1.

1 Industry
profile

1.1.1 F.M.C.G. INDUSTRY

Fast Moving Consumer Goods (FMCG) goods are all consumable items (other than
groceries/pulses) that one needs to buy at regular intervals. These are items which are
used daily, and so have a quick rate of consumption, and a high return. FMCG can
broadly be categorized into three segments which are:
1. Household items as soaps, detergents, household accessories, Etc.
2. Personal care items as shampoos, toothpaste, shaving products, Etc. and finally
3. Food and Beverages as snacks, processed foods, tea, coffee, edible oils, soft drinks etc.
Global leaders in the FMCG segment are Nestl, ITC, Hindustan Unilever Limited,
Reckitt Benckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General
Mills, Pepsi, Gillette etc.

Overview
The burgeoning middle class Indian population, as well as the rural sector, present a huge
potential for this sector. The FMCG sector in India is at present, the fourth largest sector
with a total market size in excess of USD 13 billion as of 2012. This sector is expected to
grow to a USD 33 billion industry by 2015 and to a whooping USD 100 billion by the
year 2025.
This sector is characterized by strong MNC presence and a well-established distribution
network. In India the easy availability of raw materials as well as cheap labour makes it
an ideal destination for this sector. There is also intense competition between the
organised and unorganised segments and the fight to keep operational costs low.

A look at some factors that will drive growth in this sector:

Increasing rate of urbanization, expected to see major growth in
coming years.
Rise in disposable incomes, resulting in premium brands having
faster growth and deeper penetration.
Innovative and stronger channels of distribution to the rural
segment, leading to deeper penetration into this segment.
Increase in rural non-agricultural income and benefits from
government welfare
programmes.
Investment in stock markets of FMCG companies, which are
expected to grow constantly.

1.1.2 Overview of the world Market

FMCG Companies are among the top contenders that pursue the brand positioning
process to establish their products in market. Product differentiation, portable & attractive
package styling, tag lines and punch lines in advertising, competent marketing and
innovative product promotion strategies are very important for this industry to perform
well. Due to high competition in the FMCG sector pressure on margins is very high that
makes advertisement a prerequisite for this sector. Subsequently, FMCG industry has
actually been responsible for the growth of advertisement industry in India and
consequently for creating a large number of jobs in this sector also.

FMCG sector in India has been experiencing a phenomenal pace of growth since last
decade owing to increasing consumer incomes and rapidly changing consumer tastes and
preferences. Large scale and low cost production, modern retailing strategies, branding
and maintenance of intense distribution network have given FMCGs an edge over others
in raising hovering revenues. At present Indian FMCG sector is worth Rs. 1300 billion
and expected to be around a whopping value of Rs. 4000 to Rs. 6000 billion by 2020.

FMCG industry provides a wide range of consumables and accordingly the amount of
money circulated against FMCG products is also very high. The competition among
FMCG manufacturers is also growing and as a result of this, investment in FMCG
industry is also increasing, specifically in India, where FMCG industry is regarded as the
fourth largest sector with total market size of US$13.1 billion. FMCG Sector in India is
estimated to grow 60% by 2010. FMCG industry is regarded as the largest sector in New
Zealand which accounts for 5% of Gross Domestic Product (GDP).

1.1.3 Overview of Indian Market

Unlike the U.S. market for fast moving consumer goods (FMCG), which is dominated by
a handful of global players, India's Rs 460 billion FMCG market remains highly
fragmented with roughly half the market going to unbranded, unpackaged home made
products. This presents a tremendous opportunity for makers of branded products who can

convert consumers to branded products. However, successfully launching and growing

market share around a branded product in India presents tremendous challenges. Take
distribution as an example. India is home to six million retail outlets and super markets
virtually do not exist. This makes logistics particularly for new players extremely
difficult. Other challenges of similar magnitude exist across the FMCG supply chain. The
fact is that FMCG is a structurally unattractive industry in which to participate. Even so,
the opportunity keeps FMCG makers trying

