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Consumer Products Poised for a Rebound in 2010
Posted: November 19, 2009
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Already a number of earnings reports have indicated that 2010 will be the Year of Recovery—Procter & Gamble and Estée Lauder have both posted better-than-expected quarterly results. By far, the key to success in the coming year will be to take action—serious action—to turn these tip-of-the-iceberg glimmers into sustainable growth.
Innovation: The Key to Recovery
Innovation in both product development and marketing strategy will be a key component in getting ahead of the curve as consumers begin to feel more comfortable. It took the industry about five years to recover from the last major recession (1990–91), and it was innovation, particularly in the mass skin care category, that lit the path to recovery.
While the new GDP recovery numbers are promising, there is some evidence that the recovery may be coming at the expense of “intangible investments” such as research and development and new product design. In other words, in an effort to cut costs and quickly restore profitability, some companies have slashed investment in areas that drive innovation, which could come back to haunt them in the very near future.
To prevent this innovation backslide, new product activity must be dusted off and pushed forward to renew consumer excitement in shopping, spending and trying new products. By invigorating the market with new formulations, novel delivery systems, and updated packaging, branded companies can differentiate themselves against the private-label surge. It may seem tempting to pull back brand support to trim costs, but marketers must continually re-invest to maintain a competitive edge and stave off pressure from private-label competitors.
Beyond product innovation, marketers must leverage the power of the Internet and social media to connect with consumers. As a sales channel, the Internet is no longer insignificant in the personal care market with online sales tripling over the last five years. Consumers love the wider selection, competitive pricing, and the convenience of shopping online, especially for replenishment of higher priced items.