Growth of Fmcg Products in Rural Market

Certificate This is to certify that Ms. Vrushali Awachar of IBS Nagpur has submitted her coer up name, offshoot of FMCG yieldions in bucolic grocery for the twelvemonth two hundred9-2010 in partial fulfilment of the requirement for the completion of pragmatic as definite at the eldest semester of MBA programme. Place examine _ Preface As part of argument in MBA for the premiere semester, we entrance subaltern-spirited to fasten a extend based on sector analysis which I am presen sufferg is on Growth of FMCG products in rude securities industry.This opport unity altogetherows the students to subject the real pedigree environment and a consequent report nevertheless suff sparklers in improving on the communication and presentation aspects which atomic add together 18 extremely essential to be inculcated amongst way students. This pr exploitical training at MBA programme develops a feeling ab place the difficulties and ch t forbidden ensembleenges in the by bit world. Only theory kat erstledge does non impart exonerate education. To fulfill these objectives these reports play an essential part in MBA programme.In this direction, I devote tried my direct best to analyze the various entropy obtained and dumbfound presented in a synthetic and understandable format. Ac familiarityment I off gratitude to respected Dean Sir of our Institute. I am heartily thankful to the management for providing me the probability to rag a relieve up of practical training in their organization. I educe my sincere thanks to the staff of the unit who nourish given us on the in alone the information and who guided us. I am bidwise thankful to Prof. Upal Sinha and Dr.Sarita Modak with whose help the line of business was conducted and made possible they pictured full guidance, cooperation and worthy suggestion about the Report. I am thankful to my college friends and either those who pose helped me at sensation snip or indir ectly in the forwardness of this report. With thanks Place Nagpur Date twenty-eighth/08/2009 Yours Sincerely, Vrushali Awachar 09BS0000502 confine of the Report Table of Contents Certificate Preface Acknowledgement 1. lift Growth of FMCG products in agrestic securities industry place P. Balakrishna 2. Introduction Sales zoomed from 35,000 sachets to 12 lakhs. ab initio they in any casek any sachet and now they be restricted to Chik sachets. Now at present, early(prenominal)oral grocery is one of the best opportunity and boil come outing sector for the major(ip) FMCG companies in India. Each and every tele callr is upchuck together to invest a huge great for argument in homespun mart. harmonize to the Federation of Indian Chambers of concern and Industry, the number of verdant theaters utilise FMCG products has greathearted(a) from 136 meg in 2004 to 143 million in 2007,a clear indication that country consumers ar shifting from commodities to mark pr oducts.urban consumers on the different hand could go s off assemble on FMCG expenses, thanks for inflation spiral, demonstrate in fuel embody and personifylier credit. rise suggest that for the first time, that the hobnailed merchandise has adult faster than the urban grocery in gravestone product categories in April-May 2008, the latest months for which much(prenominal)(prenominal) information is available, harmonize to market place research firm NC Nielson. commercialize and Indian companies, in India. * To report the argufys face up by unpolished sellers in India. * To study the reasons of popularity of cracker-barrel markets in India. 5. Need of the study To determine the consider of FMCG products in unpolished India.Know about the diffe select picking of hobnailed consumers. campestral and urban authorization _(table 1. rustic and urban community)_ _(Source statistical delimitate of India (2001-2002) NCAER_ consort to a study by Chennai-based Fra ncis Kanoi foodstuffing Planning 7. Growth Prospects With the heading of 12. 2% of the world population in the villages of India, the Indian homespun FMCG market is roughlything no one drive out overlook. Increased focus on farm sector depart boost cracker-barrel incomes, hence providing break developing prospects to the FMCG companies. Better infra organise facilities lead improve their add up twine.FMCG sector is too wishly to benefit from maturation demand in the market. Beca commit of the grim per capita consumption for close all the products in the country, FMCG companies withstand big possibilities for developing. And if the companies be able to change the mindset of the consumers, i. e. if they be able to fulfil the consumers to disgraceed products and brook new generation products, they would be able to generate graduate(prenominal)er offshoot in the near future. It is anticipate that the rude income get out rise in 2007, boosting get power in the countryside. However, the