CHAPTER-I

INTRODUCTION AND DESIGN OF THE STUDY

Marketing is the moving and exciting activity in everybody activities. The sellers, distributors,
advertising agencies, consultants, transporters, financers, store agencies and every one as a
counter are part of the marketing system. Any exchange process be it consumer, goods,
intermediary goods, services of ideas, comes under the preview of marketing. It is very often
regarded that the development of markets and marketing is synonymous with the economic
development of account. Through marketing is an action discipline. In the ever-growing
corporate world, marketing is being regarded as a crucial element for the success of an
Enterprise.

The marketing discipline is undergoing fresh re aparisal in the light of the vast global,
technological, economic and social challenges facing today’s companies and countries. Marketing
at its best is about value creation and raising the world’s living standards. Today’s winning
companies are those who succeed most in satisfying, indeed delighting their target customers.

As quoted by P.P.Drucker “Marketing is so basic that it cannot be considered a separate

function. It is whole business seen from the point of view of its final result, that is, from the
customer’s point of view. Business success is not determined by the producer but by the
customer”.

Philip Kotler has therefore defined marketing as “it is a social and managerial process by
which individuals and groups obtain what they need and want through creating, offering and
exchanging products of values with others”. Many Indian companies espouse a satisfied
customer philosophy and describe marketing as customer-satisfaction engineering. Since the
economy in this country has changed from a primary condition of scarcity to gradual and steady
stage of affluence, largely giving consumers the opportunity to choose among many varied
alternatives, satisfaction has become a major concern of business.

INTRODUTION TO CONSUMER BEHAVIOR:

 One thing that we have in common is that we all are consumers. In fact
everybody in this world is a consumer. Every day of our life we are buying and
consuming an incredible variety of goods and services. However, we all have
different tastes, likes, dislikes, and adopt different behavior patterns while making
purchase decisions.

The term consumer behavior refers to the behavior that consumers display in
searching for purchasing using evaluation and disposing in searching for
purchasing using evaluating and disposing of products and services that they exact
will satisfy o how individuals make decisions to send their available resources
(time, money and effort) on consumption related items. It includes the study of
“What they buy”, ”Why they buy”, “When they buy it”, “Where they buy it”, “how
often they buy it” and “how often they use.

DEFINITIONS:

Consumer Behavior (or Buyer Behavior) is broadly defined by various

scholars & researchers as:

1. It’s the behavior displayed by the consumers during the acquisition,

consumption and disposition of products, services, time and ideas by
decision making units.
2. It is the body of knowledge which studies various aspects of purchase and
consumption of products and services by individuals with various social and
psychological variables at play.
3. The behavior that the consumers display in searching for, purchasing, using,
evaluating and disposing of products and services that they expect will
satisfy their needs.
 4. The process and activities people engage in when searching for, selecting,
purchasing, using, evaluating, and disposing of products and services so as
to satisfy their needs and desires.
5. The activities directly involved in obtaining, consuming, and disposing of
products and services, including the decision processes that precede and
follow these actions.
6. The American Marketing Association (AMA) defines consumer behavior as
“The dynamic interaction of cognition, behavior & environmental events by
which human beings conduct the exchange aspect of their lives.

Consumer behavior is helpful in understanding the purchase Behavior and

preferences of different consumers. As consumers, we differ in terms of sex age,
education, occupation, income, Family setup, religion, nationality and social
status. Because of this different background factors, have different needs and we
have only buy those products and services, which we think, will satisfy our needs.

A MODEL OF CONSUMER BEHAVIOUR:

A consumer decisions to purchase a particular product of service is the result

of complex interplay of a number of variables. The starting point of the decision
process is provided by the companies marketing stimuli in the shape of product,
promotion, price and distribution strategy. Consumer often purchase new products
that are associated with a favorable viewed brand name.

The term consumer behavior refers to the behavior that consumer display in
searching for purchasing, using, evaluating and disposing of products and services
that they expect will satisfy these needs. The study of consumer behavior in the
study of how individuals make decisions to spend their available resources (time,
money, effort) on consumption related items. It includes the study of “what they
buy”, “why they buy”, “when they buy”, “where they buy”, “how often they buy”
and “how they use”.

MODEL OF CONSUMER BEHAVIOUR

Marketin Other stimuli
g
stimuli
Consumer
Decisions
Product Economic
Product
Price Technological
Choice
Place Political
Consumer Consumer Brand
Promotion cultural
Characteristic Decision Choice
s Process Dealer
Cultural Problem
choice
recognition
Purchasing
Social Information
Timing
DETAILED MODEL OF Personal Search
Purchasing
Psychological Evaluation
FACTORS INFLUENCING Amount
Decision
CONSUMER BEHAVIOR
post
Cultural Factors Purchase
Social Factors Behavior.
Reference Personal Factors
Culture
groups
Age and Life Psychological
Cycle
Sub Factors
Culture Family Occupation Motivation
Economic
Perception
Circumstance
Social s Lifestyle Learning Buyers
Class Personality
Roles & Beliefs and
Status and Self
Attitudes
Concept

CULTURAL FACTORS:

Culture: Culture is the most fundamental determinant of a persons wants and

behavior like set of values, perceptions, preferences and behaviors through his or
her family member.

Subculture: social classes are relatively homogeneous and enduring divisions in a

society which are hierarchically ordered and whose members shares similar Values,
interest and behavior and social classes includes upper class, middle class and
lower class.

SOCIAL FACTORS:

References Groups: A persons reference groups consist of all the groups that have
a direct (face to face) are indirect influence on the persons altitude or behavior.
This group to which the person, belongs and interacts.

Personal Factors: A consumer decision also influenced by personal characteristics

notably the buyers age & life cycle stage, occupation, economic circumstances,
life style and personality and self concept.
PSYCHOLOGICAL FACTORS:

Motivation: A person has many needs at any given time. Some needs are biogenic.
They arise from psychological states of tension such as hunger, tryst and
discomfort.

Perception: Perception is defined ass “the process by which an individual selects,

organizes, intercepts, information, inputs to create a meaningful picture of the
world.

