tag:blogger.com,1999:blog-18011725369661310182024-03-24T23:10:18.117-07:00Fast Moving Consumer GoodsMy personal quest to understand the nuances of FMCG sector in India and other related trends world wide.Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-1801172536966131018.post-1016383344383981062009-03-11T07:22:00.000-07:002009-03-12T13:06:25.600-07:00FMCG, THE CHOICE FOR MANAGEMENT GRADUATES POST GLOBAL FINANCIAL MELTDOWN<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVZDoNlObh9W6woEtuc1l4lHmDeqcPxUlMguy2WFEuN_VvPmBqs2qLtWGe1T9Wn4_3P9pQupRyn-Y3MMris4PeUlqWmC4Wzy4AiS51C5uAPGbM5y8JQwlWPOT1ydm4yGUA3qreJTNsx6a7/s1600-h/getttin+mba.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 600px; height: 82px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVZDoNlObh9W6woEtuc1l4lHmDeqcPxUlMguy2WFEuN_VvPmBqs2qLtWGe1T9Wn4_3P9pQupRyn-Y3MMris4PeUlqWmC4Wzy4AiS51C5uAPGbM5y8JQwlWPOT1ydm4yGUA3qreJTNsx6a7/s400/getttin+mba.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5311943917202975938" /></a><br /><br /><br /><span class="Apple-style-span" style="font-size:x-small;"><br /></span><div><br /></div><div><br /></div><div><span class="Apple-style-span" style="font-size:x-small;">The Fast Moving Consumer Goods sector (FMCG) has emerged as the most popular industry of choice for the 2009 batch of management graduates in the latest Nielsen Campus Track–B School Survey. Management Consulting (35%), Software/IT Consulting (23%), Foreign Banks and Retailing (both 22%) join FMCG as the top five most popular sectors for students, reflecting a changed order of preference, on the tail of recent global financial turmoil.<br /><br />According to the Nielsen survey, the “Dream Company” for students includes the likes of McKinsey & Co, Google, HUL, Accenture and P&G, and their most admired role model was Ratan Tata - for more than one in four (27%) students surveyed.<br /><br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJ5ArpPC2I32OBb_-SW2w9oCV9OKnAuVLXzoVNG1epnRSdGG8-EI5yPsrIO8XLWYeVUn8uElta_Kl6Jn3vW3K6nKNf1S7M00xlbb7qlwOz3s2uCpnJamPQzro4PZflHWVSr4-5PFQDIhVO/s1600-h/job-interview.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 400px; height: 245px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJ5ArpPC2I32OBb_-SW2w9oCV9OKnAuVLXzoVNG1epnRSdGG8-EI5yPsrIO8XLWYeVUn8uElta_Kl6Jn3vW3K6nKNf1S7M00xlbb7qlwOz3s2uCpnJamPQzro4PZflHWVSr4-5PFQDIhVO/s400/job-interview.jpg" border="1" alt="" id="BLOGGER_PHOTO_ID_5311944943163965170" /></a>In its ninth year, the nielsen Campus Track-B School survey gauged students’ perceptions of companies and their considerations as they evaluate prospective employers. 1,311 soon-to-be graduates from the top 40 management institutes were interviewed.<br />“Preferences seem to have shifted in favour of large business conglomerates and the IT sector as a consequence of the current global financial turmoil. In particular, students are opting for FMCG companies over the financial sector,” said Vatsala Pant, Associate Director, The Nielsen Company. “Indeed, considering the current financial job market, the security offered by the FMCG industry has become a major attraction for graduates.”<br /><br /><span class="Apple-style-span" style="text-decoration: underline;">Industry of the future</span><br /><br />A sector showing greatest promise for the future, Retailing tops the list for 30 percent of students. Other industries that feature in the top five industries of the future are Management Consultancies (27%), Entertainment & Media (25%), FMCG (21%) and Investment Banking (19%) .<br />“The retail industry has been growing in popularity with graduates over the last few years. Changing government policies and the influx of foreign banners in the sector, along with the entry of big Indian banners, etc. have combined to form a strong pull for the industry,” said Pant.<br /><br /><span class="Apple-style-span" style="text-decoration: underline;">Drivers of choice</span><br /><br />Amongst the various factors considered by students before joining a company, personal growth and independence in decision making topped the list. The other factors that emerged as ‘very important’ for students before zeroing in on a company are take-home salary, reputation of the company and flexible working hours .<br />The average salary expectation of students from their “Dream Company” is rupees 14 lakhs this year although more than half the respondents have mentally scaled back their expected salary because of the recent financial market environment, particularly those specializing in Finance.<br /><br /><span class="Apple-style-span" style="text-decoration: underline;">Reasons for moving on</span><br /><br />According to the Nielsen survey, graduates tend to stay in their first job for two to three years and expect to move on in search of better career options (65%), better salary/ better designation (40%). Interestingly, 17 percent of students expect to move out of their first job to pursue higher studies. Students from premier management institutes are less disposed to pursue higher studies.<br />“While the demographic profile of students has not changed dramatically, over the years their expectations from a prospective employer have become sharper. For example, these days, the fact that an employer offers flexible working hours might drive choice in their favour,” said Pant.</span><div><span class="Apple-style-span" style="font-size:10px;"><br /></span></div><div><span class="Apple-style-span" style="font-size:10px;"><br /></span></div><div><span class="Apple-style-span" style="font-size:10px;">Source: <a href="http://in.nielsen.com/">ACNielsen-India</a></span></div></div>Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com3tag:blogger.com,1999:blog-1801172536966131018.post-75351917768527502192009-03-09T11:16:00.000-07:002009-03-09T12:38:27.852-07:00LongTail and The Indian FMCGs<span class="Apple-style-span" style="font-size: x-small;"><br /></span><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgiyiGDzvYyhTuuzv1hNkNnnXL_f-FarrlAvFCMjkAkH1opw-_Hoq3Yg579oz_aE8obLBpN1FaGZqPXhRH2EHkWUkFHdY2h_kDf04MgTwkmJWp6vspVX1l0SFAr8Xjsb92becfXJ8u73lq3/s1600-h/long-tail.png"><img style="float:left; margin:1 10px 10px 1;cursor:pointer; cursor:hand;width: 250px; height: 200px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgiyiGDzvYyhTuuzv1hNkNnnXL_f-FarrlAvFCMjkAkH1opw-_Hoq3Yg579oz_aE8obLBpN1FaGZqPXhRH2EHkWUkFHdY2h_kDf04MgTwkmJWp6vspVX1l0SFAr8Xjsb92becfXJ8u73lq3/s400/long-tail.png" border="1" alt="" id="BLOGGER_PHOTO_ID_5311260605956517410" /></a><div><span class="Apple-style-span" style="font-size: x-small;">The theory of the Long Tail is that our culture and economy is increasingly shifting away from a focus on a relatively small number of "hits" (mainstream products and markets) at the head of the demand curve and toward <br /></span></div><div><span class="Apple-style-span" style="font-size: x-small;">a huge number of niches in the tail. As the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all containers. In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly-target goods and services can be as economically attractive as mainstream fare. </span></div><div><span class="Apple-style-span" style="font-size: x-small;"> One example of this is the theory's predictions that demand for products *not* available in traditional bricks and mortar stores are potentially as big as for those that are. But the same is true for video not available on broadcast TV on any given day, and songs not played on radio. In other words, the potential aggregate size of the many small markets in goods that don't individually sell well enough for traditional retail and broadcast distributio</span></div><div><span class="Apple-style-span" style="font-size: x-small;">n may rival that of the existing large market in goods that do cross that economic bar. </span></div><div><span class="Apple-style-span" style="font-size: x-small;">Traditional retail economics dictate that stores only stock the likely hits,because shelf space is expensive. But online retailers (from Amazon to iTunes) can stock virtually everything, and the numbers of available niche </span></div><div><span class="Apple-style-span" style="font-size: x-small;">products outnumber the hits by several orders of magnitude. Those millions of niches are the Long Tail, which had been largely neglected until recently in favor of the Short Head of hits. </span></div><div><span class="Apple-style-span" style="font-size: x-small;"> When consumers are offered infinite choice, the true shape of demand is revealed. And it turns out to be less hit-centric than we thought. People gravitate towards niches because they satisfy narrow interests better, and in one aspect of our life or another we all have some narrow interest (whether we think of it that way or not). </span></div><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9xHrmB-PHA6BUAVdvH3wHeZGwwb9Q_3FQVD7h2wmm8_vNNqD8xw1TDLq2rLGZRuH7YA9QjJ_YXYqIAgZhwUUooXwF3PdhT8pxezRBCfsJS-j5fyN-RhX6LaQ44-44hr_qL1zUtJkVhqrS/s400/longtail.png" style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 400px; height: 290px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5311262156257391298" /><div><span class="Apple-style-span" style="font-size: x-small;"> Our research project has attempted to quantify the Long Tail in three ways, comparing data from online and offline retailers in music, movies, and books. </span></div><div><span class="Apple-style-span" style="font-size: x-small;"> 1. What's the size of the Long Tail (defined as inventory typically not available offline? 2. How does the availability of so many niche products change the shape of demand? Does it shift it away from hits? </span></div><div><span class="Apple-style-span" style="font-size: x-small;"> 3. What tools and techniques drive that shift, and which are most </span></div><div><span class="Apple-style-span" style="font-size: x-small;"> effective? </span></div><div><span class="Apple-style-span" style="font-size: x-small;"> </span></div><div><span class="Apple-style-span" style="font-size: x-small;">The Long Tail article (and the subsequent book) is about the big-picture consequence of this: how our economy and culture is shifting from mass markets to million of niches. It chronicles the effect of the technologies that have made it easier for consumers to find and buy niche products, thanks to the "infinite shelf-space effect"--the new distribution mechanisms, from digital downloading to peer-to-peer markets, which break through the bottlenecks of broadcast and traditional bricks and mortar retail. </span></div><div><div><span class="Apple-style-span" style="font-size: x-small;">In a recent report jointly published by Mckinsey and HUL. The report talked about "FMCG sector in recession and its future"...One of the most important findings was the fact that the rural India is growing at the much faster rate compared to urban India. The growth of rural India provided FMCG sector with the cushion which made them grow at 15-20% YoY basis even in these recessionary times. Today with I-banks struggling to survive, IT sector relying on ruthless cost cutting as its only way to survive, FMCG sector is showing promising growth...</span></div><div><span class="Apple-style-span" style="font-size: x-small;"><br /></span><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijK1eX7tx4_TSik58_tfjNw6XBEOT9QAsJw0GY9zlc87UVnVfveJ-I3xuIyDTOwdW2z1py7zRJSOtwOIbToTHkAQUFfPRzK6ApmeYYzDqEiDewReYTfrTHmgn6MaPYe4JTwzoFiwMQ23ED/s1600-h/photo.cms.jpg"><img style="float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 281px; height: 200px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijK1eX7tx4_TSik58_tfjNw6XBEOT9QAsJw0GY9zlc87UVnVfveJ-I3xuIyDTOwdW2z1py7zRJSOtwOIbToTHkAQUFfPRzK6ApmeYYzDqEiDewReYTfrTHmgn6MaPYe4JTwzoFiwMQ23ED/s400/photo.cms.