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Small Packs Would Save The Day For FMCG Companies

With pressure on Fmcg  for  price hike due  to  spiralling prices  on all front , let it be raw material , overheads , transportation to Ads . Major Fmcg players like  Cadbury , Nestle , HUL , Britannia , Parle  and others have shifted their focus to small packs  priced  Rs1/- , 2/- , 3/-  and 5/-   to boost their sales .

An Article On Small Pack as marketing strategy

Shailaja Sharma / DNAMonday, May 17, 2010 2:16 IST Email


Mumbai: As input costs rise, the dilemma for fast-moving consumer goods (FMCG) companies is, should they guard margins by fresh grammage reductions or offer value till things turn around?

For now, they are preferring to brave it out, even as their eyes keep darting skywards for assurance.


Unlike last fiscal, which became tough for FMCGs due to a very weak monsoon, there is hope crops are likely to be better this time round because of the forecast of a normal monsoon. A good monsoon improves farm productivity and brings down raw material prices.


The prices of wheat, sugar, cocoa and milk had darted up last fiscal, forcing FMCGs to hike retail prices of everything from biscuits to chocolates and beverages.



A majority of the hikes was in bigger stock-keeping units (SKUs), which is retailese for packages.


On the other hand, prices of smaller SKUs weren’t changed; instead, the packs just got smaller in terms of grammage, to offset the cost increase.


Structurally, small SKUs are not very profitable, but since they are bought frequently, they drive volumes of FMCGs, and cater to the needs of a larger base of consumers — the so-called mass-segment.


Samir Jain, head, mass detergents, Hindustan Unilever, said last week at the launch of Ernst & Young’s report ‘The New Market Shehers’ that even as small SKUs are not profitable and are witnessing pressure, there is a need to make products available at affordable rates for consumers, especially in small towns.




Source
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http://www.dnaindia.com/money/report_fmcgs-brave-it-out-on-small-packs_1383902

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