Usefulness of Consumer Oriented Sales Promotion in FMCG

What is FMCG?

FMCG refers to Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG). FMCGs are products that are sold quickly and at relatively low cost.

Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG), are products that have a quick turnover, and relatively low cost. Consumers generally put less thought into the purchase of FMCG than they do for other products. Although the absolute profit made on FMCG products is comparatively small, they are generally sold in large numbers. Hence profit in FMCG goods generally scales with the number of goods sold, rather than the profit made per item.

The FMCG product category generally includes a wide range of frequently purchased consumer products including toiletries, soaps, cosmetics, teeth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products and drinks, although these are often categorized separately.

Characteristics of FMCG Products

•  Individual items are of small value. But all FMCG products put together account for a significant part of the consumer's budget.

•  The consumer keeps limited inventory of these products and prefers to purchase them frequently, as and when required. Many of these products are perishable.

•  The consumer spends little time on the purchase decision. Rarely does he/she look for technical specifications (in contrast to industrial goods). Brand loyalties or recommendations of reliable retailer/dealer drive purchase decisions.

•  Trial of a new product i.e. brand switching is often induced by heavy advertisement, recommendation of the retailer or neighbors/friends.

•  These products cater to necessities, comforts as well as luxuries. They meet the demands of the entire cross section of population. Price and income elasticity of demand varies across products and consumers.

Consumer Oriented Sales Promotion in FMCG

In ever changing world scenario hyper competition has become a regular phenomena. Today the markets are full of competition and every organization has to strive very hard for survival and growth. Because of very rapid industrialization all over the world the demand for the managerial skilled employees, officers and the administrative personnel has increased. The perfect study of Management involves both the theoretical as well as practical aspects. To survive in this highly competitive market “Practical Knowledge” is as relevant as the Theoretical. The significance of MBA Degree is that the Theoretical aspects, which a student learns throughout the year in the class sessions, can be practically applied through different projects, which one undertakes. Keeping in tune with this doctrine, we have tried to apply theoretical aspects throughout the project, which we learned under the course of management. In this project more emphasize given to the various tools of sales promotion and its impact on consumers buying decisions.

Actually in recent trend to some extent this technique also become victim of clutter, even though it can be eliminated by generating innovative and more attractive tools to lure the customers. Now a day most of the FMCG companies considering sales promotion as an important part of their marketing strategy. From the analysis of survey it becomes clear that consumers do response to the sales promotion campaign, but there are customers who strongly prefer to stick to brand name.

The term FMCG (fast moving consumer goods), although popular and frequently used does not have a standard definition and is generally used in India to refer to products of everyday use. Conceptually, however, the term refers to relatively fast moving items that are used directly by the consumer. Thus, a significant gap exists between the general use and the conceptual meaning of the term FMCG.

Further, difficulties crop up when attempts to devise a definition for FMCG. The problem arises because the concept has a retail orientation and distinguishes between consumer products on the basis of how quickly they move at the retailer's shelves. The moot question therefore, is what industry turnaround threshold should be for the item to qualify as an FMCG.

Promotion is one of the important elements of marketing mix. There are so many elements of promotion such as …

• Advertising;
• Direct Marketing
• Public Relations
• Sales Promotion

Traditionally, sales Promotions have been used by marketer to increase sales in the short term. However, in the last few decades this communication tool has evolved and now is considered from a strategic point of view. For this reason, it is necessary to realize new studies in this area and study how consumers evaluate sales promotions.

Sales promotions have grown in both importance and frequency over the past few decades. Although an accurate estimate for total sales promotions expenditures does not exist, we can be sure that the trend is up.

Sales promotion serves three essential roles: It informs, persuades and reminds prospective customers about a company and its products. Even the most useful product or brand will be a failure if no one knows that it is available. As we know, channels of distribution take more time in creating awareness because a product has to pass through many hands between a producer and consumers.

Therefore, a producer has to inform channel members as well as ultimate consumers about the attributes and availability of his products. The second purpose of promotion is persuasion. The cut throat competition among different products puts tremendous pressure on their manufacturers and they are compelled to undertake sales promotion activities. The third purpose of promotion is reminding consumers about products availability and its potential to satisfy their needs.