What are fmcg products. What are FMCG companies

FMCG market concept

Definition 1

FMCG (Fast Moving Consumer Goods) are products of everyday demand, wide consumption, the frequency of purchase of which is relatively high.

Everyday goods and consumer goods, united by the abbreviation FMCG, are relatively inexpensive and have a fast turnover in the market. The FMCG industry is characterized by a high degree of competition and oversaturation of the market with offers, since products in individual markets are poorly differentiated.

FMCG is sometimes understood as consumer goods, which is not entirely true. Products are classified into the FMCG industry based on the frequency of purchases, not the degree of distribution of the product, despite the fact that these categories often overlap.

Example 1

Examples of FMCG products are:

• Personal hygiene items;
• Cosmetics;
• Cleaning and detergents;
• Batteries;
• Light bulbs;
• Food and Beverages;
• Clothes and shoes.

Market Features

• High product turnover – FMCG purchases occur quite often, on a daily or weekly basis, so buyers have an established consumption pattern;
• Low level net profit– consumer products are usually sold at low prices and have low margins;
• High demand – everyday consumer goods provide a high level of demand constantly, due to which companies can take advantage of economies of scale;
• Low degree of consumer involvement - purchasing FMCG market products is a routine and everyday process, the attention and interest of buyers in which is reduced; the buyer often seeks to reduce the time for making such purchases and makes them out of habit;
• Interchangeability of goods – in FMCG markets it is offered a large number of products that do not have significant differences, which leads to the effect of market saturation and facilitates the process of replacing one brand with another.

Market restrictions

There are a number of factors in the FMCG markets that create additional difficulties and restrictions when doing business:

• Mass market - products should be aimed at a wide range of consumers with different characteristics;
• Complex structure of the product sales chain - the chain includes a large number of intermediaries various types, the distribution channels used are often saturated and require high costs to introduce a new product name to the market;
• High level of price sensitivity of buyers - everyday goods are easy to compare with each other, which creates low switching costs for the buyer;
• The need for branding - branding and bright packaging allows you to distinguish the product from analogues;
• Lots of impulse purchases.

Strategies used in the FMCG market

Companies operating in the FMCG market apply the following strategies:

• Search for prospects in emerging markets – the growth rates of markets in developing countries are twice as high as the corresponding growth rates in developed countries;
• Acquisition of leaders in attractive segments is the most common method of increasing sales of multi-brand companies by restructuring the brand portfolio;
• Alliance with competitors - turning direct and indirect competitive brands into business partners through the release of joint products;
• Effective innovation management – ​​introducing innovations to improve product quality and develop new products;
• Sales channel management – ​​working with a large number of intermediaries different types, building complex communication channels.

The article was published under the name of my colleague, because the editor-in-chief considered that 2 original articles in one issue was too much. This happens too :)

Nest chicksFMCG

IN last years termFMCG * is used very often. Just a few years ago, most people were perplexed when they heard it. Companies are looking for people with experience in this field, and applicants are trying to understand why this experience is an advantage. Market participants are concerned with the same questions as others: where to find good personnel, who and how to look for?

Of course, the abbreviation FMCG practically does not need to be deciphered. This market includes companies selling goods with fast turnover. These are food, tobacco products, alcohol and others. But what is it about this very market that employers so want to see employees who have gone through this “school of life”?

* FMCG - Fast Moving Consumer Goods

High speedbusiness

The main difference between the FMCG market is its technology. This is one of the most actively developing sectors of the economy. Due to the specifics of the goods that FMCG market companies deal with, high competition and the need for their rapid implementation (since in conditions of low prices, turnover speed is of great importance), the industry has become the source of most of the most advanced technologies. Almost all companies are forced to participate in this race, and constant movement forward is synonymous with success.

Of course, most of the technologies were brought from the West, where the main players came from in the early 90s. However, quite quickly, domestic companies appeared in this sector of the economy and compete with them quite successfully.

