Evolution of the

FMCG industry

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 The Mass Market

The main characteristic is the existence of 4 (!!!) entities in the

market:

Consumer Shopper

Retailer Manufacturer

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 What does the consumer do ?

The consumer is looking for convenience:

• Unperceivable:
• Satisfy subjective and objective needs
• Immediately accomplish a desire
• Time management

• Perceivable:
• Convenience in the use of a product
• Healthier and wholesome products
• Products adaptaded to age (population gets older)
• Innovation

• The consumer decides the products he wants according to qualitative and

quantitative criteria

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 What does the shopper do ?

•Goes less •Buys at discount channel

•Spends more •Buys PL

Looks for the most economical

Shopping trips 35

PL Share per region

Food & beverages
Household care
29,8 Personal care

26,4
24,5

21,3

17,4

13,5
12.0 11,8

7.6

3,6
2,4 1,8 2.0
1.0 2,1 2,2
1.0 1.0 0,2 0,8
0,1
0

Western Europe Other Central/ U.S. Asia-Pacific China Latin America

‘Big-5’ Western Eastern
Europe Europe

• The shopper determines the turnover of the industry, but he becomes more
and more selective in his search to optimise the relation between quality of
life and price
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 What does the shopper do ?
What is he looking for?
TOTAL Evolution
Main reasons for visiting preferred store - 1
2001 2002 2005 2006
Proximity 50,2 46,9 44,8 44,7 --
Offers a good quality - price relation 43,3 43,4 41,2 39,8 -
Always has good prices 39,6 40,0 35,8 35,4 --
I can do my entire shopping at this store 21,4 21,1 0
Quality of the PL of the store 15,9 17,4 19,8 20,9 +
Special offers / promotions 23,3 21,2 17,8 17,1 --
Wide choice of products of PL brand 12,8 13,9 14,2 14,8 +
Practical / convenient 12,9 14,1 +
Has parking facilities 12,3 11,7 14,6 13,8 0
Cleanliness and order in the store 15,7 13,8 13,2 13,5 -
Wide choice of brands and products 19,3 16,5 14,0 13,4 --
The brands I am looking for are always available 15,4 16,0 13,0 11,6 --
Quality of fresh produce 12,2 11,5 11,8 10,8 -
Offer food with quality guarantee 14,7 13,1 10,8 10,5 0
Easy to find the products 13,9 11,7 10,5 10,3 0
Advantages through the loyalty card 6,0 9,5 ++
It is nice to shop there 11,7 10,5 8,4 9,4 -
Friendliness of personnel 10,5 9,0 8,8 8,4 -
Prices of products are well indicated 7,8 7,7 0
Speed at check-out 6,7 7,3 +
Trustworthy meat 6,5 5,6 -
Home delivery 5,4 5,2 0
Sample size: has preferred store 5.923 5.918 5.938 5.825

Source: TNS

• Proximity is losing relevance, but still is together with a good price-

quality relation the most important issue
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 What does the shopper do?
Purchase planning

Source: Nielsen

• Among those who have not planned the purchase of a product, impulse
purchase and the influence of price / promotion are the most important
reasons for the purchase

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 What does the shopper do?
Attitude to promotions

Source: Taylor Nelson

• The shopper wants to benefit from special offers, especially of his

favourite brands

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 What does the retailer do?
Concentration, but still very local

Turnover in Th. mio. € No. of countries per retailer

• The retail industry generates 3.700 Th. mio. € in turnover, but WalMart
only achieves 7,0 % of this in few countries

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 What does the retailer do?

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 What does the manufacturer do?
Concentration, but losing power in front of the retailers
72,1

56,2
50,5

41,4 40,4
33,6

23,6
21,3
17,7 16,2 16,0 15,8
14,5 14,1 13,7 13,1
12,3 12,1 12,0 11,7
Japan Tobacco Inc.
Unilever PLC

Imperial Tobacco Group PLC

Altria Group Inc. (KJS + Philip Morris)

Tyson Foods Inc.

British American Tobacco PLC

L'Oréal
PepsiCo Inc.

