Encyclopedia of Marketing. FMCG - what is it? The FMCG market and its marketing secrets What does fmcg mean
The concept of the FMCG market
Definition 1
FMCG (Fast Moving Consumer Goods) - products of daily demand, wide consumption, the frequency of purchase of which is relatively high.
The goods of daily demand and consumption, united by the abbreviation FMCG, are relatively inexpensive and have a fast turnaround 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. The assignment of products to the FMCG industry is based on the frequency of purchase, and 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;
- Electric light bulbs;
- Food and drink;
- Clothing and footwear.
Market Features
- High product turnover – FMCG purchases occur frequently enough, on a daily or weekly basis, so buyers have an established consumption pattern;
- Low level of net profit - consumer products are usually sold at low prices and have a low level of marginality;
- High Demand – FMCG delivers a high level of demand all the time, allowing companies to take advantage of economies of scale;
- Low degree of consumer involvement - the purchase of FMCG market products is a routine and everyday process, the attention and interest of buyers to which is reduced, the buyer often seeks to reduce the time for making such purchases and makes them out of habit;
- Substitutability of goods - FMCG markets offer 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
In the FMCG markets, there are a number of factors that create additional difficulties and restrictions when doing business:
- Mass character of the market - products should be focused on a wide range of consumers with different characteristics;
- The complex structure of the product distribution chain - the chain includes a large number of intermediaries of various types, the distribution channels used are often saturated and require high costs to bring 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 impulsive buying.
Strategies applied in the FMCG market
Companies operating in the FMCG market apply the following strategies:
- Looking for opportunities in emerging markets – emerging markets are growing at twice the rate of growth in developed countries;
- Acquisition of leaders in attractive segments is the most common method of increasing the sales of multi-brand companies by restructuring the brand portfolio;
- Alliance with competitors - the transformation of direct and indirect competitive brands into business partners through the release of joint products;
- Effective innovation management - the introduction of innovations to improve product quality and develop new products;
- Sales channel management - work with a large number of intermediaries of various types, building complex communication channels.
FMCG - what is it? The article provides an answer to this question, and also tells how this system works, what goods belong to this group, and why this particular segment has a high demand and turnover. It also presents the tools that companies need to always be afloat and keep a good competitive defense.
FMCG - what is it?
Probably, many at least once in their lives have come across such a concept. It means consumer goods with fast turnover. This includes categories of goods that are purchased by people constantly.
FMCG companies are ranked as worthy employers with high wages and low staff turnover. In addition, they are highly competitive.
The segment of goods in this category is divided into purchases with a margin, for the arrival of guests and everyday purchases. To maintain their position, companies have to constantly improve their product and conduct promotions. Successful manufacturers have a wide range, and their brand is always heard.
Kinds
The FMCG segment is characterized by fast sales and low prices. The consumer demand for them is high due to the fact that they serve for a certain period of time. After that, the purchase will need to be made again. Of course, the bulk proceeds from such sales are small amounts. However, the profit is very significant due to the fast and large turnover.
Depending on the type of destination, goods are for everyday use and for stock.
- Shampoos, shower gels, toothpaste and other hygiene items.
- Powders, cleaning products and more.
- Tobacco and alcoholic products.
- Carbonated drinks.
- Cosmetical tools.
- Medications.
- Batteries and light bulbs.
It should be noted that sales of this category of goods are less dependent on the crisis periods of the economy. While large household appliances, electrical appliances usually change about once every 2 years, if not less often.
How does it work
We have already found out that the goods of this segment have a fast turnover. Consider the marketing components:
- Low price for goods with low margins.
- When selling this segment, you do not need additional advertising and the help of a consultant. The buyer purchases the goods, not particularly thinking about its cost and necessity at the moment.
- High demand is accompanied by strict control over the filling of empty shelves.
- Repeat purchases are made again! Goods such as toothpaste, washing powder, shampoos and others run out quickly.
In hypermarkets, supermarkets and small shops, such a product segment is mainly placed at the checkout, butts and promo zones. The more people see the product, the more likely it is to sell. Merchandisers and sales representatives of their brand have well-designed instructions on what and where should be located.
Basic FMCG tools
The more stores and retail outlets a manufacturer covers, the better sales will affect its revenue and turnover. You have probably noticed that famous brands are found almost anywhere.
