A Research On

Analytical analysis of association between Celebrity Advertisement & Brand Recall on FMCG In the partial fulfillment of comprehensive project study in semester III of Two Years MBA Programme

Submitted To: Prof Sharif Memon Sumittedd By:

Kandarp Prajapati Enrollment Number: 107140592028 Roll No: GLS 1033 Batch: 2010-12 Harshil Shah Enrollment Number: 107140592021 Roll No: GLS 1042 Batch: 2010-12

Table of Content
Sr.No 1 2 3 4 Content Research Methodology Literature Review Introduction To Industry Questionnaire Page No. 3 7 18 29

Chapter 1 Research Methodology

Research Methodology

TITLE OF THE PROJECT:

A Study association between Celebrity Advertisement & Brand Recall on FMCG

OBJECTIVES:
Macro objective: To study of association between Celebrity Advertisement & Brand Recall on FMCG Micro objective: Our research will answer following question: What is celebrity advertisement & brand recall? How do endorsement of celebrity effects the awareness of the product? Effect on sales after celebrity endorsement. Negative effect of endorsing a celebrity To study the brand attitude of people.

CHOICE OF RESEARCH DESIGN

Research design constitutes the blueprint for data collection, measurement and analysis of the data. Research design is the plan and structure of investigation so convinced to obtain answers to research question. A research design specifies the methods and procedures for conducting a particular study. The researcher should specif y the approach he intends to use with respect to the proposed study. Broadly speaking, research designs can be grouped into three categories

(1) Exploratory Research (2) Descriptive research (3) Causal Research

(1) Exploratory Research An exploratory research focuses on the discoveries of ideas and is generally based on secondary data. It is preliminary investigation that does not have a rigid design. (2) Descriptive Research A descriptive study is undertaken then the researcher wants to know t he characteristics of certain groups such as age, sex, educational level, income, occupation, etc. in contrast to exploratory studies, descriptive studies are well structured. (3) Causal Research A causal research is undertaken when the researcher is interested in knowing the cause and effect relationship between two or more variables. Such studies are based on reasoning along well-tested lines. Research design selected for this project is Descriptive. Descriptive research is based on survey It is intended to find answers for questions like why, who, whom, where, what and how much of the research which is on hand.

SCOPE
Time Scope: For completing this project we have taken a time period of three month with our study of the 4 th semester.

Sample Design: Sampling type: In this project convenient sampling method is used for the selection of customer. Sample Size: Sample size will be of 200.

Methods of Data Collection: Primary methods: 1. Questionnaire Secondary methods: 1. Magazines. 2. Newspapers 3. Websites 4. Books

FIELDWORK
In order to gather the primary data associated with our survey of consumers over a selected hub of areas in Ahmedabad, we have undergone an extensive fieldwork. The basic purpose of the field work was obviously to record the responses of target consumers.

Chapter 2 Literature Review

Literature Review

The air was laden with nervous excitement at Ballroom 1, Taj Lands End in Mumbai. It was an unusual sweaty February afternoon and yet the room was full of journalists and the rest. The press invite promised premiere of Compaq Presarios latest blockbuster starring Indias biggest superstar. The corporate communications people would not reveal anything else, preferring to keep that you will be shocked and bewildered kind of smug expression on their faces. The event started, HP Indias head honcho spoke briefly about the achievements and emphasized how historic the day was. The music and lights at the back went berserk for a brief while and out of the prop emerged Shahrukh Khan,the reigning Bollywood star, in a black leather jacket.A hush descended upon the gathering, with the flashbulbsbursting ever so rapidly. Shahrukh muttered a few words on Compaq and its affordable PCs for the Indian market. Posed for a few more photo-ops, answered a few questions and zoomed away presumably to his posh villa next door, leaving the gathering much content and overawed. This is the effect celebrities have on Indian audiences. Even sane and serious individuals are known to swoon in the presence of celebrities. The effect is most evident at airports: people go in a tizzy whenever there is a cricketer or a Bollywood star around. To state that Indians are starstruck would by no means be an exaggeration. We are an obsessed nation, keeping a tab on what our stars do, what they eat, what they useLittle surprise then that celebrities know their power and use them smartly too and the game is known as celebrity endorsements. The trend caught on in the late eighties or so, when television truly arrived in India. It was then that advertisers started using celebrities (namely film stars) to increase awareness for their products. And just after the Indian cricket team trounced West Indies at Lords by 43 runs to pick up the Prudential Cup in 1983, advertisers knew they had 11 more people to peddle their products. Thus, Kapil Dev was signed up for a host of advertisements ranging from BSA SLR bicycles to Palmolive shaving cream (Palmolive da jawaab nahin) and so were his other teammates.