Fast Moving Consumer Goods (FMCG), are products that are sold quickly at relatively low
cost. 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 large. Examples of FMCG
generally include a wide range of frequently purchased consumer products such as toiletries,
soap, cosmetics, teeth cleaning products, shaving products and detergents, as well as other non-
durables such as glassware, light bulbs, batteries, paper products and plastic goods. [1] FMCG may
also include pharmaceuticals, consumer electronics, packaged food products and drinks,
although these are often categorized separately.

FMCG products contrast with durable goods or major appliances such as kitchen appliances,
which are generally replaced less than once a year. In Britain, "white goods" in FMCG refers to
large household electronic items such as refrigerators. Smaller items such as TV sets and stereo
systems are sometimes termed "brown goods".[
FMCG industry, alternatively called as CPG (Consumer packaged goods) industry primarily
deals with the production, distribution and marketing of consumer packaged goods. The Fast
Moving Consumer Goods (FMCG) are those consumables which are normally consumed by the
consumers at a regular interval. Some of the prime activities of FMCG industry are selling,
marketing, financing, purchasing, etc. The industry also engaged in operations, supply chain,
production and general management.

FMCG industry provides a wide range of consumables and accordingly the amount of money
circulated against FMCG products is also very high. The competition among FMCG
manufacturers is also growing and as a result of this, investment in FMCG industry is also
increasing, specifically in India, where FMCG industry is regarded as the fourth largest sector
with total market size of US$13.1 billion. FMCG Sector in India is estimated to grow 60% by
2010. FMCG industry is regarded as the largest sector in New Zealand which accounts for 5% of
Gross Domestic Product (GDP).

Some common FMCG product categories include food and dairy products, glassware, paper
products, pharmaceuticals, consumer electronics, packaged food products, plastic goods, printing
and stationery, household products, photography, drinks etc. and some of the examples of FMCG
products are coffee, tea, dry cells, greeting cards, gifts, detergents, tobacco and cigarettes,
watches, soaps etc.

Some of the merits of FMCG industry, which made this industry as a potential one are low
operational cost, strong distribution networks, presence of renowned FMCG companies.
Population growth is another factor which is responsible behind the success of this industry

FMCG industry creates a wide range of job opportunities. This industry is a stable, diverse,
challenging and high profile industry providing a wide range of job categories like sales, supply
chain, finance, marketing, operations, purchasing, human resources, product development,
general management.

Some of the well known FMCG companies are Sara Lee, Nestlé, Reckitt Benckiser, Unilever,
Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills, Pepsi and Mars etc
 CHAPTER -II
INDUSTRY PROFILE

HISTORY OF FMCG INDUSTRY:

FMCG industry, alternatively called as CPG (Consumer packaged goods) industry primarily
deals with the production, distribution and marketing of consumer packaged goods. The Fast
Moving Consumer Goods (FMCG) are those consumables which are normally consumed by the
consumers at a regular interval. Some of the prime activities of FMCG industry are selling,
marketing, financing, purchasing, etc. The industry also engaged in operations, supply chain,
production and general management.

FMCG industry provides a wide range of consumables and accordingly the amount of money
circulated against FMCG products is also very high. The competition among FMCG
manufacturers is also growing and as a result of this, investment in FMCG industry is also
increasing, specifically in India, where FMCG industry is regarded as the fourth largest sector
with total market size of US$13.1 billion. FMCG Sector in India is estimated to grow 60% by
2010. FMCG industry is regarded as the largest sector in New Zealand which accounts for 5% of
Gross Domestic Product (GDP).

FMCG industry creates a wide range of job opportunities. This industry is a stable, diverse,
challenging and high profile industry providing a wide range of job categories like sales, supply
chain, finance, marketing, operations, purchasing, human resources, product development,
general management.
WHY INDIA
Large domestic market
India is one of the largest emerging markets, with a population of over one billion. India is one of
the largest economies in the world in terms of purchasing power and has a strong middle class
base of 300 million.
Now India has two major sectors where the market can be spotted. Urban and Rural markets.
Rural-urban profile
Urban Rural

Population 2001 – 02 (mn house hold) 53 135

Population 2009-10 (mn household) 69 153

% Distribution (2001-02) 28 72

Market (Towns/Villages) 3,768 627,000

Universe of Outlets (mn) 1 3.3

Around 70 per cent of the total households in India (188 million) resides in the rural areas. The
total number of rural households is expected to rise from 135 million in 2001-02 to 153 million
in
2009-10, this presents the largest potential market in the world. The annual size of the rural
FMCG market was estimated at around US$ 10.5 billion in 2001-02. With growing incomes at
both the
rural and the urban level, the market potential is expected to expand further.
India - a large consumer goods spender
An average Indian spends around 40 per cent of his income on grocery and 8 per cent on
personal care products. The large share of fast moving consumer goods (FMCG) in total
individual spending along with the large population base is another factor that makes India one
of the largest FMCG markets.

History of FMCG in India

In India, companies like ITC, HLL, Colgate, Cadbury and Nestle have been
a dominant force in the FMCG sector well supported by relatively less competition
and high entry barriers (import duty was high). These companies were, therefore,
able to charge a premium for their products. In this context, the margins were also
on the higher side. With the gradual opening up of the economy over the last
decade, FMCG companies have been forced to fight for a market share. In the
process, margins have been compromised, more so in the last six years (FMCG
sector witnessed decline in demand).

Products and Categories:-

Personal Care, Oral Care, Hair Care, Skin Care, Personal Wash (soaps); -
Cosmetics and toiletries, deodorants, perfumes, feminine hygiene, paper product;
Household care fabric wash including laundry soaps and synthetic detergents,
household cleaners, such as dish/utensil cleaners, floor cleaners, toilet cleaners, air
fresheners, insecticides and mosquito repellents, metal polish and furniture polish -
Food and health beverages, branded flour, branded sugarcane, bakery products
such as bread, biscuits, etc., milk and dairy products, beverages such as tea, coffee,
juices, bottled water etc, snack food, chocolates, etc.
Top 10 FMCG Companies in India

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

3. Nestle India

4. Dabur India

5. Asian Paints (India)

6. Cadbury India

7. Britannia Industries

FMCG Category and products

Health care –
 Fabric wash (laundry soaps and synthetic detergents); household cleaners (dish/utensil
cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito repellents,
metal polish and furniture polish).

