2. 1.1About the Industry
FMCG Industry
The Indian FMCG industry, with an estimated market size of `2 trillion ,accounts
for the fourth largest sector in India. In the last decade, the FMCG sector has
grown at an average of 11% a year; in the last five years, annual growth
accelerated at compounded rate of ~17.3%. The sector is characterized by strong
presence of global businesses, intense competition between organized and
unorganized players, well established distribution network and low operational
cost.
Availability of key raw materials, cheaper labor costs and presence across the
entire value chain gives India a competitive advantage. During 2012, the country
witnessed high inflation, muted salary hikes and slowing economic growth, which
affected the FMCG sector with companies posting deceleration in volume growth
in their quarterly results. However, the trend seen in 2012 is likely to accelerate in
2013 as growth will come from rural dwellers that are expected to see a rise in
their disposable incomes
The fast-moving consumer goods (FMCG) sector is an important contributor to
India’s GDP and it is the fourth largest sector of the Indian economy. Items in this
category are meant for frequent consumption and they usually yield a high return.
The most common in the list are toilet soaps, detergents, shampoos, toothpaste,
shaving products, shoe polish, packaged foodstuff, and household accessories and
extends to certain electronic goods.
The Indian FMCG sector, which is the fourth biggest sector in the Indian
economy, has a market size of `2 trillion with rural India contributing to one third
of the sector’s revenues.
3. The Indian FMCG sector is highly fragmented, volume driven and
characterized by low margins. The sector has a strong MNC presence, well
established distribution network and high competition between organized and
unorganized players.
FMCG products are branded while players incur heavy advertising, marketing,
packaging and distribution costs. The pricing of the final product also depends on
the costs of raw material used. The growth of the sector has been driven by both
the rural and urban segments.
India is becoming one of the most attractive markets for foreign FMCG players
due to easy availability of imported raw materials and cheaper labor costs.
Household care .The fabric wash market size is estimated to be ~USD 1 billion,
household cleaners to be USD 239 million, with the production of synthetic
detergents at 2.6 million tones.
The demand for detergents has been growing at an annual growth rate of 10 to
11% during the past five years. On account of convenience of usage, increased
purchasing power, aggressive advertising and increased penetration of washing
machines, the urban market prefers washing powder and detergents to bars.
The regional and small unorganized players account for a major share of the total
detergent market in volumes. Household Care category recorded robust volume
and value growth during the year through focused innovation in the portfolio to
provide greater consumer value. Vim bar continues to delight consumers by
delivering superior performance and new offerings like the Anti-Germ Bar and
the Monthly Tub Pack. Vim liquid continues to develop the liquid dish wash
category driven by superior product quality and strong advertising.
It has effectively accomplished the dual job of growing the liquids market by
reaching out to more households, while increasing consumption in existing
households. Domex continued to provide clean and germ free toilets to the
consumers.
4. Major segments in FMCG sector
Fast Facts: Indian FMCG Industry
The Indian FMCG industry represents nearly 2.5% of the country’s GDP.
The industry has tripled in size in past 10 years and has grown at ~17%CAGR in
the last 5 years driven by rising income levels, increasing urbanization, strong
rural demand and favorable demographic trends.
The sector accounted for 1.9% of the nation’s total FDI inflows in April 2000-
September 2012. Cumulative FDI inflows into India from April 2000 to April
2013 in the food processing sector stood at `9,000.3 crore, accounting for 0.96%
of overall FDI inflows while the soaps, cosmetics and toiletries, accounting for
0.32% of overall FDI at `3,115.5 crore.
Food products and personal care together make up two-third of the sector’s
revenues. Rural India accounts for more than 700 mn consumers or 70% of the
Indian population and accounts for 50% of the total FMCG market.
With changing lifestyle and increasing consumer demand, the Indian FMCG
market is expected to cross $80 bn by 2026 in towns with population of up to 10
lakh.
India's labor cost is amongst the lowest in the world, after China & Indonesia,
giving it a competitive advantage over other countries.
