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Surviving the local FMCG ecosystem

Despite all the existing barriers to entry, how can startups be able to effectively penetrate the highly competitive market? Here are some helpful tips.
By Amor Maclang |

Dear Amor,
 
surviving_ecosystem.pngThere’s so much competition in the market today, and it feels like newcomers coming in have no chance to penetrate an already saturated market. I don’t think that newcomers like me, who want our products to join the market, have any hope of competing alongside brands that have become household staples. I believe that my products have potential, but how can we stand out when everyone else is sticking to products they already know?
 
Sincerely,
 
Nathaniel G.

 


 
Dear Nathaniel G.,
 
There is so much competition going on in the market now. As a newcomer, you’ve yet to build a brand presence, and your brand name is all but known. Newcomers not just compete with products that already have a following, but are also competing with big name brands that have the money to invest in innovative iterations. They have the power to back their claims and position their products to offer all sorts of promises. There's 100% this, 8-in-1 that, instant this, and better-for-you that. In the world of FMCG (fats moving consumer goods), the battle seems to favor the ones with the capacity to rise and address specific consumer behaviors.
 
But this doesn’t mean newcomers don’t have a chance. All the big brand names had their own rough beginnings–competing with a market that already had an existing competitor, or maybe starting out with a product that has yet to be developed. The start of something, or anything, is always the most anxious and trying, especially in FMCG where everything seems to be moving so quickly.
 
Here are a few quick tips to remember if you want to successfully penetrate the market:
 
Target the right market.
 
Research is integral when finding the right market for your product. It sets the tone for how you should market your product.
 
A popular brand of noodles and a top manufacturer of instant coffee are two perfect cases to study. With a 98% penetration rate, the maker of the popular instant pancit canton in the local market has branding and packaging that appeals to people of all ages and of all classes. Its affordability has made it a popular staple not just as a snack, but also for mealtimes. More than affordability, its convenience, variety, and easy-cooking make it popular among those who consume it, and that makes it appealing to a wider market.
 
A popular instant coffee and a chocolate energy drink for kids and teens are another two great examples, with the two being among the forefront of products most recognized and sold in the Philippines. The top instant coffee brand penetrated all markets by targeting coffee-drinking Filipinos with product variations that appeal to coffee drinkers with different tastes. The milk chocolate drink with malt, on the other hand, has been able to target students and sports-enthusiasts with not just its milk powder product, but a marketing strategy that includes partnering with sports and sports athletes.
 
These companies maintained top position in the FMCG food and drinks for obvious reasons. They understand what kind of products their consumers want, and they are constantly researching and adapting their products to suit customer needs and tastes.
 
Bigger is not always better.
 
Contrary to the saying that bigger is better, in FMCG, smaller sizes are key to winning over consumers. Size has become an important factor to the everyday Filipino’s purchasing choice. Products like shampoo, coffee sachets, and even small-serve drinks and bite-size snacks appeal to a bigger market.
 
Take the most popular softdrinks brand, for example. It released smaller versions of its usual drinks, with a 237ml bottle serving size called ‘Sakto.’ An even smaller version (at 300ml) called ‘Mismo’ was launched a few months later. Despite the manufacturer being such a big company, it saw the appeal that a small-sized bottle would have on those willing to spend for less.
 
Sachet products also have a large market, not just for travelers, but also for consumers who want to buy products that can be consumed on a daily or weekly basis. Look closely and you’ll notice that turnover rates for sachet products are quicker than if you’re selling products packaged in bigger quantities.
 
With their smaller-packaged detergent powder and detergent bar, a consumer goods manufacturer’s mass-appealing brand of detergent became the third most recognized brand in the country. The release of smaller products does not necessarily spell less profit as smaller packaging may appeal to a greater number of people. The smaller the products, the larger the purchasing power.
 
Distribution is KEY.
 
Where products are distributed is important to its success. It’s important to find the right ‘partners’ who can ensure that your products are distributed and sold at the ideal places.
 
The key to getting noticed is good distribution. Wide distribution inspires curiosity, and once it sets in, people will start buying and trying out a product. If a product has great market potential, it will bring in distributors who would want the products for their own establishments. The kind of reach E-commerce sites have made it a great distribution source as well.
 
One thing to note: Don’t limit your products to big groceries and department stores. In this aspect, even the little guys have an important role to play. Sari-sari stores are the backbone of local communities, especially in remote areas and neighborhoods. A study by Nielsen says that in mid-2014, one sari-sari store sold about P26,000 worth of FMCG products every month. With a million outlets in the country, imagine the amount of FMCG products being stocked and sold by these stores every month.
 
At the end of it all Nathaniel, remember that no brand is set in stone. There will always be something new in the market, but the key to staying relevant is knowing who your customers are, what your customers are looking for, and where your customers are buying. If you have that down, it will be easy to get inputs from businesses and consumers on how you can improve and how you can continue staying relevant to your market.
 
Best of luck on your business endeavor.
 
Sincerely,
Amor

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About the columnist

amormaclang.jpgAmor Maclang leads GeiserMaclang, an internationally awarded full-service marketing communications company that steers leading names in a diverse field of industries. For more information and to post her a message, visit Geiser Maclang Network ’s online directory listing here. 

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