The best artists worked on the packaging design of this product. Everything in it should attract the eye of the buyer: font size, colors and pictures. Often, in order to earn the client's trust in his trademark, a representative uses such inscriptions: light bulb - savings, candy - based on natural juice, toothpaste - natural ingredients.
The best-selling products are located at the level of the human eye. This technique is well thought out. There are shelves in the store, passing by which we stop looking at the product of interest. They are located at a distance of 150-170 centimeters from the floor. Less priority products are placed on the lower and higher shelves.
The product is analyzed by analysts in retail outlets and centers, sales reports are generated for each brand and product for the required period.
Sales Secrets
There is no single methodology that would ideally work for the entire FMCG sector. Consider the main professional tools:
- Location of goods on the promotional shelves.
- Teamwork with all project participants (manufacturing company - supplier - advertising - personnel involved in promotions).
- Advertising should not be only on TV. Periodic consultations in large shopping centers, on the Internet, and so on, are simply necessary for a qualitative increase in sales.
- Digital - advertising.
- Finding a stronger incentive to buy your brand.
- Analysis of the effectiveness of the advertising campaign.
It is enough to consider the work of the FMCG network using the example of Magnit, Lenta, Auchan and others. Their profits are only growing, the number of stores is increasing, and the turnover is increasing every year.
Basic rules in the operation of the FMCG market
FMCG - what is it and what are the foundations for the successful existence of the strategy? The segment is characterized by healthy competition and the frequent emergence of new companies engaged in the production of goods in a similar category. To maintain a leading position in the market, companies need to constantly expand and improve their product, maintain optimal price levels by optimizing costs, and at the same time remember to regularly advertise their brand.
The correct positioning of the product on the shelves plays a fundamental role in increasing sales. The client's trust in the brand must always be warmed up, only in this way it is possible to achieve an increase in turnover.
So we have sorted out the question of FMCG - what is it and what are the foundations for the successful existence of the strategy. The easiest way in this market is for companies whose brand belongs to monopolists, such as Coca-Cola. It should be noted that the wider the range, the higher the turnover. Although this brand has enough trust from the client, which is also important. Dairy products producers have a more precarious position, as there are about 2-3 main items in the assortment (cottage cheese, kefir, yogurt), and competition is high.
Multi-products that cover a wide segment of the market and continue to grow at an active pace. This applies to manufacturers such as P&G, Nestle, etc.
Look at the last receipt from the supermarket. Products, washing powder, shower gel - all these products are denoted by the short abbreviation FCMG. The decoding of these four English letters speaks for itself - translated into Russian Fast Moving Consumer Goods sounds like "consumer goods" or consumer goods.
Distinctive features of these products:
- Fast turnaround - goods are quickly dismantled from the shelves and replaced with new ones. Large turnover brings high profits.
- Short life cycle, because of which consumers have to go shopping almost daily.
- Spontaneous shopping. People are so accustomed to buying these products that they don't even think about putting them in a shopping cart.
- Low price. It reduces the criticality of perception and reduces the decision-making time to a few seconds. The buyer comes to the store and in half an hour or an hour collects 5-10-15 commodity items in the basket, without seeking advice from the sellers.
Let's figure out what these products are and how to sell them.
FMCG sales categories
There are tens of thousands of commodity items on the FMCG market. Popular items include:
- food and drink
- decorative and hygienic cosmetics
- personal hygiene items
- laundry and cleaning products
- pharmaceutical products
- other non-durable goods
- everyday goods. This group includes perishable foodstuffs.
- Goods bought with a margin. They are characterized by a long shelf life.
- Goods necessary for receiving guests: decorative paper napkins, disposable tableware, cocktail tubes.
Seasonal products are classified as a separate category. For example, soft drinks, ice cream and drinking water, the demand for which rises sharply with the onset of the warm season. Or notebooks and pens sold in bulk before September 1st.
FMCG market structure
The FMCG market is a highly competitive multi-level environment.
Level 1
At this level, those who come up with and implement new ideas in the field of production of consumer goods work. They are also responsible for developing an overall advertising strategy for a branded product, so their margin is maximum.
When asked what a company's fmcg is, their names are best answered:
- Mars - produces well-known Snickers and Twix chocolate bars, UncleBens sauces, animal feed.
