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© 2012 EDFRED Corporation.
Talk shop with us about manufacturing, distribution and retail.
Consumers might prefer to chat with us on our EDFRED Consumer Resources Blog
This is a great idea. I am looking forward to your posts about better retail methods for cleaners.
There is an enormous challenge getting new products to market. Without very strategic marketing the best products often never make it to the consumer. The “best product” does not win the race without a method to cut through the “noise”.
The exciting thing for a smaller company like EDFRED Corp is that the web is changing the rules and leveling the playing field. The smart and diligent can compete with the well financed.
Recession Effects On Chemical Specialties
There are two elephants in the room for the chemical specialty market.
1. Consumers are cutting back on purchases.
2. Manufacturers have slowed new product development.
CONSUMERS
While the consumer continues to require cleaners, there is a trend to trade down to private label brands. General purpose cleaners would be most vulnerable to this. They are not differentiated much so why not at least try the cheap brand?
Also, with the ability to market a very dilute product as a general purpose cleaner there is plenty of margin for private labels or newcomer discount products.
Do consumers read the label to see how much active ingredient the product contains vs. water? Go to any store, pick up a general purpose cleaner and view the active ingredient percent.
For example, our visit to a national office supply store cleaner section revealed a name brand with a “couple of drops” of bleach in mostly water. Major brands effectively exploit this as their name gives the consumer confidence. That is why they are major brands!
Specialty cleaners, such as our Shower Stall & Tile Cleaner and Cling N Clean Toilet Bowl Cleaner fare better as they are designed for a specific task. In this case unbeatable removal of lime, rust and soap scum in bathroom showers, tile and toilets. A general purpose will not handle this job – or at best it’s a tedious task.
So “trading down” has not been much of an issue for these EDFRED products.
That being said, the consumer does have less dollars to spend and are likely to purchase less frequently or look for sales or promotions.
We have responded by packaging in gallon sizes, encouraging retailers to participate in TPRs to promote, and diligently communicate the fact that EDFRED products are better performers.
Of course some consumers will value their time and choose performance, others will buy the largest jug at the lowest price. Visit a dollar store and you get the picture.
Susan Viamari is a respected analyst with SymphonyIRI and says in the HAPPI publication that consumers are cautious in their spending even when it comes to a $3 disinfectant. She also notes that consumers are reducing the variety of what they buy.
EDFRED noted this same trend several years ago and trimmed the product lineup to basically three major products that could replace most every cleaner in a home. The strategy:
Shower Stall & Tile Cleaner – for almost every case of lime buildup in shower stalls and tile, grout cleaning, stainless steel and glass.
Cling N Clean Toilet Bowl Cleaner – Lime and rust stain specific.
Liquid Garage & Driveway Cleaner – Grease, fat and oil on concrete, BBQs, and diluted as a floor and hard surface cleaner.
A pricing collision is on it’s way. Retailers are pressing prices downward where they can, and manufacturers are experiencing an explosion of raw material price increases. Most of the big boys, including Procter & Gamble implemented price increases in 2011.
We are monitoring 2012 Middle East tensions potentially affecting oil prices, which in turn affect most material costs. Where possible we will mitigate price changes by carefully planned material buys, thereby maintaining market share by assisting retailers and consumers with stable pricing.
MANUFACTURING PRODUCT DEVELOPMENT
As long as the recession continues new product development be modest. Slimming profits and diminished consumer product appetite will restrain R&D for the specialty chemical manufacturers for the near future.
EDFRED has a list of new products that will remain “parked” for awhile. We will continue a reduced level of development as the focus remains on cost containment and productivity.
We hear the distributors, retailers and consumer – “loud and clear”.
We excess inventory for sale. Two pallets (about 12,000 count) of brushes and sprayers for bottles. See photos here: http://www.edfredcorp.com/blog/Surplus/index.htm#3