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The consumer products divide
Lessons for consumer products companies in the light of consumer income bifurcation
A recent Deloitte survey into buying patterns polled over 3,000 consumers and analysed data for more than 1,100 brands. The survey particularly investigated how income divisions and changes in financial position impact purchase behaviour.
We found that the gap in income between the high- and the middle- and lower-income tiers is widening, and that this divide alters purchase behaviours. This plays out differently per category.
Perceived financial position
While income remains an important determinant of where consumers shop and what they purchase, the perception of a change in financial position has the most influence on how consumers change their purchase behaviours. No matter what income cohort one is in, consumers who perceive their financial position as worsening are more likely to cut spending – cutting back on volume of spend, or switching to less expensive products and brands. As one would expect, shoppers with perceived improving financial positions spend more. But what and how consumers spend differs per category.
Deep dive per category
How do consumer income and spend behaviours impact your brand performance?Get the report
This knowledge gives consumer products companies an opportunity to adapt marketing and commercial strategies so that they are future proof. We recommend four strategies:
- Shift away from the 'middle' and focus on premium or value products. This is needed in order to capture market share and accelerate growth in the current climate, in which income gaps are widening.
- Determine how sensitive your category and portfolio are to changes in consumers' perceived financial position. Understand how improving and worsening financial positions shift consumer behaviours (i.e. what, how much, and where a consumer purchases).
- Choose the most important levers for effectively dealing with income gaps and a potential economic slowdown. Determine what you think the likelihood is of consumers cutting back on volume vs. switching brands when they perceive that their financial position is worsening.
- Adapt your brand, product, and portfolio strategies, resource allocation, and go-to market execution, by category. It is important to anticipate and influence consumer needs and behaviours in order to grow and win.
Detailed information per category
Deloitte's report on 'The consumer products bifurcation' provides data and research about how consumer products companies can shift gear in order to grow or adapt their brands.
Please contact us if you'd like to discuss opportunities for your organisation.