Competitive Advantages of Fmcg Companies
Referring to Millward Brown’s research, identify the competitive advantages of FMCG companies. Discuss if these competitive advantages are sustainable and suggest how these companies should further develop their competitive advantages in future.
The case study talks about how fast moving consumer goods (FMCG) achieve competitive advantages in marketing. A company is said to have a competitive advantage if the company has greater profitability comparing to the average profitability of his rivals and have better profit growth than other companies in the same industry (Smallbusiness , 2013). Competitive advantage is gained by having the strengths and competencies which are hard to catch up by other companies. Through these strengths and competencies, the business is able to differentiate its products and services, or significantly reduce its costs, or in other ways to stand out among its rivals. The case study mentioned three competitive advantages, namely cost advantage, differentiation advantage and brand recognition advantage. To explain these competitive advantages, first we need to understand the FMCG, which is contrast to the durable goods.
FMCG
Fast moving consumer goods (FMCG) is also called Consumer Packaged Goods (CPG). FMCG have the feature of quick turnover and comparatively low cost. FMCG including so many products you can find some in super markets such as shampoos, soaps, soft drink, snacks etc. It also includes those non-durables like bulbs, plastic goods, batteries and so on. FMCG have very short usage life, mostly within one year, and a lot of some are disposable. As the single price of a FMCG is low, therefore the profit per item is also low. But the total profit of a FMCG company can be very large because the items are sold in large quantity. There are a lot of well know FMCG brands such as Nestle, Unilever, Procter & Gamble, Coca-Cola, Wrigley etc.
Competitive advantage and sustainable competitive advantage
As the competition in the business
The case study talks about how fast moving consumer goods (FMCG) achieve competitive advantages in marketing. A company is said to have a competitive advantage if the company has greater profitability comparing to the average profitability of his rivals and have better profit growth than other companies in the same industry (Smallbusiness , 2013). Competitive advantage is gained by having the strengths and competencies which are hard to catch up by other companies. Through these strengths and competencies, the business is able to differentiate its products and services, or significantly reduce its costs, or in other ways to stand out among its rivals. The case study mentioned three competitive advantages, namely cost advantage, differentiation advantage and brand recognition advantage. To explain these competitive advantages, first we need to understand the FMCG, which is contrast to the durable goods.
FMCG
Fast moving consumer goods (FMCG) is also called Consumer Packaged Goods (CPG). FMCG have the feature of quick turnover and comparatively low cost. FMCG including so many products you can find some in super markets such as shampoos, soaps, soft drink, snacks etc. It also includes those non-durables like bulbs, plastic goods, batteries and so on. FMCG have very short usage life, mostly within one year, and a lot of some are disposable. As the single price of a FMCG is low, therefore the profit per item is also low. But the total profit of a FMCG company can be very large because the items are sold in large quantity. There are a lot of well know FMCG brands such as Nestle, Unilever, Procter & Gamble, Coca-Cola, Wrigley etc.
Competitive advantage and sustainable competitive advantage
As the competition in the business