fmcg agency business plan

A step-by-step guide to starting an FMCG business

FMCG or fast-moving consumer goods are everyday items that an average consumer uses regularly.

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FMCG Business Strategy: A Comprehensive Guide

Updated: Feb 15

Introduction:

In the fast-paced world of Fast-Moving Consumer Goods (FMCG), businesses are constantly striving to stay ahead of the competition. With consumers demanding convenience, quality, and affordability, FMCG companies face unique challenges and opportunities. To navigate this dynamic landscape successfully, CEOs and business decision-makers must develop and implement effective FMCG business strategies. In this comprehensive guide, we will delve into the intricacies of FMCG business strategy, providing valuable insights and actionable tips for driving growth and success in the industry.

Understanding FMCG Business Strategy:

FMCG business strategy encompasses a range of tactics and initiatives aimed at maximizing market share, profitability, and brand equity in the consumer goods industry. From product development and pricing to distribution and marketing, every aspect of an FMCG business must align with a cohesive strategy to achieve sustainable growth and competitive advantage.

Key Components of FMCG Business Strategy:

Product innovation and development:.

● FMCG companies must continuously innovate and develop new products to meet evolving consumer needs and preferences. Innovation can take various forms, including new product formulations, packaging designs, and value-added features.

● Investing in research and development (R&D) to create innovative offerings that differentiate the brand from competitors. This involves conducting market research, consumer surveys, and trend analysis to identify emerging opportunities and unmet needs.

● Adapting to changing consumer trends, such as the growing demand for organic and sustainable products, to stay relevant in the market. This requires agility and flexibility in product development processes, as well as collaboration with suppliers and industry partners.

Go-To-Market (GTM) Strategy :

● The Go-To-Market strategy outlines how a company will bring its products to market and reach target consumers effectively. It encompasses aspects such as market segmentation, distribution channels, pricing strategies, and promotional tactics. A comprehensive GTM strategy is essential for FMCG companies to maximize market penetration and drive sales.

FMCG Pricing Strategy:

● Implementing a dynamic pricing strategy that balances profitability with affordability to attract price-sensitive consumers. Pricing decisions should be based on factors such as production costs, competitor pricing, and consumer willingness to pay.

● Utilizing data analytics and market research to optimize pricing strategies based on competitor pricing, consumer demand, and market dynamics. This involves analyzing sales data, conducting pricing experiments, and monitoring competitor pricing trends.

● Offering promotional pricing and discounts to stimulate sales and drive consumer engagement. Promotions can include discounts, coupons, rebates, and bundling offers, which can be targeted to specific customer segments or used to clear excess inventory.

FMCG Distribution Channels:

● Establishing a robust distribution network to ensure widespread availability of FMCG products across diverse markets and channels. Distribution channels can include supermarkets, convenience stores, online retailers, wholesalers, and direct-to-consumer channels.

● Leveraging technology and data-driven insights to optimize distribution channels and streamline logistics processes. This involves using tools such as supply chain management software, inventory forecasting algorithms, and route optimization algorithms.

● Partnering with retailers, wholesalers, and e-commerce platforms to expand market reach and enhance product visibility. Collaboration with channel partners is essential for gaining access to new markets, securing shelf space, and executing promotional campaigns.

Marketing and Branding:

● Developing a strong brand identity and positioning that resonates with target consumers and sets the brand apart from competitors. Branding encompasses elements such as brand name, logo, packaging, messaging, and brand personality.

● Implementing multi-channel marketing campaigns to build brand awareness, drive customer acquisition, and foster brand loyalty. Marketing channels can include advertising, public relations, social media, content marketing, events, and influencer partnerships.

● Embracing digital marketing strategies, such as social media marketing and influencer partnerships, to engage with consumers and amplify brand messaging. Digital marketing offers opportunities for targeted advertising, real-time engagement, and personalized communication with consumers.

Product Strategy :

● A well-defined product strategy is essential for FMCG companies to stay relevant and competitive in the market. This involves continuous product innovation, portfolio optimization, and adaptation to changing consumer preferences. FMCG companies must invest in research and development to introduce new products, improve existing offerings, and differentiate themselves from competitors.

Customer Experience:

● Prioritizing customer satisfaction and loyalty by delivering exceptional product quality, service, and support. Customer experience encompasses every interaction that consumers have with the brand, from product purchases to post-purchase support.

