1. ~ 1 ~
To: Managing director – “MAK Products – Sri Lanka”
From: Brand Executive - “MAK Products – Sri Lanka”
Date: 8th
of November 2012
Subject: Enter the consumer market under new corporate
Brand name
2. ~ 2 ~
1. Executive Summary
“MAK Products – Sri Lanka” have great opportunity to enter the consumer market under
5 years experience in industrial market. But the company must known industrial market and
consumer market behavior is totally different. So we have to do market visibility study
including FMCG and Auto cosmetics consumer market. According to the market analysis
there is market place to enter the company. But mainly local competition is huge in FMCG
industry and also global competition is in both industries. The company moves to B to B
market into B to C market.
According to this project proposal this company enters consumer market in “Enrich”
corporate brand name. And under it “Utter gloss” brand name is for Auto care product range
in blanket family brand naming strategy and “Ritzy” brand name is for Home care product
range in also blanket family brand naming strategy. And also I recommend brand extension
and brand stretching strategies are related to these products.
“MAK Products – Sri Lanka” has 5 years experience in original equipment manufacturing
production industry local as well as internationally. The company is super in production but
not in marketing side. So the company has task to improve the marketing strategies to enter
the consumer market.
Consumer buying motives create brand value in consumer mind set. And also functional
and emotional value part of the product is important to create it. The company is functionally
strong under its experience. There is huge competition in the industry but company can win
the market with their effective commercialization methods.
So doing effective positioning and successful branding methods “MAK Products – Sri
Lanka” can win the consumer market local as well as international. But the company must
consider the leading competition in the market.
3. ~ 3 ~
2. Introduction
According to this project proposal “MAK Products – Sri Lanka” expecting to enter the
consumer market. Its core business is specialized in original equipment manufacturing
production of FMCG and Auto care/ Auto cosmetics industry for last five years. But “MAK
Products – Sri Lanka” is in industrial market. So it wants to move the consumer market
without venture.
This company FMCG product mix consists of Laundry Liquid, Laundry Powder,
Dishwashing Liquid, Hand Sanitizer, Fabric Softener, Toilet Cleaner, Kitchen Cleaner,
Cleaning Powder, Liquid Bleach, Glass Cleaner, Cleaning Products and Air Fresheners. And
also this company has Auto care/ Auto cosmetics product mix including from Tire Shine
Protector, Vehicle Body Wash Liquid, Dash Board Cleaner, Glass and Mirror Cleaning
Liquid, Lamp Cleaners, Vehicle Body Wax and air Freshener.
Figure – 2.1
Industrial market
(Business to Business
market)
Consumer Market
(Business to
Consumer market)
“MAK
Products – Sri
Lanka”
4. ~ 4 ~
3. Methodology
3.1 Secondary data.
3.1.1 External sources of secondary data.
Accounting records of FMCG and Auto care/ Auto cosmetics companies
Sales force report of FMCG and Auto care/ Auto cosmetics companies
Budget report from FMCG and Auto care/ Auto cosmetics companies
Central bank report.
Censes and statistic department report.
Trade association.
Web pages/ internet.
(Refer annexure: 1)
3.1.2 Internal sources of secondary data.
Articles about consumption of FMCG and Auto care/ Auto cosmetics
Catalogs.
(Refer annexure: 2)
3.2 Primary data
Studying a retail outlet of supermarkets and FMCG and Auto care/ Auto cosmetics
outlets.
(Refer annexure: 3)
5. ~ 5 ~
4. Advantages which are having OEM Company enter the consumer
market.
Mainly original equipment manufacturing companies have different benefits to enter the
consumer market. It is expert in manufacturing side. So that company can easy to get
customers good responses because product functional part is important to create emotional
appeal in consumer mind set. And also OEM companies have below strengths.
Mature and market proven technology.
Short time to market.
Rapid rate of innovation.
Focus on your business, leaving the engineering
Experience
Resources
Strong employees
Have labeling and packaging experience
Having effective manufacturing
6. ~ 6 ~
5. FMCG industry in Sri Lanka
Sri Lanka’s Fast Moving Consumer Goods market has seen a rapid growth over the years.