Food and beverages –

Health beverages; soft drinks; staples/cereals; bakery products (biscuits, bread, cakes);
snack food; chocolates; ice cream; tea; coffee; soft drinks; processed fruits, vegetables;
dairy products; bottled water; branded flour; branded rice; branded sugar; juices etc.

Personal care –

Oral care, hair care, skin care, personal wash (soaps); cosmetics and toiletries; deodorants;
perfumes; feminine hygiene; paper products.

Most Indian FMCG companies focus on urban markets for value and rural markets for volumes.
The total market has expanded from US$ 17.6 billion in 1992-93 to US$ 22 billion in 1998-99 at
current prices. Rural demand constituted around 52.5 per cent of the total demand in 1998-99.
Hence, rural marketing has become a critical factor in boosting bottomlines. As a result, most
companies' have offered low price products in convenient packaging. These contribute the
majority of the sales volume. In comparison, the urban elite consumes a proportionately higher
value of FMCGs, but not volume.
Critical operating rules in Indian FMCG sector

• Heavy launch costs on new products on launch advertisements, free samples and product
promotions.

• Majority of the product classes require very low investment in fixed assets

• Existence of contract manufacturing

• Marketing assumes a significant place in the brand building process

• Extensive distribution networks and logistics are key to achieving a high level of penetration in
both the urban and rural markets

• Factors like low entry barriers in terms of low capital investment, fiscal incentives from
government and low brand awareness in rural areas have led to the mushrooming of the
unorganised sector
• Providing good price points is the key to success.

Britannia India Ltd (BIL)

Britannia India Ltd was incorporated in 1918 as Britannia Biscuit Co Ltd and currently the
Groupe Danone (GD) of France (a global major in the food processing business) and the Nusli
Wadia Group hold a 45.3 per cent equity stake in BIL through AIBH Ltd (a 50:50 joint venture).
BIL is a dominant player in the Indian biscuit industry, with major brands such as Tiger glucose,
Mariegold, Fifty-Fifty, Good Day, Pure Magic, Bourbon etc. The company holds a 40 per cent
market share in the overall organised biscuit market and has a capacity of 300,000 tonne per
annum. Currently, the bakery product business accounts for 99.1 per cent of BIL's turnover. The
company reported net sales of US$ 280 million in 2002-03. Britannia Industries Ltd (BIL) plans
to increase its manufacturing capacity through outsourced contract manufacturing and a
greenfield plant in Uttaranchal to expand its share in the domestic biscuit and confectionery
market.
Dabur India Ltd
Established in 1884, Dabur India Ltd is the largest Indian FMCG and ayurvedic products
company. The group comprises Dabur Finance, Dabur Nepal Pvt Ltd, Dabur Egypt Ltd, Dabur
Overseas Ltd and Dabur International Ltd. The product portfolio of the company includes health
care, food products, natural gums & allied chemicals, pharma, and veterinary products. Some of
its leading brands are Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola, Lal Dant Manjan,
Pudin Hara and the Real range of fruit juices. The company reported net sales of US$ 218
million in 200304. Dabur has firmed up plans to restructure its sales and distribution structure
and focus on its core businesses of fast-moving consumer good products and over-the-counter
drugs. Under the restructured set-up, the company plans to increase direct coverage to gap outlets
and gap towns where Dabur is not present. A roadmap is also being prepared to rationalise the
stockists' network in different regions between various products and divisions.
Indian Tobacco Corporation Ltd (ITCL)
Indian Tobacco Corporation Ltd is an associate of British American Tobacco with a 37 per cent
stake. In 1910 the company's operations were restricted to trading in imported cigarettes. The
company changed its name to ITC Limited in the mid seventies when it diversified into other
businesses. ITC is one of India's foremost private sector companies with a turnover of US$ 2.6
billion. While ITC is an outstanding market leader in its traditional businesses of cigarettes,
hotels, paperboards, packaging and agriexports, it is rapidly gaining market share even in its
nascent businesses of branded apparel, greeting cards and packaged foods and confectionary.
After the merger of ITC Hotels with ITC Ltd, the company will ramp up its growth plans by
strengthening its alliance with Sheraton and through focus on international projects in Dubai and
the Far East. ITC's subsidiary, International Travel House (ITH) also aims to launch new
products and services by way of boutiques that will provide complete travel services.
Marico
Marico is a leading Indian Group incorporated in 1990 and operating in consumer products,
aesthetics services and global ayurvedic businesses. The company also markets food products
and distributes third party products. Marico owns well-known brands such as Parachute, Saffola,
Sweekar, Shanti Amla, Hair & Care, Revive, Mediker, Oil of Malabar and the Sil range of
processed foods. It has six factories, and sub-contract facilities for production. In 2003-04, the
company reported a turnover of US$ 200 million. The overseas sales franchise of Marico's
branded FMCG products is one of the largest amongst Indian companies. It is also the largest
Indian FMCG company in Bangladesh. The company plans to capture growth through constant
realignment of portfolio along higher margin lines and focus on volume growth, consolidation of
market shares, strengthening flagship brands and new product offerings (2-3 new product
launches are expected in 2004-05). It also plans to expand its international business to Pakistan.

Nirma Limited
Nirma Ltd, promoted by Karsanbhai Patel, is a homegrown FMCG major with a presence in the
detergent and soap markets. It was incorporated in 1980 as a private company and was listed in
fiscal 1994. Associate companies' Nirma Detergents, Shiva Soaps and Detergents, Nirma Soaps
and Detergents and Nilnita Chemicals were merged with Nirma in 1996-1997. The company has
also set up a wholly owned subsidiary Nirma Consumer Care Ltd, which is the sole marketing
licensee of the Nirma brand in India. Nirma also makes alfa olefin, fatty acid and glycerine.
Nirma is one of the most successful brands in the rural markets with extremely low priced
offerings. Nirma has plants located in Gujarat, Madhya Pradesh and Uttar Pradesh. Its new LAB
plant is located in Baroda and the soda ash complex is located in Gujarat. Nirma has strong
distributor strength of 400 and a retail reach of over 1 million outlets. The company reported
gross sales of US$ 561 million in 2003-04. It plans to continue to target the mid and mass
segments for future growth.