demand in urban argonas would be the key return striker over the farsighted term.Also, annex in the urban population, a coherent with addition in income levels and the handiness of new categories, would help the urban argonas master(prenominal)tain their position in terms of consumption. At present, urban India reports for 66% of add together FMCG consumption, with outlandish India figureing for the rebriny 34%. However, arcadian India fibs for much than 40% consumption in major FMCG categories such as in the flesh(predicate) business organisation, fabric c atomic number 18, and unrecorded beverages. In urban atomic number 18as, home and personal c atomic number 18 grade, including skin c are, household care and feminine hygiene, give keep increment at relatively attractive rates. inwardly the foods incision, it is estimated that processed foods, bakery, and dairy are semipermanent egression categories in twain bucolic and urban areas. Indian Competitiveness and comparability with the World Markets The by-line occurrenceors make India a agonistic player in FMCG sector Availability of barren materials Because of the diverse agro-climatic conditions in India, there is a volumed raw material base suitable for food processing industries. India is the macroscopicalst producer of livestock, take out, wampumpeag toilettee, coconut, spices and cashew and is the foster largest producer of strain, wheat and fruits &038vegetables.India withal produces stinging soda and soda ash, which are necessitate for the production of soaps and detergents. The availability of these raw materials gives India the location advantage. Labor cost comparison haulage shape (Fig. 2 Labor cost comparison) (Source www. equitymaster. com _ _ get-go cost undertaking gives India a belligerent advantage. Indias labor cost is amongst the last-place in the world, later on China &038 In wear offesia. Low labor costs gi ve the advantage of low cost of production. umpteen MNCs have completed their plants in India to out radical for domestic and apportion markets. Presence crossways honour chainIndian companies have their presence across the value chain of FMCG sector, adjust-hand(a) from the supply of raw materials to packaged practiceds in the food-processing sector. This brings India a more cost warring advantage. For example, Amul supplies milk as salubrious as dairy products like cheese, butter, and so forth 8. Indian FMCG empyrean The Indian FMCG sector is the quartetteth largest in the economic system and has a market surface of US$13. 1 jillion. Well- establish statistical dispersion ne iirks, as tumesce as intense competition amidst the organized and unorganized separates are the characteristics of this sector.FMCG in India has a strong and competitive MNC presence across the entire value chain. It has been predicted that the FMCG market go away touch on to US$ 33. 4 bi llion in 2015 from US $ billion 11. 6 in 2003. The pennyre of attention class and the pastoral segments of the Indian population are the most promising market for FMCG, and give note makers the opportunity to transpose them to put up products. Most of the product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per capita consumption as hygienic as low penetration level, but the electric authority for growth is huge.The Indian Economy is inflate ahead by leaps and bounds, keeping ill-treat with rapid urbanization, increased literacy levels, and rising per capita income. The big firms are evolution bigger and nickel-and-dime(a) companies are catching up as well. accord to the study conducted by AC Nielsen, 62 of the pull in 100 brands are owned by MNCs, and the balance by Indian companies. Fifteen companies own these 62 brands, and 27 of these are owned by Hindustan open. Pepsi is at number three followed by Thums Up. Britannia takes the f ifth place, followed by Colgate (6), Nirma (7), Coca-Cola (8) and Parle (9).These are figures the tardily drink and cigarette companies have ever so shied away from revealing. Personal care, cigarettes, and soft drinks are the three biggest categories in FMCG. Between them, they method of accounting for 35 of the fade 100 brands. THE pass by 10 COMPANIES IN FMCG SECTOR (table 3 lift 10 co. s) Source Naukrihub. com The companies mentioned in Exhibit I, are the billeting cards in their respective sectors. The personal care kinsperson has the largest number of brands, i. e. , 21, inclusive of Lux, Lifebuoy, funfair and Lovely, Vicks, and Ponds. at that place are 11 HLL brands in the 21, aggregating Rs. ,799 crore or 54% of the personal care kinsperson. Cigarettes account for 17% of the top 100 FMCG cut-rate bargains, and in force(p) below the personal care house. ITC whole accounts for 60% volume market deal and 70% by value of all filter cigarettes in India. The foods c ourse of instruction in FMCG is gaining popularity with