Consumer Products
Introduction

Industry Leaders and Fragmentation

The consumer products
industry is comprised of avariety of products, suchas toiletries andcosmetics, smallappliances, consumer
durables, consumer
electronics, and otherhousehold items. This
industry has seen steady
growth since the Industrial
Revolution, and with therising markets of Russia, China, and India starting todemand more commodities, this growth is expected tocontinue into the future.

* All amounts are given in Billions USDCompany
Mitsubishi
ItochuGeneral Electric
Procter & Gamble
MitsuiCountry179
179
161
161
179

Sales116.796.6
79.9
74
59.9

Profits
3.1
4.1
5.6
13.8
2.4

Highly Fragmented

Market Value
41.6
47.6
117.6
338
35

Highly Concentrated

Profitability and Demand Drivers

Industry Composition
The consumer products industry is very hard to define
because of its rather eclectic nature and its close
relationship to many other industries. For our purposes, it
can be described as enveloping practically every item anindividual can purchase, especially in the areas of toiletries
and cosmetics, appliances, electronics, beverages and food,and other generic household items.
Analysts often divide it into two categories, durable andnondurable. The former includes items with staying power,
like home furnishings. The latter includes more ephemeral
merchandise, with a life expectancy of fewer than threeyears, like personal care items.
The consumer products industry is a powerful industry, as it
accounts for two-thirds of the volume of trade in the worldeconomy. Due to its close relationship to other industries,
the consumer products industry plays an important role in
the global economy. It is the source of a significant portionof the gross domestic product (GDP) of many countries, andalso acts as a driver for other industries, especiallyadvertising and retail. These last two industries are very
important to the consumer products industry as they
typically invest in consumer products companies.

Primary Demand Drivers:• Population growth• Consumer preferences

Profitability Drivers:• Product innovation• Effective sales and marketing• Efficient operations

TrendsRecently in the industry, there has been an increasing reliance on technologies. The interactive qualities of the internet and the costeffective benefits of other technology are increasingly being utilized to help create a closer relationship between consumers and more
efficient enterprises. These include:• Customer relationship management (CRM) applications, programs which collect information about customer behavior, have also
seen a rise in importance as companies strive to better understand their target market to increase sales and market presence.
• Radio-frequency identification (RFID), which is used to tag product shipment and gather information used to boost supply chain
efficiency. The increased use of this technology is being pushed by the retailers who sell the consumer products.
• Many companies now have interactive websites where consumers can play product based games and purchase goods.
Aside from technology, the consumer products industry has also seen a rising inclination for companies to engage in mergers,
acquisitions, or alliances. This is for many reasons including reducing risk when creating new products or expanding into new markets,
reaching new demographics, increasing operating efficiencies, reducing capital outlays, or cutting costs.
Recently, with American and European markets becoming increasingly competitive, manufacturers of consumer products are turning
towards emerging markets in boom nations like India, China, Russia, Brazil, and Turkey. While there are obvious benefits to this, there
are also several risks involved with producing internationally. Emerging economies often play by different rules than developed ones,
and the governments can be prone to corruption, impeding the profitability of businesses.

Country Memo Provided by: globalEDGE.msu.edu and TRADE.GOV