After ruling the micro-product industry for over half a century, the FMCG (fast-moving consumer goods) market is experiencing significant hurdles in keeping up with the extensive market share that it had been holding onto. Digital marketing, E-commerce platforms, automated productions are few catalysts currently scaling up the FMCG bulk to meet the latest trends.

The small and medium scale manufacturers being strictly limited to retailers and grocery stores, are facing stiff competition from cheaper goods manufactured by local brands being sold online through global brands.

Also, the large manufacturers, having not cultivated their brand value in the consumer market, are also facing serious hurdles from branded market giants who are rapidly encashing on digital transformation to gain brand recognition and visibility resulting in more acceptance in the market. 

Post World War 2, there are 23 FMCG companies in the top 100 manufacturing giants in the world, maintaining an annual 15% TRS (Total Return to Shareholders), thus actively attracting investments for 45 long years. However, this journey has been hitting rough patches now due to increased competition, exploding local brands, stocking-up issues and other parameters.

So, let’s see how digital networking and mobility can help gain momentum in this market.

Strengthen Brand Recognition

Too many product launches in the FMCG market have threatened the brand value of the companies as, according to Nielson’s study, only 0.2% of the new products gain influence among the consumers. This can be visualized by the fact that out of 14,509 FMCG products launched in India, only 31 have been able to make their mark in the Rs. 2 lakh crore business.

The new generation of buyers are living better lifestyles and hence, prefer branded products more.

Poor consumption pull down retail sales - FMCG Market

This declining growth rate is evident of the fact that the millennial consumption behavior is changing towards more branded products i.e the companies enjoying brand visibility are taking on this market. 

Thus, bringing the products live on websites and mobile apps: encouraging searching as well as purchase directly online is the way you can improve your brand visibility among your consumers. 

Marketing your mobile app or website not only gives you an extra channel to sell but also bring your brand closer to your customers: influencing brand recognition.

Replace Offline Trading with Omni-Channel Sales

FMCG product sales are mostly limited to grocery and retail stores which experience visibility only physically. Instead of transporting an entire bulk of goods for sales, e-commerce platforms facilitate demand-based transportation: helping bring down delivery costs.

Such e-commerce platforms employ omnichannel trade, enhancing market presence as well as brand visibility which gives you an upper hand against local brand products that seldom sell online. 

The 21-36 age group buyers are becoming more value-conscious: a byproduct of an evolving lifestyle. Hence, this is the right time to capitalize on digital disruptions and increase your brand recognition across the urban consumers which have been the main driving force of the FMCG market.

Automation in Production: A Necessity

Traditional manufacturing pipelines put stress on a company’s goal of increasing production and at lower costs to survive in the market. In 2011, Harvard Business Review agreed that the adaptability of key market players to automation and robotic technology is a necessity.

Manual transportation often relies on on-paper statistics that aren’t updated in real-time and are prone to multiple errors. Thus, heavy reliance on offline trading channels has resulted in decreased profit margins: FMCG companies’ growth in TRS lagged the S&P 500 by three percentage points from 2012 to 2017.

Understanding Customer Behaviour

With large scale digital disruptions facilitated by internet penetration, consumer behavior has changed drastically. While consumers shopping on e-commerce platforms focus more on brand value, in grocery stores they actually tend to prioritize cost over the brand. 

In both cases, FMCG companies are losing out either due to non-existent brand recognition or declining profit in cheaper goods competition. 

Mobile apps and websites give you an augmented analysis of organic visits, click-through rates, conversion ratio, etc. helping you with data to understand real-time purchasing behavior at the consumer level. Based on this, you can now come up with sales strategies to meet your profit goals in this highly competitive market.

Win Loyalty via Customisation

In a survey of retail industry leaders, nearly 40 percent said the #1 concern they have about millennials is their lack of loyalty. This is a direct reflection of the fact that millenials today are about 9% poorer than what they were in the last generation.

