NORTH EASTERN REGIONAL INSTITUTE OF MANAGEMENT PROJECT REPORT ON MIMICRIPRODUCTS AVAILABLE IN BELTOLA BAZAAR SUBMITTED BY (MBA 2nd SEM, (B) SUBMITTED TO PARTHA PRATIM MAHANTA RAHUL PURKAYSTHA (Faculty Member of Marketing)
1 CONTENTSTOPICS PAGESIntroduction to FMCG 2Growth Rate of FMCG in India 3Mimicry Products 4Production Process 5Mimicry Products available in Beltola Bazaar 6-13Causes of Duplicacy 14-15Loses and Measures 16Conclusions 17
2 INTRODUCTION TO FAST MOVING CONSUMER GOODS (FMCG)Fast-moving consumer goods (FMCG) – or consumer packaged goods (CPG) – are productsthat are sold quickly and at relatively low cost. Examples include non-durable goods such as softdrinks, toiletries, and grocery items. Though the absolute profit made on FMCG products isrelatively small, they generally sell in large quantities, so the cumulative profit on such productscan be substantial. The term FMCG refers to those retail goods that are generally replaced orfully used up over a short period of days, weeks, or months, and within one year. This contrastswith durable goods or major appliances such as kitchen appliances, which are generally replacedover a period of several years.FMCGs have a short shelf life, either as a result of high consumer demand or because theproduct deteriorates rapidly. Some FMCGs – such as meat, fruits and vegetables, dairy productsand baked goods – are highly perishable. Other goods such as alcohol, toiletries, pre-packagedfoods, soft drinks and cleaning products have high turnover rates.The following are the main characteristics of FMCG. From the consumers perspective: o Frequent purchase o Low involvement (little or no effort to choose the item – products with strong brand loyalty are exceptions to this rule) o Low price From the marketers angle: o High volumes o Low contribution margins o Extensive distributions networks o High stock turnover.
3 GROWTH RATE OF FMCG PRODUCT IN INDIAIndia’s FMCG sector is the fourth largest sector in the economy and creates employment formore than three million people in downstream activities. Its principal constituents are HouseholdCare, Personal Care and Food & Beverages. The total FMCG market is in excess of Rs. 85,000Crores. It is currently growing at double digit growth rate and is expected to maintain a highgrowth rate. FMCG Industry is characterized by a well established distribution network, lowpenetration levels, low operating cost, lower per capita consumption and intense competitionbetween the organized and unorganized segments.The Rs 85,000-crore Indian FMCG industry is expected to register a healthy growth in the thirdquarter of 2008-09 despite the economic downturn. The industry is expected to register a 15%growth in Q3 2008-09 as compared to the corresponding period last year. Unlike other sectors,the FMCG industry did not slow down since Q2 2008. the industry is doing pretty well, buckingthe trend. As it is meeting the every-day demands of consumers, it will continue to grow. In thelast two months, input costs have come down and this will reflect in Q3 and Q4 results.Market share movements indicate that companies such as Marico Ltd and Nestle India Ltd, withdomination in their key categories, have improved their market shares and outperformed peers inthe FMCG sector. This has been also aided by the lack of competition in the respectivecategories. Single product leaders such as Colgate Palmolive India Ltd and Britannia IndustriesLtd have also witnessed strength in their respective categories, aided by innovations and strongdistribution. Strong players in the economy segment like Godrej Consumer Products Ltd in soapsand Dabur in toothpastes have also posted market share improvement, with revived growth insemi-urban and rural markets.
