Fast moving consumer goods (abbreviated FMCG) refer to products that are sold at a low cost and relatively fast. These goods are also referred to as consumer packaged goods (abbreviated CPG). Examples of FMCG include non-durable products, such as toiletries, over the counter medications, and packaged foods. These products have a short shelf life as a result of high demand or because they quickly deteriorate.
Fast moving consumer goods refer to consumer products that sell fast and have a relatively low price. Virtually everyone in developed countries, as well as developing countries, use fast moving consumer goods on a daily basis. These goods are purchased on a small scale and are usually made at grocery stores, produce stands, drug stores, discount department stores, and warehouse outlets, for example.
What Are Fast-Moving Consumer Goods?
Fast-moving consumer goods are goods that are often found in a supermarket or even in convenience stores and are sold and replenished very quickly. These are the essential goods that people are always buying. Toilet paper is the perfect example of a fast-moving consumer good. However, it is certainly not the only example. There are many items out there the people tend to buy over and over and over again; and there are stores that are specifically set up to sell those goods.
The difference between fast-moving consumer goods and other types of products this how regularly you buy them after the previous purchase. Of course, there is no hard-and-fast rule because some of these items have longer shelf lives than others do, and some people tend to buy in bulk. For example, Household A might buy toilet paper weekly at the grocery store, while household B goes to Costco and buys it just four times a year in giant bulk containers.
One of the other things that can identify fast moving consumer goods is whether or not they are expensive. Most of the fast-moving consumer goods out there are only a couple of dollars and they are definitely consumable. For example, there is a major difference between a bottle of soda that you get at the gas station and a blender that you use to make beverages at home.
Fast Moving Consumer Goods Examples
To further explain, fast moving consumer goods are non-durable products. They have a short shelf life, either because they are purchased so quickly or because they deteriorate rapidly. Examples of fast moving consumer goods include:
- Bottled water
- Toilet paper
- Paper towels
- Feminine hygiene products
- Over the counter medications, such as aspirin and cold remedies
- Baked goods
Items that are highly perishable are considered fast moving consumer goods because their very nature means that they cannot stay on shelves for a long period of time. Other goods, like soft drinks, pre-packaged foods, toiletries, cleaning products, tissues, and toilet paper are considered fast moving consumer goods because their turnover rate is very high. Sales of these types of products are often influenced by specific seasons and holidays.
These products are purchased wide-scale and on a daily basis. The profit margin for individual sales of FMCG is relatively low; however, because they are purchased at such a large volume, their collective profit margin is high.
Packaging of FMCG
Packaging is crucial for fast moving consumer goods. These products have to be packaged in such a way that they are well protected and that they can retain their shelf life for as long as possible (though even with effective packaging, the shelf life for these products is still very low). Additionally, packaging provides consumers with information about the product, including ingredients, the date they were packed on, their expiration date, and where they originated from. Packaging can also include sales incentives that encourage consumers to purchase the products.
Let's take a look Add some of the characteristics that identify fast-moving consumer goods in the marketplace. There are two different categories that characterize fast-moving consumer goods.
- Consumer perspective characteristics include items that have a very low price, are not difficult to choose, are purchased frequently, are consumed rapidly and have short shelf lives.
- From the perspective of the marketer, these items are characterized by high volumes of sales, a high contribution margin, fast stock turnover and nationwide or worldwide distribution networks.
In order for a product to be considered a fast moving consumer good, it should meet one or more of the following characteristics:
From the Perspective of Consumers
- Frequently purchased. Products that are purchased on a daily basis, such as milk, bread, or toiletries are bought frequently, making them fast moving consumer goods.
- Low cost. The price tags of these items are relatively low, especially when compared to slow moving consumer goods (SMCG), such as televisions, computers, and home furnishings.
- Short shelf life. Due to the ingredients or the nature of some products, such as dairy products, meat, vegetables, and fruits, many fast moving consumer goods have a very short shelf life.
- Rapidly consumed. These products are also used quickly. For example, many people use milk on a daily basis, or consume meat on a daily basis. As such, these products are quickly consumed and therefore consumers replace them quickly.
From the Perspective of Marketers
- High volumes. These products are sold at very high volumes.