1.1.3.1India & the FMCG Market:

The Indian FMCG sector is an important contributor to the country's GDP. The Indian
FMCG sector with a market size of US$14.8 billion is the fourth largest sector in the
economy and is responsible for 5% of the total factory employment in India. The FMCG
industry also creates employment for 3 million people in downstream activities, much of
which is disbursed in small towns and rural India. This FMCG industry has witnessed
strong growth in the past decade. This has been due to liberalization, urbanization,
increase in the disposable incomes and altered lifestyle. Furthermore, the FMCG boom
increased due to the reduction in excise duties, packaging innovations etc. and unlike the
perception that the FMCG sector is a producer of luxury items targeted for the elite but in
reality, the sector meets the every day needs of the masses. The lower-middle income
group accounts for over 60% of the sector's sales. At present, urban India accounts for
66% of total FMCG consumption, with rural India accounting for the remaining 34%. The
growing incline of rural and semi-urban folks for FMCG products will be mainly
responsible for the growth in this sector, as manufacturers will have to deepen their
concentration for higher sales volumes. Many of the global FMCG majors have been
present in the country for many decades. But in the last ten years, many of the smaller
rung Indian FMCG companies have gained in scale. As a result, the unorganized and
regional players have witnessed erosion in the market share. Availability of key raw
materials, cheaper labor costs and presence across the entire value chain gives India a
competitive advantage. The FMCG market is set to double from USD 14.7 billion in
2008-09 to USD 30 billion in 2012. FMCG sector will witness more than 60 per cent
growth in rural and semi-urban India. The bottom line is that Indian market is
changing rapidly and is showing unprecedented consumer business opportunity

1.1.4 Growth of the industry sector

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.

1.1.5 About major companies in this industry

India's fast moving consumer goods (FMCG) sector is the fourth largest sector in
the economy. Its principal constituents are foods, personal care, fabric care and
household products. The total FMCG market is in excess of US$ 17.36 billion
and is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015.

Gujarat Co- operative Milk Marketing Federation Ltd (GCMMF), Hindustan

Unilever Limited (HUL), Dabur India, Nestl India and Indian Tobacco Company
(ITC) Limited are the oldest FMCG companies in India. Globalization has
broadened the list of FMCG Companies in India. Foreign players like Cadbury,
Pepsi Co, Johnson & Johnson, Procter & Gamble (P&G), Godfrey Phillips,
Gillette, Britannia and Reckitt Benckiser, have registered a firm presence in India
for last so many years now. Among other Emami, Asian Paints (India), Marico
Industries Ltd., Colgate-Palmolive (India) Ltd., Henkel Spic, Modi Revlon,
GlaxoSmithKline, Nirma Ltd, vini cosmetics and Godrej Consumer Products Ltd
lead the FMCG Companies.

1.1.6 Background of the study

The importance of consumer sales promotion in the marketing mix of the fast
moving consumer goods (FMCG) category throughout the world has increased.
Companies spend considerable time in planning such activities. However, in
order to enhance the effectiveness of these activities, manufacturers should
understand consumer and retailer interpretations of their promotional activities.
The study here pertains to consumers perceptions regarding sales promotion.
Some past researches have suggested that promotion itself has an effect on the
perceived value of the brand. This is because promotions provide utilitarian
benefits such as monetary savings, added value, increased quality and

convenience as well as hedonic benefits such as entertainment, exploration and

self-expression.

Broadly speaking most of the companies using Marketing Mix which includes
Price
Place (Channel of Distribution)
Product
Promotion
These are the four basic pillar of marketing mix. Most of the marketing strategies
are built on the basis of these criteria.

Promotion is one of the important elements of marketing mix. There are so many
elements of promotion such as
Advertising
Direct Marketing
Public Relations
Sales Promotion
Traditionally, sales Promotions have been used by marketer to increase sales in
the short term. However, in the last few decades this communication tool has
evolved and now is considered from a strategic point of view. For this reason, it is
necessary to realize new studies in this area and study how consumers evaluate
sales promotions.

