Background
There has been a proliferation of generic brands in the United States of America and other markets around the world since 2007.
Discount stores such as Walmart and others have taken into offering their clients generic products that are relatively cheaper than their brand name counterparts to combat the current dire economic situation across the globe
- maintain high-profit margins to stay afloat.
- increase the sales volume of fast-moving brands such as drugs and utility items
Significance of this Study
- The findings of the proposed study will go a long way in providing a link between the generic brands and organizational profit margins.
- From the findings, the organization manufacturing branded products will be able to know whether generic products for their branded items are a boost to their sales or not.
- Organizations will be able to make informed decisions regarding whether to produce generic products or not.
- Review financial statements from 2002 to 2009.
- Examine the revenues and EBIT to determine the net profit.
- Compare to sales volume reports.
Sundry Items Used in Study
- Care One toothbrush versus Reach toothbrush – Publix supermarkets in Tennessee.
- Family Dollar Window Cleaner versus Windex Window Cleaner – Family Dollar.
- Sun OxyMagic versus OxiClean all-purpose detergent and cleaner.
- Publix toilet paper versus Scotts toilet paper – Publix supermarket in Tennessee.
- CVS Skin Relief Body Wash versus Neutrogena Body Wash – CVS in Manhattan, New York.
Pharmaceutical oriented products
- CVS eye drops versus Clear Eyes eye drops – CVS in Manhattan, New York.
- CVS Cold and Cough Medicine versus Halls Cold/Cough Medicine – CVS in Manhattan, New York.
- CVS aspirin versus Bayer aspirin – CVS in Manhattan, New York.
- CVS Multivitamin versus Centrum Daily Multivitamin – CVS in Manhattan, New York.
Discussion
- Market forces of demand and supply play a significant role in determining product prices
- Word of mouth is vital as a means of sales promotion especially when the product meets the expectation of the users
- Store brands are very effective when they create uniqueness associated with particular stores
- Generic products are continuously becoming attractive to consumers posing stiff competition to the brands especially in economic hard times.
- Going by statics, the brand is continuously losing customers to the generic as most Americans do not go back to the brands after using the generic products making it hard for the brand outlets to survive as consumers have a small percentage of disposable income.
Conclusion
Cheap generic products have increased their popularity among consumers and retail outlets. Manufacturing of generic products is cheap and quite easy as compared to brand manufacture which faces many hurdles. The economic hard times have made the generic products to be preferred by the consumers over the brands
Recommendations
There is a need for more market research to be carried out ton identify the rise in popularity of the generic products.
The relationship between current economic recessions on profit margins on both original brands and generic brands, consumer spending, and further explanations on why consumers opt to buy cheaper brands compared to original brands that are expensive but of a better quality of to be investigated.
Recommendations continue…
The emerging consumer characteristics over the years in terms of consumption of generic products and analyze the relationship between product quality, product price, and customer loyalty on profits on a larger scale ought to be investigated.
It is advisable that demographic analysis of consumer behavior and trends and a financial analysis need to be across more states in the United States to arrive at a concrete answer to the above researches.