Fast-moving consumer goods
Fast-Moving Consumer Goods (FMCG) are products that are sold quickly and at a relatively low cost. Examples include non-durable household goods such as packaged foods, beverages, toiletries, over-the-counter drugs, and other consumables.
Many fast-moving consumer goods have a short shelf life, either as a result of high consumer demand or as the result of fast deterioration. Some FMCGs, such as meats, fruits, vegetables, dairy products, and baked goods are highly perishable. Other goods, such as pre-packaged foods, soft drinks, candies, and toiletries have high turnover rates. Sales are sometimes influenced by holiday and/or seasonal periods and also by the discounts offered.
Packaging is critical for FMCGs. To become successful in the highly dynamic and innovative FMCG segment, a company not only has to be acquainted with the consumer, brands, and logistics, but also, it has to have a sound understanding of packaging and product promotion. The packaging has to be both hygienic and customer-attracting. Logistics and distribution systems often require secondary and tertiary packaging to maximize efficiency. Unit or primary packaging protects products and extends shelf life while providing product information to consumers
The profit margin on FMCG products can be relatively small, but they are generally sold in large quantities; thus, the cumulative profit on such products can be substantial. According to BASES, 84% of professionals working for fast-moving consumer goods are under more pressure to quickly bring new products to the market than they were five or ten years ago. With this in mind, 47% of those surveyed confessed that product testing suffers most when deadlines are accelerated.
The growth of the internet over the past quarter century and the rise of the brand community phenomenon have contributed greatly to the demand for FMCGs. For example, according to German research group AGOF's internet facts, 73% of Germany's population is online. Additionally, 83.7% of internet users claim to use the web to search for information and 68.3% to shop online. However, most FMCGs are not ordered online as most consumers opt for the convenience of nearby brick and mortar stores for products in this category.
FMCGs are present in Monopolistic Competitive Markets (like that of soaps and shampoo) where product differentiation plays a major role in determining sales and profits.
- From the consumer perspective
- Frequent purchases
- Low engagement (little or no effort to choose the item)
- Low prices
- Short shelf life
- Rapid consumption
- Price Comparison over online purchase by customer.
- From the marketer perspective
Consumers in rural areas typically purchase goods from nearby towns and villages. Recently, there has been a shift in consumer purchase behavior towards purchasing locally, that has prompted the need for better local promotional efforts to generate brand awareness in small towns. FMCG's play a large part in the economy, as inelastic products that touch every part of consumer life in one way or another. Businesses that supply FMCG's to a rural community can help provide employment opportunities, as well as drive down the cost of such products in those rural areas. For instance, the FMCG sector in India is the 4th largest sector in its economy and generates employment for more than 3 million people in downstream activities.
The retail market for FMCG's includes businesses in the following International Standard Industrial Classification (ISIC) (Revision 3) categories:
- ISIC 5211 retail sales in non-specialized stores
- ISIC 5219 other retail sales in non-specialized stores
- ISIC 5220 retail sales of food, beverages and tobacco in specialized stores
- ISIC 5231 retail sales of pharmaceutical and medical goods, cosmetic and toilet articles
- ISIC 5251 retail sales via mail order houses
- ISIC 5252 retail sales via stalls and markets
- ISIC 5259 wholesale goods
- ISIC 5269 wholesale medical prescriptions
Supplier industries for FMCGs include:
- 1512 fish and fish products
- 1513 fruit and vegetables
- 1514 vegetable and animal oils and fats
- 1520 dairy products
- 1531 grain mill products
- 1532 starches and starch products
- 1533 animal feeds
- 1541 bakery products
- 1542 sugar
- 1543 cocoa, chocolate and sugar confectionery
- 1544 macaroni, noodles, couscous
- 1549 other food products
- 1551 spirits, ethyl alcohol
- 1552 wines
- 1553 malt liquors and malt
- 1554 soft drinks, mineral waters
- 1600 tobacco products
- 2101 pulp, paper and paperboard
- 2102 corrugated paper, containers
- 2109 other articles of paper and paperboard
- 2424 soap and detergents, cleaning preparations, perfumes
- 2430 men's and women's inner garments, shaving gels, deodorants , Personal care , Home Care
Fast-moving consumer electronics
Fast-moving consumer electronics are typically low-priced generic items with many comparable alternatives offering similar functionality. Examples of consumer electronics include: mobile phones, MP3 players, game players, earphones, headphones, OTG cables, and digital disposable cameras.
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