Sales promotions have grown in both importance and frequency over the past

few decades. Although an accurate estimate for total sales promotions

expenditures does not exist, we can be sure that the trend is up.

Sales promotion serves three essential roles: It informs, persuades and reminds
prospective customers about a company and its products. Even the most useful
product or brand will be a failure if no one knows that it is available. As we know,
channels of distribution take more time in creating awareness because a product
has to pass through many hands between a producer and consumers.

Therefore, a producer has to inform channel members as well as ultimate

consumers about the attributes and availability of his products. The second
purpose of promotion is persuasion. The cut throat competition among different
products puts tremendous pressure on their manufacturers and they are
compelled to undertake sales promotion activities. The third purpose of
promotion is reminding consumers about products availability and its potential to
satisfy their needs.

From these elements Sales Promotion is the element which is in the focus of this
project. Further Sales Promotion is quite broad term it includes

1.1.7 LIST OF 25 INDUSTRIES/SECTORS

INDUSTRY
CEMENT INDUSTRY

PAINT INDUSTRY

5 COMPANIES
Binani Cement Ltd

LOCATION

JK Lakshmi Cement Ltd

UltraTech Cement Limited

Kolkata, West Bengal

Sirohi Dist, Rajasthan
Mumbai, Maharashtra

Ambuja Cements Limited

Shree Cement Ltd.

Junagadh,Gujarat
Beawar, Rajasthan

Kansai Nerolac Paints Ltd.

Mumbai, Maharashtra

Dulux India Paints

Gurgaon,Haryana

BANKING INDUSTRY

AUTOMOBILE
INDUSTRY

PAPER INDUSTRY

POWER (ENERGY)
SECTOR

TELECOM SECTOR

COAL INDUSTRY

REALTY/ESTATE
SECTOR

PHARMACEUTICAL
SECTOR

Asian Paints India

Santacruz (E), Mumbai

Berger Paints

Kolkata, West Bengal

Shalimar Paints
State Bank of India
ICICI Bank Ltd.
Axis Bank Ltd.
HDFC Bank Ltd.
IDBI Bank Ltd
Mahindra & Mahindra Limited

Mumbai, Maharashtra
Mumbai, Maharashtra
Vadodara, Gujarat
Ahmedabad, Gujarat
Mumbai, Maharashtra
Mumbai, Maharashtra
Mumbai, Maharashtra

Maruti Suzuki India Ltd

New Delhi, Delhi
Tata Motors Limited
Mumbai, Maharashtra
Swaraj Mazda Ltd
Nawanshahar, Punjab
Ashok Leyland Limited
Chennai, Tamil Nadu
Agio Paper & Industries Ltd
Kolkata, West Bengal
Bio Green Papers Ltd.
Hyderabad, Andhra Pradesh
J K Paper Limited
Tapi, Gujarat
Rainbow Papers Ltd
Ahmedabad, Gujarat
Genus Paper Products Ltd.
Moradabad, Uttar Pradesh
Krisons Electronic Systems Ltd.
New Delhi, Delhi
Star Delta Transformers Ltd
Bhopal, Madhya Pradesh
Maurya Industrial Resources Ltd.
New Delhi, Delhi
Globus Power Generation Ltd.
New Delhi, Punjab
Epic Energy Ltd.
Mumbai, Maharashtra
Bharti Airtel
New Delhi, Delhi
Tata Communications Ltd
Mumbai, Maharashtra
Spice Communications Ltd.
New Delhi, New Delhi
Reliance Communications Ltd.
Mumbai, Maharashtra
Idea Cellular Ltd.
Gandhinagar, Gujarat
Neyveli Lignite Coorporation Ltd.
Chennai, Tamil Nadu
Burdwan, W.B.
Eastern Coalfields Limited
Coal India ltd.
Singareni Collieries Company

