Fast-Moving Consumer Goods refers to all the products that the average person purchases on a regular basis: fruits and vegetables, drinks, pastries, paper napkins, detergents, etc.
Everything that belongs to the FMCG category has several distinctive properties, among which it is worth highlighting the following:
Quick turnover. Products from this category do not lie on the shelves of supermarkets and online stores for a long time, so they are constantly being replaced by new batches.
Short life cycle. Products from this segment are constantly "running out" – food is eaten, toothpaste is running out. In this regard, people have to purchase them regularly.
Low price. Due to the low cost, a person's critical perception decreases, so he usually makes a purchase decision in a matter of seconds.
Spontaneous purchases. Before purchasing such products, buyers do not think for a long time, they just put them in the basket and immediately pay for the purchase.
A wide range. On the shelves of the store, you can always find many variants of the same nomenclature, differing only in the manufacturer and price.
Easy interchangeability. In the consumer goods category, it is rare to find a segment without alternative options. Therefore, if suddenly a certain company goes bankrupt and closes, its place will not be empty for a long time.
Consumer goods have a certain functional purpose – they satisfy the need, but at the same time they do not give uniqueness to the buyer. At the same time, it is sold in large quantities, which is why it brings a fairly large profit to the manufacturer.
There are tens of thousands of commodity items on the FMCG market, but all of them can be divided into several simple categories:
- food and beverages, including fruits and vegetables,
- semi-finished products and ready meals, including frozen products and dried fruits,
- cosmetics,
- personal
- hygiene supplies, laundry and cleaning products,
- medicines that can be bought without a doctor's prescription,
- office supplies,
- some types of electronics, etc.
The whole list can also be divided into several separate groups (depending on the frequency of purchases made by a person or on the expiration date of products).
For example:
Purchased for long-term use. In this case, the shelf life of products can be from 3 years or more.
Daily use. This also includes products that are stored for a year or less.
For the reception of guests – a conditional category, including disposable tableware, decorative items, paper napkins and much more.
There are also seasonal products, the demand for which increases sharply with the onset of a certain time of the year or with the approach of holidays. For example, bottled water and ice cream are sold better in the summer, the stationery is sold out faster before the start of the academic year, and on New Year's Eve some types of products (such as mayonnaise and peas) and everything that can act as a good gift diverge.
The FMCG market is characterized by a high level of competition, which is associated with the constant appearance of new types of goods and manufacturers. Accordingly, the assortment in this segment is huge – remember how in a supermarket sometimes you have to choose from several dozen positions.
Most of what is presented on the market is produced by brands owned by large companies. They cover several categories at once and produce goods that satisfy almost all possible human needs. These include Colgate, Johnson & Johnson, PepsiCo, Procter & Gamble, Coca-Cola, Unilever and many others.
Packaging plays an important role in the production of such products. And all because logistics and distribution systems often require secondary and tertiary packaging to increase the efficiency of processes (transportation, transportation). Primary packaging is also important for protecting the product and stimulating sales, because it often has a bright design in order to easily attract the attention of the buyer. If we talk about online stores and grocery delivery services, then the design of the product card and customer reviews will play an equally important role.
Due to the large assortment and high competitiveness, the market of consumer goods is huge. The product path consists of four levels:
At the first level there are manufacturers – those who come up with a product and turn ideas into reality. The advertising strategy of the company or brand is immediately thought out, and therefore the margin of participants at this level is very high.
On another level there are wholesalers who buy products of large brands in large batches. This includes distributors who develop a customer base and organize marketing events to promote brand products. Wholesalers put their mark-up, ranging from 15 to 40% of the primary cost of goods.
On the third level there are retail stores, including chain stores, and online stores. The former have a single name and design, as well as a similar trading matrix and pricing policy. The margin at the same time they can range from 5 to 100%. The second, single stores, are independent and are usually purchased in small batches.
At the last level there are end consumers who buy goods for personal consumption in the store. These are exactly those who are targeted by all kinds of promotion strategies, quality improvement programs and plans for the introduction of new products.
There are individual manufacturers who supply their products to the market not in the above way, but carry out direct sales. A typical example is AVON, Faberlic or Oriflame.
Due to the pandemic, the demand for the delivery of everyday goods has increased many times, now almost all supermarkets and large online stores bring products to their homes.
One of the trends in the FMCG market is the use of AI. Amazon has announced the production of a smart refrigerator that will monitor the shelf life of products and their stocks. In addition, it will use AI to predict what users want and order products before they run out.
A successful experience of a smart refrigerator can set a trend that regular visits to the supermarket will lose meaning for many people. But what will happen then? An AI that scans the whole house and knows about the condition of every thing? Will delivery services and AI completely replace conventional supermarkets?
It is still difficult to answer unequivocally, time will tell. Who knows, maybe in the future AI and products will choose for us, freeing humanity from such a troublesome routine.