Mars Inc.

Anheuser-Busch Company Inc.

Gallaher Group PLC

Diageo PLC

SABMiller PLC
Procter & Gamble

Groupe Danone
Nestlé SA

Sara Lee Corp.

Coca Cola Co.

Kimberly-Clark Corp.
Kirin Brewery Company Ltd.
• In general, manufacturers are more international, but the big retailers
achieve a much higher turnover

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 The conflict between manufacturer
and retailer

• Due to the negotiation power of retailers, they earn more and more of the
overall profit generated, but due to the fierce competition the consumer
needs less money to spend on FMCG products of his total budget

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 Introduction

Product Price

4 P’s
Place Promotion
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 Introduction

1st problem: You have to do it twice!

Retailer Consumer
Product Price Product Price

4 P’s 4 P’s
Place Promotion Place Promotion

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 Introduction

2nd problem: You never know the reality of the

consumer! You have to guess…

Consumersssss

Product Price
Product Price
Product Price 4 P’s
4 P’s Product Price
Place Promotion
Product Price

Place Promotion
4 P’s
Place
4 P’s 4 P’s
Promotion
Place Promotion Place Promotion

Product Price

4 P’s
Place Promotion

Product Price
Product Price
4 P’s
Place Promotion
4 P’s
Product Price Product Price
Place Promotion
Product Price
Product Price 4 P’s 4 P’s
Place Promotion Place Promotion
4 P’s
4 P’s Place Promotion
Place Promotion

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 Introduction
3rd problem: Space costs money!

Brand A Brand B
Product ct Price

4 P’ 4 P’s
Place e Promotion

Brand C
roduct Price

4 P’s

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 Introducción = Management Summary

Category Management manages space!

Product
Space in the consumer’s head Space in the consumer’s wallet Price

4 P’s
Space in the P&L of the retailer
Place
Space in the shelf
Promotion
and the manufacturer

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 The beginning of FMCG Marketing

In the FMCG industry, everything got more complicated when the

new business model consists of REDUCING the value chain in the 30s:
They take the shop assistant away!

Today, models that consist of

reducing the value chain are
again the latest fashion:
• Discount
• Ikea
• Zara (“lost fashion”)

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 The evolution of FMCG Marketing

“Consumer “Consumer “Customer

Marketing” Needs Marketing” Marketing”

Manufacturer Manufacturer Manufacturer

national multinational multinational

Consumer
promotion
PUSH
sells similar products and
distributes to diversifies portfolio discovers shopper needs
fragmented and distributes to convince Trade

?
Trade to Trade

PULL
PULL

Retailer

PULL
Media
Media

Media
Retailer Retailer multinational
local national

promotion
PUSH
selects top products

Trade
lists all
products
lists all
products
Shopper
seeks best offer

Consumer Consumer Consumer

“Buy this specific “Buy one get
“Buy me!” product for you!” one for free!”

1950 1980 1995 2010

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 Major trends

Manufacturer
• More concentration • Strategic alliances • POS Management
• More umbrella brands • Reduction of sales force • 1to1 Marketing

Retailer
• More concentration • Assortment reduction • Loyalty schemes
• Positioning consumer • Price and place • Private labels
• Discount boom • More chain development • Category killers

Shopper
• Convenience (place, service) • Information through internet • Expenditure reduction
• Better selection, not wider • Customised offer

Consumer
• Top brands or price • Convenience in usage
• Innovation • Media coverage more expensive

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 Un nuevo modelo de negocio

“Customer Management”
“Get what you expect buy “creating” your preferred supplier!”

Consumer needs research

Manufacturer PULL
multinational Media + Information Consumer
Internet)

“SHOPSUMER”
“Shopsumer” solutions
PARTNERING

Chooses brand
Jointly develop umbrella
solutions
brands (products /
channels) that satisfy all
major consumer needs POS
through research focused Integrated communication
on consumer / shopper
and transaction platform
and define the optimum
assortment
Chooses shopping
type solutions

Retailer PUSH
multinational Channel + promotion benefits Shopper

Shopper needs research

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