FMCG industry
FMCG Industry
Introduction
The fast moving consumer goods (FMCG) sector is a large and important part of almost every economy in the world, insofar as the products associated with the industry represents a big part of every consumer budget. The goods produced by the industry are basically necessities and the inelastic nature of the goods makes their impact on economies worldwide significant. The FMCG are sometimes referred to as consumer packaged goods and the various products are characterized by being sold quickly, in large quantities, and at low costs and include almost all consumables regularly bought by consumers.
The FMCG industry consist of both a supplier side that manufactures the goods and a retail side such as wholesalers or supermarkets, that sell the products produced by the suppliers. The link between the manufacturers of FMCG and the retailer side are logistics providers and intermediaries that constitute a smaller but significant part of the industry. Few industries rely more on efficient logistics systems than the FMCG industry. In a modern economy, an efficient transportation system is of great importance and it can perhaps be considered especially important for FMCG firms. This is because most FMCG firms would ideally want their products to saturate the market by being available at practically every outlet in order to increase sales. In the soft drink industry for instance, consumers may have a preferred brand. If this brand is not available however, they will in most cases simply purchase a rival or substitute product – not go to another store to buy their preferred brand. You can thus have a high value product and spend heavily on advertisement, but if the product is not widely available in stores, revenues will be limited as consumers will mostly buy their second choice product instead. Being able to distribute your products widely in the market, making them accessible when and where a customer wishes to purchase it, is as a consequence
Introduction
The fast moving consumer goods (FMCG) sector is a large and important part of almost every economy in the world, insofar as the products associated with the industry represents a big part of every consumer budget. The goods produced by the industry are basically necessities and the inelastic nature of the goods makes their impact on economies worldwide significant. The FMCG are sometimes referred to as consumer packaged goods and the various products are characterized by being sold quickly, in large quantities, and at low costs and include almost all consumables regularly bought by consumers.
The FMCG industry consist of both a supplier side that manufactures the goods and a retail side such as wholesalers or supermarkets, that sell the products produced by the suppliers. The link between the manufacturers of FMCG and the retailer side are logistics providers and intermediaries that constitute a smaller but significant part of the industry. Few industries rely more on efficient logistics systems than the FMCG industry. In a modern economy, an efficient transportation system is of great importance and it can perhaps be considered especially important for FMCG firms. This is because most FMCG firms would ideally want their products to saturate the market by being available at practically every outlet in order to increase sales. In the soft drink industry for instance, consumers may have a preferred brand. If this brand is not available however, they will in most cases simply purchase a rival or substitute product – not go to another store to buy their preferred brand. You can thus have a high value product and spend heavily on advertisement, but if the product is not widely available in stores, revenues will be limited as consumers will mostly buy their second choice product instead. Being able to distribute your products widely in the market, making them accessible when and where a customer wishes to purchase it, is as a consequence