Marketing

Environment
FMCG Industry
 Kellogg’s
 Marico

Submitted By
Disha Sachan
JL19PG043
Acknowledgement
The successful completion of this project on Fundamentals of
Marketing has been possible only because of the continuous
guidance and assistance of my Professor Dr. Reeti Agarwal. I would
like to thank her for giving me the opportunity to prepare this
project which has helped me increase my knowledge on how actually
marketing environment affects an organisation and what is the
importance of understanding it. The project has been a great way of
learning and understanding how organisations work in such market
conditions.
Table of Contents
1. Meaning of Marketing Environment
2. Importance of Understanding Marketing Environment
3. Introduction to FMCG Industry
4. Macro factors affecting FMCG Industry
 Political Factors
 Economic Factors
 Demographic Factors
 Technology Factors
 Environmental Factors

5. Introduction to Companies

 Kellogg’s
 Marico

6. Micro Factors affecting Kellogg’s

7. Micro Factors affecting Marico

8. SWOT Analysis of Kellogg’s

9. SWOT Analysis of Marico

10. Conclusion

11. References and Bibliography

 Marketing
environment
Marketing environment is a blend of internal and external factors
and powers that surround the business and affect the organisation’s
capacity to build and maintain effective relationship with its clients.

There are two types of factors affecting Marketing environment.

1. Macro Environmental Factors

2. Micro Environmental Factors

The factors within an organisation that affects its objective to serve

its customers, suppliers, stakeholders, intermediaries and the
company itself are known as micro environmental factors. Since
these factors are within an organisation, they can be controlled with
actions and hence they referred as controllable factors or internal
factors.

The external factors that affect a business’s performance and

decision making are known as macro environmental factors. Since
these factors are outside the organisation hence they are
uncontrollable and are also known as external or uncontrollable
factors. These include demographic, economic, political,
technological, natural and cultural factors.
 Importance of
Understanding
Marketing
environment

1. Essential for planning

It is fundamental for the administration of the business to
comprehend the importance of marketing environment clearly as it
helps in planning various operations of the business such as planning
the nature and highlights of new items to be propelled in the market.
It additionally helps in planning various marketing strategies so as to
match the contributions of the organisation to the present market
conditions.

2. Understanding customers
Firms require understanding of marketing environment to
comprehend the accurate needs and necessities of its existing as well
as forthcoming customers. Various factors such as political impacts,
progression in the domain of innovation, increment in market share
of contender’s brands and change in government standards affects
the preference and inclination of customers.
There is a probability that even the most loyal clients leave their
preferred brands and go for products or services offered by
contenders attributable to their developing taste and upcoming
trends. Hence offering importance to marketing environment helps
organisation to retain its loyal customers and pull in new customers
as well.

3. Harp on opportunities

There are various productive opportunities that come along the way
of a business and with a devoted thoughtfulness regarding the
importance of marketing environment, the management can
catapult and harp on such opportunities like innovative technical
advancements that gives driving force in accomplishing the ideal
targets and objectives.

4. Helps understand competition and build strategies

An organisation can flourish in a competitive market by keeping a

detailed eye on contenders by checking and understanding the
feature of their products, level of customer service provided,
marketing and promotional strategies used to retain their customers
through loyalty cards, discount offers etc. to plan and construct
different business strategies.
 FMCG Industry
FMCG (Fast moving consumer goods) industry deals in products that
have a relatively short shelf life and are sold rapidly and at a
moderately low cost. Examples of FMCG include non-durable family
goods, refreshments, food items, personal care and other
consumables. Some food items such as fruits, vegetables, meat, dairy
are highly perishable and others such as soft drinks, candies, packed
food have shelf life from 6 months to 2 years.

