Challenges in Consumer Goods Industry
There are tens of thousands of general consumer products manufacturers in the United States. They compete to develop the best products at the most affordable price for the greatest number of consumers. Challenges for these organizations include meeting the changing demands of customers, maneuvering through a consolidating market, and executing strategies to grow profitably.
Some companies are part of traditional sectors (such as the clothing industry) that have existed for many years, while others, such as Apple and Dell, are part of the technology sector, which has emerged only in the last three decades. Manufacturers range from massive, multinational corporations to small firms with fewer than 50 employees.
In the past 10 years, the global market has witnessed a surge in demand as economies such as Brazil, Mexico, India, and China have opened up and begun rapid development. The consumer durables industry has always exhibited impressive growth despite strong competition and constant price cutting. There exists a very strong correlation between demand for durables and income. Leading players in this sector include Sony Corporation, Toshiba Corporation, Whirlpool Corporation, and Panasonic Corporation.
Developing countries such as India and China have largely been shielded from the backlash of the recession, as consumers continued to buy basic appliances. In fact, China has been ranked the second-biggest market in the world for consumer electronics. Despite the recession, their strong domestic economy and growing high-income population have buoyed demand leading to aggressive market growth.
The Internet has also changed the manner in which general consumer products are sold. Consumers can purchase almost any general consumer product they want and have it delivered to them without ever having to leave their homes.
The challenges faced by Consumer Durable Industry are listed below:
Changes in Delivery Model
Challenges for these organizations include meeting the changing demands of customers, maneuvering through a consolidating market, and executing strategies to grow profitably. Changes in delivery models have affected how CPG merchandise is being marketed. Coupons and loyalty card programs are designed with mobile end-users in mind and marketing initiatives are Omni-channel, providing the customer with a seamless shopping experience for frequently purchased products.
Changes in Consumer Expectations
A consumer's expectations are built on the basis of the information, which is gathered by word of mouth from friends, neighbors, and colleagues at work, shoppers, and the like. In addition, the various media where products may· be advertised, such as newspapers, magazines, hoardings, banners, neon signs, posters, radio, and T.V. commercials, all help to influence the consumer, in various ways, to change his/her expectations.
A common buying behavior seen among consumers is that of "Brand Preference". Consumers tend to purchase the same brand for many years if their experiences are good with respect to products meeting their expectations. If new products are launched under the same brand name, consumers expect it to have the same quality standards that they are used to, and often have no hesitation to try out the product. Studies have shown that brand image is built on the basis of a set of ideas and impressions that the consumer forms about a brand. He generally buys those brands which match his self-image.
Changes in Buying Behavior
The buying behavior of the consumer has shown considerable changes over the past few decades. Environmental changes that have taken place due to industrialization, urbanization, migration, occupational shifts, and modernization of lifestyles, are factors which have changed consumer expectations from products and services offered by the market.
Impact of Technology
Digital technologies are reshaping the consumer goods (CG) marketplace—and blurring the boundaries between stores and brands forever.
Other Challenges
Listed below are other challenges that are influencing the consumer goods sector:
- Local industry dynamics
- Supply-related issues pertaining to distribution and infrastructure
- Demand issues due to competition from imported goods
- Lack of well-developed distribution networks
- Penetrating fastest-growing rural areas
- Electricity availability
- Road infrastructure
- Systematic production
- Labor availability
- Increasing choice from both domestically produced and imported goods
- Superior technology
- A steady flow of capital
- Well-acknowledged brands
- Extensive distribution network
- Insight in local market conditions
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