Consumer Spending: It's All About the Bargains

Posted on November 8, 2009

The Wall Street Journal reports that consumers are really spooked by the 10.2% unemployment rate and are continuing to hold back spending to only essential items. And bargains are key. Many brands are having to change marketing and production strategies in order to hand on to their customers.
The recession may be over but companies that cater to consumers believe people are digging in for a long, frugal winter. That's why Clorox Co. is keeping the price steady on a new improved trash bag that grips the top of the garbage can. Clorox says it wants to highlight the bags' "greater value." Similarly, Campbell Soup Co. recently reduced the promoted price of its V8 beverages in some markets to 2 for $5 from 2 for $6. Burger King Holdings Inc. is selling double cheeseburgers for just a dollar.

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Pricing is perhaps where companies are finding consumers at their most grudging. Procter & Gamble Co. and other major makers of household staples, while vowing to resist price wars, say they plan to flood stores with enhanced versions of existing products. After nearly a decade of introducing increasingly expensive items, P&G's new products will span a wider range of prices, most notably at the low end. Among its efforts, P&G is paring the price of its Cheer detergent to reposition it as a "value" brand.

Beauty products maker Estee Lauder Cos. Inc. recently reported better-than-expected results in a sign that consumers are starting to boost discretionary spending. But Estee Lauder CEO Fabrizio Freda told analysts it's "prudent to remain cautious in our outlook" because of high unemployment and weak consumer sentiment. As a result, Mr. Freda said Estee Lauder's holiday gift sets will offer wider price ranges to give consumers greater choice.
Supermarkets are noticing that more people are using coupons and buying less than they used to. These days, it's all about who has the best prices and the steepest discounts.
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