Group B5-Ninja readers- Source- 4ps- 7th march,2013

Consumer goods firms cut prices, offer discounts after 18 months

Rohit Biswas

1.       Manufacturers of consumer packaged goods have begun cutting prices and offering discounts on products such as soaps and shampoos after almost six quarters of continuous price hikes in a bid to revive slowing growth as consumers cut back on spending.

2.      Hindustan Unilever Ltd (HUL), the country’s largest consumer personal goods manufacturer has reduced the price of its premium soaps Dove and Pears by Rs.5

3.      Even popular brands such as Godrej No. 1 from Godrej Consumer Products Ltd, Wipro Ltd’s consumer arm Wipro Consumer Care and Lighting’s soap brand Santoor and HUL’s Lux have been discounted by 5-10%.

4.      As a percentage of sales, 12 out of 20 consumer packaged goods companies increased their ad spending in the December quarter over the corresponding quarter a year ago, reflecting focus on improving volume growth

5.      Over the past 18 months, consumer packaged goods companies increased prices across categories such as soaps, detergents, shampoo sachets, edible oils, health drinks and tea to beat the effects of high raw material prices on their margins.

KFC launches China campaign to rebuild brand

Rohit Biswas

1.      KFC launched a campaign on Monday to rebuild its battered brand in China, promising tighter quality control after a scandal over misuse of drugs by its poultry suppliers.

2.      The company, a unit of  Yum Brands Inc., promised to test meat for banned drugs, strengthen oversight of farmers and encourage them to improve their technology.

3.      It said more than 1,000 small producers used by its 25 poultry suppliers have been eliminated from its network.

4.      KFC is China’s biggest fast-food chain, with more than 4,000 outlets, but was hit hard when state television reported in December that some suppliers violated rules on the use of drugs to fatten chickens.

5.      The company estimates January sales plunged 37%.

Source – Business Standard

Google tests same-day delivery, raising marketplace speculation

Nikhil Narayanan

Google Inc. began testing a same-day delivery service with retailers in recent weeks, the latest move into Amazon.com Inc’s e-commerce turf by the world’s largest Internet search company.

Google Shopping Express helps local retail stores sell products online and have the items delivered to shoppers the same day, according to a person familiar with the test.

Google arranges for third parties, such as couriers, to pick the products up from local stores and deliver the items to shoppers. Neither the stores nor Google handle the deliveries. The service is still in the early development stage. Test is focused on the San Francisco Bay Area and has been going for at least a month, the person added.

Google has not yet decided how to charge for the service. It is considering an annual subscription, similar to Amazon, which charges $79 a year for free two-day delivery of many items purchased on Amazon.com. However, Google may also charge a small fee each time a shopper orders through the service, the person said.

Google Shopping Express is the latest sign that the company is expanding from its online search roots into e-commerce. It also suggests that Google may be building an online marketplace that connects merchants and consumers, a business model that has made Amazon and eBay Inc. successful in the US.

Amazon’s marketplace business, which lets other merchants sell through its website, has grown rapidly in recent years and has been a big driver of Amazon’s revenue and profit growth. This success has encouraged more shoppers to search for products on Amazon.com, rather than going to Google—a potential threat to Google’s search dominance online.

In the past, consumers would search for an item on Google.com, an Amazon sponsored link would pop up, the shopper would click through, Google would get paid for the ad and Amazon got the sale.

“Everyone was happy. At least they used to be,” said Tom Allason, founder of Shutl, a start-up that provides same-day delivery for retailers’ online orders. “Today Google needs a new play because increasingly consumers are cutting out Google and going direct to Amazon for their product search.”

Last year, Google changed its free product search offering to a paid service called Product Listing Ads, a move aimed at generating more revenue and profit from e-commerce.

In February, Google acquired Channel Intelligence, a $125 million deal that brought the search giant lots of data on e-commerce transactions. Longer-term, that could help Google build a product catalogue, a crucial ingredient for an online marketplace that would compete with Amazon and eBay, according to Wingo.

Amazon has an advantage because it already has a network of large distribution warehouses, known as fulfilment centres, to deliver goods sold through its online marketplace, according to Wingo.

Google is likely taking a different approach, building a network of loosely affiliated local retail stores that, in effect, act like small fulfilment centres, Wingo explained.

EBay took a similar approach when it acquired Milo in late 2010. Milo let shoppers search for products available to buy in retail stores nearby.

The business formed the foundation of eBay’s Local Shopping business and is a crucial part of eBay Now, a same-day delivery service that the company began testing in San Francisco and New York last year