The Loss of A Value Proposition


Value Proposition

 10 Products American Consumers Suddenly Aren’t Buying Anymore

Business professionals around the world need business acumen skills to thrive and survive. One of the many elements that incorporates the competency of business acumen is the ability to utilize business economics skills to assess and understand markets.

At Advantexe Learning Solutions, we spend a significant amount of time working with global Fortune 1000 companies developing business skills for business leaders so they can make the best decisions in support of their strategies. It is always surprising to find out how many business leaders don’t step back from the daily grind of executing to understand the drivers of strategy and to understand the changes going on around them that could impact future strategies and tactics.

Last week, Money Magazine published a list called “10 Things Consumers Have Suddenly Stopped Buying.” Food and food products make up most of the list and guns made a surprising showing.

On July 21, 2014, I wrote a blog/case study about the dynamics of the changing breakfast food industry based on trends and observations (including trying a delicious breakfast burrito from Cosi). Well, it turns out there is something happening out there in terms of shifting consumer desires beyond just breakfast. For many reasons – including the continued trend in eating more healthy foods while living a more stressed life style – American consumers have drastically scaled back buying many items and some of them quite dramatically.

The Value Dashboard The article puts together the top 10 list of things we are not buying as much of and I have provided some analysis from a business acumen perspective. For each of the items on the list, I suggest one key changed value driver in the Value Dashboard. For those unfamiliar with the concept of the Advantexe Value Dashboard™, it is a tool that is used to present a value proposition to customers in support of their needs and in reaction to voice of customer data.

Breakfast Cereal
As I mentioned a few weeks ago in the earlier blog, cereal sales are down dramatically (7%) and industry leaders like Kellogg’s have seen their sales drop by more than 10%. There are many reasons why cereal sales are down including lifestyle changes, the evolving modern family, eating “healthier” (yogurt sales are way up – especially Greek yogurt), and more people are eating breakfast out of the house.

Breakfast burritos, breakfast sandwiches, and yogurt all have more protein and it’s clear that breakfast eaters don’t want the carbohydrates any more. And of course from a microeconomic perspective, if cereal sales are down, so are milk sales.

At the same time breakfast cereal sales are down, American consumers are drinking less cow’s milk now then they have in decades, migrating instead to new milk alternatives such as almond and soy milk.

From the Business Acumen perspective, manufacturers need to quickly adjust their value proposition and their value dashboard. Strategically, the cereal manufacturers are trying to develop new products and applications such as higher protein versions of core cereals.

Suggested Value Dashboard Change: New Applications
For example, how about positioning breakfast cereals as a great topping for your Greek yogurt parfait?

Soda manufacturers have been seeing revenues and shares go down for years as a result of lifestyle changes, and diet sodas have been replaced with energy drinks and various flavored waters. In North America, sales of Diet Coke have fallen into the single digits in terms of market share, causing Coca-Cola to miss their projections.

While changing consumer preferences have changed drinking habits, many Federal, State, and Local governments have been engaged in a battle with soda manufacturers (First Lady Michelle Obama has been targeting the industry for years) and local politicians are always looking for special “soda taxes” (similar to cigarette taxes) to fund gaps in school district budgets.

It’s interesting to note that many of these same government agencies are pursuing the legalization of marijuana, which causes one to wonder about overall priorities and to ask questions about how governments choose to decide what is good for us and what is not. (Full disclosure: my team and I are huge Diet Coke and Coke Zero supporters and don’t understand all of the anger…)

Suggested Value Dashboard Change: Drink Responsibly
How about some sort of value driver similar to alcohol? When consumed in moderation and responsibly, there shouldn’t be any issues.

I find this one kind of hysterical. The sales of chewing gum are down significantly and there are several theories as to why. First of all, what is the value proposition of gum in the first place? I think a lot of the positioning is as a breath freshener and another one for years has been an alternative to smoking or chewing tobacco. The bottom line on gum is this: there are really very few things more repulsive that observing and listening to a fellow human chew, snap, and do strange things with the rubbery wad of goop in their mouths. In addition, stepping, sitting on and coming into contact with the discarded remnants of a mouthful of old gum may be even more disgusting. Mints and healthier candies have been rising steadily and I am sure this is a good thing. But if support is the purpose of this blog in order to apply business acumen theory…

Suggested Value Dashboard Change: Chew instead of eating
In a more health conscious, fitness crazy world, there has to be a value driver that focuses on chewing gum as an alternative to eating a snack that you don’t need.

