Growth Strategies For FMCG

Ali Heydari
MBA Marketing
IV Semester

FMCG

Fast-moving consumer goods (FMCG) or consumer

packaged goods (CPG) are products that are sold quickly
and at relatively low cost.
Examples include non-durable goods such as soft drinks,
toiletries, and grocery items.
Though the absolute profit made on FMCG products is
relatively small, they generally sell in large quantities, so the
cumulative profit on such products can be substantial.

Introduction

The success of an FMCG depends greatly on its

marketing strategy.
Typically a marketer pursues a wide combination of
strategies.
For instance when prices are competitive the company
would use an extensive distribution network, design
suitable advertising and sales promotion schemes for time
to time.

1.Multibrand Strategy
A company often nurtures a number of brands in the same
category. There are various motives for doing this.
The main rationale behind this strategy is to capture as
much of the market share as possible by trying to cover as
many segments as possible, as it is not possible for one
brand to cater to the entire market.
This also enables the company to lock up more distributer
shelf space.
Example : Hindustan Lever . It has Dove in the ultra
premium segment, Lifebuoy for the economy segment and
brands like Rexona, Liril, Lux, Le Sancy for the intervening
segment.

2.Product Flanking
Refers to the introduction of different combinations of
products at different prices, to cover as many market
segments as possible.
It is basically offering the same product in different sizes
and price combinations to tap diverse market opportunities.
The idea behind this concept is to flank the core product by
offering different variations of size and price so that the
consumer finds some brand to choose from.
Example: Vicks the cough and cold relieving medicine is
now available in small containers and also as inhalers,
cough drops and cough syrups.

3.Brand Extensions

Companies make brand extensions in the hope that the extensions

will be able to ride on the equity of successful brands, and that the
new brand will stand in its own right in the course of time.
A well respected brand name gives the new product instant
recognition and easier acceptance.
It enables the company to enter new product categories more easily.
Example: Amul. With the success of its first product, Amul milk
powder, the company came out with Amul ghee, Amul butter, Amul
cheese, Cheese spread, and finally added Amul chocolates to its
portfolio.

4.Building Product Lines

Some companies add related new product lines to give the
consumer all the products he/she would like to buy under one
umbrella.
Example: Britannia has adopted a similar strategy. It has
introduced different kinds of biscuits and backed foods in the
past few years. By adding a number of flavours in each product
line the company grew in the industry.

5.New Product Development

A company can add new products through the acquisition of other
companies or by devoting ones own efforts on new product
development.
With the help of new products a company can enter a growing market
for the first time, and supplement its existing product lines.
Example: Dove by HLL is an example of creating an entirely new
premium segment. For the first time in India, a soap with One-fourth
moisturiser was offered to the consumer.
It has been positioned for the super premium segment as a skin care
product not as a soap.

6.Innovations in Core Products

In the FMCG market, the life of a product is short.
Marketers continually try to introduce new brands to offer
something new and meet the changing requirements of
customer.
It is prudent for a marketer to innovate from time to time
both by technological expertise as well as from the
consumers or dealers feedback.
Such innovations are tried out around the core products of
a company.

7.Long term outlook

Many companies adopt a long term outlook towards growth in an

FMCG market. In the process, short term gains which might adversely
affect the long term prospects of the company are sacrificed.
Example: Kelloggs in Mexico.
The concept of cornflakes for breakfast promoted by Kelloggs is
entirely American in nature and in Mexico which is culturally so different
from America, could not accept.
Kelloggs with its long term outlook took 28 years before finally breaking
even. Today is the market leader in the breakfast cereals market,
enjoying an unparalleled monopoly.

8.Extending the PLC

Economic conditions change, competitors launch new assaults, and the

products encounters new types of buyers and new requirements are
situations in which a FMCG company try to extend the PLC.
In the mature stage of the PLC, some companies abandon their weaker
products. They prefer to concentrate their resources on their more
profitable products and quickly develop new products.
Example: Existing models in products like automobiles, motorcycles,
watches and cameras in India have experienced a good demand
whenever new options were offered.

9.Expanding markets by usage

A company usually expands the market for its brand in two ways,
either to increase the number of customers or by encouraging more
consumption per intake.
The usage rate of the consumers can be increased in 3 ways :
1) It may try to educate or persuade customers to use the product
more frequently.
2) The Company can try to induce users to consume more of the
product on each occasion.
3) The company can try to discover new product uses and convince
customers to use the product in more varied ways.

10.Wide distribution network

A very simple way of increasing FMCG companys market share

is by developing a strong distribution network, preferably in terms
of more locations.
An extensive distribution system can be developed over time, or
the company many acquire another company which has an
extensive distribution network.
Example: Brooke Bond, Asian Paints, Hindustan Lever, Union
Carbide have developed a good distribution network.

11.Monitoring the pulse of the consumers

Companies spend considerable effort to find out the what,

where, how and when of their consumers.
Well known companies frequently undertake marketing
research to find out more about their consumers and how
to satisfy their needs and wants in a better manner.
It helps them to monitor the pulse of their buyers.
Example: We may cite here the famous Marketing
Research about instant coffee.

12.Advertising and Media coverage

Advertising is required to build awareness about an FMCG or brand
which is available in the market but not many people might know about
it.
Informative advertising figures heavily in the pioneering stage of a
product category, where the objective is to build primary demand.
Persuasive advertising becomes important in the competitive stage
where the objective is to build a selective demand for a particular
brand.
Reminder advertising is quite common with mature products.
Example: Expensive four colour Coca-Cola ads in magazines tries to
remind people to purchase it.

13.Sales promotion

Sales promotions offer a direct incentive to buy more in the

short term.
They are designed to stimulate quicker and/or greater
purchase of particular products by consumers or the trade.
Example : Pepsi has been doing a large amount of
promotions since the time it entered India. Pepsi cassettes
and T-shirts have been offered to young people all over the
country.