● Implementing customer-centric initiatives, such as personalized promotions and loyalty programs, to enhance the overall customer experience. Personalization can involve tailoring product recommendations, offers, and communications based on individual customer preferences and behavior.

● Soliciting feedback from customers and incorporating their input into product development and marketing strategies. Customer feedback can provide valuable insights into product performance, satisfaction levels, and areas for improvement, enabling continuous refinement and innovation.

Case Studies:

To illustrate the effectiveness of FMCG business strategies in action, let's explore two case studies:

Procter & Gamble (P&G):

● P&G is a global leader in the FMCG industry, known for its portfolio of iconic brands such as Tide, Gillette, and Pampers.

● The company's strategic focus on product innovation, brand building, and customer-centricity has enabled it to maintain market leadership and drive sustainable growth.

● P&G's investments in R&D, marketing, and distribution have allowed it to adapt to changing consumer preferences and expand into emerging markets successfully.

● Unilever is another FMCG powerhouse with a diverse portfolio of brands spanning food, personal care, and home care categories.

● The company's sustainable living plan, which focuses on environmental and social responsibility, has resonated with consumers and stakeholders worldwide.

● Unilever's commitment to sustainability, coupled with its strong brand equity and distribution network, has positioned it as a leader in the FMCG industry.

Conclusion:

Developing a robust FMCG business strategy is essential for CEOs and business decision-makers to drive success and innovation in the dynamic consumer goods market. By focusing on product innovation, pricing optimization, distribution excellence, marketing effectiveness, and customer experience enhancement, FMCG companies can position themselves for long-term growth and profitability. By staying agile, responsive, and consumer-centric, FMCG businesses can unlock new opportunities and thrive in an ever-changing business landscape.

The Role of Consultancy Firms in FMCG Business Strategy

Consultancy firms specializing in FMCG offer a wide range of services aimed at enhancing business performance and driving growth. These firms leverage their industry expertise, market knowledge, and analytical capabilities to provide tailored solutions to FMCG companies' unique challenges. Some key areas where consultancy firms add value to FMCG business strategy include:

● Go-To-Market Strategy Consulting : Consultancy firms assist FMCG companies in developing comprehensive Go-To-Market strategies tailored to their target markets, consumer segments, and product portfolios. This involves market analysis, competitive benchmarking, channel selection, and promotional planning to maximize market penetration and revenue generation.

● Distribution Channel Optimization : FMCG consultancy firms help companies optimize their distribution channels to improve efficiency, reduce costs, and enhance customer reach. This may involve assessing current distribution networks, identifying opportunities for expansion or consolidation, and implementing strategies to strengthen relationships with channel partners.

● FMCG Pricing Strategy Development : Consultancy firms provide expertise in developing and implementing effective pricing strategies for FMCG products. This includes conducting pricing analysis, competitive benchmarking, and consumer research to determine optimal pricing levels and promotional tactics that drive sales while maintaining profitability.

● Product Innovation and Portfolio Management: FMCG consultants assist companies in developing and managing their product portfolios to meet evolving consumer needs and market trends. This may involve new product development, portfolio rationalization, brand positioning, and lifecycle management strategies to maximize revenue and market share.

FMCG & CPG Consulting firms specializing in FMCG play a crucial role in supporting companies in developing and executing effective business strategies. By leveraging their industry expertise and market insights, consultancy firms empower FMCG companies to overcome challenges, capitalize on opportunities, and achieve sustainable success in a dynamic and highly competitive market landscape.

At Strategii At Work , we understand the complexities of FMCG business strategy and offer tailored consulting services to help companies navigate the evolving market landscape. From Go-To-Market strategy consulting to distribution channel optimization and pricing strategy development, we partner with FMCG companies to drive growth and maximize business performance in an increasingly competitive environment.

Profitable FMCG Business Ideas Growing Day By Day

The fast-moving consumer goods, or FMCG, are everyday items that the average consumer uses regularly. Most of these products are very cheap to buy and include products like shampoo, soap, and coffee. FMCG products are much in demand, and the industry is estimated to be worth almost $5 trillion.

As the industry grows at a steady pace, it is predicted to reach $7 trillion in 2025. FMCG segments are believed to be among the most competitive segments in this market. In the FMCG sector, multiple big companies, such as PepsiCo, Hindustan Uniliver, and P&G, have been dominating for decades.

