A COMPREHENSIVE PROJECT REPORT

ON
Consumer perception towards pricing strategies in FMCG industry

Submitted to

Faculty Of Management Studies

Submitted in partial fulfilment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

In

Parul University

UNDER THE GUIDANCE OF

DR. JAYPRAKASH LAMODIA

Submitted by

Vijeta Anand 2306142000086

MBA SEMESTER III/IV

Faculty Of Management and Studies

MBA PROGRAMME

Parul University, Limda, waghodia

October, 2023-2024

1
 Student Declaration

I, VIJETA ANAND, hereby declare that the report for Comprehensive Project entitled “consumer
perception towards pricing strategies in FMCG” is a result of our own work publications, references,
if any,

Have been duly acknowledged.

Place: Signature

Vijeta Anand
Date
2
 Institute Certificate

Certified that this comprehensive project report Titled “consumer perception towards pricing
strategy in FMCG industry” is the bonafide work of Ms. VIJETA ANAND (enrollment no.
2306142000086), who carried out the research under my supervision. I also certify further, that to the
best of knowledge the work reported herein does not form part of any other project report or
dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or
any other candidate.

Signature of the Guide

Dr. Jayaprakash Lamodia
Assistant Professor

(Certificate is to be counter signed by the Director/HOD)

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 PREFACE

In this research, I embarked on a journey that required the support and guidance of numerous
individuals. I express my deepest gratitude to all those who provided me with valuable advice and
assistance throughout this endeavor.

I am indebted to Dr. Bijal Zaveri, the Dean of the Faculty of Management Studies, for providing
essential resources.

Prof. Dr. Jayaprakash Lamodia, my class teacher, offered invaluable support and guidance at every
stage.

To my friends and family, I am forever grateful for their unwavering encouragement.

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 ACKNOWLEDGEMENT

I would like to take this opportunity to express my heartfelt gratitude to everyone who has provided
me with valuable advice and guidance throughout this endeavor. Above all I am eternally grateful to
the Lord Almighty for his guidance, which has enabled me to successfully complete this work.

I am deeply obliged to Dr. Bijal Zaveri, the Dean of the faculty of Management Studies, for providing
me with various facilities that were instrumental in the completion of this project.

I would like to extend my sincere thanks to Prof. Dr. Jayaprakash lamodia, my class teacher for her
cordial support, invaluable information, and guidance at every stage of this task. His assistance and
encouragement played a pivotal role in the preparation of this report.

Furthermore, I would like to express my gratitude to all the faculty members of the department for
their interest and cooperation in this matter.

Lastly, I want to express my sincere thanks to my friends and family for their unwavering support,
which has been instrumental in my successful completion of this report.

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6
PART – I GENERAL INFORMATION

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 About the Industry

Fast-moving consumer goods (FMCG) companies produce, distribute, and sell everyday
items that are consumed or replaced frequently. FMCG companies operate in a
competitive market and focus on high-volume sales with relatively low-profit margins per
item FMCGs have a short shelf life because of high consumer demand (e.g., soft drinks
and confections) or because they are perishable (e.g., meat, dairy products, and baked
goods).

They are bought often, consumed rapidly, priced low, and sold in large quantities. They
also have a high turnover on store shelves. The largest FMCG companies by revenue
are among the best known, such as Nestle SA. (NSRGY) ($99.32 billion in 2023
earnings) and PepsiCo Inc. (PEP) ($91.47 billion). From the 1980s up to the early
2010s, the FMCG sector was a paradigm of stable and impressive growth; annual
revenue was consistently around 9% in the first decade of this century, with returns on
invested capital (ROIC) at 22%.1

McKinsey & Co. "Rescuing the Decade: A Dual Agenda for the Consumer Goods Industry ."

• Examples of FMCGs include milk, gum, fruit and vegetables, toilet paper, soda,
beer, and over-the-counter drugs like aspirin.
• The FMCG industry is massive, ever-evolving, and characterized by fierce market
competition, high volumes, and heavy investments in marketing.

The FMCG sector in India also includes pharmaceuticals, consumer electronics, soft
drinks packaged food products and chocolates. Since the sector encompasses a
diverse range of products, different companies dominate the market in various sub-
sectors. However, some of the top FMCG companies in India are- Dabur (60%),
Colgate (54.7%), Hindustan Unilever (54%).

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 Types of Fast-Moving Consumer Goods
FMCGs include several subcategories:

• Processed foods: Cheese products, cereals, and boxed pasta

• Prepared meals: Ready-to-eat meals
• Beverages: Bottled water, energy drinks, and juices
• Baked goods: Cookies, croissants, and bagels
• Fresh foods, frozen foods, and dry goods: Fruits, vegetables, and nuts
• Medicines: Aspirin, pain relievers, and other medications that can be purchased
without a prescription
• Cleaning products: baking soda, oven cleaner, and window and glass cleaner
• Cosmetics and toiletries: Hair care products, concealers, toothpaste, and soap
• Office supplies: Pens, pencils, and markers

Indian Consumer market

The Fast-moving consumer goods (FMCG) sector is the 4th largest sector of the
Indian economy.

