CHAPTER- 1: INTRODUCTION

1.1About the Industry

FMCG Industry

The Indian FMCG industry, with an estimated market size of `2 trillion ,accounts

for the fourth largest sector in India. In the last decade, the FMCG sector has

grown at an average of 11% a year; in the last five years, annual growth

accelerated at compounded rate of ~17.3%. The sector is characterized by strong

presence of global businesses, intense competition between organized and

unorganized players, well established distribution network and low operational

cost.

Availability of key raw materials, cheaper labor costs and presence across the

entire value chain gives India a competitive advantage. During 2012, the country

witnessed high inflation, muted salary hikes and slowing economic growth, which

affected the FMCG sector with companies posting deceleration in volume growth

in their quarterly results. However, the trend seen in 2012 is likely to accelerate in

2013 as growth will come from rural dwellers that are expected to see a rise in

their disposable incomes

The fast-moving consumer goods (FMCG) sector is an important contributor to

India’s GDP and it is the fourth largest sector of the Indian economy. Items in this

category are meant for frequent consumption and they usually yield a high return.

The most common in the list are toilet soaps, detergents, shampoos, toothpaste,

shaving products, shoe polish, packaged foodstuff, and household accessories and

extends to certain electronic goods.

The Indian FMCG sector, which is the fourth biggest sector in the Indian

economy, has a market size of `2 trillion with rural India contributing to one third

of the sector’s revenues.

The

Indian FMCG sector is highly fragmented, volume driven and characterized

by low margins. The sector has a strong MNC presence, well established

distribution network and high competition between organized and

unorganized players.

FMCG products are branded while players incur heavy advertising, marketing,

packaging and distribution costs. The pricing of the final product also depends on

the costs of raw material used. The growth of the sector has been driven by both

the rural and urban segments.

India is becoming one of the most attractive markets for foreign FMCG players

due to easy availability of imported raw materials and cheaper labor costs.

Household care .The fabric wash market size is estimated to be ~USD 1 billion,

household cleaners to be USD 239 million, with the production of synthetic

detergents at 2.6 million tones.

The demand for detergents has been growing at an annual growth rate of 10 to

11% during the past five years. On account of convenience of usage, increased

purchasing power, aggressive advertising and increased penetration of washing

machines, the urban market prefers washing powder and detergents to bars.

The regional and small unorganized players account for a major share of the total

detergent market in volumes. Household Care category recorded robust volume

and value growth during the year through focused innovation in the portfolio to

provide greater consumer value. Vim bar continues to delight consumers by

delivering superior performance and new offerings like the Anti-Germ Bar and

the Monthly Tub Pack. Vim liquid continues to develop the liquid dish wash

category driven by superior product quality and strong advertising.

It has effectively accomplished the dual job of growing the liquids market by

reaching out to more households, while increasing consumption in existing

households. Domex continued to provide clean and germ free toilets to the

consumers.

Major segments in FMCG sector

Fast Facts: Indian FMCG Industry

The Indian FMCG industry represents nearly 2.5% of the country’s GDP.

The industry has tripled in size in past 10 years and has grown at ~17%CAGR in

the last 5 years driven by rising income levels, increasing urbanization, strong

rural demand and favorable demographic trends.

The sector accounted for 1.9% of the nation’s total FDI inflows in April 2000-

September 2012. Cumulative FDI inflows into India from April 2000 to April

2013 in the food processing sector stood at `9,000.3 crore, accounting for 0.96%

of overall FDI inflows while the soaps, cosmetics and toiletries, accounting for

0.32% of overall FDI at `3,115.5 crore.

Food products and personal care together make up two-third of the sector’s

revenues. Rural India accounts for more than 700 mn consumers or 70% of the

Indian population and accounts for 50% of the total FMCG market.

With changing lifestyle and increasing consumer demand, the Indian FMCG

market is expected to cross $80 bn by 2026 in towns with population of up to 10

lakh.

India's labor cost is amongst the lowest in the world, after China & Indonesia,

giving it a competitive advantage over other countries.

Unilever Plc's $5.4 billion bid for a 23% stake in Hindustan Unilever is the largest

Asia Pacific cross border inbound merger and acquisition (M&A) deal so far in

FY’14 and is the fifth largest India Inbound M&A transaction on record till date.

