The Impact of Economic downturn on b rand preference and “Buy Down” Behavior in FMCG sector
Journal Title: International Journal of Scientific Research and Management - Year 2016, Vol 4, Issue 10
Abstract
The global economic recession continues to be long and deep — and consumers across the globe remain insecure and anxious. They are tightening their budgets and actively trading down. The impact of the recession has also been evident in India with slower growth, higher interest rates and accele rating inflation. However, in the midst of all this gloom and doom, one silver lining that has lurked beneath the radar and escaped broader attention has been the strong trading up and consequent rise of the premium segment in India. Like the previous rec essions, during these periods consumers see their purchasing power diminished, and as a consequence private brands gain market weight and brand managers working at top FMCG firms such as Unilever, ITC , Johnson & Johnson, Reckitt Benckiser , Nestlé, and so o n, are faced with a complicated but challenging scenario, where the immediate profit is not often aligned with maintaining brand equity. Although demand in cosmetics and other lifestyle products may decrease a little but no real impact comes in the overall demand of food items (like biscuits and confectionaries); batteries and torches; tea, coffee and other beverages; toiletries (soap, shampoo, detergents) etc, which comprises essential commodities of day to day use. It‘s the diverse product portfolio which keeps these FMCG companies going even in a slowdown. Data shows that consumers return to their favorite brands after the recession, partially because they recognize its quality, but it‘s the recognition the brand has by the time recession comes, as well a s the decisions taken during the following days that will decide the extent to which the brand will come out healthy after the storm. This price - sensitivity by consumers leads to the exchange of the usual brands for private brands, and retailers take advan tage by dedicating them more shelf - space, since they own those brands they usually offer higher margins.
Authors and Affiliations
Dr. R. R. Bhardwaj
Keywords
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