Consumer spending is the key driver of the global economy. The pace of consumer spending is a controlling factor in causing economic expansion or retraction. Consumer spending is sometimes referred to as consumption and is the largest part of aggregate demand. Aggregate demand is the total amount of goods and services in the economy that will be purchased in a given time frame.

Consumer spending can be divided between durable goods and non-durable goods. Consumer packaged goods (CPG) primarily includes products from the non-durable sector that comprises consumer spending.

• Non-durable goods: include those items that are purchased repeatedly and generally have a life span of less than one-year. They are also lower cost than durable goods. These include such items as food, beverages, soap, cosmetics, paper products and household cleaning materials. These items are usually intended to be replaced after final use.
• Durable Goods: include such items as cars, television sets, kitchen appliances, home furnishings and sporting goods. These products are intended to last a long time and are more expensive than non-durable goods.

There are several key factors that continue to drive CPG companies and the industry itself. The distribution channels are always evolving but certain factors remain present despite these changes.

• Branding: It is critical that a product establish its brand among the sea of alternative options. Consumers are generally loyal to well-recognized brand names. Companies must continually provide brand support to maintain brand awareness.
• Performance / Innovation: Products must deliver what they promise and continue to innovate. The marketplace is competitive and the consumer demands product performance. Improvements to existing products are constantly being brought to market.
• Consolidation: The marketplace is continually consolidating. There is a constant battle for shelf-space which becomes increasingly more difficult to obtain. Smaller companies with quality products and brand names are forced to merge with larger organizations to maintain their brand’s growth.
• Internet: The web is increasingly becoming the channel of choice for new companies to launch their products. It tends to somewhat level the playing field for newcomers. However, it is becoming much more difficult to attract a customer base because of the competition for preferred placements with search engines. Nevertheless, the consumer marketplace is increasingly becoming more comfortable with web based purchasing. This will continue to take market share away from the traditional retailer.