Of course, the driving force of this market are sales specialists. However, to survive the competition, it is not enough to sell well. Therefore, FMCG companies were among the first to understand that a systematic approach to management and business development is needed. Western companies, of course, had this understanding from the very beginning; Russian companies needed time. Currently, FMCG companies are distinguished by serious attention paid to optimizing business processes, including interaction between procurement, sales and logistics departments, as well as to working with personnel.

Most often, companies from this market have a large staff and are actively developing. They usually have their own training centers. Serious attention is paid not only to recruiting, but also to the comp&ben (compensation and benefits) system and personnel development. Employers are very willing to hire recruiters who have worked in similar companies, since they have excellent theoretical (thanks to a well-established training system) and technological training and are able to successfully work with a large number of vacancies.

Let's return to the question we asked at the beginning of the article: why do employers often specify experience in the FMCG sector in the requirements for applicants' experience? For companies that do not have serious opportunities for staff development and training, a specialist in this field can be a valuable find, as he has the necessary knowledge, experience working in high-intensity conditions and is result-oriented ( we're talking about both about top managers and line managers and specialists).

However, this does not mean that you can hire any specialist or manager who has worked in this market and be confident of success. It is equally important how ready the company itself is for this style of work, what kind of person was invited and what kind of team he will have to perform the “heroic feat of taking the company to a new level.” In some industries, the specificity is so strong that technologies successfully used in the fast-moving goods sector become ineffective in them (for example, the sale of luxury goods). And FMCG digests so many people that among them there are a sufficient number of incompetent or completely inactive “citizens”.

The head of Chukotka and other people in short supply

FMCG market companies, like other rapidly developing structures, require personnel in various fields. These are wholesale sales managers, retail chain managers, purchasing managers, marketing specialists, HR specialists, financial specialists, business process managers and many others.

Special attention should be paid to top managers. Most of the top managers heading companies in this sector started their careers in Western companies and pursued a classic Western career: specialist, line manager, manager. Many of them later moved to Russian companies, as they provided greater independence and opportunities for self-realization. Nowadays, managers from the FMCG sector are increasingly in demand in other markets. However, in the overwhelming majority of cases, they do not enter the open labor market, which, however, does not stop headhunters hunting for them. It is difficult to talk about the income of managers at this level, since the figures here depend on many factors, the main one of which is the degree of interest in the candidate.

Yulia MAKAROVA, HR manager of the companyDanone:“In the 90s, in large companies, almost the only criterion when choosing a specialist was knowledge in English, since the business was directed to the west. Companies were actively looking for employees who could work with foreign partners. Those specialists who spoke the language made their careers very quickly. Now the situation has changed. Knowledge of the language is not such a rarity and the professional and personal qualities of the candidate come to the fore.”

Fast-moving consumer goods, known by the abbreviation FMCG, are a special category of products that are intended for general consumption.

The main features of this category are low cost, which contributes to quick sales, a large range of products and a wide audience of buyers.

It is worth noting that consumers come to stores for everyday products several times a week or month.

• Detergents and cleaning products.
• Cosmetics.
• Glassware.
• Batteries and light bulbs.
• Products made of plastic, paper.
• Items intended for personal hygiene, teeth cleaning and shaving.

Quite often this category includes not only food products and medications, but also various drinks. It is worth noting that Everyday products are divided into three types according to their purpose:

1. Daily.
2. For stock.
3. For receiving guests at home.

Among the world leaders in the consumer products segment, companies such as Unilever, Henkel, L'Or?al, Reckitt Benckiser, Gillette, Heinz, Johnson & Johnson, PepsiCo, Procter & Gamble, Mars Inc, and many others stand out.

What are the features of the FMCG market?

The modern market for mass consumer products is characterized by the following key features:

• High turnover of goods.

Since the purchase of goods is carried out quite often, the buyer develops a certain consumption pattern. This makes it easy to achieve economies of scale.

• High demand.

Targeted consumption ensures consistently high demand.

• Low level of customer involvement.

Everyday purchases contribute to the fact that every consumer wants to reduce time costs, and quite often, reduce them to a minimum. For this reason, the buyer develops the habit of buying the same product.

• The products are characterized by easy replaceability.
• Relatively low cost of goods.