A Heady Concoction:
Over the years, celebrity advertisements as a trend gained solid ground and evolved into celebrity endorsements.The difference between the two, endorsement and advertisement, is minor but significant. By endorsing a product, the celebrity not only appears in the adverts (like in advertisements) but also becomes a brand ambassador of sorts. He or she is supposed to know about the product and is often seen at different company events. Endorsements are pretty common for white goods (like consumer durables) or the FMCG sector, as the products require a higher brand recall. Thus a Coco Cola needed Hritik to counter Pepsis Shahrukh. But an IT product company like HP signing on a celebrity is indeed a surprise. The dynamics of the industry are quite different; a person would buy a laptop based on two main criteria, cost and configuration. Hence, debates were plenty on whether Shahrukh would help Compaq. Some even suggested that the move was a defensive one, in response to a Chinese companys push into Indian market. Quite a Saif Choice In 2005 a relatively unknown company from China, Lenovo, created a buzz across the world by buying out IBMs PC division for $1.25 bn. Suddenly it was in the big league, and yet it was not widely known. While in the Western markets the transition happened quite steadily, the story in India was a wee bit different. Thanks to the dumping of products by Chinese companies; the made in China tag reads cheap and unreliable in India. To counter this impression in India, Lenovo decided to enlist the services of Saif Ali Khan. After quite many years, Saif had found his foothold in the Indian film industry and was finally in the reckoning for the big league. Also, he had a much cleaner image in comparison to his peers. Lenovo snapped him on, with sister Soha Ali Khan, and splashed them all over town. The association with Saif is great. He has a healthy image and, more importantly, is choosy about endorsing products. We did not want to associate with a celebrity who was endorsing 35 different products. The result is there for all to see, says Deepak Advani, senior VP and chief marketing officer, Lenovo. Lenovo was one of the first few IT companies in India to use celebrities in a big way. Meanwhile, HP also seems to be pretty happy with the response to the Shahrukh adverts. Shahrukh is the right choice as his popularity cuts across gender, age, geographies. He is a technology buff, and a

content Compaq user. The association helped us to leverage his popularity among the masses to educate on the proposition of empowering people with their PCs, mentions Shuchi Sarkar, head (Marketing), Personal Systems Group, Hewlett-Packard India.

Peaks and Pitfalls:

Using a celebrity is like treading a fine line, as there area variety of things one needs to assess before going in for such endorsements. Do celebrity endorsements make sense for IT products? They do make sense. If it is an Amitabh Bachchan, Shahrukh Khan or Hritik Roshan, it surely makes sense, as they are known to be quite discerning in nature. Take Aamir Khan for that matter, who is quite a clever guy, you could put him on a forum with a bunch of industrialists and he will hold his own against them. These guys are very savvy in terms of FMCG, hardware, computers, IT, etc. In fact Amitabh Bachchan is a known collector of sophisticated toys, they enamor him to the extent that if you give him a new gizmo, he will sit with it for hours to figure out how it works, says adman Prahlad Kakkar, CEO, Genesis. He has been associated with celebrities for a long time with ads like Pepsi, et al. A celebrity does not guarantee success. The main issue is the idea. I think Lenovo has done a fine job in bringing the idea out and there is not much dependence on Saif. He is a part of the whole story and not merely peddling a product. Take for instance the face recognition commercial that is running now, it is a very straight benefit of how a computer recognizes you. As I said earlier, it all depends on the idea that you have, says Piyush Pandey, executive chairman and national creative director, O&M. He is renowned for the Fevicol and Cadbury campaigns. But adman Alyque Padamsee warns about selecting the right celebrity, as it can be quite crucial to the message that is spread. The important thing is to choose the right celebrity for the right product. Using tech savvy celebrities like Shahrukh and Saif for computers is a good choice. But it would not be really advisable to enlist Sachin Tendulkar to promote a computer brand, as his persona does not really match with the product, he says. Finally, there must be a need for a celebrity. For instance, product launches suit well with celebrity style endorsements. In this regards, Microsoft used Akshay Kumar and Yuvraj Singh quite well to sell X-Box 360. The product instantly caught on the fancy of the Indian users.

