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Case Study on Indian FMCG Sector

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ABSTRACT

The Fast Moving Consumer Goods sector is growing with an increasing rate in the present era. It involves daily utility products, such as detergents, soap, shaving products, cosmetics, toiletries and non-durable products, such as batteries, plastic goods, bulbs, glassware, etc. These goods also comprisepackaged food products, consumer electronics, pharmaceuticals, etc. FMCG products are purchased by customers on continuous basis say in between 15 to 20 days. There are various types of brands available in the market place, which deals in the products of FMCG. These brands add various quantity and types of items in its particular brand, according to the needs and desires of target market.

Growth of FMCG brands is seen, as now days customers are believe in purchase of premium brand products either for daily utility or long time use. FMCG sector contributes by large share in the country’s economy. Moreover, unemployment rate is also reducing with an effect of expansion of such companies, as it provides employment opportunities to many people at single time. In their daily life products, customers are raising more concern on cleanliness, hygiene and quality. Due to such increasing concern of customers, brands are required to provide more attention on quality assurance of their produces. Buyers are selecting brands for their shopping, just because of offering of best quality products by these firms.In this context, it is seen that brands are focusing on testing and checking their items for three to four times from quality inspector.

In this research paper, the investigation is made on FMCG sector of India. The industry is the fourth largest sector of country’s economy as well as it is gaining more preferences of customers, due to the expansion in the awareness about availability of brands. This report is prepared to take insights on perception of Indian population for FMCG products. The analysis of this paper will provide knowledge on what are the potentials of customers for FMCG items as well as how much they are conscious about the quality. Moreover, due to more poverty line in India, the brands are required to charge reasonable prices for this particular nation. Hence, the investigation will give information on disposable income of the buyers along with their desires for the products. This will help the FMCG brands to know about the Indian market and also in designing products according to the wants of customers.

INTRODUCTION

To define, a brand is the visual image or an idea of a particular service or product, wherein consumers unite with, by identifying the design, name, logo or slogan of the company who owns the image or idea. Some of the definitions of brands are:
According to Ambler (2003) a brand is a design, name or symbol that distinguishes a product or a group of the same and is something bought by the consumers. Leiser (2004) defined the same as a set of hope and relations evoked from experience with a product or company. Furthermore, it is all about how consumers feel and think about what the product or company can deliver across the board. Further, giving light on the difference between brand and product, Batey (2008) said:

In a particular product area, the brand which has the maximum percentage sales is known as leading brand. They enjoy a good market share, and there is a consumer notion that the top brands provide best products. Further, to explain this, few features of leadings brands are described:

Products with have a speedy turnover available at a comparative low cost are FMCG (Fast Moving Consumer Goods) and such products normally get replaced within a year. Instance of such products can be frequently purchased consumer products such as soap, tooth cleaning products, cosmetics, detergents and shaving products, as well as other nondurables such as chocolate bars, glassware, tissue paper, bulbs, soft drinks, batteries, packaged food products, paper products, pharmaceuticals and consumer electronics.
India is a big market for Fast Moving Consumer Goods companies. A more than 100 crore person of India depends on FMCG companies for their daily basis. It is the best country for the big players. Here, is the list of top 10 leading FMCG companies in India.
Top 10 FMCG Companies In India.

The Indian FMCG (Fast Moving Consumer Goods) sector has a market size of US$13.1 billion and is the 4th largest in the economy. Well-established distribution networks, as well as strong competition between the unorganized and organized segment are the features of this sector. FMCG in India has a strong and competitive multinational company’s presence across the entire value chain. It has been estimated that the fast moving consumer goods (FMCG) market will reach to US$ 33.4 billion in 2015 from US $ billion 11.6 in 2003. In the Indian population, the most promising market for FMCGis the rural segments and the middle class. Most of products like shampoos jam, skin care, toothpaste, etc.have low penetration level as well as low per capita consumption in India, but the potential for growth is vast.
There is an immense growth potential for all the FMCG companies in India, the prospect or demand could be increased further if these companies can offer new generation products and change the consumer's mindset. Earlier, Indian consumers were using non-branded clothes, but now a day’s clothes of different brands are available and the same consumers are willing to pay more for branded quality garments. It's the innovation, promotion and quality of products, which can drive many segments.

