Indian FMCG companies love to Cheat customers (by the way they call this a strategy) and Indian Customers are happy being Cheated knowingly or unknowingly. The biggest problem in India is that we don’t have strong Consumer Protection Act against FMCG sector like Western Countries. Lets find out the strategies of FMCG companies to fool the customer.
1. Packing Remains Same but Qty is Reduced: Have u ever wondered why the prices of some OTC FMCG goods are unchanged for years…I still remember, the standard packing of well known small chips packet is 10 Rs from quite long…With 8% average food inflation, Are these companies doing favor to customers by not increasing the pricing…I realized the strategy behind the same recently from following 2 incidents
(a) Recently i bought a very famous OTC pain relief Balm…I am using this FMCG product from many years and only difference i noticed over years is that packing changed from cylindrical glass unit to a plastic one, Fair enough but this time i noticed that there is Cylindrical Plastic unit is not completely filed but there is a one more oval shaped small chamber inside cylindrical unit. There is a vacuum between ovel chamber & cylindrical unit in bottom half so from customer perspective, he is under impression that he is getting higher quantity becoz of big external unit but actually he is getting very less quantity.
(b) A standard medium size packing of very famous chips brand cost 20 Rs and over the years customer is happily buying the same…Only catch is earlier customer used to get 100 gms & now he is getting more vacuum air :) & very less quantity i.e. 61 gms.
Very Smart Strategy, infact now restaurants are also adopting same technique..they serve main course meal in serving bowl with very very thick base so customer feel quantity from look of it but in reality, u just get foot to mouth quantity..What a great way to make fool of customers…This is one of the way but their are another more smarter ways which require changing consumer behavior over a period of time.
2. Smaller Unit Cost Less and Bigger Unit Cost More: 10 years back, majority of customers preferred sachet shampoo packs over bottled units…Sounds good becoz i still remembered i applied simple logic at that time…A 5 ml shampoo sachet used to cost 2.5 Rs and 100 ml bottle of same brand used to cost 40 Rs therefore if i buy 20 units of sachet, it used to cost 50 Rs but bottle cost 40 Rs so pure economics suggest that buying a bottle unit is wise decision:) & it also goes by law of economics that the bigger units should cost less than smaller units.
Now the situation has reversed, Firstly during those days people used to prefer soap for washing hairs but now they have graduated to Shampoo rather graduated to Shampoo by FMCG companies..Secondly shampoo sachets are now off the shell and u cud not find it in any urban or semi-urban areas…Sachets are now available either in small kirana shops or in Rural areas…Last but not least, today a sachet of same brand with 5 ml packing cost 3.5 Rs (i bought it from 1 store in rural market, out of sheer nostalgia) & 100 ml bottle cost approx 90 Rs so again going by logic if i buy 20 shampoo sachets, it will cost 70 Rs but now bottle is costing approx 90 Rs…Law of economics does not fit here as bigger unit is costing more then smaller unit….Secondly FMCG companies are forming cartel by not selling sachets in many Geography Pockets so that customer does not have any other option but to buy only bottled units.
3. Phasing out Smaller Packing and Only Pushing Bigger Unit: Typical e.g. is Health Drinks…The smallest & standard packing available these days is 500 gms, which cost approx 150 Rs…Customer is being graduated from smaller unit to bigger unit by FMCG Companies….Second e.g. is of Cola drinks, today for home use the minimum unit available is of either 500 ml becoz now a days no one buy a wooden carat of 24 Glass Bottles (It was 300 ml packing 15 years back and now its 200 ml)…200 ml Glass Bottles are sold only at small time cafe’s or tea shops for single consumption so customer has graduated from 300 ml to 500 ml.
4. Artificially Jacking Up price and Then Offer Heavy Discounts Selectively: There is no mechanism in India to fix price of products…Examples in this category are Rice and Vegetable Oil…A vary famous FMCG Rice brand is permanently being sold as Buy 1 & Get 1 Free at few stores but in other stores, it is available without this offer so any customer buying from 2nd category of stores is being cheated to extent of 50% of cost..Its not the case that 1st category stores are not making money but imagine margins of 2nd category, where it is available without offer….5 Kg packing of same brand with MRP of approx 550 Rs is available at 350 Rs after adjusting discount offered by Retailer though no where on product it is mentioned that there is a discount on this unit…Is it customers fault that he is buying from 2nd category of stores rather 1st category which is offering heavy discount & by arbitarily fixing the price, the brand is openly cheating the customer. It is very famous strategy of FMCG companies to cheat customers.
5. Creating Impression of being Premium: This category is honored by Tea and Soaps…I saw 4 variants of Tea Brand in a Row…Each variant was better in packing compared to previous one and costlier by 30 Rs…Over a period of time i tried all 4 but unfortunately could not find any difference. Now difference between various variants is also not mentioned clearly except that higher version has long leaves, which means basic version is sub-standard…Similarly in soaps u will find 3-4 variants without any defined additional benefits…It’s similar to going to a mid segment restaurant & u will find 10 variants of Paneer in Main Course…I tried all variants in all restaurants but cud not find much difference except minor modification…Basic stuff i.e.95% ingredients remain the same.
We have seen that despite being in 21st century and living in a technologically connected world, we are still far behind in consumer activism specially against FMCG Companies…We don’t have any law which standardize weights of various products or maintain transparency with customer on various aspects of product availability in market. Though we agree that objective is not to squeeze FMCG companies profit but at the same maintaining transparency in terms of standardization of weights i.e. Chips packet will be available only in standard packing’s of 50 gm, 100 gm & 200 gm so that any price variation, customer will come to know immediately & if customer wishes to move to lower unit then he is free to do so rather price remain constant and weight varies, which means customer is mislead intentionally. I agree Indian Customers are price sensitive but at the same time, they are value seekers. Hope FMCG Companies are listening.
In a normal scenario, we don’t pay too much attention on nitty gritty but it is very imp to know all these practices & our rights, which can help us in taking informed decisions while shopping.
“Happy Shopping” !!!! Pun Intended :)
Copyright © 2011-2012 Nitin Bhatia. All Rights Reserved.
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