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Guest Talk on the FMCG industry by Mr Balaji Prakash, Business Head and GM, Marketing, Sales at CavinKare.

On 27th July, Mr. Balaji Prakash, Business Head and GM, Marketing, Sales at CavinKare bestowed his presence to deliver a guest lecture to PGP-I and II students. Mr. Balaji is Business Head with 15 years of experience in FMCG industry across personal care, confectionery, beverage and dairy markets. He is currently heading the beverage and dairy business for CavinKare handling sales, marketing and operations functions with profit center responsibility.

Mr. Balaji commenced with giving a discerning definition of FMCG by explaining each word of the abbreviation in great detail based on his experience of working so many years in this industry. The word Fast in FMCG denotes fast in speed, change and time. According to Mr. Balaji, fast is not just from sales point of view, but the whole market and industry changes so fast that in order to survive organizations need to keep pace. The consumers’ needs continually evolve and there is no time to stop but change. The only industry faster than FMCG is telecom industry. The marketers, retailers, even supply chain guys have no time to spare. The word moving signifies shifting, evolving and logistics. Today products, delivery mechanisms and the benefits are constantly changing. The last 8-9 years have been extremely rapid in consumer needs evolution. He consumers keep shifting between brands, the brands keep shifting and products keep shifting in this industry. And most importantly logistics can be a complete nightmare unless done right. Due to the complexities involved in supply chain and distribution, one needs to ensure that it works very well so that the customer does not walk out. Marketing is talking one to many which has its own complications and implications. The complication can be that not everybody understands what a brand wants to convey to them and the implication is that segment market is divided as finely as possible. This makes FMCG industry most exciting and interesting to work in also because you are part of consumers’ everyday life. The word consumer connotes the end point or actual users who consume the product. And lastly, Goods implies the materials or the physical presence.

Throwing light on why there is so much hype about India and FMCG, Mr. Balaji highlighted that India is country of population of more than 1 billion. It has the fastest changing lifestyle adoption pace. Indians are generally more flexible than others and the rate of adoption of new and changing trends is very high. Another critical reason is vast availability of cheap labor. There is also growing “future consumers” and high numbers of “potential consumers”. A very low penetration of branded products creates a huge untapped potential. Future spending opportunity is rising both for Residential Indians as well as non-residential Indians. The FMCG industry represents nearly 2-5% of the country’s GDP which is expected to rise further. The size has tripled in the last 10 years and in last 5 years the compound annual growth rate has been 17%. Rural India accounts for more than 700 million consumers or 70% of Indian population and accounts for 50% of the total FMCG market. Food and personal care together make up two-thirds of the sector’s revenue. Cumulative FDI inflows into India from April 2000 to April 2013 in the food processing sector stood at 9000 crores while the soaps, cosmetics and toiletries at 3115.5 crores. FMCG sector accounted for 1.9% of the nation’s total FDI.

Defining the categories in FMCG, Mr Balaji explained that the categories in FMCG can be divided into personal care, household care, food, beverages and convenience products. Under personal care, the sub heads are hair care, skin care, colors and cosmetics. The household care can be categorized into fabric care, domestic care and personal hygiene. The food category has two segments which are emerging viz RTE or Ready to eat and RTC or Ready to cook. Beverages can be hot or cold. The convenience products are those like batteries, pre-paid cards and even internet packages.

Illustrating the special features of FMCG, Mr Balaji said that marketing is one to many. This makes communication very specialized area as it is not possible to check if everybody understands what the marketer actually wants to say. It is also most of the times an emotional buying decision for FMCG, durables, non-durables rather than being rational decision making process. For this, Brand managers work in great detail towards the motto part which makes them very integral to the organization. Consumer behavior is always flirtatious which keeps brand managers on their toes as there is always a possibility of losing customer to someone else. Sustaining relevance is important i.e. staying in the consideration set of consumers. Retaining existing customers is important. For this reason brands keep copying products. And there is constant need to innovate. Organizations, to go the next level need small innovations that can make big difference. He further explained, there are two ways to grow the existing business. First can be to expand the consumer base and second to retain existing consumers by giving better products. Since the future of growth lies in the hands of marketers, they are also referred to as the captains of the ship as they decide which way to go and which way to take. The reach to customers is important and the products should be at consumers’ arm length. Company needs to constantly increase its reach and progress relentlessly. Companies should constantly upgrade customers to next order or higher order benefits. FMCG has a multiple and complex structure which is beneficial as it requires human intervention in such case and people with career in sales are required. This juggernaut is very difficult to manage and the complexity and complications at every level calls for different skill sets. For this reason sales and marketing are very different domains. There is also need for channel partner collaboration which can be explained through IIC concept. IIC stands for investment capacity, involved in your business and Credit to market as not everything can be sold on cash.
From supply chain perspective, explaining the special features Mr Balaji quipped efficiency is the name of the game. Various factors like vendor management, cost management, inventory management, working capital management and productivity improvement are taken to consideration.

The opportunities in this field for the budding managers are enormous. Conceptual skills are needed at every point and level. Managers need to analyze and make decisions. Seemingly unconnected data has to be connected and there are situations where data may not be connected but one need to connect and come to conclusion. Forecasting and envisioning capabilities are important and lastly motivation and leadership qualities are essential. The marketers/managers play key role in value creation, thinking, direction and leading and above all creating the future.

Concluding the enlightening lecture, Mr. Balaji listed some dos and don’ts while making a career choice. Managers should choose what they like and match and develop required skills and competencies accordingly. They should stay focused on the chosen career and in one particular sector to become an expert of the domain. Understanding organization and industry expectations is crucial. And track should be kept of progress and responsibilities and not designation. Some of the don’ts can be like not choosing what is popular or swaying from one sector to another as every sector has its own challenges. Managers shouldn’t go after money and rather work on their skills and experience which brings money. Clearing students’ doubts Mr. Balaji took a barrage of questions and ended on a note of invigorating the students by encouraging them chase their dreams and enjoying the chase at same time.From supply chain perspective, explaining the special features Mr Balaji quipped efficiency is the name of the game. Various factors like vendor management, cost management, inventory management, working capital management and productivity improvement are taken to consideration.

Jul 2014