Last month, Coca-Cola launched a new product called ‘Fanta Fun Taste'. The product, a powder that can make the orange-flavoured soft drink, is packed in sachets, and priced at Rs 5 . Only a few days earlier, Pepsico had brought out a 200 ml bottle of its popular drink, ‘Nimbooz'. Once again, this was priced at Rs 5.

Small packs, priced at five, two or one rupee each, have always done well in India. But what is surprising is their scope and spread today, cutting across diverse product categories and brands. When I went down to my neighbourhood grocery store, I was amazed to discover more than 50 products and brands, all available in Rs 5 versions. Here is an illustrative list:

Chocolates for Rs 5: Cadbury's 5-Star, Diary Milk, Munch, Gems, Nestle Milky Bar Chew. The weights of these chocolate bars vary, from 9.5 to 15 grams.

Bathing soaps for Rs 5: Lux, Santoor, Lifebuoy. Weights of these bathing bars vary from 30 to 40 gm, but the price point is identical.

Detergent bars for Rs 5: Wheel Activ (190 g), Rin (significantly different weight, at 115 g.)

Snacks for Rs 5: Haldiram's Bhujia Sev , mixture, and a host of other tasty local varieties

Tea & coffee powder for Rs 5: Brooke Bond Red Label, Tata Tea, Bru, Nescafe. Tea is also available in Re 1 and Rs 2 sachets.

Shampoos for Rs 5 and below: Virtually every brand of shampoo, whether ultra-premium or cheap, offers small packs. The most popular are priced at Rs 2 and Re 1.

Noodles for Rs 5: Maggi offers a 40 gm pack at Rs 5, which (according to my neighbourhood shopkeeper) is flying off the shelves.

Biscuits for Rs 5: Britannia Tiger, Tiger Chocolate, Sunfeast Orange Cream, and a host of other varieties.

It is interesting and educative to note that while all these small packs perform admirably well, the reasons for their success are not the same, in fact, they vary significantly from one product category to the other. Behind the success of each small pack lies an important consumer insight, which is quite different for shampoos, chocolates and bhujia sev . This article explores some key reasons for the success of small consumer packs — typically, packs priced at Rs 5 and below. Students of marketing may wish to study these reasons, and also ponder on whether there are any other insights that should be explored.

Affordability

One of the main reasons for the success of small packs in several categories is their affordability to specific consumer segments. For instance, while marketing brands of tea many years ago, I discovered that our small packs (priced at Re 1 and Rs 2) did extremely well in areas populated by migratory labour, such as the cotton growing areas of Andhra Pradesh. The reason was simple: these labourers earned a daily wage, not a weekly or monthly salary. They all drank tea, but could only allocate a rupee or two from their daily earnings to the purchase of tea, given that they also had to buy many other essential household requirements. Hence, they were unable to afford the larger packs, but could easily buy these small packs, and thus relish their favourite strong cup of chai every single day. This is an extreme example, but affordability is relevant in many ways to several consumer groups.

Convenience

In some categories, convenience plays a big role in the success of small packs. Mothers find it convenient to give their children Rs 5 to buy a chocolate. It is also convenient to slip that small pack of biscuits or noodles into your handbag, where it can sit quite comfortably until you reach home. Also, with five rupees coins available plentifully, neither the shopkeeper nor the consumer has to fumble and hunt for change, which is a big convenience in itself. Therefore, for many indulgence categories which involve on-the-spot impulse purchase, such as chocolates or cream biscuits, convenience plays a big role. Please observe that this consumer insight is quite different from affordability. Many of these consumers can afford to spend much more than Rs 5 to buy large packets of cookies or toffees, yet sheer convenience leads them to buy the small packs.

Travel Packs

In categories such as toothpaste, shaving cream and hair oil, small packs also do well because they are widely used in travel kits. For travelling executives, salesmen and families on vacation, these packs are both affordable and convenient, and in addition they are not messy to carry or use. A large bottle of oil can sometimes spill into your suitcase, but a sealed travel pack is always safe. An important and distinct consumer need that is met by small packs.

Trial Packs

In the case of new categories and brands, small packs priced at Rs 5 or below offer excellent reason for trial. Consumers may prudently not want to buy the larger packs until they have reassured themselves about suitability or quality of the new offering. Therefore, companies routinely launch small trial packs to encourage consumers to try the brand. While you may not want to spend Rs 50 to buy a big pack of ‘Fanta Fun Taste' powder (who knows how it will taste, and will the kids really like it?), you may be quite willing to spend Rs 5 to try out the small pack.

Economy

In many modern categories such as shampoos, where penetration is still at low levels, the Re 1 or Rs 2 packs are deliberately priced economically compared to the larger packs. Companies offer surprisingly attractive prices on small packs (in many cases, the price per gram or ml is actually lower than in larger packs), primarily because they want many more households to adopt the use of these products. Value-conscious consumers immediately realise that there is great economy in buying the smaller packs, and therefore buy them in preference to the bigger bottles, which cost more per unit of consumption. Given that India is a hugely under-penetrated market for several products, such distortion in pricing will continue in the years ahead, and thus provide one more good reason for small packs to sell well.

Single Use

In categories such as savoury snacks and noodles, a single-use pack makes great sense to consumers. You may prefer to buy a small Rs 5 pack of Bhujia Sev or peanuts, which can serve as an excellent accompaniment to your evening drink or hot tea. The entire pack can be used up at a single sitting, and you don't have to find an airtight vessel or box to store the remaining quantity.

Psychological price point

The psychology of price points plays a very important role, particularly for the huge Indian middle-class, which is constantly trying to make both ends meet, and simultaneously save a little for the future. Today, a small pack priced at Re 1, Rs 2 or Rs 5 is easily purchased, because middle-class consumers feel that these amounts are no great skin off their wallet, also there is no guilt associated with spending this quantum of money. For many consumers, this psychological price limit may extend up to Rs 10 per packet of biscuits or chocolates. However, spending a higher amount than this may not sit comfortably in their minds, even if they can actually afford the higher expenditure. For this reason, once again, small packs do very well.

In conclusion, while small packs do very well in India, we should understand and appreciate that there are multiple reasons for the spread of this phenomenon, which are often quite different between products. Marketers who leverage these category-specific consumer insights smartly will continue to fuel growth and success.

(Harish Bhat is Chief Operating Officer – Watches, Titan Industries Ltd. These are his personal views.)

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