FMCG micro-branding in top gear

FMCG micro-branding in top gear

Author | Source: Business Line | Tuesday, Apr 25,2006 6:05 AM

FMCG micro-branding in top gear

With MRPs running so low, even poor people can try these products

Think a one-minute trunk call is all you can buy for a rupee? You're wrong. A rupee may not get you a bus ticket, or a cup of tea. But it can buy you some hair oil, or even a sachet of a super brand shampoo.

Double your outlay, and you will find branded bath soaps, detergents, pain balms and a much wider array of shampoos within your reach, including Procter and Gamble's Pantene, and HLL's Sunsilk. For five rupees, you can also buy yourself a packet of Lays chips, Dairy Milk/Gems/5 Star chocolates, and small packs of Colgate toothpaste, Ponds Sandal Talc and Fair and Lovely `fairness' cream.

This means that reports of some bath soaps, detergents, toothpastes and shampoos having been able to achieve `70 per cent rural penetration' may not be all that fantastic after all. With MRPs running so low, it is likely that all but the poorest 10 per cent of households have given these products a try. Though the percentage of daily users would be smaller for lower and middle-income groups, a great many more would regularly use, say, powders and face creams at weekly, fortnightly or monthly intervals. So, the number of users in the lower and middle income groups can outnumber users in the upper income groups more than enough to compensate for lower per capita spend. This can make low income customers critical to the growth prospects of many brands. After all, there is a limit to the amount of detergents the rich will consume, no matter how rich they get. Margins, too, are sometimes very much higher for products sold to lower income groups. For example, the 15-gm pack of Lays Chips (at Rs 5) is priced 67 per cent higher than the the 100-gm pack (at Rs 20). Similarly, the detergent in a Rs 2 Surf Excel sachet is priced at a premium of 30 per cent.

Another interesting thing about micro-branding is the extensive use of `spin'. Small shampoo sachets, for instance, are available not only for Clinic All Clear (the anti-dandruff shampoo) but also for Pantene Strong Hair and Sunsilk Black Shine.

Though some items cost the poor more than what they cost the rich, in other cases, such as bath soaps, hair oil and Amrutanjan, low-income groups can access products at about the same price as the rich. As shown in the table, toothpaste and face powders cost them a little less. And in shampoos and face creams they actually get `discounts' of 40 to 60 per cent.

One last thing. In the case of discounts on shampoos and face creams, it seems as if FMCG majors charge the rich more rather than charging the poor less. How much more depends on what they feel they can get away with.

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