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1.2. Literature Review

To create a brandit’s not about just making a product but the first step is to dobrand differentiation, which owns a value. According to Jean-Noel Kapferer (n.d.), it is usually assumed that the best brands have the best products; it’s generally held to be irony that number one brands are not the best products. There can be several question regarding this whether Pentium is the best chips, whether dell computers are the best or was the original IBM PC the best Pc available at the time, Thus to understand this, let’s take the example of a school class. Academic grading is shown according to well-known criteria: a student who has well displayed qualities such as to present their work well, excellent memory, to work correctly and the fast ability to solve problems, these are the values of the classroom and likewise each market has values.To become No: 1 in the market, it is essential to recognize what the market values are. Obviously, one cannot succeed without a good product, it has to be liked to make repeat purchases, to recommend others; the product must build brand loyalty. Michelin is certainly the No: 1, in the trucktyre market: it holds 66% of the original tyre market.But, in the replacement market, that is the ‘after-market’, even though Michelin is still the market leader, its shares fall to 29%. It shows that Michelin in not well oriented to the values of the fleet owners, those who maintain their trucks and buyers in the aftermarket.
In the spirits market, Bacardi is world No: 1, but the question that arises is that are Bacardi really the world best spirits.One could definitely argue that it is nothing of the kind: it has no taste, and in all blind testing’s it fares extremely poor.But, then why does it sells in such largevolume, well the source of its big business is not experts considering over its taste, but partygoers and casual drinkers. They normallywant a spirit that will mix well in a cocktail and the best mixer should have a very neutral taste, and that is exactly what CartaLanca gives; it supplies 90% of Barcardi’s sales. Branding is created from the customer, and asks what does the customer value?Bacardi is certainly not the ‘better’ but it could be called ‘batter’. One of its keys intangible added values is its brand image, qualities represent by its symbol of a bat. The 1stBacardi factory in Cuba was full of bats. This became the brand’s symbol, adding a long lasting circle of light of mystery to it.
According to Haresh B. Vaishnani (2011), Similar to store image, brand name is also an importantrelative variable that affects consumer’s reaction to price and its discount. A leading brand name conveys high quality and highimage perceptions. Lot of researches on the price-quality relationship have found that brand name is a significant moderating variable that helps stabilize or control the quality perceptions of a branded product even when its price is decreased.For example, Della Bitta et al. (1981) used different discount levels for a Texas Instruments calculator and found that the perceived qualitywas not influenced by the range of discount. They came to the conclusion that this was evidence of the influence of the Texas Instruments, the brand name, and by this Dickson and Sawyer (1984) repeated this idea and suggested that, in the presence of a brand name, consumers are not going to use low price as a sign of unacceptable or lowquality.
E.g.: There are leading brands which had to drop off the products because they were not one of the best products for example Britannia had to discontinue some products like
Swiss Rolls, Half Half Cakes, Glucose – D, Milk man Milk, Chutney Bread, Zip Sip Flavored MilkChaiBiscuit, Checkers, Snacks, Thin Arrow root or Jacob Thin and Cheezelets.
Cadbury produces the best quality products and that’s the main reason for its growth which justifies that leading brands needs to have the best product, but there are also some leading brands which produces average products but manage to survive in the market due to its brand image for example Godreg consumer product ltd launched Godreg fair glow soap which is an average product but its surviving in the market due to the brand name which also means that leading brand does not always need to have the best product.
The tactic that is essential for branding in FMCG is to develop a strong brand by combining quality and taste according to regional preferences, introduce more of variety and advertise it with a culture overtone.
According to S. Ramesh Kumar (n.d.) consumersconnect not with products but withbest brands. They formpowerfulrelation with brands; sometimes they just buy the brand product irrespective of the quality just because it is familiar to them. He has emphasized more on advertising, innovation and varieties for a leading brand to stay competitive than improving the quality.
FMCG are products that have relatively low cost, but a fastshelfturnover and does not require a lot of thought, time and financial investment to purchase. On FMCG, product the margin of profit on every individual is less.Though the large number of goods sold is what makes the difference. Hence profit in FMCG always turns to number of goods sold (Sujathag, n.d).