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 Overview of World Market

The international FMCG (FMCG) market, encompassing merchandise like food and drinks,
toiletries, cleansing merchandise, and personal care gadgets, continues to be a cornerstone
of the global financial system. This market is characterized by its ubiquity, speedy-paced
nature, and constant innovation, making it a vital part of clients' daily lives. One of the key
factors of the FMCG marketplace is population boom. As the global populace continues to
increase, there may be a consistent demand for essential everyday products. Moreover,
urbanization and converting existence, such as the upward push of twin-profits families, have
brought about increased convenience and packaged items consumption. E-trade and virtual
technology have reshaped the FMCG landscape considerably. Online purchasing,
subscription services, and cellular apps have revolutionized how customers browse, buy, and
obtain FMCG products, presenting more comfort and accessibility. Additionally, records
analytics and personalization have turned out to be instrumental in know-how client options
and tailoring products and advertising and marketing strategies consequently. Sustainability
and fitness-attention have additionally left an indelible mark on the FMCG marketplace.
Consumers are increasingly seeking green and healthier alternatives, prompting FMCG
corporations to adapt by offering sustainable packaging, natural products, and plant-based
total options.
The worldwide FMCG marketplace boasts a quite competitive landscape characterized by a
multitude of well-mounted multinational groups, local players, and revolutionary startups.
Key players inclusive of Procter & Gamble, Unilever, Nestlé, and The Coca-Cola Company hold
to dominate with their big product portfolios and international attainment. They engage in
competitive advertising, product diversification, and acquisitions to hold their market
positions. In recent years, e-trade giants like Amazon and Alibaba have disrupted the FMCG
sector, providing clients with handy online shopping stories. This has triggered traditional
FMCG groups to bolster their e-commerce presence and adapt to converting patron
shopping habits. Additionally, customers' growing preference for healthier and sustainable
merchandise has brought about the upward push of niche and nearby brands that cater to
those demands. These smaller agencies leverage their agility and area of interest to compete
efficiently. Overall, the aggressive panorama of the FMCG market remains dynamic, with
corporations constantly innovating, expanding their product traces, and adapting to evolving
customer developments to keep and gain marketplace share in this ever-changing industry.

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Top Player’s Company Profile
• Procter & Gamble (USA)
• Unilever (Netherlands/UK)
• Nestlé (Switzerland)
• The Coca-Cola Company (USA)
• PepsiCo (USA)
• Johnson & Johnson (USA)
• L'Oréal (France)
• Colgate-Palmolive (USA)
• Kimberly-Clark (USA)
• Mondelez International (USA)
• Danone (France)
• Mars, Inc. (USA)
• Reckitt Benckiser (United Kingdom)
• Kellogg's (USA)
• General Mills (USA)
• The Kraft Heinz Company (USA)
• AB InBev (Belgium)
• Henkel (Germany)
• Beiersdorf AG (Germany)
• Estée Lauder Companies (USA)
• The Hershey Company (USA)
• SC Johnson (USA)
• Constellation Brands
(USA)
• Ferrero Group (Italy)
• Coty Inc. (USA)

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12
 Overview of Gujarat Market

Gujarat has garnered maximum growth in per capita food and non-food consumption expenditure
across the country between FY05 and FY10 with growth rate of about 28% and 33%, respectively, an
Assocham study said. Gujarat has garnered maximum growth in per capita food and non-food
consumption expenditure across the country between FY05 and FY10 with growth rate of about 28%
and 33%, respectively, an Assocham study said. Besides registering a growth of about 24.69%,Gujarat
has also topped in terms of household consumption of fast moving consumer goods (FMCGs) during
the said five-year period.

Overview of Indian market

Indian FMCG industry is mainly driven by various factors such as increasing disposable
income, changing lifestyles, supportive government policies, and increasing youth
population, and increasing awareness about healthcare.

With growing disposable income people are becoming more health conscious and
lifestyle is changing, which in turn drives the demand for FMGC products such as home
care, health care, personal care & cosmetics, food & beverages, and others, thereby
promoting the development of the FMCG market in India significantly.

Easy raw material availability, lower labour costs and a well-connected value and supply
chain give India a competitive advantage in the FMCG industry.

The growth of the Indian population, the rise in consumer awareness of FMCG products,
the frequent introduction of a variety of products by key players operating in the market,
and the effective advertising and marketing of FMCG brands all contributed to the growth
of the Indian FMCG market.

India has a spectacular youth population when compared to other developing countries.
The majority of the workforce in India comprises this young population aged between 25-
45 and this age group of people is a major consumer of FMCG products especially in the
packaged foods category as they barely get time to cook.

Many international players are entering in Indian FMCG market due to the increasing
middle-class population. The Indian FMCG market continues to grow because more
people start to move up the economic ladder and the benefits of economic progress
become accessible to the public.

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In the last two years, the Indian FMCG industry saw high inflation translating into price-led
growth. Key players operating Indian FMCG sector have indicated that price-led growth
has started tapering off and volume-led growth is set to return in the next few years.

• Despite strong fundamentals, the Indian FMCG Industry facing various challenges. Factors
such as less adoption in rural areas, stringent government regulations about the production
and consumption of many FMCG Products, fluctuation in raw materials prices, and growing
counterfeiting of products are restraining the market growth.

• The growing popularity of online purchasing, the development of new brands and
products, innovation in product development and the expansion of FMCG networks
in rural areas are expected to create significant opportunities for market
participants during the forecast period.

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India FMCG Market: Regional Analysis
West India is expected to emerge as a potential region during the forecast period. States like
Maharashtra, Gujrat, Madhya Pradesh are playing a major role in driving the growth of this region.
Increasing consumption of FMCG products in major metro cities like Mumbai, Ahmadabad, Pune,
Nagpur, Surat, Indore, Bhopal etc is propelling the market growth of this region.

India FMCG Market: Recent Developments

• In October 2023, Unilever announced that it has agreed to sell Dollar Shave Club with
completion expected before the end of 2023. Unilever will retain a minority shareholding of
35%. Through this agreement, Unilever is aiming to expand its market presence and market
share in India FMGC Market.

• In June 2023, Skincare brand VLCC acquired men’s grooming brand Ustraa.

• In October 2022, Tata Consumer Products renovate and rebrand TATA Q as TATA Sampann
Yumside with a new and larger range of Ready to Eat and Ready to Cook offerings. Through

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 such rebranding developments, Tata Consumer is planning to strengthen their Ready to Eat
and Ready to Cook product portfolio.

