Monday, April 16, 2012

FMCG – Mass markets to Niche Markets

Traditionally, considered a defensive sector, strength of FMCG sector are low operational costs, the presence of established distribution networks and well-known brands with the lower scope of investing in technology. Low exports levels and "Me-too" products, which illegally mimic the labels of the established brands, narrow the scope of FMCG products in therural and semi-urban market. But FMCG stocks seem to be the dark horse in the queue. Analysts and market experts are now putting a move, which is not just being considered a safe ploy, but also as a defensive strategy to counter a volatile and uncertain market. Here, threats for FMCG sector can be identified as: Removal of import restrictions resulting in replacing of domestic brands, Slowdown in rural demand, Tax and regulatory structure. 

In order to deal with these threats and considering strengths and growth of FMCG market, a company needs to focus on its price strategy as increasingly competitive environment has become a global trend in FMCG sector. On an average, FMCG Company introduces 70 to 80 new products per year. For an example, P&G offered 46 different types of ‘Tide brand’ washing powder in the US. In order to sustain a fast pace of new product introduction, it is important to have potential new ideas ready for development. 

FMCG
*Image Courtesy- Cognitio 
FMCG sector is the first segment to get affected, whenever macroeconomic factors change. Brand loyalty has become irrelevant where many similar products are flooded in the market. Informed customers are making rational purchasing decisions. This makes niche a conditional option for FMCG companies. All existing players need to focus on ‘Niche marketing’ because Niche markets are the creative segments that help marketers to respond to change on a continual basis and get the market insights. It helps the marketers to clearly define and project the growth and transformation of the market. Because of these, the focus of the marketers has now shifted to niche market from mass market. 

When it comes to Global advertising campaigns, language barriers, religious barriers, cultural barriers come across. P&G’s advertising for disposable diapers in Japan is an example of this. In today’s business marketplace, effective use and flow of information is the key to success. GIS, and IT tools for analyzing spatial data is an answer to problems related to business information parameters like market size, demand and supply ratio, consumer dynamics, market segments and demographic profiles, etc. It provides a decision support in developing result-oriented market strategies.

1 comment:

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