Prof. Atul Tandan
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Small is
Big Prof. Atul Tandan
18/03/2008
Director MICA
Indian Economy Year
GDP growth rate in %
2003-04
8.4
2004-05
8.3
2005-06
9.2
2006-07
9.7
2007-08
8.7 projected
Source: Business Standard 1/03/08 18/03/2008
The Indian Consumer - Age Age
Total %
Urban %
Rural %
12-14
9.9
8.5
10.5
15-19
13.5
13.6
13.5
20-29
22.8
24.2
22.2
30-39
20.0
20.3
19.9
40-49
14.3
15.2
13.9
50+
19.4
18.1
20.0
18/03/2008
Source: IRS 2007
Market Classification • The Globals: – Who buy the most expensive consumer products
• The Strivers: – Who buy the bulk of all consumer goods marketed in India
• The Seekers: – Who own some durables especially, televisions and small home appliances
• The Aspirers: – Who possess the most basic durables such as transistor radios, bicycles, and aspire for the rest
• The Deprived: – Who are generally not consumers of manufactured goods 18/03/2008
18/03/2008
Consumer Diversity
18/03/2008
Consumer Diversity • India’s economic diversity matches its social diversity • Class is difficult to define in India • Incomes alone don’t define the class • Purchase behaviour is related to cultural conditioning, location, source of income, education and occupation • The salaried prefer the finance packages but the rural rich relying on agriculture make cash purchases 18/03/2008
Small gives “Value” • Small is convenient • Small is affordable – Price • Small is to attract – Non-users – One time users – New users • Small saves the space 18/03/2008
Small is Big • For customers, small packs mean – Affordably priced products – Less investment – Reduced risk of buying
• And for companies, it translates into – Large volumes – Helps address diverse customer segment – Attracts non-users
• Single-serve packs are expected to find more prominence in low penetration categories like health food, baby products and more 18/03/2008
Small is Big – Retail Outlets • 15 million retail outlets spread across India • Stamping the country with the epithet "Shopkeepers' Nation" • More than 80% of these 15 million outlets are from small family businesses
18/03/2008
Source: The Times of India 29/11/2007
Small is Big • Apart from paying less for a quality product, Indians are very sensitive to costs • A large section of sachet users feel that they can restrict the consumption of the product by buying sachets • Give consumers more of a chance to experiment with a larger range of brands • Sachets also grow due to the Indian tendency of top-up shopping, as opposed to buying large quantities at the end of the month 18/03/2008
Sachets: The Next Big (Small) Thing • Mass market phenomenon • 50 paise and Rs 1 are entry level • Sachets are well ensconced in few categories and the trend will a rising one • Increase category penetration of, which extends their appeal beyond just the lower end of the market • Work better with single-use categories with a low frequency of purchase • According to Kakkar, the market is polarised between the LPU consumers and those who prefer bottles 18/03/2008
War within a Brand to get a market share • Small pack vs. Big pack • Sachet vs. small bottle – – – – – – – – –
Nescafe Sunsilk Vaseline Colgate Nivea Ponds Maggi Clinic All Clear Dabur Honey
18/03/2008
Small FMCG • • • • • • •
Shampoo Detergent Hair oil Fairness cream Toothpaste Shaving cream Soap
18/03/2008
Novino
18/03/2008
Small Packs • FMCG companies are focusing more on smaller packs to tap the rural and smaller markets • Small cos use trial packs in newer markets to attract new users
18/03/2008
Small Packs • Small unit packaging – Britannia’s Tiger Glucose Biscuit – Cadbury’s Dairy Milk Chocolate – Parle-G
• Inducing product trial – Coke • Panch matlab chota Coke • Thanda matlab Coca Cola
• Colgate Palmolive distributed free herbal toothpaste for trial use 18/03/2008
Small Packs •
• •
Shampoo of Rs.1000 crore category – 80%t of sales of shampoos from 50 paise and Re 1 pack – CavinKare’s Chik shampoo prices at 50 paise for 8 ml Fairness cream of Rs. 900 crore category Sell almost 40% through sachets – Sachet of 9 gram of fairness cream costs Rs 5 and if you need 3 such packs translates 27grams for Rs 15. You also have a choice of buying a pack of 25 grams for Rs 28
18/03/2008
Small Packs • Sachet sales are strong in hair care and detergent categories • Detergents – Large pack users prefer the convenience of buying only one pack at a time, rather than using a sachet each time to wash clothes. – Low and mid-tier detergent sachet users, sachets act as a great trial-builder to eventually move to large packs" a P&G spokesperson said • Dabur’s Hajmola – Sachets are for a younger – Bottles are primarily a medicinal offering bought by older people 18/03/2008
Small Packs • Cadbury is pushing Bournvita at Rs 3.50 – To taste the product • Starting price point for Cadbury Gems for instance is Rs. 1 for a pack of just four units – The lower price unit (LPU) at the company are growing at a healthy 30%
• Frito Lays considers it, – – – –
The Rs 5 and sub-Rs 5 segment Offerings between Rs 5 and Rs 2 for namkeens Rs 3 for Kurkure, co-exist with larger packs. The number of transactions according to Anand (MD) is almost 50-50
18/03/2008
Cadbury
18/03/2008
Affordable Products • Nestle’s brands – Maggi at Rs. 5 – KitKat at Rs. 2
• CavinKare’s brand – Chik at Rs. 17 for 100 ml.
