Facebook Pixel Code

Changing realities: FMCG firms use new tactics to sell products to discerning consumers

Fast moving consumer goods companies are turning to a new manual to sell their products to more discerning consumers, amid the consumption slowdown and e-commerce disruption.

The new marketing tactics have developed at a time when FMCG sales have slowed down over the last six quarters to mid-single digits in the quarter-ended September.
The new marketing tactics have developed at a time when FMCG sales have slowed down over the last six quarters to mid-single digits in the quarter-ended September.

Fast moving consumer goods companies are turning to a new manual to sell their products to more discerning consumers, amid the consumption slowdown and e-commerce disruption. They not only have to make their existing products more affordable but also understand the fast-changing behaviour of the millennial consumers through latest tools such as ‘online customer review analysis’.

The new marketing tactics have developed at a time when FMCG sales have slowed down over the last six quarters to mid-single digits in the quarter-ended September. The industry was registering double-digit growth before the slowdown began. Speaking at the CII National FMCG Summit, Suresh Narayanan, chairman and managing director, Nestle India said the industry must acknowledge that change is happening and respond to the new realities. He explained that the ‘spray and pray’ model of earlier times that sought to introduce a product and grow it to maturity may not work as customers today require localisation and customisation. Some of the leading FMCG industry leaders were in presence at the summit to discuss strategies that could push the industry to double-digit growth.

Bharat Puri, chairman, national committee on FMCG, CII and managing director, Pidilite Industries said that the industry has faced 2-3 slowdowns over the last decade, but the difference this time is the fall in rural consumption. Traditionally, FMCG rural sales has been 1.5 times that of urban. Over the last one year, rural sales has slipped to nearly 0.8 times that of urban. “There are companies that have a well-developed rural network. Then, there are those that are still developing a rural network. In the first category, there are only a few companies whereas a large number of companies fall into the second category. They are facing a problem in servicing the rural areas on a consistent basis,” Puri said.

An analysis by Bain & Company shows that despite slowdown there have been some winners. FMCG companies that are focussed on building memorable brands, ensuring physical availability, and delivering a range of products have grown ahead of the category and gained market share, according to Nikhil Prasad Ojha, partner, Bain & Company.

Several FMCG players have used the slowdown to test new products ranging from childcare to women-centric products. Nestle has even moved away from its core business and introduced a coffee machine that is available exclusively on online platforms. The product has been dispatched to nearly 600 towns.

“Rural India is seeking high quality,” said Narayanan. While there is a belief that consumers are buying smaller packets due to lower disposable income, Mondelez – the maker of Cadbury’s chocolates — has witnessed rural traction for its Rs. 200 chocolate bar Silk. Speakers at the event highlighted that aspirations are as high in rural India as it is in big cities due to the penetration of mobile phones and internet. But, fall in real income is impacting sales. “Money is scarce. That is the big issue across the channel,” said Puri.

Get live Share Market updates, Stock Market Quotes, and the latest India News and business news on Financial Express. Download the Financial Express App for the latest finance news.

First published on: 19-12-2019 at 03:09 IST
Market Data
Market Data
Today’s Most Popular Stories ×