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5311273139811250978" /></a><span class="Apple-style-span" style="font-size: 10px; ">With the understanding of longtail in mind, we'll find that in modern times we just cannot ignore the demand of rural India. Though they belong to the bottom most strata of the pyramid, yet they have immense potential if aggregated properly. A modern day business needs to have such cushions for survival even in the bad times.</span></div><div><span class="Apple-style-span" style="font-size: x-small;"><br /></span></div><div><span class="Apple-style-span" style="font-size: 10px;"><br /></span></div><div><span class="Apple-style-span" style="font-size: 10px;"><br /></span></div><div><span class="Apple-style-span" style="font-size: 10px;"><br /></span></div><div><span class="Apple-style-span" style="font-size: 10px; ">By: Shakti Pandey & Prashant Gupta</span><br /></div><div><span class="Apple-style-span" style="font-size: 10px;">( Symbiosis Institute of International Business )</span></div></div>Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com2tag:blogger.com,1999:blog-1801172536966131018.post-59207525929460957862009-01-07T09:03:00.000-08:002009-01-07T10:58:24.455-08:00Amazon - Business Model<div style="text-align: center;"><span class="Apple-style-span" style="font-weight: bold;"><span class="Apple-style-span" style="color: rgb(255, 102, 0);">Amazon – Business Model</span></span><br /></div><w:sdt contentlocked="t" sdtgroup="t" id="89512093"><div style="mso-element:para-border-div;border:none;border-bottom:solid #4F81BD 1.0pt; mso-border-bottom-themecolor:accent1;padding:0cm 0cm 2.0pt 0cm"><p class="underline"><o:p> </o:p></p></div> </w:sdt> <p class="MsoNormal" style="margin-left:36.0pt"><u>Company Overview:</u></p><ul><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Founded in 1994; Started selling books online and now operate Web sites that offer various products and services, which include: music, DVDs, videos, electronics, camera and photography, clothing apparel, shoes, etc.</span></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore"><span class="Apple-style-span" style="font-family:Georgia;"> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Features include: one-click shopping, customer review and e-mail order verification.</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore"><span class="Apple-style-span" style="font-family:Georgia;"> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">The company is in coalition with other retailers and offers various new, refurbished, and used items in categories.</span></li><li><span lang="EN-US" style="mso-ansi-language:EN-US"><span lang="EN-US" style="mso-ansi-language:EN-US">Headquarters is in Seattle (Washington) with an additional office in Coffeyville, Kansas. It has six global websites to serve domestic customers in the US, the UK, Germany, France, Japan and Canada.</span></span></li></ul><p></p> <p class="MsoNormal" style="margin-left:36.0pt"><u><span lang="EN-US" style="mso-ansi-language:EN-US">Vision:</span></u></p><p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><blockquote>Our vision is to be Earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.</blockquote><div style="text-align: center;"><br /></div><o:p></o:p></span></p> <p class="MsoNormal" style="margin-left:36.0pt"><u><span lang="EN-US" style="mso-ansi-language:EN-US">Mission:<o:p></o:p></span></u></p> <p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><blockquote>The company’s six core values: customer obsession, ownership, bias for action, frugality, high hiring bar, and innovation. The company motto: ‘Work Hard, Have Fun, and Make History’.</blockquote><o:p></o:p></span></p> <p class="MsoNormal" style="margin-left:36.0pt"><u><span lang="EN-US" style="mso-ansi-language:EN-US">External Opportunities:</span></u></p><ul><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Construction of an extensive community of buyers</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Positive changes in the business model of the book market</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Internet taxes prohibited by the Internet Tax Freedom Act (1998) and its extensions (2001 and 2003)</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Growth of internet users in the next five years, predominantly in the international market</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">E-commerce expansion in Asia and the Pacific</span></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Several product categories with high penetration of retail on-line sales</span></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">13% jump of Latinos going online in 2003 in the US since 2001</span><br /></li></ul><p></p> <p class="MsoNormal" style="margin-left:36.0pt"><u><o:p><span style="text-decoration: none"> </span></o:p></u></p><p class="MsoNormal" style="margin-left:36.0pt"><u>External Threats:</u></p><ul><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">eBay, Barnes & Nobles, and Wal-Mart</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Possible rejection to on-line sale in international markets if new taxes (Value Added taxes: VAT) in products are levied</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Population segment not targeted to on-line sales due to their lack of internet access</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Weak economic performance of Germany and France in the last year</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Competition will increase due to the low barriers to entry in the market: offline companies are coming online</span></li></ul><p></p> <p class="MsoNormal" style="margin-left:36.0pt"><o:p> </o:p></p> <p class="MsoNormal" style="margin-left:36.0pt"><span class="Apple-style-span" style="text-decoration: underline;">Few of the things that make that Amazon what it is today:<span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""></span></span></span></span></p><p class="MsoNormal" style="margin-left:36.0pt"></p><ul><li><span style="font-family: 'Wingdings 2'; font-family:";"><span style=""><span style="font: normal normal normal 7pt/normal 'Times New Roman'; "> </span></span></span><span lang="EN-US" style="">Very large database</span><br /></li><li><span style="mso-spacerun:yes"> </span><span style="mso-spacerun:yes"> </span>including out of print and used books<br /></li><li><span lang="EN-US" style="mso-ansi-language:EN-US">Not restricted catalogue</span><br /></li><li><span lang="EN-US" style="mso-ansi-language:EN-US">Not just buying from Amazon but a network of booksellers</span></li><li><span lang="EN-US" style="mso-ansi-language:EN-US">Not just books</span></li><li><span lang="EN-US" style="mso-ansi-language:EN-US">One stop shop – web supermarket</span><br /></li><li><span lang="EN-US" style="mso-ansi-language:EN-US">Useful features like:<span style="mso-spacerun:yes"> </span>Reviews by readers, readability scores, sample<span style="mso-spacerun:yes"> </span>pages,<span style="mso-spacerun:yes"> </span>Filter searches by price, genre.</span></li></ul><p></p> <p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-left:36.0pt"><u><span lang="EN-US" style="mso-ansi-language:EN-US">Collaborative Filtering:</span></u></p><p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;mso-list:l3 level1 lfo6; tab-stops:list 36.0pt"></p><ul><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Collaborative filtering based on user profiles tracking</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">— <span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">What books/cds/dvds/etc people have bought</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">What web pages they have visited</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Aim is to recommend items to people who share similar tastes.</span><br /></li></ul><p></p> <p class="MsoNormal" style="margin-left:36.0pt"><span class="Apple-style-span" style="text-decoration: underline;"><br /></span></p><p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><o:p><span class="Apple-style-span" style="text-decoration: underline;"> Business Structure</span></o:p></span></p><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiuMjTL-xpJYyfubFfwaauHNShiOJxQWQ7oC26IgbpNMXoV2pezy4Cg4lkfCdHOQxF91fUkxPatc-h6Qd-2prsuvTvlo4kY4Zn3LgsW_YdH5Z0Kn7LPMqCYFRHqYX6-A99ZbVIRttfhfa_L/s400/Picture3.png" style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 236px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5288607686357062242" /><p class="MsoNormal" style="margin-left:36.0pt"><span class="Apple-style-span" style="text-decoration: underline;"><br /></span></p><div style="text-align: center;"><br /></div><span class="Apple-style-span" style="-webkit-text-decorations-in-effect: underline; "><span class="Apple-tab-span" style="white-space: pre; "> </span> <span class="Apple-style-span" style="text-decoration: underline;">Competitive Environment</span></span><br /><br /><br /><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6lDfocRwMD8jP246XF_9oN5oP-Eo2kKHvx2mQf4cRIsUEFWI_p3D0Vd3hULa8wsFBsJ7B5w1B-29rbUSTktk18AFGk5cbvfmxYSN31XAsZD-SbNNvWDMZZnMMvrg8vpIk4Jg246BXEkTg/s400/Picture1.png" style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 213px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5288607677103287922" /><p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><o:p><span class="Apple-style-span" style="text-decoration: underline;">Competitive Advantage: </span></o:p></span></p><div style="text-align: center;"><br /></div><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgcrlO7RgnCzdb5mCic_j6Hjnzv-6dI8XsPPPBjl0ktSzvX69hY9DeZoNLFF3DsaVdYFnxytpMTXcdcKYKfUkPIystsx5MHRKkQP-hAr-vS6-3I6xLvNZXTdV8KRXj8QLLFLYfdnaA4424p/s400/Picture2.png" style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 234px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5288607679919425922" /><div style="text-align: center;"><br /></div><div style="text-align: center;"><br /></div><br /><p class="MsoNormal" style="margin-left:36.0pt"><br /></p> <p class="MsoNormal" style="margin-left:36.0pt"><u>Market Strategy:</u></p><p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;mso-list:l2 level1 lfo7; tab-stops:list 36.0pt"></p><ul><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Strong brand name</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US"><span style="mso-spacerun:yes"> </span>Customer service support (Highest score in 2002 American Customer Satisfaction Index)</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US"><span style="mso-spacerun:yes"> </span>Developed and upgraded technology: software and hardware</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-ansi-language:EN-US"><span style="mso-spacerun:yes"> </span></span>Two segments: B2C and B2B e-commerce.<br /></li></ul><p></p> <p class="MsoNormal" style="margin-left:36.0pt"><o:p> </o:p></p> <p class="MsoNormal" style="margin-left:36.0pt"><u>How Amazon works ?</u></p><p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;mso-list:l11 level1 lfo8; tab-stops:list 36.0pt"></p><ul><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Bulk Purchase from source.</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Huge Distribution Capacity</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US"><span style="mso-spacerun:yes"> </span>No intermediaries- An effective B2C purchase model.</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US"><span style="mso-spacerun:yes"> </span>Excitement-Jeff Bezos describes it as “<i>Thrill Factor</i>” associated with Amazon.