Foreign Players

Cadbury India Ltd

is a 93.5 per cent subsidiary of Cadbury Schweppes Plc, UK, a global major in the chocolate and
sugar confectionery industry. CIL was set up as a trading concern in 1947 and subsequently
began its operations with the small scale processing of imported chocolates and food drinks. CIL
is currently the largest player in the chocolate industry in India with a 70 per cent market share.
The company is also a key player in the malted foods, cocoa powder, drinking chocolate, malt
extract food and sugar confectionery segment. The company had also entered the soft drinks
market with brands like 'Canada Dry' and 'Crush', which were subsequently sold to Coca Cola in
1999. Established brands include Dairy Milk, Perk, Crackle, 5 Star, Éclairs, Gems, Fructus,
Bournvita etc. The company reported net sales of US$ 160 million in 2003. The company plans
to increase the number of retail outlets for future growth and market expansion.
Cargill
Cargill Inc is one of the world's leading agri-business companies with a strong presence in
processing and merchandising, industrial production and financial services. Its products and
geographic diversity (over 40 product lines with a direct presence in over 65 countries and
business activities in about 130 countries) as well as its vast communication and transportation
network help optimise commodity movements and provide competitive advantage. Cargill India
was incorporated in April 1996 as a 100 per cent subsidiary of Cargill Inc of the US. It is
engaged in trading in soyabean meals, wheat, edible oils, fertilisers and other agricultural
commodities besides marketing branded packaged foods. It has also set up its own anchorage
facilities at Rosy near Jamnagar in Gujarat for efficient handling of its import and export
consignments.
Coca Cola
Coca-Cola started its India operations in 1993. The Coca-Cola system in India comprises 27
wholly company-owned bottling operations and another 17 franchisee-owned bottling
operations. A network of 29 contract-packers also manufacture a range of products for the
company. Leading Indian brands Thums Up, Limca, Maaza, Citra and Gold Spot exist in the
Company's international family of brands along with Coca-Cola, Diet Coke, Kinley, Sprite and
Fanta, plus the Schweppes product range. During the past decade, the Coca-Cola system has
invested more than US$ 1 billion in India. In 2003, Coca-Cola India pledged to invest a further
US$ 100 million in its operations.

Colgate-Palmolive India
Colgate Palmolive India is a 51 per cent subsidiary of Colgate Palmolive Company, USA. It is
the market leader in the Indian oral care market, with a 51 per cent market share in the toothpaste
segment, 48 per cent market share in the toothpowder market and a 30 per cent share in the
toothbrush market. The company also has a presence in the premium toilet soap segment and in
shaving products, which are sold under the Palmolive brand. Other wellknown consumer brands
include Charmis skin cream and Axion dish wash. The company reported sales of US$ 226
million in 2003-04. The company's strategy is to focus on growing volumes by improving
penetration through aggressive campaigning and consumer promotions. The company plans to
launch new products in oral and personal care segments and is prepared to continue spending on
advertising and marketing to gain market share. Margin gains are being targeted through efficient
supply chain management and bringing down cost of operations.
H J Heinz Co
A US$ 8.4 billion American foods major, H J Heinz Co comprises 4,000 strong brand buffet in
infant food, sauces and condiments. The company was the first to commence manufacturing and
bottling of tomato ketchup in 1876. In India, Heinz has a presence through its 100 per cent
subsidiary Heinz India Pvt Ltd. Heinz acquired the consumer products division of
pharmaceutical major Glaxo in 1994. Heinz's product range in India consists of Complan milk
beverage, health drink Glucon-D, infant food Farex and Nycil prickly heat powder, besides the
Heinz ketchup range.
Hindustan Lever Ltd (HLL)
Hindustan Lever Ltd is a 51 per cent owned subsidiary of the Anglo-Dutch giant Unilever, which
has been expanding the scope of its operations in India since 1888. It is the country's biggest
consumer goods company with net sales of US$ 2.4 billion in 2003. HLL is amongst the top five
exporters of the country and also the biggest exporter of tea and castor oil. The product portfolio
of the company includes household and personal care products like soaps, detergents, shampoos,
skin care products, colour cosmetics, deodorants and fragrances. It is also the market leader in
tea, processed coffee, branded wheat flour, tomato products, ice cream, jams and squashes. HLL
enjoys a formidable distribution network covering over 3,400 distributors and 16 million outlets.

Here are a few breakups of what Indian standards look like when compared with the other
similar or powerfull countries. Few examples as to where our country stands…

Detergent per capita consumption

25

20

15 Detergent per capita

consumption

10

0
West europe USA Philipines India
Products
Household care
The size of the fabric wash market is estimated to be US$ 1 billion, household cleaners to be
US$ 239 million and the production of synthetic detergents at 2.6 million tonnes. The demand
for detergents has been growing at an annual growth rate of 10 to 11 per cent during the past five
years. The urban market prefers washing powder and detergents to bars on account of
convenience of usage, increased purchasing power, aggressive advertising and increased
penetration of washing machines. The regional and smallunorganised players account for a major
share of the total detergent market in volumes.
Personal care
The size of the personal wash products is estimated at US$ 989 million; hair care products at
US$ 831 million and oral care products at US$ 537 million. While the overall personal wash
market is growing at one per cent, the premium and middle-end soaps are growing at a rate of 10
per cent. The leading players in this market are HLL, Nirma, Godrej Soaps and Reckitt &
Colman. The oral care market, especially toothpastes, remains under penetrated in India (with
penetration level below 45 per cent) due to lack of hygiene awareness among rural markets. The
industry is very competitive both for organised and smaller regional players. The Indian skin care
and cosmetics market is valued at US$ 274 million and dominated by HLL, Colgate Palmolive,
Gillette India and Godrej Soaps. This segment has witnessed the entry of a number of
international brands, like Oriflame, Avon and Aviance leading to increased competition. The
coconut oil market accounts for 72 per cent share in the hair oil market. In the branded coconut
hair oil market, Marico (with Parachute) and Dabur are the leading players. The market for
branded coconut oil is valued at approximately US$ 174 million.