That personal care and home care compete closely with a market share of 15% and 11%
respectively. That despite the growth in the FMCG sector, its traditional dependence on
imported goods has slowed down as local manufacturers are substituting with equally good
products. Famous Sri Lankan FMCG companies in below. All FMCG companies create
competition; because they are product mixes have home care products.
Figure – 5.1
Hemas (pvt) Ltd
Unilever Sri Lanka
CIC Holdings
7. ~ 7 ~
6. Auto Cosmetics industry in Sri Lanka
In Sri Lanka there is a moderate level auto cosmetics market. But there is effective market
opportunity to new products under middle level price.
LAUGFS Car Care Limited a subsidiary of the LAUGFS Holdings Limited, specializing
in motor vehicle cleaning and maintenance. Dash Auto care products also well establish in
Sri Lanka. And also Autopia Car Care is to the best car wax, car polishes, and detailing
supplies available.
Figure – 6.1
8. ~ 8 ~
Task 01
7. MAK product new business venture under new brand name
“MAK Products – Sri Lanka” expect to enter the consumer market under new brand name.
“Enrich” is cooperate brand name. And under it “Utter gloss” brand name is for Auto care
product range in blanket family brand naming strategy and “Ritzy” brand name is for Home
care product range in also blanket family brand naming strategy. Brand name, Brand logo
and Brand slogan can design input perspective for the brand.
7.1 Cooperate brand name
9. ~ 9 ~
7.2 Blanket family brand name for FMCG / Home care product rage
7.3 Blanket family brand name for Auto care / Auto cosmetics product range
10. ~ 10 ~
“Enrich” means improve the quality to best way.
“Ritzy” means high level.
“Utter gloss” means completely shine on smooth surface.
FMCG / Home care product rage and Auto care / Auto cosmetics product range are lunch
under above brand names. We can’t use “MAK” brand name because it is in that company
industrial product rage. And also I found these brand names are not in already existing. We
must register these brand names under intellectual property Act No 36 of 2003. It creates
legal protection to the brands. And it divides products and services in to 45 classes. These
products are in class No: 03
(Refer annexure: 4)
Class No: 03 - Bleaching preparations and other substances for laundry use;
cleaning, polishing, scouring and abrasive.
11. ~ 11 ~
7.4 Reasons for using blanket family branding strategy
It is best brand naming strategy to create consumer attraction to whole product range.
Advertizing budget can move to whole product range.
Best methods to enter the market under new brand name.
Easy branding strategy to get large target audience.
Easy to enter the international market.
7.5 Disadvantages of using MAK brand name and other brand naming strategies
Definitely we can’t use MAK brand name because it is already existing brand name
in industrial market.
If we use individual brand naming strategy we have to promote product range in one
by one.
Sometimes consumer buying will be change under different brand name.
If we use combined brand naming strategy it create difficulties to catch consumer
attraction.
And mainly that strategy is not relevant for “Ritzy” and “Utter gloss” product range
Brand is get effective with it image in consumer party.
12. ~ 12 ~
8. Reasons to selecting above branding strategies
In this way I would like to mention corporate brand naming strategy and blanket family
brand naming strategy is effective to achieve company goals. So the company can use
“Enrich” brand name again to lunch new product range under new blanket family brand
name.
And also blanket family brand names are easy to convent different products including
FMCG or Auto care product range. And brands which is including the strategy creates low
cost advertizing budget.
Figure – 8.1
“Ritzy”
Easy to introduce
new product
Easy to create
customer attraction
Low advertizing
budget
Blanket family brand naming
strategy
“Utter gloss”
13. ~ 13 ~
9. Product mix expects to introduce.
Figure – 9.1
“Enrich”
“Ritzy” “Utter gloss”
Laundry Liquid
Laundry Powder
Dishwashing Liquid
Hand Sanitizer
Vehicle Body Wash Liquid
Glass and Mirror Cleaning Liquid
Air Freshener
Tire Shine Protector
14. ~ 14 ~
10. Effective strategies for new venture
I recommend both branding strategies are creating advantages to this product range.
Brand Extension strategy give strength to face economical dynamics.
It utilizing the existing strength of the brand.
Less expenditure on brand building.
Easy for market development
Easy for good brand to start cross boarder selling.
Brand Extension strategy
Brand Stretching strategy
15. ~ 15 ~
10.1 Using brand extension strategy
In this company expect to launch new and modified products under the same brand name,
same market and same need. So it has opportunity to practice brand extension strategy.