• Godrej Consumer Product • Cinthol, Fairglow and Godrej No. 1 (50 gm at Rs.5)
• Hamam at Rs. 3.25 18/03/2008
Hamam
18/03/2008
Sachet, Not Striped Urban Contribution of Small Packs (% of Sales) Categories
1998
2001
2007 (est.)
Toothpowder
35.7
42.9
57
Talcum Powder
13
18.1
28
Hair Oils
9.8
11.5
15
Coffee
8.3
13.3
23.3
All Biscuits
1.4
4.4
10
Coconut Oil
4
7.9
16
Toothpaste
0.9
2.7
6.2
Mosquito Rep.
1.3
4.1
9.7
18/03/2008
Source: KEIC
Small is big Rural Contribution of Small Packs (% of Sales) Categories
1998
2001
2007 (est.)
Toothpowder
49.8
65.8
95
Talcum Powder
22.3
31.6
49
Hair Oils
16.4
18.3
22.1
Coffee
19.6
37.8
73
All Biscuits
1.5
5.2
12.6
Coconut Oil
6.4
13.1
26.5
Toothpaste
0.8
3.4
8.5
Mosquito Rep.
2.8
4.7
9
18/03/2008
Source: KEIC
Pepsodent
18/03/2008
Colgate
18/03/2008
Small Packs - Cosmetics • 'look good' products – Nail polish – Lipstick – Same penetration in metros and non-metros – Close to 30% of the new growth in these categories comes from less than 1 lakh towns
18/03/2008
Small is Big • New generation foods – (cheese, noodles, cornflakes) are growing; – 36% of the growth in branded cornflakes – 42% of the growth in noodles comes from small towns!
• However snacking (chips and colas) remains largely a metro phenomenon
18/03/2008
Source: The Economic Times 16/07/2003
Small is Dangerous Tobacco - Gutkha • • • •
Turnover of close to Rs 25,000 crore 46.5% men 13.8% women use tobacco 250 million people use tobacco products – 16% cigarettes smokers – 44% bidis – rest use gutkha, mishri (roasted black tobacco powder applied to the gums)
18/03/2008
Small is Big - Guthka
18/03/2008
Manikchand
18/03/2008
Rajni Gandha
18/03/2008
Durable • Small towns may be big in terms of their market potential and may not be as far behind the big metros as we think • Non-metros are fast catching up with metros in penetration of – 'basic' durables • Colour television, • Refrigerator 18/03/2008
Source: NRS
High-end durables catch small towns' fancy •
According to ORG-GFK estimates, – Towns with a population < 1 lakh Product Name
Towns Contribution in % Product Category Growth in %
Flat TV
33
214
Frost Free Refrigerator
28
31
Fully Auto. Wash. Mach. 20
54
•Growing disposable incomes in smaller towns •Small price packs the most evident ploy to achieve these •Pick-up in demand from smaller markets and rural areas
18/03/2008
Source: The Economic Times 16/03/2005
Nano Samsung AC
18/03/2008
One Time Use – Pooja Samagri
18/03/2008
Hospitality – Ginger Hotel • Smart Basics™ – Signifies simplicity – Convenience – Informality – Style – Warmth – Modernity – Affordability 18/03/2008
A Tata Enterprise
Hospitality • One time use – – – – – – – – – – – –
Soap Shampoo After save lotion Body lotion cream Toothpaste Shaving cream Face wash Hair oil Sugar Milk powder Tea Coffee
18/03/2008
Currently, India has some 1,975 hotels with over one lakh rooms According to a report by HVS International, a total of 1,02,000 rooms will be added in the next five years in the Indian hotel industry
Source: The Economic Times 2/4/07
Small requirements in Aviation Industry • • • • • • • • • • •
Small mineral water Toffee Three years ago, there were 130 commercial Chocolate aircraft, and the number has now swelled to 350 Mouth pick The sector is poised to attract an investment of $200 billion. Increased fleet will enable Salt approximately 2,000 commercial flights every day Sugar by 2020. Jam Milk powder Tea Coffee Butter
18/03/2008
Source: Business Line 22/11/07
Small is Beautiful – Mass Market Nano by Tata – – – –
1 lakh Milestone for auto industry Aspirations of India’s rising middle class Solution to urban transport problems • Congestion • Environmental impact
• Bajaj - Renault • Electric car by Field Marshal Group, Rajkot • Rs. 99,000 18/03/2008
Tata
Bajaj - Renault
Small Size - Maruti
18/03/2008
SAS Tractor 30hp
18/03/2008
