Fast-Moving Consumer Goods in India

Fast-Moving Consumer Goods in IndiaThe vivification styles and culture of India is ever-changing drastically. The universe of India is increasing each year and this go out let a direct imp feign on the FMCG industriousness and its shapings. Although cosmos of India is increasing every year the population maturement target is change order of magnitude over a period of time. In 2008 the population growth rate is 1.6%, in 2009 it is 1.5%. In 2010 the growth rate is 1.3%. Although the figures didnt change drastically, the supply and convey of the FMCG reapings yielding be affected due to change in population structure. There forget be decrease in demand and hot rival as the birth rates and number of nodes decrease. Most importantly it is the change is life style of Indian customers and accessible behavior will affect the FMCG labor in India. It will demand a revolutionary mathematical crossways and services over the time and will lead to increase in inducement in RD of FMCG companies. Now the world is facing with food paucity leading to increasing invest in food end product. If the agreements fail to maintain products and services according to changing lifestyle and behavior then it will be difficult for any organization to survive in the securities patience. scotchCurrent s downhearteddown in global economic scenario affected surface-nigh every exertion across the world. There has been increase in unemployment and low consumer spending power. This leads to consumers non opting to buy expensive products or services. This further pressurizes the RMCG companies to issue the values for the products and services.Organizations will have to review this economic ride and have to answer accordingly,A successful organization will respond according changing economic conditions, consumer and stakeholder behavior. An efficient organization must be aw ar of the changing economic condition across the country and global and should employ a suitable strategy to stay in the market.PoliticalPolitical factors will have a longer influence on the organization and manufacturing and it is the duty of the organizations to comply with it. It is necessary for the organizations to comply with the legislations implemented non conformance of which may lead to serious implications on the organization. The government has implemented certain rampart in the import policies. nonetheless tax exemptions in gross sales and fret duty atomic number 18 provided for the nice scale industries. This will allow the SMEs to invest much and will increase the number of new entrants. Transportation and home facilities ar improving not only in urban just now in addition in the hoidenish atomic number 18a which will help in distribution network.TechnologicalAdvancement in technology boost the production with enhancement in quality of products and services rendered to the customers. Organizations began to adopt e-business to rectify c ommemorate conversation and market. Technological advance makes the supply reach and transactions along the chain simple. Organizations reduced bells with effective IT technologies and increased the rate of data transactions. Technology is playing a key and huge part in the FMCG firmament by developing the new encase, increasing productivity and nightlong shelf life of food products.Better, stronger, more effective and faster are the key elements that all manufacturers in this sector push for, as it drives sales. The advancement enhances the sales by enabling the manufactures to produce better products with attractive packaging and better communication. With advancement in communication technology and rising social media network it enables the organizations to communicate better to the customers by improved marketing campaigns. planetary trendsThe economic crisis and slowdown had greatly affected the sales FMCG goods across the world. thus far emerging economies manage I ndia, China and Brazil are not greatly affected and manage to do well to recover quickly. A mutual trend that was followed across the world during economic slowdown was trading down. Because, customers became more cautious looking for less expensive discolourations, special offers and discounts. This added tremendous storm on the market prices due to severe competition and down trading. provided emerging economies like India, China and Brazil saw development in hypermarkets helping the growth of FMCG markets in these countries.Macro environmental opportunitiesIndia has Vast plain trade with majority of population where the market is unflustered untapped market. India has crummy labour to provide cost utility over other countries. legion(predicate) multinational companies are having cost advantage by outsourcing its product requirements from its Indian conjunction.ENVIRONMENTAL THREATS AND OPPORTUNITIES labor structureThe FMCG market of India divided into two sectors the nonionised sector and the ununionized sector. The organized sector has only few Indian companies and MNCS whereas the unorganized sector is crowded by a numerous local anesthetic players.Indian FMCG market accounts for about Rs.460 billion where the market has been super