Ex: 01
Brand name
Introduce for same market segment
Using for same need
Figure – 10.1.1
Laundry Liquid and Laundry Powder both are use to clean the laundry items. It goes to
same consumer market under one brand name. So the company can practice the brand
extension strategy.
Laundry Liquid
Laundry Powder
“Ritzy”
16. ~ 16 ~
10.2 Using brand stretching strategy
And also this company hopes to establish brand for products in different market. It shows
under same brand name this company expects to satisfying different needs.
Ex: 01
Brand name
Using for different needs
Introduce for different market segments
Figure – 10.2.1
Laundry Powder is used to clean laundry item. Dishwashing Liquid is use to clean dishes.
Hand Sanitizer is used to clean our hands. So Hand Sanitizer can be use in home, office and
sometimes it is in a ladies hand bags. It creates different needs and different market. But it is
in same brand name.
“Ritzy”
Laundry Powder
Dishwashing Liquid
Hand Sanitizer
17. ~ 17 ~
Ex: 02
Brand name
Using for different needs
Introduce for different market segments
Figure – 10.2.2
Vehicle Body Wash Liquid is used to clean the vehicles body. Glass and Mirror Cleaning
Liquid are used to clean the glasses. Air Fresheners are used to get attractive environment.
And Tire Shine Protector is used to clean tires. So there is different consumption under same
brand name.
Vehicle Body Wash Liquid
Glass and Mirror Cleaning Liquid
Air Freshener
Tire Shine Protector
“Utter gloss”
18. ~ 18 ~
Task 02
11. Consumer market to Home care and Auto care
Home care market is stronger and larger than Auto care market in Sri Lanka. In local
market is in a developing economy. So customer mainly purchase FMCG / Home care
products.
Source: Discussing persons who are work in FMCG industry and Auto cosmetics industry
Figure 11.1.1
87%
13%
Consumption
Home care products
consuption
Auto care products
consumption
19. ~ 19 ~
11.1 Home care products market
Source: Discussing person who are work in FMCG industry
Figure – 11.1.1
11.2 Auto care product market
Source: Discussing person who are work in Auto cosmetics industry
Figure – 11.2.1
Home care product consumption
Laundry Liquid
Laundry Powder
Diswashing Liquid
Hand Sanitizer
Auto care products consumption
Vehicle Body Wash
Liquid
Glass and Mirror
Cleaning Liquid
Air Freshener
Tire Shine Protector
20. ~ 20 ~
12. Segmenting the market
The company has to identify its market segment. So the company expects to enter the B to
C (Business to Consumer) market. The company has to give consideration to Home care
market and Auto care market.
12.1 Home care / FMCG market segmenting
a) Demographic parameters.
Main target consumers in middle age level.
That person or family income is in middle level and over.
Definitely these product consumers have middle or high level education knowledge.
b) Geographic parameters
Mainly people who are in urban areas mostly consume these types of products.
21. ~ 21 ~
12.2 Auto care / Auto cosmetics market segmenting
a) Demographic parameters.
Main target consumers in middle age level.
That person or family income is in high level.
b) Geographic parameters
Mainly people who are in urban areas mostly consume these types of products.
c) Psychographic parameters
People who are having professional personality.
22. ~ 22 ~
13. Targeting the market.
This company has to get their target markets are Auto care market and Home care market.
So the differentiated marketing strategy is better for this situation. It is which an organization
goes different market mix for different market segment. It creates higher sales and stronger
position within each market segment.
Figure – 13.1
Marketing Mix 2
under “Utter gloss”
brand name
Segment 2
Segment 1
Marketing Mix 1
under “Ritzy” brand
name
23. ~ 23 ~
14. Consumer buying motives
According to the 3 steps of buying process consumer purchase decision will be create. It is
Input, Process and Output.
Figure – 14.1
Create a need to Buy Hand Sanitizer.
Finding what are the brands available
in the market.
That way will be find “Ritzy” Hand
Sanitizer under in “Enrich corporate
brand name.
According to the details about “Ritzy”
Hand Sanitizer buy it.
24. ~ 24 ~
When consumers buy brands, the stages they go through, and therefore their expectations
of brands, vary according to the degree to which they are involved in the brand buying
process and the extent to which they perceive competing brands to differ.