</span><br /></li></ul><p></p> <p class="MsoNormal" style="margin-left:36.0pt"><o:p> </o:p></p><p class="MsoNormal" style="margin-left:36.0pt">Sales figures:</p><p class="MsoNormal" style="margin-left:36.0pt"><o:p> <img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9YuKY2WRksUCpqkfnuze-4bIWTgvJX7QINCoXc1JmeL1Gk7RNrfQx-g-rsjbQxmmtSgCidTqVxTS9NaQGcjRsyfXv3ER6B3M6x4il_q9EexaZyZ5Oiawc2nFwGB6f4dMYyG2DD5_iAcsL/s400/Picture4.png" style="cursor:pointer; cursor:hand;width: 400px; height: 179px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5288618131662690834" /><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjrJ3eG1oSOwTowvJv1RWt7jcdxyJpJwPzNFRegce4okQF1YkR_cCY278Q8mLeEsEmzZ6uu_3CfSg_M0V7EDSoaW8O_sy24uHHGLeBpWOZaEsYqgbumGZvhqIM6eKlTR7tn57Zp3wsP8OMo/s400/Picture5.png" style="cursor:pointer; cursor:hand;width: 400px; height: 182px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5288618136419079778" /></o:p></p><p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US">Major competitors in Internet Space: <img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgnMBAq7ejuTy_xdaq6iCXnktw2BXquCvq80toY2RZXXx8w5TuACRSfLWqmHwDGwiEudw48B6MTPCqc5NR3Ga8T1sLyjiIijec3zAUcXKDQGc7QcCPKmVkedj4vV801LDeg0x4YzJysZzuu/s400/Picture6.png" style="cursor:pointer; cursor:hand;width: 400px; height: 227px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5288618138196499106" />pic here</span></p> <p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><span class="Apple-style-span" style="text-decoration: underline;">Strategic Mergers & Acquisitions:</span><o:p></o:p></span></p> <p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;mso-list:l4 level1 lfo9; tab-stops:list 36.0pt"></p><ul><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Highly aggressive growth strategies in thr form of Organic as well as Inorganic growth.<span style="font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""></span></span></span></span></li><li><span lang="EN-US" style="mso-ansi-language:EN-US"><span style="font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><i><span lang="EN-US" style="mso-ansi-language:EN-US">Bookpages</span></i><span lang="EN-US" style="mso-ansi-language:EN-US"> (April 1998, Amazon.co.uk)<span style="font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""></span></span></span></span></span></li><li><span lang="EN-US" style="mso-ansi-language:EN-US"><span lang="EN-US" style="mso-ansi-language:EN-US"><span style="font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><i><span lang="EN-US" style="mso-ansi-language:EN-US">Telebuch</span></i><span lang="EN-US" style="mso-ansi-language:EN-US"> (Telebook) Inc. (April 1998, Amazon.co.de)<span style="font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""></span></span></span></span></span></span></li><li><span lang="EN-US" style="mso-ansi-language:EN-US"><span lang="EN-US" style="mso-ansi-language:EN-US"><span lang="EN-US" style="mso-ansi-language:EN-US"><span style="font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Paid $200M to acquire <i>e-Niche, Inc., Music Find, Accept.com</i>, and <i>Alexia Internet Company</i> (1999)<span style="font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""></span></span></span></span></span></span></span></li><li><span lang="EN-US" style="mso-ansi-language:EN-US"><span lang="EN-US" style="mso-ansi-language:EN-US"><span lang="EN-US" style="mso-ansi-language:EN-US"><span lang="EN-US" style="mso-ansi-language:EN-US"><span style="font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Bought 35% of <i>Homegroc</i>Offered a co-branded credit card with <i>Nextcard</i> (1999)</span></span></span></span></span></li><li><span style="font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Annouched plans to open a Target store at <a href="http://www.amazon.com/">www.amazon.com</a> (2001)</span><br /></li><li><span style="font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Others partnered with: <i>BabiesRUS, ToysRUS, and Borders Group</i> (2001)</span><br /></li></ul><p></p> <p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><span class="Apple-style-span" style="text-decoration: underline;">Stock & Shareholder Policies:</span><o:p></o:p></span></p> <p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;mso-list:l1 level1 lfo11; tab-stops:list 36.0pt"></p><ul><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Trading on NASDAQ, ticker symbol AMZN.</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">IPO: 1997 ($18 per share)</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore"><span class="Apple-style-span" style="font-family:Georgia;"> </span>—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Dividends have never been declared or paid on the common stock.</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore"><span class="Apple-style-span" style="font-family:Georgia;"> </span>—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Reason: Earnings are retained to finance future growth and therefore do not anticipate paying any cash dividends in the foreseeable future.</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore"><span class="Apple-style-span" style="font-family:Georgia;"> </span>—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">The Company currently does not offer a Direct Stock Purchase Plan.</span><br /></li></ul><p></p> <p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><span class="Apple-style-span" style="text-decoration: underline;">Control System:</span><o:p></o:p></span></p> <p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;mso-list:l7 level1 lfo12; tab-stops:list 36.0pt"></p><ul><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Financial reports annually and quarterly if necessary</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Customer feedback program</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Top level management meetings to assure goals are achieved</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore">—<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Determine corrective actions after the first year if annual objectives weren’t accomplished</span><br /></li></ul><p></p> <p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><span class="Apple-style-span" style="text-decoration: underline;">Road Ahead:</span><o:p></o:p></span></p> <p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;mso-list:l6 level1 lfo13; tab-stops:list 36.0pt"></p><ul><li><i><u><span lang="EN-US" style="mso-ansi-language:EN-US">Primary</span></u></i><span lang="EN-US" style="mso-ansi-language:EN-US">: <b>Expanding to emerging Asian Markets</b></span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""><span class="Apple-style-span" style=" ;font-family:Georgia;font-size:14px;"><span lang="EN-US" style="mso-ansi-language:EN-US">Introducing new product categories</span></span></span></span></span></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore"><span class="Apple-style-span" style="font-family:Georgia;"> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Expanding to Central and South American markets</span><br /></li><li><span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore"><span class="Apple-style-span" style="font-family:Georgia;"> </span></span></span><span lang="EN-US" style="mso-ansi-language:EN-US">Research and Development to increase the innovation and quality of customer services provided<span style="font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-Wingdings 2"font-family:";"><span style="mso-list:Ignore"></span></span></span></li><li><span lang="EN-US" style="mso-ansi-language:EN-US"><span lang="EN-US" style="mso-ansi-language:EN-US">Increasing marketing expenditures in order to reach new population segments and fastest growing trends and tendencies</span></span></li></ul><p></p> <p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><o:p> </o:p></span></p><p class="MsoNormal" style="margin-left:36.0pt"><span lang="EN-US" style="mso-ansi-language:EN-US"><o:p>Compiled by:</o:p></span></p><p class="MsoNormal" style="margin-left:36.0pt"><span class="Apple-style-span" style="font-size:small;"><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-style: italic;"><span class="Apple-style-span" style="color: rgb(0, 102, 0);">Prashant Gupta</span></span></span></span></p><p class="MsoNormal" style="margin-left:36.0pt"><span class="Apple-style-span" style="font-size:small;"><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-style: italic;"><span class="Apple-style-span" style="color: rgb(0, 102, 0);">MBA - Symbiosis Institute of International Business ( SIIB )</span></span></span></span></p>Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com0tag:blogger.com,1999:blog-1801172536966131018.post-41084483254365242672008-12-12T12:59:00.000-08:002009-03-09T13:22:09.194-07:00MBA - Market Basket Analysis<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQTR2havlj8nFKAl15We8pqhtXHkkITDJqhTCvPGk5fnzORl9ERYdxQMO6MgmVLX3VAb3Bzy_WyGB7CgDu7rEzIU2p-yTUJg-Hn7K6BKznOS8ja0c3KaOdSKXcVkGpyTzRW1uOD2ZOphqJ/s1600-h/basket.jpg"><img style="display:block; margin:0 10px 10px 0; text-align:left;cursor:pointer; cursor:hand;width: 400px; height: 250px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQTR2havlj8nFKAl15We8pqhtXHkkITDJqhTCvPGk5fnzORl9ERYdxQMO6MgmVLX3VAb3Bzy_WyGB7CgDu7rEzIU2p-yTUJg-Hn7K6BKznOS8ja0c3KaOdSKXcVkGpyTzRW1uOD2ZOphqJ/s400/basket.jpg" border="1" alt="" id="BLOGGER_PHOTO_ID_5311284136029571506" /></a><br /><span class="Apple-style-span" style=" ;font-family:Helvetica;font-size:12px;"><h1 style="margin-right: 0px; margin-left: 0px; border-bottom-width: 1px; border-bottom-color: rgb(59, 86, 105); border-top-width: 1px; border-top-color: rgb(59, 86, 105); color: rgb(55, 54, 50); margin-bottom: 4px; border-top-style: none; border-right-style: none; border-bottom-style: none; border-left-style: none; margin-top: 5px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; clear: none; font-size:18px;"><span class="Apple-style-span" style="color: rgb(0, 0, 0); font-weight: normal; line-height: 15px; "><span class="Apple-style-span" style="font-size:x-small;">Since the introduction of electronic point of sale, retailers have had at their disposal an incredible amount of data. The challenge has been how to leverage this data to produce business value. Most retailers have already figured out a way to consolidate and aggregate their data to understand the basics of the business: what are they selling, how many units are moving and the sales amount. However, few have ventured far enough to analyze the information at its lowest level of granularity: the market basket transaction. The main reason for this is, perhaps, the preconceived notion that looking at data at this level of granularity is expensive and has limited business value. This article will explore the business value of market basket analysis through real scenarios, outlining along the way why the users don't need a strong statistics background to understand it and benefit from it.</span></span><span class="Apple-style-span" style="font-size:x-small;"><br /><br /></span></h1><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">Market basket analysis, or MBA for short, is the process of analyzing transaction-level data to drive business value. At this level of detail, the information is very useful as it provides the business users with direct visibility into the market basket of each of the customers who shopped at their store.