Consumers Cash In: Companies Create Cheaper Versions of Products
Jan. 20, 2010— -- When companies want to boost sales, what they usually do is discount the same old merchandise. But there is a more creative approach some companies are taking and it's a chance for consumers to cash in.
In this tricky economy, some companies are innovating by creating less expensive versions of their own products. They're not lowering the prices of existing products, but rather inventing brand new lines that are more affordable for folks. It's their way of keeping generic brands and competitors at bay.
Neil Fusco, owner of Cucina Antica Foods Corporation, began noticing a change in his customers' needs when he provided in-store samples of his premium pasta sauce.
"They're very budget conscious, they know exactly what they want to spend, they have their lists made out and their coupons clipped," Fusco observed.
"I needed to address that by… coming out with a product just as good in quality but [also] something of a less priced item."
The company's original sauce sells for nearly $9 because it uses expensive tomatoes imported from Italy. To meet customer needs, Fusco introduced "Monte Bene," a new $5 dollar sauce created by incorporating cheaper, New Jersey tomatoes.
Large national companies are also going back to the drawing board to come up with lower priced options. Recently, Starbucks launched VIA, an instant coffee alternative to their fresh brewed menu items. A single latte from the coffee giant costs around $3 while multiple servings of VIA cost the same price.
Scott D. Anthony, author of "The Silver Lining: An Innovation Playbook for Uncertain Times," says these companies have learned to "love the low end."
By "loving the low end," Anthony explained, "they're not introducing something that's targeting the most demanding customer who really wants the most luxurious product. Instead, they're saying let's create a more diverse line of products so we've got some things that can connect with the value conscious customer."
