Question

The major U.S. food/CPG manufacturers, as a group, have seen little sales growth in the past few years, despite the economic recovery and growth in the U.S. population. List and explain two reasons discussed in class for their lack of sales growth.

Answer 1

Sales growth refers to the increase in the sales revenue of a company or an industry as a whole.

There are two main reasons for lack of sales growth:-

1) modifications and updating the product-

This is the main reason behind less sales growth and decrease in the sales revenue because when there are no changes made to the existing product, the good loses their potential to attract customers because after a period of time they tend to get bored from it. Regular updates must be made to boost the sales of a product which will help increase the overall sales revenue.

2) substitutes available for the same product-

When there are many substitutes available for a product, the product loses its customers and gets replaced by other products. This leads to overall decrease in the sales revenue. The customers are now more aware then they used to be, which leads them to use their resources on a better product and leads to more profit competition and less sales.