4 MIMICRY PRODUCTSMimicry consumer goods, commonly called counterfeit or imitation products offered for sale.The spread of counterfeit goods has become global in recent years and the range of goods subjectto infringement has increased significantly. According to estimates by the CounterfeitingIntelligence Bureau (CIB) of the International Chamber of Commerce (ICC), counterfeit goodsmake up 5 to 7% of world trade. A report by the Organization for Economic Co-operation andDevelopment (OECD) states that up to $200 billion of international trade could have been forcounterfeit and pirated goods in 2005, and around $250 billion in 2007. Other estimates concludethat a more accurate figure is closer to $600 billion lost, since the OECD estimates do notinclude online sales or goods counterfeited and sold within the same country.Products in high demand can be manufactured based on the same or similar designs, oftenpackaged and branded in ways to make them indistinguishable from the original. The counterfeitgoods can then be sold through parallel markets, or even introduced into the licit supply chain.Without the overheads of the licit products, these counterfeits can be priced extremelycompetitively while remaining vastly more profitable. Due to this competitive edge, in somemarkets in some parts of the world, counterfeit products are far more common than the originals.In aggregate, however, product counterfeiting poses a serious global challenge. The branding ofa product provides implicit quality assurance and a legal line of accountability that consumershave come to take for granted. Without a brand to protect, counterfeiters have no incentive toproduce anything but superficial quality. Where it becomes impossible to distinguish the realfrom the counterfeit, poor quality products destroy the reputation of the copied brand, and thecheaper goods will inevitably dominate. The ultimate threat of counterfeiting has been realized insome parts of the developing world: the original, high-quality products have been essentiallypriced out of the market. Electronic goods are one of the most commonly encounteredcounterfeit products, and detection of pharmaceuticals has also been rising. The single mostcommonly counterfeited class of goods, however, is apparel: clothing, accessories and shoes.
5 PRODUCTION PROCESSThe production of counterfeit or mimicry products can be as simple as producing alternativepackaging materials using a laser printer or as complicated as the production of the originalproduct. In general, counterfeit production in China appears to be more sophisticated than inIndia. In China, counterfeit drug producers are often chemical companies that are not licensed toproduce pharmaceuticals, or even licensed companies that produce both legitimate and bogusdrugs. In 2008, the Chinese Government shut down 363 fake medicine production facilities.In India, the manufacturers can be loosely grouped into three categories: unlicensedmanufacturers who operate out of small cottage factories, licensed manufacturers whosecretly make fake drugs alongside their legitimate products, and importers who bring in drugsor any mimicry FMCG products from China and then fraudulently repackage them.The small manufacturers operate from the outskirts of major cities. If we only talking aboutcounterfeit Drugs then, in the past, their products were crude, but the dispersion of printing andpackaging technology has brought credibility within the reach of even the small entrepreneur.Medications may contain the right active ingredient in dilute amounts, and are distributedthrough informal channels to local retailers. Agra is reportedly a major outlet for these drugs.
6SOME OF THE MIMICRY/DUPLICATE/COUNTERFEIT PRODUCT AVAILABLE IN BELTOLA BAZAR1. Name of the Mimicry product : Voroline2. Original product : Veseline3. Product type : Petrochemical Product4. Manufacturing Unit : New Delhi5. Selling Price : Rs. 5 per unit6. Distributor Price : 32 unit @ Rs. 957. Profit Margin : Rs. 65-75 (60% - 70%) (approx)8. Distributors : General Supplier9. Supply Place : Lakhtokia, Fancy-bazaar10. Customer : Low income person specially person who earn on daily basis11. Reason for purchase : 1. Affordable price 2. Lack of adequate knowledge12. Market Strength : As per retailer, they sold 32 unit within week.
71. Name of the Mimicry product : Rebaxo Sandal2. Original product : Relaxo Footwear3. Product type : Footwear4. Manufacturing Unit : New Delhi, Kolkata, Ludhiana5. Selling Price : Rs. 60 – 70 per unit6. Distributor Price : N/A7. Profit Margin : 40% - 60% (approx)8. Distributors : Local Wholesaler9. Supply Place : Kolkata (Direct), Lakhtokia10. Customer : High to Low income person11. Reason for purchase : 1. Affordable price 2. Lack of adequate knowledge 3. Use and Throw 4. For the servant 5. Rough use12. Market Strength : Customer satisfaction is high for this product as this product is used for normal use and throw.