a swing of launches by HLL, ITC, Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crore. Nestle and Amul swig it out in the powders segment. The food category has alike seen innovations like softies in ice creams, chapattis by HLL, ready to eat rice by HLL and pizzas by both GCMMF and Godrej Pillsbury.This category seems to have faster development than the stagnating personal care category. Amul, Indias largest foods society has a good presence in the food category with its ice-creams, curd, milk, butter, cheese, and so on. Britannia also ranks in the top 100 FMCG brands, dominates the biscuits category and has launched a serial publication of products at various legal injurys. In the household care category (like mosquito repellents), Godrej and Reckitt are two players. Goodknight from Godrej is worth supra Rs 217 crore, followed by Reckitts Mortein at Rs 149 crore.In the shampoo category, HLLs Clinic and Sunsilk make it to the top 100, although Ps Head and Shoulders and Pantene are also nerve-wracking hard to be positioned on top. Clinic is just about double the size of Sunsilk. Dabur is among the top five FMCG companies in India and is a herbal specia heed. With a dollar volume of Rs. 19 billion (approx. US$ 420 million) in 2005-2006, Dabur has brands like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola and Real. Asian Paints is enjoying a formidable presence in the Indian sub-continent, federationeast Asia, Far East, Middle East, southbound Pacific, Caribbean, Africa and Europe.Asian Paints is Indias largest paint company, with a turnover of Rs. 22. 6 billion (around USD 513 million). Forbes ball-shaped magazine, USA, graded Asian Paints among the 200 Best miniature Companies in the World Cadbury India is the market leader in the cho poopte confectionery market with a 70% market serving and is ranked number two in the tot up food drinks market. Its popular br ands include Cadburys Dairy Milk, 5 Star, Eclairs, and Gems. The Rs. 15. 6 billion (USD 380 Million) Marico is a leading Indian base in consumer products and function in the Global Beauty and Wellness space. 8. observation post there is a huge growth strength for all the FMCG companies as the per capita consumption of closely all products in the country is amongst the lowest in the world. Again the demand or prospect could be increased progress if these companies can change the consumers mindset and carry new generation products. Earlier, Indian consumers were using non- mark apparel, but today, clothes of different brands are available and the uniform consumers are willing to pay more for branded fictitious character clothes. Its the fictitious character, promotion and innovation of products, which can drive umteen sectors. . 2 Sector Outlook Threats 1. Removal of import restrictions resulting in regenerate of domestic brands 2. Slow spate in hoidenish demand Tax an d regulatory structure The clownish market w rapethorn be alluring but it is non without its problems Low per capita liquid incomes that is half(a) the urban disposable income large number of daily profit earners, acute accountence on the vagaries of the monsoon seasonal worker consumption linked to harvests and festivals and special do poor roads power problems and in admission chargeibility to constituted denote media.However, the coarse consumer is not opposed his urban counterpart in many ways. The more daring MNCs are meeting the consequent argufys of availability, affordability, acceptability and sensory faculty (the so-called 4 As) The first challenge is to contain availability of the product or service. Indias 627,000 villages are dissipate over 3. 2 million sq km 700 million Indians whitethorn live in country areas, purpose them is not easy. However, given the poor posit of roads, it is an even greater challenge to egularly gain products to the far-flung villages. Any serious marketer must strive to devote at least 13,113 villages with a population of more than 5,000. Marketers must trade off the distribution cost with incremental market penetration. everyplace the years, Indias largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a strong distribution system which helps its brands reach the interiors of the campestral market. To service remote village, stockists use autorickshaws, bullock-carts and even boats in the backwaters of Kerala.Coca-Cola, which considers rural India as a future growth driver, has evolved a hub and spoke distribution model to reach the villages. To ensure full loads, the company pole supplies, double a week, large distributors which who act as hubs. These distributors ap site and supply, once a week, secondaryer distributors in adjoining areas. LG Electronics defines all cities and towns other than the seven metros cities as rural and semi-urban market. To bung these unexplored country ma rkets, LG has set up 45 area offices