Kolkata, West Bengal

Hyderabad

Ltd.
Mahanadi Coalfields ltd.
DLF Limited
Pearl Apartments Ltd.
Alchemist Realty Ltd
Omaxe Limited
Phoenix Township Ltd.
Cipla Ltd.
Dr. Reddy's Laboratories Limited
Wyeth Ltd.
GlaxoSmithKline

Brajraj Nagar, Brajrajnagar

Gurgaon, Haryana
New Delhi, Delhi
Mumbai, Maharashtra
Gurgaon, Haryana
Panaji, Goa
Mumbai, Maharashtra
Hyderabad, Andhra Pradesh
Mumbai, Maharashtra
Mumbai, Maharashtra

Pharmaceuticals Limited
Novartis India Limited
Indian Oil Corporation Ltd.

Mumbai, Maharashtra
New Delhi, Delhi

OIL & GAS SECTOR

Bharat Petroleum Corporation

Limited
Oil India ltd.
Oil and Natural gas Corporation
Gujarat State Petroleum

Mumbai, Maharashtra
Noida
Dehradun
Gandhinagar, Gujarat

Corporation
STEEL INDUSTRY

NON FERROUS METAL

INDUSTRY
EXCEPT
ALUMINIUM
IT SECTOR

ALUMINIUM SECTOR

TYRE SECTOR

TEXTILE INDUSTRY

Jindal Steel and Power Limited

Bhushan Steel Ltd.
Tata Steel Limited
Steel Authority of India Limited
Steelco Gujarat Ltd
Novelis
Mcreller Industry Incorporation
ALCOA
Encore Wire Corporation
Olin Corporation
Infosys Technologies Ltd.
TECH MAHINDRA
Tata Consultancy Services

Hisar, Haryana
Mumbai, Maharashtra
Mumbai, Maharashtra
New Delhi, Delhi
Bharuch, Gujarat
Pune
Mumbai, Maharashtra
New Delhi, Delhi
Mumbai, Maharashtra
New Delhi, Delhi
Bengaluru, Karnataka
Mumbai, Maharashtra
Mumbai, Maharashtra

Aplab Ltd.
HCL Technologies Ltd.

Thane, Maharashtra

HINDALCO

Mumbai, Maharashtra

NALCO

Bhubaneswar

PG Foils

Pali, Rajasthan

Hind Aluminium

Mumbai, Maharashtra

Sacheta metals

Mumbai, Maharashtra

Apollo Tyres

New Delhi, Delhi

Gurgaon, Haryana

MRF Tyres

Chennai

Ceat Tyres

Mumbai, Maharashtra

Goodyear

Faridabad

Balkrishna Industry

Thane, Maharashtra

Denim Fashions Ltd.

Kavita Fabrics Ltd.

Vadodara, Gujarat

The Birla Cotton Spinning &

New Delhi, Delhi

Surat, Gujarat

Weaving Mills Ltd.

FMCG SECTOR

Binny Mills Ltd.

Reid & Taylor (India) Ltd

Chennai, Tamil Nadu

Mumbai, Maharashtra

ITC Limited

Kolkata, West Bengal

HEALTHCARE SECTOR

CONSUMER DURABLES
SECTOR

PSU SECTOR

AVIATION SECTOR

HOTEL (HOSPITALITY)
SECTOR

ACCOUNTING

Marico Ltd

Mumbai, Maharashtra

Britannia Industries Ltd

Kolkata, West Bengal

Nestle India Ltd

New Delhi, Delhi

Hindustan Unilever Limited

Mumbai, Maharashtra

GlaxoSmithKline Consumer

Nabha, Punjab

Healthcare Ltd
Piramal Healthcare Ltd

Mumbai, Maharashtra

Procter & Gamble Hygiene and

Mumbai, Maharashtra

Health Care Limited

Amrutanjan Health Care Ltd.

