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Quoting AdEx figures, he said that in 1999, advertising spend from
the FMCG sector was 76 per cent, but in 2004 it had reduced to 50
per cent. "This sector has been registering a compound growth
of 2½ per cent in the last three-four years. The sector has
stagnated in the last few years but thankfully it is slowly resurrecting,
having registered a growth of six per cent last year. Hopefully
this growth will continue in the coming years," he said.
According to Balsara, the three reasons why the FMCG sector had
stagnated were:
- The stagnation had something to do with the corporate ownership
structure. Most of them are publicly listed and hence their main
focus is on quarterly results. Hence the focus shifted from brand
building to sales.
- Marketing professionals therefore began to lose confidence in
above the line brand building.
- This stagnation also came about because management became highly
risk averse. They didn't spend money on innovations. Risk averse
also meant that no new products were being launched unless they
were backed by clinching data from research.
Gupta assured Balsara that the worst was over as far as the FMCG
sector was concerned. Citing some consumer trends, he said that
today's India was getting younger since 70 per cent of its population
was under 35 years of age and the figure will reduce year on year.
"The need for innovations in the FMCG sector will be stronger
in the coming years. The challenges that the sector will face will
be scarcity of talent in brand management. There will be a surge
in demand for brand consultants and strategic account planners.
The mantra is to survive is to promise what you will deliver and
deliver what you promised," Gupta emphasized.
Ranganathan said that some of the factors that will drive volume
growth in the FMCG sector will be innovations, increasing value
for money and the increase in the per capita income of Indians.
"There is a correlation between penetration levels of various
FMCG products and the per capita income of the country. There is
a great opportunity for low penetration categories of FMCG products
if marketers offer bite size products to the consumers," he
said.
"Today the consumer is looking at various ways to look good
and feel good. It is a great opportunity to drive per capita consumption
in this sector," he concluded.
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