Additionally, it should be taken into account that the FMCG market is characterized by:

• Dynamic development.
• Seasonality.
• The presence of high and serious competition.
• Constant struggle for the leading positions of various companies.

What should you consider to succeed in the FMCG segment?

Despite the rather low cost of everyday goods, sales turnover in this economic segment may even exceed similar sales figures for expensive and large products. Many global brands prove this in practice by maintaining a constant high level of demand and large volumes of sales of everyday consumer goods.

The FMCG market is characterized by rapid and dynamic changes, therefore in order to maintain the gained positions it is necessary to perform a number of actions, in particular:

• Rotate brands of consumer goods.
• Constantly expand the range of products.
• Introduce new products.

Successful companies represented in the FMCG segment really have an impressive turnover, and the range of offers is characterized by a constant increase in goods, although when compared with others economic sectors, then the level of profitability will be low.

The main key to success in the consumer goods market is an affordable pricing policy for most consumers. It is also necessary to follow the rules of merchandising so that the display of goods in retail outlets facilitates the purchase of products, and each buyer, entering in a hurry, can quickly find the necessary products. It is worth noting that numerous marketing solutions are distinguished by a revolutionary approach.

At the moment, several trends can be identified in the consumer goods market: strengthening and toughening of competition, constant introduction new products related to this segment, as well as a noticeable reduction in the life cycle of FMCG products.

FMCG– from English fast moving consumer goods (fast moving consumer goods). Fast-moving consumer goods (FMCG segment goods) are goods purchased by individuals for private consumption that have a short life cycle, that is, goods that are quickly used. During the Soviet era, the FMCG product group had a different name - consumer goods (consumer goods, Common consumption goods).

FMCG market– one of the most competitive and long-established, both in terms of the level of competition and in terms of methods, promotion tools and development of sales technologies.

FMCG products– These are everyday goods: food, household chemicals, beer and cigarettes. The FMCG consumer goods market segment is just high-turnover goods. Between ordinary consumer goods and high turnover goods - let's call them essential goods, such as bread, milk, soap, salt, meat, etc. and – there is a significant difference. Eg, mobile phone although it is relevant to the consumer market, it cannot be consumed so quickly that a re-purchase is required in a short time, and the lack of habit of buying this product regularly forced it to be done spontaneously.

Fast turnover inventories, a wide range of goods, the constant need for FMCG goods in retail requires effective distribution, such that the desire to buy is ensured by maximum availability.

Marketing of FMCG products characterized by the fact that:

1. Each individual product is inexpensive, so there is no excess profit when selling it, and due to fierce and ever-growing competition in the segment, turnover must constantly increase in order to generate income;
2. In FMCG, you need to carefully work out all stages of product promotion - from production to the buyer - in order to make money on the low cost of goods;
3. The main task of FMCG marketing addressed to the consumer is to create in the consumer a stable, often unconscious or quickly realized need to purchase goods from the FMCG segment.
4. The struggle for customers in the FMCG segment is carried out in two vectors: for the retail shelf and for the heart of the consumer.
5. In the FMCG segment, much attention is paid to trade marketing - promotion at points of sale, indoor advertising and promotions;

FMCG and network retail. Supermarket chains gained strength because they could sell FMCG products at low prices, in a wide range, and always in stock. Shoppers are accustomed to buying basic products in hypermarkets, and perishable products - such as milk and eggs - in specialized stores or corner stores.

This material opens a series of practical articles on increasing the profits of FMCG market enterprises through increasing the efficiency of marketing, development and sales services. These materials will be relevant for enterprises and other sectors, since the FMCG market is one of the most dynamic and highly competitive, and with the most developed marketing and business development technologies.

Introduction

The efficiency of enterprises in the FMCG (Fast Moving Consumer Goods) market depends on in a key way from distribution (representation) and disposal of goods from retail outlets.

Any marketing activity will be nullified if the product is not on the store shelves or there is a situation of “overstocking” (when a type of distribution channel has several times more inventory than it is able to sell per unit of time - especially true for goods with long shelf life) distribution channel.