• In January 2023, ITC announced plans to acquire 100% of Sproutlife Foods (SFPL), a direct-
to-consumer (D2C) startup and parent company of health food brand ‘Yoga Bar’ over three
to four years. Through this acquisition, ITC is aiming to strengthen the distribution channel
and health food brand portfolio.

• In January 2023, ITC opened 59 acre food processing plant in Telangana, that will make in
phases biscuits, chips, and noodles as well as atta that ITC markets under its popular
brands, including Sunfeast and Aashirvaad. Through this expansion, ITC is planning to
enhance their food processing production capacity and market presence in South India.

• In December 2022, Hindustan Unilever Limited (HUL) announced its foray into the ‘Health &
Wellbeing’ category through strategic investments in Zywie Ventures Private Limited and
Nutritional Private Limited. Through this strategic investment, HUL has entered the Health
and Wellbeing category.
List of the prominent players in the India FMCG Market:

• AB InBev
• AMUL
• Asian Paints (India)
• Britannia Industries
• Cadbury India
• Coca-Cola
• Colgate Palmolive
• Dabur India
• Hindustan Unilever Ltd.
• ITC (Indian Tobacco Company)
• Marico Industries
• Nestlé India
• Pantanjali Foods
• PepsiCo
• Procter & Gamble Hygiene and Health Care
• Unilever
• Tata Consumer Limited
• United Spirits
• Godrej Consumer Ltd
• VLCC
• Others

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Market Share of the FMCG Sector in India

An extensive summary of India's FMCG market share is provided below-

• From US$ 110 billion in 2020, the FMCG market in India is projected to grow at a CAGR of 14.9%
to US$ 220 billion by the next couple of years.

• The packaged food market in India is anticipated to grow twofold to US$ 70 billion in the next few
years.

• Urban and Rural Areas are becoming more connected to the internet, increasing the requirement
for FMCG India, primarily through e-commerce sites.

• There is potential for growth due to rising disposable income in rural India and low levels of
market penetration.

• It is anticipated that the e-commerce sector will account for 11% of all FMCG sales.

• Up to 100% of foreign equity in single-brand retail and 51% in multi-brand retail investments have
been approved.

• With an investment of US$ 1.42 billion, the union government's production-linked incentive (PLI)
scheme offers businesses a significant chance to increase exports.

• Due to the year-round demand for FMCG products, investments in this sector draw investors.

Investments/Developments in FMCG Industry

• The Indian government has permitted 51% of Foreign Direct Investment (FDI) in multi-brand
retail and 100% of FDI in food processing. This would inspire more product launches while
increasing employment, supply chains, and consumer spending.

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 Growth Of the Industry

Total revenue of FMCG market is expected to grow at a CAGR of 27.9% through 2021-27,
reaching nearly US$ 615.87 billion. In 2022, urban segment contributed 65% whereas rural
India contributed more than 35% to the overall annual FMCG sales. Good harvest, government
spending expected to aid rural demand recovery in FY24. The sector had grown 8.5% in
revenues and 2.5% in volumes last fiscal year. In the January-June period of 2022, the sector
witnessed value growth of about 8.4% on account of price hikes due to inflationary pressures.
In third quarter of FY23, the FMCG sector clocked a value growth of 9.0% YoY — lower than the
9.2% YoY value growth seen in third quarter of FY22.

As per CRISIL, India's dairy industry is projected to experience a healthy revenue growth of 13-14%
in FY25, driven by strong consumer demand and increased raw milk supply.

According to NielsenIQ’s report, in 2024, the FMCG industry in India is expected to grow between
4.5-6.5%, owing to strength in the sector and Indian economy.

Indian food processing market size reached US$ 307.2 billion in 2022 and is expected to reach US$
470 billion by 2028, exhibiting a growth rate (CAGR) of 9.5% during 2023-2028.

The Union government approved a new PLI scheme for the food processing sector, with a budget
outlay of Rs. 109 billion (US$ 1.46 billion). Incentives under the scheme will be disbursed for six years
to 2026-27.

India’s FMCG sector has long been the top spender in the country’s advertising market, commanding nearly one
third share Rs. 31,000 Crore (US$ 3.75 billion) in 2023 of the total advertising expenditures.

India includes 780 million internet users, where an average Indian person spends around 7.3 hours per day on
their smartphone, one of the highest in the world. Number of active internet users in India will increase to 900
million by 2025 from 759 million in 2022. In 2022, India’s consumer spending was US$ 2,049.57 billion. Indian
villages, which contribute more than 35% to overall annual FMCG sales, are crucial for overall revival of the
sector. E-commerce now accounts for 17% of the overall FMCG consumption among evolved buyers, who are
affluent and make average spends of about Rs. 5,620 (US$ 677.11 million).

The Indian e-commerce market is anticipated to grow from US$ 83 billion in 2022 to US$ 185 billion in 2026.
By 2030, it is expected to have an annual gross merchandise value of US$ 350 billion. Fuelling e-commerce
growth, India is expected to have over 907 million internet users by 2023, which accounts for ~64% of the total
population of the country.

The market has grown exponentially over the past five years due to the surge in internet and smartphone users,
improved policy reforms, and increase in disposable income. Mobile wallets, Internet banking, and debit/credit
cards have become popular among customers for making transactions on e-commerce platforms. The total value
of digital transactions stood at US$ 300 billion in 2021 and is projected to reach US$ 1 trillion by 2026.

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The India online grocery market size has been projected to grow from US$ 4,540 million in 2022 to US$ 76,761.0
million by 2032, at a CAGR of 32.7% through 2032.

