Packaged Goods On Brink of Decline

THE consumer goods industry’s growth has slowed to an all time low in recent years.

The top global 250 companies have grown by just 0,3% in 2012. With margins under continued pressure from growth of mega-retailers, hyper competition, explosive increases in input costs, and declining effectiveness in traditional marketing methods the future for the industry looks glum.

Contributing to this is what Toby Desforges amp Mike Anthony, authors of highly acclaimed book The Shopper Marketing Revolution, label the ‘US$200 Billion Crime.’

“We estimate that the global top 250 consumer goods companies spend US$320 billion a year in retail. Research that we’ve been involved in shows that 70% of that money doesn’t pay back,” says Toby.

The authors cite two major contributors to the haemorrhaging. The first is that the majority are still using a marketing model based on yesteryear. The second is that as a result of an out-dated model, sales, marketing and key accounts continue to operate in silos with their own agendas.

South African shopper marketer expert Jason Frichol states ‘having worked on a number of categories and with various retailers over the last decade the same rings true in Africa. In some categories there is 80% wastage. ‘

Frichol said many companies are too focussed on vacuous price and trade promotions as a driver of short-term sales and market share versus changing medium to long-term behaviour for sustained growth and bankable profitability.

“The root cause of this is that shopper marketing to this day remains on the periphery. Making shopper marketing an organisational discipline from the top down is paramount to curb and decline and stagnation,” he said.

In their book the authors state that there are exceptions. There are companies that are doubling revenue, growing their brands four-fold and moving from negative promotions to positive in just one year.

Source : The Namibian