In the current conditions of limited marketing funding, working with a trade channel is one of the most effective tools that can bring effect at minimal cost compared to other communication tools and in a short time.

In addition, ATL activity (carrying out events aimed at indirect contact with the target audience, implies advertising in the press, transport, television, radio, outdoor advertising) must be carried out at a retail representation level of at least 20%.

Communication activities aimed at interacting with end consumers must be carried out at a level of product representation in retail outlets reaching at least 20%, since otherwise the sale of promotions may lead to negative consequences. It is worth noting some of them.

• A brand whose promotion program has been launched, but is not on store shelves, may be associated by the consumer with a brand that is constantly absent from retail outlets. The consumer decision-making model for purchasing in the FMCG market is such that, in search of the product (brand) he needs, he turns to a maximum of three to five stores (the minimum distribution level should be at least 20%).
• The effectiveness of promotion programs is directly proportional to the quantitative representation of products. A low level of distribution entails a direct reduction in the effectiveness of promotions implemented to attract end consumers.

Thus, activities aimed at ensuring brand representation in retail outlets are key in the brand promotion system. The ongoing trade marketing programs are of particular importance for a number of sectors of the FMCG market (for example, alcohol and tobacco), where the range of communication tools is legally limited. To achieve the greatest efficiency when introducing a new product to the market, promotions should primarily be aimed at interacting with that distribution link that directly affects the product’s presence in the retail sector.

FMCG trade marketing system

Trade marketing activities are a system in which a participant in the commodity distribution route is provided with appropriate financial or other motivation for achieving a certain KPI. The goals of these events can be both short-term (information and increasing sales) and structural (building loyalty), including:

• increase in sales volume due to increased distribution and expansion of the product line;
• increasing the level of representation due to increased sales volumes;
• familiarization with products by distribution channel participants, receiving feedback;
• expert assessment of product items that are in greatest demand, carried out by persons making purchasing decisions (if it follows from the terms of the promotion that the assortment can be formed by the person responsible for purchasing products included in certain product items);
• increasing the loyalty of partners - participants in the distribution channel (for entering retail chains, creating greater commitment compared to loyalty to other companies / brands, creating better trading conditions);
• attracting consumer attention to products through expanded display and placement of products in attractive places;
• attracting the attention of representatives of companies that do not sell these products who make decisions about the purchase of goods, by monitoring the display in competitors' stores (about 30% of non-chain retail companies monitor other retail outlets, for chain retail this figure is close to 90%);
• increasing the number of positions in the assortment matrix (distributor or final retail outlet);
• improving the quality of display.

The trade marketing model in the FMCG market is shown in the figure

* MPP – comprehensive marketing promotion program

A significant part of market operating companies, when carrying out trade marketing activities, direct their efforts to one, maximum two links of the Chamber of Commerce and Industry, and very often this is only the first link - which does not communicate with customers in retail outlets (is not responsible for placing goods on shelves). Thus, when motivating those responsible for purchasing products (merchandise experts), there is no promotion of incentives for sellers in retail stores, who can directly influence the consumer’s purchasing decision and ensure the disposal of goods.

And here a situation may arise that will negatively affect the results of promotions and sales in general - oversaturation of distribution channels and further sales of products at reduced prices, which also entails a subsequent drop in sales. The risk of this situation especially increases when only one (first) link of the distribution channel is motivated - a large wholesale company without taking into account and controlling further product distribution. The solution to this problem for the manufacturer is to focus the promotion not on the dealer himself, but on his clients (smaller wholesale companies, subdealers, etc.). Next, the author's trade marketing program will be considered - the motivation of all links of the commodity distribution path when introducing a new brand to the market, which has proven its effectiveness in practice.

In addition, there is a risk when conducting trade marketing programs, which is associated with an insufficient level of control. When stimulating the distributor's sales staff - the head of the sales department, sales managers, sales representatives - a situation very often arises when the funds from the motivation fund transferred by the organizers of the promotion simply do not reach the specified employees, i.e. those who directly achieved their goals. This fact, of course, has a very negative impact on both the effectiveness of the action itself and the reputation of its organizers.

