Thursday, December 23, 2010

FMCG sectoral growth in India is likely to come from 'upgrading'

The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion.It has a strong MNC presence and is characterised by a wellestablished distribution network, intense competition between the organised and unorganised segments and low operational cost. Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage.

The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products.

IMRB: Premiumisation in FMCG driven by personal care and household care

Consumers increasingly want the best when it comes to pampering themselves or their homes. This is borne out from data that market research agency IMRB has provided on household consumption in the top eight metros, for September 2008 to August 2010.

The metros here are Mumbai, Delhi, Kolkata, Pune, Ahmedabad, Chennai, Bangalore and Hyderabad.

Data shows the reach of premium products within categories such as shampoos, skin creams, talcum powders, metal scourers and floor cleaners in households in these metros has grown substantially in the past two years. This, even as households have had to contend with food inflation which has eaten into expenditure of allied products. Over half of a household’s monthly expenditure is devoted to food alone. In inflationary times, this can rise to 60-70 per cent of a monthly budget.

Wednesday, December 22, 2010

Three R’s of mobile location-based marketing

Location-based marketing is a much talked about subject among large national retailers, local merchants and digital media agencies. 
Even Silicon Valley entrepreneurs want to get in on the action, creating innovative applications for mobile check-in and checkout, location-based gaming and buying, and advertising.
From simple local advertising and more complex location-detection technology using GPS and triangulation that is available on most smartphones, location-based marketing is using a diverse array of methods to help marketers achieve their goals.
Marketers are tapping mobile location-based services (LBS) to compel customers to use various types of applications to engage with the brand, product or venue via their mobile phone to drive new customer acquisition and expand their existing loyalty programs.
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Tapping the Buying Power of Indonesia’s Young Professionals

Picture of Jakarta, from top to bottom: panora...Image via Wikipedia
As with other developing countries, Indonesia’s economy is strong, and that development has propelled a growing middle class eager to spend.  In Indonesia, retailers and manufacturers should focus their attention on the nation’s young, married, urban-dwelling professionals, according to Yudi Suryanata, Executive Director, Consumer Research, Nielsen Indonesia, who spoke at the company’s Marketing & Media Presentation in Jakarta earlier this month.

“Yuppie couples are educated, well-employed and represent the next generation of Indonesia’s affluent consumers,” said Suryanata.  “But retailers and consumer products manufacturers need to know how to specifically appeal to them if they want a greater share of their Rupiah.”

So what exactly makes a “yuppie couple?” They are young – below 30 – and have university or higher education.  They reside in an apartment or a middle-up housing complex located in the city or suburbs.  They work as professionals, typically at the managerial level, in fields such as banking and finance, energy, consulting or marketing, and are focused on their careers.

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The year of the mobile.

Tuesday, December 21, 2010

eBay sets sights on India’s e-commerce market

SAN JOSE, CA - FEBRUARY 24:  eBay CEO John Don...Image by Getty Images via @daylife
GLOBAL auction e-commerce company eBay Inc has set its sights on India’s e- commerce market, which is anticipated to grow over the next three to five years with the increased adoption of 3G technologies and mobile broadband networks, said its president and CEO, John Donahoe, in a recent interview with local media.

“I am very bullish on e- commerce in India. I think India is still in its early days, and the Indian e-commerce market [is] growing at 30% [annually],” he said. 

Donahoe added that “as broadband gets more ubiquitous”, this would bring about a change in consumer behaviour, in terms of willingness and ability to shop online. 

The eBay chief predicted that as with other parts of the world, India is going through the transition to mobile devices, where “people are accessing the Internet seven days a week, 24 hours a day”. 

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China and India to see ‘substantial’ mall growth by 2013, says report

TWO of Asia’s economic behemoths, China and India, are expected to see a substantial increase in shopping centre supply over the next two to three years, riding on the back of improving retail sales and returning consumer confidence, a new report by global property consultant Jones Lang LaSalle said in September this year.

According to the company’s Global Market Perspective September 2010 report, consumer spending in the Asia-Pacific region remains strong, “underpinned by employment growth not only in emerging markets, but also in mature economies such as Australia, Singapore and Hong Kong”. 

Citing a recent survey by UKbased market research group, Ipsos MORI, which revealed marked changes in consumer confidence across 24 countries globally, the report noted that a “high level of optimism” was identified in the BRIC (Brazil, Russia, India and China) economies, “where a combination of cyclical and structural factors are boosting consumer activity”. 

Read more here.