1.3. Research Methodology

Question under study
“A case study on Indian FMCG sector-Do leading brands needs to have a best product?”
Research Aim
This research aims to study the importance of requirement of the best product launched by a leading brand. The area of research will be the FMCG sector in India. Here, we will also analyze impacts of best products and non-best product of FMCG leading brands on the Indian consumers brand loyalty aspect. Companies spend a large percentage of their funds on their brand image and try to establish to be the leading brand, but I am keen to know whether the company takes in mind the quality aspect of the product or just launches it with the perception that it would work due to brand image.
Research Objectives
Objectives of the study are as under:

Research Methodology
Research methodology is a meanto analytically solve the research problem. In it, westudy the different steps that are usually taken up by a researcher in studying his research problem along with the logic behind them. Research methodology can be understood as a science of studying how research is done scientifically.
Here in this study, we will use qualitative analysis technique. Secondary data will be availed from the company sources. From the secondary data analyze on the concern of leading brands on quality of the product will be done.
Primary data to know the perception of the customers about the importance of quality of a product in FMCG sector will be collected through a framed questionnaire. The population for the study will be India and Sample for primary data collection will be of 100 Indians, which would be a Random sample. Questionnaire will be filled through an encounter method. Under this, the first 100 persons encountering at a place will be asked to fill the questionnaire. After collection of data, data analysis techniques will be used as per the requirements of the data. On the basis of data analysis, results will be derived or authenticated.

1.4. Research Tool

For data collection, Questionnaire methodwill be used as it is a qualitative research.
Qualitative research is mainly significant in the behavioral aspects where the goal is to find out the essential motives of human behavior. Through this research, we can analyze the different factors which motivate people to act in a particular manner or which make a person dislike or like a particular product.

1.5. Significance of the Research

Thus, research is the source of information an importantbasis of providing plan for solving different social, business and governmental problems.

1.6. Structure of the Research

The undertaken research should be represented with a proper piece of work that is accomplished in a series of steps, each and every section of the reviewed task are commonly dependent on each other and hence appropriate composition of every section are needed in every chapter. This research report is assembled with a sequence of chapters and a brief of every section that are being included in the research report are as follows;
Chapter 1: Introduction – In this section of the report a defined section of research subject and its background is being included in a comprehensive manner. The ultimate aim of report is being is discussed under specific headings and the significance of research is also embraced in it as will provide a separate set of diverse aspects of research. Other than this a brief discussion on various methods of survey is also comprised in it and about research methodology will be followed in subsequent chapters.
Chapter 2: Literature Review – This is the second section of formulated research report and it will include all diverse information about Fast Moving Consumer Goods in the form of literature survey. It is one of the most important parts of research report as all the main topic of survey some suitable and valuable academic journals and articles are chosen and are represented in respect of issue of project. The literature review in this research report is mainly to highlight the importance of FMCG goods and measures adopted by companies to control the quality. In this aspect leading FMCG companies of India are being selected and their plans and policies for quality measures are being discussed in literature review section. In this part different journals and articles of diverse authors are accessed to acquire an in depth knowledge about importance and marketing strategies of FMCG goods in India.
Chapter 3: Research Methodology – This is the third section of report that will reflect about various methodologies that are being used in order to assemble and analyze accumulated data. This section of report will also provide validity and reliability of method of research with the help of different research approaches and philosophies. Other than this numerous issues like ethical constraints, validity and reliability is also being discusses with significant importance in order to maintain the exactness of research. Research methodology section will represent the exact structure and method of research that is being carried out in entire project report.
Chapter 4: Data Analysis – Under this section the accumulated data from survey accomplished is being analyzed and results are evaluated. This is the fourth chapter of research report and includes mainly the assessment of results that is has been accumulated from the data. In this research report a qualitative analysis is being performed in which diverse themes are being prepared in order to assess each and every question separately from the questionnaire. After every theme a discussion is being made about findings and results derived from the survey accomplished.
Chapter 5: Conclusion and Recommendations – This is the last chapter of the research report and will represent information about entire research and the ultimate results being attained form survey. In this research report it will provide an image of the entire survey that it will include a discussion about FMCG goods of India, market segment and results that has been attained from the survey performed.

1.7. Conclusion

India’s FMCG is the fourth largest sector in the economy,and it creates employment for more than three million people in downstream activities; hence there is a lot of scope for FMCG companies and brands. A leading brands has to keep in mind that launch of varieties of products should be done with the coming changes and fashion and should also do high marketing and advertising for building a brand, the quality of the product also matters as there is a lot of competition between brands and therefore, it has become important for the leading brands to maintain good quality to some extent (Kumar, n.d).

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