A PROJECT ON

MARKETING RESEARCH PROCESS

MARKETING STRATEGIES FOLLOWED BY SELECTED
PLAYERS OF FMCG & RETAILS
(CASE OF AHMEDABAD)

In Partial fulfilment for the awards of the PGPGBM (2014-16)

Submitted by:
Ankit Malli (240)
Vimal Rupapara (218)
Harshil limbani (233)

ACKNOWLEDGEMENT

I acknowledge the sincere assistance provided to me from several rather unexpected quarters
during the course of execution of this study. It would be a mammoth task to place on record my
gratitude to each and every one of them but a whole hearted attempt would be made nevertheless,
least I be branded ungrateful.
I am extremely thankful to Xcellon institute for giving me an opportunity to A STUDY ON
MARKETING STRATEGIES FOLLOWED BY SELECTED PLAYERS OF RETAIL AND FMCG
and making my memorable learning experience.

I am deeply thankful to Prof. Jitendra Sharma (Mentor) for his encouragement, affections,
valuable advice and guidance that helped me to complete this project successfully.

PREFACE
This report focus on study of marketing strategies followed by selected retail and fmcg company,
its marketing environment , demographic factor ,marketing factors. We designed a report to
provide a brief description about its marketing mix & its major competitors in India. We also
discuss four Ps of marketing & their marketing tools. We apply application of industry analysis
tools of retail and fmcg and make data analysis of it.
In addition to it, this report includes a research base survey on marketing strategy fmcg and retail
use, we take interview to selected players of retails and fmcg industry. We all have tried our level
best to fulfill all the requirements mentioned to us. Now its depend upon the reader to read it
carefully and understand what we want to communicate. This report provides a brief knowledge
about all type marketing strategy used by every retail and fmcg company.

EXECUTIVE SUMMARY
The present business scenario is totally customer oriented. Each company faces stiff competition
from its competitors, each provides the best services at competitive rates. As a result customer
has lot of choices to get the best with least cost. To face this competition, it is very important to
know customers behavior towards different products and services.
This project is aimed at understanding the Marketing strategies adopted by retail and fmcg players
and its impact on the perception Customers.
Research has showed that it is far more costly to win a new customer than it is to maintain an
existing one, and there is no better way to retain a customer than to exceed his expectations. For
this purpose it is essential to know the level of customer satisfaction. Finally the results of the
research verify the fact that keeping the customer satisfied is the best strategy to not only retains
the existing customers but also to expand the business to new horizons.
My objective of research is:
To study marketing strategies of Broad-line Retailers in Ahmedabad
To study marketing strategies followed by FMCG (Personal Care) company in Ahmedabad
To study effectiveness of different marketing strategies followed by Broad-line retailers and
personal care.
To study the difference between personal care and broad-line retailing marketing strategies

TABLE OF CONTENTS
SR
NO.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

PARTICULAR
Chapter 1 INTRODUCTION
Overview of Industry
Present status of Industry
Major Trend Industry
Key driver of Industry
Brief of player
-Swot analysis
-marketing mix
-competitive strategy
-key functional strategy
Regulation framework for Industry
Future Prospects For Industry
Chapter 2 Application of Industry Analysis Tools
Pestle Analysis
Five Force Analysis
Bcg Matrix
I/O Framework
Value Chain Analysis
Strategy Group Mapping
Chapter 3 Research
Research methodology
Appendixes & Bibliographic
Data Analysis
Discussion Guide

PAGE
NO.
6
10
12
14
16

44
48
53
53
56
58
61
62
63
65
65
67
68
69

Chapter: 1 INTRODUCTION

Retail Industry
The Indian retail industry has emerged as one of the most dynamic and fast-paced industries due
to the entry of several new players. It accounts for over 10 per cent of the countrys Gross
Domestic Product (GDP) and around 8 per cent of the employment. India is the worlds fifthlargest global destination in the retail space.

Market Size
The Boston Consulting Group and Retailers Association of India published a report titled, Retail
2020: Retrospect, Reinvent, Rewrite, highlighting that Indias retail market is expected to nearly
double to US$ 1 trillion by 2020 from US$ 600 billion in 2015, driven by income growth,
urbanization and attitudinal shifts. The report adds that while the overall retail market is expected
to grow at 12 per cent per annum, modern trade would expand twice as fast at 20 per cent per
annum and traditional trade at 10 per cent.
Retail spending in the top seven Indian cities amounted to Rs 3.58 trillion (US$ 57.6 billion), with
organized retail penetration at 19 per cent as of 2014. Online retail is expected to be at par with
the physical stores in the next five years. India is expected to become the worlds fastest growing
e-commerce market, driven by robust investment in the sector and rapid increase in the number
of internet users. Indias e-commerce market is estimated to expand to over US$ 100 billion by
2020 from US$ 3.5 billion in 2014.

INVESTMENT SCENARIO
The Indian retail industry in the single-brand segment has received Foreign Direct Investment
(FDI) equity inflows totaling US$ 275.4 million during April 2000May 2015, according to the
Department of Industrial Policies and Promotion (DIPP).With the rising need for consumer goods
in different sectors including consumer electronics and home appliances, many companies have
invested in the Indian retail space in the past few months.
Paytm plans to set up 30,00050,000 retail outlets where its customers can load cash on their
digital wallets. The company is also looking to enroll retailers mostly kirana stores as
merchants for accepting digital payments. Mobile wallet company MobiKwik has partnered with
Jabong.com to provide mobile payment services to Jabongs customers.
Data Wind partnered with HomeShop18 to expand its retail footprint in the country. Under the
partnership, HomeShop18 and Data Wind would jointly launch special sales programs across
broadcast, mobile and internet media to provide greater access to the latters tablet range.
Fashion And You has opened three distribution hubs in Surat, Mumbai and Bengaluru to
accelerate deliveries. Abu Dhabi-based Lulu Group plans to invest Rs 2,500 crore (US$ 402.0
million) in a fruit and vegetable processing unit, an integrated meat processing unit, and a modern
shopping mall in Hyderabad, Telangana.
6

Aditya Birla Retail, a part of the US$ 40 billion Aditya Birla Group and the fourth-largest
supermarket retailer in the country, acquired Total hypermarkets owned by Jubilant Retail. With
an aim to strengthen its advertising segment, Flipkart acquired mobile ad network AdiQuity, which
has a history of mobile innovations and valuable experience in the ad space.US-based Pizza
chain Sbarro plans an almost threefold increase in its store count from the current 17 to 50 over
the next two years through multiple business models. Amazon, the world's largest online retailer,
is readying a US$ 5.0 billion war chest to make India its biggest market outside the US. Wal-Mart
India Private Ltd, a wholly owned subsidiary of Wal-Mart Stores Inc., plans to open 500 stores in
India in the next 1015 years.
British retail major Tesco invested Rs 850 crore (US$ 133.8 million) in multi-brand retail trading
by forming an equal joint venture with Tata group company Trent; to form the joint venture, Tesco
purchased 50 per cent stake in Trent Hypermarket Ltd (THL). THL operates the Star Bazaar retail
business in India.

GROWTH OF RETAIL
Retail and real estate are the two booming sectors of India in the present times. And if industry
experts are to be believed, the prospects of both the sectors are mutually dependent on each
other. Retail, one of Indias largest industries, has presently emerged as one of the most
dynamic and fast paced industries of our times with several players entering the market.
Accounting for over 10 per cent of the countrys GDP and around eight per cent of the
employment retailing in India is gradually inching its way toward becoming the next boom industry.
As the contemporary retail sector in India is reflected in sprawling shopping centers, multiplexmalls and huge complexes offer shopping, entertainment and food all under one roof, the concept
of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution
in shopping in India. This has also contributed to large-scale investments in the real estate sector
with major national and global players investing in developing the infrastructure and construction
of the retailing business. The trends that are driving the growth of the retail sector in India are:
Low share of organized retailing
Falling real estate prices
Increase in disposable income and customer aspiration
Increase in expenditure for luxury items (CHART)

FMCG INDUSTRY
INTRODUCTION
The overall fast moving consumer goods (FMCG) market is expected to increase at a compound
annual growth rate (CAGR) of 14.7 per cent to US$ 110.4 billion during 20122020, with the rural
FMCG market expected to increase at a CAGR of 17.7 per cent to US$ 100 billion during 2011
2025.Rising incomes and growing youth population have been key growth drivers for the sector.
Brand consciousness has also aided demand. It is estimated that First Time Modern Trade
Shoppers (FTMTS) spend will reach US$ 1 billion by 2015.
The industry has witnessed healthy foreign direct investment (FDI) inflow, as the sector accounted
for 3 per cent of the countrys total FDI inflow in the period April 2000 to October 2013. Organized
retail share is expected to double to 1418 per cent of the overall retail market by 2015.
The Government of India has approved 51 per cent FDI in multi-brand retail, which will boost the
nascent organized retail market in the country. It has also allowed 100 per cent FDI in the cash
and carry segment and in single-brand retail. The government has also amended the Sugarcane
Control Order, 1966, and replaced the Statutory Minimum Price (SMP) of sugarcane with Fair and
Remunerative Price (FRP) and the State Advised Price (SAP).
The FMCG sector has grown at an annual average of about 11 per cent over the last decade. The
overall FMCG market is expected to increase at (CAGR) of 14.7 per cent to touch US$ 110.4
billion during 2012-2020, with the rural FMCG market anticipated to increase at a CAGR of 17.7
per cent to reach US$ 100 billion during 2012-2025.Food products is the leading segment,
accounting for 43 per cent of the overall market. Personal care (22 per cent) and fabric care (12
per cent) come next in terms of market share.
Growing awareness, easier access, and changing lifestyles have been the key growth drivers for
the consumer market. The Government of India's policies and regulatory frameworks such as
relaxation of license rules and approval of 51 per cent foreign direct investment (FDI) in multibrand and 100 per cent in single-brand retail are some of the major growth drivers for the
consumer market.

Road Ahead
FMCG brands would need to focus on R&D and innovation as a means of growth. Companies
that continue to do well would be the ones that have a culture that promotes using customer
insights to create either the next generation of products or in some cases, new product categories.
One area that we see global and local FMCG brands investing more in is health and wellness.
Health and wellness is a mega trend shaping consumer preferences and shopping habits and
FMCG brands are listening. Leading global and Indian food and beverage brands have embraced
this trend and are focused on creating new emerging brands in health and wellness.
According to the PwC-FICCI report Winds of change, 2013: the wellness consumer, nutrition
foods, beverages and supplements comprise an INR 145 billion to 150 billion market in India, is
growing at a CAGR of 10 to 12%.

Investments Overview
Bosch & Siemens, the largest manufacturer of home appliances in Europe, plans to manufacture
more products in India in the next three years, led by rise in demand for premium home and
kitchen appliances. San Francisco-based Fit bit Inc., a fitness-tracking device maker, has
launched its fitness wristbands across 300 towns in India and expects the country to be among
its top five markets in next two years, with increasing demand for health monitoring devices in the
country. Italian premium apparel and denim brand GAS has planned to form a joint venture
company with Reliance Brands for consolidation and expansion of its business in India.
FMCG major Hindustan Unilever (HUL) announced a reorganization of its go-to-market
operations from the traditional four sales branches to 14 consumer clusters in order to provide
services to diverse consumers across channels and geographies. The company has termed the
initiative as Winning in Many Indias. Hero Group is set to acquire a majority stake in direct-tohome devices manufacturer my box Technologies through its subsidiary Hero Electronics. The
deal is the first step by Hero Group, which operates in numerous business verticals, towards
entering the consumer electronics market.
Chinese technology major Huawei is entering the consumer broadband networking segment in
India, with a range of devices aimed at homes and SOHO customers. With the aim to strengthen
its position in the Indian market, online cashback and coupon site CashKaro.com plans to list
about 50 global retailers over the next six months, according to one of its founders.
Smartphone brand Gionee is entering the urban market in a big way through tie-ups with Indias
top large format retailers. The companys smartphones will now be available at stores such as
Spice, The Mobile Store, Mobility World, Jumbo Electronics, Croma Retail and Planet M retail,
expanding its overall footprint to over a thousand retail stores.

GROWTH OF FMCG
According to a study by TMW and Marketing Sciences that surveyed 2,000 people across different
age groups ranging, young consumers are the most rational and likely to spend more time
weighing up potential purchases. The survey also suggests that younger people are using
recommendations from their peers about products and services in order to make rational
purchase decisions. According to the study, shoppers aged 18 to 24 are 174 per cent more likely
to use recommendations on social media than shoppers aged 25 and over.
Another key factor today is speed. Today's consumer wants packaged goods that work better,
faster, and smarter. The need for speed" trend highlights the importance of speed as a potentially
decisive purchase factor for packaged goods products in a world where distinctions between
products are shrinking.
Younger consumers express the greatest need for speed, not a huge surprise for the smartphone
generation. Data monitors 2013 Consumer Survey found that younger consumers those in the
15-24 year old age group were twice as likely to say that "results are achieved quickly" has a
"very high amount of influence" on their health and beauty product choices than consumers in the
oldest age group, those aged 65 or older. Speed matters, and 2014 will almost certainly see the
introduction of new game-changing timesavers.