Online sales soar in November

Window shopping at Eaton's department store. (...Image via Wikipedia
Shoppers spent £6.4bn online during November, equivalent to £104 per person, according to the IMRG Capgemini e-Retail Sales Index.
Sales were up 23.4% month-on-month and 21.5% year-on-year.
Christmas was the big sales driver and the gift sector delivered the largest growth - up 123% month-on-month, the biggest leap since between October and November in 2006.
Big ticket items fared well as shoppers made purchases before the VAT hike in the New Year. Sales of electrical items were up 44% month-on-month and 12% year-on-year.
Clothing, footwear and accessories sales also jumped as consumers rushed to buy winter jackets and woolly socks as the big freeze set in. The sector managed a year-on-year increase of 35% - its strongest growth for 18 months.
There was also a 50% leap in the clothing sales conversion rate, suggesting consumers are not just surfing the net to window shop but researching the best price and placing an order.
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Asia-wide surge in online shopping

Logo of PayPal.Image via Wikipedia
More and more Asians are choosing to buy products online, according to research from PayPal.  

Their motivation: to avoid the crowds, long queues and parking troubles at shopping malls, while benefiting from holiday promotions on a wider variety of items that can be found online, the payments gateway concluded.

PayPal says it saw a 160 per cent increase in online shopping transaction value from Asian consumers on November 7, highlighting that the holiday shopping period across the region began in early November. This is also the first year-end holiday season for Asian consumers to be covered by PayPal's expanded Buyer Protection policy.

According to the Asia Digital Marketing Association (ADMA) 2010 Report, the top three reasons for online shopping across the region include the convenience of being able to shop anytime, better deals from price comparisons, and the ability to find and compare a wide range of products. ADMA also reported that 39 per cent of online shoppers across the region indicated that they buy from overseas websites, highlighting the importance of cross-border shopping.

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New POS system goes mobile via the web

Vend, an Auckland, New Zealand based start-up, has launched a new point of sale product designed to run off any device with internet connection.  

The product allows retailers to run their business from any computer in the world, and connects with other cloud based applications.

The brainchild of founder and CEO Vaughan Rowsell, a self described entrepreneur and internet technologist, the company already has the backing of Trade Me founder, Sam Morgan.

read more here.
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Friday, December 17, 2010

The AaramShop PRO is now mobile.

Keeping in mind the fast paced, on-the-move life of the B2B users of this site, the site is now available in it's pure mobile format for easy and quick access and updates. The mobile version does not have any heavy imagery and has been custom built to ensure quick access on mobile across all geos, including on low bandwidth locations.

If you visit the PRO site using a mobile device, you would be automatically taken to the site optimized for the mobile decides across all platforms..

Thursday, December 16, 2010

Create a Cozy Consumer Experience With Web and Catalog Product Descriptions

Catalog and web product descriptions can pull consumers in and make them beg for more, or they can be boring and leave consumers unsatisfied or even suspect of the product. To keep consumers reading, begin your copy with a compelling opening statement that moves them to the next sentence and on to the next one until they're completely engaged in the description. Miss a link somewhere and you lose your audience.
Here are two ways to create an experience for consumers:
1. Create an experience. 2. Spark a good memory.

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Despite Consumer Demand Most Retailers Lag on In-Store Pick-up

There’s a bit of a disconnect between consumers and retailers when it comes to local inventory data and “buy online and pick up in store.” Once they’ve made a product decision, consumers typically want to know whether an item is in store.
This is the biggest single consumer question and the biggest source of calls to local stores very often. However, because of cost issues, culture issues and a lack of clear understanding of its importance, most retailers are not yet trying to implement updated inventory systems that make in-store pick up possible.
Read more here.

More validation of the "ROBO" principal.

Research Online Buy Offline is an understood fact, validated further by the Nielsen Study.

The web’s role is becoming integral for brick-and-mortar retailers, even for in-store purchases, according to (pdf) a recent Nielsen Online survey, which found that among those who had recently made consumer electronics purchases in a store, 80% did so after first visiting the store’s website.
Moreover, 53% purchased from the retailer on whose website they had spent the most time, Nielsen said.
Among consumer electronics purchasers, 58% indicated that if they had only one channel in which to do product research prior to purchase, they would choose the internet, compared with only 25% that would choose to be able to do research in a physical store.

Even in product categories that involve less research before purchase, the web plays an important part in the information gathering process, Nielsen’s survey found.

For example, some 44% of pet food consumers went online to learn more about the product. Safety was top of mind for these consumers, who were most interested in nutritional specifications, product ingredients and recall information in their online research.

Read more here.

Shopping trip

Spending on P-O-P, the largest consumer promotions category, increased 2.2% to $20.79 billion in 2008, as in-store media — with its ability to reach a captive audience at point-of-sale — became a focus of marketing campaigns.