- Nestlé - sweets, coffee, ice cream, breakfast cereals, baby food
- Procter & Gamble - detergents, shaving and personal care products
- Johnson&Johnson - medicines and cosmetics
- Philip Morris International - tobacco products
In addition to manufacturers (they are most often the owners of trademarks), importers are at the first level of the market.
Level 2
Large consignments of goods from manufacturers go to wholesale buyers, who make up the second level of the FMCG market. However, there are manufacturers who sell directly to end customers. A prime example is Avon.
The wholesaler is a distributor or a regular wholesale warehouse company. The latter, unlike a distributor, does not develop a client base, does not develop or organize marketing activities, and does not cooperate with the manufacturer as part of product promotion.
The standard margin of a wholesale company is 15-20%, rarely up to 40%.
Level 3
Retail stores - chain or single - closely interact directly with the end consumer.
- Network outlets have the same name, a single design of trading floors, a similar assortment assortment matrix and a common pricing policy with margins of 5-100%
- Single stores work every man for himself. Due to the small volumes of supplies, purchase prices for them are relatively high, which prevents stores from setting a margin above 30%.
The third level in the structure of the FMCG market also includes HoReCa enterprises: hotels, restaurants, catering agencies. The margin on goods reaches 500%.
Level 4
So we got to the ultimate goal of any manufacturer - the final buyer. In the FMCG sales segment, it is an individual who purchases products for their own consumption. It is on him that they are guided in the development of promotion strategies, the creation of new products, and the improvement of their quality.
Features of the FMCG sales segment
One brief sketch will help you understand what FMCG sales are all about. Imagine you are walking down the street and you are thirsty. You will not explore the offers of different stores, but go to the first one that comes across and buy a bottle of drinking water with a familiar name on the package, ignoring a dozen others. Everything, the act of sale/purchase has been completed, the manufacturer's task has been completed.
The example clearly shows the features of sales in the FMCG segment:
- the habit of buying familiar goods quickly, without hesitation
- spontaneity of decision-making based on momentary desires
- seasonality (not for all products)
- formation of a certain consumption model
- high demand and high competition
- easy replacement and low cost of goods
All this together contributes to the dynamic development of the market and active competition. To be successful in FMCG sales, you need to carefully consider marketing, regularly conduct advertising campaigns and organize competent merchandising.
It is impossible to survive in the FMCG market without the help of professionals who will do a huge amount of work:
- Increase product awareness and flood retail outlets
- Place products in the “golden” areas of the store and correctly place them on the shelves
- Provide fast turnover, especially for products with a limited shelf life.
- Reduce accounts receivable arising from the traditional postpaid settlement system between distributor and retailer.
- They will select qualified personnel and motivate them to achieve results.
Recruitment in FMCG company
The main task of the FMCG business is not only to retain already loyal customers, but also to constantly attract new ones to continuously increase income, which is impossible without the participation of competent and responsible personnel.
Requirements for employees of FMCG companies:
- activity, the ability to quickly make independent non-standard decisions
- effective communication skills
- focus on results
- team work orientation
- self-motivation and responsibility for one's role
- high leadership potential
Recruitment in an FMCG company is a multi-stage complex process, and at the interview, the HR specialist pays attention not to the education, but to the personal qualities of the candidate. To identify them, testing is used, as a result of which the candidate's compliance with the needs of a particular FMCG business is determined.
As a result of the test, the employer receives an objective assessment of a potential employee on:
- personality type and communication style
- logical and rational thinking
- analytical and communication skills
FMCG sales marketing tools
The FMCG marketer of the company works in several areas at once:
- search for ways to increase turnover
- customer loyalty assessment
- development of all stages of promotion
- the formation of an unconscious need among consumers to buy a specific product
- capture the most advantageous places on store shelves
What marketing tools does he use?
- Buying behavior research: where, when, why and why the consumer buys a product.
- Advertising to increase brand awareness.
- Presentation of goods in the maximum possible number of outlets.
- Merchandising - displaying goods in priority places, extended display, shelf branding.
- Packaging design that attracts attention and makes you want to buy.
- Promotions: drawing of prizes, tastings, discounts.
It is very difficult to work in all areas of FMCG marketing at the same time. But it is easy to miss something important, something that makes a well-thought-out strategy fly to hell. That is why many companies involve consultants from the outside - a specialist with a fresh, uncluttered look quickly finds weaknesses and offers extraordinary solutions to bring the product to a leading position.
