What Is the FMCG Industry?

1. INTRODUCTION OF FMCG INDUSTRY

What is the FMCG Industry?

"Resilient, Rewarding and really, really Fast."

FMCG industry, alternatively called as CPG (Consumer packaged goods) industry primarily deals with the production, distribution and marketing of consumer packaged goods. The Fast Moving Consumer Goods (FMCG) are those consumables which are normally consumed by the consumers at a regular interval. Some of the prime activities of FMCG industry are selling, marketing, financing, purchasing, etc. The industry also engaged in operations, supply chain, production and general management.

The Fast Moving Consumer Goods (FMCG) industry in India is one of the largest sectors in the country and over the years has been growing at a very steady pace. The sector consists of consumer non-durable products which broadly consists, personal care, household care and food & beverages. The Indian FMCG industry is largely classified as organised and unorganised. This sector is also buoyed by intense competition. Besides competition, this industry is also marked by a robust distribution network coupled with increasing influx of MNCs across the entire value chain. This sector continues to remain highly fragmented.

Industry Classification

The FMCG industry is volume driven and is characterised by low margins. The products are branded and backed by marketing, heavy advertising, slick packaging and strong distribution networks. The FMCG segment can be classified under the premium segment and popular segment. The premium segment caters mostly to the higher/upper middle class which is not as price sensitive apart from being brand conscious. The price sensitive popular or mass segment consists of consumers belonging mainly to the semi-urban or rural areas who are not particularly brand conscious. Products sold in the popular segment have considerably lower prices than their premium counterparts. Following are the segment-wise product details along with the major players:

The facts about the FMCG Industry

FMCG, otherwise known as CPG, is one of the biggest industries in the world and there are a lot of facts that stand the FMCG industry apart as a career choice:
FMCG companies are behind the biggest brands in the world. FMCG is all about names, the products which everyone recognises from trips to the supermarket or from ads on television. The brands that make up this sector are the high profile ones, the ones everybody knows and loves. Think Coca-Cola, Dettol and Dove. This is an industry that puts you in living rooms, kitchens and bathrooms across the globe.

The FMCG industry changes fast and is constantly evolving. It's fair to say there is never a dull moment in FMCG. From the pace at which goods leave the shelves to the rate of product innovation and career progression, things move quickly. And it doesn't end there. The brands themselves are changing just as quickly. 40% of brands on the top 100 list twenty years ago have already been replaced by new names today.

FMCG firms thrive on employee and customer retention. Employee investment is a big part of the ethos of the FMCG world. Perhaps it's because we understand the importance of loyalty. Customer loyalty can make or break a brand. Take Twinning’s, for example – a century after they entered the top 100 brand list, they are still there and going strong. So it makes sense for FMCG companies to encourage the loyalty of their employees too.

FMCG companies can beat the recession. This is an industry that has proved itself very resilient to recession – with the majority of companies in the sector weathering the financial storm in a way that very few others have managed. Why? Well, consumers will always need to buy the products created by FMCG companies. They may not buy big items like refrigerators or cars in a recession, but floors still need to be cleaned, clothes need to be laundered and aches and pains still need to be soothed.

The FMCG industry thinks bigger – and better. This is an industry that offers things on a whole new scale. Where else could you find yourself handling $150 million accounts? Working in FMCG gives you the chance to be a part of some global success stories and influence the way consumers shop for products. FMCG firms are always thinking of the next great discovery or innovation – always developing and ever-changing to meet consumer's needs.

FMCG has a history of delivering what consumers want. Some FMCG companies' roots are over two centuries old – driving the industry to a value of $570.1 billion. In short, to quote Sam Walton, founder of Wal-Mart: "High expectations are the key to everything"

1. INTRODUCTION OF NESTLE COMPANY

Nestlé is...

...the world's leading nutrition, health and Wellness Company. Their missionof "Good Food, Good Life"is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night.

They believe that leadership is about behaviour, and they recognise that trust is earned over a long period of time by consistently delivering on their promises. Nestlé believes that it is only possible to create long-term sustainable value for their shareholders if their behaviour, strategies and operations also create value for the communities where they operate, for their business partners and of course, for their consumers. They call this 'creating shared value'.

TheNestlé Corporate Business Principlesare at the basis of their company’s culture, developed over 140 years, which reflects the ideas of fairness,honesty and long-term thinking.

Nestlé can trace its origins back to 1866, when the first European condensed milk factory was opened in Cham, Switzerland, by the Anglo-Swiss Condensed Milk Company. One year later, Henri Nestlé, a trained pharmacist, launched one of the world’s first prepared infant cereals ‘Farine lactée’ in Vevey, Switzerland.
The two companies merged in 1905 to become the Nestléwe know today, withheadquartersstillbased in theSwiss town of Vevey. They employ around 328 000 people and have factories or operations in almost every country in the world. Nestlé sales for 2011 were almost CHF 83.7 bn.

"Good Food, Good Life" is thepromise they commit to everyday, everywhere – to enhance lives, throughout life, with good food and beverages.

