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Managing organizational andManagement challenges in India

A research on challenges faced by

organizations due to changing

consumer landscape

Ishwar B Kelwadkar

Kevin Jon

Team 1

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1

5

Introduction

FMCG Sector & Challenges

3 Research Methodology

4

Background of Research2

6

Journey of FMCG sector in India

7

Growth Drivers for FMCG Sector

8

Strategies by Companies to face Challenges

9

Action Plan

10

Conclusion

Bibliography

PresentationPlan

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Introduction

India : A Land of Bill

ionPe

ople

151 Languages spoken

Economy - Oneof the Worlds fastest

Disparity - 70% Populationearnless than1dollar

DivisionofIndian Consumers

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DivisionofIndian Consumers

Consumers

Climbers

Aspirants

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Backgroundof Research Area

Survey Conducted by McKinsey

Executives from 93 countries

Research Methodology

Exploratory Research

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FMCG Sector

ImmensePotential FMCG market to reach 33.4 $

Billion by 2015

HighlyFragmentedFMCG market

GrowthDrivers EmergingMarkets

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GrowthDrivers

IncreasedDisposable

Income

Emergenceof

OrganizedRetail

Distribution

Depth -Rural

Penetration

Favorable

IndianEconomy &

Demographics

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Challenges forFMCG Sector

Design and ManufacturingLowCapitalIntensity

Technology

Third-party Manufacturing

MarketingandDistributionHighInitial Launch Cost

Limited Mass Media Options

HugeDistribution Network

CompetitionSignificantPresenceof UnorganizedSector

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JourneyofFMCG Sector

LACKLUSTER Stage 1950s to1970s

RURAL SENSITIZATION Stage

1970s to1990sLIBERLIZATION BOOM andSTABLIZATION Stage - Post

Liberalization (1991 - 2000)

DROP Stage (2000 2005)

BOOM REVISTED Stage: 2005

onwards9/12/2010 9N

CMS2010

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Consumer classhouseholdIncomeBoom

Distribution

0

10

20

30

40

50

60

Very rich Consumingclass

Climbers Aspirants Destitute

2

26

41

1

13

5

54

34

4 3

2009 2015

Fig. 1 consumer classhouseholdIncomeBoomDistribution

Source : HLL, NCAER

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Strategies byFMCG Companies

I. Operational ChallengeII. BrandDilution

III. Consumer Communication

IV. Research & D

evel

opme

ntV. Distribution

VI. BackwardIntegration

VII. Acquisition

VIII. Focuson CoreBusiness

IX. ShiftinBusinessPortfolio

X. Focuson LowIncome Consumers9/12/2010 11N

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I. Operational Challenges

P & G

MarketDevelopment Organization

Nestle Channel & CategorySalesDevelopment

Nat ional Key Accounts Management Organization

HUL

Cost ReductionStrategy

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II. BrandDilution

Nestle NestleEveryDaySlimTea Whitener

NestleFresh & NaturalSlimDahi

III. Communication

Nestle

Nutritional Compass

Nirma

-UmbrellaBrandingStrategy9/12/2010 13N

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IV. Research & Development

Nirma

On LineInstruments

P & G

Innovation Leader

HUL

PureIt

Nestle Nestle ConsumptionZone

Nirma

- Nirma Consumer Car

eLimit

ed

V. Distribution

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VI. BackwardIntegration

Nirma

Manufacture Key raw

materials

VII. Acquisition

Nirma- GlobalPresence

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VIII. Focuson CoreBusiness

P & G

- BillionDollarBrands contributing

80 % ofitsSales

IX. ShiftinBusinessPortfolio

P & G

- FocusonPaper & Food business

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X. Focuson LowIncome Consumers

P& G

42 % ofSales Growth fromDevelopingMarket

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ActionPlan: CompaniesEntering

Indian Market

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Consumer

preference

research

R&D

Indian market

Consumerpreferences

Disposableincome

Shiftin consumer class

distribution

Consumer

Communication

DistributionChannel

Fig. 2 Road map for companies toenterIndian market

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ActionPlan: Companies toFace

Challenges from Changing

Consumer Landscape

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BrandFocus on core

business

R&D

Operational

Efficiency

Backward

Integration