Small is Beautiful & Size Does Matter

By

A. Ramesh
Asst. professor
TKR Institute of Management and Science
E-mail: avadhanamramesh@yahoo.com
 

Most of the FMCG products are now available in small packs from facial creams to shampoos, detergents, tea, coffee and chocolates etc.  Interestingly the size whether  big or small, offered unique advantages to both marketers and consumers. It  resulted in form differentiation, convenience, and affordability.  Sales growth was achieved, which was otherwise becoming elusive to the marketers. In the consumer durable segment too, certain small products won the appreciation from the consumers. On the obverse side, bigger the better in cases such as 29inch TV, 200Lit fridge, sedan etc, indicates prestige valve among the consumers. Small business segments were also providing opportunities to the big organizations. The article examines both the alternatives and their implications.

Cavinkare started sachet revolution by first launching velvette shampoo in sachet, at very low price. The other companies later followed the strategy with great  joy. Cavinkare also offered single use perfumes at Rs.2. It has broken the myth that big fish swallows small fish, by taking on gaints like Hll & P&G.

For consumers small packs make a great sense or deal, as they cost less than large counter packs. It offers the consumers a chance to try out the product/brand before graduating to larger packs. Some buyers purchase premium products such as expensive creams or shampoos for occasional use. Without sachets buyers might not have bought the brand/product. It was attractive choice for occasional use/consumption. Smaller packs tackle the problem of affordability as they are invariably priced low, thus leads to acceptability. It is easy way to generate trial among non product category users. Research reveals that an average unit price of large packs is twice that of sachets. This can be rationalised as plastic or glass bottles cost more than sachet packaging.

Sachet account for nearly 70% of the shampoo's sales. Companies follow  a penetration pricing strategy for sachets but get higher margins on the bottles. Some consumers don't want to buy large quantities because of high price or low consumption, as their disposable incomes are low. This inhibiting factor is removed  if certain products can be offered in small volumes or packs with lesser price. Single use units or single consumption units also did wonders in rural markets resulting in sales growth. Some consumers felt they had better control on use/consumption because of smaller packs.

Let us look at various examples were launching of products in small pack sizes, proved to be huge in success.

HLL  has launched lifebuoy at Rs. 2 for 50 gm and Godrej has Cinthol, fairglow in 50 gm at Rs. 4-5.  Coke & Pepsi are rolled out( carbonated soft drinks )in 200 ml.  launch Maaza also is to launched in 200 ml.   "sunfill"  a powdered soft drink concentrate is available in a single serve pack or sachet of 25 gm priced at Rs. 2.  Mysoresandal soap is  available in travel pack. India today has mini planner cum wallet, which is easy to carry aimed at modern woman.

The Bose wave Radio / CD is  most highly acclaimed radio in the U.S.A.   and now also available in India.  It delivers remarkably rich, detailed, room fulfilling sound from  a surprisingly small cabinet which includes a multifunctional CD players. It is widely used in cars etc.  where space is a constraint or to save space and look attractive. Patented Bore acoustic wave guide technology inside the Bose wave Radio / CD  make it possible for hat much  sound to come out of something so small.

Brylcream ( Hair cream) is available in small tubes, thus ensuring trial and encourage occasional / regular Use.

The new Hitachi Atom, is 30%  smaller than conventional split Ac's  more advanced, powerful , efficient and also saving space.  IBM think pad Note books include  various models providing blend of portability, essential features performance one of the model is extra light and extra small has price nearly Rs. 1,45,000/-.

National Postal small saving  has  five year recurring deposit scheme, in which investor can start with the small investment (lower limit)  of Rs. 5 per month.  This is a boon for small investors.

ITC & HLL have launched aashirwad & annapurna atta in 1kg packs.

P&G's  whisper ultra was launched long back on the usp of small size and more powerful.  It  consists of 10 unit pack size  occupying less retail space.

Portable  Tv's  and 14" inch TV's  were also well received by  consumers. Two  wheeler owners  desiring / aspiring to graduate to 4 wheeler segment were looking  for solution.  The  "Small Car"  proved to be the right answer.  Initially Maruthi 800, Maruthi Zen have reaped rich harvest of success. With the influx of MNC's  into small Car segment, Consumer now has wider choice & greater variety  across small car segment.

Tata Motors vaunted project of Rs. 1 lakh car bigger than and lighter than Maruthi 800 is on the cards.The Indian Diary Market has endowed  with 2 A's  of marketing namely availability, and acceptability but leaves the  third marketing factor affordability.   To make milk affordable for the large majority with limited purchasing power, the strategy is to pack  milk in  small quantities of 250 ml or less in polyethylene sachets.

Small and sleek handsets are liked by the consumers.  Butter milk and drinking water  are selectively  available in 50 to 250 ml packets.

The limit to product miniaturization in consumer durables is that, it should not be too small making it difficult for  consumers to use.

In U.S.A,. Dell Computers has sales division to service small business.. segment.  Small business in particular  have become holy grail for business marketers. In U.S.A,. small businesses,  are now responsible for 50%  of the G.N.P. according to the U.S. small business administration, this segment is growing at 11.5%.  In U.S.A.,  IBM within small business segment, is targeting minority owned business because small business owners are more likely to be women, black , Asian Hispanic.

In some cases, bigger the better, both in FMCG and consumer durable segments.  In products such as 29 inch  TV, Fridges in 220 Litres and above, Mid size Cars, and multilutility vehicles, greater the size, greater is  the Prestige value associated with it.  These are targeted to middle and high end of the segment, priced highly ,offering  additional features, delivering greater benefits and also having aesthetic value to the  consumers.

In FMCG category, Annapurna &other brands of Atta are available in 10 KG.  Complan brand has super saver pack of 1.5 Kg.  They are aimed at bulk  purchases or high volume purchases.   Cool drinks are also available in 1 litre and 1.5 litres pet bottles.  Mineral water brands are available  in 5 litre capacity.

Grand Hyatt residency offers mumbai's  most spacious and contemporary serviced apartments.

References:

www.ibm.com
www.cavinkare.com
www.bose.co.in
www.indiandiary.com
www.hitachi-hi.com
www.indiandiary.com
www.indiainfoline.com
a business world, "Ratan Tata Interview"  24 January 2005 P.No: 33

Profile of the Writer:

A . Ramesh
BE, MBA (Marketing) from Osmania  University
SLET Qualified
Seven year of Academic experience
Presently working as Asst. Professor at TKRIMS (MBA College affiliated to O.U)
 

A. Ramesh
Asst. Professor
TKR Institute of Management and Science
E-mail: avadhanamramesh@yahoo.com
 

Source: E-mail September 25, 2005

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