and 59 rural/remote area offices. The south challenge is to ensure affordability of the product or service.With low disposable incomes, products need to be affordable to the rural consumer, most of whom are on daily wages. Some companies have addressed the affordability problem by introducing small unit packs. Godrej re pennyimely introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant particularizedally for Madhya Pradesh, Bihar and Uttar Pradesh the so-called Bimaru States. Hindustan Lever, among the first MNCs to realise the potential of Indias rural market, has launched a variant of its largest merchandise soap brand, Lifebuoy at Rs 2 for 50 gm.The move is mainly targeted at the rural market. Coca-Cola has addressed the affordability issue by introducing the revertible 200-ml glass bottle priced at Rs 5. The enterprise has paid off Eighty per cent of new drinkers now come from the rural markets. Coca-Cola has also introduced Sunfill, a powdered soft-drink concentrate. The repetitive and ready-to-mix Sunfill is available in a single-serve sachet of 25 gm priced at Rs 2 and mutiserve sachet of 200 gm priced at Rs 15. The third challenge is to gain acceptability for the product or service.Therefore, there is a need to offer products that suit the rural market. One company which has reaped rich dividends by doing so is LG Electronics. In 1998, it developed a customized TV for the rural market and christened it Sampoorna. It was a runway hit sell 100,000 sets in the very first year. Because of the lack of electricity and refrigerators in the rural areas, Coca-Cola provides low-cost ice corneres a tin box for new outlets and thermocol box for seasonal outlets.The insurance companies that have tailor-made products for the rural market have performed well. HDFC Standard lifetime topped private insurers by marketing policies worth Rs 3. 5 crore in native premia. The company t ied up with non-governmental organizations and offered reasonably-priced policies in the nature of group insurance covers. With large parts of rural India inaccessible to conventional advertizement media besides 41 per cent rural households have access to TV building awareness is another challenge.Fortunately, however, the rural consumer has the same likes as the urban consumer movies and euphony and for both the urban and rural consumer, the family is the key unit of identity. However, the rural consumer ex weight-liftions differ from his urban counterpart. Outing for the former is confined to topical anaesthetic fairs and festivals and TV viewing is confined to the state-owned Doordarshan. drop dead of branded products is treated as a special treat or indulgence. Hindustan Lever relies heavily on its own company-organized media. These are promotional events organized by stockiest.Godrej Consumer Products, which is severe to push its soap brands into the interior areas, uses communicate to reach the local commonwealth in their language. The key dilemma for MNCs eager to tap the large and fast- ontogenesis rural market is whether they can do so without bother the companys profit margins. Mr. Carlo Donati, Chairman and Managing-Director, Nestle, date admitting that his companys product portfolio is essentially designed for urban consumers, cautions companies from plunging headlong into the rural market as capturing rural consumers can be expensive. Any generalization says Mr Donati, about rural India could be molest and one should focus on high GDP growth areas, be it urban, semi-urban or rural. ISIC 5211 sell gross sales in non- specialize stores ISIC 5219 other retail sale in non-specialized stores ISIC 5220 retail sale of food, beverages and baccy in specialized stores ISIC 5231 retail sale of pharmaceutical and medical checkup goods, cosmetic and toilet articles ISIC 5251 retail sale via mail order houses ISIC 5252 retail sale via st alls and markets ISIC 5259 whole sale goodsprovider industries for FMCGs include 1511 meat and meat products, 1512 look for and fish products, 1513 fruit and vegetables, 1514 vegetable and wildcat oils and fats, 1520 dairy products, 1531 grain mill products, 1532 amylumes and starch products, 1533 animal feeds, 1541 bakery products, 1542 sugar, 1543 cocoa, chocolate and sugar confectionery, 1544 macaroni, noodles, couscous, 1549 other food products, 1551 spirits ethyl radical alcohol, 1552 wines, 1553 malt liquors and malt, 1554 soft drinks, mineral waters, one hundred sixty0 tobacco products, 2101 pulp, penning and paperboard, 2102 corrugated paper, containers, 2109 other articles of paper and paperboard, 2424 soap and detergents, cleaning preparations, perfumes. 9. 1 liking to go Rural 1. Large tribe (_Source NCAER). _ 2. Rising Rural Prosperity twice as many lower warmness income households in rural areas as in the urban areas. distribution of masses income-wise (Table 5. ) (SourceNCAER) against is Rs. 3,500 crores in rural India. 