Ever since Henri Nestlé invented Farine Lactée to alleviate infant mortality, Nestlé has been dedicated to enhancing lives. They strive to help consumers care for themselves and their families by offering tastier and healthier choices. Their dedication to great tasting, healthier and trusted products is tied to their respect for the environment and the people they work with.

Business of the Nestle

Nestle is the largest food company in the world. It is present in all five continents,has an annual turnover of 74.7 billion Swiss Frances. There are 509 factories arerunning in 83 countries, having 231,000 employs

Company Mission

• At Nestle, they believe that research can help them to make better food, so thatpeople live a better life.
• Good food is the primary source of good health, so they are trying to make good food.To provide fresh and pure products to the customers, they introduced (SHE) Safety,Health and environment policy to protect health of their employs and keep clean theirsurrounding environment.

Company Vision

• Vision of Nestle Milkpak Company is to expand business according to theincreasing demand of market.
• As per their company vision in 2020 production capacity of all plants workingin Pakistan is being increased.So extension of Kabirwala Plant is the example of their company vision.

1. INTRODUCTION TO MAGGI NOODLES

Ever since its launch in India in 1983, this brand has become synonymous with noodles. The bright red and yellow colours of the packet with the brilliant blue “2-minute Noodles” printed on it has found a place on every kitchen. Over the years, Maggi has grown as a brand and positioned itself as a “Fast to cook! Good to Eat! “ food product.

The history of this brand traces back to the 19th century when industrial revolution in Switzerland created factory jobs for women, who were therefore left with very little time to prepare meals. Due to this growing problem Swiss Public Welfare Society asked a miller named Julius Maggi to create a vegetable food product that would be quick to prepare and easy to digest. Julius, the son of an Italian immigrant came up with a formula to bring added taste to meals in 1863. Soon after he was commissioned by the Swiss Public Welfare Society, he came up with two instant pea soups & a bean soup- the first launch of Maggi brand of instant foods in 1882-83.Towards the end of the century, Maggi company was producing not just powdered soups, but bouillon cubes, sauces and other flavourings.

However in India (the largest consumer of Maggi noodles in the world!) it was launched in 1980 by Nestle group of companies. Maggie had merged with Nestle family in 1947. When launched it had to face a stiff competition from the ready to eat snack segments like biscuits, wafers etc. Also it had other competitor the so called home made snacks which are till today considered healthy and hygienic. Hence to capture the market it was positioned as a hygienic home made snack, a smart move. But still this didn’t work, as it was targeted towards the wrong target group, the working women. After conducting an extensive research, the firm found that the children were the biggest consumers of Maggi noodles. Quickly a strategy was developed to capture the kids segment with various tools of sales promotion like pencils, fun books, Maggi clubs which worked wonders for it. No doubt the ads of Maggi have shown a hungry kid saying “Mummy bhookh lagi hai” to which his mom replies “Bas do minute!” and soon he is happily eating Maggie noodles.

Further the MAGGI 2-MINUTE Noodles has been renovated to provide 20% of the RDA1 of Calcium and Protein for the core target group building on the nutrition proposition “Taste bhi health bhi”. The company could have easily positioned the product as a meal, but did not, as a study had shown that Indian mentality did not accept anything other than rice or roti as meal. They made it a easy to cook snack that could be prepared in just two minutes. The formula clicked well and Maggi became a brand name.

1. PRODUCT MIX, BRANDS AND PRODUCT OFFERING

4.1 PRODUCTS MIX OF NESTLE:

A product mix is the set of all products and items, a particular seller offers for sale. A product mix consists of various product lines. A company’s product mix has a certain width, length, depth and consistency.

Nestle is a well-known company all over the world and Pakistan. The company basically deals in food products as their logo says “Good Food, Good Life”.

The width of a product mix refers to how many different product lines the company carries.

The length of a product mix refers to the total number of items in the mix.

The depth of a product mix refers to how many variants are offered of each product in the line.

Nestlé’s major products lines:

Milk Products:-

Nestle Milkpak UHT Milk

Milkpak Butter

Milkpak UHT Cream

Milkpak Desi Ghee

Nestle Everyday

Nestle Nido

Chocolate Drinks:-

Milo power

Milo RTD

Coffee:-

Nescafe Classic

Fruit Drinks:-

Frost

Nestle Orange Juice

Dietetic & Infant Products:-

Lactogen

Cereals

Nestle Rice

Nestle Wheat

Neslac

Culinary Products:-

Maggi Noodles

• Maggi Vegetable Multigrainz Noodles
• Maggi 2-Minute Noodles
• Maggi Vegetable Atta Noodles
• Maggi Cuppa Mania

Maggi Cold Sauces

Confectionery:-

Nestle Milkpak

PoloMint

Kitkat

Water:-

Nestle Pure Life

4.2 BRANDS OF NESTLE

Nestlé offers quality culinary and beverage products through a portfolio of brands operators and consumers count on for great taste, consistency, and convenience.