PRESENT STATUS OF THE INDUSTRY

RETAILING IN INDIA: THE PRESENT SCENARIO

The present value of the Indian retail market is estimated by the India Retail Report to be around
Rs. 12, 00,000 crore ($270 billion) and the annual growth rate is 5.7 percent. Retail market for
food and grocery with a worth of Rs. 7, 43,900 crore is the largest of the different types of retail
industries present in India. Furthermore around 15 million retail outlets help India win the crown
of having the highest retail outlet density in the world. The contribution of retail sector to GDP has
been manifested below:

Source: CII-AT Kearney Retail Study

As can be clearly seen, retailing in India is superior to those of its contenders. Retail sector is a
sunrise industry in India and the prospect for growth is simply huge. There are many factors that
have stimulated the rise of the shopping centers and multiplex-malls in a jiffy. Some of them can
be listed as follows:
Rise in the purchasing power of Indians- the rise in the per capita income in the last few years
has been magnificent. This has led to the generation of insatiable wants of the upper and middle
class. The demand of new as well as second hand durables has risen throughout the country thus
providing the incentive for taking up retailing.
Favorable to farmers- retailing has helped in removing the middlemen and has thus enhanced
the remuneration to farmers. This is a new revolution in the agricultural sector in India and will go
a long way in amending the condition of agriculture, a major concern among policy makers.
Use of credit- a typical Indian is most conversant with using credit cards than carrying money.
This has led to a shift of the consumer base towards supermarkets and make the payments in
the
form
of
credit.
Comfortable Atmosphere- a visit to a retail store appears to be more soothing for the generation.
People and kids prefer to shop in an air conditioned a tech savvy manner.
The retail industry is the second largest employer in India. It currently employs about 7 percent of
the total labor force in India. Finance Minister P. Chidambaram's recent statement salaries ought
not to be legislated is a welcome move as most of the organized retail is in private hands.
However only about 4.6% of the total retail trade is in organized sector. It generates about Rs.55,
000 crore ($12.4 billion). The major and minor players desperately need to work hard in this
direction so that next time the figures look more decent. The government must also make an
attempt to ameliorate the situation as political instability and infrastructure namely power and
roads are the major roadblocks in the path of smooth functioning of the market.

10

FMCG IN INDIA: THE PRESENT SCENARIO

Fast Moving Consumer Goods (FMCG) Industry in India is one of the fastest developing sectors
in the Indian economy. At present the FMCG Industry is worth US$ 13.1 billion and it is the 4th
largest in the Indian Economy. These products have very fast turnaround rate, i.e. the time from
production to the revenue from the sale of the product is very less. In the present economic
scenario, time is regarded as money, so the FMCG companies have to be very fast in
manufacturing and supplying these goods. Fast Moving Consumer Goods (FMCG) Industry in
India
Facts.
The Fast Moving Consumer Goods (FMCG) Industry in India include segments like cosmetics,
toiletries, glassware, batteries, bulbs, pharmaceuticals, packaged food products, white goods,
house care products, plastic goods, consumer non-durables, etc. The FMCG market is highly
concentrated in the urban areas as the rise in the income of the middle-income group is one of
the
major
factors
for
the
growth
of
the
Indian
FMCG
market.
The penetration in the rural areas in India is not high as yet and the opportunity of growth in these
areas is huge by means of enhanced penetration in to the rural market and conducting awareness
programs in these areas. The scopes for the growth of the FMCG industry are high as the per
capita consumption of the FMCG products in India is low in comparison to the other developed
countries. The manufacturing of the FMCG goods is concentrated in the western and southern
belt of the country. There are other pockets of FMCG manufacturing hubs.
The FMCG sector has grown at an annual average of about 11 per cent over the last decade. The
overall FMCG market is expected to increase at (CAGR) of 14.7 per cent to touch US$ 110.4
billion during 2012-2020, with the rural FMCG market anticipated to increase at a CAGR of 17.7
per cent to reach US$ 100 billion during 2012-2025.Food products is the leading segment,
accounting for 43 per cent of the overall market. Personal care (22 per cent) and fabric care (12
per cent) come next in terms of market share.
Growing awareness, easier access, and changing lifestyles have been the key growth drivers for
the consumer market. The Government of India's policies and regulatory frameworks such as
relaxation of license rules and approval of 51 per cent foreign direct investment (FDI) in multibrand and 100 per cent in single-brand retail are some of the major growth drivers for the
consumer market

11

MAJOR TRENDS IN THE INDUSTRY

REATAIL SECTOR
In the past few years, Indian Retail sector has seen tremendous growth in the organized segment.
Major domestic players have stepped into the retail arena with long term, ambitious plans to
expand their business across verticals, cities and formats. Companies like Tata, Reliance, Adani
Enterprise and Bharti have been investing considerably in the booming Indian Retail market.
Along with these giant retailers, a number of transnational brands have also entered into the
market to set up retail chains in close association with bigger Indian companies.
High consumer spending over the years by the young population (more than 31% of the country
is below 14 years) and sharp rise in disposable income are driving the Indian organized retail
sectors growth. Even Tier I & Tier II cities and towns are witnessing a major shift in consumer
preferences and lifestyles, the result of which, they have emerged as attractive markets for
retailers to expand their presence. The Indian retail sector is highly fragmented and the
unorganized sector has around 13 million retail outlets that account for around 95-96% of the total
Indian retail industry. However, going forward, the organized sectors growth potential is expected
to increase due to globalization, high economic growth, and improved lifestyle.
Although the growth potential in the sector is immense, there are obstacles too, that could slow
the pace of growth for new entrants. Rigid regulations, high personnel costs, real estate costs,
lack of basic infrastructure, and highly competitive domestic retailer groups are some such
challenges within retail, the emerging sectors would be food and grocery, apparel, electronics, ecommerce, fashion and lifestyle. Incorporation of technology in the organized retail segment has
been something to reckon with in the past few years. Use of computers for merchandise planning
and management, control of inventory costs and supplies and replenishment of goods done
electronically, internal store billing, etc. has changed the face of product retailing.
Online retail business is the next gen format which has high potential for growth in the near future.
After conquering physical stores, retailers are now foraying into the domain of e-retailing. The
retail industry is all set to test waters over the online medium, by selling products through
websites. Food and grocery stores comprises the largest chunk of the Indian retail market. An
emerging trend in this segment is the virtual formats where customer orders are taken online
through web portals which are delivered at the door step the very same day or the following day.
This trend has been catching up with most of the large sized retail chains that have their websites.
Flourishing organized retail sector: The construction of mega malls and hypermarkets is boosting
organized retailing. Spending capacity of youth is showing an upward trend. India has large youth
population Easy availability of customer credit, increase in use of credit cards, access to cheap
and quick loans. Changing mindset of consumers. The mindset of buyers is shifting from low price
and higher quantity to better quality and high satisfaction. High brand consciousness amongst
buyers.

12

FMCG SECTOR
The Indian FMCG industry represents nearly 2.5% of the countrys GDP. The industry has tripled
in size in past 10 years and has grown at ~17%CAGR in the last 5 years driven by rising income
levels, increasing urbanization, and strong rural demand and favorable demographic trends. The
sector accounted for 1.9% of the nations total FDI inflows in April 2000- September 2012.
Cumulative FDI inflows into India from April 2000 to April 2013 in the food processing sector stood
at `9,000.3 crore, accounting for 0.96% of overall FDI inflows while the soaps, cosmetics and
toiletries, accounting for 0.32% of overall FDI at `3,115.5 crore. Food products and personal care
together make up two-third of the sectors revenues. Rural India accounts for more than 700 MN
consumers or 70% of the Indian population and accounts for 50% of the total FMCG market. With
changing lifestyle and increasing consumer demand, the Indian FMCG market is expected to
cross $80 ban by 2026 in towns with population of up to 10 lakh. India's labor cost is amongst the
lowest in the world, after China & Indonesia, giving it a competitive advantage over other
countries. Unilever Plc.s $5.4 billion bid for a 23% stake in Hindustan Unilever is the largest Asia
Pacific cross border inbound merger and acquisition (M&A) deal so far in FY14 and is the fifth
largest India Inbound M&A transaction on record till date. Excise duty on cigarette has been
increased in the Union Budget for 2013-14, which would hit major industrial conglomerates like
ITC, VST Industries in the short term.
Untapped rural market India is one of the worlds biggest producers of a number of FMCG
products but the countrys exports account for a very small proportion of the overall output. Foodprocessing Industry: With 200 MN people expected to shift to processed and packaged food, India
needs around USD 30 ban of investment in the food processing industry.
Indias per capita income, a measure of living standards, is projected to have increased 11.7 per
cent to `5,729 per month in 2012-13 at current prices, up from `5,130 in the previous fiscal. The
per capital income at current prices during 2012-13 is estimated to have stood at `68,747, up from
`61,564 in FY 2011-12. Rising per capital incomes are likely to bolster discretionary spending,
driving growth in the Indian FMCG sector. The per capita income in real terms (at 2004-05
constant prices) during 2012- 13 is likely to attain a level of `39,143 as compared to the First
Revised Estimate for the year 2011-12 of `38,037. According to the IMF, Indias per capital income
is tipped to grow at a CAGR of 8.8 per cent to USD 2,228.5 over a period of 2012-17. In 201213, Indias per capita income stood at USD 1,535.6. Also, rising number of working women and
the reducing popularity of the joint family system has increased the demand for processed and
packaged food products. Further, rising awareness has also boosted demand for personal care
and healthcare products. People in the rural areas have become more open to consuming modern
packages food products and personal grooming products as satellite TV and internet powers
awareness.

13

KEY DRIVING FORCES OF THE INDUSTRY

RETAIL SECTOR
Economic growth: The increased disposable income resulting from economic growth has spurred
higher spend on retail as consumers look out for preferences and become brand conscious. This
gives firms the chance to target the large middle class who were earlier hard to reach because of
their price sensitivity.
Demographics: As the demographics change, the consumer demand also shifts, favoring certain
products over others. Hence it's important for the retail industry to look out for these demographic
changes and realign themselves to be ready to cater to the changing demands.
Urbanization: As people move into the urban areas and spend long hours at work, they require
products that make life easier for them. Retail industries have sprung up to cater to these needs
in the form of ready-to-eat food and affordable readymade clothing.
Credit availability: The availability of credit spurs a proportional growth in spend. However the
extent of spend is also dependent on the culture of the place - some cultures tend to be credit
loving while others tend to discourage too much use of credit in everyday life. In Philippines, credit
does spur growth, though on a moderate scale.
Supply chain: A superior and well established supply chain ensures that the products are more
accessible to the customers, improving demand-supply matching. This also reduces inventory
costs and spurs sales

14

FMCG Sector Key Drivers:

Disposable Income:
There is increase in disposable income, observed in both rural and urban consumers, which is
giving opportunity to many rural consumers to shift from traditional unorganized unbranded
products to branded FMCG products and urban fraternity to splurge on value added and lifestyle
products. The increasing salaries, along with rising trend of perks in the corporate sector at regular
intervals, have increased peoples spending power. As per some research, there is a high
correlation between Disposable per capita and HPC per capita.
Organized Retail:
The emergence of organized retail have led to more variety with ease in browsing, opportunity to
compare with different products in a category, one stop destination (entertainment, food and
shopping) etc., which is playing an important role in bringing boom in the Indian FMCG market.
Currently the modern. Trade is capturing 5% of the total retail space, which will increase to 10%
and 25%in 2010 and 2025 respectively. Also, as the credit card and organized retail trend picks
up, people wont think much while buying and buy more.
Distribution Depth - Rural Penetration:
There are 5500 towns and 6.38 Lacsvillages with 2.5Mln and 5Mln outlets respectively. Due to
saturation and cut throat competition in urban India, many FMCG companies are devising
strategies for targeting rural consumers in a big way. Many FMCG companies are focusing on
increasing their distribution network to penetrate with a step by step plan. This is the reason that
FMCG urban market size has dropped from 50% to 29% in last 5years. The FMCG market size
for semi-urban and rural segment was 19% and 52%respectively for the year 2006-07. The
planned development of roads, ports, railways and airports, will increase FMCG penetration in
the long term. 180 million rural and semi-Urban peoples attention has already Been diverted
towards FMCG products, according to latest estimates released by industry chamber, Ascham in
2008. The estimated number of households using FMCG products in rural India has grown from
131 million in 2004 to 140 million in2007, according to market research company IMRB. Over
70% sale of FMCG products is made to middle class households and over 50% of middle class
is in rural India.
Buying Pattern Shift:
The crisis of declining FMCG markets during 2001-04 was driven by new avenues of expenditure
for growing consumer income such as consumer durables, entertainment, mobiles, motorbikes
etc. Now, as many consumers have already upgraded, their income is being directed towards
pampering themselves.
Favorable Indian Economy & Demographics:
45% people in India are under 20years of age. Per capita disposable income has increased
from $550 to $600 in 2007(9% increase). GDP is growing at a CAGR between 8 to 9%.In the next
five years, affluent and aspirers as a total will supersede strivers and will be dominated by
aspirers, as per NCAER.

15

Brief on Major players in the Industry

BIG BAZAAR
Big Bazaar is the largest hypermarket chain in India. Big Bazaar was launched in September,
2001 with the opening of its first four stores in Kolkata, Indore, Bangalore and Hyderabad in 22
days. Currently, there are 214 stores across 90 cities and towns in India covering around 16
million sq. of retail space. It was started by Kishore Biyani. Big Bazaar was launched mainly as a
fashion format selling apparel, cosmetics, accessories and general merchandise. Over the years,
the retail chain has included in its portfolio a wide range of products and services, ranging from
grocery to electronics.
Big Bazaar is popularly known as the Indian Wal-Mart today. Most Big Bazaar outlets are multileveled stores and are located in stand-alone buildings in city center as well as within shopping
malls. These stores have more than 2, 00,000 stock keeping units (SKU) in a wide range of
categories, led primarily by fashion and food products. The retail space of these stores in the
metros range between 50,000 and 1, 60,000 sq.
According to Kishore Biyanis 3-C theory, Change and Confidence among the entire population
is leading to rise in Consumption, through better employment and income which in turn is creating
value to the agricultural products across the country. Big Bazaar has divided India into three
segments:1. India One: - Consuming class which includes upper middle and lower middle class (14% of
India's population).
2. India Two: Serving class which includes people like drivers, household helps, office peons,
liftmen, watchmen, etc. (55% of India's population).
3. India Three: Struggling class (remaining 31% of India's population).
While Big Bazaar is targeted at the population across India One and India Two segments,
Aadhaar Wholesale is aimed at reaching the population in India Three segment. With this, Future
Group emerged as a retail destination for consumers across all classes in the Indian society.

