FMCG Marketers Indian Challenges

The latest issue of the Economist lists India as the sixth largest economy in the world on PPP (Punching Power Parity) basis. On real income basis India ranks eleventh. These numbers are very tempting for an FMCG marketer. On top of this you layer the one billion population, over 175 million households, you can imagine the enormous opportunity. However all is not easy in the Indian FMCG marketing scene. The complex country throws several challenges and I have tried to categorize them into 10 types, for ease of understanding.

Challenge No 1:           How do you define the market?

Several large markets in India are as yet highly underdeveloped. Only 60% Indians use toothpaste. Only 5% of households use a floor cleaner. Often it is necessary to go beyond “share of market’ to “share of solution”. From that perspective we might discover over 30% of homes use a normal household detergent for floor cleaning!

Challenge No. 2:           How to target the market?

The 200 million middle class is a myth. How to identify the segment to target? Often the lucrative segments are very small. And the large segments do not have the deep pockets to buy a better FMCG product. 

Challenge No. 3:           How to understand the consumer?

India should be seen not as one country but as a sub-continent, with many small countries. So consumer behaviour may vary from north to south, big town to village. The conventional research methods need to be layered with a sharp ‘feel’ for the market.

Challenge No. 4:           How to tailor the product?

Kellogg could not create a breakfast habit. But as a snack it is finding favour. Tropicana had to educate consumers about its different taste as ‘the taste of good health’. Brands like Nirma that offer a unique proposition based on value will continue to flourish. FMCG marketers who can tailor their product to unearth a key consumer need will reap rich returns, ask Chik, Ujala, Moov!

Challenge No. 5:           How to make the packaging work?

Indian consumers believe in reusing and recycling. So a throwaway pack is seen as a waste. No wonder refill packs, pouch packs are bought across all the income classes. Further, single use packs have helped income the penetration of tea, shampoos and the ubiquitous pan masalas.

Challenge No. 6:           How to price it right?

Value pricing. Penetration pricing. Skimming pricing. There are many approaches to the pricing game but Indian consumers need to see value. Halls sales dropped off the charts when price per lozenge moved from 50p to 75p. The demand for the product category just disappeared. Onjus lost the trust of dealers and consumers with its repeated price hiker. A well thought out pricing strategy is critical, not just a pricing strategy for entry.

Challenge No. 7:           How to reach the product to the consumer?

Trade can make or break an FMCG brand. You pamper them, you become their slave. You mistreat them and they shun you. The presence of the wholesale trade is yet another complexity. Marketers have to decide on how to use these various channels to reach the consumers effectively. Here again it is necessary to define the roles of the various channels, and define your own rules.

Challenge No. 8:           How to communicate?

What do Indians love? How to capture that in the communication? The task of communication in FMCG marketing is to make the consumer remember the brand, like the brand and try the brand. If that calls for a song like the ‘Doodh Doodh’ jingle so be it. Let the advertising pass the age old RUB text, relevant, unique, believable. In addition let it also pass the Indian likeablility text - will you see the ad with your daughter and your mother?

Challenge No.9:           How to track the brand?

Using market research intelligently, not just blindly. The ideal way to measure the success of the marketing mix is to do a real market pressure text. Hindustan Lever tested Close-up in Tamil Nadu (a media isolatable state) before taking on Colgate on the national playing field. The rest is history.

Challenge No. 10:           How to use promotions better?

Is the promotion brand led or discount led? Rin gave away open soap dishes, it helped the product usage since it dried better on an open dish. Nescafe gave away shakers to popularize the coffee milk shake. Indian FMCG market today has become a sales promotion mela. There are 2 for 1 offers, banded packs, 50% extra offers, 3 for 2 offers… all chasing the discount buying tendency of Indian consumers. This phase will soon pass, one hopes! Sales Promotions need to help in building the brand values, in addition to generating short-term results.

The above 10 challenges are probably true of any market. But Indian FMCG marketers face these challenges in different degrees in different parts of the country. Being aware of the challenges will help them focus their efforts better.

(Based on an article that appeared in Madras Management Association Journal in July 2001)

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