10 principles of effective trade marketing campaign.

1. Setting goals. The goals of the action at the stage of its preparation must be clearly formulated, their results must be measurable, based on the feasibility of achievement and an exact time frame (formulation of goals in a SMART format).
2. Prizes and motivation fund. It is necessary to determine gift options based on the values ​​of the target audience (managers, merchandisers, sellers), i.e. the prize should be interesting and useful. In addition, it is important to understand the likelihood of actually receiving a gift. The promotion will not be effective if, for example, when holding a competition for merchandisers of retail stores, a single car is raffled off as a prize. On the contrary, a kettle or a mobile phone, the possibility of obtaining which will be obvious, will become an incentive to achieve the desired result.
3. Visualization. A clear reflection of the terms of the promotion and prizes is one of the key conditions for organizing the program. On advertising and information media it is necessary to depict gifts and characterize the terms of the promotion. Maximum use should be made of placement opportunities to convey information to the target group. Information should be published on the company’s website and internal corporate portals (in the case of a motivational program for managers).
4. Winner's reward ceremony. It must take place publicly, with the involvement of the maximum number of participants in the action. This is necessary for them to understand that victory in the competition is real and achievable. Publicity in this case will also act as an informational reason for further PR campaigns.
5. Control. It is necessary to monitor the process of implementing the program, remind about the progress of its implementation and intermediate results (as practice shows, when conducting such events, for example, for the sales staff of a distributor, employees forget about the program one to two weeks after the launch). Prizes must be awarded directly by representatives of the event organizer in order to prevent a situation in which the gift does not reach the recipient.
6. Creation of an information and analytical base. The goal here is operational control of measurable indicators (the number of active customers, the rate of product disposal, the width of the product line, etc.), the progress of the program and the movement of goods before they are removed from retail. To plan target indicators, it is necessary to conduct an audit of the distributor's sales.
7. Brief and accessible presentation of the terms of the promotion.“Five sentences on one page” - this is how you can designate the format for presenting information about the conditions for the implementation of the event, prizes, the mechanism for holding and receiving gifts. The information should be simple to understand, easy to remember and not difficult to interpret.
8. Control of product disposal from retail. When carrying out promotions aimed at stimulating the efficiency of distributors, it is necessary to control the movement of goods in order to avoid the occurrence of a situation of increasing inventory during this period. Control is carried out by analyzing the distributor's shipments to its customers.
9. Education. When organizing training for the distributor’s sales staff during a promotion, introducing a merchandising standard in a retail company through sales representatives, it is necessary to focus on the rules and methods of selling your products, and not on general principles sales and merchandising.
10. Complexity. In practice, the best performance indicators are inherent in projects with a comprehensive impact on the commodity distribution route along the “manufacturer-consumer” chain. In this case, the involvement of all participants in the distribution channel increases, and the risk of its oversaturation decreases. In addition, campaign costs are reduced.

Integrated trade marketing campaign.

I developed my own trade marketing technology, which made it possible to solve marketing problems using less resources and reducing the risk of standard negative situations arising from trade marketing activity (channel overpacking, low level of control, etc.).

I have been using this technology since 2006 and have proven its effectiveness in practice. I will illustrate the technology and results of the project using the example of a company that produces grocery products.

When promoting an umbrella brand (four product groups: cereal flakes, cereals, breakfast cereals, gourmet flour; a total of 23 assortment items; price segment- “average+”) in the market of one of federal districts I, as Director of the Marketing Department, implemented a comprehensive program of work with the distribution channel. Its activities were an integral part and foundation of a larger promotion program, which included the stages shown in Fig. 2.

Rice. 1. Stages of the promotion program

It was decided to abandon the use of direct price promotion methods (discounts, cost reductions, special payment terms), and provide direct bonuses to persons responsible for achieving target indicators when promoting products in the trading channel.