3. Growth in Market 4. Effectiveness of Communication 5. IT Penetration in Rural India Into rural India, the possibilities of change are becoming visible. 6. Impact of Globalization FMCG Products and Categories In late years, rural markets of India have acquired significance, as the overall growth of the Indian economy has resulted into substantial increase in the depraveing power of the rural communities. On account of green revolution, the rural areas are overpowering a large quantity of industrial and urban manufactured products. In this con schoolbook, a special marketing system, namely, rural marketing has emerged.Rural India with its traditional perception has with child(p) over the years, not only in terms of income, but also in terms of thinking. The rural markets are growing at above two times faster pace than urban markets not surprisingly, rural India accounts for 60% of the amount of money national de mand. Today, rural market occupies a larger part of our economy and it is expected to grow at least quadruplet times the existing size. Another add factor for rural push was growing saturation in urban markets. To be precise, rural marketing in Indian economy covers two broad sections 1. change of agricultural products in the urban areas 2. selling of manufactured products in the rural regionsIn present situation, our huge population is assist marketers to think new marketing strategies. 630 one thousand thousand rural populations are greater than total consuming markets of many countries like Canada, South Korea, etc. Tapping the rural market is one of the most essential marketing strategies followed by various MNCs and Indian companies now-a-days. A number of companies in FMCG, consumer durables as well as telecom sector have adapted strategies to expand their base in rural market. Among those who have already taken remarkable initiative in rural market are HLL, Colgate, L G Electronics, Philips, BSNL, LIC, Britannia and Hero Honda. Rural Marketing in simple password is preparation and implementation of marketing function for rural areas.Rural marketing has been delimit as the process of developing, pricing, promoting, distributing rural specific products and services leading to exchange between urban and rural markets which satisfies consumer demands and also achieves org. objective. Of the two million BSNL mobile connections, 50% are in small towns / villages. Of the six lakh villages, 5. 22 lakh have a Village Public Telephone (VPT). 42 million rural households are availing banking services in comparison to 27 million urban households. Investment in clump savings instruments 6. 6 millions households in rural and 6. 7 million in urban India. Large Population Approximately 75% of Indias population resides in around 6,38,365 villages of India spread over 32 lakh self-coloured kilometer. 41% of Indias middle class resides in rural areas.Higher Purc hasing aptitude Purchasing power of rural people is on rise Market Growth Market is growing at a rate of 3-4% per annum. The journey of markets to the rural markets has thence been one of surmounting one hurdle after another these include the 4 As Availability, Affordability, and Acceptance &038 Awareness adopting themselves to the rural melodic phrase marketers. So, in the setting of growth aspects of the Rural markets and their adoption and operation by major MNCs and Indian companies, I want to take this cast as my Research Project so that I could go in to the in-depth study of the rural markets- their future scope, challenges etc. in the context of India Rural markets are future battlegrounds Icfai University Journal of Rural charge The very nature of economic activities of rural market extending the provision of quality access to fiscal solutions is vital for the development of people residing in rural areas. * Khan N. A. , construction Competitiveness in Small-Scale an d Rural Industries in India Icfai University Journal of Rural Management The significance of competitiveness in the rural marketing was neglected for a long time in India, but now it is be recognized. seduceframe It is interesting to note that consumers will well-nigh always buy exactly what they put on their shopping advert.If they write big money flour, they are going to buy flour. What do you think will happen if they write Gold Medal Flour on their tilt? Getting the consumer to write your brand name on their shopping list almost guarantees they will buy your product instead of your competitors, but how do you get them to do that? The simple answer is go along brand advertising overtime. This helps cement your brand with consumers, but where do you advertise? Having your advertisements lead next to the online normals that mention your product will certainly build brand awareness. in particular since the consumer is usually looking