According to the “Assael’s a topology of consumer buying process” these newly
lunching products are in “Routine Problem Solving” part with high consumer perceived
different and low consumer involvement.
Consumer Involvement
High Low
Perceived High
Different
Low
Figure – 14.2
“Ritzy” “Utter gloss”
“Routine Problem Solving”
25. ~ 25 ~
15. Consumer buying motives for “Ritzy” and “Utter gloss “brand names
Nature of the brand name can create image about brand in customer side. So “Ritzy”
brand name can create grand nature of the brand and “Utter gloss” brand name creates
trust to the brand. So consumer motive to buy the brand under above emotional
appeals.
Personality of the brand name can give support to create strong loyalty to brand in
customer side. “Ritzy” brand name creates house wife personality and “utter gloss”
brand name creates gentlemen personality. So people who are like above personality
definitely purchase the brands.
According to the value driven strategy added more benefits than competitor, high
focus of functional and emotional benefits and it can crates high brand value. So that
can create consumer attraction to the brands.
Strong brand name can reduce performance risk. So people focusing to buy that
brands
Best brand name can give value for money. So consumers haven’t financial risk.
Good brand name can reduce selecting time. So consumer motive to buy that brand
because their time wasting is decrease.
If customer buys a product under best brand name their feel right with the brand. So it
can reduce the psychological risk.
Good brand name can also reduce social risk to motive the consumer buying process.
26. ~ 26 ~
16. Developing value of the “Ritzy” and “Utter gloss “brand names
According to the “brand triangle” we can identify it.
19.1 “Ritzy” brand name
Functional value
High quality and attractive fragrance
Emotional value
Pleasant environment
Figure – 16.1.1
High quality and attractive
fragrance
Pleasant environment
Best brand
27. ~ 27 ~
16.2 “Utter gloss” brand name
Functional value
High quality and strong
Emotional value
Pleasant environment
Figure – 16.2.1
The company has strong functional value of 5 years experience in original equipment
manufacturing industry.
High quality and strong
Best brand
Pleasant environment
28. ~ 28 ~
17. Strategic approach to develop brands value
According to the “Poter’s value chain” we can identify it well.
Figure – 17.1
Inbound Logistics
Use “JIT” just in times methods to handling materials.
Use effective and profitable stock control methods.
Operations
Use new technology to production process.
Produce product under high quality.
Do attractive packaging.
29. ~ 29 ~
Outbound Logistics
Store finishing goods still 3 months.
Use Lorries to deliver the finishing goods.
Marketing/ Sales
Do marketing communication campaign.
Add prices under cost base pricing strategy.
Service
Train the sale force in the organization.
30. ~ 30 ~
18. Environment analysis
18.1PESTEEL factors
There are the external elements in marketing environment. This environment include the
major force that act not only on the organization itself, but also on its competitors and on
elements in the macro environment.
Figure – 18.1.1
Macro environment
Economic
Political
Legal
Ethical
Ecological
Technological
Social and
Cultural
31. ~ 31 ~
Political environment.
This can be one of the less predictable element is an organization’s marketing
environment. Marketers need to monitor the political environment because political changes
can profoundly affect a firm’s marketing.
Economic environment
This is basically about the level of demand in the economy and is the most visible aspect
in the macro environment. Economic factors are of concern to marketers because they are
likely to influence, among other things, demand, costs, prices and profits.
Incomes of buyers are depending by their target market situation. So it is profitable
accessories company get benefits. This is creating by economic. And also high inflation level
will bring down the real income.
Economic broom is continuous growth. And economic recession is creating negative
movement to industries.
Sometimes economic is influence with taxes. This is impact for the company budget.
Social and cultural environment
These factors are most difficult to evaluate, and hence pose the greatest challenge to the
marketing organization. Social and cultural change manifests itself in changing tastes,
purchasing behaviors and priorities of consumers and marketers need to understand and
identify these changing trends.
Technological environment
The pace of technological changes is becoming increasingly rapid need to understand how
technological development might affect them.
32. ~ 32 ~
Ecological environment
This is concerned of issues as to how the organization interacts with and affects the natural
environment or the ecology.
The company begin this production process have to allocate resources for it. So have to
face resources depletion.
And this factory has to use chemicals to production. It destroys the environment.