Food and Beverages Food

According to the Ministry of Food Processing, the size of the Indian food processing industry is
around US$ 65.6 billion including US$ 20.6 billion of value added products. Of this, the health
beverage industry is valued at US$ 230 billion; bread and biscuits at US$ 1.7 billion; chocolates
at US$ 73 million and ice creams at US$ 188 million. The size of the semi-processed/ready to eat
food segment is over US$ 1.1 billion. Large biscuits & confectionery units, soyaprocessing units
and starch/glucose/sorbitol producing units have also come up, catering to domestic and
international markets. The three largest consumed categories of packaged foods are packed tea,
biscuits and soft drinks.

Beverages
The Indian beverage industry faces over supply in segments like coffee and tea. However, more
than half of this is available in unpacked or loose form. Indian hot beverage market is a tea
dominant market. Consumers in different parts of the country have heterogeneous tastes. Dust tea
is popular in southern India, while loose tea in preferred in western India. The urban-rural split of
the tea market was 51:49 in 2000. Coffee is consumed largely in the southern states. The size of
the total packaged coffee market is 19,600 tonnes or US$ 87 million. The urban rural split in the
coffee market was 61:39 in 2000 as against 59:41 in 1995. The total soft drink (carbonated
beverages and juices) market is estimated at 284 million crates a year or US$ 1 billion. The
market is highly seasonal in nature with consumption varying from 25 million crates per month
during peak season to 15 million during offseason. The market is predominantly urban with 25
per cent contribution from rural areas. Coca cola and Pepsi dominate the Indian soft drinks
market.

Exports
India is one of the world's largest producers for a number of FMCG products but its exports are a
very small proportion of the overall production. Total exports of food processing industry was
US$ 2.9 billion in 2001-02 and marine products accounted for 40 per cent of the total exports.
Though the Indian companies are going global, they are focusing more on the overseas markets
like Bangladesh, Pakistan, Nepal, Middle East and the CIS countries because of the similar
lifestyle and consumption habits between these countries and India. HLL, Godrej Consumer,
Marico, Dabur and Vicco laboratories are amongst the top exporting companies.
 COMPANY PROFILE

Kannan departmental store, is India’s leading retailer that operates multiple retai
formats in both the value and lifestyle segment of the Indian consumer market.
Headquartered in Mumbai (Bombay), the company operates over 12 million square
feet of retail, has over 10000 stores across 71 cities in India and employs over
30,000 people.

The company’s leading formats include pantaloons, a chain of fashion

outlets, Kannan departmental store, a uniquely Indian hypermarket chain, Food
Bazaar, a supermarket chain, blends the look, touch and feel of Indian bazaars with
aspects of modern retail choice, convenience and quality and central, a chain of
seamless destination malls. Some of its formats include brand factory, blue sky, all
top 10 stars and sitara. The company also operates an online portal,
futurebazaar.com.

A subsidiary company, Home solutions Retail (India)limited, operate Home

Town, a large – format home solutions store, collection I, selling home furniture
products and e-zone focused on catering to the consumer electronics segment.

Pantaloon Retail was recently awarded the international retailer of the year
2007 by the US – based National Retail Federation (NRF) and the Emerging
market retailer of the year 2007 at the world retain congress held in Barcelona.

Pantaloon Retail is the flagship company of Future Group, a business group.

Catering to the entire Indian consumption space.

THE FUTURE GROUP AS GIVEN BY THE GENERAL MANAGER:

“Future Bazaar.com is owned and operated by Future Bazaar India Ltd.

(FBIL).

FBIL is a part of the Future Group, India’s largest retain conglomerate. FBIL
is the e-commerce arm of the Future Group. The company was incorporated in
2006 and began business in 2007.

As part of India’s largest retail chain, we enjoy the benefits of buying in

bulk for the entire group. Out aim is to get you a great range of products at great
prices.

Core competency of the business… what makes us different from other.!!

 A choice of more than 20,000 products.

 Delivery across more than 1500 cities and towns in India covering around
16,000 pin codes.
 Fast deliveries – tie ups with world leaders in logistics & transportation
services
 A dedicated customer care helpline for any queries.
 Always offering Manufacturer’s guarantee as opposed to seller’s guarantee,
which most of the other online shopping sites offer.
 Aggressive prices –FutureBazaar.com has the benefit of leveraging the
sourcing network of the Future Group’s retail chains. This sourcing network
straddles a wide range of product requirements, thus being able to offer us
economies of scale thereby – unbelievable prices to it’s customers.
 Unmatched selection of products an Brands - we have more than 20,000
products which crates the flexibility to offer a large range of choices to
customers. We also have partnerships with most of the brands available in
the country, which allows us to get the latest in the range to our customers.
We have been able to create some major popularity ripples with our
corporate clients with products like mobiles, electronics, laptops, MP3
players, T-shirts, Gift Vouchers and so on.
 Seamless end-to-end Logistics solution – we pride ourselves in having
built an end-to-end logistics solution, right from stocking, dispatching, and
delivery confirmation up to post-sales support. Our back-end infrastructure
enables us to service around 15,000 pin codes across India.
 Dedicated Customer Care for online customers as well as corporate
clients – We have a dedicated team straddling client servicing, sourcing,
logistics and customer service for all our customers.
 “our Brand Association” – Most importantly out parentage & association
with humungous retail brands like Kannan departmental store, Pantaloons,
Central and many more, lends tremendous amount of trust jj& credibility to
our end consumers.”
The FutureBazaar.com’ promise as given by the General Manager:

Manufacturer’s warranties on all products

Future Bazaar sells only original products from authorized dealers; so

all applicable products carry the original manufacturer’s warranty. Customers
can visit any of the authorized service centers of the manufacturer if required.
The invoice accompanying the product is your warranty document, so please
preserve it.

Guaranteed Delivery

Future bazaar guarantees to deliver the exact product you selected,

without defects. In case you have received a different product, or if the product
was damaged in transit, please let us know and we will ensure that we replace
the product or ensure that your money is refunded. Please note that delivery
times vary according to products to products 95%of our deliveries take place
with in the committed time period. For the occasional delays, we wil contact
you and update you about the status.