Chennai, Tamil Nadu

Cadila Healthcare Limited

Ahmedabad, Gujarat

Samsung India Electronics Pvt.

Gurgaon, Delhi

Ltd.
Whirlpool

Gurgaon, Delhi

Philips India Limited

Chennai, Tamil Nadu

LG Electronics

Greater Noida, U.P.

Godrej Industries Limited

Vikhroli, Mumbai

Bengal Chemicals &

Kolkata, West Bengal

Pharmaceuticals
Central Warehousing Corporation

Hauz Khas, New Delhi

Eastern Coalfields

Burdwan, W.B.

Bharat Earth Movers

Byculla, Mumbai

Central Inland Water Transport

Kolkata, West Bengal

Corporation
Kingfisher Airlines Ltd

Bengaluru, Karnataka

SpiceJet Ltd.

Gurgaon, Haryana

Jet Airways (India) Ltd.

Mumbai, Maharashtra

Indigo/Deccan Aviation ltd.

Gurgaon, Haryana

Air Charter India

New Delhi, Delhi

Hotel Leela Venture Limited

Mumbai, Maharashtra

Taj GVK Hotels and Resorts

Hyderabad

Royal Orchid

Bangalore, Karnataka

Jindal Hotels

Vadodara, Gujarat

ITC Hotels

New Delhi, Delhi

Ernst & Young

Kolkata, West Bengal

KPMG

Mumbai, Maharashtra

COMPANY
(INCLUDING
BIG-4)

Arthur Anderson

Dublin, Republic of Ireland

PWC

Mumbai, Maharashtra

Delloite

Ahmedabad, Gujarat

1.2 Company Profile

1.2.1 INTODUCTION

To be a market leader, the most important aspect is to understand consumer needs and then make
them understand by comparing its utilities with their needs. In present market conditions, it takes
years for a product to cement its place and compete with the existing brands. If we just imagine
the scenario some years back, the only brand in deodorant market which we could remember was
Axe. In less than a year axe, a market leader with market share of 18 % has been toppled by
Fogg, taking a market share of 12% in short span of 2 years. Presently Axe, has even lost the 2nd
spot and is on 3rd position in market share after Fogg and Park Avenue.

Axe, launched in India in 1999 and is a global brand available in 60 countries. Axe has
consistently strengthened its imagery of a cool, iconic and youth brand. Fogg was launched in
India in 2011 with a new concept of no gas and only perfume. The basic idea of Fogg was to tap
a market gap and understand human psyche.

With Deodorant market today stands at 1500 crore, growing 5 folds in past 5 years. We would
analyze both the brands with some parameters to have better understanding.

FOGG: A new brand was launched in the deodorant category of 1200 crore. Deodrant
have continuously harped on the communication of attraction wherein the females have
always being the targets of male fantasies. Fogg striked out differently with Bina gas
wala spray (deodorant without gas) increasing the number of sprays compared to the
competition. One bottle of Deodrant gives almost 800 sprays. Thats reduced cost per
spray. A new communication had taken birth. The 2500 crore deodorant market followed
a different suit than onwards making Fogg gaining a 15%-17% market share even after
selling at 15-20% premium to the peers.

1.2.1.1 COMPANY, TAGLINE AND USP

Fogg is a product of Vini Cosmetics with a punch tagline of without gas body spray and again
finished. It came with a basic USP of long lasting fragrance and guaranteeing 800 sprays for a
single Fogg bottle.
Axe a bi product of HUL limited mainly concentrated with advertisements usually broadcasted
with Indian youth in mind. The angels dropping from the sky and dark temptation advertisements
from Axe are tough to forget.

1.2.2 INNOVATION IN INDIA

Businesses are successful if they prioritize consumer behavior and innovation. When all the
Deodorants brands were coming with the same type of product, Vini cosmetics came up with a
different type of product, a liquid based product instead of gas. The people of India have a
common mindset of getting more for less capital. Fogg understood this human behavior and
delivered a product in Indian market with demonstrating this product with only liquid and no gas.