Excise duty on cigarette has been increased in the Union Budget for 2013-14,

which would hit major industrial conglomerates like ITC, VST Industries in the

short term.

Corporate impact of FMCG

Hindustan Unilever: The company will benefit from the overall excise duty cut on

packaging materials from 16 to 8 per cent, as this will reduce the raw material

cost for the company

ITC: Excise duty on both filter and non-filter cigarettes brought on par by

applying higher rates on non-filter cigarettes. This will not affect the company, as

it does not have a presence in non-filter cigarettes. The company will benefit from

the other positives announced such as excise duty cuts

Godrej Consumer Products: Excise duty reduction on packaging materials should

benefit the company. Economic boom will benefit the company and reduction in

tax slabs will leave more money with consumers for consumption. A positive for

all FMCG companies

Dabur India: The cut in excise duty from 16 per cent to 14 per cent will result in

overall cost efficiencies and savings for Dabur India. (This is also valid for the

other FMCG companies)

Marico: Excise duty reduction on packaging materials should be beneficial for the

company

Sectoral impact

Excise duty exemption on specified refrigeration equipment for the installation of

cold storage, etc. on end-use basis

Reduction in excise duty from 16 per cent to 8 per cent on specified packaging

material and prepared food items will act as a booster for FMCG players

Section 35D, preliminary expenses benefit extended to FMCG companies.

CHAPTER 2:

ABOUT THE TOPIC

2.1 Effects Of Advertising In FMCG Industry

Advertising

Advertising is a form of communication used to persuade an audience

(viewers, readers or listeners) to take some action with respect to products,

ideas, or services.

Any paid form of non personal presentation and promotion of ideas of goods

and services by an identified sponsor (Philip Kotler 2006)

Paid non personal communication from an identified sponsor using mass

media to persuade or influence an audience ( Wells, Burnett and Moriaty

1998)

Advertising is always present, though people may not be aware of it. In

today's world, advertising uses every possible media to get its message

through. It does this via television, print (newspapers, magazines, journals

etc), radio, press, internet, direct selling, hoardings, mailers, contests,

sponsorships, posters, clothes, events, colours, sounds, visuals and even

people (endorsements). 

Advertising in FMCG

Advertising has become an indispensable means of reaching the consumer. It is

more so in the case of Fast Moving Consumer Goods (FMCG). The marketer

tries out new, innovative ways to communicate with the consumers.

LITERATURE REVIEW

Many advertisements do not occur in a vacuum, but rather appear simultaneously

with other materials such as programs on TV, articles in magazines, ads for other

products, and station identifications. Such materials within which ads are

embedded are usually referred to as advertising context (Soldow and Principe

1981). Advertising context can vary to a great extent, and an important decision

is selecting an appropriate context for advertisements. In this regard, a key

question should be considered: What are the influences of advertising context on

consumers' responses (e.g., brand recall, attitudes toward the ad or brand,

purchase intentions).  It is proposed that advertising context may have at least

two types of influence on the impact of advertisements: affective influence and

cognitive influence. Affective influences of advertising context are examined in

the first and second papers (e.g., how context-generated mood influences

consumers' attitude toward the brand). Douglas Stayman examines the impact of

affective context (mood, program tone, other ads) on advertising effectiveness.

This paper provides an overview of various streams of research on affective

context (e.g., affect modeled either as a moderator or as a mediator).  It is

proposed that perception of an ad stimulus will be a function of how close (or

similar) that stimulus is to the current reference point. Specifically, close stimuli

are assimilated, while distant stimuli are contrasted to the reference.

CHAPTER – 3: RESEARCH

METHODOLOGY

3.1 Research Objectives

To study the FMCG advertising techniques.

To ascertain the effects of advertising on consumers.

To study the positive impact or negative impact of advertising

3.2 Purpose of the study

Advertising is a form of communication that attempts to persuade potential

customers to purchase or consume more of a particular brand of product or

services. Every major medium is used to deliver these messages including

television, radio, cinema, magazines, newspapers, video games and the internet.