FMCG giants such as Johnson & Johnson, Himalaya, Hindustan Unilever, ITC, Lakmé and other companies
(that have dominated the Indian market for decades) are now competing with D2C-focused start-ups such as
Mamaearth, The Moms Co., Bey Bee, Azah, Nua and Pee Safe. Market giants such as Revlon and Lotus took
~20 years to reach the Rs. 100 crore (US$ 13.4 million) revenue mark, while new-age D2C brands such as
Mamaearth and Sugar took four and eight years, respectively, to achieve that milestone.

Tier 2 and Tier 3 cities are emerging as key markets, surpassing metropolitan regions in retail
consumption. Mumbai, Bangalore, Chennai, Delhi, and Hyderabad are among the top five Indian cities that
showcase a strong intent to hire for FMCG jobs. The top three functions experiencing significant hiring in
the industry are sales, marketing, and information technology.

Additionally, the FMCG sector is witnessing robust growth in rural areas, driven by increased disposable
income and improved living standards. Market segmentation reveals a diverse range of products, from
Household and Personal care (50%), Food & Beverages (31%), and Healthcare (19%).

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 About Major Companies in the Industry

10 Largest Fast-Moving Consumer Goods Companies by Revenue

The 10 largest FMCG companies in the world are the following (all figures in U.S.
dollars, as of mid-2024):

1. Nestlé: A Swiss multinational company that focuses on food and drink processing.
It makes a variety of products, including candy, infant formula, bottled water, dairy
products, and cereals. The company has a market capitalization of $279 billion in
mid-2024 and had 2023 revenue of $99.32 billion.8
2. PepsiCo: An American food company that produces soft drinks and snack foods.
Its market capitalization is $228 billion, and it had 2023 revenue of $91.47 billion.9
3. Proctor and Gamble Company (PG): Proctor and Gamble is an American
consumer goods company that makes a variety of health, personal care, and
hygiene products, such as soaps, fabrics, and beauty products. The company has
a market capitalization of $395.32 billion and had 2023 revenue of $84.06 billion.10
4. JBS Foods (JBSAY): JBS Foods is a Brazilian meat processing business that sells
beef, chicken, salmon, pork, as well as meat byproducts. It has a market
capitalization of $11.85 billion and had 2023 revenue of $72.92 billion.11
5. Unilever plc (UL): Unilever is a British FMCG company that makes beauty products,
cereals, energy drinks, healthcare products, and other products used daily. It has a
market capitalization of $142.40 billion and had 2023 revenue of about $63.91
billion.12
6. Anheuser-Busch InBev SA (BUD): AB InBev is a Belgian beer company. It's the
largest brewer in the world, including Budweiser. It has a market capitalization of
$107.38 billion and had 2023 revenues of $59.40 billion.
7. Tyson Foods Inc. (TSN): Tyson Foods is an American meat processing company
that produces chicken, pork, and beef. It's behind major brands such as Jimmy Dean
and Hillshire Farms. Its market capitalization is $19.43 billion, and it had $52.88
billion in revenue in 2023.13
8. Coca-Cola Co. (KO): Coca-Cola is an American drinks company that produces
soda, sports drinks, and other beverages. It has a market capitalization of $273.94
billion and made $45.75 billion in revenue in 2023.14
9. L'Oréal Co. (LRLCY): A French business that makes cosmetics, including skincare,
makeup, perfume, hair coloring, and hair care products. It has a market
capitalization of $239.84 billion and produced revenues of $44.57 billion in 2023.15

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 10. British American Tobacco (BTI): British American Tobacco is a British
company focused on cigarettes and other products that include nicotine. It has a
market capitalization of $68.52 billion and produced revenues of $34.80 billion in

Indian FMCG Companies

Hindustan Unilever

Year of Establishment– 17 October 1933

CEO– Rohit Jawa

This is the best FMCG company in India and a subsidiary of the global consumer products company
Unilever. It was established in 1933 as Lever Brothers India Ltd and later merged with Hindustan
Vanaspati Mfg. Co. Ltd and United Traders Ltd in 1956.

This FMCG company ranks first among the top 10 FMCG companies in India owing to its variety of
products. These include foods, beverages, cleaning agents, personal care products, and water
purifiers.

Some of its popular brands are Lux, Surf Excel, Dove, Lifebuoy, Kissan, and Brooke Bond.

• Nestle India

Year of Establishment– 1961

Chairman and MD– Mr Suresh Narayanan

This is a subsidiary of the Swiss food and beverage giant Nestle SA. Formed in India in 1961, Nestle
is one of the top 10 FMCG companies in India. The company set up its first factory in Moga, Punjab,
where it developed the milk economy.

It manufactures and markets products that cater to both cooking and consumption, such as milk, dairy
products, chocolates, coffee, noodles, sauces, and infant nutrition.

Some of its well-known brands are Nescafe, Maggi, Milkybar, Kit Kat, Milkmaid, and Nestea.

• Varun Beverages

Year of Establishment– 1995

Chairman- Ravi Kant Jaipuria

This is one of the largest franchisees of PepsiCo in the world, outside the US. It was incorporated in
1995 and produces and distributes a range of carbonated and non-carbonated beverages. The
products of this FMCG company in India includes. Pepsi, Mountain Dew, 7UP, Mirinda, Slice, Aquafina,
and Tropicana.
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It has operations in India and several international markets, such as Africa, Nepal, Sri Lanka, and
Morocco.

• Godrej Consumer Products

Year of Establishment– 1897

CEO and MD– Sudhir Sitapati

This is one of the top 10 FMCG companies in India in the home and personal care segment, part of
the diversified Godrej Group. The company was started as the part of India’s Swadeshi movement –
the original ‘Make in India’ movement.

It manufactures and sells products in categories such as hair care, skin care, oral care, household
insecticides, and hygiene. Some of its flagship brands are Cinthol, Godrej No.1, Godrej Expert, Hit, and
Protekt. It also has a strong international presence in Asia, Africa, and Latin America.

