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David Krenkel and The Relevancy of Marketing in The FMGC Category

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David Krenkel and The Relevancy of Marketing in The FMGC Category

September 14
14:19 2022

                   

It is relevant to know the marketing background theory of this category to understand what sector your products are in and how you can improve profits. Let’s first define what FMGC stands for. Fast-moving consumer goods are products that sell very quickly and typically have a low cost. The average person buys goods in this category, usually in high demand, such as meat, dairy products, or even soft drinks. Due to high demand, they have a short shelf life and high store turnover. Most of these purchases are made impulsively; customers often do not plan to go to the store and buy these items but decide on the spot at the checkout line of supermarkets, warehouses, and grocery stores. For instance, people rarely add chewing gum to their shopping list, but given the moment at the checkout line, they impulsively decide to purchase them. Which items are part of this group? Here are a few examples: gum, candy, vegetables, sodas, cleaning supplies, etc.

FMGC Marketing Involvement 

The price is crucial as it must stay relatively low, so people do not hesitate to buy them. FMGCs tend to have weak involvement in purchases since the price is low compared to big purchases such as buying a brand-new house. Due to these characteristics, marketing strategies in this category are specific and must be tailored for this sector. If you look around in your local grocery store, there are several successful brands for which you have probably never seen any commercial. 

How is it possible that those brands are successful and don’t need to invest much into tv advertisements and other big marketing strategies, unlike companies producing cars? As described previously, deciding whether a customer will purchase gum is done at the actual point of sale. 

Even though the customer might see the commercial and like the product, they might not encounter it at their local grocery store and not purchase them. Therefore, investing in point-of-sale marketing materials such as flyers, posters, and brochures is usually much more effective. These materials are one of the most effective marketing strategies in this category as they attract customers’ attention, which may lead to increased sales. Another essential aspect in this category is the packaging itself. Marketers focus on the package design as it can catch people’s attention. The packaging must be not only practical but also a good experience, such as having attractive colors and a good logo to display.

Another reason why you do not see that often commercials for each brand in the chocolate bar category is that most of the brands are owned by a corporation, they own simply too many brands, therefore, do not have a high marketing budget to invest in expensive forms of advertisement. If we look at, for example, Mars Incorporated; they have brands like “Snickers,” “M&Ms,” “Skittles,” therefore smaller brands like “Winterfresh” (a brand for chewing gum) are not the biggest priority in terms of advertising due to low marketing budget activities in these sections; therefore, companies usually focus on point-of-sales materials rather than expensive marketing strategies. What is critical is the position of the product on the shelf. Space is usually limited, and due to being a competitive market, companies often fight for shelf space. 

Historically, products placed near eye level typically sell better than those that are too high or too low in people’s eyesight. There is limited space for the best position in grocery stores, so companies must compete for the most prestigious places to increase sales. Acquiring a good shelf position is lengthy, especially for startup companies with new brands. It is harder to compete with well-established brands and convince the retailer to give them a better position at the cost offered to those established brands. Those positions result from contracts between the companies producing those products and the retailers, which are not placed randomly. Companies’ managers strategically plan each position to maximize sales.

To sum it up, in terms of marketing in this category, the price cannot be high to discourage a customer from purchase, the actual place on the shelf matters. In terms of communication, it is proven that the point of sale is one of the most effective ways to grab people’s attention. As we know, FMCGs are sold in significant quantities and can be a good source of revenue, offsetting the low-profit margins to high volume sales. It can be a good source of income and a safe way to predict margins for the future.

For more info visit: https://www.linkedin.com/in/david-krenkel/

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