Secure Payments

We are committed to encuring that no payment misuse happens, so we

work with bank and payment gateways to ensure that your information is
protected. Payments are protected both by us and by the policies of your bank,
and the chances of fraud in these channels are actually very low.
 We also have a Risk Management team that scrutinizes all payments to
ensure that there are no fraudulent transactions. Our office address is also
available for anyone who wishes to contact us in person. moreover, being part
of India’s largest retail company with a presence all over India, we are
omnipresent.

Our simple 15-Days Return Policy – No questions asked!

If you have purchased something at FutureBazaar.com ad the product

did not meet your expectations or does not fit your needs, then you can return
the product to us, no questions asked, as long as it is in its original packaging
and accompanied by its invoice. Just contact our Customer Care and we’ll
arrange to pick up the product from your home – simple.

Prompt Customer Support

Our Customer Care is manned by dedicated personnel, who can take

decisions and resolve your problems. They are empowered to solve your
problems and are aware of the processes and means to handle them. In case they
cannot solve the problem at their end, they will trigger the required action on
your half or advise you the best possible method to a successful fulfillment of
all your queries/issues. Be assured that when you call us, your call is being
taken seriously.

Values:

o Indian ness: Confidence in ourselves.

o Leadership: To be a leader, both in thought and business
o Respect & Humility: To respect every individual and be humble in
our conduct.
o Introspection: Leading to purposeful thinking.
 o Openness: To be open and receptive to new ideas, knowledge and
information.
o Valuing and Nurturing Relationships: To build long term
relationships.
o Simplicity & positivity: Simplicity and positivity in our thought,
business and action.
o Adaptability: To be flexible and adaptable, to meet challenges.

Mission;

We share the vision and belief that our customers and stakeholders
shall be served only by creating and executing future scenarios in the consumption
space leading to economic development. We will be the trendsetters in evolving
delivery formats, creating retail realty, making consumption affordable for all
customer segment.

We shall infuse Indian brands with confidence and renewed ambition.

We shall be efficient, cost – conscious and committed to quality in whatever we do.

We shall ensure that our positive attitude, sincerity, humilityand united

determination shall be the driving force to make us successful.

When the Mughals first came to India they were drawn by the lure of her
fabulous wealth – India was known as the “Sone Ki Chidiya”, literally –“ “The
Golden Bird”.

According to economic historian Angus Maddison in his book the World

Economy: A Millennial Perspective, India had the world’s largest economy in the 1
st century and 11 th century , with a 33% share of world GDP in the 1 st century
and 29% in 1000 CE. During 1700 AD, Mughal era, India’s share was 24%, more
than the whole of Western Europe. It came down to 3.8% in 1950s. paul Kennedy,
in this highly regardd book, The Rise and Fall of the Great Powers: Economic
Change and Military conflict from 1500 to 2000 estimates that in 1750.

India’s share o the world trade was nearly 25 percent. It came down to
0.5% in the 1960s and now stands at around 1..5%.

The Indian economy is once again at the centre of the global attention. As
domestic consumption drives economic growth in India, Future Group hopes to
play a pivotal role in bringing back the Sone Ki Chidiya.

Future Ventures:

Future Ventures, seeks to promote and participate in innovative and emerging

business ventures in India. The company intends to play a role in powering
entrepreneurship, by promoting or participating in diverse business activities,
primarily in “consumption-led” sectors in the country, which it defines as sectors
whose growth and development will be determined primarily by the growing
purchasing power of Indian consumers and their changing tastes, lifestyle and
spending habits.

The company will also participate in businesses where it exercises control or

influence, and can add value as active shareholders, by utilizing the experience and
knowledge of the Future Group, and specifically its parent, pantaloon Retail ltd.

STATEMENT OF THE PROBLEM

  The Organization where the studys the rural fmcg products The retailer satisfaction is a
major cause of sale in marketing and improves the sales towards the retailer Fmcg
products . However the present study deal with the analysis in Retailer consumer
behavior in the organization mainly with an interaction identifying which refer to things
that we buy from local supermarkets on daily basis determining the pre purchase
decision.

1.3 OBJECTIVES OF THE STUDY

 To determine about the rural consumers preference towards FMCG

products.
 To know about the recent demand of FMCG products in rural area.
 To study the factors determining the pre purchase decision.

 To find out how the consumers spent their incomes, time on the
purchasing of the Fmcg Rural products.
 To find out the factors which influence the consumption of the Fmcg
products in karur city

 To study and analyze consumer shopping behavior towards Fmcg Rural

products in karur city
 To identify what type of strategies are suitable for the company to reach
the targeted customers.

SCOPE OF THE STUDY

.
 The scope of the study is to identify the Rural consumer behavior towards
Fmcg product. It is aimed at enlightening the company in karur city about
different steps to be taken up to increase the competitors and also to make the
company to provide better customer services.
The scope of the study is only confined to the area covered under karur city
and only confined in studying about the consumer behavior towads Fmcg products

LIMITATIONS:

 Time has been a major constraint throughout the study as it has been only for
duration of 2 months.

 As this survey was restricted to karur city this cannot be stated as an in depth
research on this subject.

 Enough care is taken in formulating the questionnaire, still some errors may
creep in.
 The Rural consumer behavior varies according to different Fmcg products.

REVIEW OF LITERATURE

Rural market is one of the best opportunity for the FMCG sector. In some sense we can say that
rural market is future of FMCG. As per research of Purba Basu, (faculty of ICFAI business
school),the lifestyle of rural consumers is changing. Rural Indian market and the marketing
strategy have become the latest marketing buzzword for most of the FMCG majors. She added
the strategies of different FMCG companies for capturing rural market like Titan’s Sonata
watches, Coco Cola’s 200ml bottle,different strategies of HUL and Marico etc. She takes into
consideration the study of National Council for Applied Economic Research (NCAER).
According to the NCAER projections, the number of middle and high-income households in
rural area. India is expected to grow from 80 million to 111 million by 2007. In urban India, the
same is expected to grow from 46 million to 59 million. Thus, the absolute size of rural India is
expected to be double that of urban India.

