In a 2015 article from strategy& (price Waterhouse Cooper) K.B Shiram, talks about what he calls the ‘’great fragmentation’’ of consumer behavior.
‘Individual consumer behavior is more pluralistic. Fewer consumers are making one big stocking-up trip each week. Instead, shoppers are visiting a premium store and a discounter as well as a supermarket, in multiple weekly stops — in addition to making frequent purchases online.’
Shoppers are free to no longer adopt the middle of the road product that gives them value at a median cost. They now have multiple options for purchasing super low cost products for some of their needs and splurging on a greater variety of high-end products for others.
It sounds like more opportunity for the CPG companies except that consumers aren’t any richer than they were 5 years ago and there doesn’t seem to be anything that can stop this trend. In Mr Shiram’s words ‘We expect continued weakness in consumer disposable income regardless of which way macro GNP uncertainties break’’
Faced with more frugal consumers demanding more choices, a manufacturer must tread carefully. How to diversify the product line to appeal more specifically to customers yet keep overall profitability? The first answer to this is, as Mr. Shiram points out is a ‘rethinking of go-to-market approach with emphasis on analytics.’ Just as consumers can get an enormous amount of information online to find what the need, manufacturers can use high powered, web based analytics tools to find out about customer requirements and inform their decision-making.
Production technology developments
But it is only part of the answer. Diversifying production requires agility. There are developments in production technology that make shorter production runs not only possible but profitable. Advances in digital inkjet printing for example allow extremely fast changes to a packaging’s design during production. Don’t use digital inkjet printing in your production? A knowledgeable partner can set up a parallel production at your site on a rental or purchase basis.
There are practical answers to almost any production scenario your analytics may point to. You may choose to partner with a co-packer to have certain aspects of your production done entirely off-site. There is no lack of experienced co-packers, it is just a matter of finding the right one.
An experienced partner
The key to efficiently set up a co-packing partnership is to find an experienced partner that can not only guide you with extensive knowledge of production, but is well-connected enough to find appropriate subcontractors when the need arises.
Today’s CPG companies, particularly those just starting out, find themselves having access to niche markets unimaginable just 10 years ago, yet also requiring leading-edge efficiency in their operations just to survive. Getting guidance is key.
This is exactly where the people at IMS can help. Don’t hesitate to contact us if you have any questions.