• Britannia Industries

Year of Establishment– Kolkata in 1892

CEO and MD– Varun Berry

Read about the amazing history of Britannia Industries!

This is one of India’s oldest and most trusted food companies, specialising in bakery and dairy
products. It was founded in 1892 by a group of British businessmen and later acquired by the Wadia
Group in 1993. It offers a variety of biscuits, breads, cakes, rusk, cheese, and milk products under
brands such as Britannia, Good Day, Tiger, Marie Gold, NutriChoice, and Cheese.

It has a presence in over 60 countries across the globe.

• Dabur India

Year of Establishment– 1884

Chairman- Mr. Mohit Burman

This is one of the largest Ayurvedic and natural healthcare companies in India, with a legacy of over
135 years.

It was founded in 1884 by Dr. S.K. Burman as a small pharmacy in Kolkata. It offers a range of products
based on the principles of Ayurveda and natural ingredients, such as health supplements, hair care,
oral care, skin care, home care, and foods.

Some of its renowned brands are Dabur Chyawanprash, Dabur Honey, Dabur Amla, Dabur Red Paste,
and Real.

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• Colgate-Palmolive

Year of Establishment– 1937

Managing Director and CEO– Prabha Narasimhan

This multinational corporation, founded in 1806 by William Colgate in New York City, focuses on
manufacturing and distributing a wide range of products. The products of this top FMCG company in
India include household items, health care products, personal care items, and veterinary products.

Initially established as a soap and candle business, it has evolved into a diverse enterprise over the
years. It later merged with Palmolive-Peet Company in 1928.

How did Colgate Palmolive begin its operations in India?

It offers products such as toothpaste, toothbrush, mouthwash, soap, shampoo, and pet food under
brands such as Colgate, Palmolive, Protex, Ajax, and Hill’s.

• P&G Hygiene and Health Care

Year of Establishment- 1964

Director and MD– Mr. Chittranjan Dua

This is a subsidiary of the American consumer goods giant Procter & Gamble Company in India. It was
incorporated in 1964 and operates in the feminine hygiene and healthcare segments.

One of the leading names among the top 10 FMCG companies in India, this manufactures and markets
products such as sanitary napkins, tampons, cough and cold remedies. They also produce analgesics
under brands such as Whisper, Vicks, and Old Spice.

P&G Hygiene and Health Care exports its products to several countries in Asia, Africa, and Europe.

• Hatsun Agro Product

Year of Establishment– 1970

MD– Mr. C.Sathyan

This is a leading private sector dairy company in India with headquarters in Tamil Nadu, Chennai. It
was founded by R. G. Chandramogan in 1970.

Another one of the top 10 FMCG companies in India manufactures and markets a wide range of
products for both cooking and consumption. These include milk, skimmed milk powder, curd, ice
cream, dairy whitener, ghee, paneer, and butter. Some of its brands are Arun, Arokya, Hatsun, HAP
Daily, Ibaco, and Santosa. It also has operations in overseas markets, such as Africa and Sri Lanka.

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Emami

Year of Establishment- 1974

Owners- Mr. R.S. Agarwal and Mr. R.S. Goenka

This is a reputed business group in India that operates in the personal care, health care, and paper
sectors. It was founded by R.S. Agarwal and R.S. Goenka in 1974 as a cosmetic manufacturing unit in
Kolkata.

One of the best FMCG companies in India, it offers a range of products based on Ayurveda and natural
ingredients, such as balms, oils, creams, lotions, powders, and deodorants. Some of its popular brands
are Boroplus, Navratna, Zandu, Fair and Handsome, and Kesh King. It also has a presence in over 60
countries across the world.

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 Major Products

FMCGs include several subcategories:

• Processed foods: Cheese products, cereals, and boxed pasta

• Prepared meals: Ready-to-eat meals
• Beverages: Bottled water, energy drinks, and juices
• Baked goods: Cookies, croissants, and bagels
• Fresh foods, frozen foods, and dry goods: Fruits, vegetables, and nuts
• Medicines: Aspirin, pain relievers, and other medications that can be purchased
without a prescription
• Cleaning products: Baking soda, oven cleaner, and window and glass cleaner
• Cosmetics and toiletries: Hair care products, concealers, toothpaste, and soap
• Office supplies: Pens, pencils, and markers

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PART – II PRIMARY STUDY

26
 Introduction of the Study
.

The fast-moving consumer goods (FMCG) industry plays a critical role in the global economy, characterized by
high demand and rapid turnover of products. As competition intensifies, pricing strategies have become a focal
point for companies seeking to enhance market share and consumer loyalty. This study explores the intricate
relationship between pricing strategies and consumer perception within the FMCG sector.

Understanding consumer perception is vital, as it influences purchasing decisions and brand loyalty. Various
factors, including psychological pricing, promotional pricing, and price skimming, affect how consumers
perceive value. This study aims to analyze how these strategies shape consumer attitudes and behaviors,
ultimately impacting sales and brand reputation.

By employing a mixed-methods approach, incorporating both quantitative surveys and qualitative interviews,
the research seeks to uncover the underlying dynamics of consumer perception in relation to pricing strategies.
The findings aim to provide actionable insights for FMCG companies to refine their pricing approaches and
enhance their competitive advantage.

In an industry where consumer preferences shift rapidly, grasping the nuances of pricing and perception is
essential for sustained success. This study not only contributes to academic literature but also offers practical
recommendations for practitioners navigating the complexities of the FMCG marketplace.