<br /><br />The data becomes a window into the events as they happened, understanding not only the quantity of the items that were purchased in that particular basket, but how these items were bought in conjunction with each other. In turn, this capability enables advanced analytics such as:</span></p><ul style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 1em; margin-right: 1em; margin-bottom: 1em; margin-left: 2em; list-style-type: disc; "><li style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><span class="Apple-style-span" style="font-size:x-small;">Item affinity: Defines the likelihood of two (or more) items being purchased together.</span></li><li style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><span class="Apple-style-span" style="font-size:x-small;">Identification of driver items: Enables the identification of the items that drive people to the store that always need to be in stock.</span></li><li style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><span class="Apple-style-span" style="font-size:x-small;">Trip classification: Analyzes the content of the basket and classifies the shopping trip into a category: weekly grocery trip, special occasion, etc.</span></li><li style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><span class="Apple-style-span" style="font-size:x-small;">Store-to-store comparison: Understanding the number of baskets allows any metric to be divided by the total number of baskets, effectively creating a convenient and easy way to compare stores with different characteristics (units sold per customer, revenue per transaction, number of items per basket, etc.).</span></li></ul><h4 style="margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-left: 0px; color: rgb(0, 0, 0); margin-bottom: 3px; margin-top: 10px; padding-bottom: 3px; "><br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgM_dIcrm9u17YyLWyZZToceedL6fdTi5627P40RWXibrhytPnGskX3W_9xMJuc6XRB7JiqQT2ZpdN_0L0W2DeY9Cg0q7ZF_4WA9BcEXF3I_UL7vS2AGFV9cAU72Y13Gg4s2JjXGh-4WwQK/s1600-h/basketpen.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 400px; height: 290px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgM_dIcrm9u17YyLWyZZToceedL6fdTi5627P40RWXibrhytPnGskX3W_9xMJuc6XRB7JiqQT2ZpdN_0L0W2DeY9Cg0q7ZF_4WA9BcEXF3I_UL7vS2AGFV9cAU72Y13Gg4s2JjXGh-4WwQK/s400/basketpen.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5311282543844377810" /></a><br /><br /></h4><h4 style="margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-left: 0px; color: rgb(0, 0, 0); margin-bottom: 3px; margin-top: 10px; padding-bottom: 3px; "><span class="Apple-style-span" style="font-size:x-small;">Affinity Analysis</span></h4><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">As previously discussed, affinity analysis is used to determine the likelihood that a set of items will be bought together is. There are natural product affinities in the market place. For example, it is very typical for people who buy hamburger patties to buy hamburger rolls, as well as ketchup, mustard, tomatoes and other items that make up the burger experience.</span></p><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">While there are some product affinities that might seem trivial, there are some affinities that are not very obvious. The classic example is diapers and beer as husbands who are sent to the store for diapers cannot pass the opportunity to buy beer to compensate for the emotional stress of being seen with a diaper bag.</span></p><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">Another classic example is toothpaste and tuna. It seems that people who eat tuna are more prone to brush their teeth right after finishing their meal. So, why it is important for retailers to get a good grasp of the product affinities? This information is critical to appropriately plan for promotions because reducing the price on some items may cause a spike on related high-affinity items without the need to further promote these related items.</span></p><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">A good understanding of the affinity of the items might lead to customer friendly planograms by re-accommodating the products in the store. Already a number of hardware stores stock items by "project" along with their regular categories. This facilitates things for beginners who are trying to do home improvements project themselves but are daunted by the thought of knowing what items to buy and where to find them in the store.</span></p><h4 style="margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-left: 0px; color: rgb(0, 0, 0); margin-bottom: 3px; margin-top: 10px; padding-bottom: 3px; "><span class="Apple-style-span" style="font-size:x-small;">Indentification of Driver Items</span></h4><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">Identifying the items that drive the traffic to the store is always a challenge. It is becoming increasingly difficult to strike the right balance between product depth and breadth regarding inventory. With only a couple of units on the shelf, the probability of running out of stock is very high. If a particular customer was drawn to the store for this particular item and there are none in stock, it is possible that this customer leaves the store immediately or makes a mental note not to come back in the future.</span></p><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">Identifying the driver items will also help to distinguish the main item from the related items when doing product affinity. For example, discounting the burger patties might increase the sales of rolls, veggies and ketchup, but the reverse will not hold true as discounting the ketchup will not bring additional sales.</span></p><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">Unlike filler items, shoppers are usually very brand sensitive when buying the driver items. If retailers are planning to introduce private labels, this information will be critical to determine the initial price point and the target market for these private items, otherwise they run the risk of one failed retailer who wanted to displace the leading brand of detergents with a product of "similar" quality at the same price point. Needless to say the results were a disaster; the national brand did not loose any market share and this retailer was eventually forced to severely discount their private label. It was not until someone realized that they had positioned the product for the wrong market and changed the market strategy to position the product for consumers with low and moderate incomes that the private label started moving at a decent pace.</span></p><h4 style="margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-left: 0px; color: rgb(0, 0, 0); margin-bottom: 3px; margin-top: 10px; padding-bottom: 3px; "><span class="Apple-style-span" style="font-size:x-small;">Trip Classification</span></h4><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">The concept of basket or trip classification is not new, but it has received renewed interest over the last couple of years as retailers struggle to determine the format for their new stores. There is no magic behind trip classification. It requires a real understanding of how to properly classify the contents of the basket to profile the shopping trip. Taking into consideration variables such as total basket value, number of items, number of category A vs. category B items, rules can be derived that help map each of the baskets to a previously defined classification.</span></p><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">Understanding what kind of shopping trips a customer performs at a particular store at a particular time is critical for planning purposes. This data provides a unique window into what is happening at the store and enables advanced applications such as labor scheduling, product readiness and even temporary layout changes.</span></p><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">Let's take for example a grocery store, given that most of the grocery items have a short shelf life - it is important for the store manager to understand when the items are going to be consumed to have enough product in stock. With some preliminary analysis he learns that not many people will buy beer during the early part of the week As a result, he calls the beer dispatcher and asks him to stop deliveries on Monday and Tuesday and come twice a day during Saturdays (when he is always running out).</span></p><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">Other retailers are using MBA to understand their customers shopping behavior during a particular day of the week and at various times from morning to afternoon. A particular hardware store used MBA to analyze the demand on certain consumer departments and found out that on certain days of the week, some employees were sitting idle while the contractor department was short staffed. By implementing on-demand systems (e.g., call buttons), this retailer was able to reduce labor costs by redirecting the employees to where they were needed and keep an electronic eye for any customers outside of the pattern.</span></p><h4 style="margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-left: 0px; color: rgb(0, 0, 0); margin-bottom: 3px; margin-top: 10px; padding-bottom: 3px; "><span class="Apple-style-span" style="font-size:x-small;">As a Basis for Store-to-Store Comparison</span></h4><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">This is a very simple but effective use of MBA - count the total number of baskets for each of the stores and use metrics that can be normalized so stores can be compared to each other.</span></p><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">Let's take, for example, a retailer that has big stores and small stores; the big stores have more employees, more customers and more sales than the smaller ones. One day this retailer decides to create a contest across the whole chain where all the stores will compete against each other on dollar sales and volume. The store managers for the small stores do not want to play ball, arguing that they will never be able to compete with their big brothers. An analyst reviews this concern and finds it to be valid.</span></p><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">Fearing a showstopper for the contest, the analyst remembered that he read an article about MBA where the author suggested dividing store metrics by the total number of customers per store. This metric could be used to compare results from store to store independently of the size. The analyst explained the idea to the disgruntled store managers with a practical example: Assume store A sold $540 worth of product x, and store B only sold $188. At first glance it seems that store A did three times better than store B. However, once you factor in MBA - you discover that store A had 400 baskets (customers) while store B only had 80 customers. This changes things. If you divide the $540 for store A by 400, you get $1.35 per basket; store B divides $188 by 80 for $2.25 per basket. Store B is getting a full dollar more per customer than store A. The store managers are not disgruntled anymore; corporate found a way for all the stores to compete on the same basis so every customer matters.</span></p><p style="margin-top: 0px; margin-right: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-bottom: 8px; line-height: 1.3em; "><span class="Apple-style-span" style="font-size:x-small;">MBA is indeed a great capability that can revolutionize the retail business as we now know it. MBA provides an excellent way to get to know the customer and understand the different behaviors. This insight, in turn, can be leveraged to provide better assortment, design a better planogram and devise more attractive promotions that can lead to more traffic and profits.