16

SWOT ANALYSIS:

1. Strengths
Everyday low pricing
Point of purchase
Experience marketing team executive staff
Emphasis on providing total customer satisfaction
Variety of stuff under single roof
Maintain good employee-employer relationship

2. Weakness
Failing revenue/sq.
Unable to meet store targets
Unavailability of popular brands

3. Opportunities
Population of country is growing where the scope of market is kept on increasing for retail sector.
Evolving consumer preference
Organized retail presently nearly 5% in India. So it acts as a great opportunities to the organization
for its growth.

4. Threats
Competition from organized retail players which are in market and are emerging.
Competition from local retailers.

17

Competitive strategies:
Big Bazaar has launched new marketing strategy which is based on Guerrilla Marketing. Guerrilla
marketing warfare strategies are a type of marketing warfare strategy designed to wear down the
enemy by a long series of minor attacks, using principles of surprise and hit and run tactics. Attack,
retreat, hide, then do it again, and again, until the competitor moves on to other markets. Herein
guerrilla force is divided into small groups that selectively attack the target at its weak points. In
the world of cut throat competition, corporate use extension of the same strategy in marketing.
Corporate like Coke, Pepsi, etc. have been using the same for quite some time now and the latest
entrant is our very own Future Group- Big Bazaar, Pantaloons, Future Bazaar, e-zine are all part
of this group and they are taking on the biggies like Shoppers Stop, Lifestyle and Tatas Westside.
In order to do the same, Future Group have come up with 3 catchy and cheeky ad campaigns
which surely do catch our eyes and surely one cant resist appreciating the same.
1. Keep West-aside. Make a smart choice!
2. Shoppers! Stop. Make a smart choice!
3. Change Your Lifestyle. Make a smart choice!
Advertising: - The departmental store chain Big Bazaar has launched a commercial sometime
back to promote 'The Great Exchange Offer'. The commercial portrays how customers can
exchange any old and broken items (junk) and get new products at a discounted price from Big
Bazaar.
The 30 seconds film unfolds through the eyes of a cabbie in a busy city street, he is intrigued by
the disruptive visual of a well-dressed office executive carrying a bundle of old newspaper and
walking through a crowded place. The cabby then notices a young office going lady in western
wear carrying a rusty bucket filled with broken utensils, the cabbie is absolutely confounded but
continues to follow her with a broken tire in his hand and comes across another absurd situation
of a highly placed executive in a chauffeur driven car with a broken commode on the top of the
car. Penultimate situation reveals everybody is heading towards Big Bazaar for the exchange
offer; the cabbie comes out of the store happy and excited after getting an amazing deal for his
junk tire. Moving images are interspersed with supers that hi-light the amazing prices a consumer
can get for his junk. The sound track uses a typical kabada guy's shout as he walks through City
Street calling for junk.
The month of January and February is generally a low-key affair in terms of customer footfalls
and revenue generation. Innovative, out of the box promotions is one of the effective ways to draw
customer attention and shore up the revenue. Historically exchange schemes have been used to
induce better sales, it also has a strong appeal with the Indian mindset of getting value even for
their junk, states an official release from Big Bazaar.
Brand Ambassador: - A brand ambassador is a celebrity (or an attractive or interesting person)
used to help advertise a product or services. Big Bazaar, has roped in cricketer Mahendra Singh
Dhoni as the brand ambassador for its new range of fashion apparel. Dhoni would feature in a
series of advertisements across all media. Dhoni and Big Bazaar have a lot of synergies as the
Indian one-day international teams captain stands for the aspirations of youths, while Big Bazaar
is looked up to by millions of Indians to fulfill their aspirations.
In this way, Big Bazaar make full use of the marketing mix for a new venture which earlier belongs
to the unorganized retail sector, i.e., kirana stores. Application of the best marketing practices
helps Big Bazaar in a great way.
18

SPECIAL STRATEGIES:1. To minimize retailing cost.

2. Operating: - Fewer staff on the floor; one person for every 500 sq.
3. Minimize the furniture cost.
4. Saving shelf space.
5. Way to deal unsold stock off.
6. Todays Price:- Everyday a chosen product is being sold at lower than usual price.

19

MARKETING MIX OF BIG BAZAAR:Product: - Big Bazaar offers a wide range of products which range from apparels, food, farm
products, furniture, child care, toys, etc. of various brands like Levis, Allen Solly, Pepsi, CocaCola, HUL, ITC, P&G, LG, Samsung, Nokia, HP etc. Big Bazaar also promotes a number of in
house brands like:1. DJ & C
2. Tasty Treat
3. Clean Mate
4. Sensei
5. Care Mate
6. Koryo and 44 other brands.

Pricing: - The pricing objective at Big Bazaar is to get Maximum Market Share. Pricing at Big
Bazaar is based on the following techniques:1. Value Pricing (EDLP Every Day Low pricing):- Big Bazaar promises consumers the lowest
available price without coupon clipping, waiting for discount promotions, or comparison shopping.
2. Promotional Pricing: - Big Bazaar offers financing at low interest rate. The concept of
psychological discounting (Rs.99, Rs.49, etc.) is also used to attract customers. Big Bazaar also
caters on Special Event Pricing (Close to Diwali, Gudi Padva and Durga Pooja ).

3. Differentiated Pricing: - Differentiated pricing, i.e., difference in rate based on peak and nonpeak hours or days of shopping is also a pricing technique used in Indian retail, which is
aggressively used by Big Bazaar. For example, Wednesday Bazaar.

Bundling: - It refers to selling combo-packs and offering discount to customers. The combo-packs
add value to customer and lead to increased sales. Big Bazaar lays a lot of importance on
bundling. For example 3 Good Day family packs at Rs.60 (Price of 1 pack = Rs.22), 5 kg oil + 5
kg rice + 5 kg sugar for Rs.599.
Place: - The Big Bazaar stores are operational across three formats hypermarkets spread over
40,000 - 45,000 sq., the Express format over 15,000 - 20,000 sq. And the Super Centers set up
over 1 lakh sq. Currently Big Bazaar operates in over 34 cities and towns across India with 116
stores. Apart from the metros these stores are also doing well in the tier II cities. These stores are
normally located in high traffic areas. Big Bazaar aims at starting stores in developing areas to
take an early advantage before the real estate value booms. Mr. Biyani is planning to invest
around Rs.350 cores over the next one year expansion of Big Bazaar. In order to gain a
competitive advantage Big Bazaar has also launched a website www.futurebazaar.com, which
helps customers to orders products online which will be delivered to their doorstep. This helps in
saving a lot of time of its customers.
20

Promotion: - The various promotion schemes used at Big Bazaar include:1. Saal ke sabse saste 3 din.
2. Hafte ka sabse sasta din Wednesday bazaar.
3. Exchange Offers Junk swap offer.
4. Future card (3% discount).
5. Shakti card.
6. Advertisement (print ad, TV ad, radio).
7. Brand endorsement by M S Dhoni and Asin.
8. Big Bazaar has come up with 3 catchy lines written on hoardings taking on biggies like
Westside, Shoppers stop and Lifestyle. They are:a) Keep west - aside. Make a smart choice!
b) Shoppers! Stop. Make a smart choice!
c) Change your Lifestyle. Make a smart choice!
People:1. Well trained staff at stores to help people with their purchases.
2. Employ close to 10,000 people and employ around 500 more per month.
3. Well - dressed staff improves the overall appearance of store.
4. Use scenario planning as a tool for quick decision making multiple counters for payment, staff
at store to keep baggage and security guards at every gate, makes for a customer friendly
atmosphere.
Process: - Big Bazaar places a lot of importance on the process right from the purchase to the
delivery of goods. When customers enter the stores they can add the products they which to
purchase in their trolley from the racks. There are multiple counters where bill can be generated
for purchases made. Big Bazaar also provides delivery of products over purchases of Rs.1000.
Physical Evidence: - Products in Big Bazaar are properly stacked in appropriate racks. There
are different departments in the store which display similar kind of products. Throughout the store
there are boards/written displays put up which help in identifying the location of a product.
Moreover boards are put up above the products which give information about the products, its
price and offers. Big Bazaar stores are normally U shaped and well planned & designed.

21

HyperCity
Founded in 2006, HyperCity Retail (India) Ltd. is part of the K. Raheja Corp. Group, a leader in
the Indian retail sector. K. Raheja Corp helped create modern retailing in India with the Shopper's
Stop, Mall and Crossword chains in addition to its successes in realty and hospitality.
HyperCity opened its first store in Malad, Mumbai. Today, HyperCity has opened a total of 17 stores since
the
company's
founding
and
has
established
a
presence
in
cities
including Hyderabad, Bangalore, Jaipur, Amritsar, Bhopal, Navi Mumbai, Ahmedabad, Vadodara and Pune
New Delhi
The K. Raheja Corp. Group, with retail interests in two existing chains, Shoppers' Stop
(department store) and Crossword (bookstore), has further expanded its presence in the retail
arena, with India's largest hypermarket - 'HyperCity. HyperCity provides a truly international
shopping experience, where customers can shop comfortably in a large, modern, and exciting
environment. HyperCity offers a wide and contemporary range of innovative products, sourced
from both local and international markets.

Background and Inception of the Company

At over 1.2 lace sq. ft.; is the biggest Hyper CITY and will continue to offer the widest selection of
innovative products sourced from both local and global markets. Hyper CITY,
Indias finest hypermarket chain which was launched its Bangalore store on 25th March at
Embassy Paragon, ITPL Road, near Brooke Field. The city of Bangalore has the relevant
characteristics of a rapidly emerging market: A cosmopolitan environment, a broad base of
customers with a high propensity to purchase and above all, fast growing organizedretail.Hyper
CITY houses well-acclaimed international brands like Waitrose and Raleigh. The store has
developed a suite of exclusive brands across all categories via; Fresh Basket in Food, Beano and
Avro in Home-ware, Maxi in Sports, Techno in Appliances, City, Reverencing Fashion among
others.

22

SWOT Analysis
Strengths
Leader in the Indian retail sector with prior experience in running retail stores such as Shoppers
stop, In-orbit mall and crossword before establishing HyperCity
Accomplished over 12 HyperCity superstores in India in all major cities such as Mumbai,
Hyderabad, Pune, Bangalore etc.
Excellent management team with experience of many years in running retail business
large economies of scale compared to competitors

Weakness
Huge infrastructure costs involved in HyperCity projects
Low possibility of success of this store format in lower tier-2 and tier-3 cities
huge operating costs put an upward pressure on price

Opportunity
Expansion in other major cities of India such as Delhi, Luck now, Chandigarh etc.
Development of its own in-store brands
Massive advertising and brand promotion
Putting sound customer loyalty programmer in place

Threats
Increasing competition from other retailers and store formats
Recession in real estate and infrastructure sector
rising inflation for food and fuel prices

23

Competitive strategies:
Raheja-owned HyperCity plans its growth on the back of quality merchandise rather than cheaper
price
points.
A few months ago, an international business consultancy conducted a perception survey on how
consumers perceive prices charged by different hypermarkets in Thane, near Mumbai.
Most respondents felt the Raheja-owned hypermarket chain HyperCity was among the most
expensive ones. HyperCity Chief Executive Officer Mark Ashman, however, says he is not
convinced with the results of the survey given its thin participation, adding that HyperCity is
competitive in many categories such as staples, food and so on. A hypermarket is a larger version
of a supermarket. Apart from food and groceries, it stocks apparel and general merchandise too,
among
other
things.
Big retail chains like Reliance Retail, Aditya Birla Retail, Trent Hypermarket, D Mart and Spencer's
are increasingly focusing on hypermarkets, which are considered essential for generating
volumes and economies of scale for retailers. Some of these chains offer up to seven per cent
discount on maximum retail price (MRP).Ashman, however, feels attracting customers with
discounts is a short-sighted strategy. "I can't see how it is ultimately sustainable? You are taking
customers only on price. If you stop giving discounts, customers go away," he says.
In early 2009, when the economy was still reeling under slowdown, Ashman as the CEO of Mark's
and Spencer Reliance India (M&S) had lowered the prices of some its products by 20 per cent.
Ashman back then had told Business Standard that the strategy was aimed at retaining customers
who were moving away to cheaper products.
Ashman is now planning a different strategy for HyperCity. When other chains are competing with
each other on pricing, he says HyperCity wants to differentiate itself with different products and
quality merchandise. "If you go to most of the hypermarkets, everybody is selling the same plastic
boxes, steel utensils and so on. We want to sell different products that are not available with
others,'' the chief executive adds. The chain wants to launch more international designs in its
homeware and apparel - two of its focus areas. It has increased products of the UK-based
Waitrose (with which it has an exclusive supply agreement) by 50 per cent and reduced prices of
Waitrose products to attract buyers.
Launching imported products, however, is not unique to HyperCity. Tata's hypermarket chain Star
Bazaar has already launched store brands of UK's Tesco (with which it has a franchise
agreement) in personal care, health and food, among other things. RPG group's Spencer's and
Aditya Birla's more also sell imported products.
With 27 per cent same store sales growth and growing number of stores, Ashman says there are
no issues with topline. "We want to drive profitability with better margins,'' he says. He adds that
the company wants to drive margins with a better mix of products.
"If we can reduce the percentage of food and increase the apparel from eight to 10 per cent next
year and 12 per cent a year after that, we can do much better," he says. Though food contributes
to 57 per cent of HyperCity revenues, it carries gross margins of 10-15 per cent while apparel
carries margins of 30-35 per cent.
HyperCity is also focusing on private labels to boost its margins. While it sells almost 100 per cent
private labels in men's wear and plans to launch private labels in undergarments and socks. It
also plans to increase the share of private labels in kids wear to 70 per from 50 per cent in the
coming autumn. Private labels are considered major margin drivers for retailers as they can be
directly bought from vendors, thus saves marketing and advertising costs. Private labels in
24

apparel range between 50 and 55 per cent, while that of food account for 30-35 per cent. Arvind
Singhal, chairman of business consultancy Technopak Advisors, says there are enough
opportunities for premium products in hypermarkets and department stores. However, Hypercity's
peers say premium has limited catchments. "They had great success in certain areas like Malad
in Mumbai, Hyderabad, and Whitefield in Bangalore. But in cities like Jaipur, Thane and Bhopal,
which do not have great catchments, they are yet to see success,'' says a senior executive of a
retail chain who does not want to be quoted.
"It is not a hugely scalable model," the executive says. But Hypercity's management does not
believe so. Last year, Hypercity Vice-Chairman BS Nagesh said the retail chain's current stores
are set to break-even by 2012 and the chain will become profitable by 2013.
"I have no reason to disagree with Nagesh. We are capable of doing that," says Ashman.
Hypercity posted sales of Rs 456.83 crore (Rs 4.56 billion) and a loss of Rs 50 crore (Rs 500
million) year to date till December 31, 2010.
Hypercity has eight stores now and plans to open in Ludhiana, Bangalore, Ahmedabad and Pune.

