1. 18/03/2008 Small is Big Prof. Atul Tandan Director MICA

2. 18/03/2008 Indian Economy YearGDP growth rate in % 2003-048.4 2004-058.3 2005-069.2 2006-079.7 2007-088.7 projected Source: Business Standard 1/03/08

3. 18/03/2008 The Indian Consumer - Age AgeTotal %Urban %Rural % 12-149.98.510.5 15-1913.513.613.5 20-2922.824.222.2 30-3920.020.319.9 40-4914.315.213.9 50+19.418.120.0 Source: IRS 2007

4. 18/03/2008 Market Classification The Globals: – Who buy the most expensive consumer products The Strivers: – Who buy the bulk of all consumer goods marketed in India The Seekers: –Who own some durables especially, televisions and small home appliances The Aspirers: – Who possess the most basic durables such as transistor radios, bicycles, and aspire for the rest The Deprived: –Who are generally not consumers of manufactured goods

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6. Consumer Diversity

7. 18/03/2008 Consumer Diversity India’s economic diversity matches its social diversity Class is difficult to define in India Incomes alone don’t define the class Purchase behaviour is related to cultural conditioning, location, source of income, education and occupation The salaried prefer the finance packages but the rural rich relying on agriculture make cash purchases

8. 18/03/2008 Small gives “Value” Small is convenient Small is affordable –Price Small is to attract –Non-users –One time users –New users Small saves the space

9. 18/03/2008 Small is Big For customers, small packs mean –Affordably priced products –Less investment –Reduced risk of buying And for companies, it translates into –Large volumes –Helps address diverse customer segment –Attracts non-users Single-serve packs are expected to find more prominence in low penetration categories like health food, baby products and more

10. 18/03/2008 Small is Big – Retail Outlets 15 million retail outlets spread across India Stamping the country with the epithet "Shopkeepers' Nation" More than 80% of these 15 million outlets are from small family businesses Source: The Times of India 29/11/2007

11. 18/03/2008 Small is Big Apart from paying less for a quality product, Indians are very sensitive to costs A large section of sachet users feel that they can restrict the consumption of the product by buying sachets Give consumers more of a chance to experiment with a larger range of brands Sachets also grow due to the Indian tendency of top-up shopping, as opposed to buying large quantities at the end of the month

12. 18/03/2008 Sachets: The Next Big (Small) Thing Mass market phenomenon 50 paise and Rs 1 are entry level Sachets are well ensconced in few categories and the trend will a rising one Increase category penetration of, which extends their appeal beyond just the lower end of the market Work better with single-use categories with a low frequency of purchase According to Kakkar, the market is polarised between the LPU consumers and those who prefer bottles

13. 18/03/2008 War within a Brand to get a market share Small pack vs. Big pack Sachet vs. small bottle –Nescafe –Sunsilk –Vaseline –Colgate –Nivea –Ponds –Maggi –Clinic All Clear –Dabur Honey

14. 18/03/2008 Small FMCG Shampoo Detergent Hair oil Fairness cream Toothpaste Shaving cream Soap

15. 18/03/2008 Novino

16. 18/03/2008 Small Packs FMCG companies are focusing more on smaller packs to tap the rural and smaller markets Small cos use trial packs in newer markets to attract new users

17. 18/03/2008 Small Packs Small unit packaging –Britannia’s Tiger Glucose Biscuit –Cadbury’s Dairy Milk Chocolate –Parle-G Inducing product trial –Coke Panch matlab chota Coke Thanda matlab Coca Cola Colgate Palmolive distributed free herbal toothpaste for trial use

18. 18/03/2008 Small Packs Shampoo of Rs.1000 crore category –80%t of sales of shampoos from 50 paise and Re 1 pack –CavinKare’s Chik shampoo prices at 50 paise for 8 ml Fairness cream of Rs. 900 crore category Sell almost 40% through sachets –Sachet of 9 gram of fairness cream costs Rs 5 and if you need 3 such packs translates 27grams for Rs 15. You also have a choice of buying a pack of 25 grams for Rs 28

19. 18/03/2008 Small Packs Sachet sales are strong in hair care and detergent categories Detergents –Large pack users prefer the convenience of buying only one pack at a time, rather than using a sachet each time to wash clothes. –Low and mid-tier detergent sachet users, sachets act as a great trial-builder to eventually move to large packs" a P&G spokesperson said Dabur’s Hajmola –Sachets are for a younger –Bottles are primarily a medicinal offering bought by older people

20. 18/03/2008 Small Packs Cadbury is pushing Bournvita at Rs 3.50 –To taste the product Starting price point for Cadbury Gems for instance is Rs. 1 for a pack of just four units –The lower price unit (LPU) at the company are growing at a healthy 30% Frito Lays considers it, –The Rs 5 and sub-Rs 5 segment –Offerings between Rs 5 and Rs 2 for namkeens –Rs 3 for Kurkure, co-exist with larger packs. –The number of transactions according to Anand (MD) is almost 50-50

21. 18/03/2008 Cadbury

22. 18/03/2008 Affordable Products Nestle’s brands –Maggi at Rs. 5 –KitKat at Rs. 2 CavinKare’s brand –Chik at Rs. 17 for 100 ml. Godrej Consumer Product Cinthol, Fairglow and Godrej No. 1 (50 gm at Rs.5) Hamam at Rs. 3.25

