Consumer Trend

What are some recent consumer behavior trends that are influencing the industry?


With rising costs in every factors, such as the rising price of oil and food, consumers’ allocation of disposable incomes for food is shrinking. First, rises in gasoline prices are affecting consumer spending on food. According to analysts Graves and Kwon (2011) from Standard and Poor's, consumers are more likely to shop efficiently by shopping closer to home to reduce fuel consumption. To further save on gas usage, consumers are more likely to eat and have fun in home instead of going out. Thus, from my point of view, this could lead to potential profit growth in frozen foods, such as TV-dinner and ready-to-eat meals. Second, with increases in food, consumers are more price consciousness. This means a few things. First, for some areas, consumers are forgoing some brand name food items for private brands. In addition, consumers are looking for “benefit from promotional sales, discount coupons, and loyalty card programs” (Graves and Kwon (2011)). So for food companies to compete for higher market shares, they must have special market promotions to encourage consumers to buy their brand. One interesting way for market promotion is to bundle food items together, but it is up to the most creative food industry to use successive tactics to recapture the market consumers. Currently, one way for the some companies to spread awareness is offering discounts on online web pages, such as Groupon or Livingsocial. In general terms, cost-conscious consumers and rising raw commodity causes will lead to slow growth in the United States.



Graves and Kwon (2011) predicted that the industry is expected to growth in emerging markets, such as Asia, Easter Europe and Latin America. As developing countries are getting wealthier, foreign consumers are expected to change their lifestyle to consuming more process goods/food. They stated (2011), “developing international markets, we expect that consumers’ diets are shifting toward protein (e.g., meat and dairy), with less of an emphasis on carbohydrate grain products. We think demand for processed foods should grow, especially in urban areas, where busy consumers seek some of the same features (e.g., convenience, healthier choices, variety, and quality) that are valued in the US. We expect that rising education levels will cause people to make more informed choices about what they eat, and we think that more women working outside the home creates a need for faster, simpler food preparation, which is likely to encourage use of processed foods.” With the rise of industrial workers in developing countries, process food is becoming more of a choice for foreigners. Thus, companies with frozen entrees as one of their product line are in good standing. One thing to note that as consumers get wealthier, they are leaning towards healthier options. Thus, this trend would most likely be profitable to those companies that are able to produce healthier and more nutritious goods than their competitors.

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