According to Pradeep Tognatta, (former vice president of LG) The economic

growth inIndia's agricultural sector in last year was over 7%, compared with 3% in the industrial
sector.This implies a huge market potentiality for the marketer to meet up increasing demand.
Factors such as village psyche, strong distribution network and market awareness are few
prerequisites for making a dent in the rural markets. The model is of the stolid Anglo-Dutch
conglomerate UnileverGroup, which has enjoyed a century-long presence in India through its
subsidiary HindustanLever Ltd. It was Hindustan Lever that several years ago popularized the
idea of selling itsproducts in tiny packages. Its sachets of detergent and shampoo are in great
demand in Indian villages. Britannia with its low priced Tiger brand biscuits has become some of
the success storyin rural marketing.

Rajesh K Aithal of IIM(L) had done his research on rural telecome in India .He
explain that Rural markets are an important and growing market for most products and services
including telecom. The characteristics of the market in terms of low and spread out population
and limited purchasing power make it a difficult market to capture. The Bottom of the pyramid
marketing strategies and the 4 A's model of Availability, Affordability, Acceptability and
Awareness provide us with a means of developing appropriate strategies to tackle the marketing
issues for marketing telecom services in rural areas. Successful cases like the Grameen Phone in
Bangladesh and Smart Communications Inc in Philippines also provide us with some guidelines
to tackling the issue.

As per concern of my research, it is a detail study of different FMCG products

used by rural consumers. It will provide a detail information about consumers preferences
towards a good number of FMCG products which is too unique and different from those above
researches.

RESEARCH METHODOLOGY

MEANING OF RESEARCH
Research methodology is the way of systematically solving the research problem. It may be
understood as a science of studying how research is done scientifically and systematically.

DEFINITION

According to fred N.Felinger scientific research is systematic, controlled, empirical and critical
investigation of hypothetical propositions about the presumed relations among natural
phenomena.

RESEARCH DESIGN
A research design is an arrangement of conditions for collection and analysis of data in a manner
that aims to combine with relevance to the research purpose with economy in procedure. The
researcher had done a descriptive research for studying the

POPULATION

It is the aggregate of all unit’s processing certain specific characterizes from which the sample will
be drawn.
It can be finite or infinite. In finite universe the number of item is certain but in case of an infinite
universe the number of item is infinite.

SAMPLING METHOD
Here the researcher used the simple random sampling method

SAMPLING SIZE

✓ A part of the population selected for the study is called sample, Here the researcher took 120 as a
sample size.

Data collection method:

1. Primary data: it will be collected with the help of a self administered questionnaire.
This questionnaire aims to gather information related to various Branded products.
2. Secondary data: it will be collected with the help of books, research papers, magazines,
news papers, journals, internet, etc.

RESEARCH INSTRUMENTS
The research instrument used for the study is interview schedule which contain both closed and open
ended questions.

SAMPLE TECHNIQUE:-

Here the researcher used the simple random sampling method.

SAMPLING DESIGN:-

Sample is that by selecting some of the elements in a population we may draw the conclusion about
the entire population.

SAMPLING AREA:-

Sample area is Rural areas uin karur city

ANALYTICAL TOOLS USED

The data has been mainly analyzed by using the following methods and tests.

 Simple Percentage Analysis

 Chi-Square Test.

Gross Tabulation and Percentage Method supplemented by appropriate charts are used to interp,

DATA ANALYSIS AND INTERPRETATION

Gender:
Gender play vital role in purchase decisions. Gender classified on sex Basis
i.e. male and female. Gender classification is requiring to marketer because
different gender exhibit different perception towards products. In classification of
gender the following number is used to know their perception

Sex No. of respondents Percentage

Male 35 35
Female 65 65
Total 100 100

Interpretation:
35% of the respondents are male and 65% of the respondents are female.
From the above table we can conclude that, the majority of the respondents belong
to female group.

Occupation:
 Occupation is also influences a person’s consumption pattern. A blue
Collar worker will buy work cloths, work shoes and lunch boxes. Similarly the
FMCG products are purchased by various occupants.
The following occupants of the respondents are classifies for the data collection.

Occupation No. of respondents Percentage

Business 20 20
Employees 10 10
House wives 65 65
Others 05 05

Interpretation:

20% of the respondents are business, 10% of the respondents are Employees,
and 65% of the respondents are house wives, 05% of the Respondents are others
group.
Purchasing F actor

Identification of various factors plays a vital role in consumer behavior

study. The various factors such as quality, price easy available etc. is influencing
lot and influences positively. The following data reveals how various factors are
influencing to buying of FMCG products.
Factors No of respondents Percentage
Quality 38 38
Brand 28 28
Price 20 20
Easy availability 14 14
Others 0 0
Total 100 100

Interpretation:
38% of respondents buying FMCG products for its Good Quality, 28% of
respondents use for its Band Name,20% of its Price Consideration, 14% of its easy
availability of respondents buying FMCG products.
 Quality:

Company has two responsibility in a quality centered. First, they must

participate in formulating strategies and policies designed to help the company win
through total quality excellence. Second they must deliver marketing quality
alongside production quality. This helps to company to attract more number of
customers to their products. Hence I try to collect information related to quality of
FMCG products.
Opinions No of respondents percentage
Durability 35 35
Freshness 45 45
Taste 20 20
Others 00 00
Total 100 100

Interpretation:
As per the data, 35% of the respondents buy the milk due to Thickness, 45%
of the respondents for Freshness, and 20% of respondents for Taste. Quality takes
vital role in every organization. From the above table we can conclude that
majority of the respondents expressed that FMCG product

Opinion towards Products:

The behavior of users after his commitment to a product has been collected
with respect product and terms of satisfaction with rating scale. The following are
the data obtained related to FMCG products. Analysis of Rating towards FMCG
products
Ratings No of respondents Percentage
Excellent 25 25
Good 48 48
Average 22 22
Poor 05 05
Total 100 100

Interpretation:
 25% of the respondents rated that FMCG products are excellent. 48% of the
respondents rated as good, 22% of the respondents rated as Average Quality. 05%
of the respondents rated that FMCG products are Poor.
From the above table we can conclude that majority of the respondents rated
FMCG are of Good Quality

Purchasing Place:

Purchase place is also important to know where users choose their Purchase
point. This helps to marketer to design various promotion and distribution
programmers’. The data is collected to know the various purchase place and
availability.

