Analysis of various customer retention strategies for FMCG brands in India

Abstract

It is very necessary for a firm to implement right marketing strategies to succeed. Traditionally, firms have been focussing their marketing strategies around attracting new consumer and increasing their market share. However, due to globalization, very much industries and market are becoming more and more competitive and this has led to significant changes in the way the firm do business. So in today’s challenging economy and competitive business world, it becomes critical for the organization to retain consumer. If firms don't give their consumer some good reasons to stay, organization’s competitors will give them a reason to leave. Consumer retention and satisfaction drive profits. It's far less expensive to cultivate organization existing consumer base and sell more services to them than it is to seek new, single-transaction consumer. Very much surveys across industries show that keeping single existing consumer is five to seven times more profitable than attracting single new single. The FMCG market is characterized by low involvement and low switching cost, where there are numerous products with little or no product differentiation. So consumer retention becomes critical for FMCG firms because consumer shift rapidly from single product to another. The challenging task in the existing arena is to make consumer loyal to ensure the long-term survival and profitability of the firm. Managers of these firms therefore look for the ways to attract the potential consumer and to retain the existing consumer. Consumer loyalty remains an necessary and ever discussing topic in the literature with lot of proposed moderating, mediating, and independent variables. The purpose of writing this paper is to talk about the very much critical factors or variables, which lead to consumer retention in FMCG sector and to come up with consumer retention strategies that can be implemented by FMCG brands. As the dimensions of consumer retention are different for consumer from different geographies, this research focuses on Indian FMCG firms. This paper begins with the introduction of the topic and theories behind the consumer retention. The paper also analyses the existing practices used by FMCG firms for retaining consumer. At the end, based on the analysis and findings, conclusion and recommendations would be given.