Sometimes employee’s health problem will increase.
Ethical environment
Marketing ethics are more philosophies that define right or wrong behavior in marketing.
The most basic ethical issues have been formalized through laws and regulations to conform
to the standards of society. It could be 4ps issues.
Company will have to face some issues. Sometimes can’t arrange effective distribution
network. And in inflation time have to face low price losses.
Legal environment
Changes in the political environment often lead to changes in legal environment and in the
existing laws enforced. The legal environment sets the basic rules for how a business should
operate in society.
Company brand name has to protect Intellectual property Act No 36 of 2003,
environmental protection laws etc.
33. ~ 33 ~
18.1 SWOT analysis.
Table: 01
Strengths
- Money is not matter.
- Have healthy business network.
- Have 5 years experiences in industrial market.
- They are going to come up with new attractive brand name
to the consumer market.
Weaknesses
- They have not experience in marketing side.
- They have to get new employees to improve the product
functional side to doing promoting.
Opportunities
- Government gives subsidies for this industry.
- And also there are is not much best FMCG and Auto
Cosmetics Company in Sri Lanka.
Threads
- They are best company in overseas.
- Economic shifting is directly impact for this industry.
- Some resources are difficult to available
- There are so many legal rules.
34. ~ 34 ~
19. Behavior influence the brand choice
According to the “Gutman’s theory” we can identify it.
19.1“Ritzy” brand name
Figure – 19.1.1
Use natural materials Effective
“Ritzy”
Pleasant environment
Best fragrance
Easy to cleaning
35. ~ 35 ~
19.2“Utter gloss” brand name
Figure – 19.2.1
Use natural materials Strong
“Utter gloss”
Attractiveness
Best fragrance
Not much side effect
than other products
36. ~ 36 ~
20. Creating Brand personality
According to the “Aaker’s explanation” it is in 5 ways. And also according to the
“Okazaki’s explanation it is in 7 ways.
So “Ritzy” and “Utter gloss” brand has different personalities.
Table: 02
“Ritzy” “Utter gloss”
Sincerity - Strong
Excitement Family influence Social class influence
Competence Successful results -
Sophistication Upper class Upper class
Ruggedness - High
Popularity - Unique
Affectionate likability -
Comparing other competitive brand cultures “Ritzy” and “Utter gloss” brand name have
attractive and effective brand personalities.
37. ~ 37 ~
21. Competitor analysis
Competitors in Sri Lankan market are mostly important.
Figure – 21.1
38. ~ 38 ~
22. Competitors product mixes
22.1 Home care product mix
Figure – 22.1.1
39. ~ 39 ~
22.2 Auto care product mix
Figure – 22.2.1
40. ~ 40 ~
22.3 Competitor positioning
High Price
“Ritzy” “Utter gloss”
Low High
Quality Quality
Low rice
Figure – 22.3.1
Competitors position in the Sri Lankan market
41. ~ 41 ~
23. Creating brand culture
Employees
They can create the culture of the brand.
Distributers
They also can create the brand culture.
“Ritzy” “Utter gloss”
Traditional culture Young and royal culture
Figure – 23.1
Comparing other competitive brand cultures “Ritzy” and “Utter gloss” brand name have
differentiation cultures.
42. ~ 42 ~
24. Creating brand identity
According to the “components model of brand identity” there is 5 parts. It creates
unique identification for the brand.
24.1 “Ritzy”
Figure – 24.1.1
Attractive
packaging
House wife
personality
Friendly
relationship
between staff,
customers and
Stakeholders
Positioning the
Family part
Traditional
culture
43. ~ 43 ~
24.2“Utter gloss”
Figure – 24.2.1
Attractive
packaging
Young person
personality
Friendly
relationship
between staff,
customers and
Stakeholders
Positioning the
part of vehicle
attraction
Young and royal
culture
44. ~ 44 ~
And also according to the “Jhone’s triangular model” “Ritzy” and “Utter gloss” brand
name have necessary purpose, golden future and strong brand value.
Comparing other competitive brand cultures “Ritzy” and “Utter gloss” brand name have
attractive brand identities.