</span></p><div><span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-size:x-small;"><br /></span></span></div><div><span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style="font-size:x-small;"><br /></span></span></div><div><span class="Apple-style-span" style="line-height: 15px;"><span class="Apple-style-span" style=" font-weight: bold; line-height: normal; font-size:10px;"><li class="byline" size="12px" style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><a href="http://www.dmreview.com/authors/1067599.html" style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; color: rgb(20, 99, 151); text-decoration: none; "><span class="Apple-style-span" style="font-size:x-small;">Noe Gutierrez</span></a><span class="Apple-style-span" style=" "><span class="Apple-style-span" style="font-size:x-small;"><a href="http://www.dmreview.com/specialreports/20061031/1067598-1.html"></a></span></span></li><li class="byline" style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><span class="Apple-style-span" style=" "><a href="http://www.dmreview.com/specialreports/20061031/1067598-1.html"><span class="Apple-style-span" style="font-size:x-small;">DM Review Special Report, October 2006</span></a></span></li></span></span></div></span>Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com0tag:blogger.com,1999:blog-1801172536966131018.post-60254151131668938592008-11-21T09:01:00.000-08:002009-03-09T13:00:54.753-07:00The FMCG story: Good times are here<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOIJcHHd7Ax-YiR4u2kfnsg67pmyC3lifnZ4SsrwjEC58fOADeMlsU8tbuRVBNRvZi70Jc0CrD_uPOj5UVrLhit_6iMPwSHMrdP7Ji9JRUB05_STJU-kRSipLpThl0pIt0zhAMtvuM05kr/s1600-h/fmcg.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 250px; height: 300px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOIJcHHd7Ax-YiR4u2kfnsg67pmyC3lifnZ4SsrwjEC58fOADeMlsU8tbuRVBNRvZi70Jc0CrD_uPOj5UVrLhit_6iMPwSHMrdP7Ji9JRUB05_STJU-kRSipLpThl0pIt0zhAMtvuM05kr/s400/fmcg.jpg" border="1" alt="" id="BLOGGER_PHOTO_ID_5311278264310018546" /></a><br /><span class="Apple-style-span" style="font-size:x-small;">From shampoos to skin creams, they're flying off the shop-shelves. Fast moving consumer goods (FMCG) firms have been doing fairly good business for about a year now as consumers found they had had enough of televisions and music systems and were willing to pay more for their toiletries.<br /><br />But few expected such a sharp rebound. AC Nielsen's retail sales audit numbers for August 2006, confirm that growth is robust -- sales growth y-o-y hit 24 per cent -- about a year back it was barely in double digits.<br />Of course, AC Nielsen's FMCG retail sales audit figures from July 2006 are based on a larger panel size that has led to better coverage of rural sales. As a result, the sales and market share data have undergone a change and are more reflective of the current market scenario.<br />But, the trend is reflected in the September quarter numbers too and the industry's relieved. Not so long ago, in July 2005 most firms were unable to pass on even basic cost increases and growth had plunged to under 3 per cent y-o-y. That's changing for many.</span><div><span class="Apple-style-span" style="font-size:x-small;">But the Street's not so sure Ironically, the BSE FMCG index has underperformed the Sensex over the last three months since August after outperforming the broad market between February and July. The culprits: Hindustan Lever and ITC. Since mid-May, HLL underperformed by about 19 per cent with the Street anxious about how it would manage input costs.<br /><br />However, Sivasubramanian K N, senior portfolio manager-equity, Franklin Templeton Mutual Fund, believes that the outlook for the sector is promising. Says he: "The cyclical recovery appears to be underway with a combination of increasing incomes, improved marketing and innovation and better price-value equation."<br /><br />Sivasubramanian adds that growth will depend on two structural drivers -- increasing penetration and consumption in rural areas and changing aspirational values of the urban markets. Both factors seem to be at work already.<br /><br />Rural demand kicking in For the sector as a whole, the volumes in the September quarter are estimated to have grown at around 15 per cent y-o-y compared with 12 per cent in the June quarter.<br />While ITC was a star performer showing a revenue growth of 32 per cent y-o-y, HLL managed just under 14 per cent y-o-y for continuing businesses, while Colgate turned in a top line growth of 15 per cent y-o-y.<br />Britannia and Marico did better at 24 per cent and 26 per cent respectively, while Nestle too didn't disappoint at 16 per cent. With the economy in fine fettle and disposable incomes rising, consumers in urban India are clearly buying.<br />And rural demand is kicking in. Confirms Sunil Duggal, CEO, Dabur India, "Rural demand is much stronger this year and many of our SKUs (stock-keeping units), which cater for the rural population such as shampoo sachets, are doing much better. Thus, rural demand is now catching up with urban demand."<br />Observes Sanjay Sinha, head-equities at SBI Mutual Fund, "From what we understand, the rural market is growing at around 11-12 per cent while both together (urban and rural) are growing at around 8 per cent."<br />This is reflecting in the the AC Nielsen August numbers, which show that all the top-12 categories have grown in double-digits while two-thirds of the companies have seen a growth of over 20 per cent y-o-y.<br /><br />Modern trade is chipping in: The increasing presence of large format retail stores in the metros, has also spurred sales, according to Milind Sarwate, CFO, Marico.<br />While sales through modern trade still form a very small percentage of overall sales, the growth through these larger stores -- on the low base -- is today much higher at around 20 per cent, than that through traditional grocery outlets.<br />While companies admit that margins on sales to organised retail are slightly lower, they realise that modern retail encourages growth because the interaction between a consumer and a product is far greater in the modern stores.<br /><br />Says Sarwate, "Modern trade allows increasing visibility of good brands and encourages trials of new categories, and customers who are satisfied with a new product will make repeat purchases."<br />Clearly, the opportunity to make products more visible by creating special units or doing special promotions is leading to increased throughput. Going ahead, it could be a key factor in driving growth FMCG space because it's a good way to capture the wallet share of the consumer.<br />Observes Duggal, "Sales through this channel are growing three times as fast as through the regular channels. We expect exponential growth through modern trade from now on."<br /><br />Pricing power makes a comeback: The recent price hikes announced by FMCG majors indicate that they are able to pass on the increased input costs. HLL has taken one of the biggest price increases in recent times covering nearly 30 per cent of its domestic FMCG portfolio.<br />It has raised prices by 2-20 per cent on products such as soaps -- Lux and Lifebuoy, laundry care -- Surf and Wheel, skin and oral care -- Pepsodent and the weighted average price hike across all categories would be about 1.5 per cent. At Dabur, the increase has been 3-4 per cent on an average over the last nine months.<br />The HLL management indicated after the results that it had taken a judicious increase in prices and would continue to do so to cover raw material costs, in other key categories, such as skin care and shampoos.<br />The others are not far behind. Says Hoshedar K Press, executive director and president, Godrej Consumer Products (GCPL), "We have started raising prices in a staggered manner as we supply fresh stocks to dealers and on an average the increase would be between 6-8 per cent for soaps. For hair colour though, we are not upping prices yet."<br />At Marico, Sarwate says Parachute has been selling at the same price for about 20 months now but prices of Saffola are up.<br />Observes Sivasubramanian, "The recent price hikes reflect the continued cyclical turnaround that the sector is witnessing. Revenue growth has been encouraging in recent times on increased demand and appropriate product positioning, and these price hikes should help companies experience higher margins through better price realisation."<br />Indeed, consumer down-trading (buying cheaper products in the same category) seems to have almost come to an end and money which was being diverted to aspirational products is now coming back to household and personal care products.<br />Observes Press, "It's true that down-trading is being reversed and I feel that even if prices go up, it would not impact demand because the environment is favourable."<br />Agrees Duggal, "Price hikes have been necessitated by raw material cost increases but we don't expect that to affect demand." Godrej's Press believes that the soaps category could continue to grow at 15 per cent over the next couple of years.<br /><br />Margins on the mend:<br />Companies such as Marico managed to improve margins by about 485 basis points to 16 per cent in the quarter while HLL's OPM was higher by 50 basis points at 13.1 per cent. Thanks to the changing product mix, away from cigarettes, ITC's OPM lost around 400 basis points.<br />Not everyone managed to tide over the cost inflation though: Britannia's operating profit margin crashed to just over 5 per cent from 14 per cent in Q2 FY06. In a highly competitive environment, Britannia was not able to pass on the higher input costs. Nestle too saw margins dip 80 basis points y-o-y to 19.7 per cent.<br />Industry watchers believe that with volumes kicking in, companies will look to increasing market share and while they may take price increases, it is likely to be limited to the extent of cost inflation in inputs.<br />Explains Duggal, "Few firms are likely to risk losing market share in a growing market and will keep a close watch on their competitors' price lists."<br />However, what they are more likely to do is to improve the product mix and try to push higher value-added products, which would pull in better margins. That way even if volumes were to remain stagnant or taper off somewhat, the improved product mix would cushion margins.<br />In fact, D Sundaram, director, finance, HLL, mentioned after the results that gross margins had improved in the September quarter thanks to a better product mix.<br />For instance, two high-end ranges were introduced in Ponds, and in laundry wash a new variant of Surf was launched. Duggal, however, believes that with rural demand being so robust, companies would also try to offer new price points at the lower end.<br /><br />"Companies are unlikely to use pricing as a tool to enhance margins," he observes. Says Templeton's Sivasubramanian, "The mass market can contribute to a major chunk of volumes in the future as consumption of goods increases and many companies are realising the importance of creating a good mix of volumes."<br /><br />SBI Mutual's Sinha feels that should there be a softening of input costs, companies will also not roll-back prices which will help boost margins.<br /><br />Valuations are not cheap:<br />Sumeet Budhraja who tracks FMCG at Edelweiss believes that while stocks may not be cheap, there could be a 15-20 per cent upside from current levels, over the next three to four quarters.