New Strategies for Consumer Goods
One of the major head-aches facing the consumer product industry today is the exclusive focus on price and discounted retailing. This is an issue both for manufacturers and retailers.
A part of this development is that many categories and markets are showing a significant decrease in total profit. For example, the beverage market in Italy showed a 22.5% drop in total profit from 2000 to 2003. This decrease affected manufacturers and retailers equally. (Source: CIES - The Food Business Forum, www.ciesnet.com).
The decreased share of the household budget for consumer goods products may also be directly or indirectly linked to price level and profit decreases. Innovation in-, and development of a category is likely to decrease as prices are cut. A category with no innovation becomes a commodity and is likely to continue living with low prices and low margins.
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