Advertising is a mass marketing technique. Assorted techniques are used for

advertising which persuades the consumers that why they need the product which

is being advertised. They focus more on the benefits, which consumer will get

from that product, rather than the product itself. Through advertising, products

can be known to public easily. They can decide which product they need and why.

Thus increasing the consumption and as a result also increasing the demand of the

product.

There are also various blames that advertising is causing negative social impact

on lives. Even if advertising has a vast good impacts on society, it can be ruled

out that is has bad impact also. It plays with the emotions of general public and

encourages them to think that buying and depleting are the activities of life.

Advertising posters of modern films, where sexuality is shown much than the

actual theme of the movie, can divert the society a lot. Materialism is being much

glorified through advertisements, which can again have dangerous consequences

Society is becoming ignorant towards social or world issues because we are too

obsessed to satisfy our newly created needs. We want to earn more and more

money so that we can buy happiness in forms of products, being advertised as

they can bring all the happiness in our lives. We are starving for material goals,

because we always just want to have more.

 So, we can say that advertising has positive as well as negative impact on society.

The balance, of what is necessary and what really not needed should be focused

more. Advertisement can create contentment but can also simultaneously create

discontentment. Our society and the marketing of products depend so badly on

advertisement that even its negative impact on society can’t outweigh the many

positive social and economical effects.

3.3 Research Methodology of the study

Research methodology is the process used to collect data and other types of

information for use in making business decisions. Examples of this type of

methodology include interviews, surveys, and research of publications. All of

these types include the use of present and historical information. When someone

is doing theoretical work, paradigims can be used to satisfy most of the criteria

that are set forth for methodology. The use of paradigms work because they are a

constructive frame work.

3. 3.1 Research Design:

Descriptive research includes surveys and fact-finding enquiries of different

kinds. The major purpose of descriptive research is description of the state of

affairs as it exists at present. A detailed outline of how an investigation will take

place. A research design will typically include how data is to be collected,

what instruments will be employed, how the instruments will be used and the

intended means for analyzing data collected.

Exploratory Research

Exploratory research is a process of gathering facts and doing research that later

allows for the team to create the best research design or data collection method

available for specific subjects. This process will draw definitive conclusions only

with caution due to the nature of the process. In many cases, this process leads to

the understanding that no problem actually exists.

Investigation into a problem or situation which provides insights to the researcher.

The research is meant to provide details where a small amount of information exists. It

may use a variety of methods such

as trial studies, interviews, group discussions, experiments, or other tactics for the

purpose of gaining information.

3.3.2 Data Collection Techniques

Sources Of Data

Primary Data: Primary data are the data gathered for the specific project and are directly

taken from the very source of information.

Questionnaire

A questionnaire is a research instrument consisting of a series of questions and other

prompts for the purpose of gathering information from respondents.

Telephonic Interview

Telephone interviews are often conducted by employers in the initial interview round

of the hiring process or to get ant view on any point.

Face-to-face interview

Trained interviewers ask fixed questions in a consistent format. Mainly specific and

closed questions are asked.

“In this project, Questionnaire was made in order to collect primary data”.

Secondary Data: Secondary data are the data, which already exists and were collected

for some other purpose or similar previous studies. Secondary data were proved to be

instrumental in structuring the questions to be asked for collecting primary data.

Internet

Magazines

NokiaWebsite

Samsung Website

Publication of books, company records, brochures, catalogues and other

documents.

3.3.3 SAMPLE DESIGN

Sample Design is the technique or the procedure, the researcher would adopt in selecting

items to be included in the sample research should select design which would be reliable

and appropriate for the study.

The "best" sample design depends on survey objectives and on survey resources. For

example, a researcher might select the most economical design that provides a desired

level of precision. Or, if the budget is limited, a researcher might choose the design that

provides the greatest precision without going over budget.

PROBABILITY SAMPLING :

Probability sampling everyelement in the population has a known nonzero probability of

selection. The simple random is

the bestknown probability sample, in which each member of

the population has an equal probability of beingselected.  

NON-PROBABILITY SAMPLING 

Non-probability sampling is a sampling technique where the samples are gathered in a

process that does not give all the individuals in the population equal chances of being

selected.

3.3.3.1 POPULATION

The population of the research was Delhi/NCR,which includes Service people, Self-

Employed& Students.