<br />"The inference from our interaction with managements is that the growth momentum is sustainable and that together with some price hikes, it should help margins sustain or move up by about 50 basis points," says Budhraja.<br /><br />Sinha, however, feels that much of the upsides, stemming from good volumes, are already factored into the prices. "A re-rating of the sector will happen only if there are signals that margins are expanding," he observes, adding that "the stocks are now a defensive play and evenly valued."<br /><br />Adds Sivasubramanian, "On a relative basis, valuations appear to be reasonable compared to the broad markets and as earnings visibility improves further, we could witness increased interest in the sector that offers an exposure to the consumption boom in India over the coming decades."</span><div><span class="Apple-style-span" style="font-size:x-small;"><br /></span></div><div><span class="Apple-style-span" style="font-size:x-small;">:- Shobhana Subramanian ( </span><a href="http://inhome.rediff.com/cms/print.jsp?docpath=//money/2006/nov/13spec.htm"><span class="Apple-style-span" style="font-size:x-small;">rediff.com</span></a><span class="Apple-style-span" style="font-size:x-small;"> )</span></div></div>Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com0tag:blogger.com,1999:blog-1801172536966131018.post-47241195538646698292008-11-21T08:30:00.000-08:002008-11-21T08:33:29.612-08:00Emerging market opportunities for Global Retailers - ATKearney<span class="Apple-style-span" style="font-family: Arial; font-size: 12px; line-height: 16px; "><p style="font-family: Arial, Helvetica, sans-serif; font-style: normal; font-size: 12px; color: rgb(0, 0, 0); font-weight: normal; ">The annual A.T. Kearney Global Retail Development Index™ (GRDI) was designed to help retailers make strategic investments in exciting new markets. Now in its eighth year, GRDI ranks the top 30 emerging markets on a 100-point scale—the higher the ranking, the more urgency there is to enter a country. Results for the 2008 Index, highlighted in the figure, indicate that retailers must be more pragmatic with their market entry strategies. The credit crunch and higher cost of capital mean large-scale expansions on multiple fronts will be difficult to sustain. Indeed, the tough—but familiar—world of global retailing is transforming into a tougher, more unfamiliar, but resolutely more global market.</p><p style="font-family: Arial, Helvetica, sans-serif; font-style: normal; font-size: 12px; color: rgb(0, 0, 0); font-weight: normal; "><a onmouseover="self.status=''; return true;" onclick="popup_window('shared_img/08-Research-02-800.gif','popup',835,835,0,1);return false;" onmouseout="self.status=''; return true;" href="http://www.atkearney.com/main.taf?p=5,1,1,120,9"><img alt="GRDI 2008 country attractiveness" src="http://www.atkearney.com/shared_img//08-Research-02-480.gif" border="0" /></a></p><p style="font-family: Arial, Helvetica, sans-serif; font-style: normal; font-size: 12px; color: rgb(0, 0, 0); font-weight: normal; "><span class="LEGALTEXT" style="font-family: Arial, Helvetica, sans-serif; font-style: normal; font-size: 10px; color: rgb(102, 102, 102); font-weight: normal; ">Click the image to enlarge.</span></p><p style="font-family: Arial, Helvetica, sans-serif; font-style: normal; font-size: 12px; color: rgb(0, 0, 0); font-weight: normal; ">The top retail markets in 2008 are as follows:</p><p style="font-family: Arial, Helvetica, sans-serif; font-style: normal; font-size: 12px; color: rgb(0, 0, 0); font-weight: normal; "><strong>Vietnam: the shackles are off. </strong>Vietnam stole the spotlight this year from the regional behemoths, India and China, with its recently deregulated retail markets. Vietnam is one of the few remaining single-party Communist countries. The country’s leaders are eager to follow China’s blueprint for growth by attracting foreign investment.</p><p style="font-family: Arial, Helvetica, sans-serif; font-style: normal; font-size: 12px; color: rgb(0, 0, 0); font-weight: normal; "><strong>India: the retail freeway gets bumpy. </strong>For the first time in five years, India’s ranking drops from first to second place in the Index but the country remains among the most attractive markets for global retailers—although they continue to be frustrated by government regulations.</p><p style="font-family: Arial, Helvetica, sans-serif; font-style: normal; font-size: 12px; color: rgb(0, 0, 0); font-weight: normal; "><strong>Russia: retail moves into second-tier cities. </strong>Russia slips one place to third on the Index. Record high prices for crude oil and natural gas—its main exports—and strong domestic demand are contributing to a booming economy. Russia is especially attractive to foreign retailers experiencing sluggish growth in their domestic markets. Moscow and St. Petersburg are still the most favored destinations, but retail continues to expand into second-tier cities and industrial regions.</p><p style="font-family: Arial, Helvetica, sans-serif; font-style: normal; font-size: 12px; color: rgb(0, 0, 0); font-weight: normal; "><strong>China: consumer spending surges. </strong>Although China has dropped from number three to number four in this year’s Index, its strong GDP growth makes it one of the fastest-growing economies in the world. Consumer spending has more than doubled since the mid-1990s and is growing rapidly in the large southern and eastern cities.</p><p style="font-family: Arial, Helvetica, sans-serif; font-style: normal; font-size: 12px; color: rgb(0, 0, 0); font-weight: normal; "><strong>Overall: Asia grows up. </strong>Asia has turned a corner this year. Asian markets have held their own despite the economic turmoil affecting most developed markets such as the United States, Japan and Europe. GDP growth across the region remains strong and will probably top 7 percent on average.</p><p style="font-family: Arial, Helvetica, sans-serif; font-style: normal; font-size: 12px; color: rgb(0, 0, 0); font-weight: normal; "><strong>What’s in Store for the Rest of 2008? </strong><br />This year is shaping up to be a turbulent one for global retailers—the credit crunch may have started in the United States, but it has quickly spread around the globe, creating financing woes for existing and expanding retailers. Although the European markets have fared better so far, this scenario cannot last long given the level of turmoil across the Atlantic. As a result, 2008 will be a landmark year for visionary retailers that differentiate their companies from the competition by expanding into new emerging markets. For large mass market retailers, the message could not be more clear: expand or perish.</p><p style="font-family: Arial, Helvetica, sans-serif; font-style: normal; font-size: 12px; color: rgb(0, 0, 0); font-weight: normal; ">( Source: <a href="http://www.atkearney.com/">ATKearney</a> )</p></span>Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com0tag:blogger.com,1999:blog-1801172536966131018.post-76260832613307140572008-11-01T11:21:00.000-07:002009-03-09T13:33:51.532-07:00Methodology for selecting the 2008 BCG 100<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOzH8b5X9vjtr46-9hxOdDuhINjI2r0pd_u16Vamo_vaSFj7TEvZ-n0F7vmwfuVfMERg0HbYLfT5RCliebrLzOna_o5pYA4epCqus7u5JwjMCWRhsNg7rnygTtLqhsRML4dAvdYZeLr-9y/s1600-h/bcg.gif"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 400px; height: 332px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOzH8b5X9vjtr46-9hxOdDuhINjI2r0pd_u16Vamo_vaSFj7TEvZ-n0F7vmwfuVfMERg0HbYLfT5RCliebrLzOna_o5pYA4epCqus7u5JwjMCWRhsNg7rnygTtLqhsRML4dAvdYZeLr-9y/s400/bcg.gif" border="0" alt="" id="BLOGGER_PHOTO_ID_5311288379869112562" /></a><br /><span class="Apple-style-span" style=" -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px; font-family:Verdana;font-size:14px;"><p><span class="Apple-style-span" style="font-size:10px;"></span></p><p><span class="Apple-style-span" style="font-size:x-small;"><span class="Apple-style-span" style="font-family:arial;">The Boston Consulting Group generated the 2008 list by using a detailed screening process based on rigorous selection principles. For the earlier, 2006 report, it had looked at 2004 financial data; this time it had the benefit of additional data from fiscal years 2005 and 2006. First, it selected a set of rapidly developing economies (RDE) in which to find the challenger companies. The BCG started with 30 countries ranked according to size of GDP, value of exports, and amount of outbound foreign direct investment. From these rankings, it chose a set of 14 RDEs: Argentina, Brazil, Chile, China, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Poland, Russia, Thailand and Turkey.</span></span></p><p><span class="Apple-style-span" style="font-size:x-small;"><span class="Apple-style-span" style="font-family:arial;">Then an initial master list of more than 3,000 candidate companies that are based in these countries was compiled. This list drew on a variety of local company rankings, such as the top 500 companies in India selected by Business Worldmagazine and the top 500 companies in Brazil selected byExame, a Brazilian business magazine. Having amassed this large candidate pool, an international BCG research team from Brazil, China, Eastern Europe, India, Mexico and Russia, together with a panel of senior BCG experts in Asia, Europe, Latin America, Russia, and the US, conducted a rigorous three-step triage process.</span></span></p><p><span class="Apple-style-span" style="font-size:x-small;"><span class="Apple-style-span" style="font-family:arial;">In step one, it ensured that the selection included only companies that are truly RDE-based, omitting foreign joint ventures and the RDE-based subsidiaries of multinational corporations. In step two, the BCG homed in on those players with 2006 revenues of at least $1 billion, a threshold believed to be generally necessary to drive a serious globalisation campaign. “We allowed ourselves some flexibility on this criterion; four companies on our final list fell short of the $1 billion threshold. We included them because their revenues are fast approaching this level and because we felt that they merit inclusion on the basis of other criteria,” says the BCG report.</span></span></p><p><span class="Apple-style-span" style="font-size:x-small;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></p><p><span class="Apple-style-span" style="font-size:x-small;"><span class="Apple-style-span" style="font-family:arial;">In step three, it scored the major globalisation credentials of the remaining companies using five criteria: the international presence of the company as indicated by its owned and operated subsidiaries, sales networks, manufacturing facilities, and R&D centres; the major international investments pursued in the past five years, including mergers and acquisitions; the company’s access to capital for financing international expansion, whether through free cash flows, stock markets, or other sources; the breadth and depth of its technologies and its intellectual-property portfolio; and the international appeal of its existing offerings and value propositions</span></span></p><p><span class="Apple-style-span" style="font-size:x-small;"><span class="Apple-style-span" style="font-family:arial;"><br /></span></span></p><p><span class="Apple-style-span" style="font-size:x-small;"><span class="Apple-style-span" style="font-family:arial;">( Source: the hindu business line )</span></span></p><p></p></span>Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com5tag:blogger.com,1999:blog-1801172536966131018.post-16793189411852071802008-10-01T23:01:00.000-07:002008-10-01T23:04:38.145-07:00Indian FMCG industry grow by 16 pc in 2007-08: FICCIIndian FMCG industry, valued at Rs 746.5 billion in 2006-07, has grew by 16 per cent in 2007-08, compared to 14.5 per cent growth in the previous fiscal, a survey by industry body Ficci said. <p>The high growth in the sector is backed by the rising demand, fiscal incentives provided by the government like tax exemptions in some states and improved performance by leading companies, the chamber said in a statement.