Consumer Goods – Design And Sell Issues
By James Nicholson-Smith
Most branded consumer goods companies do not manufacture their own goods. Commercially their core expertise is to design new products that meet their customers’ needs and then market both the products and the brand they are sold under. Building these sorts of businesses is a challenge for many owners who have a strong vision but find themselves frustrated about how to get to their end goal.
We asked Martin de Grandprey former FD of Gillette and now a part-time FD with the www.thefdcentre.co.uk to comment on the common pitfalls in building these businesses:-
• Generally these businesses...
...are built by entrepreneurs with a determined passion to see their product concepts on shelf and used by consumers worldwide. Unfortunately most do so in a very uncompromising way especially when it comes to understanding the supply chain costs and margin requirements for each step in the supply chain. It is essential that the design process starts at the recommended retail price and works back taking into account, promotions, listing fees, stock obsolescence, retailer margin, (wholesaler margin if appropriate) delivery costs, storage costs, packaging costs and then product costs.
• In many cases the success of the product depends on the packaging and not the product itself. Consequently the product may be fantastic but the consumer will never know because he/she will not buy it. Cosmetics are a classic example of this dynamic.
• More and more products have to meet legislative standards before they can be sold. At one end this is obviously required eg pharmaceuticals, but at the other end the justification is more questionable eg naturally derived biocides. Irrespective of the justification, the cost of not having the appropriate approvals is potentially huge. Large scale product recalls from retailers have destroyed many... continued on page two >