25

Marketing mix of Hypercity

Product: - it offers a wide range of products which range from apparels, food, farm products,
furniture, child care, toys, etc. of various brands like Pepsi, Coca-Cola, HUL, ITC, P&G, LG,
Samsung, Nokia, HP etc. it also promotes a number of in house brands like:
Pricing: - The pricing objective at Big Bazaar is to get Maximum Market Share. is based on the
following techniques:1. Value Pricing (EDLP Every Day Low pricing):- it promises consumers the lowest available
price without coupon clipping, waiting for discount promotions, or comparison shopping.
2. Promotional Pricing: - it offers financing at low interest rate. The concept of psychological
discounting (Rs.99, Rs.49, etc.) is also used to attract customers. It also caters on Special Event
Pricing (Close to Diwali, Gudi Padva and Durga Pooja).
3. Differentiated Pricing: - Differentiated pricing, i.e., difference in rate based on peak and nonpeak hours or days of shopping is also a pricing technique used in Indian retail, which is
aggressively used by Big Bazaar. For example, Wednesday Bazaar.
Bundling: - It refers to selling combo-packs and offering discount to customers. The combo-packs
add value to customer and lead to increased sales. Big Bazaar lays a lot of importance on
bundling. For example 3 Good Day family packs at Rs.60 (Price of 1 pack = Rs.22), 5 kg oil + 5
kg rice + 5 kg sugar for Rs.599.
Place: - The stores are operational across three formats hypermarkets spread over 40,000 45,000 sq., the Express format over 15,000 - 20,000 sq. And the Super Centers set up over 1
lakh sq. Currently Big Bazaar operates in over 34 cities and towns across India with 116 stores.
Apart from the metros these stores are also doing well in the tier II cities. These stores are
normally located in high traffic areas aims at starting stores in developing areas to take an early
advantage before the real estate value booms. Mr. Biyani is planning to invest around Rs.350
cores over the next one year expansion of Big Bazaar. In order to gain a competitive advantage
it has also launched a website www.futurebazaar.com, which helps customers to orders products
online which will be delivered to their doorstep. This helps in saving a lot of time of its customers.
Promotion: Advertisement (print ad, TV ad, radio).
Make a smart choice!
Change your Lifestyle. Make a smart choice!

People:Trained staff at stores to help people with their purchases.

Well - dressed staff improves the overall appearance of store.
Use scenario planning as a tool for quick decision making multiple counters for payment, staff at
store to keep baggage and security guards at every gate, makes for a customer friendly
atmosphere.
26

Process: - it places a lot of importance on the process right from the purchase to the delivery of
goods. When customers enter the stores they can add the products they which to purchase in
their trolley from the racks. There are multiple counters where bill can be generated for purchases
made. It also provides delivery of products over purchases of Rs.1000.

Physical Evidence: - Products are properly stacked in appropriate racks. There are different
departments in the store which display similar kind of products. Throughout the store there are
boards/written displays put up which help in identifying the location of a product. Moreover boards
are put up above the products which give information about the products.

27

Pantaloons
Pantaloons Retail (India) Limited was incorporated as Manz Wear Private Limited by Mr. Kishore
Biyani on 12 October 1987, converted into a public limited company in September1991, renamed
as Pantaloons Fashions (India) Limited a year later and thereafter into Pantaloons Retail (India)
Limited in July 1999. The company is headquartered in Mumbai. Mr. Kishore Biyani is the
Managing Director. Pantaloons Retail forayed into modern retail in 1997 with the launching of
fashion retail chain, Pantaloons in Kolkata. In 2001, it launched its first set of Big Bazaar stores
in 2001 in Kolkata, Hyderabad and Bangalore, a hypermarket chain that combines the look and
feel of Indian bazaars, with aspects of modern retail, like choice, convenience and hygiene. This
was followed by Food Bazaar, food and grocery chain and launch Central, a first of its kind
seamless mall located in the heart of major Indian cities. Some of its other formats include
collection I (home improvement products), E-Zone (consumer electronics), Depot (books, music,
gifts and stationary), all (fashion apparel for plus-size individuals), Shoe Factory (footwear) and
Blue Sky (fashion accessories). It has recently launched its e-retailing venture, futurebazaar.com.
Today Pantaloons Retail (India) Limited, is India's leading retail company with presence across
multiple lines of businesses. The company owns and manages multiple retail formats that cater
to a wide cross-section of the Indian society and is able to capture almost the entire consumption
basket of the Indian consumer. The company operates through 12 million square feet of retail
space, has over 1000 stores across 71 cities in India and employs over 30000 people
The USP is primarily on offering fresh fashion at affordable prices. Pantaloons Retail was 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 Retail Congress held in Barcelona.
Pantaloons Retail is the flagship company of Future Group, a business group catering to the entire
Indian consumption space.

Mail stone to world class retiling

The company was established in 1987 as Manz wear private Limited launched its first product
Pantaloons rousers. In May-1992 company offered Initial public offering. The company enters in
modern retails business in 1997 from Kolkata with 8000Sq.ft store. In 2002 company initiated a
lunch of food chain market Food bazzar. In 2004 central mall was lunched to concentrate on India
one sector launched near brigade road in Bangalore. In 2005 group moves beyond retailing starts
diversification and in organic growth by acquiring galaxy entrainment, Indus League clothing and
Planet retail. In 2006 company starts finical facilitation company to help internal need Future
capital Holdings. Starts its first Home building and improvement product retailing in Bangalore.
Starts joint ventures with Staples, US based company and with Generally an Italian Insurance
major. In 2007 Group had turnover of $1 billion. Specialized companies in retail media, logistics,
IPR and brand development and retail-led technology services become operational. In2008 big
bazaar crosses 100 malls.

28

SWOT analysis of Pantaloons

Strengths
Pioneer in the industry, largest market share and capitalization.
Reputation for value for money(Competitive pricing), convenience and a wide range of
products all in one store
Presence in major cities
Highly Strategic human resource management and development. It invests time and money in
training people, and retaining them.
Most trusted and respected brand by the consumers
Weakness
Pantaloons does not function internationally, which has an effect on success, as they do not
reach consumers in overseas markets.
PRIL is the Worlds largest grocery retailer and control of its empire, despite its IT advantages,
could leave it weak in some areas due to the huge span of control
Since Pantaloons Retail India Ltd sell products across many sectors, it may not have the
flexibility of some of its more focused competitors.
Each business line faces competition from specialty companies. Fashion segment, Shoppers
Stop, Trent, Lifestyle. In hypermarket-RPG (Spencers), Trent (Star India Bazaar) In Food
business, Reliance Fresh, Spinach, Food World

Opportunities
Huge untapped market
(The Indian middle class is already 30 Crore & is projected to grow to over 60 Crore by 2010
making India one of the largest consumer markets of the world)
Organized retail is only 3% of the total retailing market in India. It is estimated to grow at the
rate of 25-30% p.a. and reach INR 1, 00, 000 Crore by 2010.
To take over, merge with, or form strategic alliances with other global retailers, focusing on
specific markets
Threats
Being number one means that you are the target of competition.(Extra competition and new
competitors entering the market could unsteady pantaloons retail India)
A slow economy or financial slowdown could have a major impact on pantaloons retail India
business and profits.
Consumer lifestyle changes could lead to less of a demand for pantaloons retail India
products/services
Price wars between competitors, price cuts and so on could damage profits for pantaloons
retail India.
The actions of a competitor could be a major threat against pantaloons retail India, for
instance, if they bring in new technology or increase their workforce to meet demand
Shopping Culture: Shopping culture has not developed in India as yet. Even now malls are just
a place to hang around with family and friends and largely confined to window-shopping.
29

Key Functional strategies

The company observes retail customer trend and changing consumption tastes. Organizations
customer driven opposed to product driven .Company is very conscious about culture and
regional consumption pattern. Strategies change frequently due to orient to the customers needs.
The continues of learning, unlearning and relearning is applied to update the quick changing
strategies across the organization. As Kishore Biyani MD Pantaloons retail India LTD saysRetail
is like riding bicycle. In uphill if you stop pedaling you will slide down. The statement express the
need of continues learning process to form the strategies. Based on analysis its business
strategies can be categorized in 3 major groups.

Diversification strategy
Classes destination strategy
Maximum market shares strategy

Diversification strategy

The company started its business as textile manufactures but growth in modern organized
retailing attracted the company to switch diversify to the next consumption pattern. The company
diversified and acquired a large business in organic and inorganic way. But company did not forget
ripe its strategy and values in the diversified company. In every new business company.

30

Classes destination strategy

Future group has diversified its business keeping the retiling as common goal. To set and
concentrate on one stratum is main objective of this strategy. Each business is set to operate on
defined strata. Company has divided Indian customers in three different groups. INDIA ONE,
INDIA TWO, INDIA THREE. Each has different values, products and quality requirements. INDIA
ONE or consuming class .The population of this constitutes only 14%.Till recent times the modern
retiling formats is offered for this class. According Maslows theory of hierarchy the 14% people
are in self-actualization and Esteem needs in the pyramid. For this class pantaloons patterned
Future bazaar, E zone, Central, brand factory, Home town and star Galaxy entertainment. INDIA
TWO or the serving class it includes people like house hold helpers, office phonetic. This is the
people who make service INDIA ONE class. The population of this class is more than 30%. In the
needs hierarchy they are located in for Social and security .Earning capacity of this class is 60%
lesser than INDIA ONE. For this class as the big bazaar, Food bazaar, Future money and other
retail formats are presented.
INDIA THREE or struggling class. The class led life on hand to mouth existence. They afford for
beater living style. This segment doesnt contribute much in the contribution cycle. The need of
the segment is local as they are finding it cheaper. The present business model is not addressing
this class. Figure 3 shows change in consumption patter by different class in 2001-02 and 200708.INDIAONE has changed from 25% to 35% normally the total profit in this segment will
comparatively20% more than they are sold in next segment. As ambiance is factor and other
pleasuring no value added services are necessary. INDIA TWO has not changed it conception
level. INDIATHREE has seen 10 % decline

31

Maximum market shares strategy

The retail chain by pantaloons in all business patterns tries to achieve maximum market share in
all the products or service it provides .The Company does not bothers about short term profit or
loss by a strategy. This are considered as learning. The business will sell at marginal profit some
times to attract the new customer who will prove potential customers in future. The strategy
achieved by focusing pricing factors in INDAI TWO and on service and quality in INDIA ONE.
Pricing strategies
Pricing is strategy used by Pantaloons retail chain to attain maximum market shares. The
company offers numerous schemes to attract the new customer as well as to retain the present
customers. The companys schemes are categorized in following groups.
Value pricing this approach is used where external factors such as recession or increased
competition force companies to provide 'value' products and services to retain sales. The product
value will be associated with external factors.
Promotional pricing to promote a product is a very common application. The application of this
done by BOGO (Buy one Get One), BTGO (Buy Two Get One Free) etc.
Bundling is marketing tool sell two or more complementary product as a package with attractive
price.
The
price
is
will
lesser
then
individual
selling
price.
Example: A Person needs one soap for a period of time but bundling with attractive price with
more than 3 soaps can attract them.
Low interest rate financing Future money helps in asset purchase at 0% interest.
Physiological discounting In India this approach is called as Bata rating system. Organization
utilizes this approach when product has emotional value rather than rational value. Example a
product is priced for 99 instead of 100.When board shows price reduction from 100 to 99,
Consumer looks at 3 digits to 2 digits rather than exact value
Time pricing the innovative way of attract the customer is Timely pricing it is known that during
holidays rate of customer is more. Reduction of profit margin with lot of advertisement will invite
new customers. The company has learnt it from strategy made on public holiday 26-Feb. When
the turnover of the day reached 30 cores where average is 5 cores. With such experience crowded
management is essential so to divert potential customers Wednesday bazaar where it will offer
less profit margin sales.
Bundling Marketing: Technique of offering two or more complementary goods or services together
as a package deal. Bundled items are sold at a price attractively lower than the total of their
individual selling prices.