Easy available No of respondents percentage

Yes 95 95
No 05 05
Total 100 100
Interpretation:

95% of the respondents said that they are getting FMCG products easily.
Only 05% of the respondents disagree with the easy available of FMCG products.
From the above table we can conclude that majority of the respondents getting the
FMCG products easily from the dealers or retailers
Value for the Money:
Consumers always think while paying price to the products such as how
much we are paying towards products and how much we are getting. This data is
gathered to know what value they are receiving from the FMCG Products.

Response No of respondents percentage

Yes 96 96
No 04 04
Total 100 100

Interpretation:
96% of the respondents feel that they get the value for money they paid.
Only 04% of the respondents feel that they are not getting the value for money
what they paid. From the above table we can conclude that majority of the
respondents are agreed that they are getting the value for money they paid.
Influence to Others to Buy Products:

Post experience & benefits will help organization in obtaining the additional
sale. In this connection feedback its act as an influence to others to adopt the
product the user survey has conducted to identify what an extent user recommends
to others. The data has been extracted & it is as follows.

Recommend No of respondents percentage

Yes 95 95
No 05 05
Total 100 100
Interpretation:

95% of the respondents recommended FMCG products, 05% of the

respondents not recommended FMCG products to others. From the above table we
can conclude that majority of the respondent’s recommended FMCG products.

FINDINGS AND CONCLUSIONS

FINDINGS:

1. It is found in the survey that females are the main decision maker for
the FMCG products. As per the data, 65% of female and 35% of male makes
purchase decision.

2. Based on the occupation of the customer, it is found in the survey

that 65% are the housewives and 35% are from various occupations such as a
businessman, employee, farmers, etc for the FMCG products.

3. The main purchasing factors for the FMCG products are Quality
and Brand image. The data reveals that 42% influences on Quality and 32%
influenced for the Brand.
 4. 88% of the total respondents are using product since from a long
time. The majority of the respondents are using FMCG products from more than 3
years.

5. It is found in the survey that customer are influencing through Word

of Mouth

SUGGESTIONS

 The rural market is very large in compare to the urban market as

well as it is more challenging market.
 The consumer wants those products which are long lasting, good,
easy to use and cheaper.
 The income level of rural consumers is not as high as the income
level of urban consumers that’s why they want low price goods.
 It is necessary for all the FMCG major companies to provide those
products which are easy to available and affordable to the
consumers.
 It is right that the profit margin is very low in the FMCG products,
but at the same time the market size is much large in the rural area.
Conclusions:

From the survey conducted it is observed that FMCG products have a good
market share. From the study conducted the following conclusions can be drawn.
The factors considered by the customer before purchasing FMCG products are
freshness, taste, durability and easy availability.

Finally I conclude that, majority of the customers are satisfied with the
FMCG products because of its good quality, reputation, easy availabilities. Some
customers are not satisfied with the FMCG products because of high price, lack of
availability, spoilage and low shelf life etc. therefore, if slight modification in the
marketing programme such as dealers and outlets, promotion programmers,
product lines etc., definitely company can be as a monopoly and strong market
leader.
 BIBLIOGRAPHY

Marketing Research (Author- G C Beri)

(Publish by Tata McGraw Hill Publishing Co. LTD., New Meerut -

Ghaziabad)

Third Edition (2002)

 Marketing Management (Author- Rajan Sexana)

(Publish by Tata McGraw Hill Publishing Co. LTD, New Meerut -
Ghaziabad)

Second Edition (2001)

 Marketing Management (Author- R S Sexana)

(Publish by Himalaya Publication, New Meerut - Ghaziabad)

Ninth Edition (2000)

 Marketing Management (Author- Philip Kotler)

(Publish by Pren Tice-hall of India PVT. LTD., New Meerut - Ghaziabad)

Ninth Edition (2002)

 Research Methodology (Author- Bhandrai)

Print 2004, second edition
WEB SITE:

www.google.com

Questionnaire
 I am Manikanta Bhakta, student of second year MBA of the Poornaprajana Institute of
Management, Udupi, doing my minor project on “factors to be considered while choosing a
FMCG products” as a part of study. I request you to provide the required information for the
completion of my study. And I Promise that the information is used exclusively for academic
purpose only.

1. Personal profile:
a. Name:
b. Address:
c. Sex: Male: [ ] Female [ ]
d. Age: [ ]

2. Occupation:
a. Self-employed: [ ] b. Professional: [ ]
c. House wife: [ ] d. Student: [ ]

3. What is the most important factor that matters while buying an FMCG?
a. Quality: [ ] b. Price: [ ] c. Service: [ ]

4. How did you come to know about the FMCG product?

a. By friends/family: [ ] b. Direct mailers: [ ]
c. Press Ads: [ ] d. Reference website: [ ]
e. T.V. Ads: [ ]

5. Which configuration would you decide on while buying an FMCG?

a. Intermediaries: [ ] b. Standard: [ ]
c. Latest / Advanced: [ ]
6. Are you satisfied with the quality of the product?
a. Yes: [ ] b. No: [ ]
7. Do you think the price of FMCG product is high / low compared to
Competitor’s product?
a. Very good: [ ] b. High: [ ]
c. Average: [ ] d. Same: [ ]

8. How often do you buy this product of FMCG?

a. Daily: [ ] b. Monthly: [ ]
c. Weekly: [ ] d. Occasionally: [ ]

9. What is your opinion about the performance of FMCG product?

a. Outstanding: [ ] b. excellent: [ ]
c. Good: [ ] d. Average: [ ]

10. Do the various schemes / promotional activities affect your purchase?

a. Yes: [ ] b. No: [ ]

11. Suggestion (if any):

________________________________________________________________________
________________________________________________________________________
________________________________________________

Date: SIGNATURE
 BIBLIOGRAPHY

Text Books

Consumer Behavior: Albert J. Dells Bittas

Consumer Behavior: David L. Loudon

Principles of Marketing: Philip Kotler

Marketing Management: Philip Kotler

Websites:

www.consumerbehavior.com
www.bigbazaar.com

www.panthalone.com

www.futuregroup.com