In the face of rapid economic and technological changes, today ‘s consumer is more curious, more educated and conversant
with what he/she exactly wants. These changes also affect the needs of firms. According to Ehmke et al (2005), marketing
your business is about how you position it to satisfy your customers ‘needs. Borden (1984) stated that marketing manager
must weigh the behavioral forces and then handle marketing elements in his mix with focus on the resources with which
he has to work when building a marketing program to fit the needs of a firm. For marketing to effect a change either in a
new product or reinvigorate a new brand there are elements that remains constant which must be incorporated in the
marketing mix and this is called the ―Four P‘s". These four P‘s are product, price, promotion and place (Ehmke et al
2005). In the context of this paper, the emphasis will be on price; hence the need to elucidate more on meaning of price to
both customers and firms. Price is the amount a customer pays for a product or the sum of the values that consumers
exchange for the benefits of having or using a product or service (Bearden et al 2004). Price means different things to
different people; it is interest to lenders, COT or service charged by the banker (lenders), premium to the insurer, fare to
the transporter, honorarium to the guest lecturer etc, (Kotler et al 2008). According to Rosa et al (2011), the importance of
price as a purchase stimulus has a key role in price management since not only does it determine the way prices are
perceived and valued, but it also influences consumer purchase decisions (Rosa, 2001; Simon, 1989; Vanhuele and Dreze,
2002). Studies have shown price as an important factor in purchase decision, especially for frequently purchased products,
affecting choices for store, product and brand (Rondan, 2004). The greater the importance of price in purchases decisions,
the greater the intensity of information and the greater the number of comparisons between competing brands (Mazumdar
and Monroe, 1990). Considering the nature of the consumer products (frequently purchased and consumed products,
implying medium-low level of consumer-supplier interaction), the basic is, the customers who usually purchase are more
frequently in contact with prices. Pricing strategy is paramount to every organization involved in the production of
consumer goods and services because it gives a cue about the company and its products, a company does not set a single
price but rather a pricing structure that covers different items in its line (Kotler et al, 2001). According to Hinter Huber
(2008) pricing strategies vary considerably across industries, countries

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and customers and can be categorized into three groups: cost-based pricing, competition-based pricing, and
customer value-based pricing. These will be discussed in detail in the next section. Choosing a pricing objective
and associated strategy is an important function of the business owner and an integral part of the business plan
or planning process. It is more than simply calculating the cost of production and adding a markup (Roth 2007).
Therefore, assigning product prices is a strategic activity and the price or prices assigned to a product or range
of products will have an impact on the extent to which consumers view the firm ‘s products and determine its
subsequent purchase.

1)Achieve target return on investment or on net sales Kotler and Armstrong (2008) described this as building a
price structure designed to provide enough return on capital used for specific products so that the sales revenue
will yield a predetermined average return for the entire firm. This objective is usually used by most firms for
short run periods (Ezeudu 2005) whereby a percentage markup on sales is set. This set percentage covers
anticipated operating cost-plus desired profit for the year

. 2) Stabilize prices Another pricing objective could be to stabilize prices. This is mostly found in industries
where there is a market leader and prices fluctuate frequently. "Price leadership does not necessarily imply that
the objective of stability is reached by having all firms in the industry charge the same price as that set by the
leader (Stanton 1981). It only means that some regular relationships exist between the leader‘s price and those
charged by other firms" (Sean 2005).

3) Maintain or improve target share of the market Most companies have their pricing objective to be to increase
or maintain market share (Stanton 1981). Increased market share is a result of effective long term pricing
strategies. Any firm who has this as a pricing strategy must be ready to operate and plan on the long run. It is
quite different from target return which might be deceptive because a firm could be earning but losing market
share gradually (Lancaster, et al., 2002).

4) Meet or prevent competition Lancaster, et al., (2002) stated that organizations may try to meet up with
competition by reducing prices or even prevent it by adopting what is called 'follow the leader' policy (a policy
whereby companies price products based on competitor‘s price).

5) Maximize profits This pricing objective is used by countless firms. The problem with this goal is that it is
often connected in the public mind with profiteering, high price and monopoly although there is nothing wrong
with it (Ezeudu 2005). If the profit is high due to short supply in relation to demand new capital will be attracted
into the field. F

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 Literature review
Introduction

The Fast-Moving Consumer Goods (FMCG) sector is characterized by high competition and rapid turnover of
products. Pricing strategies play a crucial role in influencing consumer perceptions and purchasing behaviors.
This literature review examines various pricing strategies employed in the FMCG industry and their impact on
consumer perception.

Pricing Strategies in FMCG

1. Cost-Plus Pricing
o This strategy involves adding a markup to the cost of production. Research shows that while it ensures
profit margins, it may not always align with consumer willingness to pay, potentially leading to reduced
market competitiveness (Gheorghe, 2018).
2. Value-Based Pricing
o Value-based pricing sets prices based on the perceived value to the customer rather than the cost of the
product. Studies indicate that this approach can enhance customer loyalty and brand perception, as
consumers feel they are receiving fair value (Smith & Nagle, 2005).
3. Dynamic Pricing
o Dynamic pricing involves adjusting prices based on demand fluctuations and consumer behavior. This
strategy can maximize revenue but may lead to consumer dissatisfaction if perceived as unfair (Khan et
al., 2020).
4. Penetration Pricing
o Often used to gain market share, penetration pricing sets low initial prices to attract consumers. While
effective in increasing sales volume, long-term profitability can be jeopardized if consumers expect
ongoing low prices (Kotler & Keller, 2016).
5. Premium Pricing
o Premium pricing positions a product as high-quality or luxury, appealing to consumers' status and
perceived value. This strategy can strengthen brand equity but risks alienating price-sensitive consumers
(Heil & Helsen, 2001).