32

7ps of Marketing mix

1. Product:
E-commerce: Pantaloons website Futurebazaar.com has revolutionized the e-commerce
business in India. It offers a wide range of products at affordable prices.
Food: In food business, the group offers a host of options.
Food Bazaar a chain of large supermarkets; Brew Bar a beer bar; caf Bollywood a national
chain of eateries; Chamosa a pan-Indian chain of snack counters, and Sports Bar a bistro
focused on the world of sports.
Fashion: The group offers a variety of options in fashion. Its brands include all, Blue Sky, Central,
Etam, Fashion Station, Gini & Jony, Navarros, Pantaloons, and Top 10.

2. Price:
Pantaloons India has brought a whole new revolution when it comes to pricing strategies, which
is evident through the success of its Big Bazaar and Food Bazaar outlets.

3. Place:
The company operates over 12 million square feet of retail space, has over 1000 stores across
71 cities in India and 65 rural cities with taking over Aadhar(). It plans to take up floor space of
30 million square feet by 2011.It has plans to open over 3000 new stores by 2010. It is targeting
the Tier-2 and 3 cities which has a huge unleashed potential.

4. Promotion:
They use magazines, newspapers, television, radios, hoardings, internet etc. for promoting the
brand. They have joint ventures and alliances with many companies to promote the brand.
Seasonal Discounts, Sales Discounts during Festivals are offered to attract consumers.

5. People:
At the senior management level, the group hired high profile executives from reputed
organizations like Goldman Sachs, Coca-Cola India, and PRIL also tied up with a few
management schools to create a management talent pool for the lower levels.
Best Employers in India (Rank 14th) in the Hewitt Best Employers 2007 survey.
The company follows a multi-format retail strategy that captures almost the entire consumption
basket of Indian customers.

33

6. Processes:
Pantaloons Retail has implemented SAP with an investment of $10 Million in keeping pace with
the technology and it is currently in the process of setting up a SAP consultancy software. SAP
will be helpful in building robust transaction management system and

7. Physical Evidence:
It has a huge list of awards, recognition in its kitty like Most Admired Fashion Group Of The Year,
Most Admired Food & Grocery Retailer Of The Year , Most Admired Food Court , Most Admired
Retailer of the Year, ,Most Admired Food & Grocery Retailer of the Year Supermarket
It is the pioneer in the retail industry and it believes in developing strong insights on Indian
consumers and building businesses based on Indian ideas, as espoused in the groups core value
of Indianans. The groups corporate credo is, Rewrite rules, Retain values.

34

Shoppers stop
Shoppers Stop is an Indian retailing company promoted by the K Raheja Corp Group, started in
the year 1991 with its first store in Andheri, Mumbai. Shoppers Stop Ltd has been awarded "the
Hall of Fame" and won "the Emerging Market Retailer of the Year Award", by World Retail
Congress at Barcelona, on April 10, 2008. Shoppers Stop is listed on the BSE. As of 2013,
Shoppers Stop has 73 stores in India. Shoppers Stop began by operating a chain of department
stores under the name Shoppers Stop in India. Shoppers Stop has 74 stores across 35 cities
in India. Specifically, Shoppers Stop stores retails clothing, accessories, handbags, shoes,
jewelry, fragrances, cosmetics, health and beauty products, home furnishing and decor products.
Shoppers Stop launched its e-store with delivery across major cities in India in 2008. The website
retails all the products available at Shoppers Stop stores, including apparel, cosmetics and
accessories. Shoppers Stop opened stores in Amritsar, Bhopal and Aurangabad
THE MILESTONES OF JOURNEY....
THE FOUNDATION OF SHOPPERS STOP was laid on October 27, 1991, by the K. Raheja Corp.
group of companies. Being amongst India's biggest hospitality and real estate players, the Group
crossed yet another milestone with its lifestyle venture
FROM INCEPTION, SHOPPERS STOP has progressed from being a single brand shop to
becoming a Fashion & Lifestyle store for the family. Today, Shoppers stop is a household name,
known for its superior quality products, services and above all, for providing a complete shopping
experience.
WITH AN IMMENSE AMOUNT OF EXPERTISE and credibility, Shoppers stop has become the
highest benchmark for the Indian retail industry. In fact, the company's continuing expansion plans
aim to help Shoppers Stop meet the challenges of the retail industry in an even better manner
than it does today
VISION
To be a global retailer in India and maintain its No.1 position in the Indian market in the
Department Store category.
Values that help us in achieving our mission and vision:
We will not take what is not ours.
The obligation to dissent (against a viewpoint that is not acceptable).
We will have an environment conducive to openness.
We will believe in innovation.
We will have an environment conducive to development.
We will have the willingness to apologies and forgive.

35

SWOT Analysis
Strengths
-skilled workforce
-existing distribution and sales networks
-domestic market
-high growth rate
-experienced business units

Weaknesses
-future debt rating
-competitive market
-productivity
-investments in research and development
-tax structure

Opportunities
-growth rates and profitability
-growing demand
-income level is at a constant increase

Threats
-Financial capacity
-increase in labor costs
-tax changes
-increasing rates of interest
-cash flow
-increasing costs
-rising cost of raw materials

36

MARKETING MIX
PRODUCT
General Products: Shoppers Stop includes domestic as well as international
Retail articles and products
Private Label: Shopper Stop has also launched their own private labels such as STOP.
Others:
In addition to the above, Shopper Stop also does promotional marketing. E.g. they launched Zoo
Zoo range and also other similar products have been launched. These also form the part of the
Product as SS.
PLACE
Shoppers Stop is Indian largest chain of Super Stores and has many stores in whole of India
Shoppers Stop Ltd. Excels in Service quality and the stores of a high class feel which is different
from Big Bazaar or similar stores.
PROMOTION
The communication strategy of Shoppers Stop has been to reach out to the Customers in their
own style and language
SS uses print as well as OOH media to promote the brand. The brand uses brand ambassadors
like Kareena Kapoor to endorse the brand.
The private label STOP is promoted in store through logo and proper placement in the store adjoin
similar national brands Associates itself with Local festivals and events
PRICING
SS has a proper mix of both premium and affordable priced products. The brands are sold at MRP
and lower.
The main USP is the choice given to the customer rather than the Price. Various Pricing S
Strategies used by Shoppers Stop are as below:
Premium Pricing
Economy Pricing
Psychological Pricing
Optional Product Pricing
Promotional Pricing
Geographical Pricing

37

Function strategy of shopper stop

Promotional strategy:
Promotional strategy deciding on a marketing communications strategy is one of the primary roles
of the marketing manager and this process involves some key decisions about how who the
customer is, how to contact the consumer them, and what the message should be. These
questions can be answered using a three stage process, which is equally relevant for all elements
of the marketing mix: Segmentation Dividing the marketing into distinct groups Targeting Deciding
which of these groups to communicate with, and how to talk to them Positioning How the product
or brand should be perceived by the target groups Messaging Delivering a specific message in
order to influence the target groups 1. Segmentation dividing potential customers into discrete
groups is vital if you want to increase the success rate of any communications message. If you
don't know who you are talking to, it's unlikely you will get much of a response. Who are the
potential customers? How many sub-groups should you divide them into? How do these groups
differ? Hopefully, most of this information will be readily available from your market research.
Once you have an idea of the customer, you should further drill down to explore them in more
detail. What are their media consumption habits? What are their expectations and aspirations?
What are their priorities? How much disposable income do they have? What are their buying
habits? Are they likely to have children? How many holidays to they take a year? How much
money do they give to charity? How can you help them? This information can be obtained in a
variety of ways, from commissioning a specialist market research agency, to examining sales
patterns or social media interactions.
Digital marketing new channels are emerging constantly Company websites Social media
applications such as Facebook or Twitter Blogging Mobile phone promotions using
technology such as Bluetooth YouTube E-commerce Deciding which media channel to use
In nature, evolution occurs most rapidly when competition for resources is intense. The same
process is now occurring with promotional media. All traditional media channels are now
saturated, and competition for consumer attention is intense. At the same time, the impact of any
one medium is becoming diluted. There are many more TV and radio channels, consumer have
the ability to skip adverts and free information is now much more accessible. As a result,
companies are becoming increasingly innovative in their approach to communications and a host
of new media channels have emerged. As a result, media choice is becoming a tricky task, which
is why detailed segmentation is so important - it's no use starting a Twitter campaign if none of
your target market are regular users of the site. Highly targeted communications often lead to
better results. You can usually expect a response rate of under 1% for a relatively generic mass
mailing. However, personal letters to a handful of your most loyal customers would lead to a
dramatically increased rate of return. When deciding which media to use consider the reach,
frequency, media impact and what you can expect for your budget but most of all, ensure your
target customer will see the message in the first place. Media choice is a matter of compromise
between volumes of people versus the personalization of the message. Ensuring your message
reflects the stages of the purchasing funnel once you have made the audience aware of your
brand, work doesn't stop there. The customer needs to be guided through the purchasing process.
Sales promotion - price / money related communications, Coupons, Discounts, Competitions
Loyalty incentives Public relations - using the press to your advantage, Press launches PR events
Press releases Personal selling one to one communication with a potential buyer, Salesmen
Experiential marketing, Dealer or showroom sales activities, Exhibitions, Trade shows Direct
marketing - taking the message directly to the consumer, Mail order catalogues, Bulk mail
Personalized letters, Email Telemarketing, Point of sale displays, Packaging design.
38

Product and market diversification

Production policies are the general rules that management makes to guide itself in making
production decisions. Developing new product, modifying and improving upon the existing ones,
diversifying into new areas and markets, branding and survey of market demand are some of the
key areas of product planning. Product policies may be stated in the form of series of either short
definition or of question arranged as a check list. According to Kline A product strategy is the
strategy for improving the companys overall sales and profit position in respect of a particular
product as well as to promote the sale of the companys other products and in case this policy
hinders the sale of other products of the company it should have a greater potential long range
profit than the products in conflict with it.

Product line extension strategy

Groups of products that are used together, sold and to the same customers and marketed through
the same channels are known as product lines. Extension in these product lines is said to occur
when same additions in their width or depth are made for holding their position in the market.
Their width relates to the number of product and depth refers to number of items in each line. In
product line extension strategy different aspects are to be taken into consideration which may
vary from firm to firm and from one situation to other situation. A readymade garment industry
plans to produce many product lines such as mens wear, ladies wear, kids wear etc., casual
wear, sportswear etc. which are consumed domestically and are being exported.

Miscellaneous Branding strategies

Line extension: this is where an organization adds to its current product line by introducing
versions with new features.
Brand extension: if your current brand is successful you may use brand names to extend into new
or existing areas. E.g. Virgin extends its brand from record to airlines, and mobiles.
Multi branding: the company decides to further introduce more brands into a already existing
category.
New brands: an organization may decide to launch a new brand into a market. A new brand may
be used to compete with existing rivals and may be marketed as something new or fresh

39

Oriflame
Oriflame is an internationally successful company providing consumers withScandinavian natural
skin care and cosmetic products marketed through direct sales systems. In accordance with its
vision, it started its operation in the largest consumer market of world in India in July 1996 through
a
joint
venture.
Now,
thecompany has good reputation among Indian consumers, but its direct sales,systems and multilevel marketing systems has made the academics and practitioners of Indian corporate market to
focus
centrally
on
the
issue.
It
is
in
thisconcern that, finding the issue most interestingly; I selected this topic andcompany for my final
year project. The present study makes an attempt to inquire about the impact of innovation in
marketing system (direct marketing and multi-level marketing) on Oriflammes performance in
relation to making improvements in customer service system. For this study both the primary and
secondary methods of research methodology have been applied. Based on these a brief findings
and analysis follows. After the completion of whole study, plainly suitable suggestions and
recommendations have been made, which would be useful not only for the future operation
of Oriflame, but several other companies wishing to adopt the concerned marketing system, may
learn a lot and in this way the utility of this study goes without saying.
Oriflame Holding AG (Switzerland) (until mid-2015 "Oriflame Cosmetics S.A.", Luxembourg) is a
company, founded in 1967 in Sweden by the brothers Jonas af Jochnick and Robert af Jochnick,
and publicly traded at NASDAQ OMX since 2004. The company sells personal care, accessories
and nutritional products online and direct.
Oriflame Cosmetics is an international cosmetics company, which uses multi-level marketing to
sell directly to customers. The company began operations in 1967 in Sweden and today has a
presence in over 62 countries worldwide. The company has over 3.0 million marketing associates
worldwide with annual sales of 1.365 billion.
The brand is named for the Oriflamme, the royal banner of medieval France
Oriflame Holding AG is a company, founded in 1967 in Sweden by the brothers Jonas af Jochnick
and Robert af Jochnick, and publicly traded at NASDAQ OMX since 2004.
Headquarters: Schaffhausen, Switzerland
CEO: Magnus Barnstorm
Founded: 1967
Founders: Robert AF Jochnick, Jonas AF Jochnick

40

SWOT Analysis
Strength
1. Easily available products in residential areas, at parlors and sold by people whom customers
know and trust
2. Release catalogues frequently with offers on products
3. Customers get help from sponsors who help them as a consultant choose product according
to their skin type, climate etc.
4. Established brand name since 43 years
5. Provides natural beauty products through an independent Salesforce of over 3 million people

Weakness
1. Lack of promotional activities through mass media
2. Depends on the network of individual sponsors on most of its distribution and available in very few
stores

Opportunity
1. Develop deeper distribution network
2. Expanding in rural areas
3. Investing in R&D, launch of new products through innovation

Threats
1. Aggressive price competition from local and multinational players
2. Availability of cheap beauty products
3. Presence of many established brands at one place in the stores thus giving customers variety

41

Functional Strategy
Flexibility
By contracting customers at their convenience rather than yours.