Market Segmentation
2%
10%
Food and beverages
Personal care
15% Tobacco
Household care
53% lightning

20%

FMCG segment has been the 4th largest sector in Indian economy
with house hold and personal care representing 50% of FMCG sales
in India. Developing mindfulness, easier access and lifestyle changes
have been the key growth drivers for this division. The urban
segment (represents a revenue share of 55%) is the largest
contributor to the overall revenue generated by the FMCG segment
in India. However, over the recent couple of years, the FMCG market
has developed a quicker pace in rural India as compared to urban
India. Rural and semi-urban fragments are developing at a quick pace
and FMCG items account for 50% of total rural spending.

Macro factors
affecting FMCG
Industry
Macro factors are the significant external and uncontrollable factors
that impact on an organisation’s decision making and affect its
operation and performance.

Some of the major macro factors affecting FMCG industry are:

1. Political Factors
 Government implementation of certain restrictions on import
policies, however tax exemption in excise duty is given for
SMEs so as to increase the number of new players.
 Improvement of transportation and infrastructure in urban as
well as rural areas which will help widening the distribution
network.
 Ban on single use plastic can have a major impact on FMCG
Industry.

2. Economic Factors
 Overall slowdown in Indian economy has led to year-on-year
drop in volume growth in FMCG sector.
 Volume growth of 2019 in april-june quarter dropped by 10%
since last year.
 Reduction of demand in rural areas which in past were 1.5x
urban demand (in 2Q19) and have now come in line (1.1x in
4Q19) with urban demand.
 Although liquidity scenarios have been improved but they
remain far away from satisfactory levels.
 Increasing inflation and unemployment has been a major factor
for reduced demand.

3. Demographic factors
 Increasing population in India has a direct impact on FMCG
sector
 Various income and age groups, literature diversity, change in
family system has a great impact on FMCG industry.

4. Technology Factors
 Drastic lifestyle and cultural changes have been observed in
India in recent past which leads to increase in investment in
R&D.
 With new technologies arriving each day (eg. New packaging,
increased shelf life etc.) , companies need to change their
technologies very frequently to keep up with the competition.

5. Environmental Factors
 Environmental factors like climatic changes, reduced monsoons
etc. affects agriculture which in turn affects FMCG industry.
  Natural calamities like landslides and floods which are very
common in India affects FMCG sector badly.

Kellogg’s is an American multinational food manufacturing company

which was founded in 1900 as Sanitas Food Company by Will Keith
Kellogg and Dr. John H. Kellogg. The company produces cereals and
ready to eat convenience food and markets their items with various
well-known brands. Its mission statement is “Nourishing families so
they can flourish and thrive.” Kellogg’s Corn Flakes was one of the
oldest and most preferred breakfast cereals.

Kellogg’s entered Indian market in 1994 and was a complete failure

initially since there was a very little appetite for breakfast cereals in
early 90’s since Indians were in a habit of eating parathas and puris.
The company was overconfident and thus overlooked various critical
cultural aspects that prevailed in India. Indians consumed their milk
hot and sweetened with which Kellogg’s was unaware initially and
thus failed. Later the company realised its mistake and persuaded
Indians to use cold milk rather than hot milk and enjoyed success
with Frosties, which sweetened the milk when added to it and hence
Kellogg’s truly became a multinational and multicultural company.
Marico Limited is one of India’s leading FMCG Company which
provides consumer goods and services in areas of health, beauty,
personal care and wellness. It was founded on 2nd April 1990 by
Harsh Mariwala in Mumbai. Marico is available in more than 25
nations worldwide. It sustains various brands that have excellence in
classifications of hair care, skincare, grooming, healthy food and
household products.

Marico has 8 processing plants in India situated at Dehradun,

Pondicherry, Perundurai, Jalgoan, Baddi, Paldhi, Kanjikode and
Paonta Sahib. Alongside giving particular arrangements in the Indian
market, Marico additionally obliges worldwide clients with brands
that are localized to satisfy their needs.

Global presence of Marico

America Asia-Pacific Middle East

USA Afghanistan Bahrain
Canada Australia Iran
Bangladesh Israel
Bhutan Kuwait
Malaysia Lebanon
Nepal Oman
India Qatar
Pakistan Saudi Arabia
Singapore Sudan
 Sri Lanka UAE
Yemen

Micro environmental
factors affecting
Kellogg’s
For analysing micro environment of a company one needs to have a
great inside information about the company which is not easily
accessible. We can only say that Kellogg’s as a company is driven by
its mission and vision statements.