24.3 “Ritzy”
Figure – 24.3.1
Family personality
Give attractive atmosphere
Effective
Factory
Clean
45. ~ 45 ~
24.4“Utter gloss”
Figure – 24.4.1
Factory
Give pure clean
Create freshness
Attractive
Cleaning person personality
46. ~ 46 ~
25. Setting long turn to the brand
Table: 03
“Ritzy” “Utter gloss”
Future Profitable Profitable
Purpose Give comfortable Give value for money
Value High value High level social classes
47. ~ 47 ~
26. Vision and Mission of the brands
26.1 “Ritzy” brand
Vision
To be the leader in Sri Lankan Home care industry by breaking into
the exclusive league of top ten FMCG companies in Sri Lanka.
Mission
Do high volume of sales and give high quality products to the
market. And also will achieve it through unparalleled business
innovations and consumer satisfaction after 10 years.
48. ~ 48 ~
26.2 “Utter gloss” brand
Vision
To be the leader in Auto care market in Sri Lanka
Mission
Give value for customer with giving unforgettable products under
high level quality. And get high volume of sales and going the target
to be a leader in Auto care market in Sri Lanka after 10 years.
49. ~ 49 ~
27. Long turn and short turn objectives
Be a market leader in the industry.
Get high volume of market share.
Create best relationship between vision and the brand.
Modifying the products ranges.
Create best atmosphere to working people.
Get staff committed to the brand.
Create strong brand promotions.
50. ~ 50 ~
Task 03
28. Brand essence
28.1 “Brand essence pyramid” for “Ritzy” brand
Figure – 28.1.1
Family personality
Conformability
Pleasant environment
Easy to use
Formula and fragrance
51. ~ 51 ~
28.2 “Brand essence pyramid” for “Utter gloss” brand
Figure – 28.2.1
Cleaning person personality
Formula and fragrance
Usage frequency
Protection
Fast reaction and germ killer
52. ~ 52 ~
29. Brand differentiation
According to the “Kapfer’s prism” can identify it.
29.1 “Ritzy” brand
Home care House wife Personality
Traditional Culture
Best product
Figure – 29.1.1
53. ~ 53 ~
29.2 “Utter gloss” brand
Auto care products Strong personality
High level culture
Strong self - image
Figure – 29.2.1
54. ~ 54 ~
30. Positioning the Brands
This brand can create position in customer mind under benefits, unique, quality and price.
According to below perceptual map this new brands named “Ritzy” and “Utter gloss” high
quality and moderate price level.
High Price
“Ritzy” “Utter gloss”
Low quality high quality
Low price
Figure – 30.1
55. ~ 55 ~
According to the “Schiffman and Kanuk’s model” we can position the company brands.
Company has to do effective communication to customers.
Figure – 30.2
Unknown
brands
Overlooked
brands
Unacceptable
brands
Acceptable brands
including “Ritzy”
and “Utter gloss”
brands
Rejected brands
Purchased brands
including “Ritzy”
and “Utter gloss”
brands
Known brands including
“Ritzy” and “Utter gloss”
brands
All brands including “Ritzy”
and “Utter gloss” brands
56. ~ 56 ~
31. Competitive advantages in the market
So these brands haven’t faced huge entry barriers because those are strong brands. And
this company expect to practicing value driven strategy mainly. And also little bite follow
cost driven stategy.
Competitive advantages
Cost driven Value drive
Narrow
Market
Board
Figure – 31.1
“Ritzy” “Utter gloss”
57. ~ 57 ~
32. Commercialization the brands
Brand lunching is very important to get expected results. So we have to using best
strategies for that.
Doing effective communication.
Introduce sashay packets to the market.
Highly position the personality and importance of the product.
58. ~ 58 ~
33. Findings and Conclusion
33.1 Findings
The company can get legal protection under intellectual property. And also there is
competition under strong brand name. Mainly retails companies are introduce Home care
products into the market. Sri Lanka auto care market is day by day increasing under vehicles
purchasing.
So I would like to tell the company has great opportunity under its functional part
manufacturing experience in 5 years.
33.2 Conclusion
There is effective market in Sri Lanka. I think the company can get profit with this new
venture. Sri Lanka is developing country and the people who are this country income are
increasing day by day. Under the customer buying power Company can reach the market.
59. ~ 59 ~
34. Recommendations
I would like to recommend blanket family branding strategy is effective to the company.
And also company can be best under using market stretching and market extension strategy.