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Celebrity endorsements do make sense for IT products. If it is an Amitabh Bachchan, Shahrukh Khan or Hritik Roshan, it surely makes sense, as they are known to be quite discerning in nature. These guys are very savvy in terms of FMCG, hardware, computers, IT, etc
Prahlad Kakkar, CEO, Genesis

Cover story
What does gurus say..

On celebrity endorsements
Obviously, it works. Otherwise they would not be used as regularly. Though, let me tell you, that a great majority of advertisements are not celebrity driven, I have a feeling that not more than 10-12% are actually celebrity driven and the rest are your everyday ads. Now look at the power of celebrity endorsements, the perception today is that 90% of all ads are celebrity driven though it is quite the opposite. That means that the only ads that one remembers are the ones that have celebrities in them. Thus, celebrity endorsements do work, otherwise people would not be paying that kind of money to a celebrity, the difference is too huge. Celebrity endorsements do pay otherwise businesses would not shell out so much money for them.

Celebrity towering over the brand

There is a danger in that aspect also, the celebrity is so big that it completely vampires the product. That is a creative solution, if your creative is weak then the celebrity will tower over and if the creative is strong then he or she becomes part of the whole presentation. You cannot be lazy just because you have a celebrity, in fact one has to work all the more harder to justify the presence as the brand needs to stand shoulder-to-shoulder and not five step behind.
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Piyush pandey
executive chairman and national creative director, O&M

On IT and celebrity
Celebrity and computers are quite a credible match, as everyone uses a computer. The important issue is the idea.

Big money at stake

If you are paying that kind of money, you should be working very hard on it. It is like having a bad movie script and signing on Amitabh Bachchan. As no Mr Bachchan can really save you if your script is really bad. So all depends on how good is the match between the brand and the celebrity and what is the best balance between the brand, the celebrity and the idea.

Celebrity endorsements in India

Lot of celebrities are used in America, ditto for South East Asia. It is like this, if you have a good idea, who would not want a good actor? But yet again, let me emphasize on the need for a good script otherwise nobody benefitsneither the brand nor the celebrity. When a celebrity gets accolades for those lovely ads,take the case of Abhishek Bachchan for Motorola, then you feel it is a win-win situation for every one.

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Alyque Padmsee On celebrity endorsements

Celebrity endorsements work in India. The important thing is to choose the right celebrity for the right product. Using tech savvy celebrities like Shahrukh and Saif is a good choice. But it would not be really advisable to say use Sachin Tendulkar to promote a computer product, as his persona does not really match with the product. There must be a kind of bonhomie between the product and the celebrity.

Challenges
The challenges can be quite daunting as one needs to pay attention to the idea and not get carried away with the celebrity, and this is where many falter.

Big money at stake

Celebrities come at a price. The choice of a celebrity is dependent on the business needs. Are you launching a product, or is it a branding exercise? It is important to weigh the cost of using a celebrity vis--vis the expected returns.

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Mobility Wars
While IT companies might be new entrant in the celebrity endorsements game, mobile companies, both operators and OEMs, have been cavorting celebrities for sometime now. Airtel has extensively used celebrities in the past and continues to do so. The company used both Shahrukh and Sachin to spread the word about its products. Hutch was relatively slow on the celebrity front, letting its pug talk about the benefits. Even then, Hutch has employed the Indian cricket captain, Rahul Dravid, for endorsements. It used Dravid for the launch of its voice services and special brand promotions like World Cup Jao etc. Tata Indicom has also decided to woo the Indian audience in a big way through the Bollywood couple, Ajay Devgan and Kajol. In the past the company had signed on Saurav Ganguly and Irfan Pathan, but since both of them went through a slump, the company simply dumped them for the Devgans. In fact, at the launch of Tata Indicoms online store, Daryl Green, CEO, Tata Teleservices, was unusually joyful in the company of Kajol, stating that he was grateful to the couple for endorsing the products. The brand association has been a resounding success, he said. Meanwhile, Kajol could not even recall the Tata Indicom phone that she used, it is a nice black one, she stated. Reliance is another company that has used celebrities extensively: first it was Virender Sehwag and now it is Mahendra Singh Dhoni. Though it was not really renowned for the creative aspect in its campaigns. On the OEM front a resurgent Motorola signed on Abhishek Bachchan to reach the youth. Somehow the campaign does not seem to have been much of a success, as they are back to using creative without celebrities. Nokia and Sony, meanwhile, seem to be fairly reluctant to use a celebrity to promote their brand. The small players are also using celebrities, albeit the not so shining ones. Take the case of Fly Telecom, it used Malaika Arora-Khan for launching their product. And therein lies another