set-aside(p) by local and unbranded products. This has been a challenge for many organized players to successfully launch a product and to occupy the market share. statistical distribution and supply chain has also been a challenge as Indias root word and transport systems not quite helpful with one thousand thousands of retail outlets in the country. Although infrastructure and transportation system is developing in recent times it is still considered as a challenge by many players.The FMCG sector has a wide range of products including confectioneries, beverages, detergents, tooth last(prenominal)e, toilet soaps, shampoos, creams, powders, food products, cigarettes.Typical characteristics of FMCG products areTh e products furnish to necessity, comfort and luxury.Price and income elasticity of demand varies across products and consumers.Individual items are of elflike value (small SKUs) although all FMCG products put together account for a signifi lowlifet part of the consumers budget.The consumer spends little time on the purchase decision. He seldom ever looks at the technical specifications. Brand loyalties or recommendations of rock-steady retailer/ dealer drive purchase decisions.Limited inventory of these products (many of which are perishable) are kept by consumer and prefers to purchase them frequently, as and when required.Brand fault is often induced by heavy advertisement, recommendation of the retailer or word of mouth.Distinguishing features of Indian FMCG BusinessFMCG companies sell their products directly to consumers. Major features that part this sector from the others include the followingDesign and ManufacturingLow Capital gaudiness as most of products in FMCG requir es relatively little investment in plan, machinery and other fixed assets.Basic technology required for manufacturing is easily available. trinity party manufacturing is common and the benefits include production and inventory planning flexibleness, flexibility in controlling labor costs and logistics.Marketing and Distribution uplifted Initial Launch Cost with huge investment in product development, market research, test marketing and launch. Creating awareness for a new brand requires enormous initial expenditure.Huge Distribution Network as India has millions of retail outlets across the country making the logistics functions difficult for many players.CompetitionMarket is crowded with many unorganized players. Presence of many unorganized players and exceedingly capable MNCs provides fierce competition in the market to launch many new brands. This gives wide range of prime(prenominal) of brands for the customers.PORTERS FIVE COMPETITIVE FORCES emptor POWERThe consumer base of this fabrication is larger than any other industry and they have little or no influence on the price of the product. The consumer everlastingly possesses great plectrum of brands within the product category and they depose shift from one to another without much influence. Hence, buyer power is not quite strong in this industry. But they have power when they provide threat to shift from one brand to another brand. In FMCG retailers should also taken into the account for analysis. Retailers can always decide which brand to production line and consumers dont show much interest to wait if one brand of choice is not available. So retailers can always make choice betwixt brands and they have more buyer power than consumers.SUPPLIER POWERprovider power is little or check in the FMCG industry. The industry always has great number of suppliers with great size. There will not be any uniqueness in the product or service of suppliers and the manufacturer can always shift from one supplie r to other supplier. However manufacturer faces some amount of supplier power due to the cost they have to incur when fault suppliers. Suppliers who do large business with manufacturers are always obliged to their customers.THREAT OF NEW ENTRANTSThreat of new entrants is limited in this industry. The new entrants generally cater to local or small markets contributing to the large unorganized sector. Raw materials for most of the segments in FMCG industry can be easily procured. The investment will not be high for machinery and other assets required for most of the products in the industry. Also the prefatory technology is easily available. These factors can make the local or small manufactures to enter easily in the industry. But this industry requires high initial launch cost and distribution network is always a challenge. These factors act as a barrier for any new entrants in the industry and virtually provide low threat of new entrants.THREAT OF SUBSTITUTESThe FMCG industry bea rs a high threat of substitutes. The industry possesses many organized players with great number of local manufactures. The products in the industry can always be imitated and marketed. The industry possesses high level threat of substitutes in rural market than in the urban.DEGREE OF RIVALRYThe degree of rivalry is high in the industry. There are many global players along with local manufacturers. The industry enjoys low customer loyalty. The customers always have wide choice of brands and the switching cost is always