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For FMCG, promotional spend to rise 5-10% this year

On chocolates, there could be discounts of 10-30% this year. Also on offer could be buy-1-get-1-free schemes to push the special gift packs launched by firms like Cadbury, Nestle, Ferrero Rocher, Mars

Read more on:    Fmcg | Advertising | Consumer Promotions
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With shoppers continuing to defer purchases, are expected to gather steam this festive season. As the pressure to push up sales grows, consumer goods firms — from chocolate makers to home and surface cleaning majors, beauty companies, paint players, food & beverage firms — which rely heavily on the festive period for a significant portion of their annual sales, are expected to increase their promotional budgets by 5-10 per cent.

Typically, companies land up spending about 80 per cent of their marketing budgets on and 20 per cent on promotions during the festive period. But this year, promotions are likely to inch up to 25-30 per cent, while advertising will stand at 70-75 per cent of the overall marketing expenditure.

In the case of chocolates, this will mean aggressive discounts of 10-30 per cent (can even go up to 40-45 per cent, depending on the brand). Also on offer could be buy-one-get-one-free schemes to push the special gift packs launched by companies like Cadbury, Nestle, Ferrero Rocher, Mars and Lindt.

Jeevan Verma, business head, Lindt, says promotions will be launched aggressively in modern trade, as well as high-end general trade. Consumers will also be induced to purchase, he explains, by drawing their attention to interesting collections. Cadbury, for instance, has just introduced new flavours for its chocolate-dry-fruit collections (it is being advertised aggressively) which come in neat tin boxes, making for an exciting gifting option according to company executives.

Though the per-capita consumption of chocolates in India continues to be low — at Rs 50-60 per year, compared with over Rs 10,000 in Britain and over Rs 5,000 in the US, according to Euromonitor — chocolate majors continue to push gift packs aggressively, pitching these as an affordable (and hygienic) alternative to sweets. According to industry estimates, the festive period, which for chocolate majors begins with Rakshabandan (preceding Onam) and going right up to Christmas and New Year, gives them nearly half their sales. Therefore, to ensure sales do not suffer, chocolate makers are expected to pull out all the stops. Leader Cadbury has already set the ball rolling with multi-media campaigns on TV, radio, oudoor and digital. Rivals are expected to follow suit shortly.

In the beauty space, French major LÓreal, is using both promotions and activations to induce sales.

Satyaki Ghosh, director, consumer products division, L’Oreal, explains: “Discounts are one part of the exercise; there will be ground-level initiatives that we will be undertaken to draw consumers. During Durga Pooja, for instance, a van with beauty specialists will visit different locations in Kolkata and other cities of West Bengal. We will invite women to go in for a makeover. Once done, we will use this opportunity to speak to them about our products, give them interesting offers. In the North, for instance, there are a lot of stalls that come up during the festive period in places like Chandigarh, Haryana, Himachal Pradesh and Punjab. We propose to tie up with those to push our cosmetics and hair colour.”

Paint majors, in contrast, propose to incentivise consumers through scratch cards that give them automatic entry into lucky draws (where they can win prizes) or provide them with free home-painting solutions when purchasing their products. With paint companies, however, H M Bharuka, managing director, Kansai Nerolac, says, incentivising consumers alone is not enough. That’s because the role of the dealer in closing a sale is also important. “Dealers are given free gifts, insurance, etc, when they achieve their targets. They are also given reward points that can be redeemed later,” he adds.

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