81. Name of the Mimicry product : Jockay2. Original product : Jockey3. Product type : Garment Product4. Manufacturing Unit : Ludhiana5. Selling Price : Rs. 35 – 55 per unit6. Distributor Price : N/A7. Profit Margin : 70% - 80% (approx)8. Distributors : Local Wholesaler @ Fancy Bazaar9. Supply Place : Kolkata, Ludhiana10. Customer : High to Low income person11. Reason for purchase : 1. Affordable price 2. Lack of adequate knowledge 3. For the servant12. Market Strength : Customer satisfaction is high for this product. As per report, more than 80% of this product (high profit), were sold in every weekly bazaar.
91. Name of the Mimicry product : Abibas2. Original product : Adidas3. Product type : Apparels Product4. Manufacturing Unit : Kolkata5. Selling Price : Rs. 130 – 170 per unit6. Distributor Price : N/A7. Profit Margin : 20% - 30% (approx)8. Distributors : Local Wholesaler @ Fancy Bazaar9. Supply Place : Kolkata10. Customer : High to Low income person11. Reason for purchase : 1. Affordable price 2. Normal wear 3. Rough Use 4. Seasonal demand12. Market Strength : Customer satisfaction is high for this product. As per report, more than 1200 track pants (high profit), were sold within two weeks.
101. Name of the Mimicry product : Super Dent Tooth Paste2. Original product : Pepsodent Tooth Paste3. Product type : Tooth Paste industry4. Manufacturing Unit : Amingaon, Guwahati5. Selling Price : Rs. 10 per unit6. Distributor Price : N/A7. Profit Margin : 35% - 45% (approx)8. Distributors : Local Wholesaler @ Fancy Bazaar9. Supply Place : Fancy Bazaar10. Customer : Low income person11. Reason for purchase : 1. Affordable price 2. Lack of adequate knowledge12. Market Strength : Customer satisfaction is moderate for this product. Demand is not much higher in this product.
111. Name of the Mimicry product : Lipchu & Lovely / Neha & Love2. Original product : Fair & Lovely / Fair & Handsome3. Product type : Cosmetic Products4. Manufacturing Unit : Kolkata5. Selling Price : Rs. 10 per unit6. Distributor Price : N/A7. Profit Margin : 40% - 50% (approx)8. Distributors : Local Wholesaler @ Fancy Bazar9. Supply Place : Kolkata, Ludhiana10. Customer : Medium to Low income person11. Reason for purchase : 1. Affordable price 2. Lack of adequate knowledge 3. Saloon Business12. Market Strength : Customer satisfaction is moderate for this product. Most of this products were purchased by unorganized saloon business person.
121. Name of the Mimicry product : Fena Detergent Soap2. Original product : Fena3. Product type : Detergent Soap4. Manufacturing Unit : Amingaon, Guwahati5. Selling Price : Rs. 10 per unit6. Distributor Price : N/A7. Profit Margin : 60% - 70% (approx)8. Distributors : General Supplier9. Supply Place : N/A10. Customer : Hotel and Restaurants Laundry11. Reason for purchase : 1. Affordable price 2. Lack of adequate knowledge 3. The Hotel and Restaurant Work 4. Laundry use12. Market Strength : Customer satisfaction is high for this product. Market demand is more for this product.
131. Name of the Mimicry product : Kay Kicks2. Original product : Kurkure3. Product type : Chips4. Manufacturing Unit : Abhoyapuri, Assam5. Selling Price : Rs. 5 per unit6. Distributor Price : N/A7. Profit Margin : 10% - 15% (approx)8. Distributors : General Suppliers9. Supply Place : N/A10. Customer : School going Children11. Reason for purchase : 1. Affordable price 2. Lack of adequate knowledge12. Market Strength : Low demand for this product.
