How Data Can Help India’s FMCG Companies Make The Most Of The Opportunity In Bharat
The FMCG industry has started to take a keen interest in Bharat, i.e. the rural and semi-urban areas of the country.
According to Nielsen’s Report, rural India has started to outpace the urban counterparts in consumption.
After a brief lull, rural India has reported recovery, and sales have picked up again. In fact, companies like Dabur and HUL have reported that rural areas now account for 40-45% of their revenue.
This increasing consumption is driving a shift in the focus of FMCG companies. Add to that the penetration of smartphones and low-cost internet that has made consumers of Bharat more aware, well-informed, and curious to experiment with new products.
All these factors have contributed to making Bharat a fertile ground for FMCG companies to innovate and grow.
But what can they do to strengthen their position in Bharat? How can they maximize their sales and revenues in these areas? The answer lies in data.
How FMCG Companies Can Use Data To Grow In Bharat
Data is the new oil.
Cliché it may be, but the truth is if an FMCG company wants to consolidate its position as a leader in Bharat, it has to leverage the potential that data presents.
Here are some ways in which data can help India’s FMCG companies grow in Bharat.
1. Predict buyer’s behavior
The consumers of Bharat may have different tastes and needs than those living in urban areas. A simple example could be the difference in the family unit. People in rural and semi-urban areas often live in a large, joint family. The older generation might be unwilling to experiment with new products. Urban areas, on the other hand, have a nuclear setup that is willing to try new products.
Data analytics can help FMCG companies understand and then predict the behavior and preferences of the consumers. It can help companies capture data across various platforms such as social media and consumer surveys to understand the general sentiments of consumers and derive meaningful insights to strengthen the relationship with the consumers. So, FMCG companies cannot get a dependable understanding of consumer behavior accurately in each area without using analytics.
2. Planning distribution
Bharat is a fragmented market. It’s been said that the language and culture of people change every 100 kms. FMCG companies use data analytics to collect information such as untapped markets, the right location to open an outlet, and to identify optimum routes to distribute products to wholesale and retail outlets. It helps companies save costs by finding an optimal solution to reach consumers cost-effectively. Take Nestle India, for example. It realized that expanding direct distribution by adding more regions under its territory can help them triple their direct reach in the next few years. It has already helped them reach 50,000 villages directly. According to some experts, the phenomenal growth of FMCG in rural areas between 2007 and 2013 was just due to the distribution drive by FMCG companies.
3. Innovate product offerings
Every region has its own tastes and preferences. The only way to capture this market and build loyalty in consumers is by innovating the product offerings. Nestle, for instance, is experimenting with a new range of products and SKUs that target the rural and semi-urban areas. HUL has been doing 30-50 innovations every year to reach out to the deep pockets of the country. Using data analytics and business intelligence tools, companies can derive insights on what could appeal to the customer in a particular region, what drives them to purchase a product, and accordingly launch their product innovations.
4. Improve forecasting
If FMCG companies want to predict the future sales volume scientifically, identify the current market situation, and its implications on sales, then they would have to leverage data. Using business intelligence tools and data analytics, FMCG companies can build a predictive model and use what-if analysis to predict the outcome of sales under multiple situations. It could help them identify potential events and factors that could influence sales and structure their product launch strategy and marketing campaigns around it. These insights also prepare the company to optimize its inventory to ensure that the products do not go out-of-stock during crucial events such as festivals.
5. Fix right pricing
FMCG companies have to set the right price if they want to establish themselves as market leaders. With the help of data, companies can find out the impact of a price change on overall sales and its impact on the margin. It can build a pricing model to fix the right price for products across different categories. For example, it can help the company to determine the price elasticity for each product category and suggest optimal pricing for offers to drive sales and profit. The right pricing model has a direct impact on the sales margins and the bottom-line of the company.
6. Optimize Supply Chain
The supply chain is the foundation of an FMCG company’s success. If FMCG companies want to reach the deeper pockets of Bharat, they need to strengthen their supply chain and logistics. And they can leverage data analytics to enhance it. They can use it to streamline the process right from picking the product from the manufacturing plant to delivering it to the retail. The whole process can be made optimal and companies can save time and costs on tracking the delivery or fixing lapses in the process.
Conclusion
The FMCG industry is all set to strengthen its reach in every corner of the country. The increase in consumption, higher aspirations, and better income has led to rapid growth in consumer interest. That’s why the FMCG sector in rural and semi-urban India is poised to cross $220 billion by 2025. Of course, the only to make a mark in these areas is by leveraging data.