at cogitate recipes tour they are plan ning their shift to the grocery store.Of course, you could even take that whole concept a step further by providing the recipes on your website where you could also provide the shopping list for that recipe complete with your products brand name. Think of the possibilitiesSome consumers dont write their shopping list shoot down or maybe their pressman is out of ink. What would happen if they could get that branded recipe or shopping list sent remedy to their cellphone phone by email or sms text? How about a branded iPhone application that would allow the consumer to look up the recipe and download their shopping list right in the grocery store while they are trying to decide whats for dinner? The possibilities are endless once you start thinking outside the box of conventional advertising and meet the consumer right where they live.Technology is becoming more and more integrated with our lives and the consumer is using the internet and their cell phones to help them with just a bout everything including planning their meals and grocery shopping list. FMCG ( fast pitiable consumer goods ) is a great career opportunity for any professional worth his salt. The succeeder in the sales and marketing section of any FMCG company will depend on great team work. The results are almost directly counterpoiseate to the thrust of the cranial orbit personnel. As the classic dictum goes in cricket the weeklong you persist in the middle the chances of scoring more runs is inevitable unless he is a ostracize type of batsmen. Similarly the more the field work put in by the field staff the greater the results in terms of volume in general. The hang on side is that the wholesale channel of distribution is highly unpredictable.They attract customers based on the simple premise that they sell it cheaper when compared to company recommended billing price to retailer. How does the wholesale sell cheap, by the virtue of their volume leveraging they manage to get better rejects, which is mainly cash discount. If they get 2 dole out discount they pass on 11/2 percent to the retailer, which obviously explains the bass discount. more a times few wholesaler go to the extent of selling even below the cost price, they discount the schemes and packing material cost, which is the precise racy discount which in whole parlance is also cognise as undercutting. Many company personnel are vex by this phenomenon. passelframe selling This aspect of sales promotion is unheeded by most companies.But in todays modern trade context, special sales team is deployed to ensure Merchandising on the shelves. P &038 G always believe in merchandising their product at prominent and core catching level. The company used to buy the ledge space for a uttermost of time by paying monthly rental to the shopkeeper. In this manner they established Gillette range against stiff competition from Malhotra blades. Many of the Mega Malls bargain for higher rentals from comp anies for hiring out their shelf space. In fact some malls pick up as much as rent as possible to cover all the overheads in running the establishment. Jo dikta hai woh bikta hai seems to be the philosophy of most street smart sales team. 13. 1 Rural FMCG sales run townsFMCG growth (in value terms) in rural markets has far outpaced the sectors growth in urban markets during the first nine months of the current financial year. Though rural markets are growing from a smaller base, the total are stark. In the case of chyavanprash, the whole of urban market has shrunk, while the rural market has grown as much as eight per cent. This is a new trend. ordinarily we do not see rural India dominating all categories, express an FMCG analyst. nonparallel good monsoons and a corresponding growth in farm income have elevated the purchasing power of rural households. This, in turn, has fuelled FMCG sales growth in rural markets.Products that have seen significant growth in rural markets i nclude toothpaste, hair oils and shampoos. shampoo sales in rural India, for instance, have departed up by 30. 8 per cent compared with just 11 per cent in urban areas. Kunal Motishaw, analyst, Equitymaster, horizontal surfaceed out, The rural boondocks is more attractive for FMCG companies compared with tier I and II cities as penetration levels are drastically lower for numerous products, unlike urban markets which are highly saturated. According to Dabur India CEO Sunil Duggal, while the figures may discourse of value growth (because there has been no significant change in prices or the product mix in rural markets), in most cases these are also indications of a growth in volumes.HK Press, executive-director and president, Godrej Consumer Products, said as far as the companys products were touch on, the sales of soaps and hair colors had grown considerably in rural markets in the October-December quarter. 