Money and More Money:

Celebrities dont come cheap, even the Indian ones. According to media reports, Shahrukh charges around Rs 5 crore per annum for brand endorsement, whereas Saif charges around Rs 2 crore. The Lenovo adverts also feature Soha Ali Khan, who is believed to charge Rs 3550 lakh for an endorsement deal. Now that Lenovo has signed up Saif and Soha again, there must have been a revision in those rates. In fact, now specialist celebrity management companies have emerged that mainly deal with managing a celebritys endorsement deals.
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But does all this money make sense? There is a greasy baniya sitting behind each company and if he ready to pay so much, then indeed it must be making sense, says Kakkar in his inimitable style.

Innovative Trends:
If you thought that glitzy commercials were all that were there to celebrity endorsements, then you couldnt be more mistaken. A lot of IT companies use celebrities for a small stint, without really signing them on. For instance, Microsoft hosted a Bollywood extravaganza, with stars like Akshay Kumar, Kareena Kapoor, Priyanka Chopra, etc to mark the launch of Vista in India. IBM had enlisted the services of Dia Mirza for emceeing their event, when Sam Palmisano had come visiting. Sun Microsystems had also taken on Perizad Zorabian for a dealer event. Compaq has innovated a product placement strategy on the Kaun Banega Crorepati show. Not only is the Lenovo computerji replaced by a Compaq, host Shahrukh frequently requests Compaq daro (brother in Tamil and other regional languages) to check the answers given by the contestants KBC is a new thing we have just done with SRK. Watch this space for some more exciting stuff, promises Sarkar.

The naked truth about celebrity endorsements :

The pitfalls of the celebrity endorsement were thrown into sharp relief yesterday with the news that two of its brightest (and most expensive) stars do not use the products they advertise. The pitfalls of the celebrity endorsement were thrown into sharp relief yesterday with the news that two of its brightest (and most expensive) stars do not use the products they advertise. In the US, a lawsuit filed by a consumer group forced sports giant Nike to admit Tiger Woods does not use the Nike Tour Accuracy golf balls he is paid 694,000 a year to endorse. In his recent run of victories, he has used a modified ball, created specially for him. The lawsuit, brought by a non-profit organisation called Public Remedies Inc, claims Nike was

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misleading golfers into thinking they were playing with the same ball as Woods, and demands the company returns its "ill-gotten gains" to the public. In Britain, Jamie Oliver, the omnipresent Naked Chef who broke a BBC precedent to front a 1m advertising campaign for supermarket chain Sainsbury, has admitted he uses independent suppliers. "I do not buy from Sainsbury's for my restaurant," he said. "For any chef, supermarkets are like a factory. I buy from specialist growers, organic suppliers and farmers." It was pointed out in Oliver's defence that restaurants do not use supermarkets for supplies, and the adverts show him in a domestic setting. But Woods and Oliver are not the first celebrities hoist by their own endorsements. Australian spin bowler Shane Warne was caught smoking, after pharmaceutical giant Upjohn and Pharmacia, makers of Nicorette chewing gum, had sponsored him for 84,000 to quit. Actress Helena Bonham Carter was signed as the face of Yardley cosmetics, then admitted she didn't wear makeup. But, said David Benady, deputy editor of Marketing Week magazine, sponsors should not be surprised. "If you've got a top footballer or pop star they're not always the most dependable. Things can go wrong, and often do." He cited Pepsi's use of singer Michael Jackson until damaging claims about his sex life came to light. "With Jamie Oliver and Tiger Woods, (the revelations) might not necessarily be bad for business, but it just looks silly. You would expect Jamie Oliver to go to Sainsbury's." In the world of celebrity endorsement, some associations look unlikely, such as Ivana Trump's endorsement of Kentucky Fried Chicken, or the advertising by comedian Jim Davidson, who recently signed a 3.5m two-year deal with the BBC, of a car finance company, under the slogan: "Need a car but can't get credit?" "With Jim Davidson, you are targeting a certain sector of the population," said Mr Benady. "It won't matter if they aren't going to use the product themselves, it matters that they identify with the brand."