Engine/Lubricant Oil • Key players – Castrol India Ltd – Indian Oil Corporation – Bharat Petroleum Corporation Ltd – Hindustan Petroleum Corporation
• Petrol Pumps keep the engine oil not to lose the customer
18/03/2008
Lubricant
18/03/2008
Cricket • Test match – five days
• One Day Cricket – 50:50 over
• Three hours – 20:20 over
• Cricketor – Sunil Gavaskar – Sachin Tendulkar 18/03/2008
IT - Wave of Miniaturisation • Intel Corporation – Latest brand of mini microprocessor chip • Intel Atom • Intel Centrino Atom – Low-cost classmates PC will begin using the Intel Atom
• Apple iPod nano
18/03/2008
World’s Smallest Gadgets • Homes are becoming king size but lifestyle gadgets can be fitted into a doll’s house • Gadgets fit into palm, briefcase and handbags • Price factor makes people smile – Cheapest laptop • MiLeap X Rs. 13,990 18/03/2008
World’s Smallest Gadgets • Worlds Smallest Digital Camera – Qualia 016(69 x 16.8 x 24 mm) – Two mega pixel images – Zoom facility – Store images on its memory stick – Flash – Four picture in rapid succession and combine into one image – Doesn’t require a manual instruction 18/03/2008
Sony
Conclusion Small is smart Small is future Small is for penetration and growth
18/03/2008
Thank You E-mail: [email protected] Mobile: +91-98250-70915
18/03/2008
Prof.AtulTandan Director, MICA
18/03/2008
Big Prof. Atul Tandan
18/03/2008
Director MICA
Indian Economy Year
GDP growth rate in %
2003-04
8.4
2004-05
8.3
2005-06
9.2
2006-07
9.7
2007-08
8.7 projected
Source: Business Standard 1/03/08 18/03/2008
The Indian Consumer - Age Age
Total %
Urban %
Rural %
12-14
9.9
8.5
10.5
15-19
13.5
13.6
13.5
20-29
22.8
24.2
22.2
30-39
20.0
20.3
19.9
40-49
14.3
15.2
13.9
50+
19.4
18.1
20.0
18/03/2008
Source: IRS 2007
Market Classification • The Globals: – Who buy the most expensive consumer products
• The Strivers: – Who buy the bulk of all consumer goods marketed in India
• The Seekers: – Who own some durables especially, televisions and small home appliances
• The Aspirers: – Who possess the most basic durables such as transistor radios, bicycles, and aspire for the rest
• The Deprived: – Who are generally not consumers of manufactured goods 18/03/2008
18/03/2008
Consumer Diversity
18/03/2008
Consumer Diversity • India’s economic diversity matches its social diversity • Class is difficult to define in India • Incomes alone don’t define the class • Purchase behaviour is related to cultural conditioning, location, source of income, education and occupation • The salaried prefer the finance packages but the rural rich relying on agriculture make cash purchases 18/03/2008
Small gives “Value” • Small is convenient • Small is affordable – Price • Small is to attract – Non-users – One time users – New users • Small saves the space 18/03/2008
Small is Big • For customers, small packs mean – Affordably priced products – Less investment – Reduced risk of buying
• And for companies, it translates into – Large volumes – Helps address diverse customer segment – Attracts non-users
• Single-serve packs are expected to find more prominence in low penetration categories like health food, baby products and more 18/03/2008
Small is Big – Retail Outlets • 15 million retail outlets spread across India • Stamping the country with the epithet "Shopkeepers' Nation" • More than 80% of these 15 million outlets are from small family businesses
18/03/2008
Source: The Times of India 29/11/2007
Small is Big • Apart from paying less for a quality product, Indians are very sensitive to costs • A large section of sachet users feel that they can restrict the consumption of the product by buying sachets • Give consumers more of a chance to experiment with a larger range of brands • Sachets also grow due to the Indian tendency of top-up shopping, as opposed to buying large quantities at the end of the month 18/03/2008