</p> <p>Driving the growth of the sector, the 'deodorant' segment of the industry has achieved the highest growth of 40 per cent followed by hair dye at 30 per cent and chemical segments including cleaner and repellents at 23 per cent, the survey pointed out.</p> <p>Although, there has been some deceleration in the soap and toiletries segment, it said.</p> <p>The industry has been able to achieve growth despite of rising prices, increase in costs of various inputs such as petroleum products and packaging materials, the chamber said.</p> <p>According to the study done by Indian market research bureau, the industry has witnessed launch of over 251 new products including 223 variants of existing products during the first 10 months of 2007, compared to 191 products including 173 variants in the same period in 2006.</p> <p>The on-going retail boom in the country has forced the FMCG companies to re-work strategies and making arrangements with retail majors for sales promotion, the chamber said.<br /></p><p>( Source: <a href="http://indiabiznews.com/biznews/categoryNewsDesc.jsp?catId=13542">indiabiznews</a> )<br /></p>Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com0tag:blogger.com,1999:blog-1801172536966131018.post-62236965089376516772008-10-01T22:58:00.000-07:002008-10-01T23:00:28.583-07:00MORE THAN HALF OF INDIAN CONSUMERS LOOK AT NUTRITION LABELS ON FOOD PACKAGING<p> 71 percent Indians say they take notice of packaged goods labels containing nutritional information compared to two years ago but only 59 percent Indians <em>mostly</em> understand the nutritional panels/ labels that they read on the food packaging, according to findings from a recent internet survey on Food Labelling and Nutrition conducted in 51 countries by The Nielsen Company. </p> <p>The percentage of people who check nutritional information on packaging has increased from 49 percent to 59 percent in the last two years. With 59 percent, India also tops Asia Pacific in its understanding of nutritional labels. North Americans lead the race in understanding food labeling. 67 percent of North American consumers claim to <em>mostly</em> understand food labels. </p> <p>“Indians were never as busy before, long work hours, working mothers, long commute, nuclear family, has left very little time in their hands for household chores like cooking. Quite naturally, packaged products are making entry in a big way in the Indian kitchen. However, people are not ready to risk their well being and are favouring available nutritional packaged food, this surely indicates an opportunity for savvy food manufacturers to use nutritional labelling as a powerful marketing tool,” said Chandana Banerji, Director, Client Solutions, The Nielsen Company.</p><p>For further reading, please follow the link...<br /></p><p>(Source: <a href="http://in.nielsen.com/news/20080811.shtml">ACNielsen</a> )<br /></p>Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com0tag:blogger.com,1999:blog-1801172536966131018.post-14140469305401694272008-09-25T11:33:00.000-07:002008-09-25T11:36:06.926-07:00Double Whammy Inflation hitting FMCG sector with low sales & high input cost : ASSOCHAM<p align="justify"><b><span style="color: rgb(0, 0, 128);font-family:Verdana;font-size:85%;" ><br /> </span><span style=";font-family:Verdana;font-size:78%;" ><br /></span></b> </p><p><span style=";font-family:Verdana;font-size:85%;" > <p><span style=";font-family:Verdana;font-size:85%;" >With the prices of key raw materials touching new highs, FMCG companies registered a 16.2 per cent rise in their cost of raw material within three months ending March even though its sales growth stagnated to mere five per cent, the ASSOCHAM Eco Pulse (AEP) has stated. </span></p> <p><span style=";font-family:Verdana;font-size:85%;" >According to ASSOCHAM Paper on <b>“Inflation hit FMCG sector”</b>, the sales of major FMCG players have been considerably low as the inflation across the commodities has affected the consumer goods segment. </span></p> <p><span style=";font-family:Verdana;font-size:85%;" >The net sales registered a marginal increase of 5.76 per cent for the period January-March 2008 on sequential quarter basis. FMCG majors Godrej and Marico registered a decline of 0.88 per cent and 8.28 per cent, while HUL and Dabur posted a 15.72 per cent and 16.47 per cent increase in their total income on sequential quarter basis. </span></p> <p><span style=";font-family:Verdana;font-size:85%;" >In a statement, the ASSOCHAM President, Mr. Venugopal N. Dhoot said, “the spiraling prices of essential commodities have impacted the companies’ bottom line. The sector witnessed a decline of 15.38 per cent in their net profits on sequential q-o-q basis putting pressures on their volume growth, which grew by only 5.76 per cent in Q4 2007-08. The big dampener, rising input costs of wheat and milk, has shown no sign of relief. Price rise of key inputs in FMCG sector like wheat and milk rose to 1.13 per cent and 9.13 per cent in Q4 from 0.38 per cent and 8.84 per cent in Q3 respectively”. </span></p> <p><span style=";font-family:Verdana;font-size:85%;" >The rise in the prices of fuel and power cost from 0.65 per cent in Q3 to 5.06 per cent in Q4 in 2007-08 have also contributed to the increased input costs. </span></p> <p><span style=";font-family:Verdana;font-size:85%;" >Mr. Dhoot added, “despite a 15.7 per cent growth in its total income, HUL reported a decline of 39.41 per cent in its net profit after tax in the fourth quarter as compared to Q3 of the FY 2007-08”. </span></p> <center><span style="font-family:Verdana;"><b><span style="font-size:85%;">Sequential quarter (Q4 over Q3, FY2007-08)</span></b><span style="font-size:85%;"><br /><b>comparison of top FMCG companies</b><br /></span><b><span style="font-size:85%;">(in percent)</span></b></span></center> <p> <table id="table1" width="100%" border="1" cols="6"> <tbody><tr> <td><b><span style=";font-family:Verdana;font-size:85%;" >Company name </span></b></td> <td><b><span style=";font-family:Verdana;font-size:85%;" >Total Income </span></b></td> <td><b><span style=";font-family:Verdana;font-size:85%;" >Net Profit </span></b></td> <td><b><span style=";font-family:Verdana;font-size:85%;" >Advertisement expenses </span></b></td> <td><b><span style=";font-family:Verdana;font-size:85%;" >Wage cost </span></b></td> <td><b><span style=";font-family:Verdana;font-size:85%;" >Consumption of raw materials</span></b></td></tr> <tr> <td><span style=";font-family:Verdana;font-size:85%;" >HUL </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >15.72 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >-39.67 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >-215.07 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >9.8 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >24.44</span></td></tr> <tr> <td><span style=";font-family:Verdana;font-size:85%;" >Marico </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >-8.28 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >-11.1 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >13.4 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >18.29 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >3.58</span></td></tr> <tr> <td><span style=";font-family:Verdana;font-size:85%;" >Dabur India Ltd. </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >16.47 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >-5.55 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >12.62 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >48.71 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >28.6</span></td></tr> <tr> <td><span style=";font-family:Verdana;font-size:85%;" >Godrej </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >-0.88 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >-5.11 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >23.26 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >0.6 </span></td> <td><span style=";font-family:Verdana;font-size:85%;" >8.54</span></td></tr></tbody></table></p> <p><span style=";font-family:Verdana;font-size:85%;" >Rising wage costs have also hit the bottom line of the FMCG companies. Net profit margins of Marico and Dabur India ltd. recorded a decline of –11.1 per cent and –5.55 per cent on sequential quarter basis owing to the rise in their wage costs by 18.29 per cent and 48.71 per cent respectively. </span></p> <p><span style=";font-family:Verdana;font-size:85%;" >The intense competition in FMCG sector makes advertising as an important expense. Godrej Consumer Products Ltd. (GPCL) has registered a 23.26 per cent increase in the advertising and sales promotion activities on sequential quarter basis. With the increasing input costs and advertising expenses, the company registered a decline of 5.11 per cent in its net earnings.<br /></span></p><p><span style=";font-family:Verdana;font-size:85%;" >( source: <a href="http://www.assocham.org/">assocham</a> )<br /></span></p> </span> </p>Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com0tag:blogger.com,1999:blog-1801172536966131018.post-40652593617381241602008-09-24T14:37:00.000-07:002008-09-24T14:40:38.205-07:00Tomorrow is a new consumer! Who is the future Asian Consumer?<p style="text-align: justify; margin-top: 0pt;">The world is looking intensely at Asia today. Not for its spirituality or its exotic cuisines, but as a critical contributor to the sustenance of its core economic superiority. Having reached a “launching pad” level of economic growth (or getting there real fast, depending on the specific country), and with its very large <em>young</em> populations, Asia is moving rapidly towards becoming not only the world’s largest producer and consumer, but also the largest productive workforce. Marketers and policy makers everywhere are keen to know how to exploit the rapid transformation happening here. </p> <p style="text-align: justify;">We begin with a macro perspective on the big environmental changes occurring in Asia today, then examine the consumers more closely with <em>selected</em> insights about youth and women, and finally end with a discussion on some thoughts on how marketers can devise strategies to deal with this exciting new opportunity - Asia. We have resisted the temptation to quote extensive demographic data and focus instead on consumer issues. Nonetheless, ‘Asia’ is not one entity, and any attempt at addressing it as one, must necessarily become a little panoramic in nature.</p> <p class="linksresearch" style="text-align: justify; margin-bottom: 0pt;"><strong>1. The Meta Trends </strong></p> <p style="text-align: justify; margin-top: 0pt; margin-bottom: 0pt;">To simplify the myriad changes taking place here, we will use the concept of Meta Trends. A meta trend is a transformational or transcendent phenomenon, not simply a big, pervasive one – it implies multidimensional or catalytic change, as opposed to a linear or sequential change. It happens as a result of evolutionary, system-wide developments that occur simultaneously in a number of individual demographic, economic, and technological areas. Instead of each being an individual free-standing global trend, it is a composite of trends. A brief description of these trends at a macro level will be followed by a more in-depth exploration of the impact of these trends on consumers and their consumption behavior.