23. 18/03/2008 Hamam

24. 18/03/2008 Sachet, Not Striped Urban Contribution of Small Packs (% of Sales) Categories199820012007 (est.) Toothpowder35.742.957 Talcum Powder1318.128 Hair Oils9.811.515 Coffee8.313.323.3 All Biscuits1.44.410 Coconut Oil47.916 Toothpaste0.92.76.2 Mosquito Rep.1.34.19.7 Source: KEIC

25. 18/03/2008 Small is big Rural Contribution of Small Packs (% of Sales) Categories199820012007 (est.) Toothpowder49.865.895 Talcum Powder22.331.649 Hair Oils16.418.322.1 Coffee19.637.873 All Biscuits1.55.212.6 Coconut Oil6.413.126.5 Toothpaste0.83.48.5 Mosquito Rep.2.84.79 Source: KEIC

26. 18/03/2008 Pepsodent

27. 18/03/2008 Colgate

28. 18/03/2008 Small Packs - Cosmetics 'look good' products –Nail polish –Lipstick –Same penetration in metros and non-metros –Close to 30% of the new growth in these categories comes from less than 1 lakh towns

29. 18/03/2008 Small is Big New generation foods –(cheese, noodles, cornflakes) are growing; –36% of the growth in branded cornflakes –42% of the growth in noodles comes from small towns! However snacking (chips and colas) remains largely a metro phenomenon Source: The Economic Times 16/07/2003

30. 18/03/2008 Small is Dangerous Tobacco - Gutkha Turnover of close to Rs 25,000 crore 46.5% men 13.8% women use tobacco 250 million people use tobacco products –16% cigarettes smokers –44% bidis –rest use gutkha, mishri (roasted black tobacco powder applied to the gums)

31. 18/03/2008 Small is Big - Guthka

32. 18/03/2008 Manikchand

33. 18/03/2008 Rajni Gandha

34. 18/03/2008 Durable Small towns may be big in terms of their market potential and may not be as far behind the big metros as we think Non-metros are fast catching up with metros in penetration of – 'basic' durables Colour television, Refrigerator Source: NRS

35. 18/03/2008 High-end durables catch small towns' fancy According to ORG-GFK estimates, –Towns with a population < 1 lakh Source: The Economic Times 16/03/2005 Product NameTowns Contribution in % Product Category Growth in % Flat TV33214 Frost Free Refrigerator2831 Fully Auto. Wash. Mach. 2054 Growing disposable incomes in smaller towns Small price packs the most evident ploy to achieve these Pick-up in demand from smaller markets and rural areas

36. 18/03/2008 Nano Samsung AC

37. 18/03/2008 One Time Use – Pooja Samagri

38. 18/03/2008 Hospitality – Ginger Hotel Smart Basics™ –Signifies simplicity –Convenience –Informality –Style –Warmth –Modernity –Affordability A Tata Enterprise

39. 18/03/2008 Hospitality One time use –Soap –Shampoo –After save lotion –Body lotion cream –Toothpaste –Shaving cream –Face wash –Hair oil –Sugar –Milk powder –Tea –Coffee According to a report by HVS International, a total of 1,02,000 rooms will be added in the next five years in the Indian hotel industry Currently, India has some 1,975 hotels with over one lakh rooms Source: The Economic Times 2/4/07

40. 18/03/2008 Small requirements in Aviation Industry Small mineral water Toffee Chocolate Mouth pick Salt Sugar Jam Milk powder Tea Coffee Butter Three years ago, there were 130 commercial aircraft, and the number has now swelled to 350 The sector is poised to attract an investment of $200 billion. Increased fleet will enable approximately 2,000 commercial flights every day by 2020. Source: Business Line 22/11/07

41. 18/03/2008 Small is Beautiful – Mass Market Nano by Tata –1 lakh –Milestone for auto industry –Aspirations of India’s rising middle class –Solution to urban transport problems Congestion Environmental impact Bajaj - Renault Electric car by Field Marshal Group, Rajkot Rs. 99,000 Tata Bajaj - Renault

42. 18/03/2008 Small Size - Maruti

43. 18/03/2008 SAS Tractor 30hp

44. 18/03/2008 Engine/Lubricant Oil Key players –Castrol India Ltd –Indian Oil Corporation –Bharat Petroleum Corporation Ltd –Hindustan Petroleum Corporation Petrol Pumps keep the engine oil not to lose the customer

45. 18/03/2008 Lubricant

46. 18/03/2008 Cricket Test match –five days One Day Cricket –50:50 over Three hours –20:20 over Cricketor –Sunil Gavaskar –Sachin Tendulkar

47. 18/03/2008 IT - Wave of Miniaturisation Intel Corporation –Latest brand of mini microprocessor chip Intel Atom Intel Centrino Atom –Low-cost classmates PC will begin using the Intel Atom Apple iPod nano

48. 18/03/2008 World’s Smallest Gadgets Homes are becoming king size but lifestyle gadgets can be fitted into a doll’s house Gadgets fit into palm, briefcase and handbags Price factor makes people smile –Cheapest laptop MiLeap X Rs. 13,990

49. 18/03/2008 World’s Smallest Gadgets Worlds Smallest Digital Camera –Qualia 016(69 x 16.8 x 24 mm) –Two mega pixel images –Zoom facility –Store images on its memory stick –Flash –Four picture in rapid succession and combine into one image –Doesn’t require a manual instruction Sony

50. 18/03/2008 Conclusion Small is smart Small is future Small is for penetration and growth

51. 18/03/2008 Thank You E-mail: director@mica.ac.in Prof.AtulTandandirector@mica.ac.in Mobile: +91-98250-70915 Director, MICA

52. 18/03/2008