Program targets

The structure of retail trade in the program area was 70% of non-chain retail outlets and 30% of chain retail stores. Before the start of the program, we managed to agree with three distribution companies that provide direct delivery of goods to non-chain retail outlets on the distribution of products during the implementation of the promotional program. Before it began, an audit of the distributor's sales was carried out - the size of the active customer base, the structure taking into account the directions (retail, chains, wholesale, HoReCa) in a certain period of time (Table 1).

Table 1. Table for conducting a distributor sales audit

Data from the distributor's sales audit were the starting point for the formation of target indicators for the program, determined based on the number of stores in which the product should be presented (active customer base - AKB), the number of assortment items in one outlet (width of the assortment line - SHL) and speed, at which each product will be sold within a month (disposal rate - SV).

Thus, for the three companies it was developed individual plan sales and promotion. The distribution plan indicators (SL and AKB) were developed as a result of an agreement between the supplier company and the distributor. It is worth noting that SV is an indicator that depends on many factors: price levels, awareness and purchasing behavior, seasonality, and quality of display.

Methodological basis and progress of the program implementation

The promotion program under consideration included three main blocks; the parameters and conditions for its implementation were specified in the agreement concluded with the distributor (Fig. 3).

Rice. 3. Main blocks of the promotion program

Motivation of the distributor's sales staff

Motivation of sales personnel (head of the sales department, sales representatives) was carried out through the payment of bonuses for fulfilling distribution and sales plans.

The head of the sales department received a bonus for implementing the final distribution plan (2,500 rubles) and the sales plan (2,500 rubles) monthly during the program period.

A sales and distribution plan was developed for each sales representative. Based on their performance results, these employees were paid a monthly bonus (1,700 rubles) for achieving a specific target. Posters describing the terms of the promotion and a description of the incentive fund were placed in the company's offices, and corresponding information modules were available on corporate portals.

To eliminate the possibility of misuse of the motivation fund, the management of the distributor company decided that the bonus payment was made by a representative of the supplier - the organizer of the promotion.

Motivation of merchandisers

The goal of motivating commodity experts was to increase the volume and range of products they purchased. Every month, following the results of the reporting period, these employees, depending on the indicators achieved, were awarded one prize, which could be chosen among gifts presented in four categories ( household appliances) according to the diagram shown in Fig. 4.

Rice. 4. Motivation scheme for merchandising specialists

Purchase of 10 or more assortment items with a total volume of at least 150 items per month Purchase of 12 or more assortment items with a total volume of at least 250 items per month Purchase of 15 or more assortment items with a total volume of at least 350 items per month Purchase of 18 -ty or more assortment items with a volume of at least 500 pieces per month.

Bright colorful leaflets were produced indicating the terms of the promotion and images of prizes. Sales representatives of distributors handed these promotional materials to merchandisers in retail stores.

Retailer loyalty program

To motivate sellers, the Mystery Shopping method was used. At the same time, at the end of the reporting period, the salesperson of the outlet was awarded a bonus if this employee was recommended by a representative of the target product. Within the framework of the program, five prize places were identified, the total prize fund was 35 thousand rubles in each reporting period.

There was also incentives for efficient display of products, because... Most retail outlets did not have full-time merchandisers, and their functions were performed by salespeople. The prize fund in this case amounted to 35 thousand rubles.

Results of the program implementation

As a result of the campaign, 1,325 retail outlets were covered (there are 3,700 stores in the city in total). The level of product representation was 36% in non-chain retail. During the program period, 320 thousand units of products were sold (5 million 450 thousand rubles in monetary terms). The final sales figures of distributor companies are presented in table. 2.

Table 2. Results of the promotion campaign

The campaign budget amounted to 465 thousand rubles, excluding funds for the implementation of consumer promotions and the ATL campaign. Over the next year, distributors continued shipments to 75% of the retail outlets participating in the promotion. The awarding of the winners was organized in the format of a corporate holiday with the involvement of local media, which became an informational occasion for coverage of the event in the regional press.

Conclusion

As we can see, conducting an effective trade marketing campaign requires significant organizational and time resources. The practical recommendations given in the article make it possible to implement an event with maximum efficiency with a minimum of effort spent on it due to the systematic organization of the project.