Major Brands of Nestle are as follows:

MINOR'S® HOT POCKETS®

CHEF-MATE® LEAN POCKETS®

STOUFFER'S® NESTLÉ® HOT COCOA

STOUFFER'S® LEAN CUISINE® MAGGI®

NESCAFÉ® NESTLÉ® TOLL HOUSE®

COFFEE-MATE® LIBBY'S®

NESTEA® NESTLÉ® CARNATION®

NESTLÉ® DESSERT INGREDIENTS TRIO®

NESCAFÉ® MILANO

4.3 PRODUCTS OFFERING BY MAGGI

• MAGGI Vegetable Multigrainz Noodles
• MAGGI 2-Minute Noodles
• MAGGI Vegetable Atta Noodles
• MAGGI Cuppa Mania

• MAGGI Healthy Soups
• Sanjeevni MAGGI Healthy Cup Soup

• MAGGI Sauces
• MAGGI Pichkoo

• MAGGI MAGIC Cubes
• MAGGI Bhuna Masala
• MAGGI Coconut Milk Powder
• MAGGI Pizza Mazza
• MAGGI Masala-ae-Magic

• MAGGI NUTRI-LICIOUS PAZZTA

1. MARKET SEGMENTATION, TARGETING AND POSITIONING

• Segmentation is the process of grouping people or organizations within a market according to similar needs, characteristics, or behaviours.
• Targeting is the actual selection of the segment you want to serve the target market is the group of people or organizations whose needs a product is specifically designed to satisfy
• Positioning is the use of marketing to enable people to form a mental image of your product in their minds (relative to other products)

5.1 Bases for Segmenting Consumer Markets

A. Geographic Segmentation:

Division of the market into different geographical units such as nations, cities, states, regions, neighbourhoods etc.

• Region: South India, Western Region, North, East
• City: Class
• Rural, urban, semi urban areas

B. Demographic Segmentation:

The market is divided on the basis of variables such as age, family size, family life cycle, gender, income, occupation, education, religion etc. Demographic variables are easy to measure and are directly associated with customer.

C. Psychographic Segmentation:

Here buyers are divided into different groups on the basis of psychological/personality traits, lifestyles or values.

• Lifestyle: Culture-oriented, sports oriented, outdoor oriented. Classification is done on three parameters: AIO Activities, lifestyles or values.
• Personality: Compulsive, gregarious, authoritarian, ambitious

D. Behavioural segmentation:

Buyers are divided on the basis of their knowledge of attitude toward, use of, or response to a product. The behavioural variables are as follows:

• Usage rate: Light, Medium, Heavy
• Loyalty status: None, medium, strong, absolute
• Readiness stage: Unaware, aware, informed, desirous, intending to buy
• Attitude toward product: Enthusiastic, positive, indifferent, negative, hostile

Evaluating and Selecting Market Segments

Five patterns of target market selection that can be followed are:

• Single Segment Concentration: Concentrated Marketing where the firms gain a can strong knowledge of segments needs and acquires a strong market presence.
• Selective Specialization: A firm selects a number of segments. Each objectively attractive and appropriate, there may be little or no synergy between the segment.
• Product Specialization: The firm makes a certain product that it sells to several different market segments.
• Market Specialization: The firm concentrates on serving many needs of a particular customer.
• Full Market Coverage: The firm attempts to serve all customer groups with all products they may need.

5.2Target segmentof Maggi noodles

Maggi 2 Minute Instant Noodles is already associated with convenience and taste and is currently accepted as a valid filling snack between meals. Maggi will continue to leverage its brand equity and target the following segments for this product.

• Children and Teenagers’: This is a large segment and is Maggi’s stronghold. The age group between 4 and 14 years has largely similar tastes and is traditionally targeted by Maggi. These segments perceive Maggi instant noodles as a welcome change in taste from the regular Indian fare and they are fascinated by the curly shaped noodles. For these segments innovative products also have novelty value, however, certain dominant preferences emerge. Realizing this early, Maggi shifted focus from the lady of the house to the end consumer i.e. children themselves ending up as the market leader of the instant noodles segment. Early buy in of this segment will help Maggi to sell in other segments in future.

• Studying Age: The studying age segment though not traditionally targeted specifically has been devouring Maggi 2 minute noodles. The proposition of convenience of cooking as well as that of a tasty filling snack attracts this segment which due to erratic schedules keeps missing their regular meals.

• Office Goers and working women: The Company also targeted this segment people because they were the one who needs refreshment time to time because of hectic schedule and with would take their minimal time. So by keeping this aspect into consideration, the company introduce the Cuppa mania, which is a type of noodle which takes less time to cook and satisfy the hunger as well.

• Health Conscious People: The Company is also focusing on the heath aspect. They introduce Veg atta noodle for health conscious people. So they also launch Health Awareness campaign to educate consumers about the benefits of health food. They also sponsor health camps, publish health information and build awareness among the masses.

5.3 Positioning of Maggi