10/15/2019 Fast-moving consumer goods - Wikipedia

Fast-moving consumer goods

Fast-Moving Consumer Goods (FMCG) are products that are sold
quickly and at a relatively low cost. Examples include non-durable
household goods such as packaged foods, beverages, toiletries, over-the-
counter drugs, and other consumables.[1][2]

Many fast-moving consumer goods have a short shelf life, either as a result
of high consumer demand or as the result of fast deterioration. Some
FMCGs, such as meats, fruits, vegetables, dairy products, and baked goods
are highly perishable. Other goods, such as pre-packaged foods, soft
Store aisle of fast moving consumer
drinks, candies, and toiletries have high turnover rates. Sales are
goods
sometimes influenced by holiday and/or seasonal periods and also by the
discounts offered.

Packaging is critical for FMCGs. To become successful in the highly

dynamic and innovative FMCG segment, a company not only has to be
acquainted with the consumer, brands, and logistics, but also, it has to
have a sound understanding of packaging and product promotion. The
packaging has to be both hygienic and customer-attracting. Logistics and
distribution systems often require secondary and tertiary packaging to
maximize efficiency. Unit or primary packaging protects products and
extends shelf life while providing product information to consumers

The profit margin on FMCG products can be relatively small, but they are
generally sold in large quantities; thus, the cumulative profit on such
products can be substantial. According to BASES, 84% of professionals
working for fast-moving consumer goods are under more pressure to
quickly bring new products to the market than they were five or ten years
ago. With this in mind, 47% of those surveyed confessed that product
testing suffers most when deadlines are accelerated.[3]

The growth of the internet over the past quarter century and the rise of the
brand community phenomenon have contributed greatly to the demand for
FMCGs. For example, according to German research group AGOF's
internet facts, 73% of Germany's population is online. Additionally, 83.7% Soft drinks are FMCGs
of internet users claim to use the web to search for information and 68.3%
to shop online.[4] However, most FMCGs are not ordered online as most
consumers opt for the convenience of nearby brick and mortar stores for products in this category.

FMCGs are present in Monopolistic Competitive Markets( like that of soaps and shampoo)where product
differentiation plays a major role in determining sales and profits.

Contents
Characteristics
Rural consumers
ISIC definition
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Fast-moving consumer electronics

See also
References

Characteristics
The following are the main characteristics of FMCGs:[1]

From the consumer perspective

Frequent purchases
Low engagement (little or no effort to choose the item)
Low prices
Short shelf life
Rapid consumption
Price Comparison over online purchase by customer.
From the marketer perspective

High volumes
Low contribution margins
Extensive distribution
High inventory turnover

Rural consumers
Consumers in rural areas typically purchase goods from nearby towns and villages. Recently, there has been a shift in
consumer purchase behavior towards purchasing locally, that has prompted the need for better local promotional
efforts to generate brand awareness in small towns. FMCG's play a large part in the economy, as inelastic products
that touch every part of consumer life in one way or another. Businesses that supply FMCG's to a rural community can
help provide employment opportunities, as well as drive down the cost of such products in those rural areas. For
instance, the FMCG sector in India is the 4th largest sector in its economy and generates employment for more than 3
million people in downstream activities.[5]

ISIC definition
The retail market for FMCG's includes businesses in the following International Standard Industrial Classification
(ISIC) (Revision 3) categories:[6]

ISIC 5211 retail sales in non-specialized stores

ISIC 5219 other retail sales in non-specialized stores
ISIC 5220 retail sales of food, beverages and tobacco in specialized stores
ISIC 5231 retail sales of pharmaceutical and medical goods, cosmetic and toilet articles
ISIC 5251 retail sales via mail order houses
ISIC 5252 retail sales via stalls and markets
ISIC 5259 wholesale goods
ISIC 5269 wholesale medical prescriptions
Supplier industries for FMCGs include:

1512 fish and fish products

1513 fruit and vegetables
1514 vegetable and animal oils and fats
1520 dairy products
1531 grain mill products

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1532 starches and starch products

1533 animal feeds
1541 bakery products
1542 sugar
1543 cocoa, chocolate and sugar confectionery
1544 macaroni, noodles, couscous
1549 other food products
1551 spirits, ethyl alcohol
1552 wines
1553 malt liquors and malt
1554 soft drinks, mineral waters
1600 tobacco products
2101 pulp, paper and paperboard
2102 corrugated paper, containers
2109 other articles of paper and paperboard
2424 soap and detergents, cleaning preparations, perfumes
2430 men's and women's inner garments, shaving gels, deodorants , Personal care , Home Care

Fast-moving consumer electronics

Fast-moving consumer electronics are typically low-priced generic items with many comparable alternatives offering
similar functionality. Examples of consumer electronics include: mobile phones, MP3 players, game players,
earphones, headphones, OTG cables, and digital disposable cameras.

See also
Category management
Mass production
Trade promotion management
Shelf-ready packaging

References
1. Ramanuj Majumdar (2004). Product Management in India (https://books.google.com/books?id=ESJzaCJE3fQC&
pg=PA26&dq=what+is+fmcg&q=what%20is%20fmcg). PHI Learning. pp. 26–27. ISBN 978-81-203-1252-4.
Retrieved 2010-06-19.
2. Sean Brierley (2002). The Advertising Handbook (2nd, illustrated ed.). Routledge. p. 14. ISBN 978-0-415-24391-
9.
3. United States: Nielsen Bases Debuts Faster In-Home Product Testing Solution for Fast-Moving Consumer Goods.
(2018, August 23). Mena Report. from http://www.highbeam.com/doc/1G1-551430065.html?refid=easy_hf
4. Meister, S. (2012). Brand communities for fast moving consumer goods: An empirical study of members
behaviour and the economic relevance for the marketer. Wiesbaden: Springer Gabler.
5. Singaravelu, Dr. K. (October 2013). "RURAL CONSUMER BEHAVIOUR ON FAST MOVING CONSUMER
GOODS" (https://www.journalijdr.com/sites/default/files/issue-pdf/Download%201068.pdf) (PDF).
6. Aydın Çelen; Tarkan Erdoğan; Erol Taymaz (June 2005). "Fast Moving Consumer Goods Competitive Conditions
and Policies" (http://www.erc.metu.edu.tr/menu/series05/0503.pdf) (PDF). Economic Research Center, Middle
East Technical University. Retrieved 2007-07-09. , p.2-4

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