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Why shoppers are abandoning classic brands

Почему покупатели отказываются от классических брендов

Mid-price categories in the U.S.A. are increasingly losing place on the shelves and with customers, giving way to premium and low-priced goods often produced under private brands of stores.

For example, sales of Kraft Kraft Heinz branded macarons dropped by 6% over the year, Bloomberg writes . Analogous goods brand Nestle also showed a decline. While this sales of packaged macaroni under the trademark of the stores grew by 6% over this time, and premium premium pasta brand Goodles doubled sales, reports The Page.

With the appearance of new and improved participants at both ends of the value spectrum products between these products aren’t just losing price, they are overvalued as well.

These classic brands were once reliable engines of growth and revenue for manufacturers of consumer goods. Meeting the needs of the growing middle class, such products as Kraft Mac & Cheese, Luvs Luvs diapers and Band-Aid, have become familiar products in cabinets around the world. But inflation has forced shoppers to become more discriminating. At the time as high income people mainly continue to spend, middle and low income consumers have to make choices: whether to spend money on this, or to better save by transitioning to a cheaper option.

How manufacturers respond to changes in demand

Companies that sell “average” products are hurrying to make up for what they’ve lost. This means reorganizing marketing orupdating products, to better respond to the changing consumer needs.

Dynamics of sales of goods of the rice category

B Kraft decided to make their macaroni with cheese more attractive to the generation Z – demographic group, who don’t buy their products. Internal research showed that the younger generation is seeking more “intense, exploratory tastes.” going outside of the classics, said President of Tastes, Dishes and Snacks at Kraft Kraft Heinz Rebecca Dunphy.

In November of last year the company launched the Fan Flavorites contest on social networks in which the competition was invited to submit suggestions of new “wonderful flavors of macaroni with cheese.” The winners were promised $10 000. In July, after receiving 90 000 applications and considering 27 flavors, Kraft decided on two new ones: jalapeño and ranch. In Target supermarkets they cost $2.39 for a box, which is approximately 40% more expensive than Common Kraft.

The company confirms that sales of new flavors are moving in the right direction, and that Kraft Mac & Cheese remains the brand number one in the category. Them not less, in October Kraft Kraft reported the 11th quarter contracted reduction of volumes and announced to investors, that its annual profit and sales would be at the lower boundary of its previous forecasts.

Recovering the once loyal base of customers is in part a partly problem created by the consumer goods companies themselves.A few years of high inflation many have raised prices for midrange brands more than for premium or lower priced goods, to keep the margin said the leader of the Research of NIQ in North America Chris Costagli. According to Circana data, national brands raised price on average by 6.6% in the last year compared with 4.6% of private brands.

Now consumers who are increasingly price-driven are easier to exclude these items from their purchase lists.

In the Last years some of the biggest retailers in the US, including Amazon, Walmart and Target, have worked to improve the quality of their low-cost store brands. In this year Target updated about 40% of its Up&Up, which includes baby goods, sandwich packets and wipes, based on customer feedback. New Storage containers have more sturdy walls; toothbrush heads have shapes designed to last longer. This spring Walmart launched a new line called Bettergoods, which includes pizza that can be taken to their own and baked, cooked “with water from Alp”, as well as macaroni and cheese “plant-based without dairy products”.

“There is no need, as it was in the past, to compromise between quality and price,” said Said Walmart Financial Director Walmart John David Raney. Walmart has raised its forecast for the year because of strong demand from shoppers for pricing. The company’s shares have appreciated by 3% behind its profit.

The reaction to the successes of private tradersbrands

Private brands are taking more place in consumers’ baskets with each year. A survey conducted by digital promotion service provider Ibott Ibott among 400 marketers of consumer goods this summer, showed that 70% believe that such low-cost lines present the most threat to their business.

Dynamics of sales of branded products

Really, increased competition has strongly hit the diapers Luvs of Procter & Gamble. In the period from 2019 to 2023 year of the Market Share of Luvs Ultra Leakguards by volume half. Consumers withdrew from the diapers because they didn’t see their value, said financial director P&G André Schulten. They think: Why pay a few dollars more for Luvs, when Costco (or Walmart, or Target) has the same as good – if not better offerings for less less money?

P&G applied two tactics. In July the company released Luvs Platinum, a hypoallergenic diaper, which calls “the softest ever existed” as a sign of respect for competitors in the market, such as Millie Moon, which calls itself a “luxury” diaper, which is “soft like a feather.”

“The way to develop the category of care for children is by promoting awesome innovations.” – Said Schulten, adding that it is too early to tell whether their innovations are responsive.

But P&G had one other lever to influence the market: they made a bid on more innovations in the market.Pampers diapers, which cost a few dollars more than Luvs. The company focused supply and innovation resources on Pampers, especially on the more specialized models Swaddlers and Cruisers 360, which sold well. “In substance, it was a compromise,

Schulten said.”

Reaction to the appearance of more expensive analogs

As and P&G, more companies are forced to respond to competitors who are producing higher quality products.

When manufacturer of patch Kenvue began noticing bright cans of Welly patch at $6.99, the brand with a century of history announced, that has been annoyed by the popularity of cans of fabric bands with unicorns and thai-dai (chaotic blurry drawings), which now have become a mandatory item in diaper bags across the US.

The Kenvue Company Kenvue invented the concept of jars with the Band-Aid (branded Band-Aid), and also the first decorative patch decades earlier, and now “this cropper” used a new interpretation of an old concept, to charge twice the price. General Director Tibo Mongon wanted Kenvue to reverse interest in the created by themselves cans.

But instead of focusing on on the design alone, Monogon said, that it wants to “engage “deep scientific research” and take “the authority and trust of consumers. This year the company released a “more effective patch” called Pro Heal a bandage with a gel pillow inside, which promises to heal small wounds and scratches better and faster than earlier. It costs 40% more than standard ones.

Kenvue is doing the same thing in the skin care category. Her brand Neutrogena has been overshadowed by startups likeGlowRecipe,whichpromoteproductsformoisturizingandfighting”prematureaging”inGenerationZ.That’s whyinAugustKenvueKenvuereleasedNeutrogena’sNeutrogenaCollagenBank cream,afocusedontwentysomethings.Itissoldat ahighprice-about20dollarsperflask.SuchcompaniesasKenvue, saysMongon,shouldnowbewellrepresentedatbothendsofproductlines.

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