The spending centers on research indicating that 70% of customer's purchase decisions are made in-store, according to the Promotional Products Association International.

The coming together of offline and online within retail.

With digital and retail converging, these are all current opportunities or near-future possibilities.
Smarter marketers, a stronger consumer-centric focus, and strategic partnerships are driving a direct link between online and offline behaviors. As the world moves forward, so does the need to maintain a place at the cutting edge of consumer adoption.

Retail Trends 2010 By Peter Fisk

Check out this SlideShare Presentation:

Tuesday, December 14, 2010

Ten Trends Driving Sales in China's Retail Industry

With dozens of new shopping outlets popping up every day in China, competitors are almost literally edging each other off the street.

Consumers are clearly the beneficiaries. They are able to compare products, prices and services quickly--and there's plenty to compare. New brands continue to bombard the retail landscape.

The retail war is quickly moving into cyberspace. Shopping from the convenience and comfort of a computer, youth are able to shop on local, national and even international websites that increasingly cater to Chinese consumers.

What's Hot for This Retail Season?

The Facebook Man. Facebook is celebrating its ...Image via Wikipedia
Smart retailers will be layering plenty of digital and social media into this year's holiday campaigns, as they should. Major retailers now boast hundreds of thousands -- if not millions -- of likes on Facebook; one-third of consumers never leave home without their smartphone; and online shopping continues to be a bright spot. 

Retailers will be fighting hard for consumers' dollars during the next two months, and they'll be looking to technology to give them a leg up on the competition. To that end, there will be plenty of tech trends to keep an eye on; Ad age reviews the following;

  1. Imitation
  2. Personalization
  3. Mobile shopping assistants
  4. Nonstop social media
  5. Breaking down barriers
  6. Location-based discounts

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Delhi tops eBay list of e-commerce base in India

Image representing eBay as depicted in CrunchBaseImage via CrunchBase
According to 'Buy and Sell Survey 2010' by e-commerce portal – eBay – Delhi bags the top rank in terms of remaining as the largest e-commerce base in both imports and exports followed by Mumbai, Jaipur, Chennai and Bangalore in second, third and fourth position respectively. 

On the exports-imports transactions made on the eBay sites, findings show that 545 export hubs sell goods to 89 countries across the globe and close to 1,259 locations import goods from 114 countries.

Rajesh Ramachandran, general manager and head of India Product Centre, eBay said, “There are about 4,000 items traded in 2,000 categories with a live listings of as many as five lakh items. eBay is growing at a rate of 64 per cent in terms of volume against the India’s e-commerce market growth of 30 per cent. 

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India may allow FDI in multi-brand retail in 3 mths- Pantaloon - The Economic Times

India may allow FDI in multi-brand retail in 3 mths- The Economic Times

Six Social Media Trends for 2011

A segment of a social networkImage via Wikipedia
It was a banner year for social media growth and adoption. We witnessed Facebook overtake Google in most weekly site traffic, while some surveys reported nearly 95% of companies using LinkedIn to help in recruiting efforts. In my outlook for last year, I cited that mobile would become a lifeline to those looking for their social media fixes, and indeed the use of social media through mobile devices increased in the triple digits.
I also outlined how "social media would look less social" or more accurately exclusive, and indeed, we've seen the re-launch of Facebook groups, which focus on niche interactivity, and more recently, the emergence of Path, billed as "the social network for intimate friends" which limits your network to only 50 people. The past year also saw some brands go full throttle on Foursquare's game-like geo-location platform, attempting to reward mayors and creating custom badges for the network's power users.

Read the full post here.
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Branding in the Digital Age: You’re Spending Your Money in All the Wrong Places

The Marketing Metrics Continuum provides a fra...Image via Wikipedia
The internet has upended how consumers engage with brands. It is transforming the economics of marketing and making obsolete many of the function’s traditional strategies and structures. For marketers, the old way of doing business is unsustainable.
Consider this: Not long ago, a car buyer would methodically pare down the available choices until he arrived at the one that best met his criteria. A dealer would reel him in and make the sale. The buyer’s relationship with both the dealer and the manufacturer would typically dissipate after the purchase. But today, consumers are promiscuous in their brand relationships: They connect with myriad brands—through new media channels beyond the manufacturer’s and the retailer’s control or even knowledge—and evaluate a shifting array of them, often expanding the pool before narrowing it. After a purchase these consumers may remain aggressively engaged, publicly promoting or assailing the products they’ve bought, collaborating in the brands’ development, and challenging and shaping their meaning.