13. 2 The five rupee FMCG lure drawframe The colas may have jettisone d the paanch strategy but a host of branded products are now realizing the importance of being present at the Rs 5 price point. Although brands such as Pepsodent, Maggi, Clinic Plus and Rin have been communicating, through ads, their availability at this price, the phenomenon isnt special to any specific category products such as pens, razors, fruit drinks and adhesive tubes too are on the bandwagon, with the price conspicuously displayed on their packs.A HLL spokesman says the ready availability of the five-rupee coin has been an advantage but that isnt the only plus. The offerings mirror consumers buying behavior many consumers are not so concerned about grammage as much as price, he says. A relatively bigger pack, compared to the Re 1 and Rs 2 ones, also give consumers enough opportunities to try out the brand, says he, while declining to comment about the wedge on volumes and margins. Some of the brands that HLL sells for Rs 5 are Pepsodent, Ponds Talc, Ponds Cold Cream, Rin, Taaza, Fair &038 Lovely, Clinic Plus and Lux. Mr K. Radhakrishnan, Vice-President, FoodWorld Supermarkets, sees growth in the user-base of brands that have introduced such packs. course of instruction penetration is the aim.Coke and Pepsi have enormously succeeded in achieving this over the past year, though much of the gain was lost payable to the pesticide issue. The consumer-base for soft drink increased from 160 million in 2002 to 240 million in 2004, a two-year block during which the Rs 5-price point remained in force. The Coca-Cola India President and CEO, Mr. Sanjiv Gupta, says The first half of this year has been good but growth has not been what it was in the same period last year. We continue to make money on Rs 5 pricing but now the quantum of money I make per bottle is squeezed. And this squeeze, brought about by a two per cent cess and higher stimulant drug costs, has forced cola companies to hike prices by a rupee each on 200 ml and 300 ml pack sizes.And though t he colas no longer sell for Rs 5, they have played a big role in sensify the consumer to the price-point, says marketing professional Ms Sangita Joshi, who reckons the Rs 5 packs to play an important role in spurring impulse purchases as well as giving a brand the first-mover advantage in a competitive market. Adds Mr. R. Subramanian, Director of discount chain, Subhiksha The small packs will increase user base and custom occasion and can explode the market. He makes the point that its more likely that a customer will guzzle a soft drink three key out times when it costs Rs 5 or Rs 6 a bottle than have a single shot at 600 ml of the cola at Rs 15.According to industry observers, the price point will also help branded FMCG categories which are battling fakes from the unorganized sector. 14. Share of FMCG sector showing a recede trend in Television as well as Press over the past intravenous feeding years an AdEx India Analysis In the year 2003, the FMCG sector had a parcel ou t of 27% in total print and TV advertising contributing 24760 million out of the total advertising of 90520 million. Share of FMCG in total advertising (TV Press) has shrunk by 11 percentage points in the past four years Share of FMCG advertising in TV has declined from 57. 6% to 48. 7%, while the same for press has come down from 12. % to 7. 9% during the four year period. The share has decreased considerably for major categories like aerated drinks and toilet soaps. It is common knowledge that the advertising pie for press and television has shown a steady increase over the past half a decade. However, the following map presents certain facts that would be a disclosure to quite a a few of us. The proportion of ad spends by the FMCG sector has been consistently declining over the past four years. The character of FMCGs to total advertising has come down by 11 percentage points during the four-year period. drawframe (Fig. 6 contribution of FMCG) (Source Adex india)A similar t rend was witnessed across both the media Television and Press. spell the contribution of FMCG advertising to total TV spends has diminished from a healthy 57. 6% in 2001 to 48. 7% in 2004 (Till May 15th), the press piece of FMCG industry has shrunk from 12. 2% in 2001 to 7. 9% in 2004. drawframe (Fig. 7 source adex india) drawframe (Fig. 8 source adex india) LOne crucial point to be noted is that although the total ad spends incurred by the FMCG sector have by deceased up, it has s work not been able to check over the pace with which the total pie has grown. One important reason for this is the ever increasing ad spends by new-economy sectors like services, lectronics and automotives, a phenomenon that we would study in detail in the extrospective special newsletters from AdEx India drawframe (Fig. 9 source adex india) Now, let us have a closer look by splitting up the various categories at bottom the FMCG sector. The category within the FMCG sector that has pulled down the t otal share the most has all the way been Food and beverages. The category that used to account for a chunk of TV &038 press advertising at 45. 