Packaged Goods Industry Eating Itself Alive
The packaged goods industry's obsession with promotion and competition distracts it from engaging in survival activities and leads to higher prices for consumers, say marketing researchers Dr. Leigh McAlister from the University of Texas at Austin and Barbara E. Kahn from the University of Pennsylvania.
The industry's current state of turmoil is caused partly by the sweeping upheaval wrought by globalization, information technology, and flattened organizational structures, but is more directly the result of destructive trading practices that have escalated since the end of WW II, say the researchers.
Common strategies such as "forward buying" and "diverting" have added $75-100 billion worth of inventory to the packaged goods distribution system, significantly increased the percentage of damaged products, and led to astronomical rates of invoice inaccuracy. Furthermore, the cost for financing, storing, and handling this excess is inevitably passed on to the consumer.
In their new text titled, "Grocery Revolution: The New Focus on the Consumer," McAlister and Kahn discuss the classic dilemmas of this industry; recent innovations by forward-thinking companies in replenishment, promotion, cost accounting, and category management; and the grocery shopping behavior of today's consumers that should dictate universal changes in the industry.
Contact: Beverly Sidelnik at 512-471-8881 or [email protected]
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