In-Store promotions by FMCG companies in modern trade channels – An empirical study

Abstract

Sales from modern trade channels (MTC) account for over 30 per cent of revenue for the retail players, and have started to contribute larger volumes for FMCG players. Modern trade in India accounts for 4 per cent of urban FMCG sales but for the top 15 metros, it is about 9.7 per cent of the total FMCG sales. Now with a dedicated shelf space which ensures a captive audience in terms of the footfalls, modern trade is slowly emerging as a new viable channel for the manufacturers. The exciting new formats also open up immense opportunities for “brand activation” at the point of purchase. Be it co-branding activities with retailers, the selling of wall space within outlets, signages, end-of-aisle spaces, carry bags, trolleys or even in-store TV — modern trade is acting as the medium for brands to connect directly with consumers. So, we defined the purpose of our project to be a research on the success or effectiveness of in-store promotions in enticing the consumer to purchase the product in modern trade channels; specifically the shopping malls. Of all types of in-store promotions, in-store displays were chosen for the study, as it is the most widely used tool by the companies. Through interviews with consumers in the store, we gathered information of how impactful the in-store displays of various brands had been, in their purchase decisions. Through the data analysis, our research has found that: Majority of the consumers make their brand choice in-store Less than 50% of consumers who were exposed to in-store displays actually purchased the product. In-store displays have the greatest effect on those consumers who have the need for a product in the same category. While our findings are based on consumer interviews only, it would be worthwhile trying to understand the same effect using sales data from the store, and also perform a brand-wise cost effectiveness analysis to know the other financial aspects like profitability, ROI etc with respect to the displays.Further research can also be done in the areas of activation and consumer offers, which will provide a comprehensive coverage to the effectiveness of in-store promotions.