3.3.3.2 SAMPLE SIZE

Sample size determination is the act of choosing the number of observations or replicates

to include in a statistical sample. The sample size is an important feature of any empirical

study in which the goal is to make inferences about a population from a sample.

“The sample size is 61”.

3.3.3.3 SAMPLING METHOD

Convenience sampling is also known as grab, opportunity, accidental or haphazard

sampling. With this method, the researcher uses subjects that are easy to reach. As the

name describes, the researcher chooses subjects because of convenience. Some examples

of convenience sampling are when students use their classmates in a research study or a

television reporter interviews people on the street.

In research methods, there are two primary classifications for sampling methods:

nonprobability and probability. With probability sampling methods, all possible subjects

out of a population have some chance of being included in the sample. Researchers can

even calculate the mathematical probability of one of them being selected. They can also

calculate sampling error, which is the degree to which the sample might differ from the

actual population.

Convenience sampling is a nonprobability method. This means that subjects are chosen in

a non-random manner, and some members of the population have no chance of being

included. With non-probability sampling, researchers have no way of calculating how

well their sample represents the population as a whole. In general, probability sampling is

considered to be more stringent and accurate than non-probability sampling, but it is not

always feasible.

When time or cost is a factor, some researchers might use convenience sampling. It is

often used in pilot or exploratory studies when the researcher wants an inexpensive and

quick way to discern whether further research is warranted. Many social science studies

use convenience sampling with students, paid volunteers or clients.

3.3.4 METHOD OF DATA COLLECTION

3.3.4.1. INSTRUMENT FOR DATA COLLECTION

QUESTIONNAIRE: Questionnaire consist of a set of questions presented to the

respondent for their answer, because of its flexibility the questionnaire is by far the most

common instrument used to gather primary data.

Questionnaire needs to be carefully developed and tested before they are actually

used on a large scale.

QUESTIONNAIRES ARE TWO TYPES:

OPEN ENDED QUESTIONNAIRE

It consists of open-ended questions that allow the respondent to answer in their own

words. Such questionnaire revel more because they do not constraint respondent’s

answer.

CLOSED ENDED QUESTIONNAIRE

This questionnaire consists of questions that pre-specified all the possible answer,

tabulation and interpretation of such open questionnaire are easier as compared to open-

ended questionnaire.

3.3.5 LIMITATIONS

Every study, no matter how well it is conducted, has somelimitations.This is why it does

not seem reasonable to use the words"prove" and "disprove" with respect to

research findings. It isalways possible that future research may cast doubt on thevalidity

of any hypothesis or the conclusions from a study.The research was subjected to

following limitations:-

The survey can’t be termed 100% accurate due to lack of time.

The lack of candidates of respondent towards answering the Questionnaire in few

cases may have reduced the accuracy of survey to some extent.

There is more measure to check out whether the information provided by the

consumer is correct or not.

Sample Size can’t be much, due to shortage of time.

CHAPTER-4

A N A L Y S I S & I N T E R P R E T A T I O N

NAME__________________________________1. Gender

Male Female

2. Age

18-20

21-23

23 and above

3 Do you believe in advertising?

Yes No

4 Do you think advertisement is important?

Yes No

5.What is the function of advertisement?

Proffer news

Entertainment form

Transfers belief and values to society

6. From the following products which is your favorite product/s.

Biscuits

Chocolates

Noodles

Health Drinks

Wafers

7. You are familiar with the advertisements of which of the products?

Biscuits

Chocolates

Noodles

Health Drinks

Wafers

8. After watching ad. of any confectionary product, have you ever tried to purchase that product?

Yes No

9 .If yes, then which product you have tried to purchase?

Biscuits

Chocolates

Noodles

Health Drinks

Wafers

9. Which media gets your intention?

Print Radio Television Word of mouth

Hoardings

10. You buy that products because…………….

Free Promotional items

Friend's Influence

Association of favorite character

Want to be like that character

The advertisement was interesting

Curious about the product

It was a familiar product or brand

11 Level of satisfaction regarding the purchase of the product.

Very satisfied

Satisfied

Neutral

Unsatisfied

Very unsatisfied