5. Unilever Plc's $5.4 billion bid for a 23% stake in Hindustan Unilever is the largest
Asia Pacific cross border inbound merger and acquisition (M&A) deal so far in
FY’14 and is the fifth largest India Inbound M&A transaction on record till date.
Excise duty on cigarette has been increased in the Union Budget for 2013-14,
which would hit major industrial conglomerates like ITC, VST Industries in the
short term.
Corporate impact of FMCG
Hindustan Unilever: The company will benefit from the overall excise duty cut on
packaging materials from 16 to 8 per cent, as this will reduce the raw material
cost for the company
ITC: Excise duty on both filter and non-filter cigarettes brought on par by
applying higher rates on non-filter cigarettes. This will not affect the company, as
it does not have a presence in non-filter cigarettes. The company will benefit from
the other positives announced such as excise duty cuts
Godrej Consumer Products: Excise duty reduction on packaging materials should
benefit the company. Economic boom will benefit the company and reduction in
tax slabs will leave more money with consumers for consumption. A positive for
all FMCG companies
Dabur India: The cut in excise duty from 16 per cent to 14 per cent will result in
overall cost efficiencies and savings for Dabur India. (This is also valid for the
other FMCG companies)
Marico: Excise duty reduction on packaging materials should be beneficial for the
company
6. Sectoral impact
Excise duty exemption on specified refrigeration equipment for the installation of
cold storage, etc. on end-use basis
Reduction in excise duty from 16 per cent to 8 per cent on specified packaging
material and prepared food items will act as a booster for FMCG players
Section 35D, preliminary expenses benefit extended to FMCG companies.
8. 2.1 Effects Of Advertising In FMCG Industry
Advertising
Advertising is a form of communication used to persuade an audience
(viewers, readers or listeners) to take some action with respect to products,
ideas, or services.
Any paid form of non personal presentation and promotion of ideas of goods
and services by an identified sponsor (Philip Kotler 2006)
Paid non personal communication from an identified sponsor using mass
media to persuade or influence an audience ( Wells, Burnett and Moriaty
1998)
Advertising is always present, though people may not be aware of it. In
today's world, advertising uses every possible media to get its message
through. It does this via television, print (newspapers, magazines, journals
etc), radio, press, internet, direct selling, hoardings, mailers, contests,
sponsorships, posters, clothes, events, colours, sounds, visuals and even
people (endorsements).
Advertising in FMCG
Advertising has become an indispensable means of reaching the consumer. It is
more so in the case of Fast Moving Consumer Goods (FMCG). The marketer
tries out new, innovative ways to communicate with the consumers.
9. LITERATURE REVIEW
Many advertisements do not occur in a vacuum, but rather appear simultaneously
with other materials such as programs on TV, articles in magazines, ads for other
products, and station identifications. Such materials within which ads are
embedded are usually referred to as advertising context (Soldow and Principe
1981). Advertising context can vary to a great extent, and an important decision
is selecting an appropriate context for advertisements. In this regard, a key
question should be considered: What are the influences of advertising context on
consumers' responses (e.g., brand recall, attitudes toward the ad or brand,
purchase intentions). It is proposed that advertising context may have at least
two types of influence on the impact of advertisements: affective influence and
cognitive influence. Affective influences of advertising context are examined in
the first and second papers (e.g., how context-generated mood influences
consumers' attitude toward the brand). Douglas Stayman examines the impact of
affective context (mood, program tone, other ads) on advertising effectiveness.
This paper provides an overview of various streams of research on affective
context (e.g., affect modeled either as a moderator or as a mediator). It is
proposed that perception of an ad stimulus will be a function of how close (or
similar) that stimulus is to the current reference point. Specifically, close stimuli
are assimilated, while distant stimuli are contrasted to the reference.
11. 3.1 Research Objectives
To study the FMCG advertising techniques.
To ascertain the effects of advertising on consumers.
To study the positive impact or negative impact of advertising
3.2 Purpose of the study
Advertising is a form of communication that attempts to persuade potential
customers to purchase or consume more of a particular brand of product or
services. Every major medium is used to deliver these messages including
television, radio, cinema, magazines, newspapers, video games and the internet.