And use high price and high quality under value driven strategy mainly and cost driven
strategy little bit is well to the industry.
I think the company use effective market communication strategies give success to the
company to win the market easily.
60. ~ 60 ~
35. Annexure
1.
FMCG Expansion
Your Company has identified the expansion and diversification of the FMCG sector to be
a thrust in its overall growth plans. The year ended saw your Company making strategic
investments to strengthen its position as a lead player in the FMCG industry. These
investments reflect our strong commitment to growth and would enable us to connect our
brands with millions of consumers to improve quality of life, help farmers and communities
succeed, and our stakeholders enjoy sustainable turns.
In November 2010 Cargills expanded its interests in the dairy sector with the acquisition of
Kotmale Holdings PLC. The Company now holds an 81.72% stake in Kotmale. With the
change in ownership, the Kotmale Board of Directors was reconstituted on 5 January 2011
and Mr. Stuart Young was appointed Chairman to consolidates Cargill’s interests in the dairy
sector and expand its product range from its present leadership in the dairy ice cream
category through Cargills Magic.
This also offers Cargills the opportunity to build on its successful out grower model that
directly impacts rural economies island wide. Kotmale and Cargills Magic together collect 22
million liters of fresh milk from an over 20,000 strong dairy farmer network, making Cargills
the 3rd largest milk collector in the island. Cargills entered the confectionary industry in
November2010 when Cargills Quality Foods Limited acquired Diana Biscuits Manufactures
(Pvt) Ltd. The production plant located
61. ~ 61 ~
2.
The last three months have been tough for many Sri Lankan FMCG companies due to the
drop in market liquidity with the interest rates going up and traders now reducing their stocks
in the trade so that the Working capital can be managed, this sure turn will affect the moneys
invested by companies on R&D.
Any of you in the FMCG business of Sri Lanka may be feeling the heat due to the down
turn in the trade and the 1.2 million people affected by the drought. Whilst we develop ways
to handle this challenge the fact remains that this will have an impact on the moneys spent on
R&D given that many companies are becoming cautions due to the downward rating of the
GDP growth in the country and the impacts of the fall out in EU and US markets . The
current street protests all also does not help the overall market momentum is my view given
that the agitation is about the drastic reforms that are wanted by the people of Sri Lanka. The
challenge is how the private sector can support this cause.
My mind goes back to the famous Asian crisis in 1988 and how the Korean electronics
giant Samsung used the opportunity to enter the market. At the initial inception the Koreans
were widely regarded as a supplier of cheap imitations in comparisons to the superior
Japanese brands like Sony. With the legendary Akio Morita at the helm, Sony had become a
house hold name with brands like the Walkman and a choice of TV's and VCR's. In fact it
was the strongest top of the mind brand among many a households in the world. But little did
this company know that this dynasty was going to hit the slopes very soon given the
aggressiveness of Samsung in a economy that was rough just like what Sri Lanka is up
against now.
62. ~ 62 ~
3.
Fast Moving Consumer Goods (FMCG)
Consumer Packaged Goods are products that are sold quickly and at relatively low cost.
Examples include non-durable goods such as soft drinks, toiletries, and grocery items.[1][2]
Though the absolute profit made on FMCG products is relatively small, they generally sell in
large quantities, so the cumulative profit on such products can be substantial. ITC Limited,
Procter & Gamble and Unilever are the three biggest consumer goods company that operate
across the globe.
The term FMCGs refers to those retail goods that are generally replaced or fully used up
over a short period of days, weeks, or months, and within one year. This contrasts with
durable goods or major appliances such as kitchen appliances, which are generally replaced
over a period of several years.
FMCG have a short shelf life, either as a result of high consumer demand or because the
product deteriorates rapidly. Some FMCGs – such as meat, fruits and vegetables, dairy
products and baked goods – are highly perishable. Other goods such as alcohol, toiletries,
pre-packaged foods, soft drinks and cleaning products have high turnover rates.
4.
69. ~ 69 ~
36. References
Kotler, P. and Armstrong (2005) Marketing An Introduction.7th
edn. India
Chernatony, L (2010) From Brand Vision To Brand Evaluation.3rd
edn. India
www.intellectualproperty.lk
www.sences&satastic.lk
www.carecare.com
www.tradecouncil.lk
www.cargills.com
www.dailymirrow.lk