Axe, on the other hand was concentrating on more fragrances by keeping an image of cool and
iconic brand.

1.2.3 STP
Fogg, identified distinct group of buyers as fashion oriented and trendy. It segmented the people
who are willing to try new products with a common notion of getting more for less. The target
group of Fogg was similar to other deodorant brands as young and middle class. The brand even
targeted women by selling large varieties of women deodorants. The market share of Fogg in
women deodorant segments has garnered share of around 10%. It positioned its product as a
deodorant with only liquid and which lasts longer than any other deodorant in the market.
Axe, also segmented mainly students and bachelors with middle and upper middle income group
with similar psychographic as outdoor-oriented and trendy. The target group of Axe was Males
(18-30 years). It tried to target youngsters mind by showcasing the product which can attract
girls. They targeted the audience presuming that Indians will adopt the foreign commercial
easily. It positioned its product by continuously launching new fragrances with internet based
marketing.

1.2.4 Components of Marketing Mix

Fogg products were marketed with quantity, quality features and services. Axe was instead
marketed with Brand Name, Packaging, quality and mainly with variety.
The other component price of marketing was one of the special traits which made fogg initiate
and secured its place as market leaders. Fogg kept its price at par with other deodorants and
projected it as long lasting and more efficient.
Now the third component of marketing mix is place. Place components were almost the same for
both the brands. Both concentrated on similar mediums such as channels, coverage and location.
Now the last component of marketing mix promotion was the one which basically made the
difference between the two brands. The basic aspects were different ways of advertising the
product. Axe used adventurous marketing; fogg used a marketing formula of upgrading its own
image by degrading the image of other deodorants.

1.2.4.1 Market Strategy

Vini Cosmetics, a Indian based firm strategized Fogg with an image which could directly strike
the Indian psyche. They understood the market and came with a product which could set their
image as a product with utilitarian use. Instead of having a same strategy of gas based product
they tapped the Indian market with a deodorant full of liquid. It was never happened before that a
similar product came with a similar idea.

One more important was advertising the product with a different angle. The theme of 85 % of the
deodorant advertisements could be summed to hulk, foreign girls and the girls attraction after he
sprays deodorant on his body. Fogg never advertised in this way. It projected itself with a product
who values Indians by giving them product which can be utilized more in a similar price. The
other aspect which Fogg concentrated was showing other deodorants as wasteful and with long
lasting aroma.

The other area which Fogg tapped was women deodorant market. Axe was mainly concentrated
on Mens grooming products.

1.2.4.2 Pricing Power

Chawla says that the deodorant category was beginning to lose pricing power but the success of
Fogg is changing that. "When the leader took the 'attraction' route in communications, all brands
followed suit. This unfortunately, commoditised the category and brands lost pricing power," he
says. Fogg, according to Chawla, took a different route in striking out and managed to garner
market attention. A 100 gm bottle of Fogg costs Rs 180, about seven-to-10 per cent higher than
other products in the market but the number of sprays per pack would be significantly higher
than competition. Indeed, Fogg was costlier than most other deodorants by over 15 per cent
about a couple of years ago but the price differential has now narrowed as other brands have
raised prices.

1.2.5 Fogg swat analysis

Strengths

1. Has a differentiated value proposition from all its competitor,

2. Effective advertising and branding targeting the youth
3. Good distribution, Promotions and campaigns for luring customers
4. Unique selling proposition of having more spray liquid
5. Available in different variants

 Weaknesses

1. Only an urban market phenomenon

2. High pricing reduces the target market
3. Controversial advertising often leads to legal issues

Opportunities
1. Coming up with Limited Edition fragrances
2. Tie up with hotel chains and large organizations like gym chains etc.

Threats
1. Deodorants sales are seasonal. Maximum sales happen in the summer months
2. Competition from Premium Segment Deodorants like Burberry, Body Shop