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Why Wal-Mart Went Shopping in Africa

Newly renovated exterior of the Walmart in Wes...Image via Wikipedia
Wal-Mart, the world's biggest retailer, made a $4.6 billion offer on September 27th to acquire the South African retail chain, Massmart Holdings. If it goes through, the acquisition will represent the American retailer's biggest acquisition in an emerging market and the first by a global retail chain in South Africa. 

The acquisition won't come cheap, though; the price offered works out to a premium of 26 times Massmart's earnings. Does that make sense? We were surprised to see Wal-Mart add another company and country to its portfolio. Our recent, in-progress research shows that most retailers find it tough to use global growth to boost sales and grow profits. A look at Wal-Mart's previous efforts at global expansion provides good context for this latest foray.

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It is not easy to compete with kirana stores: Rajiv Lal

Wal-Mart checkoutImage via Wikipedia
The fear that kirana stores across the country (India) will wilt under the onslaught of big-bang retailers such as Wal-Mart has long stood in the way of foreign direct investment coming into retail. But some believe the fear is unfounded. 
“It is not easy to compete to with the kirana stores. Just because you are a big guy with a lot of money, it doesn’t mean that you can compete,” says Rajiv Lal, Stanley Roth Senior Professor of Retailing at Harvard Business School where he supervises the retailing curriculum as well.
“On the consumer side, kirana stores can deliver services. Somebody calls them and asks ‘can you deliver six eggs?’ and the guy runs and delivers six eggs. That’s not something the big established firms can provide,” Lal toldDNA in an interview recently. 

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FMCG Industry: Rising ad spend, competition to hit margins

Liquid soap PalmoliveImage via Wikipedia
OVER the past few quarters, larger FMCG players have increased their advertising and promotional spends and reduced price per unit quantity in a bid to stay ahead of competition. This has, however, impacted their profitability since the topline growth has lagged behind the increase in operating costs. 

The scenario is not expected to change in the immediate few quarters given the competitive pressure. This means companies may show volume growth going ahead but proportionate profit growth will most likely be missing. As a result, most FMCG players would take a hit in their margins. However, ITC, which enjoys leadership in tobacco segment, and niche players such as Zydus Wellness and Colgate-Palmolive are expected to report sustained growth in earnings. 

To leverage their existing brands further, some FMCG companies have opted to introduce variation of these brands. The objective behind such a strategy is to retain existing market share while luring new customers. For instance, Nestle enjoys a market leadership in the noodles segment through its brand Maggi. It commands around 80% of the noodles market. Given the lucrative nature of the niche segment, other established players including GlaxoSmithkline Consumer Healthcare and HUL are also offering products in this category. To ward off competition, Nestle has extended its Maggi brand to Maggi Soupy Noodles. 

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FMCG companies expected to spend 10% of their ad budget on digital in 18 months

Wheel Detergent ad in rural Nepal area.Image via Wikipedia
Fast moving consumer goods (FMCG) companies in India, which have been traditionally advertising in television, outdoor and print and have just started experimenting with digital medium by allocating 1-3 per cent of their total advertising budget to digital, are expected to increase their digital spend to 10 per cent in the next 18 months. 

Pushkar Sane, chief digital officer, North and South Asia, Starcom MediaVest Group, has said that online advertising budget outlays of FMCG companies in India will increase from the current 1-3 per cent of the overall budgets to close to 10 per cent -- at par with the Western countries -- in the next 18 months. “As marketers experiment with the medium and get success, online advertising will grow exponentially,” Sane has been quoted by Business Standard as saying. 

According to digital advertising and technology company Komli Media, some of the FMCG companies like Hindustan Unilever, Proctor & Gamble, Cadbury’s and Tata Tea have already increased their digital ad budgets upto 8-10 per cent for individual brands. “FMCG companies are experimenting with increased budgets for one or two brands by increasing the brand outlay from 1 per cent to 3-5 per cent. It’s even 8-10 per cent in some categories,” Prashant Mehta, chief operating officer, Komli, has said.

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Shoppers prefer Kirana Shops to Malls, says ASSOCHAM

LONDON, ENGLAND - JANUARY 02:  A shopper perus...Image by Getty Images via @daylife
Kirana stores and local retailers would remain the most preferred destinations for majority of the shoppers across India as compared to sprawling shopping malls as they provide for cheaper purchases to an extent of 25% and also offer options for avoidance of payment of duties such as VAT and other local levies on articles sold by them. 

This are results of a country-wide survey done under the aegis of ASSOCHAM Social Development Foundation, the industry body ASSOCHAM (Associated Chambers of Commerce) informs. According to that survey, it was discovered that goods disposed of by the malls are devoid of these twin benefits and thus attract only the upmarket buyers.

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