Increasing commodity costs and a slowdown in the economy are posing tough challenges to the…

Increasing commodity costs and a slowdown in the economy are posing tough challenges to the manufacturers of food products in the US. Analysts believe that consumer behavior related to the purchase of food items had undergone significant change in these difficult times as the consumers did a juggling act to balance their budgets while trying to opt for a healthier diet. Kraft Foods Inc., realizing the importance of consumer insights, took special care to observe what consumers were choosing to eat in these troubled times.

Introduction The year 2007 was a particularly tough one for manufacturers of snacks and household staples in the US. The players in the industry had to contend with rising commodity costs and less display space at retailers, in addition to intensified competition from private label competition. This forced the manufacturers to pass on the increased costs to the consumers. Analysts felt that the changed circumstances had led to considerable changes in consumer behavior. A slowdown in the economy and soaring prices had already left consumers feeling hard done by and they had to resort to a lot of juggling to balance their budgets while trying to opt for a healthier diet.

Analysts noted that this was a challenging situation for the manufacturers as consumers bought less or switched to lower-priced substitutes…