Advertising is a mass marketing technique. Assorted techniques are used for
advertising which persuades the consumers that why they need the product which
is being advertised. They focus more on the benefits, which consumer will get
from that product, rather than the product itself. Through advertising, products
can be known to public easily. They can decide which product they need and why.
Thus increasing the consumption and as a result also increasing the demand of the
product.
There are also various blames that advertising is causing negative social impact
on lives. Even if advertising has a vast good impacts on society, it can be ruled
out that is has bad impact also. It plays with the emotions of general public and
encourages them to think that buying and depleting are the activities of life.
Advertising posters of modern films, where sexuality is shown much than the
actual theme of the movie, can divert the society a lot. Materialism is being much
glorified through advertisements, which can again have dangerous consequences
Society is becoming ignorant towards social or world issues because we are too
obsessed to satisfy our newly created needs. We want to earn more and more
money so that we can buy happiness in forms of products, being advertised as
they can bring all the happiness in our lives. We are starving for material goals,
because we always just want to have more.
12. So, we can say that advertising has positive as well as negative impact on society.
The balance, of what is necessary and what really not needed should be focused
more. Advertisement can create contentment but can also simultaneously create
discontentment. Our society and the marketing of products depend so badly on
advertisement that even its negative impact on society can’t outweigh the many
positive social and economical effects.
3.3 Research Methodology of the study
Research methodology is the process used to collect data and other types of
information for use in making business decisions. Examples of this type of
methodology include interviews, surveys, and research of publications. All of
these types include the use of present and historical information. When someone
is doing theoretical work, paradigims can be used to satisfy most of the criteria
that are set forth for methodology. The use of paradigms work because they are a
constructive frame work.
3. 3.1 Research Design:
Descriptive research includes surveys and fact-finding enquiries of different
kinds. The major purpose of descriptive research is description of the state of
affairs as it exists at present. A detailed outline of how an investigation will take
place. A research design will typically include how data is to be collected,
what instruments will be employed, how the instruments will be used and the
intended means for analyzing data collected.
Exploratory Research
Exploratory research is a process of gathering facts and doing research that later
allows for the team to create the best research design or data collection method
available for specific subjects. This process will draw definitive conclusions only
with caution due to the nature of the process. In many cases, this process leads to
the understanding that no problem actually exists.
13. Investigation into a problem or situation which provides insights to the researcher.
The research is meant to provide details where a small amount of information exists. It
may use a variety of methods such
as trial studies, interviews, group discussions, experiments, or other tactics for the
purpose of gaining information.
3.3.2 Data Collection Techniques
Sources Of Data
Primary Data: Primary data are the data gathered for the specific project and are directly
taken from the very source of information.
Questionnaire
A questionnaire is a research instrument consisting of a series of questions and other
prompts for the purpose of gathering information from respondents.
Telephonic Interview
Telephone interviews are often conducted by employers in the initial interview round
of the hiring process or to get ant view on any point.
Face-to-face interview
Trained interviewers ask fixed questions in a consistent format. Mainly specific and
closed questions are asked.
“In this project, Questionnaire was made in order to collect primary data”.
Secondary Data: Secondary data are the data, which already exists and were collected
for some other purpose or similar previous studies. Secondary data were proved to be
instrumental in structuring the questions to be asked for collecting primary data.
Internet
Magazines
NokiaWebsite
Samsung Website
14. Publication of books, company records, brochures, catalogues and other
documents.
3.3.3 SAMPLE DESIGN
Sample Design is the technique or the procedure, the researcher would adopt in selecting
items to be included in the sample research should select design which would be reliable
and appropriate for the study.
The "best" sample design depends on survey objectives and on survey resources. For
example, a researcher might select the most economical design that provides a desired
level of precision. Or, if the budget is limited, a researcher might choose the design that
provides the greatest precision without going over budget.
PROBABILITY SAMPLING :
Probability sampling everyelement in the population has a known nonzero probability of
selection. The simple random is
the bestknown probability sample, in which each member of
the population has an equal probability of beingselected.
NON-PROBABILITY SAMPLING
Non-probability sampling is a sampling technique where the samples are gathered in a
process that does not give all the individuals in the population equal chances of being
selected.