FMCG market trends
Product brand rotation, assortment expansion, revolutionary marketing solutions - this is what the FMCG sales sector means in the next two years. The market is aimed at reducing the life of products, which leads to an increase in turnover.
Experts say that by 2018:
- the number of formats of retail chains will increase (including within the same chain)
- the share of supermarkets in the total number of FMCG stores will decrease
- increase in the number of convenience stores
- the share of FMCG products of Russian brands will increase
- the number of discounters will grow up to 35% (retail stores operating in the low price segment)
- state regulation of the FMCG market will be strengthened
- retail trade turnover will grow by 3.5-4%
The growth of the industry is gradually slowing down, and competition is getting tougher. Manufacturers are fighting not for life, but for death for every percentage in the share of sales. Today, one cannot take one's place in the FMCG market and rest on one's laurels. We need constant work in different directions to maintain and grow the position of the company
In July 2009, the research center of the portal site (http://www.site) studied the offers of employers and the expectations of applicants for the position of "Wholesale Sales Manager in the FMCG sector" in 9 cities of Russia.
The abbreviation FMCG (from the English "fast moving consumer goods") stands for products with a high turnover, consumer goods, these include food, household chemicals, beer, cigarettes, etc. Managers for the wholesale sales of goods included in the FMCG group, are those who saturate supermarkets with such products. Functional duties of such specialists include active search for clients, establishment and development of business contacts with them. Wholesale managers in the FMCG sector carry out market research, monitor the competitive environment, take part in exhibitions, seminars, presentations, and advise clients on the company's products. They are also responsible for preparing commercial offers, negotiating, concluding contracts, and supervising payment under contracts.
The average salary of wholesale managers in the FMCG sector in the capital is 40,000 rubles, in St. Petersburg - 35,000 rubles. In Nizhny Novgorod and Rostov-on-Don, the average monthly income in this area reaches 20,000 rubles. Data for other Russian cities that participated in the study are presented below (see tables).
Applicants who have studied the specifics of this market segment, have skills in negotiating and business correspondence, and making presentations can try their hand as a wholesale manager in the FMCG sector. Wholesale experience should be at least 1 year, but the education requirements are not too strict: both higher and secondary specialized education may be quite enough, the main thing is knowledge of technologies and methods of wholesale sales. The chances of employment are more significant for candidates who have certificates of passing sales courses and trainings. In Moscow, novice managers can apply for a salary of 20,000 to 30,000 rubles, in the northern capital - from 16,000 to 25,000 rubles, in Nizhny Novgorod and Rostov-on-Don - from 10,000 to 15,000 rubles.
Specialists with more than 2 years of experience, who are fluent in wholesale sales techniques and demonstrate excellent negotiation skills, can apply for higher earnings. Employers welcome applicants to have their own client base, a personal car or category B rights. Priority is also given to applicants who speak a foreign language. The earnings of managers of this level reach 50,000 rubles in the capital, 40,000 rubles in the city on the Neva, 27,000 rubles in Nizhny Novgorod, and 25,000 rubles in Rostov-on-Don.
Entry to the next salary range is open to specialists with higher education and work experience of at least 3 years. Professional certifications are also required. A possible requirement on the part of employers may be experience in building distribution. The maximum salary for wholesale professionals in the FMCG sector reaches 100,000 rubles in Moscow, 80,000 rubles in the northern capital, and 50,000 rubles in Nizhny Novgorod and Rostov-on-Don.
The labor market research provides the most typical portrait of an applicant for a wholesale sales manager position in the FMCG sector. He is a young educated man. Managers under the age of 30 make up 53% of the total number of specialists. Representatives of the weaker sex in this area are about 37%. 72% of wholesale sales managers have higher education. The traveling nature of the work implies that the vast majority (70%) of specialists have a category “B” driver's license.
Research regions: gg. Moscow, St. Petersburg, Yekaterinburg, Nizhny Novgorod, Novosibirsk, Rostov-on-Don, Omsk, Samara, Ufa.
Time of the study: July 2009
Unit of measurement: Russian ruble.
Object of study: offers of employers and expectations of applicants for the position of "Wholesale Sales Manager in the FMCG sector".