Demonstration
Using the opportunities to conductdetailed demos at customs atcustomer comfort and before
potential user and the buyer both.

Building Relationship Goodwill

By satisfying a customer sight from 1st call i.e. till the service giving stages.

Reducing confusion and saving time

By
giving
personalized
visits,
customers get attention andunderstand product attributes clearlygetting confused by
other products.

Multi-level marketing
Using your customer to sell your product to other customer by enlisting direct sales agents from
its customer base.
By allowing salesperson to take pricing decisions on the spot when he can conclude the deal
immediately.

42

Direct selling strategy:

On the International front direct selling has been always an important concept
inthe marketing world. This promotion of the direct selling concept is theimportant objective.
To fulfill this objective the World Federation of Direct Selling Association was established.
Today the direct selling associations are operational in 43 countries all over the World. These
associations
have
the
directselling companies as their members. The direct selling associations have the principle
objectives
such
as:
1.Promote Direct Selling industry in the particular country.2. Meet the collective need of the me
mber
companies.3.
Protect
the
rights
of
consumers.The World Federation of Direct Selling Associations, ensures full protection toconsu
mers
and
assures
ethical
behavior
among
direct
selling
company
andcustomer through its cods of conduct. The member company should: I)
Respect the right of consumers and promote a healthy environment it theindustry.II)
to serve with honesty, sincerity, and commitment.

Strategy followed:
According to Gabriel Benet, the implementation of such a performance management system was
also an important criterion for the successful introduction of the concept of integrated business
management. That concept implies that you already have a single set of figures, or in other
words, permit only one version of the truth with regard to your business performance, Bennett
explains. By ensuring that all countries and departments within our group worked with the same
correct, unambiguous data, we were hoping to boost both the quality and speed of our
communication.
For that reason, Oriflame Cosmetics had already invested in the construction of an Oracle data
warehouse and in acquiring IBM Congos financial consolidation software. In this sense, we had
already begun the first phase of our project, says Bennett. To completely finalize that phase, all
we had to do was further roll out IBM Congos 8 Controller, throughout our organization. That is
how we were able to lay the foundations for an all-encompassing, completely integrated
management platform.
When we were to go in search of a supplier who could offer us a total package for performance
management, we were quick to return to IBM Congos, says Christian Jonson, Group IT Director
at Oriflame Cosmetics. On closer inspection, the majority of the other suppliers appeared to
offer only parts of the required solution. IBM Congos was one of the few who could compile all
the necessary elements for us in order to develop a complete performance management system
software for financial consolidation, analysis and reporting, and planning and forecasting. So
Oriflame turned to IBM Congo.
Again for the second and third phases of its project, and in addition to IBMCognos 8 Controller,
decided to roll out IBM Cognos 8 BI and IBM Cognos 8Planning as well. The real reason we
decided to go with IBM Cognos Was the rich pallet of functionalities afforded by the technology,
along with its user-friendliness? The average user with basic knowledge of Excel and the internet
can start using IBM Cognos 8 BI in just half an hour.
43

Regulatory Framework for the inddustry

The retail sector has witnessed unprecedented growth in recent times and is currently one of the
fastest growing sectors in India. Given the large size of this sector, its expansion is both a cause
as well as a consequence of rapid economic growth. However, it is largely unregulated a fact
which implies that efforts to block competition or cartelize can be effective and threaten the growth
and welfare generation potential of this sector. It is for this reason that competition and regulation
scenario in the retail sector needs to be reviewed. This Note is structured as follows. Section 1
provides an introduction followed by Section II that describes the structure of the retail sector, as
well as its diverse components. Section III looks at the main challenges faced by this sector, while
Section IV analyses the nuances of regulation and competition in this sector. Section V concludes
with questions for discussion.

STRUCTURE OF THE SECTOR in India, the retail sector is categorized into two segments:
organized and unorganized. Traditional format retailing, such as the traditional family run stores,
popularly known as the kirana stores (the small stores) or the mom-and-pop stores, hand cart and
pavement vendors come under unorganized retailing. On the other hand, licensed retailers, who
are registered for sales tax, income tax etc., such as corporate run retail chains and hypermarkets,
and privately owned larger retail business come under organized retailing.1 The retail sector is
highly fragmented in India, with 97 percent of the businesses run under unorganized retailing.
The sector grew at the rate of 25-28 percent in 2007. The size of both organized and unorganized
retail segments in 2007 was estimated at US$330bn. The retail industry is expected to swell up
to US$365bn at the end of 2008 and might reach US$440bn by 2010, according to a research
report of RNCOS (a research and e-publishing solution firm) entitled, India Retail Sector Analysis
(2006- 2007). The retail sector is the largest source of employment after agriculture, has deep
penetration into rural India and generates around 10 percent of Indias gross domestic product
(GDP). The key drivers of the rapid growth of the sector include: i) growing consumer base, which
is estimated at 217 million people or around 20 percent of population; ii) growing disposable
incomes and increasing urbanization; iii) new technological innovations that increase demand for
consumption, i.e. credit cards, debit cards, online payments etc.; and iv) the growing popularity of
one stop shopping, according to a study by CII and Morgan Stanley (2007) on the retail sector.
Another study (2007) by the Associated Chambers of Commerce and Industry of India
(ASSOCHAM) revealed
That organized retail players occupied a space of only one million sq. ft in 2002 and nearly 14
million sq. ft by 2007, illustrating a huge expansion in the intervening period. This is likely to grow
to 16 million sq ft in 2008. Large players like Reliance Industries, Plaza, DLF, Spencer and a new
entrant in the field, the Aditya Birla Group, plan to embark on a major expansion drive in their
retail businesses in 2008. The study estimated that the organized retail segment would witness
an additional investment of US$70bn by 2010. At the end of 2008, the cumulative investment
would be in the region of US$25-28bn. The study also estimated that that the share of retail trade
in the countrys GDP, currently at around 10 percent, would jump to 12 percent soon and to 22
percent by 2010. The study also estimated that rural retail would continue to be driven by the
unorganized sector for some time. As far as employment is concerned, the sector (organized or
unorganized) employs 40 million people and there are around 200 million people dependent on it
(assuming an average employee supports a family of 5). As organized retail is growing, it is also
providing quality employment. Employees are being retrained according to international
standards and practices, as international companies are opening their ventures in the country.
44

Traditional Unorganized Retailers For ages, the easiest way to enter the retail sector has been
through Kirana stores, which generally are self-employment initiatives, requiring minimal
investment in terms of capital, land and labor. Despite the phenomenal growth rate in modern
organized retailing, the Kirana store has managed to hold its own and still remains a most
convenient avenue for shopping for a significant proportion of the population. As a result of the
competition from big organized retailers, the kirana stores are also changing with the times,
increasing their services to include credit facilities, phone services, home delivery, etc. However,
small stores located just around big retail establishments are suffering losses. An Indian Council
of Research in International Economic Relations (ICRIER) study on the retail sector, 2007
suggested an inclusive model for organized retail, with big stores co-opting several kirana stores
and hawkers drawn from the pool of traditional retailers and upgrading them with adequate
infusion of capital and training. The report further states that the emerging structural
transformation in retail trade would benefit the society as a whole, but noted, The gains will
accrue early to consumers and a little later to farmers. The emerging structural transformation
and increase in healthy competition in the retail sector would benefit the consumers. However,
due to the existence of monopolistic intermediaries in the value chain, the benefits of competition
will not accrue significantly to the farmers. Lack of conducive policies and regulatory framework,
growing disparities among the states, lack of credit availability and inefficient supply chains are
some of the concerns being faced by the sector. To ensure that traditional retailers do not become
losers in this revolution, efforts are needed from the government and cooperation might be
required from the modern organized retail sector. Moreover, traditional retailers have to follow
innovative ways to stay alive in the market.

Modern Organized Retailers in India, modern retailing (organized segment) is characterized by

extensive malls and big complexes, with a variety of formats, such as discount stores,
supermarkets, hypermarkets, specialty chains, etc. For the promotion of growth in the sector,
there is a need for more investment, which can come from the organized private sector constituted
by corporate houses. It is easy to enforce taxation mechanisms and implement labor laws better
in modern retailing, as compared to the unorganized segment, thus allowing the government to
gain through higher collections of tax revenues. Modern retailing encourages efficient supply
chains for the smooth movement of goods from farmers to consumers, thereby helping farmers
to realize more income from their produce. With modern retailing, the e-retailing or non-store
retailing channels are also getting popular, like HLL initiating Sang am Direct, a director-home
service. The government has been making attempts to increase the share of organized retailing
in total retail. Though organized retail comprises of highly organized supermarkets and
hypermarkets, it presently does not enjoy a significant share in the total Indian market.
Nevertheless, it is felt that the future belongs to such modern organized retailing.

45

Regulatory Framework of Fast Moving Consumer Good

Government Policies &Regulatory Framework 1. Goods and Service Tax (GST) a. The
implementation of Goods and Services Tax is scheduled for April 16. b. Announcement of GST
is a significant development for the FMCG sector if implemented in a timely and effective manner.
The proposed law will end differential rates of sales taxes in different states and introduce a
uniform tax on goods and services throughout the country.
Government Policies &Regulatory Framework 2. Excise duty- a. The excise duty on cigarettes
has been increased by 25% for cigarettes of length not exceeding 65mm and by 15% for
cigarettes of other lengths b. The excise duty rate has been increased to 12.5% with educational
tax being subsumed
Government Policies &Regulatory Framework 3. Relaxation of license rules- a. Industrial license
is not required for almost all food and agro-processing industries, barring certain items such as
beer, potable alcohol and wines, cane sugar, and hydrogenated animal fats and oils as well as
items reserved for exclusive manufacture in the small-scale sector
Government Policies &Regulatory Framework 4) FDI in organized retail- a. The governments
decision to allow 51% FDI in multi brand retail and 100% FDI in single brand retail augers well for
the outlook for the FMCG sector. This move is expected to bolster employment, and supply
chains, apart from providing high visibility for FMCG brands in organized retail markets, boost
consumer spending, and encourage more product launches.
b. FDI of 100% under the automatic route is allowed in the food processing sector, which is
considered as a priority sector. c. Cumulative FDI inflows into India from April 2000 to May 2015
in the food processing sector stood at USD 6,370 million, accounting for 2.49% of overall FDI
inflows while that in the soaps, cosmetics and toiletries was USD 1,050 million, accounting for
0.41%. Government Policies &Regulatory Framework
Government Policies &Regulatory Framework 5. Food Security Bill (FSB)- a. The rollout of the
Food Security Act, 2013 which delivers subsidized grain to low income families is expected to free
up income for spending on FMCG goods. b. This is expected to trigger higher consumption
spends, particularly in rural India, which is an important market for most FMCG companies
Government Policies &Regulatory Framework 6. Telecom Regulatory Authority of India (TRAI)
advertising regulations- a. Under the latest regulations issued by TRAI, broadcasters are allowed
advertisement time of not more than 10 minutes for commercials and additional 2 minutes for own
channel promotion. This regulation came into force on 1 October 2013. This TRAI directive was
challenged by the broadcasters in the Delhi High court and they secured an interim stay on this
rule from the court. However, the matter is still awaiting a final decision and is expected to come
for hearing in July 15.
Government Policies &Regulatory Framework b. This new rule if implemented is likely to compel
FMCG companies to pay more for advertisements on the television media and thereby increase
their ad spend.

46

Automatic investment approval (including foreign technology agreements within specified norms),
up to 100 per cent foreign equity, or 100 per cent for NRI and overseas corporate bodies (OCBs)
investment, is allowed in food processing segments such as coffee and tea.
The Government of India (GoI) recognises food processing and agro industries as priority
sectors.
Industrial license is not required for almost all food and agro processing industries, barring certain
items such as beer, potable alcohol and wines, cane sugar and hydrogenated animal fats and oils
and items reserved for exclusive manufacture in the small-scale sector.
The GoIs announcement of a 4 per cent reduction in excise duty (as part of the earlier stimulus
package in December 2008) has impacted the FMCG industry positively.
In October 2009, the GoI amended the Sugarcane Control Order, 1966, and replaced the
Statutory Minimum Price (SMP) of sugarcane with Fair and Remunerative Price (FRP) and the
State Advised Price (SAP).

