Small is

Big
Prof. Atul Tandan
Director MICA

18/03/2008

Indian Economy
Year 2003-04 2004-05 2005-06 GDP growth rate in % 8.4 8.3 9.2

2006-07
2007-08
Source: Business Standard 1/03/08
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9.7
8.7 projected

The Indian Consumer - Age

Age 12-14 15-19 20-29 Total % 9.9 13.5 22.8 Urban % 8.5 13.6 24.2 Rural % 10.5 13.5 22.2

30-39
40-49 50+
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20.0
14.3 19.4
Source: IRS 2007

20.3
15.2 18.1

19.9
13.9 20.0

Market Classification
The Globals:
Who buy the most expensive consumer products

The Strivers:
Who buy the bulk of all consumer goods marketed in India

The Seekers:
Who own some durables especially, televisions and small home appliances

The Aspirers:
Who possess the most basic durables such as transistor radios, bicycles, and aspire for the rest

The Deprived:
Who are generally not consumers of manufactured goods
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Consumer Diversity

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Consumer Diversity
Indias economic diversity matches its social diversity Class is difficult to define in India Incomes alone dont define the class Purchase behaviour is related to cultural conditioning, location, source of income, education and occupation The salaried prefer the finance packages but the rural rich relying on agriculture make cash purchases
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Small gives Value

Small is convenient
Small is affordable Price Small is to attract Non-users One time users New users Small saves the space
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Small is Big
For customers, small packs mean
Affordably priced products Less investment Reduced risk of buying

And for companies, it translates into

Large volumes Helps address diverse customer segment Attracts non-users

Single-serve packs are expected to find more prominence in low penetration categories like health food, baby products and more
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Small is Big Retail Outlets

15 million retail outlets spread across India Stamping the country with the epithet "Shopkeepers' Nation" More than 80% of these 15 million outlets are from small family businesses

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Source: The Times of India 29/11/2007

Small is Big
Apart from paying less for a quality product, Indians are very sensitive to costs A large section of sachet users feel that they can restrict the consumption of the product by buying sachets Give consumers more of a chance to experiment with a larger range of brands Sachets also grow due to the Indian tendency of top-up shopping, as opposed to buying large quantities at the end of the month
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Sachets: The Next Big (Small) Thing

Mass market phenomenon 50 paise and Rs 1 are entry level Sachets are well ensconced in few categories and the trend will a rising one Increase category penetration of, which extends their appeal beyond just the lower end of the market Work better with single-use categories with a low frequency of purchase According to Kakkar, the market is polarised between the LPU consumers and those who prefer bottles
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War within a Brand to get a market share

Small pack vs. Big pack Sachet vs. small bottle
Nescafe Sunsilk Vaseline Colgate Nivea Ponds Maggi Clinic All Clear Dabur Honey

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Small FMCG
Shampoo Detergent Hair oil Fairness cream Toothpaste Shaving cream Soap

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Novino

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Small Packs
FMCG companies are focusing more on smaller packs to tap the rural and smaller markets
Small cos use trial packs in newer markets to attract new users

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Small Packs
Small unit packaging
Britannias Tiger Glucose Biscuit Cadburys Dairy Milk Chocolate Parle-G

Inducing product trial

Coke
Panch matlab chota Coke Thanda matlab Coca Cola

Colgate Palmolive distributed free herbal toothpaste for trial use

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Small Packs
Shampoo of Rs.1000 crore category 80%t of sales of shampoos from 50 paise and Re 1 pack CavinKares Chik shampoo prices at 50 paise for 8 ml Fairness cream of Rs. 900 crore category Sell almost 40% through sachets Sachet of 9 gram of fairness cream costs Rs 5 and if you need 3 such packs translates 27grams for Rs 15. You also have a choice of buying a pack of 25 grams for Rs 28

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Small Packs
Sachet sales are strong in hair care and detergent categories Detergents Large pack users prefer the convenience of buying only one pack at a time, rather than using a sachet each time to wash clothes. Low and mid-tier detergent sachet users, sachets act as a great trial-builder to eventually move to large packs" a P&G spokesperson said Daburs Hajmola Sachets are for a younger Bottles are primarily a medicinal offering bought by older people
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Small Packs
Cadbury is pushing Bournvita at Rs 3.50 To taste the product Starting price point for Cadbury Gems for instance is Rs. 1 for a pack of just four units
The lower price unit (LPU) at the company are growing at a healthy 30%

Frito Lays considers it,

The Rs 5 and sub-Rs 5 segment Offerings between Rs 5 and Rs 2 for namkeens Rs 3 for Kurkure, co-exist with larger packs. The number of transactions according to Anand (MD) is almost 50-50

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Cadbury

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Affordable Products
Nestles brands
Maggi at Rs. 5 KitKat at Rs. 2

CavinKares brand
Chik at Rs. 17 for 100 ml.

