Business Dynamics of Consumer Industry

Business Dynamics of Consumer Industry

The consumer goods industry is impacted by many dynamics like economic considerations, product considerations, price considerations that impact consumer buying choices. Advertisements, branding, marketing, variety of goods, and technology are the main drivers. Manufactures, retailers, warehousing, and logistics are all part of the supply chain for the consumer goods industry.

Economic Considerations – Buying Power of Consumers

Consumers' buying decisions are the outcome of economic influence which comprises income, price, and technology, the economy of purchase, dependability, quality, and operational effectiveness of the product. These factors significantly affect consumers' decision-making processes.

Income is a primary economic influence determining the consumption expenditure of individuals. Personal disposable income is the number of money people is left with after paying the taxes. Consumers, on the basis of income, are grouped as upper-class, middle class, working-class, and low-income groups. Increases in income influence the buying habits of the consumer.

Consumer expenditures are also affected by savings and debt patterns. Consumers can increase their purchasing power also through borrowing. The availability of consumer credit due to the development of banking and financial institutions has been a major contributor to the growth of consumer spending. This enables people to buy more than their current income or salaries allow, thus creating more jobs and still more income and more demand.

Product Considerations

A product can be defined as anything that can be offered to a group of consumers for attention, acquisition, use, or consumption that might satisfy a need or a want. It includes physical objects, services, persons, places, organizations, and ideas.

Products are packaged and labeled and various customer services may be offered along with the product. All these criteria exert a considerable collective influence on buyers. Brand names, for example, tell the buyer something about product quality. Packaging which imparts benefits such as protection, economy, and convenience, also influence buyers' decisions.

Price Considerations

In spite of the increased role of non-price factors in influencing consumer behavior, the price remains an important factor. The consumer decides whether the price is right for the product a company is selling. The consumer, before purchasing, weighs the price against the perceived values of using the product. Consumers differ in the values they assign to different product features and marketers often vary their pricing strategies for different consumer segments.

Sales at a concessional price, price reductions, discount offers, and free gifts are commonly used as sales promotion tools by marketers. Consumers sometimes defer purchases to avail of price reductions during an off-season sale.

Advertisements & Marketing

Advertisements today have an important influence on consumers. Advertising has emerged as a potent promotional tool in enhancing sales of existing products and introducing new products. Companies use advertising to increase the awareness of consumers through the communication of persuasive information about their products, services, or organizations.

A number of advertising agencies have sprung up to help the manufacturer in his efforts to achieve the above aims, but the consumer is often left in a state of confusion. This is because ads exploit the emotions of people without giving much information that would help the consumer to make considered choices. It will be noticed that the above aims of manufacturers do not include consumer satisfaction. It is therefore up to the consumer to look after his own interests because ads can be competitive, deceptive, or corrective in nature. Judge for yourself, but beware you don't fall into the trap of the manufacturers or persuasive efforts of the ads.


Marketing, advertising, and brand differentiation are key considerations for companies in the consumer goods sector. Many consumer goods sector companies are faced with a range of close competitors, substitute goods, and potential rivals. Competition on price and quality is often fierce, so brand identification and differentiation are critical to consumer goods sector companies' performance.

Variety of Goods

General consumer products range from utilitarian goods such as shoes and pens and pencils to cutting-edge technology such as iPads and smartphones.

There is also a wide range of quality and price within each product category.

Manufactures of Consumer Goods

Manufacturers range from massive, multinational corporations to small firms with fewer than 50 employees.

There are tens of thousands of general consumer products manufacturers in the United States. They compete to develop the best products at the most affordable price for the greatest number of consumers.

Some companies are part of traditional sectors (such as the clothing industry) that have existed for many years, while others, such as Apple and Dell, are part of the technology sector, which has emerged only in the last three decades.

Supply Chain for Consumer Industry

The industry has close relationships with other industries, including transportation, packaging, agriculture, chemicals, plastics, rubber, metal, stone, ceramics, and petroleum, which provide many of the raw materials that are used to make consumer products.

Role of Retailers

Typically, CPG merchandise is sold by retailers in physical brick and mortar stores and packaging is designed to differentiate a product from its competitors on a pharmacy, grocery, or big box store shelf.  Because shelf space is a finite commodity, the CPG market is highly competitive. Retail is a major aspect of the general consumer products industry. Retailers sell the products that manufacturers produce. Retail stores are located in nearly every town and city. These include department stores, supermarkets, “big box” stores, and drugstores. Many companies sell products online.

Career Paths in Consumer Industry

Workers with a wide range of educational backgrounds and skills are employed in the general consumer products industry.

Career paths include those in product development (such as product design), manufacturing, marketing, sales, administrative support, law (especially intellectual property and labor law), and other fields.

Influence of Technology

Until recently, it’s been difficult for manufacturers to take advantage of the internet and sell CPG through e-commerce channels. The most dramatic force shaping people's consumption is perhaps technology. Technological advancement is at the heart of consumer goods sector industry trends. Technological advancement has revolutionized supply chains, marketing, and the products themselves in this sector. It has released forces of change in production processes and the nature of products. Many of today's common products were not available a hundred years ago. The consumer today, is, therefore, constantly subjected to the advent of new products, which claim features of greater efficiency, comfort, speed, and reliability.

Using new technologies, many consumer goods sector companies are engaging with consumers in more direct and innovative ways. The consumer today has not only a wider range of products to choose from; he also has an enhanced variety and brands of products available for purchase.

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Creation Date Wednesday, 23 September 2020 Hits 1138

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