Products like these are fast-moving because they are a necessity in everyday life for most people and are typically consumed quickly. As a rule, FMCG products have very thin profit margins, but their sales volume is very high. Various business models are used to distribute FMCG products, including wholesalers, retailers, and distributors. We will provide you with a brief explanation of the FMCG business plan in this article and also discuss how it works.

Also Read: Implementing A Drug Store Business Plan In 2021

Table of Contents

What Are FMGC?

The Full form of FMCG is “fast-moving consumer goods”; these are consumer goods with a high turnover and are shipped quickly. FMCG products include cooking oils, toothbrushes, beverages, milk, and almost any other product you can find in a typical Kirana Store or other dedicated stores.

FMCG products are categorized into three general categories. These categories are durables, non-durables, and services. Durable products can last for more than three years from the date of manufacture, meaning they can still be consumed afterward.

Non-durable products have a shelf life of a maximum of three years, and they generally expire after that. In addition, services such as repair work also fall under the consumer goods section which is the third category of FMCG.

Also Read: Business Plan For Mobile Store

Here are Few FMCG Product Business Ideas

The market offers a wide range of fast-moving consumer goods. FMCG is a huge market that consists of different types of goods. FMCG products can be categorized into 9 different types, and we will describe each one in detail below.

Processed Foods – These are foods that are cooked or canned for sale in markets. These foods include pasta, cheese, ready-made sandwiches, etc.

Office Supplies – These items also fall under the FMCG category. This category of FMCG includes items like pens, pencils, and staplers.

Beverages – FMCG products of this type include regular drinks, juices, and energy drinks that are mainly consumed during the summer months.

Medicines – The pharma products fall into the category of FMCG products. Some examples of such are paracetamol, saridon, Aspirin, etc.

Cleaning Products – These products include all the regular items used for cleaning, such as floor cleaners, window cleaners, glass cleaners, etc.

Cosmetics & Toiletries – All cosmetic products are included in this section, including make-up kits, concealer, and foundation. Other products included in the toiletries section are soaps, shampoo, and shower gel.

Baked Goods – This category of FMCG includes all products baked by local businesses or manufactured by large corporations. Breads, cakes, croissants, cookies, etc. are among these products. Unlike most other FMCG products, these products have a shorter shelf life.

Fresh, Frozen, and Dry Foods- These types of products include frozen corn and peas, frozen fruits, frozen vegetables, and frozen meats.

Baby Care Products – The baby care industry is on the rise, and there’s a strong need for essentials like diapers, wipes, and baby lotions. You can jump into this market by either making these items yourself or launching your own line of baby care products.

Pet Care products – The pet care industry is booming, and pet owners are ready to invest in top-notch products for their furry friends. If you’re thinking of joining in, consider making pet food, grooming items, and other things for pets. A smart move is to create natural and organic pet care products since many people want healthier options for their pets. You could also look into making products using local ingredients, as these are gaining popularity among pet owners. There’s a great opportunity for entrepreneurs in the growing world of pet care.

What are the different types of FMCG agency business plans?

A large supply chain is involved in the FMCG business model before the goods reach the consumer. FMCG business opportunities exist in every part of the supply chain. However, there are primarily 4 types of FMCG business plans , which we will discuss in detail below:

1- Manufacturers: This is the first part of the FMCG wholesale business model. Manufacturers are the ones who produce the products in bulk from raw materials, then send them from their side for consumption.

2- Distributors : A distributor is one who is partnered with a specific manufacturer such as Nestle, P&G, or ITC. Distributors buy huge quantities of products directly from manufacturers and then distribute them further to wholesalers.

3- Wholesalers: Wholesalers purchase various products from distributors and then sell them in small quantities to retailers. The profit margin between distributors and wholesalers is typically between pennies, but this part of the supply chain has the highest volume of sales.

4-Retailers: The retailers buy products directly from wholesalers according to demand and sell the products directly to the consumers. The retailers are part of this supply chain following a B2C (business to consumer) model. All the other parties involved in the supply chain follow the B2B model (business to business).