</p> <p style="text-align: justify; margin-top: 0pt;">Three meta trends transforming this region today are discussed below: </p> <p class="linksresearch" style="text-align: justify; margin-bottom: 0pt;"><strong>Economic growth and globalization</strong>: </p> <p style="text-align: justify; margin-top: 0pt; margin-bottom: 0pt;">High GDP growths throughout most of the region and impressive increases in exports and outsourcing income have led to higher incomes and better living standards. Real average household incomes will continue to increase between 1.3% and 4.9% per annum between 2002 and 2012. High income segments are projected to grow even more rapidly in size. For e.g., the number of households earning over US$30,000 in 2001 will increase by 8.6% in urban South Korea, 3.3% in Taiwan, 4.9% in Singapore, 3.7% in Hong Kong and even 1.3% in Japan (<em>Asian Demographics Ltd</em>). Needless to say, there are vast differences between countries in levels of economic development – from the cheap, high quality labour of China; to the high technology-high value consumer market in Japan; the increasingly wealthy ASEAN consumers; the potential alliances with the highly developed Korea and Taiwan; or the relatively poor, but highly optimistic, talented and fast developing Indian business outsourcing market.<br /></p><p style="text-align: justify; margin-top: 0pt; margin-bottom: 0pt;"><br /></p><p style="text-align: justify; margin-top: 0pt; margin-bottom: 0pt;">(source : <a href="http://in.nielsen.com/site/abcd.shtml">ACNielsen - India</a> )<br /></p>Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com0tag:blogger.com,1999:blog-1801172536966131018.post-8986165670562573182008-09-24T14:24:00.000-07:002008-09-24T14:27:00.127-07:00Hinterland overtakes cities in FMCG consumptionIt’s a rural resurgence of sorts and has got companies revisiting their bottom of the pyramid strategies. Rural offtake across select categories such as shampoos, toothpastes and hair oils has grown faster than consumption in urban markets this year.<br /><br /> ACNielsen data for the January-July 2008 period shows that growth has been higher in rural markets across each of the categories by value and volume. The growth is being attributed to factors like higher prices of farm produce and farm loan write-offs, resulting in consumers upgrading to branded products. <br /><br /> Firms are addressing the increased demand by introducing SKUs (pack sizes) only for rural pockets, beefing up their distribution footprint and tailoring promotional and ad strategies specific to rural consumers — an example being upping the celebrity connect.<br /><br /> Take toothpastes — the category saw a 12.8% rural volume growth against 8.7% in urban markets in January-July 2008. Similarly, in the case of hair oils, rural value growth was 19.3% compared with 15.2% in urban markets during the period. Even an urban-centric product like shampoo saw rural volume growth at 11.8% compared with 8.8% in urban markets.<br />Dabur CEO Sunil Duggal said: “Demand for price-warrior brands and low-unit packs is being fuelled by the rural consumer. We are trying to penetrate the last mile in terms of distribution by expanding reach even in the smallest of villages. Also, since a celebrity-connect works better with rural consumers, we are tailoring our promotional strategies accordingly. <br /><br /> “In the case of Dabur, SKUs such as 30-gm Babool toothpastes, 20-gm Red toothpastes, shampoo and Hajmola sachets priced at Re 1 have all been created for rural and small-town consumers.<br /><br /> Marico marketing head Sameer Satpathy said that the company was tapping the rural growth story with increased micro-marketing, a stronger sales force and localised marketing. “As consumers move from loose to packaged products, rural demand is outpacing urban demand in select pockets. So, we are pushing, for example, Rs 3 price points for some of our products.” Mr Satpathy said that hair oil and branded starch were among Marico’s products that were growing faster in rural pockets.<br /><br /> In the <a id="KonaLink0" target="_new" class="kLink" style="text-decoration: underline ! important; position: static;" href="http://economictimes.indiatimes.com/News/News_By_Industry/Cons_Products/FMCG/Hinterland_overtakes_cities_in_FMCG_consumption/articleshow/3400694.cms#"><span style="color: blue ! important; font-family: Arial,Helvetica,sans-serif; font-weight: 400; font-size: 12px; position: static;color:blue;" ><span class="kLink" style="color: blue ! important; font-family: Arial,Helvetica,sans-serif; font-weight: 400; font-size: 12px; position: static;">automobile </span><span class="kLink" style="color: blue ! important; font-family: Arial,Helvetica,sans-serif; font-weight: 400; font-size: 12px; position: static;">industry</span></span></a> too, some of the rural resurgence seems to be evident. For example, in July, when <a id="KonaLink4" target="_new" class="kLink" style="text-decoration: underline ! important; position: static;" href="http://economictimes.indiatimes.com/News/News_By_Industry/Cons_Products/FMCG/Hinterland_overtakes_cities_in_FMCG_consumption/articleshow/3400694.cms#"><span style="color: blue ! important; font-family: Arial,Helvetica,sans-serif; font-weight: 400; font-size: 12px; position: static;color:blue;" ><span class="kLink" style="color: blue ! important; font-family: Arial,Helvetica,sans-serif; font-weight: 400; font-size: 12px; position: static;">car</span></span></a> sales had turned negative in almost three years, mopeds, a mostly rural two-wheeler, had grown, if only just. Moped sales in July are up 6% from 37,192 units in the year-ago month to 39,486 units this time round. Motorcycles, which also have a significant rural footprint, are up after a bad patch that lasted for 12-18 months. Bike sales at 4,57,178 units are up 22% over 3,75,004 units last June.<br /><br /> A senior official with one of the top three auto financing firms said: “The assumption is right and the monsoon has been good with agri products growing at 6% clip. All of which will show up in demand.” But the rural-urban skew is so sharp in cars and even <a id="KonaLink2" target="_new" class="kLink" style="text-decoration: underline ! important; position: static;" href="http://economictimes.indiatimes.com/News/News_By_Industry/Cons_Products/FMCG/Hinterland_overtakes_cities_in_FMCG_consumption/articleshow/3400694.cms#"><span style="color: blue ! important; font-family: Arial,Helvetica,sans-serif; font-weight: 400; font-size: 12px; position: static;color:blue;" ><span class="kLink" style="color: blue ! important; font-family: Arial,Helvetica,sans-serif; font-weight: 400; font-size: 12px; position: static;">bikes</span></span></a> that the upsurge will take a while to show up, he said. Typically, the top 200 cities account for 75% of the bike sales. In cars, the top 50 cities hog 80% volume.<br /><br /> Motorcycles are not the only category that’s doing well. Take <a id="KonaLink3" target="_new" class="kLink" style="text-decoration: underline ! important; position: static;" href="http://economictimes.indiatimes.com/News/News_By_Industry/Cons_Products/FMCG/Hinterland_overtakes_cities_in_FMCG_consumption/articleshow/3400694.cms#"><span style="color: blue ! important; font-family: Arial,Helvetica,sans-serif; font-weight: 400; font-size: 12px; position: static;color:blue;" ><span class="kLink" style="color: blue ! important; font-family: Arial,Helvetica,sans-serif; font-weight: 400; font-size: 12px; position: static;">tractors</span></span></a>, a purely rural product. Mahindra & Mahindra COO (FES-division) Gautam Nagwekar said: “The tractor market should end the fiscal with around 11% growth. That’s darn sight better than what most analysts expect from the car market. Indeed, in the April-July quarter, car demand is up 9% though those figures don’t reflect the slowdown which kicked in from June.”<br /><br /> Of course, not everyone buys the theory that rural India is suddenly stepping on the gas. TVS Motor MD Venu Srinivasan said: “Actually, rural demand has been worse hit in motorcycles because of a financing crunch. That’s why more executive bikes rather than entry-level ones are selling.” <br /><br /> However, he does admit that the finance crunch has now come to cities and that mopeds have managed to hold their own in all this melee.<br /><br />( source : <a href="http://economictimes.indiatimes.com/News/News_By_Industry/Cons_Products/FMCG/Hinterland_overtakes_cities_in_FMCG_consumption/articleshow/3400694.cms">Economictimes</a>)Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com0tag:blogger.com,1999:blog-1801172536966131018.post-50818066862153768592008-09-24T14:17:00.001-07:002008-09-24T14:22:39.587-07:00Amway to take on FMCG giants in India<span>After establishing itself as a major player in the home care, nutrition & wellness, cosmetics, it is time now for the Amway to take on fast moving consumer goods (FMCG) companies in India such as HUL, Dabur, Gillet. </span><p><span>The Rs 800-crore Amway India has forayed into the Rs 1,500-crore great value products market with a slew of launches such as coconut oil, amla oil, shaving cream, hair cream, disposable razors among few products recently. “We are looking at 3% to 5% in each of these segment in the first of year launch and hope to become a major player soon,” said William S Pinckney, MD and CEO, Amway India . </span></p><p><span>Addressing visiting journalists from Chennai on Friday at the company’s largest contract manufacturing facility at Baddi in Himachal Pradesh, he said, “We are bullish on the Indian market for these products. We believe given our brand equity and unique marketing exercise, the company hopes to turn the tide on its favour.” </span></p><p><span>“We are pitching our products at par with our competitors. We have 450,000 strong active distributors in India with wider public interface. With the strong brand, Amway hopes to garner sizeable market chunk of each product in India ,” he said further. The company has 102 products now under five different categories. </span></p><p><span>The company has roped in dedicated contract manufacturing facilities for each of these products. “For the first time in India it has started advertising these new products in print media and TV channels,” he added. </span></p><p><span>Earlier, talking about the Baddi facility, he said this is the largest contract manufacturing facility for Amway in India and manufactures 80% of Amway’s products in India . The Baddi facility is run by Sarvottam Care Limited and has invested over Rs 50 crore into this facility. </span></p><p><span>The facility manuafacture products in nutritional beverage, tablets and capsules, ‘Glister’ toothpaste, cosmetic creams, home care, he said. Responding to a query, “We have been growing fast in India and expect to end the current year with a turnover of Rs 1,000 crore and more from last year’s Rs 800 crore.<br /></span></p><p><span>(source : <a href="http://www.financialexpress.com/news/Amway-to-take-on-FMCG-giants-in-India/302309/">financialexpress</a> )<br /></span> </p>Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com0tag:blogger.com,1999:blog-1801172536966131018.post-44583487884338535272008-09-15T00:59:00.000-07:002008-09-15T01:08:28.620-07:00The rationale!Well, this blog is an humble effort in making all the news/research materials/latest trends in the market/ links, which of course is pertinent to FMCG sector, available in a single space.Rome Melehttp://www.blogger.com/profile/02609239037446720284noreply@blogger.com0