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Matthew Patten, chief executive of M&C Saatchi Sponsorship, said: "If you look at sport and entertainment, coverage used to be about the sport, or the entertainment. Now it's all about personalities, which makes endorsement all the more effective." Savvy marketing men are ensuring their "celebrity"is never likely to misbehave, by using techno-personalities, such as Lara Croft in Lucozade ads, or even dead celebrities, such as those in an ad for After Eights.

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Chapter 3 Introduction To FMCG Industry

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Introduction To FMCG Industry

Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars. Indias FMCG sector is the fourth largest sector in the economy and creates employment for more than three million people in downstream activities. Its principal constituents are Household Care, Personal Care and Food & Beverages. The total FMCG market is in excess of Rs. 85,000 Crores. It is currently growing at double digit growth rate and is expected to maintain a high growth rate. FMCG Industry is characterized by a well established distribution network, low penetration levels, low operating cost, lower per capita consumption and intense competition between the organized and unorganized segments. The Rs 85,000-crore Indian FMCG industry is expected to register a healthy growth in the third quarter of 2008-09 despite the economic downturn. The industry is expected to register a 15% growth in Q3 2008-09 as compared to the corresponding period last year. Unlike other sectors, the FMCG industry did not slow down since Q2 2008. the industry is doing pretty well, bucking the trend. As it is meeting the every-day demands of consumers, it will continue to grow. In the last two months, input costs have come down and this will reflect in Q3 and Q4 results. Market share movements indicate that companies such as Marico Ltd and Nestle India Ltd, with domination in their key categories, have improved their market shares and outperformed peers in the FMCG sector. This has been also aided by the lack of competition in the respective categories. Singleproduct leaders such as Colgate Palmolive India Ltd and Britannia Industries Ltd have also witnessed strength in their respective categories, aided by innovations and strong distribution. Strong players in the economy segment like Godrej Consumer Products Ltd in soaps and Dabur in toothpastes have also posted market share improvement, with revived growth in semi-urban and rural markets.

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Industry Category and Products Household Care

Personal Wash:The market size of personal wash is estimated to be around Rs. 8,300 Cr. The personal wash can be segregated into three segments: Premium, Economy and Popular. The penetration level of soaps is ~92 per cent. It is available in 5 million retail stores, out of which, 75 per cent are in the rural areas. HUL is the leader with market share of ~53 per cent; Godrej occupies second position with market share of ~10 per cent. With increase in disposable incomes, growth in rural demand is expected to increase because consumers are moving up towards premium products. However, in the recent past there has not been much change in the volume of premium soaps in proportion to economy soaps, increase in prices has led some consumers to look for cheaper substitutes.

Detergents:The size of the detergent market is estimated to be Rs. 12,000 Cr. Household care segment is characterized by high degree of competition and high level of penetration. With rapid urbanization, emergence of small pack size and sachets, the demand for the household care products is flourishing. The demand for detergents has been growing but the regional and small unorganized players account for a major share of the total volume of the detergent market. In washing powder HUL is the leader with ~38 per cent of market share. Other major players are Nirma, Henkel and Proctor & Gamble.

Personal Care Skin Care:The total skin care market is estimated to be around Rs. 3,400 Cr. The skin care market is at a primary stage in India. The penetration level of this segment in India is around 20 per cent. With changing life styles, increase in disposableincomes, greater product choice and availability, people are becoming aware about personal grooming. The major players in this

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segment are Hindustan Unilever with a market share of ~54 per cent, fol-lowed by CavinKare with amarket share of ~12 per cent and Godrej with a market share of ~3 per cent.

Hair Care:The hair care market in India is estimated at around Rs. 3,800 Cr. The hair care market can be segmented into hair oils, shampoos, hair colorants & conditioners, and hair gels. Marico is the leader in Hair Oil segment with market share of ~ 33 per cent; Dabur occu-pies second position at ~17 per cent.

