Determinants of demand of fmcg products in india

macroeconomic factors affecting fmcg sector

Growing awareness, easier access, changing lifestyles and last, but not the least, government investment leading to private investment, will be the key growth drivers for the consumer market, going forward.

Both these factors will spur demand for FMCG products. This market has immense potential, enticing FMCG companies to take different steps to capture it. No more internecine competitive wars.

Determinants of demand pdf

In a clear indication that sales drivers have played a part in this decline, a slowdown was seen in the rate of distribution expansion and the rate of sachet launches during the same period. Luxury items usually have higher income elasticity because when people have a higher income, they don't have to forfeit as much to buy these luxury items. FB Comments. As a result of this, the demand for those goods will increase which are generally purchased by the poor because the purchasing power of the poor people has increased and, on the other hand, the demand for those goods will decline which are usually consumed by the rich on whom progressive taxes have been levied. Usually these kinds of products are readily available in the market and a person may not necessarily need them in his or her daily life. The demand for normal goods varies due to. However, these two goods can be normal goods for people having lower level of income. Tea and coffee are very close substitutes, therefore when coffee becomes cheaper, the consumers substitute coffee for tea and as a result the demand for tea declines. For example, food grains, soaps, oil, cooking fuel, and clothes. These factors have been classified into two broad categories: Factors that marketers can control and those they cannot. That appears to be changing as the quarterly of the March quarter shows. Consequently, consumers reduce the consumption of old products and add new products for their consumption. If it is less than one, the curve is said to be inelastic.

As Indian consumers are likely become increasingly reliant on mobile internet services by the end of the review period, sales of electronic gadgets fulfilling the mobility needs of the consumers such as tablets, smartphones, laptops and e-readers are likely to register further growth.

That has led to reduction in input costs for these FMCG companies. Changes in the Prices of the Related Goods: The demand for a good is also affected by the prices of other goods, especially those which are related to it as substitutes or complements. For example, the high income segment of the society would prefer luxury goods, while the low income segment would prefer necessary goods.

Now, the question arises on what factors the number of consumers of a good depends. With this higher purchasing power, he decides that he can now afford air travel twice a year instead of his previous once a year.

6 determinants of demand

X increases, then he may increase the pocket money of his children and buy luxury items for his family. Related Articles:.

high demand fmcg products in india
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Introduction to FMCG Industry