Buyers demand quality


It’s a change that makers of fast moving consumer goods (FMCG) are closely monitoring. More consumers are upgrading to using better quality and higher priced products within a category.

More households, which were earlier happy washing their clothes with low-priced detergent powders, are said to be upgrading to premium quality detergents. Many consumers of toothpaste are seen switching to using better quality toothpastes.

Marketers reason that this change is taking place on the back of increased expenditure on advertising by companies, increased disposable incomes and growing aspirations.

These insights emerge from AC Nielsen’s retail audit for the previous fiscal, as per which the volume growth of detergents has declined, while the value growth is positive. �Consumers have upgraded to using premium products in detergents. Since a premium quality detergent is used less in volumes but is high in price as compared to a mid-sized of popular detergent, volumes in this sector have declined even though the value growth has increased,� said an industry official

On an annualized basis, detergent powders have grown at 6% in value, between April05-March06. However, the volumes declined by 5% during this period.

According to a director of KTC Private Limited, the makers of ‘Ghari’ detergent, the company may consider launching a premium detergent if there is greater demand for such detergents.

In case of toilet soaps, a category which has very high penetration, the value growth at 3.2% during 2005-06, surpassed the volume growth of 1.7%. This indicates that a number of consumers have upgraded their choice of soap purchases. Eliciting an example, Godrej Consumer Products executive director & president said, “If a consumer has upgraded to use a high TFM (total fatty matter) soap like Godrej No 1 , which is priced higher than the low TFM soap because of better quality then the volume used will be lower�. TFM is a key determinant of the quality of soap.

In case of oral care, the gap in category penetration between toothpastes and toothpowders has narrowed over the past five years.

* The change is taking place on the back of increased expenditures on advertising by companies and increased disposable incomes.
* Aspiration is a reason why consumers spend more and are upgrading to better quality products.
* According to NCAER, the number of aspirants in India alone is going to treble by 2013 to124 million households.
* FMCG major Hindustan Lever hiked its ad-spend by 45% to Rs. 303 crore during the first quarter ended March31, 2006. Colgate-Palmolive (India), on the other hand increased its ad spend by 31% to Rs 198 crore during the year 2005-06.

As per a presentation made to analysts by oral care leader Colgate-Palmolive (India), the category penetration of toothpastes has increased from 44% in 2001 to 49% in 2005, that of toothpowders has declined from 36% to 35%.

Fuelling aspirations are not only rising disposable incomes but also high-decibel advertisements which companies launch to pro-consumers into buying their brands of products.

It is not the ad spending alone the consumers get interested in buying a product but superior quality and long term benefits they derive out of it. U.S. Company Amway has made its entry into India, with their slogan of superior quality. But brand loyalty of consumers for Indian products and habit of using variety made Amway success a limited one. Now most Indian FMCG products are being manufactured at International standards. Irrespective of higher prices the Buyers are making a beeline for the superior ones.