Read our updated trends report here: 2024 Consumer Products Trends
Over the past few years, the consumer products industry has experienced both great innovation and widespread disruption. Companies old and new alike navigated new channels, experimenting with digital platforms and technologies to best meet the needs and demands of their consumers, whose values and priorities continued to evolve. But CP companies also had to prove their resiliency and find stability, pursuing new technologies and solutions to enable greater supply chain visibility and flexibility amidst global supply chain disruptions and geopolitical instability.
As we move into 2023, the CP industry – a booming sector expected to reach a market size of nearly $2.5 trillion by 2028 – will have to navigate some of these same challenges as businesses continue to deal with the short-term impacts and long-term implications of COVID-19: inflationary pressures, global supply chain disruption, evolving consumer preferences, and more. Yet, it’s important for CP companies to see these macro-trends as drivers for further growth, innovation, and strategic relevance in an increasingly competitive market.
In this piece, our industry experts outline six trends that will impact the consumer products industry in 2023:
- Finding the Ideal Pricing Strategy
- Navigating Supply Chain Disruptions
- Considering Overall Operational Efficiencies
- Defining Omnichannel Strategy and Execution
- Implementing Digital Marketing Strategies
- Investing in Data + Analytics
2023 Consumer Products Trends
Trend #1: Finding the Ideal Pricing Strategy
Companies across all industries continue to see higher costs, which translates to increasing pressure to raise prices for their customers. Even though higher prices are necessary to balance the higher costs, it’s crucial that brands ensure their prices don’t serve as a deterrent to a purchase. This begs the question: how does one set a pricing strategy that retains both their margins and their consumers?
The answer is to view price as a tool to create perceived value to the customer instead of as a bottom-line number to recoup cost. Price is not just a transactional figure – it’s the final piece of brand equity a customer invests in when purchasing a product. Customers don’t mind if the price is high as long as they feel the value of the product matches the dollars being spent. This isn’t a novel concept, but it’s become more important than ever due to the increasingly constricting household budgets. According to a study done by the Harvard Business Review, “Despite heightened price sensitivity, today’s consumers aren’t necessarily looking for cheap options….people are willing to spend money on products and brands that offer real value and help them reach their goals.”
Historically, quality of product or sale add-ons have been the biggest drivers of perceived value, but new innovations in pricing strategy have shown the impact accurate pricing can have on customer attraction and retention. Over the past decade, companies have begun to look at other industries for inspiration to revamp their traditional pricing practices. For example, software firms that once practiced per-seat licensing have shifted to software-as-a-service (SaaS) models that rely on metered usage, and magazine publishers that once offered annual subscriptions now offer monthly ones, too. These new strategies account for how the consumer actually uses the product and allow the customer to choose how much use they pay for, ultimately increasing the value of the product without deterring customers due to a new price.
Customers are becoming ever more sensitive to rising prices, but many are still willing to purchase the products they feel fulfill their value proposition. Pricing strategies are powerful ways to interact with customers and are the final determinant of value. As such, identifying the right strategy is crucial in a high-inflation economy. By looking at new ways to segment a product’s price based on the actual usage basis, brands can price at levels necessary for margin management while still answering the call their customers are actually asking for: more value. Continue reading by downloading the full report below.
Read last year’s Consumer Products Trends Report here.