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."
Adjusting to Lower Prices
Godiva chocolates and Hard Candy cosmetics are grand examples of learning to adjust to lower price points. The chocolatier recently introduced less elaborate candies called Gems that sell for nearly a dollar less per chocolate than Godiva's popular Ballotin candies.
Hard Candy Cosmetics has not only lowered its prices but completely reinvented itself. The brightly colored make up brand ditched department store counters and made a home for itself on the shelves of Walmart. In turn, the prices dropped dramatically to less than $10 an item.
Consumers can benefit from this trend by taking a second look at brands they assumed to be out of reach.
For example, shoppers who thought video game consoles were too extravagant can do a quick price check. Sony's new Playstation 3 is not only slimmer than the original model, but it's $100 cheaper as well!
"We have to think more broadly as consumers about who could be in our purchase set because you might find some surprises there," said Anthony.
These surprises are not simply reserved for coffee and eye shadow but for big ticket items as well. Car companies are no stranger to the economic realities this year. In response, new vehicle models are rolling off the line boasting more affordable features.
The 2010 Mazda CX-7, for example, now comes with a 2.5 liter engine option which is more affordable and fuel efficient than the existing 2.3 liter engine. With this new offering alone, Mazda gives consumers the ability to save more than $2,000 when compared to the existing models.
Instead of asking customers to reach product prices above their means, companies are adjusting to meet the budgets of their customers. And, it appears to be working. Fusco reported that sales have been up 25 percent since he introduced his more affordable line of pasta sauce.
"It's been a wonderful challenge in the sense that we feel that we've got the tools that we needed to really ride the economic wave that's at hand for us right now," Fusco said.
And now consumers can take advantage of the changing tide as well.