Consumer Perception and Its Influences

1. Price Perception
o Consumers often evaluate products based on perceived price fairness. Studies show that perceived value
and price fairness significantly influence purchasing decisions and brand loyalty (Kumar & Steenkamp,
2007).
2. Brand Image
o Pricing strategies can shape brand image, impacting consumer perceptions of quality and value. A study
found that high prices can enhance perceptions of quality, while low prices may lead to perceptions of
inferiority (Völckner & Hofmann, 2007).
3. Psychological Pricing
o Techniques such as charm pricing (e.g., $9.99 instead of $10) exploit consumer psychology. Research
suggests that such pricing can enhance the perceived value of products, leading to increased sales
(Thomas & Morwitz, 2005).
4. Promotional Pricing
o Temporary price reductions can create a sense of urgency and encourage impulse buying. However,
excessive reliance on promotions can erode brand value and lead to consumer desensitization (Gedenk et
al., 2006).

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5. Consumer Demographics
o Different demographics perceive prices differently. Factors such as age, income, and cultural
background influence how consumers respond to various pricing strategies, necessitating targeted
approaches (Berkowitz & Gilson, 2020).
6. Value Perception: Consumers often assess whether the price reflects the quality and value of the
product. Premium pricing can create a perception of higher quality, while lower prices may lead to
concerns about quality.
7. Brand Loyalty: Established brands can often charge higher prices due to consumer loyalty. Familiarity
and trust can make consumers willing to pay a premium.
8. Promotions and Discounts: Temporary price reductions or promotions can attract consumers, but
over-reliance on discounts may lead to a perception of lower value.
9. Competitor Pricing: Consumers are likely to compare prices across similar products. Competitive
pricing strategies are essential to retain market share.
10. Psychological Pricing: Strategies like pricing just below a round number (e.g., $4.99 instead of $5.00)
can influence consumer perception and buying behavior.
11. Sustainability and Ethical Considerations: Increasingly, consumers consider the ethical implications
of their purchases. Brands that reflect sustainability in their pricing (like fair trade) may appeal more to
certain consumer segments.
12. Economic Factors: During economic downturns, consumers are more price-sensitive. Brands may
need to adjust their pricing strategies accordingly to maintain sales.

• Consumer perception towards pricing strategies in self-care products is shaped by various

factors:

1. Quality and Efficacy: Many consumers associate higher prices with better quality and effectiveness.
Premium pricing can convey a perception of superior ingredients or formulations.
2. Brand Reputation: Established brands often benefit from consumer trust, allowing them to set higher
prices. New or lesser-known brands may need competitive pricing to attract attention.
3. Ingredient Transparency: Consumers are increasingly aware of ingredient sourcing and formulation.
Products that emphasize natural or organic ingredients may justify higher prices, while lower-priced
items may face skepticism regarding quality.
4. Packaging and Branding: Attractive packaging and strong branding can influence perceptions. A
well-designed product may seem worth a higher price due to perceived luxury or exclusivity.
5. Promotions and Discounts: Limited-time offers or loyalty discounts can encourage trial and repeat
purchases. However, frequent discounts may lead to concerns about quality or brand integrity.
6. Target Demographics: Younger consumers may be more price-sensitive, while older consumers might
prioritize quality and brand reputation, affecting how pricing strategies are perceived.
7. Psychological Pricing: Similar to FMCG, psychological pricing (e.g., $19.99 vs. $20.00) can impact
consumer perceptions and encourage purchases.
8. Social Media Influence: Reviews and influencer endorsements can shape consumer perceptions of
pricing. A high price may be justified if it’s endorsed by trusted figures.

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Conclusion

Pricing strategies in the FMCG industry are multifaceted and significantly impact consumer perception.
Effective pricing not only drives sales but also shapes brand identity and consumer loyalty. Future research could
further explore the intersection of digital marketing and pricing strategies, particularly in light of evolving
consumer behaviours in the digital age.

Objective of the study

1. To Find out consumer perception towards pricing of food products

2. To find out consumer perception towards pricing of self-care products

Hypothesis

1. price sensitivity

H0: there is no significant difference in consumer perception towards products priced at 100$
versus 100$+10%.

H1: consumer perceive products priced at 100$ as more valuable than those priced at
100$+10%.

2. Pricing for self-care product

H0: Quality and price does not matter for consumer

H1: Quality and price matter for consumer

3. Pricing for food products

H0: Quality and price does not matter for consumer

H1: Quality and price matter for consumer

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 Research Methodology
the research methodology for evaluating the consumer perception towards pricing strategy in FMCG industry.
this approach combines quantitative and qualitative methods to provide a comprehensive understanding of the
subject.

On the quantitative front, primary data is collected through structured surveys distributed to a representative
sample of consumer engaged with fmcg brands. These surveys aim to access customer engaged with fmcg food
products and fmcg self-care products.

Research design

this research adopted a mixed research design (Quantitative and Qualitative). Quantitative analysis
was conducted using primary data from surveys and a qualitative analysis was conducted from
secondary data from past studies.

Source of data

1. Survey and Questionnaire Findings: In our research, we conducted online surveys and questionnaires. We
sought to understand their experiences with personalized smartphones, their preferences for personalized
content, and the actual impact on their brand loyalty. The data collected from these surveys provides valuable
insights into how consumers perceive and engage with personalized marketing campaigns.

2. Social Media Analytics Insights: We harnessed social media analytics tools to gather quantitative data
pertaining to engagement metrics on various social media platforms. Metrics such as likes, shares, comments,
and clickthrough rates were rigorously analyzed. These analytics provided a robust foundation for assessing the
effectiveness of personalization in smartphones industry. The data revealed patterns and trends in consumer
interactions with personalized content.

3. Insights from Customer Interactions: Our research delved into the realm of customer interactions on
industry with FMCG. This included, direct messages, and comments. The data we collected allowed us to gain
a deeper understanding of consumer sentiments, preferences, and their overall engagement patterns. These
insights illuminated how personalization influences consumer behavior and the types of interactions that
resonate most with them.