Typical functionality:
- market analysis, monitoring of the competitive environment;
- active search for clients, establishment and development of business contacts with clients;
- preparation of commercial offers, negotiation, conclusion of contracts;
- participation in exhibitions, seminars, presentations;
- control of payment under contracts;
- Advising clients on the company's products.
Position requirements: type of employment - full time.
The level of remuneration of a specialist is determined by the well-being of the company, the list of job responsibilities, work experience in the specialty, and the level of development of professional skills.
Analysis of information on the levels of remuneration of a specialist:
(excluding bonuses, additional benefits and compensations)
| Region | Min. | Max. | Fashion | Median | Lower quartile | Upper quartile | Average |
| Moscow | 20 000 | 100 000 | 40 000 | 40 000 | 30 000 | 50 000 | 42 200 |
| Saint Petersburg | 16 000 | 80 000 | 30 000 | 35 000 | 25 000 | 40 000 | 34 600 |
| Ekaterinburg | 13 000 | 70 000 | 20 000 | 25 000 | 20 000 | 35 000 | 25 500 |
| Nizhny Novgorod | 10 000 | 50 000 | 20 000 | 20 000 | 15 000 | 27 000 | 22 100 |
| Novosibirsk | 12 000 | 60 000 | 25 000 | 24 000 | 18 000 | 30 000 | 25 300 |
| Rostov-on-Don | 10 000 | 50 000 | 20 000 | 20 000 | 15 000 | 25 000 | 21 100 |
| Omsk | 9 000 | 50 000 | 20 000 | 18 000 | 14 000 | 23 000 | 19 100 |
| Samara | 9 000 | 50 000 | 20 000 | 20 000 | 14 000 | 24 000 | 20 800 |
| Ufa | 10 000 | 50 000 | 20 000 | 20 000 | 15 000 | 25 000 | 21 200 |
Explanations for the table »
The study of the array of data on salaries in the regions under study allows us to identify several main salary ranges, each of which is characterized by a certain typical set of requirements and wishes for the candidate. Each subsequent salary range includes the requirements formulated for the previous ones.
| Region | Range I | Range II | Range III |
| Moscow | up to 30 000 | 30 000 - 50 000 | over 50 000 |
| Saint Petersburg | up to 25 000 | 25 000 - 40 000 | over 40 000 |
| Ekaterinburg | up to 20 000 | 20 000 - 35 000 | over 35 000 |
| Nizhny Novgorod | up to 15 000 | 15 000 - 27 000 | over 27,000 |
| Novosibirsk | up to 18 000 | 18 000 - 30 000 | over 30 000 |
| Rostov-on-Don | up to 15 000 | 15 000 - 25 000 | over 25 000 |
| Omsk | up to 14 000 | 14 000 - 23 000 | over 23 000 |
| Samara | up to 14 000 | 14 000 - 24 000 | over 24 000 |
| Ufa | up to 15 000 | 15 000 - 25 000 | over 25 000 |
Explanations for the table »
| № | Salary range | Requirements and wishes for professional skills |
| 1 | I | - higher / incomplete higher / secondary specialized education; - knowledge of the specifics of the market of a certain group of goods; - knowledge of technology and methods of wholesale sales; - Negotiation skills, business correspondence, presentations; - availability of certificates of completion of sales courses / trainings is welcomed; - PC user (MS Office, 1C); - Experience in wholesale sales from 1 year; |
| 2 | II | - mastering the technique of wholesale sales; - excellent negotiation skills; - knowledge of a foreign language is welcome; - Presence of own client base is welcomed; - driving license category B / own car is welcome; - At least 2 years of experience as a Sales Manager |
| 3 | III | - higher education; - availability of professional certificates; - At least 3 years of experience as a Sales Manager Possible wish: |
Statistical data:
- The age range of the most demanded wholesale managers in the labor market is 23-45 years; wholesale managers under the age of 30 account for 53% of the total number of specialists; at the age of 30 to 40 - 36%, at the age of 40 to 50 - 10%;
- 63% of wholesale managers are men;
- 65% of wholesale managers speak English at a basic level and at a level sufficient to read specialized literature; at the conversational and free levels - 14%;
- 72% of wholesale managers have higher education, 17% - incomplete higher education;
- 70% of wholesale sales managers have a driving license category "B".
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