- Low contribution margin. Contribution margin refers to the selling price per unit minus the variable cost per unit. The contribution aspect serves as the portion of sales revenue that is not consume by variable costs, and as such, contributes to the coverage of fixed costs. Fast moving consumer products have a low contribution margin for marketers.
Fast Moving Consumer Goods Market
Given the fact that fast moving consumer goods are purchased so rapidly and consumed so quickly, its market is extremely large. It is estimated that this market accounts for more than half of all consumer spending; however, these purchases usually have low involvement.
Some of the largest companies in the world are involved in the fast moving consumer goods market. Examples include:
- The Coca-Cola Company
- General Mills, Inc
- Dole Foods Co
- Johnson & Johnson
- Procter & Gamble
- Tyson Foods
List of FMCG Categories
Here is a comprehensive list of the major categories of fast-moving consumer goods so that you will have a general idea of what the category encompasses and the sheer number of items that you might find within that category.
- Processed Foods
- Dry Goods
- Prepared Meals
- Over-the-counter Medications
- Fresh Food
- Frozen Food
- Baked Goods
- Office Supplies
- Cleaning Products
- Some Clothing
Fast-moving consumer electronics are another category that is not technically part of the FMCG family, but they are related. This category includes things like earbuds and other electronics that people replace quite often. It can even include some of the higher-priced electronics like mobile phones, computer accessories and television sets.
Think about some of the stores where you might find fast-moving consumer goods. In the United States, dollar stores are the perfect example of a store where you find plenty of FMCG goods. You can find packaged foods, hygiene items, beverages and lots of other stuff that dollar stores. In addition nearly everything that you find in the grocery store would be considered a fast moving consumer good. Gas stations and convenience stores also sell consumables, although they are provided for the sake of convenience and are more expensive than you usually find elsewhere. Over the counter medications, so does, candy bars and more can be found there.
Challenges Facing the FMCG Market
Though fast moving consumer goods are very relevant, there are challenges that companies involved in this market face. Some of the biggest challenges that these companies face include:
- Online shopping. Purchasing products online is an ever-growing trend. It’s much more convenient for consumers, and it also provides consumers with more options than they could find at a local grocery store or pharmacy. Online retailers, such as Amazon, are monopolizing this industry, which presents definite challenges for local retailers and even large organizations that sell these products, such as discount department stores.
- Ensuring product availability. Companies must ensure that they have products available when consumers need them. This can be a challenge because it can be difficult to predict when certain products will be in high demand. Though many fast moving consumer goods follow a relatively distinct purchasing pattern, there can be ebbs and flows. This means that providers must ensure they are properly calculating and predicting so that they can ensure they are purchasing the right amount. They don’t want to purchase too many products that could go bad before they are bought by consumers, but they also don’t want to run out of the products.
- Determining selling prices. Pricing for fast moving consumer goods is a very detailed process. Companies need to ensure that they are setting prices so that they are affordable for consumers, yet that they are high enough so that they are making a return on investment.
FMCG Marketing Strategies
In order for companies to meet the challenges listed above, they should implement the following strategies:
- Building brand awareness. Consumers are more likely to purchase fast moving consumer goods from companies that they are familiar with.
- Establishing trust. Consumers want to ensure that they are purchasing products from business’ that they can rely on; that offer the products they are looking for, have a wide selection, and sell them at affordable prices. Companies should seek to establish the trust of consumers.
- Incentives. Consumers are more likely to shop at a retailer that offers incentives; a gift card for a certain amount after spending a specific amount, for example. Incentives are a great way for retailers to attract customers and encourage them to purchase.
- Competitive prices. One of the main characteristics of fast moving consumer goods is their fairly low prices. Companies should ensure that they are selling their products at prices that are competitive with other retailers.
Conclusion / Wrapping it Up
The fast moving consumer goods industry is one of the largest markets in the world, and it will continue to grow.
Fast moving consumer goods are also really important to the functioning of a modern society, and it is important that people have access to them. Understanding these goods from a marketing perspective is vital to jobs in marketing and advertising, especially when these goods are what is being advertised. Hopefully, you have gained some insight into what these goods are, how they work and why they are so important to the retail trade and business world in general.
Businesses that offer these products should ensure that they are meeting the needs of consumers so that they can attain as much success as possible.