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Consumers in the US are making major changes in their behavior in the US market as the economy slows. In this article, I found the Nielsen number of store grocery brands growth vs branded products having significant implications for marketing and supply managers. Over the last year ending April store brands have grown in sales by 9.1% while branded products have grown by 3.9%. These numbers signal rather immediate actions that marketing managers and supply managers across every link of the supply chain will have to consider. Store brands have very low marketing expenses and simply launch generic products when significant local sales are observed in any branded product. Consider the OTC pharmaceutical shelves in a supermarket where the store brand for an off patent pharma product will have the same ingredients and mention “compare with X name brand” and place the store brand next to the “X” brand with off course a lower price. In good times consumers will buy branded products but these days consumers will tend to simply buy the store brand whenever possible. Brand marketers are cutting prices and offering deals to come nearer in price to the generic store brand in almost every category. These discounts coupled with cut marketing budgets is making marketing much more challenging
As demand slows down supply managers are being asked to help by trying to reduce input costs in every way possible, the market will simply not absorb costs. Innovative low cost options is something that every product category is looking for. So whether you are a marketing manager or a supply manager, you may have been already asked to cut costs and yet stay effective. If you have not been asked, don’t wait for a formal mandate, get to it and just ask your customer and supplier how you can cut cost and come up with innovative solutions like combining deliveries, investigate economic inventory financing options and any way you can do more with less. And try to do these now!