Shampoos:The Indian shampoo market is estimated to be around Rs. 2,700 Cr. It has the penetration level of only 13 per cent in India. Sachet makes up to 40 per cent of the total shampoo sale. It has low penetration level even in metros. Again the market is dominated by HUL with around ~47 per cent market share; P&G occupies second position with market share of around ~23 per cent. Antidandruff segment constitutes around 15 per cent of the total shampoo market.The market is further expected to increase due to increased marketing by players and availability of shampoos in affordable sachets.

Oral Care:The oral care market can be segmented into toothpaste - 60 per cent; toothpowder - 23 per cent; toothbrushes - 17 per cent. The total toothpaste market is estimated to be around Rs. 3,500 Cr. The penetration level of toothpowder/toothpaste in urban areas is three times that of rural areas. This segment is dominated by Colgate-Palmolive with market share of ~49 per cent, while HUL occupies second position with market share of ~30 per cent. In toothpowders market, Colgate and Dabur are the major players. The oral care market, especially toothpastes, remains under penetrated in India with penetration level ~50 per cent.

Food & Beverages Food Segment :The foods category in FMCG is gaining popularity with a swing of launches by HUL, ITC, Godrej, and others. This category has 18 major brands aggregating Rs. 4,600 Cr. Nestle and Amul slug it out in the powders segment. The food category has also seen innovations like
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softies in ice creams, ready to eat rice by HUL and pizzas by both GCMMF and Godrej Pillsbury.

Tea :The major share of tea market is dominated by unorganized players. More than 50 per cent of the market share is capture by unorganized players. Leading branded tea players are HUL and Tata Tea.

Coffee :The Indian beverage industry faces over supply in segments like coffee and tea. However, more than 50 per cent of the market share is in unpacked or loose form. The major players in this segment are Nestl, HUL and Tata Tea.

Growth Prospect Large Market India has a population of more than 1.150 Billions which is just behind China. According to the estimates, by 2030 India population will be around 1.450 Billion and will surpass China to become the World largest in terms of population. FMCG Industry which is directly related to the population is expected to maintain a robust growth rate.

Spending Pattern An increase is spending pattern has been witnessed in Indian FMCG market. There is an upward trend in urban as well as rural market and also an increase in spending in organ-ized retail sector. An increase in disposable income, of household mainly because of in-crease in nuclear family where both the husband and wife are earning, has leads to growth rate in FMCG goods.

Changing Profile and Mind Set of Consumer People are becoming conscious about health and hygienic. There is a change in the mind set of the Consumer and now looking at Money for Value rather than Value for Money. We have seen willingness in consumers to move to evolved products/ brands, because of changing lifestyles, rising disposable income etc. Consumers are switching from economy to

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premium product even we have witnessed a sharp increase in the sales of packaged water and water purifier. Findings according to a recent survey by A. C. Nielsen shows about 71 percent of Indian take notice of packaged goods labels containing nutritional information compared to two years ago which was only 59 per cent.

Advantages To The Sector Governmental Policy Indian Government has enacted policies aimed at attaining international competitiveness through lifting of the quantitative restrictions, reducing excise\ duties, automatic foreign investment and food laws resulting in an environment that fosters growth. 100 per cent ex-port oriented units can be setup by government approval and use of foreign brand names is now freely permitted.

India is second largest Central & State Initiatives Recently Government has announced a cut of 4 per cent in excise duty to fight with the slowdown of the Economy. This announcement has a positive impact on the industry. But the benefit from the 4 per cent reduction in excise duty is not likely to be uniform across FMCG categories or players. The changes in excise duty do not impact cigarettes (ITC, Godfrey Phillips), biscuits (Britannia Industries, ITC) or ready-to-eat foods, as these prod-ucts are either subject to specific duty or are exempt from excise. Even players with manu-facturing facilities located mainly in tax-free zones will also not see material excise duty savings. Only large FMCG-makers may be the key ones to bet and gain on excise cut.

Foreign Direct Investment (FDI) Automatic investment approval (including foreign technology agreements within specified norms), up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies (OCBs) investment, is allowed for most of the food processing sector except malted food, alcoholic beverages and those reserved for small scale industries (SSI). There is a continuous growth in net FDI Inflow. There is an increase of about 150 per cent in Net Inflow for Vegetable Oils & Vanaspati for the year 2008.