Competitors
 Industry competition
For solid living, numerous organisations like Britannia, Glaxo
Smithkline, ITC etc. have come up with nutrition bars and healthy
biscuits which can affect the overall market share of Kellogg’s.

 Brand competition
Organisations like Mohan Meakin and General Mills have been giving
Kellogg’s an extreme competition since it has entered the Indian
market. In the ongoing past, Britannia and Glaxo Smithkline have
likewise demonstrated great interest for entering in the breakfast
grains industry. Likewise there are low-values private names that
threaten to dissolve Kellogg’s overall market share.
Suppliers: Suppliers make an important link in a company’s overall
growth and Kellogg’s knows the importance of building relationship
with its supplier network for product distribution and improved
promotion.

Micro environmental
Factors affecting
Marico
Competitors
 Industry competition
Marico has never been in competition earlier since their choices
were way too different. But recently Marico has been trying to
explore the more competitive sectors where it is facing challenges
since multinational brands have already set their roots deep into
consumer’s mind.

 Brand Competition
Marico has recently entered enter into grooming products such as
hair gel and deodorants and breakfast cereals such as oats where the
competition is cutthroat since multinational brands are ruling these
sectors. For instance, Marico’s edible oil Saffola is facing tough
competition from Adani Wilmar’s edible oil brand Fortune. Saffola
oats is finding difficulty in beating PepsiCo’s Quaker Oats who has
been dominating since past few years in India.

Suppliers: With close teamwork, Marico has developed a close

relationship with its extensive network of suppliers which are
considered as an extension of Marico.

SWOT Analysis of
Kellogg’s
Strength
weakness
1. Kellogg’s adaptability and 1. Even if
consumers flexibility towards the need of
liked the taste, the product consumers
was too expensive initially

2. Has a lot of diversity with its 2. Kellogg’s

products are items being sold across 180
already present in every countries across the
market, hence not much globe
room for expansion

3. History of changing 3. Majority of

cereals food habits internationally
being too similar

4. Customisation of 4. Wrong
evaluation of products
projection in demand
Opportunities
Threats
1. New trends arising each day 1. Rising crop
prices because of with nutritional value in basket
bad monsoon.

2. Changing lifestyle 2. Customers

being price sensitive

3. Large room for product 3. Easily available

traditional innovation
breakfast at low price

4. People becoming more 4. Market Shifts

health conscious

SWOT Analysis of
Marico

Strengths
Weakness
1. Excellent network for 1. Less market share since there
distribution and product availability is presence of strong FMCG brands

2. Solid financial performance 2. Global presence is limited

3. Experienced management and 3. Strong competition from big

R&D domestic and international brands

4. Popular brands and good 4. High dependence on

visibility leads to strong brand loyalty Monsoons
 Opportunities
Threats
1. High growth options in rural areas 1. Competition from local products

2. Brand extension through mergers 2. Intense competition among

and acquisitions FMCG firms

3. Increased demand because of 3. Entry of international

increased purchasing power brands

4. Can target all age and income 4. High price fluctuations in

groups commodities.

Conclusion
After critically analysing the current market environment,
following conclusions can be made:
Indian economy is showing a decreasing trend since the
recent past with the decrease in GDP which is a major Macro
environmental factor for FMCG industry and the companies
should be pre prepared for the slowdown.
Stringent orders like ban on single use plastic should be
looked upon since the use of plastic is the most in FMCG
companies.
Changing lifestyle can be a great opportunity for bringing in
more healthy options since people are becoming more health
conscious day by day.

References and Bibliography

References have been taken from the book
Principles of Marketing
By Philip Kotler

Gary Armstrong

Prafulla Agnihotri
Other references have been taken from official sites of
Kellogg’s and Marico