5% in 2001 now accounts for 42. 6% while Others mentioned in the above chart has also gone down from 6. 7% in 2001 to 4. 1% now. This category of others consists of such advertisers as tobacco, liquor, otc products, etc.The Personal care segment was also showing a receding trend from 2001 to 2003, but it has improved during the first five months of 2004, a trend which may well not continue till year-end. drawframe (Fig. 10 source adex india) Now, let us look at one major sub-category from each of the main FMCG categories F, Home care &038 Personal care. The following chart shows some of the traditional advertising heavyweights in the FMCG sector whose share has shrunk as a percentage of total spends over the past four years. The chart shown above throws up certain interesting numbers, especially in relation to aerated drinks advertising. W hile the popular perception would be that the cola giants have upped their spends in the recent years, the numbers suggest that their advertising has not grown as fast as some of the other advertisers.The Oral care segment comprising of advertisers like toothbrush, toothpaste, mouth swish, etc has also declined considerably from a proportion of 7. 6% in 2001 to 6. 1% in 2004 (up to May). Similarly, Toilet soaps and face wash advertisers also been contributing progressively lesser to the total advertising in recent times, with the proportion going down to a level of 7. 8% in 2003 as compared to 10% in 2001. Finally, to reiterate the main point, it is possible that total spends for a certain category might have gone up over the four year period. But a decreasing share in spite of increasing spends reflects the fact that the category hasnt grown as fast as some of the other heavy-spending categories.The forthcoming special newsletter from AdEx India would search to throw some light on some of these booming categories. 15. Company experiences in Going Rural According to a study by the National Council for employ Economic Research 16. Rural Vs Urban Consumers Challenges Conclusion After analyzing the various data I have reached to a culture that HULs products are most known and popular brand in context of home FMCG products in rural market followed by Dabur, ITC and P. Because of huge product line, cheaper cost and brand loyalty, good publicity and advertisement, the rural consumers generally prefers the products of HUL in all segments. turf out it, people prefer for good quality and comparatively low price of products. testimony The rural market is very large compared to urban market as well it is more challenging market. The consumer wants those products which are long lasting, good, easy to use and cheaper. The income level of rural consumer is not as high as income level of urban consumers thats why they want low priced products. So, we can say that thats the reason why sell of sachet is more in rural area in all segments. Its requisite for all major FMCG companies to provide those products which are easy to available and affordable to consumers. It is right that the profit margin is very low in FMCG products, but at the same time market size is quite larger in the rural area. The companies can reduce their prices by cutting down the cost on packing.Application of 4A* is also a major task for all the big players in this segment. 19. Bibliography For my Report on Growth of FMCG products in rural market I have referred to the following sites Websites (Search engines) www. assocham. org www. equitymaster. com www. exchange4media. com www. wikipedia. com www. business-standard. com www. thehindustanbusinessline. com www. economictimes. com www. google. com www. marketerstoday. com www. ncaer. com www. statisticaloutlineofindia. com 20. firmness I, hereby declare that the Report titled Growth of FMCG products in Rural market is origina l to the best of my knowledge &038 has not been published elsewhere.This is for the purpose of partial fulfillment of Dehradun University for the award of degree of the Master of production line Administration. (Vrushali Awachar) En. No. 09BS0000502 1st Semester IBS, Nagpur 21. Annexure Rural and Urban potential (table 1. Rural and urban population) (Source Statistical Outline of India (2001-2002) NCAER drawframe (Fig. 2 Labor cost comparison) (Source www. equitymaster. com) THE TOP 10 COMPANIES IN FMCG SECTOR (table 3 top 10 co. s) Source Naukrihub. com (Table 4 % Distribution) (Source NCAER). Distribution of people income-wise (Table 5. ) (SourceNCAER) Contribution to press and ad drawframe Contribution to total ad drawframe drawframe