minimum or negligible. There will be only slight difference in the quality of brands. So the competition is fierce in the industry to attract customers and retain them.Strategic groups in the industryAmong the FMCG companies in India Hindustan Unilever Limited is most catered company to almost every segment in the industry. Its competitors are only catered to certain segments but HUL faces pissed competition from all competitors in every segments. The major companies of strategic groups in FMCG industry are Hindustan Unilever Limited, ITC Limited, Nestle India, Emami Limited, Colgate-Palmolive (India) Limited, Dabur India Limited, Procter Gamble, Godrej Consumer Products Limited and Cadbury India.International CompetitionIndia is an emerging market and has become a hotspot for many multinational FMCG companies like HUL, Proctor Gamble and Nestle. However domestic companies like Marico, Dabur and Emami are great(p) tough competition to them. These companies step into natural product category by offering herbal products and managed to occupy the market. For instance, Maricos flagship brand Parachute Coconut anoint has no foreign competition. The presence of internationalistic competition is restricted to areas of where they can act and categories like natural products did not interest the global players.Industry ThreatsThe organized players in the industry are facing problems high magnitude of imitative products. The fake products are seen h ighly in rural markets and the Indian FMCG sector is losing large amount of money due to presence of counterfeits products. The industry is facing increasing input costs due to increase in price of the raw materials due to global economic slowdown and potential difference impact of rising crude oil pricesIndustry OpportunitiesThe FMCG sector is the fourth-largest sector in the Indian economy and has been growing considerably over the past few years due to changing lifestyle, consumer preferences and high disposable income. The rural market is being highly untapped and provides favorable condition for growth of the companies in this sector.EVALUATING HUL STRENGTHS AND WEAKNESSVRIO Framework of Hindustan Unilever LimitedThe value of HUL lies in their major power to offer different products and cater to the different segments in the industry. The organization has international expertise and wealth of knowledge to cater to different segments satisfying the customer needs. The organiza tion is displaying high standards of corporate behavior towards its stakeholders. The company realizes that its employees are the primary(a) source of success and well committed to their employees. The organization encourages the open communication with customers to get feedback and improve its product offerings.RarityThe company enjoys the competitive advantage in its robust supply chain and distribution network. Though the company resources are not grand it enjoys the competitive advantage in its resources utilise in supply chain and distribution network.ImitabilityThe organization possesses valuable and rare resources in its supply chain and distribution network that the competitors did not have cost advantage in imitating the resource. The social relationships entailed in resources are conglomerate that the competitors cannot easily imitate and manage well.OrganizationThe organization structure of HUL with its appoint managers across the companys nationwide operations impar ts speed and flexibility in decision-making and implementation. The organization leverages its resources for efficient management. The company realizes that its employees are the primary source of success and well committed to their employees.Analysis of Corporate StrategiesHindustan Unilever Limited has robust supply chain and distribution network covering over 3400 distributors and 16 million outlets. HULs sales organization structure integrates the Household, Personal Care and foods distribution networks together. By this the organization aligns all the units of its organization towards the common goal.Analysis of Business StrategiesHUL introduces wide mixing of products in different segments at different price points. HUL analyses its strategy to improve its foothold in the processed foods category which is largely unoccupied.HUL StrengthsThe company has chassis of products in each category giving wide array of choice to customers.Robust Distribution Network covering over 3400 distributors and 16 million outlets.The Company enjoys many reputed brands and created a well reputed brand image in the customers mind through advertisement.Well developed quality management.The company has highly capable and well developed RD resources.HUL WeaknessHUL not able to debate effectively with local competitor in the rural marketThe Companys product mostly target middle furcate and lower middle class population. So the upper middle class population terms the companys product as a cheap product with low qualityHUL is over dependent on Indian market and depends on it for majority of gross generation. This makes the company subject to changes in weather, political and economic conditions and also makes it defenceless to potential risks arising in India.