CPG Firms Must Innovate to Avoid Defection to Private Labels

Interesting CPG industry comments from Howard Sun at Seeking Alpha:

“Innovation has always been a focus of most CPG companies; however, in the face of slowdown, CPG companies need to put even more focus on innovations to drive greater revenues and profits. Innovations also keep consumers from deflecting to less-expensive private label products that do not have the same features. According to Advertising Age, product categories in more than 20 countries show a private-label market that is 56% higher where there is low innovation activity compared with cateogires with many new products.”

This idea of avoiding deflection or defection through innovation puts a little different slant on why innovation is required. I would think that this concept of avoiding defection through innovation or improvement applies to many different industries, products and customer facing business processes. Improvements in product development seem to be the first thing companies think of but ALL business processes that affect a customer’s perception of the company are in play.

What innovation related to products and/or business processes have you performed to avoid defection of customers? I’m particularly interested in the business process side and whether the focus was on product development or customer facing business processes.

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