Manufacturing costs across the board have been increasing as global commodity prices and the cost of labor increase. Combined with supply chain issues, manufacturers’ profit margins are becoming strangled. This has created the perfect storm for manufacturers who are already facing labor shortages and geo-political turmoil, negatively impacting post COVID recovery plans. What do manufacturers need to know now in order to successfully navigate to profitable growth?
What it Means:
Manufacturers find themselves choosing between the lesser of multiple evils. How much can they raise prices before consumers walk away from their products? Do they downsize their packages and keep prices stable? What happens when competition is also forced to raise their prices? Should they cull back on the number of SKUs they offer? And if so, which ones should they keep in their line? Should they offer new, lower cost SKUs? All of this impacts businesses and consumers in multiple ways.
Knowing current ‘thresholds’ consumers have in this environment is essential for businesses’ near term and future relevance and growth.
Our Firm’s POV on a Potential Solution:
Our firm has built research-based models allowing clients to simulate different scenarios for their brand vs competitors (e.g., different brands take price increases, others reduce their package size and keep prices stable). Through these models, clients can see what consumers will or will not buy; the impact on bottom line, and alternative competitive strategies. We also incorporate various real world components including cost of goods, distribution and other market conditions to fully understand the impact on our clients’ business.
To learn more about how MAi Research and Pathfinder Analytics work with clients to creatively address challenging business questions, please check us out online at www.mairesearch.com