01-04-2014, 11:59 AM
Buying Behavior of FMCG Products
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EXECUTIVE SUMMARY
In this research the researcher has put an effort to understand the buying behavior of the consumers towards FMCG products.
1. In this report, the researcher has first of all given a brief review about FMCG sector as a whole.
2. Then she has given a review of the findings of some of the researches that has already been conducted by various researchers.
3. Then she has enumerated her research objectives.
4. Then she has given the panoramic view regarding the topic.
5. Then she has described her research methodology i.e., the sample unit, sample size, sampling region, sampling procedure that she has used in her report.
6. She has used stratified random sampling as her sampling procedure.
7. Then she has analyzed the data which was collected by a questionnaire.
8. Then she has concluded the findings of the survey.
9. Then finally, she has given few suggestions & recommendations regarding the topic.
INTRODUCTION
There was a time when the FMCG companies ignores rural market, they took no any interest to produced or sell products in rural market in India. It was the initial stage of FMCG companies in India. As per as the time had passed, the strategy and marketing style of FMCG companies had been changed.
The rural market is the one of the best opportunity for the FMCG sector in the India. It is wider and less competitive market for the FMCG. As the income level of the rural consumers increasing, the demand of FMCG is increasing continuously.
Fast moving consumer goods (FMCG) are popularly named as consumer packaged goods. Items in this category include all consumables (other than groceries/pulses) people buy at regular intervals. The most common in the list are toilet soaps, detergents, shampoos, tooth paste, shaving products, shoe polish, packaged food stuff, household accessories, extends to certain electronic goods. These items are meant for daily or frequent consumption & have a high return.
FMCG in 2010
After 4 years of dull performance in both revenues & profits, FMCG sector has now, i.e., since 2010, gained the momentum, principally because of the smaller companies that have substantially improved their market shares at the cost of larger players, & in some cases, the regional players.
If we carefully observe the FMCG index & BSE index, we would realize that the returns on money invested in FMCG index are much lower than the returns in benchmark index. The FMCG sector has under performed the benchmark BSE sensex in 2010. Though both the indices were close to each other till august 2010, however, in the later part of the year the sensex surpassed the FMCG index by a reasonable margin.
Sector’s Outlook
FMCG is the fourth largest sector in the Indian Economy with a total market size of Rs.60,000 crores. FMCG sector generates 5% of total factory employment in the country and is creating employment for three million people, especially in small towns and rural India.
According to a CII – A T Kearney Report, the FMCG sector in India is expected to grow at a compounded growth rate (CAGR) of 9% to a size of Rs.1,43,000 crores by 2010 from Rs. 93,000 crores at present.
With a growth of 52.5%, the BSE FMCG index has, during the last 1 year outperformed the sensex, which could manage a growth of 41% only. A well established distribution network, intense competition between the organized & unorganized segments, low operating costs, strong branding characterizes the market.
The large consumer base, particularly in rural sector, and the growing middle class open up huge opportunities to FMCG companies to take the consumers to branded products and offer new generation products.
The sector's lack-luster performance in the last few years was due to price competition and increase in raw materials cost. However, in the FY06, the sector has witnessed a double-digit growth in profits and revenues.
Growth Prospects
With the presence of 12.2% of the world population in the villages of India, the Indian rural FMCG market is something no one can overlook. Increased focus on farm sector will boost rural incomes, hence providing better growth prospects to the FMCG companies. Better infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit from growing demand in the market. Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth. And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the consumers to branded products and offer new generation products, they would be able to generate higher growth in the near future. It is expected that the rural income will rise in 2007, boosting purchasing power in the countryside. However, the demand in urban areas would be the key growth driver over the long term. Also, increase in the urban population, along with increase in income levels and the availability of new categories, would help the urban areas maintain their position in terms of consumption. At present, urban India accounts for 66% of total FMCG consumption, with rural India accounting for the remaining 34%. However, rural India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care, and hot beverages. In urban areas, home and personal care category, including skin care, household care and feminine hygiene, will keep growing at relatively attractive rates. Within the foods segment, it is estimated that processed foods, bakery, and dairy are long-term growth categories in both rural and urban areas.
Geographical dispersion
There is large difference in economic prosperity levels among several states in India, linked to the wealth creation from trade, industrial, and agricultural development. There are poor districts in many states, classified according to their market potential. India has 500 districts, out of which 150 districts (category A) and next 150 districts (category B) account for 78% and 15% of the national market potential respectively. Remaining 200 districts (category C) are backward and account for only 7% of national market potential. Category C districts have 40% of the geographical share.