Godrej Consumer Product

Cinthol, Fairglow and Godrej No. 1 (50 gm at Rs.5)

Hamam at Rs. 3.25

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Hamam

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Sachet, Not Striped Urban Contribution of Small Packs (% of Sales)

Categories Toothpowder Talcum Powder Hair Oils Coffee All Biscuits Coconut Oil 1998 35.7 13 9.8 8.3 1.4 4 2001 42.9 18.1 11.5 13.3 4.4 7.9 2007 (est.) 57 28 15 23.3 10 16

Toothpaste
Mosquito Rep.
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0.9
1.3

2.7
4.1

6.2
9.7

Source: KEIC

Small is big Rural Contribution of Small Packs (% of Sales)

Categories Toothpowder Talcum Powder Hair Oils Coffee All Biscuits Coconut Oil 1998 49.8 22.3 16.4 19.6 1.5 6.4 2001 65.8 31.6 18.3 37.8 5.2 13.1 2007 (est.) 95 49 22.1 73 12.6 26.5

Toothpaste
Mosquito Rep.
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0.8
2.8

3.4
4.7

8.5
9

Source: KEIC

Pepsodent

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Colgate

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Small Packs - Cosmetics

'look good' products
Nail polish Lipstick Same penetration in metros and non-metros Close to 30% of the new growth in these categories comes from less than 1 lakh towns

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Small is Big
New generation foods
(cheese, noodles, cornflakes) are growing; 36% of the growth in branded cornflakes 42% of the growth in noodles comes from small towns!

However snacking (chips and colas) remains largely a metro phenomenon

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Source: The Economic Times 16/07/2003

Small is Dangerous Tobacco - Gutkha

Turnover of close to Rs 25,000 crore 46.5% men 13.8% women use tobacco 250 million people use tobacco products
16% cigarettes smokers 44% bidis rest use gutkha, mishri (roasted black tobacco powder applied to the gums)
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Small is Big - Guthka

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Manikchand

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Rajni Gandha

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Durable
Small towns may be big in terms of their market potential and may not be as far behind the big metros as we think Non-metros are fast catching up with metros in penetration of
'basic' durables
Colour television, Refrigerator
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Source: NRS

High-end durables catch small towns' fancy

According to ORG-GFK estimates, Towns with a population < 1 lakh
Product Name Flat TV Frost Free Refrigerator Fully Auto. Wash. Mach. Towns Contribution in % 33 28 20 Product Category Growth in % 214 31 54

Growing disposable incomes in smaller towns Small price packs the most evident ploy to achieve these Pick-up in demand from smaller markets and rural areas

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Source: The Economic Times 16/03/2005

Nano Samsung AC

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One Time Use Pooja Samagri

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Hospitality Ginger Hotel

Smart Basics
Signifies simplicity Convenience Informality Style Warmth Modernity Affordability
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A Tata Enterprise

Hospitality
One time use
Soap Shampoo After save lotion Body lotion cream Toothpaste Shaving cream Face wash Hair oil Sugar Milk powder Tea Coffee
Currently, India has some 1,975 hotels with over one lakh rooms According to a report by HVS International, a total of 1,02,000 rooms will be added in the next five years in the Indian hotel industry

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Source: The Economic Times 2/4/07

Small requirements in Aviation Industry

Small mineral water Toffee Three years ago, there were 130 commercial Chocolate aircraft, and the number has now swelled to 350 Mouth pick The sector is poised to attract an investment of $200 billion. Increased fleet will enable Salt approximately 2,000 commercial flights every day Sugar by 2020. Jam Milk powder Tea Coffee Butter
Source: Business Line 22/11/07

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Small is Beautiful Mass Market

Nano by Tata
1 lakh Milestone for auto industry Aspirations of Indias rising middle class Solution to urban transport problems
Congestion Environmental impact
Tata

Bajaj - Renault

Bajaj - Renault Electric car by Field Marshal Group, Rajkot

Rs. 99,000
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Small Size - Maruti

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SAS Tractor 30hp

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Engine/Lubricant Oil
Key players
Castrol India Ltd Indian Oil Corporation Bharat Petroleum Corporation Ltd Hindustan Petroleum Corporation

Petrol Pumps keep the engine oil not to lose the customer

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Lubricant

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Cricket
Test match
five days

One Day Cricket

50:50 over

Three hours
20:20 over

Cricketor
Sunil Gavaskar Sachin Tendulkar
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IT - Wave of Miniaturisation
Intel Corporation
Latest brand of mini microprocessor chip
Intel Atom Intel Centrino Atom
Low-cost classmates PC will begin using the Intel Atom

Apple iPod nano

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Worlds Smallest Gadgets

Homes are becoming king size but lifestyle gadgets can be fitted into a dolls house Gadgets fit into palm, briefcase and handbags Price factor makes people smile
Cheapest laptop
MiLeap X Rs. 13,990
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Worlds Smallest Gadgets

Worlds Smallest Digital Camera
Qualia 016(69 x 16.8 x 24 mm) Two mega pixel images Zoom facility Store images on its memory stick Flash Four picture in rapid succession and combine into one image Doesnt require a manual instruction
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Sony

Conclusion Small is smart Small is future Small is for penetration and growth

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Thank You
E-mail: director@mica.ac.in

Prof.AtulTandan
Mobile: +91-98250-70915
18/03/2008

Director, MICA

18/03/2008