47

Future Prospects for the industry

Indian Retail Industry - A Promising Future for the Investments Retail industry in India is greatly
fragmented comparing to the developed and other developing countries. This presents enormous
prospective for the structured retail industry to flourish throughout the country, as the market for
the final product is huge. Retail industry is largely led by private companies. The distribution for
fast-moving consumer products includes many layers like carrying and forwarding agencies,
distributors, wholesalers, stockiest and retailers. The Indian retail environment has attained $ 210
bn quiche, witnessing a strong development pace of five percent per year (according to a latest
survey by Price Waterhouse Coopers). As per the estimation 200 malls, presenting additional 50
mnsqft of retail space will be ready in next two years. Existing retail space in 160 malls is nearly
32 mnsq ft.Organized retailing now accounts for three percent out of the total retailing, however
is predicted to extend to 10 percent by the year 208. In other means, organized Indian retail sector
would triple its share of the total market within the coming four years, generating new eight million
jobs, in addition to the 21 million jobs that are already created by retail sector. As per the estimate,
the current retail business witnesses more than 12mn retail outlets, which include all shapes and
formats. The analysts foresee bright future of the retail sector. A huge number of shopping malls,
nearly 100, have come up in the recent past, generating 20 mnsq ft. retail space, extending more
space of about 12 mnsqft to it. Nearly 60 malls are on the verge of completion and may be
operational by the end of current financial year. A forecasted number of nearly 200 malls, in a
move to make additional 50 mnsqft of retail space, will be completed within the next two years.
According to analysis by KSA Techno park, India has lowest per capita retail space accessible
around the globe. The study depicts that India require generating at least 110 mnsqft of additional
retail space a year for many years, only to meet the demand generated on account of a continued
GDP growth rate of nearly 6 percent. Hitherto, the Central Government as well as State
Governments and local municipals have failed to match steps with drag on the economy of an
incompetent retail sector. This space crisis is leading to a condition, in which prime locations
demand extremely high rates. To make India's emerging retail market open to foreign direct
investment (FDI) has been on the Government agenda since long time. A number of
transformations and practices were being done, but the sources disclosed that the policy, which
is under finalization, is such that FDI in the retail market would lead towards the rear connections
of manufacturing and production and not only set aside to open of retail stores of global and
imported brands. The global retail giants like Wal-Mart, Gap, Tesco, Versace, K-Mart/SEARS,
Carrefour, ZARA, FCUK, Fendi, NEXT, Mother Care, lKEA, Trussardi, DKNY and Debenhams
have made plans to march in the Indian market. ESPRIT, GUESS, Chanel, Mango and many
other global marked their presence in India byimplementing licensing and franchisee agreements.
The global retailers on the line of control, awaiting the green signal from Govt. to enter Indian
retail market. However, the current scenario has encouraged Indian players to speed up retail
expansion and fresh retail ventures. Companies like Shoppers Stop, Trent, Reliance, Lifestyle,
Tanishq, Crossroads, Akbarallys' and Tanishq already have planned to invest over Rs 5,000 cr.
Trent is on the edge to take both its brands 'Star India Bazaar' and 'Westside' to new cities,
meanwhile Shoppers' Stop has recently geared up for expansion of present ones and to add 11
new stores including two hypermarkets. Also, Pantaloon has planned to add eight 'Big Bazaar'
malls within the next six to eight months. At the same time, several apparel exporters are keen to
get opportunities in retail sector. Gokaldas Images, OC, TCNS, Gokaldas Exports and Celebrity
Fashions are some of the exporters who already have expanded into retail sector with triumph. A
Vibrant Economy, India topped A T Kearneys list of emerging markets for retail investments for
three consecutive years and stood 2nd only behind Vietnam this year. The 2nd fastest growing
economy in the world, the 3rd largest economy in terms of GDP in the next 5 years and the 4th
largest economy in PPP terms after USA, China and Japan, India is rated among the top 10 FDI
48

destinations. FDI in retail industry means that foreign companies in certain categories can sell
products through their own retail shop in the country. At present, foreign direct investment (FDI)
in pure retailing is not permitted under Indian law. Government of India has allowed FDI in retail
of specific brand of products. Following this, foreign companies in certain categories can sell
products through their own retail shops in the country. Indias retail industry is estimated to be
worth approximately US$411.28 billion and is still growing, expected to reach US$804.06 billion
in 2015. As part of the economic liberalization process set in place by the Industrial Policy of 1991,
the Indian government has opened the retail sector to FDI slowly through a series of steps: 1995:
World Trade Organizations General Agreement on Trade in Services, which includes both
wholesale and retailing services, came into effect. 1997: FDI in cash and carry (wholesale) with
100% rights allowed under the government approval route. 2006: FDI in cash and carry
(wholesale) brought under the automatic route. Up to 51 percent investment in a single-brand
retail outlet permitted. 2011: 100% FDI in single brand retail permitted. The Indian government
removed the 51 percent cap on FDI into single-brand retail outlets in December 2011,and opened
the market fully to foreign investors by permitting 100 percent foreign investment in this area.
Government has also made some, albeit limited, progress in allowing multi-brand retailing, which
has so far been prohibited in India. At present, this is restricted to 49 percent foreign equity
participation. The spectre of large supermarket brands displacing traditional Indian mom-and-pop
stores is a hot political issue in India, and the progress and development of the newly liberalized
single-brand retail industry will be watched with some keen eyes as concerns further possible
liberalization in the multi-brand sector.
The Indian retail sector is ready to take on challenges from global retail players such as Walmart
and Carrefour because unlike them, they have a better understanding of the Indian consumers
psyche. Ultimately, a successful retailer is one who understands his customer. The Indian
customer is looking for an emotional connection, a sense of belonging. Hence, to be successful
any retail outlet has to be localized. The customer should feel that it is a part of his culture, his
perceived values, and does not try to impose alien values or concepts on him. Indian customer is
not keen to buy something just because it is sold by an international company. Ultimately, it boils
down to how much localization and adaptation the company is willing to do for India. Other than
tremendous money power, global companies have nothing extra or special that the Indian retail
business does not have. Only two percent of Indias retail market is organized. The future shows
tremendous potential for growth in the retail sector. Almost all large companies worldwide are
looking to establish a base or stake in the Indian market. In this scenario, the Indian retail sector
itself must seize the initiative to realize the dreams of contributing to a prosperous and booming
economy. The focus should be on the Indian horizon before looking for retail opportunities in other
countries because India itself is a big retail market. In the near future India will see a phenomenal
growth of shopping malls and specialty retail stores. The specialty stores will cater for home,
electronics, furniture, watches, sunglasses and assorted items. There will be more fashion stores
for youth. Specialty retail stores and malls are the future of Indian retail market.

49

Future Prospects for the industry

Fast moving consumer goods will become a Rs 400,000-crore industry by 2020. A Booz &
Company study finds out the trends that will shape its future
Consider this. The anti-ageing skincare category grew five times between 2007 and 2008. Its
today the fastest-growing segment in the skincare market. Olay, Procter & Gambles premium
anti-ageing skincare brand, captured 20 per cent of the market within a year of its launch in 2007
and today dominates it with 37 per cent share. Who could have thought of ready acceptance for
anti-ageing creams and lotions some ten years ago? For that matter, who could have thought
Indian consumers would take oral hygiene so seriously? Mouth-rinsing seems to be picking up as
a habit mouthwash penetration is growing at 35 per cent a year. More so, who could have
thought rural consumers would fall for shampoos? Rural penetration of shampoos increased to
46 per cent last year, way up from 16 per cent in 2001.
Consumption patterns have evolved rapidly in the last five to ten years. The consumer is trading
up to experience the new or what he hasnt. Hes looking for products with better functionality,
quality, value, and so on. What he needs is fast getting replaced with what he wants. A new
report by Booz & Company for the Confederation of Indian Industry (CII), called FMCG Roadmap
to 2020: The Game Changers, spells out the key growth drivers for the Indian fast moving
consumer goods (FMCG) industry in the past ten years and identifies the big trends and factors
that will impact its future.
The report estimates the witnessed robust year-on-year growth of approximately 11 per cent in
the last decade, almost tripling in size from Rs 47,000 crore in 2000-01 to Rs 130,000 crore now
(it accounts for 2.2 per cent of the countrys GDP). Growth was even faster in the past five years
almost 17 per cent annually since 2005. It identifies robust GDP growth, opening up of rural
markets, increased income in rural areas, growing urbanization along with evolving consumer
lifestyles and buying behaviors as the key drivers of this growth.
The report further estimates that the FMCG industry will grow at least 12 per cent annually to
become Rs 400,000 crore in size by 2020. Additionally, if some of the factors play out favorably,
say, GDP grows a little faster, the government removes bottlenecks such as the goods and
services tax (GST), infrastructure investments pick up, there is more efficient spending on
government subsidy and so on, growth can be significantly higher. It could be as high as 17 per
cent, leading to an overall industry size of Rs 620,000 crore by 2020.
Says Booz & Company Partner Abhishek Malhotra: The Indian GDP per capita is low but many
Indian consumer segments which constitute rather large absolute numbers are either close to or
have already reached the tipping point of rapid growth. The sector is poised for rapid growth over
the next 10 years, and by 2020, the industry is expected to be larger, more responsible and more
tuned to its customers.
Based on research on industry evolutions in other markets and discussions with industry experts
and practitioners, Booz & Company has identified some important trends that will change the face
of the industry over the next ten years. Some key ones related to evolution of consumer segments
are as follows:
Accelerating
premiumisation
The rising income of Indian consumers has accelerated the trend towards premiumisation or uptrading. The trend can be observed prominently in the top two income groups the rich with
50

annual income exceeding Rs 10 lakh, and the upper middle class with annual income ranging
between Rs 5 lakh and Rs 10 lakh. The reports says, the rich are willing to spend on premium
products for their emotional value and exclusive feel, and their behaviour is close to consumers
in developed economies. They are well-informed about various product options, and want to buy
products which suit their style. The upper middle class wants to emulate the rich and up-trade
towards higher-priced products which offer greater functional benefits and experience compared
to products for mass consumption.
While these two income groups account for only 3 per cent of the population, the report estimates
that by 2020 their numbers will double to 7 per cent of the total population. The rich will grow to
approximately 30 million in 2020, which is more than the total population of Sweden, Norway and
Finland put together. Similarly, the upper middle segment will be a population of about 70 million
in 2020, which is more than the population of the UK.
Over the next ten years, these groups will constitute large enough numbers to merit a dedicated
strategy by FMCG companies. We have seen companies focused on selling primarily to the mid
segments. Often, there is no clear segmentation being offered. Players will do well to clearly
separate their offerings for the upper and mid segments, says Malhotra and adds that the two
should be treated as separate businesses with a dedicated team and strategy for each.Evolving
categories Categories are evolving at a brisk pace in the market for the middle and lower-income
segments. With their rising economic status, these consumers are shifting from need- to wantbased products. For instance, consumers have moved from toothpowders to toothpastes and are
now also demanding mouthwash within the same category.
Also, the report notes, consumers have started demanding customized products, specifically
tailored to their individual tastes and needs. The complexities within the categories are increasing
significantly. Earlier a shampoo used to have two variants normal and anti-dandruff. Now, you
have anti-dandruff shampoos for short hair, oily hair, curly hair, and so on. Every thing is getting
customized, says Malhotra.
The trend towards mass-customization of products will intensify with FMCG players profiling the
buyer by age, region, personal attributes, ethnic background and professional choices. Microsegmentation will amplify the need for highly customized market research so as to capture the
specific needs of the consumer segment targeted, before the actual product design phase gets
underway.
The beauty products market will grow by 20 per cent per annum as result of the changing socioeconomic status of consumers, especially women. Middle-class women are now more conscious
of their appearance and are willing to spend more on enhancing it. Products such as colour
cosmetics (growing by 46 per cent) and sun care products (growing at 13 per cent) have latched
on to this trend rapidly.
The report says the rural BoP population is estimated to be about 78 per cent of the total BoP
population. The segment is becoming an important source of consumption by moving beyond the
survival mode. As a result of rising incomes, the growth of FMCG market in rural areas at 18 per
cent a year has exceeded that of the urban markets at 12 per cent. While the rural market
comprises only 34 per cent of the total FMCG market, given the current growth rates, its
contribution is expected to increase to 45-50 per cent by 2020. It will require tailored products at
highly affordable prices with the potential of large volume supplies.
Products such as fruit juices and sanitary pads which had no demand in the rural markets earlier
have suddenly started establishing their presence. While most FMCG players have succeeded in
51

establishing sufficient access to their products in rural areas, the next wave of growth is expected
to come from increasing category penetration, development of customised products and uptrading rural consumers towards higher-priced and better products.
Another big trend that has been the highlight of the study is the emerging idea of many Indias.
The report says that despite the complexities of language, culture and distances, the Indian
market has largely been seen as a homogenous market. Theres one product for the entire country
the same Maggi noodles for Karnataka and West Bengal, or the same Diet Coke for Punjab
and Assam. Besides, these products have the same advertisements that run across the country.
Increasingly, FMCG players are realising that India is not a homogenous market and consumer
preferences vary significantly. By 2020, Maharashtras GDP will exceed that of Greece, Belgium,
and Switzerland, and Uttar Pradeshs economic size will exceed that of Singapore and Denmark.
So, having a dedicated firm for Maharashtra or Gujarat can prove to be a realistic and profitable
proposition.
We will see companies coming up with regional products. Hindustan Unilever has teas which are
very different in one state versus the other. Pepsi has a different product in Andhra Pradesh which
is not sold anywhere else. Differentiation used to happen at the country level; now you will see at
the state level, says Malhotra.
FMCG players need to grow regional in their thinking and move towards an increasingly
decentralized operating model in India. As consumer preferences differ across regions and states,
companies may follow a regional strategy in terms of product ingredients, positioning, marketing
campaign, and channels. Overall, decentralization or regionalization will become an increasingly
important theme for FMCG players.

