Home >> Marketing >> Article

Marketers’ 3Ps mantra to tackle inflation: Nielsen

09-March-2011
Font Size   16
Marketers’ 3Ps mantra to tackle inflation: Nielsen

Despite an inflationary environment, India’s consumer spending on fast moving consumer goods (FMCGs) has been stimulated with the triple-play of aggressive promotional offers, smaller pack sizes and price discounts across categories. The organised FMCG market’s resultant value growth of 13 per cent is attributed to this and has outpaced the underlying volume growth of 8.2 per cent. This indicates a steady and stable demand for branded, packaged fast moving goods.

Impact on branded, packaged foods – Essentials Vs Impulse
Rising commodity prices have, however, impacted food categories much more than non-food categories. This is evident from the fact that food categories have grown faster in value terms while volume growth has been relatively slower. In non-food categories, however, both value and volume growth has moved in lockstep at around 8 per cent over the last year.

Within foods, two types of categories were more affected by price increases than others. Non-essential categories like jam/ jellies and squash/ cordials saw high value but low volume growth, and a slowdown in consumption during 2010 due to steady price increases. They were accompanied by milk-based categories like butter/ margarine and milk powder, which saw manufacturers step up prices to protect margins against rising input costs. These early signs indicate that if inflationary pressures don’t ease, discretionary spending on these categories is likely to shrink further.

Surprisingly, even essential milk-based categories like baby cereals and infant formula saw volumes stagnate as prices gained momentum. An increased reliance on solid foods and an earlier shift to liquid milk from specially formulated milk/ cereals are typical substitutes to combat inflationary pressures.

Other essential categories were not entirely immune to inflation either. Categories like packaged atta (wheat flour) and packaged rice, etc., also experienced sluggish volume growth as consumers temporarily resorted to unbranded alternatives.

Impulse takes on inflation
Small treats continued to be important to the Indian consumer at a time when inflation cut into bigger items of discretionary expenditure like eating out, out of home entertainment, etc. Impulse categories like biscuits, namkeens (salty snacks), and chocolates continued to attract consumer purchases. Manufacturer initiatives for these categories drove growth via small packs (small per transaction cost), product innovations (baked alternatives, new consumption occasions, and attractive promotions) and increased availability. This bodes well at a time when economic optimism and inflationary pressures appear to be colliding.

Non-food categories hold their ground
Amongst the top non-food categories like washing powder, shampoo, and toilet soap there seems to be no evidence of inflation’s adverse affect as robust topline growth continued unabated. These items have long become a part of the ‘must-buys’ in the consumer basket and remained unaffected overall with possible selective purchase of more cost-effective branded alternatives as well as greater responsiveness to promo offers. The lead players in these categories have also stepped up price activation by using value promotions and re-launching at new price points.

Interestingly, lifestyle/ personal grooming categories like hair conditioners, hair dyes, hair remover, liquid soap, etc., don’t seem to have been as affected by inflation. Like impulse foods, these too serve as a cost-effective indulgence. Baby diapers and sanitary napkins, too, stayed unaffected with help from the increased availability of small pack sizes and cheaper brand variants for consumers unwilling to compromise their health and well-being.

Interestingly, more ‘external’ manifestations of indulgence and aesthetic expenditure like nail enamel, lipsticks, etc., slowed down, indicating a temporary adjustment in the purchase basket to accommodate items that have witnessed stronger price growth. Clearly, consumers seem to be differentiating between products that represent ‘caring’, for example conditioners, and those that are purely cosmetic.

The year 2011 is set to see a surge in the number of new launches and the brands that innovate in terms of price, pack size and promotional efficacy will garner a greater share of the growth opportunity that India’s consumer markets presents.

 

Tags

Varun Raina, Marketing Manager, Airbnb India speaks to exchange4media about the successful #LiveThere campaign and how Bollywood helps them connect with its young consumer

Tim Castree is all praises for his team in India and trusts it to be a result of “an excellent execution of agency’s global strategy” headed by Kartik Sharma

Siddharth Dabhade says Criteo’s technology allows brands to engage with shoppers, create relevant experience on retail apps, thereby driving sales and profits

Shantanu Gangane says OTT platform Viu plans around 20+ originals and is all set to enter the Tamil market with a mix of syndicated and original content

right
left
OFF THE CUFF HAS JOURNALIST ARUN SHOURIE IN CONVERSATION WITH SHEKHAR GUPTA IN MUMBAI IAA HOSTS FIRST INDIAA REGIONAL AWARDS (TELUGU) IN HYDERABAD BREAK THE CEILING TOUCH THE SKY 2018 SEES OVERWHELMING INDUSTRY PARTICIPATION 10TH EDITION OF ABC EUREKA AWARDS IN MUMBAI CELEBRATES WORK OF PARTNER AGENCIES EMINENT JURY PICKS LOUDEST’S 100 MOST POWERFUL INDIAN MUSIC BUSINESS LEADERS MODE LOFT BY SABGROUP LAUNCHES SIGNATURE MENSWEAR POWER DRESSING CLOTHING LINE TOP MARKETERS DISCUSS ART AND SCIENCE OF EFFECTIVE LISTENING @PITCH CMO SUMMIT 2018, DELHI THIRD SEASON OF ‘INDIA’S TOP DIGITAL PLANNERS’ RECOGNIZES EXCELLENCE IN THE DIGITAL INDUSTRY WOMEN ECONOMIC FORUM 2018 SEES DISTINGUISHED GLOBAL PERSONALITIES IN ATTENDANCE PEPPER CREATIVE AWARDS 2018 RECOGNIZE THE BEST IN ADVERTISING IN SOUTH INDIA RADIO CITY’S POWER OF RADIO MEET HOSTS TOP ADVERTISING INDUSTRY LEADERS TOP INDUSTRY PERSONALITIES ATTEND ZOOM-MYNTRA EVENING TO CELEBRATE THEIR PARTNERSHIP LEADING MARKETERS, EXPERTS SHARE INSIGHTS ON DIGITAL TRANSFORMATION @ADOBE SYMPOSIUM IN MUMBAI NICKELODEON TRADE PARTY SEES MARKETING INDUSTRY LEADERS AND THEIR FAMILIES IN ATTENDANCE GOLDEN MIKES RADIO ADVERTISING AWARDS 2018 RECOGNIZE INDUSTRY’S MOST DESERVING ACHIEVERS AIMA MANAGING INDIA AWARDS HONOUR THE BEST IN THE INDUSTRY BW BUSINESSWORLD’S GREAT INDIA DEBATE BRINGS TOGETHER INTELLECTUALS ACROSS INDUSTRY SECTORS BW BUSINESSWORLD SMART CITIES CONCLAVE PATNA 2018 SEES EMINENT INDUSTRY LEADERS IN ATTENDANCE EMINENT JURY PICKS WINNERS OF GOLDEN MIKES RADIO ADVERTISING AWARDS MADDYS 2018 SEE TOP ADVERTISING AND MARKETING INDUSTRY LEADERS IN ATTENDANCE

Radio Mirchi maintained its top spot while Fever FM replaced Big FM at the second spot in Kolkata

Singh explains why marketers should focus more on maintaining the core essence of a brand and not just innovations

Venkat brings with him over 20 years of extensive experience of working in media, creative, cultural and knowledge industries on several international projects in over 30 countries.