Latest Trends in FMCG Industry:-

Healthy Choices: People want FMCG products that are good for their health, made with natural stuff, and don’t have harmful chemicals.
Online Shopping Boom: Since many people now buy things online, FMCG products that can be sold on the internet are really popular. Starting an FMCG business online can be a smart move for growth.
Store Brand Products: Products with the store’s own brand name, not big established brands, are getting popular. It’s a chance for new businesses to do well in the FMCG market.
Personalized Products: FMCG items that can be personalized, like custom scents or personalized nutrition plans, are getting more attention.
Eco-Friendly Packaging: Customers are asking for FMCG products that use packaging that’s good for the environment and creates less waste.

Roadmap to Start an FMCG Business

Market Research :

Research the market to understand the demand for FMCG products in your target area.
Identify which products are popular, who your target customers are, and who your competitors are.

Choose a Product Niche :

Based on your market research, decide on a specific product or range of products to focus on.
Look for a gap in the market where there is less competition and high demand.

Business Plan :

Create a detailed business plan outlining your business goals, strategies, and financial projections.
Include a marketing plan and conduct a SWOT analysis to identify your business’s strengths, weaknesses, opportunities, and threats.

Set Up Manufacturing Facility :

Secure funding and choose a location for your manufacturing facility.
Purchase equipment, install utilities, and set up the production line.
Ensure compliance with relevant regulations and standards, such as food safety regulations for FMCG food products.

Supply Chain :

Build strong relationships with suppliers and distributors.
Ensure a steady supply of raw materials and an efficient distribution system to get your products to market.

Launch Your Products :

Start producing and launching your products.
Develop a strong brand image and marketing strategy.
Use social media and other marketing channels to reach your target audience.

What are some high margin products in FMCG?

Candles Selling candles can be quite profitable, with profit margins between 25% and 50%. This is because many overseas suppliers can make large quantities of candles at a low cost. Even if you make your own candles, you can still earn good profits since the materials needed are generally inexpensive.

Specialty products

Specialty products include items like phone accessories, kitchen gadgets, watches, and collectibles such as trading cards. These products are often cheap to produce in large quantities but can be sold at a higher price because of demand from specific groups of buyers.

Some, like phone accessories, are popular with many people, while others, like unique watches, appeal to a smaller, more specific audience. Companies like Timbuk2, known for their specialty bags, and One Blade Shave have created their Shopify online stores focusing on these types of products.

Private label products

Private label products are items that a manufacturer creates specifically for a retailer according to what the retailer wants. Online sellers can work with manufacturers to design and produce these custom-made private label products to sell on their websites.

This can include things like custom clothing, jewelry, fashion accessories, and health and wellness products. Brands like Victoria Beckham Beauty, Blume, and Frank Body have successfully built online stores by selling private label products.

Dropshipping Dropshipping is similar to private label brands and is another way to run a profitable online store. In this model, online sellers offer products that are made, stored, and shipped by another company.

You can sell a variety of items through dropshipping, like coffee, clothing, and phone cases. Dropshipping can be profitable because you don’t need to rent a store or warehouse, and you don’t need workers to make the products yourself.

We conclude this article with the observation that the FMCG business, along with urbanization and transportation development in India, is growing. Every part of India is covered by the FMCG network, even the remotest areas.

In addition, the FMCG business sector is anticipated to reach a 7 trillion dollar market size by 2025, which is tremendous. The FMCG industry is relatively easy to break into and succeed in, as long as one prepares a good FMCG business plan .

The FMCG business sector, where margins range from 4% to 25%, is cited as having low margins by many. Nevertheless, we must acknowledge that this segment has the highest volume of sales which creates a great opportunity for doing business in this sector.

FAQs Related To FMCG Business Plan

Is the fmcg business profitable.

In terms of profit margins, the FMCG business has a very thin margin overall. Profit margins can range from 2% to 25%. Due to the numerous steps the products go through before reaching the store and the customer, the profit margin in this industry is very low.

Despite this, the volume of sales in the FMCG sector is large, which indirectly covers part of the less profit margin given. Additionally, we would like to point out that the competition for FMCG products is very high.

Which type of FMCG product has the highest profit margin?

In the FMCG industry, all products have very slim profit margins. Nevertheless, baby care products, cosmetics, bakery, and frozen foods have the highest profit margins, ranging from 10% to 25% at most.

Which FMCG business plan would be easier to adopt?

It completely depends on your capital. You can opt for distributorship of any FMCG company if you have huge investment plans. As an alternative, you can go into wholesaling with mediocre investment, or you can become a retailer if you do not wish to invest much and prefer to sell directly to consumers.

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