, "Raising the Bottom of the Pyramid: Strategies for Sustainable Growth" that the greatest challenge for managers is to visualize an active market when what exists is abject poverty. These successful brands are just doing that- focusing on untapped markets. Take the example of Dandi namak. Who would have advised them to enter the branded salt market when Tata and HLL virtually share the whole market among them? But they entered this category when conventional wisdom said no. And they became a success story overnight. How? The answer is focus. They entered the market not to compete with Tata and HLL, but with the focus to take branded salt to rural and semi-urban areas. With this narrow focus, they not only captured a large rural and semi-urban market but also got some share of the urban market due to rub off effect.

Moreover, these small players fully realize that in today’s world, marketing needs money. So they don’t shy away from investing in marketing. Again take the example of Dandi namak. They splashed out money on their lengthy TV commercials to ensure that the message gets ingrained in the mind of the prospect. Fairever and Ujala adopted the same strategy. Of course they don’t spend as much as the MNCs do but they do spend enough to get attraction. The best part is when they get attention and a little success, MNC Goliaths retaliate back with huge spending and these little Davids piggyback on that!

Communicating 2 Consumers
One of the important aspects of the strategy being adopted is effective communication about product. These wannabe marketers are sending just the right message to the consumers. If the advertisements of these brands are analyzed, it will be evident that they don’t go for blitz but instead try to relate themselves with their target customers. To achieve this object, they are not shying away from being unconventional. Take the case of Dandi namak. The TV advertisement was bland and uninteresting. However, without any glitz, it was able to connect to its target customers because it talked in the language of its target customers. These brands send a powerful message to their target customers that they are made for each other. Dandi namak, Ujala, Ghadi detergent, and Chik, projected that they belonged to the lower middle class! And this worked wonders.

Selecting a narrow terrain to fight!
The stratagem of this new breed of marketing is deciding the opponent to fight! In case of most of these brands, it is seen that they fight their marketing battle by selecting a particular company and in many cases a particular brand, which often is the market leader! Then they deploy their entire marketing arsenal on this selected competitor. Ujala applied this tactic to full advantage against Robin Blue and now it commands nearly three-fourth of the Rs2bn ultra marine blue market, Fairever did the same to Fair & Lovely, Ghadi detergent is doing it now to Nirma and Wheel, and Chik is going shoulder to shoulder with Clinic Plus, the market leader in shampoo. The case of Dandi namak is different only in the sense that it selected its battlefield instead of opponent. The battlefield, rural and semi-urban market, was such that no major marketing war was fought on it before. Even the advertising strategy is designed with an eye on its opponent. This hurts the big companies badly. They wake up from their complacent sleep to realize that they are being brutally attacked. And by the time they retaliate, it’s too late and they only succeed in helping these brands get more attention. HLL realized that it’s brand Fair & Lovely was in danger only after Fairever had garnered a healthy market share within months of its launch. Retaliatory advertising by Fair & Lovely only helped Fairever gain more attention!
The way these homegrown marketers are inducing insomnia to Kotler fed B-school grads is really amazing. By their ability to be flexible, innovative, and being close to their customers, they are conquering Indian market, which many MNCs find a tough nut to crack. The secret of their success is not hard to guess. It is connecting with the heart and soul of India- the lower middle class and the rural consumers. Are the FMCG giants listening?

Classi Article - Brands targeting the bottom of pyramid succeeded

But HLLs and ITC have understood the game plan of these small player and are very cautious on this front.

Once bitten twice shy !!

Evolving trends & new Frontiers in Marketing

2005-11-13T00:30:00.000+05:30

The dynamic market forces the marketers to be on their toes always. Past few years we have seen customers have become over demanding and is looking for delights may be via better experience, new product categories which will satisfy their ever increasing needs. Some of the consumers are even ready to pay a premium for these differentiators for the aspirational brands and the upcoming luxury segment.

At the same time customers have become more brand conscious. They prefer going for branded commodities for an extra penny. In past we have seen many commodities and low involvement categories being branded and many are on their way to get branded.

Over a period of time marketers have understood that there are customers who have specific needs which need to be fulfilled by niche products. Marketers have traveled a journey from mass to micro marketing.

These days customer care for convenience, which has forced marketers to go online for transactions and information dissemination of their company’s product and services.

With all this marketers also realized that the Indian urban market though look attractive, the treasure lies at the bottom of the pyramid. HLL, the FMCG leader realizes more than 50% sales from rural market. Other big and some regional players have tried to take this root, to overcome the saturated urban markets.

But where are these brands, experiences, niche and premium products available? In 1999, the retail organized sector was 1% of total retail sales, which on date is 4% and is projected to be 10% in 2010. So we have seen a shift in consumer buying behavior, from Kirana stores to Malls. But still we will have to see a major change in Indian retailing.

As product spaces become modularized, componentized, and compartmentalized to address the individual, customized, targeted needs of markets, the correspondent market space, and the value chains in them become more integrated. In a sense, products become disintegrated while markets become integrated. The future belongs not only to the convergence of devices, but also to divergent (i.e., specialized) devices.

The forces that are causing and shaping all above are Globalization, Technological Development and Deregulation. Distances are dead and the advent of Internet finally administered coup de grace to technology based competitive advantages. These numerous changes are generating a host of new challenges and opportunities. Moreover, these opportunities need to be looked upon from fresh perspectives.

Does that mean that the old and established principles of marketing are dead? No. Needs are still to be satisfied, Competition tackled and the biggest of all Customer is still the King.

Its not an easy world for Marketers !!

ITC Sunfeast Pasta Survey

2005-11-08T14:29:00.000+05:30

Please fill the survey: http://www.questionpro.com/akira/TakeSurvey?id=306641

Nitin Kochhar
K Sarat Bhushan

IIFT, School of International Business