How new brands can crack FMCG market

The FMCG market in India is estimated to be $110 billion today and is expected to double to over $200 billion by 2025. Given the size of the market, it is natural that many players see an opportunity to carve out a space for their brands. However, unlike western countries, which are homogeneous, India is a heterogeneous market with diverse preferences, many cultures, and disparity in income levels.

To win in a complex market like India, brands need to get three things right:

Focus on only one consumer segment

Companies need to decide whether they want to focus on the higher-income population or the middle-class or the lower-income population. This is important because the business model to reach each of these consumer segments is different - for higher income consumers, you need a smaller footprint, have a different product range, and a consumer value proposition designed for aspiration; while as you move to target a wider audience the footprint required is wider and the value proposition design needs to be able to cater to more basic needs.

Also Read: FMCG industry recovers on higher urban consumption

Focusing on all segments, at the same time does not work because resources are spread too thin, which makes it difficult for a company to win and create value in any one segment.

Developing a differentiation

In a cluttered and diverse market, it is important the brand is differentiated. There are several formal ways to get to a unique positioning but some of the simpler and easier ways are to develop your brand archetype early and focus on a single consumption occasion to gain traction.

Many new entrants leave the positioning to intuitive thinking, which may work, but if it does not the cost of pivoting to a new position is high and wastes precious time. It is, therefore, always better to validate the positioning using formal consumer research and get the confidence to spend money to communicate the positioning.

Invest behind in integrated marketing execution

Marketing requires a lot of different unique activities like developing insights, market opportunity mapping, developing the positioning and communication assets, and then scaling the brand up using media channels, D2C, e-commerce platforms, and traditional distribution channels.

Also Read: How FMCG companies can beat growing inflation

For a young brand, doing all the activities requires time, capital, and expertise. In a rush for results, brands often over-invest in only one of the activities, which makes the execution of the positioning suffer, resulting in a lower return on the investment.

To maximise return, brands must think in terms of building expertise in integrated marketing, which helps in generating better returns and developing marketing capability within an organisation. Building brands in India is a lucrative long-term opportunity, but it must be attempted right. The cost of pivoting is often high because differentiated products are not easy to create and repositioning brands is expensive.

(The writer is founder of NorthSide)