This one is a little surprising. Gun sales have leveled off over recent months. Much of the growth of the industry has been spurred by political talk of tougher regulation; in other words when there is a high profile incident and politicians call for more controls, gun sales go up. It seems that despite the outrageous and senseless incidents that have occurred in recent years the momentum for control has hit a wall due to the fact that there is a lack of urgency for people to purchase guns before “it’s too late.”

Suggested Value Dashboard Change: Tie into Sports and Fitness Trends
Many gun enthusiasts value the sporting aspects of hunting and harvesting their own food. When done responsibly, there is nothing more American than a great, healthy workout of hunting your own food and eating fresh and healthy meats.

Apparently the gourmet, specialty cupcake business is over. I didn’t know it started but have been told that it’s been all the rage for the past few years. A national chain called Crumbs abruptly shut down in July, signaling the end of the boom. Just this past weekend, I tried cupcakes from a place called Sprinkles and while it was very good (I am partial to the red velvet), I had a hard time enjoying it because it was so rich and so good that to me, there are so many lesser-calorie alternatives that are just as satisfying.

Suggested Value Dashboard Change: Go Mini
The big cupcakes are just overwhelming. Maybe smaller sizes that are manageable to eat and digest? At the one store I went to, they had mini versions but the pig push was on the big cupcakes. Seems like the most logical alternative.

Chef Boyardee
Chef Boyardee is the canned pasta brand of ConAgra. Sales have been slowly decreasing and the company has been preparing Wall Street for continued regression of sales and profits. For many of the same reasons as cereal and soda, changing lifestyles have impacted sales and there is a perception of unhealthiness associated with pasta-in-a-can.

Suggested Value Dashboard Change: Tap into the Healthy and Quick Trends
Americans are changing the way they eat: Greek yogurt, breakfast sandwiches outside of the home, etc. If you look at all of these trends, it seems to me that a Chef Boyardee can tap into these trends by adding more healthy protein such as chicken/turkey instead of the beef, add a whole wheat line (less white carbs), add a lower sodium line, and look for alternative packaging to cans such as microwavable containers and more “to-go” ideas. 

Golf Equipment
Who has 4-6 hours a couple of times a week to play golf? With fewer people playing, the impact on golf courses, country clubs, equipment manufacturers, and retailers has been profound. Golf equipment sales are down 10% and the average driver is selling at a price 16% less than before.

Suggested Value Dashboard Change: Focus on Relationship Building and Health
I am not a golfer, but many of my friends who are enthusiasts talk much more about the bonding experience than the actual sport. So with Americans having less time for family and exercise, how about a value driver that positions more family time? Maybe even pack a picnic of cereal, diet soda, cupcakes, and gum as well?

The beard craze is in full bloom. Razor manufacturers like Gillette say that sales are way down because beards are way up. It’s been tradition in the National Hockey League to grow your “playoff beard” and baseball has also been following the trend ranging from an entire team (World Series Champion Red Sox) to individuals like Jason Werth, who has become the poster-boy for the baseball beard craze.

Suggested Value Dashboard Change: Alternative things to shave
P&G (owners of Gillette) are smart and already figured it out. Go after alternative shaving opportunities like “manscaping.” Sales of special razors are way up and Gillette will be just fine.

White Bread
Americans have been cutting back on carb-loaded white bread for years, but the gluten-free trend has accelerated the decline dramatically. Again, Americans are trying to eat healthier and filling up on bread is not part of that heathier lifestyle. The “dinner roll” and plates of bread to accompany a meal are virtually gone from the American table replaced with more protein and vegetables.

Suggested Value Dashboard Change: Go Dark
This is a tough one, and bread manufacturers have been doing this for years, but it seems the only alternative is to use more whole wheat and darker grains to make “healthier” breads.

Convertible Cars
The choices of convertible cars seem to drop year by year. Since 2004, sales of convertibles have dropped by an astounding 44%. The costs are high, and driving a convertible – if it is your primary car – is very impractical. Most of the convertible owners have at least two cars: a primary “regular” car and a weekend convertible. The changing and more dramatic weather (who will ever forget the winter of 2013-2014?), higher insurance costs, changing family structures, and more young people living in cities are trends that will not be reversed.

Suggested Value Dashboard Change: Go Focused
The only strategy here is to go focused: target the affluent, college educated customer who wants and can afford a second car. Don’t waste time on customers who don’t want and can’t use your product.


Robert Brodo

About The Author

Robert Brodo is co-founder of Advantexe. He has more than 20 years of training and business simulation experience.