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Market Opportunities Vast Rural Market Rural India accounts for more than 700 Million consumers, or ~70 per cent of the Indian population and accounts for ~50 per cent of the total FMCG market. The working rural population is approximately 400 Millions. And an average citizen in rural India has less then half of the purchasing power as compare to his urban counterpart. Still there is an untapped market and most of the FMCG Companies are taking different steps to capture rural market share. The market for FMCG products in rural India is esti-mated ~ 52 per cent and is projected to touch ~ 60 per cent within a year. Hindustan Unilever Ltd is the largest player in the industry and has the widest market coverage. Export - Leveraging the Cost Advantage Cheap labor and quality product & services have helped India to represent as a cost advantage over other Countries. Even the Government has offered zero import duty on capital goods and raw material for 100% export oriented units. Multi National Companies out-source its product requirements from its Indian company to have a cost advantage. India is the largest producer of livestock, milk, sugarcane, coconut, spices and cashew apart from being the second largest producer of rice, wheat, fruits &vegetables. It adds a cost advantage as well as easily available raw materials.

Sectoral Opportunities Major Key Sectoral opportunities for Indian FMCG Sector are mentioned below:

Dairy Based Products India is the largest milk producer in the world, yet only around 15 per cent of the milk is processed. The organized liquid milk business is in its infancy and also has large long-term growth potential. Even investment opportunities exist in value-added products like desserts, puddings etc.

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Packaged Food Only about 10-12 per cent of output is processed and consumed in packaged form, thus highlighting the huge potential for expansion of this industry.

Oral Care The oral care industry, especially toothpastes, remains under penetrated in India with penetration rates around 50 per cent. With rise in per capita incomes and awareness of oral hygiene, the growth potential is huge. Lower price and smaller packs are also likely to drive

Beverages Indian tea market is dominated by unorganized players. More than 50% of the market share is capture by unorganized players highlighting high potential for organized players.

Company Prospects

Hindustan Unilever Limited Unilever is lowering its expenditure on packaging across its portfolio of food brands as part of a wider cost-cutting drive. HUL has pared down the colour palette used for print-ing across many products. The system has been used to reduce printed packaging costs for Unilevers products. It is also eco-friendly because it reduces waste in the printing process. HUL is taking different steps to reduce the cost and increase the margin. Hindustan Unilevers product - Pureit (a water purifier) has received the UNESCO Water Digest Water Award 2008-2009 in the category of best domestic non-electric water puri-fier. Pureit received the award for outstanding contribution in the field of water in India. The product is available across 21 Indian states and has reached more than 1 million homes in India giving them access to microbiologically safe drinking water. Pureits performance has been tested by leading international & national medical, scien-tific & public health institutions and meets the germ-kill criteria of the Environmental Pro-tection Agency, the drinking water regulatory agency in the USA.

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Procter & Gamble Hygiene & Health Care Limited (P&G) The Company has 21 product categories out of which only 8 product have presence in India. The company is planning to launch the rest 13 product in India. The company expects to see a growth in other categories. The company has an aggressive plan to set up 20 new factories across the World out of which 19 is expected to come in emerging markets and most of them would be seen in Brazil, Russia, India, and China (BRIC) nations. Whisper which is one of the companys power brands has recorded 50 per cent market share in urban India.

Godrej Consumer Products Limited (Godrej) The Board of Directors of Godrej Consumer Products Limited (GCPL) has approved the acquisition of 50 per cent stake of its joint venture partner SCA Hygiene Products stake in Godrej SCA Hygiene Limited. After the transaction, the Joint Venture which owns the Snuggy brand of baby diapers will become a 100 per cent subsidiary of GCPL. Godrej Consumer Products Limited has acquired 100 per cent stake in the Kinky Group Limited, South Africa. Kinky is among one of the largest brand into hair segment with product portfolio.

Dabur India Limited (Dabur) Dabur has entered into the malted food drink market with the launch of a new health drink Dabur Chyawan Junior. According to the company, they expect to capture a market share of 10 per cent of the Rs. 1,900 Crores malted food drink market over the next two years. Dabur has acquired 72.15 per cent of Fem Care Pharma Ltd (FCPL), a leading player in the womens skin care products market, for Rs 203.7 Crores in an all-cash deal. The Company is expected to create synergy by this deal. Dabur got approval from Government of Himachal Pradesh to set up another medicine manufacturing unit. The project has an expected investment of Rs. 130 Crores.