14 CAUSES OF DUPLICACY1. Lengthy supply chains : A supply chain is the network of organizations involvedwith the manufacture and distribution of a product from raw material providers to retailoutlets. The efficiency of a supply chain directly affects the cost of production, and thereforethe profit any member of the chain can make. An effective supply chain moves all productsfrom company to company quickly and inexpensively. It minimizes each organizationsexpenses and improves its earnings. A dependable chain provides security to eachorganization, making it easier for them to make accurate business projections. The supplychain of FMCG product is so lengthy. As this result, the counterfeit products are produced ina large scale to enjoy the market benefit, by reaching the market in a shorter period of time.2. Profit margins : As the counterfeit products reaching the market at a very shortperiod of time, the producer or marketer of these products enjoys the full opportunity of theseproducts into the market. The statistical data says that, 10-60% profits are earned by theproducer by marketing the counterfeiting products. The high profit margin attracts more ofthe producer to this counterfeiting product market.3. Easy to fake : Another reason of duplicacy of the product is the easy ofproducing the fake product at a very low cost. Many of the products of FMCG, does not gothrough the standardization process. Due to which it is easy for the producer to produce fakeproduct, as similar as the original product.4. Huge gap in demand & supply : There is a huge gap between demand and supplyof the FMCG products. The FMCG products are those which turnover is so quick. As theproducer of the products are unable to utilization of the market demand with their limitedproduction process, which created a huge gap between the demand and supply. This will leadto production of counterfeiting products.
155. Desire for getting good brands at a less cost : Some reputed brands like NIKE,ADIDAS, JOCKEY, etc have their good marketing position that is positions in the mind ofthe target buyers as delivering some central benefits. This position creates the desire forgetting good brands at less cost. This will lead the counterfeiting of the products.6. Lesser value than the original : The counterfeiting or mimcri products are found ina very low cost. As the “Production Concept” defines that, consumer will prefer products thatare available and inexpensive. The counterfeiting products are lesser value than the originalproducts. It will increase the demand of the counterfeiting product into the market. Thecounterfeiting products are strictly based on the Production Concept of Marketing.
16 LOSES DUE TO COUNTERFEITING PRODUCTS On an average music industry looses Rs. 600crores. 2009-10 sees the music industry loosing a record Rs763crores. Brands like ADDIDAS, NIKE, lost a massive 17% revenue loss due to duplicity. 61% of computer software and 40% of music sold are pirated. Rs 10,000 cr revenue is lost to the fakes industry annually. Mobile companies loosing a 7% revenue due to cheap chinese handsets in the market. Sales of Vicks Action 500 fell by 5 per cent in a few months. (Source: Internet) MEASURES TO COUNTER DUPLICATE PRODUCTS Putting up 3-d holograms on the products. Printing bar codes across the products (chips covers, pet bottles,etc). Stringent laws on the piracy & copying. Frequent raids by the police on all the illegal activities (making of the fake products). More promotion campaigns that lay emphasis on genuine products. (Source: Internet)
17 CONCLUSIONFrom our survey we came to know that, most of the products are sold in the market (BeltolaBazaar) are the FMCG products, such as Cosmetic goods, Footwear, Bags, and Apparels etc.which of are producing in Kolkata, Delhi and Guwahati. Most of these products are delivered ordistributing from the local wholesaler of Fancy Bazaar and some part of other regions. In our survey we found the following results: Most of the counterfeiting products are producing from Kolkata or Delhi Local wholesaler at fancy bazaar, lokhra and general suppliers are the distributors of these products. The distributors or suppliers directly approach to the retailer to supply the products. Average profit margin is of 20 – 80 % in most of these products. More than 500 units of mimicry products are available in the market. The seller even does not that they selling the mimcri products. Mostly group of lower income persons are the customers of these products. “Business of Mimicry Products is a profitable business”- Seller.