The arrival of the Covid-19 virus has upended the lives of most of our customers. Many people have lost their jobs and just about everyone has been forced to stay home. The result of all of this is that our customers are starting to feel “cash poor” – they are looking for ways to save money on everything that they buy. What this means for product managers is that we need to make some changes to our product development definition in order to appeal to our newly price conscious customers.
Keeping Customers As Times Get Tough
Product managers realize that their customers are cutting back on spending, as tough economic times set in. Product managers are looking back at the last major recession for tools to keep customers from swapping their brands for cheaper ones from rivals. Some companies are rolling out new, more affordable package sizes, while others are narrowing ranges to focus on top-selling, core products. In the world of cereal manufactures, their product managers are exploring marketing to convey how many meals a single box of cereal can provide.
Product managers realize that preparing for a downturn this time around is tougher because the potential for wider spread or a second occurrence of the new coronavirus isn’t yet known. Consumer-products product managers are already scrambling to meet surging demand for household essentials while operating factories at lower capacity because of worker sickness or social distancing. If we can get this right, then we’ll have something to add to our product manager resume.
In the last recession, more shoppers purchased cheaper store brands, and consumers say they’re reducing spending again in the wake of the coronavirus pandemic. A recent survey of U.S. consumers showed that 47% strongly agreed or agreed that they were cutting back on spending. The survey found 65% said they were very or extremely concerned about the U.S. economy, higher than the percentage concerned about health or how long the current situation would last.
How To Deal With Frugal Customers
Back in 2009, consumer-goods product managers used a variety of tactics to cater to cash-strapped shoppers. Some acquired affordable personal-care brands to complement their portfolio of higher-priced brands. Other product managers attempted to tailor promotions to paycheck cycles, pushing large multipacks of snacks near the start of the month and smaller packs later on after finding that brand loyalty dwindled with cash.
Another approach was to reformulated existing brands. One company launched a variant of its laundry detergent that was 20% cheaper. Another firm reworked its frozen meals to continue selling them for $1 even as costs spiked. Some product managers are examining pack sizes to make products more affordable. What product managers are doing is multipacks, big packs, 10% free, which they weren’t doing with the same intensity before Covid, and which is what they will do more and more post-Covid.
Companies are preparing to defend market share from cheaper store brands, which grew strongly in the last recession and have seen growth accelerate during recent lockdowns. Past crises have shown product mangers that consumers often indulge in more upscale supermarket products as they cut back on dining out and salon treatments. Product managers understand that it’s the two extremes, the value side and the premium side that do hold up quite well in a downturn.
What All Of This Means For You
The Covid-19 virus has had a big impact on the lives of our customers. They are going out less, their purchasing patterns are changing, and many of them have lost their jobs. The result of all of this is that customers have become more frugal in what they buy. This means that product managers have to look at their product manager job description and find ways to modify their products to continue to appeal to their customer’s new demands.
This is not the first time that product managers have had to deal with their customers limiting how much they were willing to spend. In the previous recessions customers switched to cheaper brands. Product managers are experimenting with package size and focusing on core products. Creating products can be difficult due to reduced manufacturing capacity. If product managers aren’t careful, customers may switch to store brands. One creative approach is to offer larger products at the beginning of the month when customers have more money and smaller products later in the month. During periods like this customers are looking for both premium products and value offerings.
No matter what, product managers are going to have to adjust to the new market realities. Their customers are dealing with a shortage of money and this means that it is going to have an impact on what they are willing to buy. We need to realize what our customers are going through and we need to make the changes to our products that will allow them to still appeal to our customers. If we can find a way to do this, then our customers will be happy and our products will continue to sell well.
Question For You: What can product managers do to make sure that customers don’t switch to store brands?
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