52

Chapter 2 Application of Industry Analysis Tools

PESTEL ANALYSIS
Retail
The PESTEL Analysis is an analysis of six key macro level elements which impact business and
the decisions that they make. The retail sector on the other hand entails the sale of goods and
The PESTEL Analysis looks into factors like political, economic, social, technological,
environmental and legal.
Political
There are various kinds of political factors for the retail industry. Such factors can be impacting
the sector currently and also have an impact in the future. Some of those macro level elements
that players in the retail industry need to look into include rate of tax levied by the government,
interest rates, political stability, consumer protection and foreign exchange rates for retail
businesses that are operating on an international platform.
Environment
The economic environment is yet another aspect of PESTEL analysis that is very crucial for the
retail sector. All those businesses that fall under the retail sector have to be up to date with the
economic situation of the country in order to survive and make profits since when the economy is
doing badly, spending habits shift. This in-turn impacts demand and supply.
Social
Social and cultural changes that take place in a country are also of great importance to players in
the retail industry. Such changes may have significant impacts on the performance of the sector.
For instance, in a country whereby the population is culturally diverse like the UK, retailers have
to be on the look out to supply products and services that can suit the various needs of buyers in
order to perform well. The retail industry has to know how to manage diversity in order to benefit
from the market.
Technology
In almost every sector today, technology is taking center stage. For instance, many consumers
are today opting to shop online. Thus, it is very important that players in the retail industry are
very keen to adapt to the technological changes in order to meet the various needs of buyers.
Through technology, retail businesses can develop better relationships with the customers.
Environment
Since retailers operate on fixed locations, it is also important to consider the physical environment.
Retailers have to be keen on selecting environment that is conducive for their target customers,
the location is ideal in determining the number of customers that a business can attract.
Legal
For any business, there are always certain legal minimum standards that have to be met. Besides,
there are also various pieces of legislations that are made from time to time in order to control the
way in which retailers operate. These are important to look into so as to avoid getting on the wrong
side of the law.
53

FMCG
Political

Tax exclusion in sales & excise duty for small scale industries

Transportation & infrastructure development in rural areas helps in distribution network

Restrictions in import policies

Help for agricultural sector

Economic

The GDP rate of Indian economy is increasing every year & is expected to get better in
comparison to other countries

New policies are being adopted by the government & RBI to control inflation rate

There is an increase in disposable income due to increased GDP rate which has resulted
in an increase in per capita income allowing consumers to spend more

Social

Distribution of income

Changes in lifestyle

Consumerism

Education levels

Law affect social behavior

In 2003 46 million household achiever, whereas 124 million household are in position to
spent on FMCG in 2013

Technological

Technology has been made available in India & is also imported from foreign countries

With research & development facilities available developments have been possible in
technology field with the help of some foreign players

54

Environment

Since fmcg operate on fixed locations, it is also important to consider the physical
environment.
It have to be keen on selecting environment that is conducive for their target customers,
the location is ideal in determining the number of customers that a business can attract.
It should also be keen on the impact that their businesses have on the environment since
that too can impact their performance.

Legal

Investment approval, investment of up to 100 % foreign equity for NRI & overseas
corporate bodies has been approved by the government.

FDI in organized retail, India has allowed 51 % FDI in multi brand retail

Relaxation of license rules

Priority sector

55

FIVE FORCE ANALYSIS

Retail

1. Threat of New Entrants

One trend that started over a decade ago has been a decreasing number of independent
retailers. Walk through any mall and you'll notice that a majority of them are chain stores.
While the barriers to start up a store are not impossible to overcome, the ability to establish
favorable supply contracts, leases and be competitive is becoming virtually impossible.
Their vertical structure and centralized buying gives chain stores a competitive advantage
over independent retailers

2. Bargaining power of suppliers

Historically, retailers have tried to exploit relationships with suppliers.

Bargaining power of buyers is moderate because of the size and concentration of major
retailers.
To reduce power and you retain customers, retailers seek to differentiate products and
create strong brands.
Individual private customers have a relatively low bargaining power in front of large retail
chains, however, their power is greater for small retailers, who are less organized.
A contract with a large retailer such as Wal-Mart can make or break a small supplier. In
the retail industry, suppliers tend to have very little power.

3. Power of Buyers

Individually, customers have very little bargaining power with retail stores.
It is very difficult to bargain with the clerk at Safeway for a better price on grapes.
But as a whole, if customers demand high-quality products at bargain prices, it helps keep
retailers honest

4. Threat of substitute products

The tendency in retail is not to specialize in one good or service, but to deal in a wide
range of products and services.
This means that what one store offers you will likely find at another store.
Retailers offering products that are unique have a distinct or absolute advantage over their
competitors.

5. Competitive Rivalry

Is increased by equal size and power of dominant retailers who are pushing to increase
market
share.

The trend of extinction of small retailers through acquisitions, mergers alliances and high
cost to exist this market. Among leading group there are More, Reliance store, big bazar
and Flipkart that are dominating the large markets of retail sector in India.

56

FMCG

1 Barriers to Entry

Entry of new players in an industry raises the level of competition, thereby reducing its
attractiveness. The threat of new entrants largely depends on the barriers to entry. High
entry barriers exist in some industries (e.g. shipbuilding) whereas other industries are very
easy to enter (e.g. estate agency, restaurants). Key barriers to entry include
Economies of scale. Capital / investment requirements. Customer switching costs. Access
to industry distribution channels. The likelihood of retaliation from existing industry players.
The Indian FMCG Industry is characterized with modest entry and exit barriers.

2 Threat of Substitutes

The presence of substitute products in FMCG lowers industry attractiveness and

profitability because they limit price levels. The threat of substitute products depends on:
Buyers willingness to substitute
The relative price and performance of substitutes
The costs of switching to substitutes
Being an essential commodity the demand for consumer products is elastic. Several
brands are positioned with narrow product differentiation. Companies entering a category
/trying to gain market share compete on pricing which increases products substitution.
Hence, threat of substitute is high in the FMCG industry.

3 Bargaining Power of Suppliers

Prices are generally governed by international commodity markets, making most of the
FMCG companies a price takers. Due to the long term relationships with suppliers etc.,
the FMCG companies negotiate better rates during times of high input cost inflation.

4 Bargaining Power of Consumers

High brand loyalty for a product discourages customers product shift. But low switching
cost and aggressive marketing strategies under intense competition between the FMCG
companies, induce consumers to switch between products, thereby driving value for
money deals for consumers. However on account of large number of buyers and limited
suppliers, the bargaining power of consumer is low in Indian FMCG.

5 Intensity of Rivalry

Competitiveness among the Indian FMCG players is high. With more MNCs entering the
country, the industry has become highly fragmented. Spending on advertisements
continue to grow and marketing budgets as well as strategies are becoming more
aggressive. The private labels offered by retailers at a discount to mainframe brands also
act as competition to undifferentiated and weak brands.

57

BCG matrix
In the BCG Matrix the lower right quadrant is called the Dogs. It describes a product or product
category for which a company has low market share and is constrained with low growth.
The Dogs

Products in this quadrant should, generally, either receive no support or be divested

i.e., closed out.
The reasoning is that competing here will take a significant investment in time and money
since the company has low market share and must take sales away from competitors who
may be better positioned in the market. Think about the folks who sell mass-market
products on Amazon or EBay, wherein the only real way to compete is to keep slashing
prices, lowering margin, and making less money for the same amount of effort.

The Cash Cows

Products in the lower left quadrant are called Cash Cows. In these instances the
company has relatively good share of the market, but is faced with low growth. These are
products that are money makes, but they will not necessarily take the seller further,
growing revenue or profits over time.
Here the strategy is to harvest from these products to invest elsewhere. Take advantage
of success, but dont rest.

The Question Marks

With high growth and low market share, products in the upper right are referred to as
Question Marks. Businesses simply dont know what they represent in terms of possible
market share or growing profits.
In spite of the unknowns, you want to build promotions for these items, investing in
advertising and promotion.
These products have the greatest potential for the business since there is an opportunity
to capture share and to grow with the market. Just know that not every Question Mark
product will be successful.

The Stars

A companys Star products reside in the upper left quadrant with high market share and
high growth. Because of the companys relatively strong market share the company has
a good competitive position. The high growth also means that there is the opportunity to
continue to increase revenue and profits.
For Star products, hold on to what you have or in some case try to continue to grow, but
this is really an area of moderate marketing and advertising investment.

58

BCG MATRIX ON RETAILS

STAR

QUESTION MARK

BIG BAZAR
HIGH

SHOPPERS STOP

HYPERCITY

MARKET
GROWTH CASH COWS

DOG

PANTALOONS
LAW

MARKET SHARE

59

BCG MATRIX ON FMCG

STAR

QUESTION MARK

ORIFLME
HIGH

MARKET
GROWTH CASH COWS

DOG

LAW

MARKET SHARE

60

I/O FRAMEWORK

Industrial and organizational psychology (also known as IO psychology, occupational

psychology, work psychology, WO psychology, IWO psychology and business psychology) is the
scientific study of human behavior in the workplace and applies psychological theories and
principles to organizations and individuals in their workplace.
I-O psychologists are trained in the scientistpractitioner model. I-O psychologists contribute to
an
organization's
success
by
improving
the
performance,
motivation,
job
satisfaction, occupational safety and health as well as the overall health and well-being of its
employees. An IO psychologist conducts research on employee behaviors and attitudes, and
how these can be improved through hiring practices, training programs, feedback, and
management system. IO psychologists also help organizations and their employee transition
during periods of change and organization development. I-O psychology is one of the 14
recognized specialties and proficiencies in professional psychology in the United States and is
represented by Division 14 of the American Psychological Association (APA), known formally as
the Society for Industrial and Organizational Psychology (SIOP)
The "industrial" side of IO psychology has its historical origins in research on individual
differences, assessment, and the prediction of work performance. This branch crystallized during
World War I, in response to the need to rapidly assign new troops to duty stations. Scott and
Bingham volunteered to help with the testing and placement of more than a million army recruits.
In 1917, together, along with other prominent psychologists, adapted a well-known intelligence
test, (the Stanford-Benet test, designed for testing one individual at a time) to make it suitable for
mass group testing. This new test form was called the Army Alpha. After the War, the growing
industrial base in the US added impetus to IO psychology. The private industry set out to emulate
the successful testing of army personnel, and mental ability testing soon became a commonplace
in the work setting. Industrial psychology began to gain prominence when Elton Mayo arrived in
the United States in 1924. Mayo was fascinated by not the efficiency of workers, but their emotions
and how work may cause workers to act in particular pathological ways. These observations of
workers thoughts and emotions were studied to see how prone employees would be to resist
management attempts to increase productivity and how sympathetic to labor unions they would
become. These studies are known as Hawthorne studies. The results of these studies ushered in
a radically new movement known as the Human Relations Movement. This movement was
interested in the more complicated theories of motivation, the emotional world of the worker, job
satisfaction, and interviews with workers.

61

Value Chain Analysis:

Retail

patnring
with
vendor

buying

managing
inventry

distribution
inventory

opreting
store

marketing
and selling

FMCG

inbound
logistics

operastion

outbound
logistics

marketing
and sales

services

62

Strategic Group Mapping:

RETAILS

High

SHOPPERS STOP
PANTALOONS

HYPERCITY
BIG BAZAAR

Low

Few localities

many localities

63

Strategic Group Mapping:

FMCG

High

ORIFLAME

Low

Few localities

many localities

64

Chapter 3 Research
Research Methodology

Research Objective

To study marketing strategies of Broad-line Retailers in Ahmedabad

To study marketing strategies followed by FMCG (Personal Care) company in Ahmedabad
To study effectiveness of different marketing strategies followed by Broad-line retailers
and personal care.
To study the difference between personal care and broad-line retailing marketing
strategies

Types of Research

Qualitative research

Research Design

Exploratory Study

Research Instrument

Discussion Guide

Data Collection Method

In-depth Interview

Sample size

Sample size=15

Sampling Method

Non probability
Convincing
65

Research limitation

Time limit for this project is around 2 months

We only conduct 15 interviews.
A study will conduct in Ahmedabad region only.

Research Instrument:

Population Size : Ahmedabad (India)

Sampling Unit: 10- Retail Industry, 10- Hospitality Industry and 10- Financial Services
Industry
Estimated Sample Size:10 Organizations of each Industry
Sampling Method: Non-Probability Sampling (convenience Sampling)
Sources of Data: Primary and Secondary
Tools and Techniques: Descriptive & Qualitative Interview with HR Managers.

66

APPENDIXES AND BIBILIOGRAPHY

Website:
www.marketresearch.com
www.firstresearch.com
www.ibef.com
www.study.com
www.slideshare.com
www.wikipedia.com

Book:
Philip Kotler
Strategic management

67

Data Analysis and Learnigs from Primary Interviews:

The aim of data analysis in research is to discover useful information from a set of data, and
conclusions that can be used to form insights. Large quantities of data must be summarized and
presented in a way that clearly communicates the most important features and conclusions.
Data analysis in research projects that involves quantitative methods have similar techniques,
including analyzing the frequency of variables and the differences of variables. Statistical testing
is often used during data analysis in research. These are carried out to estimate the significance
of any conclusions the results may suggest and determine that they did not occur by chance.
Main aim to know marketing strategy used by various fmcg and retails player use to fight against
compaction and sales and marketing of their product. We talk about the all strategy which they
use in regular business process.
After conducting the all interview we came know many strategy is use by selected players. And
some of it above:

Marketing and strategy is used by all company

Relationship Marketing Strategy

Viral Marketing Strategy
Diversity Marketing Strategy
Mass Marketing Strategy
Online Marketing Strategy
Email Marketing Strategy
Event Marketing Strategy
Direct Marketing Strategy
Social Media Marketing Strategy
Cross-Media Marketing Strategy
Promotional Marketing Strategy
Database Marketing Strategy
Cult-rural Marketing Strategy
Purchase Strategy
Sales Strategy
Branding Strategy
Segmentation Strategy
IMC strategy
Sales Strategy
Distribution Strategy Supply
Supply-Chain strategy

68

Discussion Guide:
1 What is the method of choosing marketing strategy?
2 What to do when strategy cannot work?
3 What type of strategy you use to fight against competitor?
4 Which is best strategy for making more foot fool?
5 What you do to make good image in customer mind?
6 What is logic behind the sales promotion offer?
7 Method of selecting the offer?
8 what strategy you use in inventory management?
9 who decide the strategy?
10 what step you take against your competitor e-commerce?
11 how you manage the inventory?
12 how you manage your distribution channel?
13 which is best strategy for increase the sales according to you?
14 according to you sales promotion offer work effectively or not?
15 what you do to generating more revenue?
16 what is medium you use to communication your strategy plan to your all team member?
17 which is the best strategy according to you is always helpful to marketing your product?

69