3.3.3.1 POPULATION
The population of the research was Delhi/NCR,which includes Service people, Self-
Employed& Students.
3.3.3.2 SAMPLE SIZE
15. Sample size determination is the act of choosing the number of observations or replicates
to include in a statistical sample. The sample size is an important feature of any empirical
study in which the goal is to make inferences about a population from a sample.
“The sample size is 61”.
3.3.3.3 SAMPLING METHOD
Convenience sampling is also known as grab, opportunity, accidental or haphazard
sampling. With this method, the researcher uses subjects that are easy to reach. As the
name describes, the researcher chooses subjects because of convenience. Some examples
of convenience sampling are when students use their classmates in a research study or a
television reporter interviews people on the street.
In research methods, there are two primary classifications for sampling methods:
nonprobability and probability. With probability sampling methods, all possible subjects
out of a population have some chance of being included in the sample. Researchers can
even calculate the mathematical probability of one of them being selected. They can also
calculate sampling error, which is the degree to which the sample might differ from the
actual population.
Convenience sampling is a nonprobability method. This means that subjects are chosen in
a non-random manner, and some members of the population have no chance of being
included. With non-probability sampling, researchers have no way of calculating how
well their sample represents the population as a whole. In general, probability sampling is
considered to be more stringent and accurate than non-probability sampling, but it is not
always feasible.
When time or cost is a factor, some researchers might use convenience sampling. It is
often used in pilot or exploratory studies when the researcher wants an inexpensive and
quick way to discern whether further research is warranted. Many social science studies
use convenience sampling with students, paid volunteers or clients.
3.3.4 METHOD OF DATA COLLECTION
3.3.4.1. INSTRUMENT FOR DATA COLLECTION
16. QUESTIONNAIRE: Questionnaire consist of a set of questions presented to the
respondent for their answer, because of its flexibility the questionnaire is by far the most
common instrument used to gather primary data.
Questionnaire needs to be carefully developed and tested before they are actually
used on a large scale.
QUESTIONNAIRES ARE TWO TYPES:
OPEN ENDED QUESTIONNAIRE
It consists of open-ended questions that allow the respondent to answer in their own
words. Such questionnaire revel more because they do not constraint respondent’s
answer.
CLOSED ENDED QUESTIONNAIRE
This questionnaire consists of questions that pre-specified all the possible answer,
tabulation and interpretation of such open questionnaire are easier as compared to open-
ended questionnaire.
3.3.5 LIMITATIONS
Every study, no matter how well it is conducted, has somelimitations.This is why it does
not seem reasonable to use the words"prove" and "disprove" with respect to
research findings. It isalways possible that future research may cast doubt on thevalidity
of any hypothesis or the conclusions from a study.The research was subjected to
following limitations:-
The survey can’t be termed 100% accurate due to lack of time.
The lack of candidates of respondent towards answering the Questionnaire in few
cases may have reduced the accuracy of survey to some extent.
There is more measure to check out whether the information provided by the
consumer is correct or not.
Sample Size can’t be much, due to shortage of time.
21. 4 Do you think advertisement is important?
Yes No
22. 5.What is the function of advertisement?
Proffer news
Entertainment form
Transfers belief and values to society
23. 6. From the following products which is your favorite product/s.
Biscuits
Chocolates
Noodles
Health Drinks
Wafers
24. 7. You are familiar with the advertisements of which of the products?
Biscuits
Chocolates
Noodles
Health Drinks
Wafers
8. After watching ad. of any confectionary product, have you ever tried to purchase that
product?
Yes No
25. 9 .If yes, then which product you have tried to purchase?
Biscuits
Chocolates
Noodles
Health Drinks
Wafers
9. Which media gets your intention?
Print
Radio
Television
Word of mouth
Hoardings
26. 10. You buy that products because…………….
Free Promotional items
Friend's Influence
Association of favorite character
Want to be like that character
The advertisement was interesting
Curious about the product
It was a familiar product or brand
11 Level of satisfaction regarding the purchase of the product.
Very satisfied
Satisfied
Neutral
Unsatisfied
Very unsatisfied