Sachets: The Next Big (Small) Thing • Mass market phenomenon • 50 paise and Rs 1 are entry level • Sachets are well ensconced in few categories and the trend will a rising one • Increase category penetration of, which extends their appeal beyond just the lower end of the market • Work better with single-use categories with a low frequency of purchase • According to Kakkar, the market is polarised between the LPU consumers and those who prefer bottles 18/03/2008
War within a Brand to get a market share • Small pack vs. Big pack • Sachet vs. small bottle – – – – – – – – –
Nescafe Sunsilk Vaseline Colgate Nivea Ponds Maggi Clinic All Clear Dabur Honey
18/03/2008
Small FMCG • • • • • • •
Shampoo Detergent Hair oil Fairness cream Toothpaste Shaving cream Soap
18/03/2008
Novino
18/03/2008
Small Packs • FMCG companies are focusing more on smaller packs to tap the rural and smaller markets • Small cos use trial packs in newer markets to attract new users
18/03/2008
Small Packs • Small unit packaging – Britannia’s Tiger Glucose Biscuit – Cadbury’s Dairy Milk Chocolate – Parle-G
• Inducing product trial – Coke • Panch matlab chota Coke • Thanda matlab Coca Cola
• Colgate Palmolive distributed free herbal toothpaste for trial use 18/03/2008
Small Packs •
• •
Shampoo of Rs.1000 crore category – 80%t of sales of shampoos from 50 paise and Re 1 pack – CavinKare’s Chik shampoo prices at 50 paise for 8 ml Fairness cream of Rs. 900 crore category Sell almost 40% through sachets – Sachet of 9 gram of fairness cream costs Rs 5 and if you need 3 such packs translates 27grams for Rs 15. You also have a choice of buying a pack of 25 grams for Rs 28
18/03/2008
Small Packs • Sachet sales are strong in hair care and detergent categories • Detergents – Large pack users prefer the convenience of buying only one pack at a time, rather than using a sachet each time to wash clothes. – Low and mid-tier detergent sachet users, sachets act as a great trial-builder to eventually move to large packs" a P&G spokesperson said • Dabur’s Hajmola – Sachets are for a younger – Bottles are primarily a medicinal offering bought by older people 18/03/2008
Small Packs • Cadbury is pushing Bournvita at Rs 3.50 – To taste the product • Starting price point for Cadbury Gems for instance is Rs. 1 for a pack of just four units – The lower price unit (LPU) at the company are growing at a healthy 30%
• Frito Lays considers it, – – – –
The Rs 5 and sub-Rs 5 segment Offerings between Rs 5 and Rs 2 for namkeens Rs 3 for Kurkure, co-exist with larger packs. The number of transactions according to Anand (MD) is almost 50-50
18/03/2008
Cadbury
18/03/2008
Affordable Products • Nestle’s brands – Maggi at Rs. 5 – KitKat at Rs. 2
• CavinKare’s brand – Chik at Rs. 17 for 100 ml.
• Godrej Consumer Product • Cinthol, Fairglow and Godrej No. 1 (50 gm at Rs.5)
• Hamam at Rs. 3.25 18/03/2008
Hamam
18/03/2008
Sachet, Not Striped Urban Contribution of Small Packs (% of Sales) Categories
1998
2001
2007 (est.)
Toothpowder
35.7
42.9
57
Talcum Powder
13
18.1
28
Hair Oils
9.8
11.5
15
Coffee
8.3
13.3
23.3
All Biscuits
1.4
4.4
10
Coconut Oil
4
7.9
16
Toothpaste
0.9
2.7
6.2
Mosquito Rep.
1.3
4.1
9.7
18/03/2008
Source: KEIC
Small is big Rural Contribution of Small Packs (% of Sales) Categories
1998
2001
2007 (est.)
Toothpowder
49.8
65.8
95
Talcum Powder
22.3
31.6
49
Hair Oils
16.4
18.3
22.1
Coffee
19.6
37.8
73
All Biscuits
1.5
5.2
12.6
Coconut Oil
6.4
13.1
26.5
Toothpaste
0.8
3.4
8.5
Mosquito Rep.
2.8
4.7
9
18/03/2008
Source: KEIC
Pepsodent
18/03/2008
Colgate
18/03/2008
Small Packs - Cosmetics • 'look good' products – Nail polish – Lipstick – Same penetration in metros and non-metros – Close to 30% of the new growth in these categories comes from less than 1 lakh towns
18/03/2008
Small is Big • New generation foods – (cheese, noodles, cornflakes) are growing; – 36% of the growth in branded cornflakes – 42% of the growth in noodles comes from small towns!