4. Analysis of Consumer Feedback and Reviews: To get a comprehensive view, we thoroughly examined
consumer feedback, comments, and reviews posted on social media platforms and e-commerce websites. By
analyzing the sentiments expressed by consumers regarding personalized content, we gained insights into the
real-world impact of personalization on their purchasing decisions. These real-time reactions and reviews
provided qualitative data that complemented the quantitative findings from our surveys and analytics.
Collectively, these research methods and data sources allowed us to paint a comprehensive picture of the brand
loyalty in the smartphones industry. The findings from surveys, social media analytics, customer interactions,
and consumer feedback strengthened the credibility of our research and provided nuanced insights into how
personalization strategies affect brand loyalty to success in the FMCG industry.

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 Data Collection Method
1. Online Surveys and Questionnaires: We asked consumers about their experiences with
personalized and how it affects their decisions. We used online surveys and forms distributed through
social media, emails, and brand websites to gather their opinions.

2. Customer Interaction Tracking: We kept an eye on how consumers talked to brands on social
media. This included conversations with chatbots, direct messages, comments, and mentions. We
counted how often these interactions happened and what people were saying. This gave us insights
into what consumers like and how they want to interact with personalized content

3. Secondary Data Analysis: We studied existing research, reports, and case studies about the brand
loyalty in the smartphones industry. This helped us understand trends, issues, and successful strategies
that other experts and companies have discovered in this area. By using these methods, we aimed to
get a complete picture of how the brand loyalty personalization impacts in the industry, in a way that's
both simple and insightful.
Population
In the context of studying brand loyalty in the smartphone sector, the population refers to the entire
group of individuals that the research aims to understand or analyze. Here’s a breakdown of the
potential population for this study:

Population for Brand Loyalty in the Smartphone Sector

1.Smartphone Users: Individuals who currently own a smartphone, regardless of brand. This includes
a diverse range of users with different preferences, habits, and brand loyalties.

2.Demographic Segmentation: Age Groups: Young adults (18-24), adults (25-34), middleaged (35-
54), and seniors (55+). Gender: Both male and female users. Income Levels: Users from various
income brackets (low, middle, high) to understand how purchasing power influences brand loyalty.

3.Geographic Segmentation: Users from different regions or countries (e.g., North America, Europe,
Asia) to analyze cultural and market differences in brand loyalty.

4.Usage Patterns: Different types of users, such as heavy users (frequent smartphone use for various
functions) versus light users (occasional use).

By focusing on this population, researchers can gather insights into the various factors influencing
brand loyalty and how they differ across demographic and geographic segments. This understanding
helps in tailoring marketing strategies and improving customer satisfaction in the FMCG industry.

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 Sampling Method

Studying brand loyalty in the smartphone industry, selecting an appropriate sampling method is
crucial to ensure the data collected is representative of the broader population.

1.Stratified Random Sampling: The population is divided into distinct subgroups (strata) based on
specific characteristics such as age, gender, income, or brand preference. Random samples are then
drawn from each stratum. Ensures representation across various demographics and helps in analyzing
differences in brand loyalty among different segments.

2.Systematic Sampling: A sample is drawn by selecting every nth individual from a list of the
population. Easier to implement than simple random sampling, and can provide a representative
sample if the list is organized randomly.

3.Simple Random Sampling: Every individual in the population has an equal chance of being
selected. This can be done using random number generators or lottery methods. Reduces selection bias
and simplifies the analysis process, making it easy to generalize findings to the larger population

Questionnaire on Pricing strategies and consumer perception in FMCG industry

4. Age:
[ ] below 18
[ ] 18-30
[ ] 31-50
[ ] above 50

5. Gender
[ ] Male
[ ] Female
[ ] Other

6. What is your monthly household income?

[ ] below 25000
[ ] 25000-50000
[ ] 50000-100000
[ ] above 100000
7. How often do you purchase FMCG food product?
o Daily
o Weekly
o Monthly
o Occasionally
8. How often do you purchase FMCG self-care product?
o Daily
o Weekly
o Monthly
o Occasionally

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9. What influences your purchase decision the most for FMCG product?
o Price
o Brand
o Product Quality
o Discount
o Packaging
10. What influences your purchase decision the most for FMCG self-care product?
o Price
o Brand
o Product Quality
o Discount
o Packaging
11. How important is price in your decision to purchase an FMCG food product?
o Very important
o Important
o Neutral
o Not very important
o Not important at all
12. How important is price in your decision to purchase an FMCG self-care product?
o Very important
o Important
o Neutral
o Not very important
o Not important at all

13. What type of pricing do you prefer for FMCG food products?
o Premium pricing for high quality
o Affordable pricing with good quality
o Discounted price
o Value pack for savings on bulk purchases
14. What type of pricing do you prefer for FMCG self-care products?
o Premium pricing for high quality
o Affordable pricing with good quality
o Discounted price
o Value pack for savings on bulk purchases

15. what is your perception of premium-priced FMCG food products?

o They are of higher quality
o They are overpriced
o I would buy them only with discount
o I don’t consider premium brands
16. what is your perception of premium-priced FMCG self-care products?
o They are of higher quality
o They are overpriced
o I would buy them only with discount
o I don’t consider premium brands

17. When you see a Food product on sale, do you perceive it as:
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o A good deal
o A chance to try something new
o A sign that the product is not popular
o Other: ______________

18. When you see a Self-care product on sale, do you perceive it as:

o A good deal
o A chance to try something new
o A sign that the product is not popular
o Other: ______________

19. Are you more likely to try a new self -care brand if it’s priced lower than established
brands?

o Yes
o No
o Maybe

20. Are you more likely to try a new food products brand if it’s priced lower than established
brands?

o Yes
o No
o Maybe

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