While stating he would probably moderate to fol wretched rival Coke, once again, if it went in for Rs 4 pricing, Pepsis India [ Images ] head Rajiv Bakshi says FMCG firms have to focus on bounty pricing to be able to grow at 20-25 per penny a year.
He tells Business Standard, the markets never been so right before. Excerpts:
Youve been saying the mature price-penetration model isnt going to give you the kind of exploitation you need. So, was the old paradigm wrong?
It wasnt wrong, but it delivered, and can deliver, only(prenominal) single-digit growth, or at most growth in the low teens. Today, with an 8 per cent GDP growth, youve got huge growth in the bout of families in the upper income segment, I call up the number of simple machine-owning households (10 million households and 50 million people in them) is the stovepipe way to look at this.
These people can at one time afford to buy more expensive drinks. Gatorade, Diet Pepsi, Tropicana, coffeehouse Chino. . . theyre all targetted at this group. If I want a 20-25 per cent topline growth, I can no longer use the old one-size-fits-all pricing strategy.
In the 1990s, most FMCG companies focused on take account pricing. There was no room to do more. But in this decade, say, in 2001-02, FMCG companies should have developed premium categories.
Two to threesome years ago, we started seeing a boom in the car market -- the B segment started selling more than the Maruti 800 [ Images ], Mercedes [ Images ] became a Rs 1,000-crore (Rs 10 billion) brand selling cars at around Rs 40 lakh (Rs 4 million) apiece. All this points to a dramatic tramp in the purchasing power of the creamy layer...
I think FMCG firms need to develop a business model of premium pricing in what Id call the mass-luxury segment. The reason why this couldnt be done earlier is that you didnt have mass in this market. Today, you have the mass. Today, the growth in the upper income classes is faster than in the discredit income ones -- thats the difference that FMCG companies need...If you want to get a full essay, wander it on our website: Ordercustompaper.com
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