• However snacking (chips and colas) remains largely a metro phenomenon
18/03/2008
Source: The Economic Times 16/07/2003
Small is Dangerous Tobacco - Gutkha • • • •
Turnover of close to Rs 25,000 crore 46.5% men 13.8% women use tobacco 250 million people use tobacco products – 16% cigarettes smokers – 44% bidis – rest use gutkha, mishri (roasted black tobacco powder applied to the gums)
18/03/2008
Small is Big - Guthka
18/03/2008
Manikchand
18/03/2008
Rajni Gandha
18/03/2008
Durable • Small towns may be big in terms of their market potential and may not be as far behind the big metros as we think • Non-metros are fast catching up with metros in penetration of – 'basic' durables • Colour television, • Refrigerator 18/03/2008
Source: NRS
High-end durables catch small towns' fancy •
According to ORG-GFK estimates, – Towns with a population < 1 lakh Product Name
Towns Contribution in % Product Category Growth in %
Flat TV
33
214
Frost Free Refrigerator
28
31
Fully Auto. Wash. Mach. 20
54
•Growing disposable incomes in smaller towns •Small price packs the most evident ploy to achieve these •Pick-up in demand from smaller markets and rural areas
18/03/2008
Source: The Economic Times 16/03/2005
Nano Samsung AC
18/03/2008
One Time Use – Pooja Samagri
18/03/2008
Hospitality – Ginger Hotel • Smart Basics™ – Signifies simplicity – Convenience – Informality – Style – Warmth – Modernity – Affordability 18/03/2008
A Tata Enterprise
Hospitality • One time use – – – – – – – – – – – –
Soap Shampoo After save lotion Body lotion cream Toothpaste Shaving cream Face wash Hair oil Sugar Milk powder Tea Coffee
18/03/2008
Currently, India has some 1,975 hotels with over one lakh rooms According to a report by HVS International, a total of 1,02,000 rooms will be added in the next five years in the Indian hotel industry
Source: The Economic Times 2/4/07
Small requirements in Aviation Industry • • • • • • • • • • •
Small mineral water Toffee Three years ago, there were 130 commercial Chocolate aircraft, and the number has now swelled to 350 Mouth pick The sector is poised to attract an investment of $200 billion. Increased fleet will enable Salt approximately 2,000 commercial flights every day Sugar by 2020. Jam Milk powder Tea Coffee Butter
18/03/2008
Source: Business Line 22/11/07
Small is Beautiful – Mass Market Nano by Tata – – – –
1 lakh Milestone for auto industry Aspirations of India’s rising middle class Solution to urban transport problems • Congestion • Environmental impact
• Bajaj - Renault • Electric car by Field Marshal Group, Rajkot • Rs. 99,000 18/03/2008
Tata
Bajaj - Renault
Small Size - Maruti
18/03/2008
SAS Tractor 30hp
18/03/2008
Engine/Lubricant Oil • Key players – Castrol India Ltd – Indian Oil Corporation – Bharat Petroleum Corporation Ltd – Hindustan Petroleum Corporation
• Petrol Pumps keep the engine oil not to lose the customer
18/03/2008
Lubricant
18/03/2008
Cricket • Test match – five days
• One Day Cricket – 50:50 over
• Three hours – 20:20 over
• Cricketor – Sunil Gavaskar – Sachin Tendulkar 18/03/2008
IT - Wave of Miniaturisation • Intel Corporation – Latest brand of mini microprocessor chip • Intel Atom • Intel Centrino Atom – Low-cost classmates PC will begin using the Intel Atom
• Apple iPod nano
18/03/2008
World’s Smallest Gadgets • Homes are becoming king size but lifestyle gadgets can be fitted into a doll’s house • Gadgets fit into palm, briefcase and handbags • Price factor makes people smile – Cheapest laptop • MiLeap X Rs. 13,990 18/03/2008
World’s Smallest Gadgets • Worlds Smallest Digital Camera – Qualia 016(69 x 16.8 x 24 mm) – Two mega pixel images – Zoom facility – Store images on its memory stick – Flash – Four picture in rapid succession and combine into one image – Doesn’t require a manual instruction 18/03/2008
Sony
Conclusion Small is smart Small is future Small is for penetration and growth
18/03/2008
Thank You E-mail: [email protected] Mobile: +91-98250-70915
18/03/2008
Prof.AtulTandan Director, MICA
18/03/2008
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