1. “SEE THE CHANGE” eZine from the Desk of M K Anand, HP: +91 94440.25283
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“SEE THE CHANGE” – Monthly eZine
FMCG - A SEA CHANGE OVER YEARS
by Mr. Y C Narendrababu, Empanelled Consultant, See Change Consulting
FMCG is a very big industry across globe, spelled out by consumers in all walks of life
through Brand names,be it, Kids, adult,house wife. More emphatically to say, brand
shift happens very fast in FMCG. by the consumers to try new brands and perhaps
later go in for re-purchase of the brand, and that is what marketing calls it "
Consumer Retentivity". This industry also thrives on Price sensitivity, no wonder
Regional brands are becoming stronger than National brands. Yesterday un-organised
brands have become today organised brand. Even basic necessity like water has a
glorified segment" Packaged Drinking water" with thousands of brands.
Looking at Sales promotions, it is very clear House to house campaign has lost its
glamour, people are looking at something new ways of doing Sales promotions..
Product distributors have given rise to SKU distributors, for info Aachi masala has
distributors for 20gm & 50 gms and for bulk like 500 gms and 1 kg they have
different distributors. Pepsi sells its produce from a bottling plant thru distributors,
whilst Tropicana is sold by different distributors. Today Kaaleeswari refinery sells its
Gold winner through one distributor, whilst its Dhall and Cardia oil is sold through
somebody else.
If you take rural penetration, in India, besides "Indirect coverage " through vans,
which HUL says, it has also has 3rd party retainers ( Preferably females) to pick up
orders from household from remotest villages. There was time when HLL used to
boast that every household will have 4 products of HLL ,1, Rin or Sunlight,2,Surf, 3,
Lux or Rexona or Lifebuoy,4, Vim. Why did it happen ? Since Levers evolved an
excellent distribution system. Today a company like Medimix ( dorcas) benchmarked
lifebuoy and positioned its product in 75 - 90% of lifebuoy outlets. The point is every
system of FMCG, has been copied by all FMCG companies, so there is no point for
FMCG specialist repeating the past practices. Those methodologies / modus operandi
was need of that situation. Today situational analysis is different, be it Cavin care or
be it Henkel, HUL or Emami.

2. “SEE THE CHANGE” eZine from the Desk of M K Anand, HP: +91 94440.25283
Email: anand@seechangeworld.com; Twitter: @mkanand
“SEE THE CHANGE” – Monthly eZine
With a complex situation, in the market, and with too many "me -too" products, and
with too many choices for the consumers, sometimes consumer is a confused animal
to pick up up the right choice. Interestingly why did the Quantitative products
substitute Qualitative products. Lets take the case of Nirma. Nirma was priced low
and reduced Surf market share, despite Surf being a superior quality. When
researched, the housewife said, with increased prices, i use nirma, for old clothes ,
bed sheets, many clothes used regularly in the house, whilst i use Surf for my
premium clothes , which my husband wears it to office and she wears it when she
goes on outing. This cost saving made the housewife switch from one kg surf to half a
kg surf and replacing the balance half a kg with a low priced detergent. It is true what
Mr Ogilvy in his Advertising book said " Consumer is not a moron". Which obviously
means housewife manages the household budget sensibly, she does not compromise
on food items she consumes, but willing to compromise on other products other than
internal consumption.
Talking about cost of BTL,it is alarming with too many Advertising agencies and that
is the reason, many smart FMCG companies have started employing " Sales Promotion
Managers" or " Trade Marketing Managers" to conceive ideas and increase Sales
promotions but very cost effectively, suiting the market and local needs without Ad
agencies. So the FMCG specialists also should be alarmed on the reducing disparity in
costs between ATL vs BTL (Above the line promotions vs Below the line promotions)
In the light of the above changes, FMCG specialists talking about past experience like
distribution width, Depth, Rural penetration, end consumer campaigns are getting
outdated, because every success done by HLL / ITC/ Colgate/ Cadburys / Nestles etc,
has been copied by every other FMCG organisations to follow.
To quote an example, there were many HLL middle level and seniors who joined
Castrol and implemented the HLL distribution system and succeeded very well. Why
it succeeded? It succeeded because no lubricant company had distribution system
similiar to FMCG, and Castrol was the first in Lubricant companies to bring in this
system and from 90 crores in 1988, it grew to 1600 crores in 2002 beating HPC, IOC,
BPC without petrol and diesel with Castrol.The popular A&M magazine termed Castrol
as a growing FMCG company.Today Castrol is beyond 3000 crores and growing but
growing pace slowed down, since all competitors are into distribution system, be it
Shell or any others which has come into India. Very surprising, that there were

3. “SEE THE CHANGE” eZine from the Desk of M K Anand, HP: +91 94440.25283
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“SEE THE CHANGE” – Monthly eZine
products in Global FMCG companies, which took 7-10 years to break even despite
Pan- India distribution net work they had.
Yet another interesting message, FMCG is no more having the highest physical
reach to End consumers, which they boasted. Today Telecom industry has the
highest reach to the end consumers, irrespective of all ages. There are more than
3 mobile connections per family ( Urban + Rural), and to top it, every tower
erected by Telecom industry attracts 80 - 1 lakh new customers, and out of which
50% to 55% consumers are retained. Therefore, every tower is able to have
customer retentivity of 50% in class 1 and small towns. But in large metros/
cosmos every tower has alarming customer retentivity.
Who thought Telecom will outbeat FMCG in end consumer reach.
Fact of the matter, each FMCG specialist should live in the present market
dynamics and plan and drive strategy not only to consumer door step but in to
their drawing rooms / kitchen, not just through through TV but other non -
conventional media.