The beginning of the year brought some hope that the consumer felt better financially then last year. The market gains and low interest rates in the U.S. supported this line of thought. Thus, we saw increase manufacturing activity in anticipation of an improving demand. Though some consumers have felt a better financially than last year, they are still holding on to their wallets and the significant demand has not fully materialized yet.
The U.S. Commerce Department had reported U.S. Consumer spending rose only 0.2% in March while January rose 0.3% and February rose 0.7%. With this weaken demand we directly see this impacting the manufacturing sector. Successful businesses have an action plan to get through these challenging times, ultimately emerging stronger when demand picks up; to survive and then to win. But getting to the action plan requires some analysis of each unique situation. At NPI we talk about your True Cost of Ownership (TCO) because it really is about you. We have three strategies that may apply to your situation:
1. Build on your product strength
a. A business may have a very strong selling, award winning product, but it is only sold to one group of consumers. With the right modifications to product design and packaging one can open up another opportunity with other consumer groups. Making the pie bigger gives you a bigger piece.
2. Low Volume Customization
a. Differentiate your products from your competitors allowing retailers to also differentiate their offering from their competitors. Consumers “Window Shopping” with smartphones have made competing on price alone an increasing challenge for some retail stores. Helping your customers feel like they received something different can improve your position with competitors.
3. Cost Reduction Analysis
a. Initiating Design Reviews and Design for Manufacturability can discover new areas where cost can be improved without jeopardizing the form, fit, function, and reputation of the product. This can improve your margins and increase your competiveness in the market.
What is your action plan?