Colgate-Palmolive (India) Limited Colgate Palmolive (India) Ltd, which is currently holding 75 per cent of the share capital of SS Oral Hygiene Products Private Ltd, Hyderabad, has acquired the remaining 25 per cent share capital from the local shareholders at an aggregate price of Rs 77.70 lakh.

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Consequently, SS Oral Hygiene Products has become a wholly owned subsidiary of the company.

Nestle India Limited Nestle is planning to invest Rs 6 billion in India in 2009 for expansion of its business in the country.The company which has allotted an investment of Rs 3 billion in the Indian market in 2008, would be doubling the investment in 2009 as part of its business strategy. Nestle International is reinvesting and expanding in India and Nestle India will have all the financial resources to expand and grow from the parent company. Nestle India reported a good increase in its standalone net profit for the second quarter.During the quarter, the profit of the company rose 26.54% to Rs 1,210.90 million from Rs 956.90 million in the same quarter, last year. The company posted earnings of Rs 12.56 a share during the quarter, registering 26.61% growth over prior year period. Net sales for the quarter rose 23.45% to Rs 10,356.30 million, while total income for the quarter rose 23.78% to Rs 10,423.40 million, when compared with the prior year period.

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Swot Analysis
Strengths: Low operational costs Presence of established distribution networks in both urban and rural areas Presence of well-known brands in FMCG sector Weaknesses: Lower scope of investing in technology and achieving economies of scale, especially in small sectors Low exports levels "Me-too products, which illegally mimic the labels of the established brands. These products narrow the scope of FMCG products in rural and semi-urban market. Opportunities: Untapped rural market Rising income levels, i.e. increase in purchasing power of consumers Large domestic market- a population of over one billion. Export potential High consumer goods spending Threats: Removal of import restrictions resulting in replacing of domestic brands Slowdown in rural demand Tax and regulatory structure

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Chapter 4 Questionnaire

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Questionnaire
I am the student of GLS-ICT, Ahmadabad pursuing Master of Administrations, conducting a survey on Association between Celebrity Endorsement and Brand recall. Please, cooperate me in this survey by giving your responses, your views will be used only for purpose of academic research.
Name: ______________________________________________________________________________ Age: _________________________ Occupation: _____________________________________

1. Through which media, you come to know about the FMCG product? a. Print Media (News paper, Magazine) c. Electronic Media (TV, Internet) b. Word of Mouth d. Other (Radio, Bill Board, Banner, Hoardings) 2. Which is your favourite Celebrity? a. Amitabh Bachchan d. Katrina Kaif b. M S Dhoni e. Aishwarya rai c. Shahrukh Khan f. Other_________ 3. Do you purchase the product because of your favourite celebrity endorsing it? a. Yes b. No 4. If yes, which particular brand do you prefer in FMCG sector? (Put product name) a. Cold Drink: _________________________________ b. Food: _________________________________ c. Chocolate: _________________________________ d. Body/Beauty Care: 1. Soap: _________________________________ 2. Shampoo: _________________________________ 3. Cream: _________________________________ 5. During purchase what influences your purchase? (Rank it 1 to 5) a. Cost / Price _________________ b. Celebrity Advertisement _________________ c. Quality & Quantity ________________ d. Experience _________________ e. Other (Packaging, Trial) _________________ 6. Do you think, products sales are higher because of celebrity Advertisement? a. Yes b. No c. May be 7. Do you think that, Celebrity give a true picture of products through Advertisement? a. Yes b. No c. May be

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8. How often is your purchase decision based on Celebrity Advertisement recall? a. Mostly c. Rarely b. Often d. Never

9. Which Product comes to your mind, from when you think of the following Celebrities? (Put product name) a. Amitabh Bachchan ___________________________________________ b. Shahrukh Khan ___________________________________________ c. Aishwarya rai ___________________________________________ d. M S Dhoni ___________________________________________ e. Sachin Tendulkar ___________________________________________

10. Do you believe that, Celebrity Endorsement on advertisement motivate you to purchase? a. Strongly Agree c. Agree e. Neutral b. Strongly Disagree d. Disagree

Thanks for Your Valuable Contribution

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