Promoting innovation in a new era of frugality

Forecasters predict consumer spending growth will be slow in the next few years in major Western markets such as the US and UK, while households in China and other emerging powers will be the ones driving global growth for CPG companies.

This dynamic has important implications for CPG manufacturers and retailers, which need to concurrently develop innovative consumer experiences for both developed and emerging market customers. For example, many CPG companies are targeting consumers with very small budgets in emerging markets by offering smaller, affordable portions of foods such as yogurt, shampoo, face cream, and milk. Overall, CGP companies are:

• Changing product assortments, often focusing on simple and practical designs, durability and value
• Adding new pricing strategies, including expanding private label brands, adding basic versions of products at lower prices, and offering deals and coupons
• Using innovative promotions and advertising approaches, including more use of digital options and social media, which allow advertisers to engage with customers on a one-to-one basis, learn about them and get immediate feedback.
• Incorporating social and environmental values into their brands.