This is pushing companies to devise a more customer-centric approach, possible only through digital adaptation. Trading in bulk makes your product vulnerable to price fluctuations locally as well as globally. Allowing customization wins you loyal users who shall continue to buy from you for lifetime.

Pampers’ coined points as a reward feature for many purchases

Pampers’ coined points as a reward feature for many purchases

We found that 95 percent or more of millennials say they want their brands to court them actively, and coupons sent via email or mailed to their homes currently (or will in the future) have the most influence on them – Accenture

Capitalizing on Immediate Demands

Online availability of products enables you to dictate sales according to time and place more efficiently. Relying on the retailer’s feedback on product demands makes inventory management cumbersome resulting in failure to tailor your sales according to local demand.

93% of millenials plan to shop on Black Friday or Cyber Monday

Immediate demands can also be generated through digital media by announcing flash sales when you identify sluggish selling of one or more products. In such cases, online availability can quickly connect you with interested customers: avoiding stock pile-up as well as encouraging brand value.

Remote Customer Service: Chatbots & Voice Assistants

The main reason why chatbots are so popular is that when people want an answer, speed is always part of the equation! Instead of relying on the selling capability of a retailer to market your product, it is always better to answer your customer queries directly within seconds!

Voice-assistants and smart speakers are also gaining attention now with over 20% of the Google searches being carried out here. Also by 2020, the number of smart speakers is supposed to hit 21.4 million. And people aren’t only doing Google searches on these. 22% of smart speakers in the US have bought something online using their speaker.

Edison Research Smart Audio Report

Social Media & Digital Marketing: Personalised Ads

Social presence is now considered a necessity to survive in any market. You can’t afford to let your product get forgotten among the buyers after giving some lucrative discounts to generate more sales.

Biggest FMCG company Coca-Cola often carries out all its customer-centric campaigns on its social media handles having millions of followers. Digital marketing gives you several options to explore for enhancing customer interaction, so as to remain in the spotlight 24/7.

Apart from social media, email marketing can give brands an average ROI of 122%, a channel that the top 100 UK FMCG brands are overlooking in Kagool’s FMCG Digital Census.

Let’s hear it from FMCG giants!

Colgate Palmolive: Automated Productions

Colgate has been one of the cornerstones of FMCG growth who have been quite actively adopting digitization and mobility in managing it’s entire processing from inventory to automated guided vehicles (AGVs) into its production chain.

Director of Factory Performance and Reliability for Colgate-Palmolive, Andres Bejarano emphasized that, “The idea is to automate everything that can be automated!”

Already ranking #9 on Gartner’s Supply Chain Top 25 for 2019, Colgate has introduced complete automation in its manufacturing and supply chains like:

  • Sensors to predict failures
  • Hand-held wireless devices to assist with material flow
  • RFID (radio frequency identification) tags to track pallets and inventory
  • Video feeds and cameras to enable remote operator support

After achieving such sophistication in its supply chain, Colgate is now targeting to take it’s digital initiatives to the customers itself like it’s peer Nestle’s app which can check the freshness of any Nestle food products.

Parle-G: Thinking E-Delivery

Huge dependency on traditional channels has affected the firm’s production and profits inevitably: 7-8% volume decline in August 2019 had made headlines when several reports of its plan to lay off around 10,000 employees came to light.

Parle G Category Head Mayank Shah has reinstated this too and said that Parle G is looking to adapt to more delivery channels as the current stock and sell is eating into the company’s profit margins. Certainly, they are looking into D2C models of Swiggy, Zomato as well as the buy & sell strategy of Big Basket and Grofers.

Thus, to sustain growth, domestic as well as global manufacturers have to revive their business models with digital initiatives in the supply chain, production, and customization sectors.

Last Words

The tapered growth rate among the FMCG companies is essentially eating up their profits. The majority of the revenue generated now is basically from the volume growth rather than price-led growth: means its contribution towards GDP is reducing every year.

Looking at the fractures in FMCG growth, the marketeers should take some bold steps in revising their existing workflows with automation and digitization right from inventory management and production to leveraging brand recognition and customer service.


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