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The New Consumer Economy: What to watch and What to do. James Russo, Nielsen. KEYS. TO. GROWTH. REACH: An increasingly economically divided consumer CONNECT: With consumer need states LEVERAGE: The redefinition of value TARGET: Economically powerful consumer segments

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slide2

KEYS

TO

GROWTH

  • REACH: An increasingly economically divided consumer
  • CONNECT: With consumer need states
  • LEVERAGE: The redefinition of value
  • TARGET: Economically powerful consumer segments
  • UNDERSTAND: New viewing habits
increasingly economically divided consumers
INCREASINGLY ECONOMICALLY DIVIDED CONSUMERS

1 in 2 Americans own stock, mutual fund, 401K or IRA

1 in 7 Americans rely on food stamps

87% of Americans earning over $75,000 own stocks

20% of Americans earn less than $20,000 a year

Source: msnbc.com; CNN Money*Supplemental Nutrition Assistance Program (SNAP)

retail spending driven by affluent households
RETAIL SPENDING DRIVEN BY AFFLUENT HOUSEHOLDS

Retail Spending: 2 year trend

Approximately

20% of HHs earn over $100k

Source: Nielsen Homescan, 52 w/e 10/1/2011 versus 10/3/2009

excludes gas-only or Rx-only trips

slide5

US MEDIAN HOUSEHOLD INCOME ON DOWNSLIDE

Source: U.S. Census Bureau; The New York Times & USA TODAY/Sentier Research

you can no longer afford to be middle of the road
YOU CAN NO LONGER AFFORD TO BE “MIDDLE OF THE ROAD”

Conventional Retailers can no longer be …conventional

They need to differentiate themselves more than ever – to get beyond price

slide7

KEYS

TO

GROWTH

  • REACH: An increasingly economically divided consumer
  • CONNECT: With consumer need states
  • LEVERAGE: The redefinition of value
  • TARGET: Economically powerful consumer segments
  • UNDERSTAND: New viewing habits
what we did
WHAT WE DID
  • Selected a list of major CPG & Retail advertiser brands to include in the analysis
  • Categorized ads (4000+) by creative approach: humor, narrative, sentimental, product, promotional & value
  • Evaluated the “effectiveness” of each creative approach throughout the recession (from 2006 through 2011) among Adults 18+
when desiging ads the smart money is on humor narrative sentimentality
WHEN DESIGING ADS, THE SMART MONEY IS ON: HUMOR, NARRATIVE, SENTIMENTALITY

2006 - 2007

2008 - 2009

2010 - 2011

focus on the connection
FOCUS ON THE CONNECTION
  • Marketers focused on product features and promotion/price do not resonate with viewers . . . even during tough economic times
  • Consumers respond to marketing that makes a connection. Focus on creating messages that engage audiences with humor, sentimental/family themes, and relatable/engaging storylines over those that tout price/promotion/product features
slide11

KEYS

TO

GROWTH

  • REACH: An increasingly economically divided consumer
  • CONNECT: With consumer need states
  • LEVERAGE: The redefinition of value
  • TARGET: Economically powerful consumer segments
  • UNDERSTAND: New viewing habits
value is not just about price it s about the balance of price and benefits
VALUE IS NOT JUST ABOUT PRICE, IT’S ABOUT THE BALANCE OF PRICE AND BENEFITS

Value Consumer = Benefits/Price

Value Consumer = Price

Greek Yogurt

Avg Price +107% higher

Unit Sales 134%

All other Yogurt

Unit Sales -8%

Premium Coffee

Avg Price 18% higher

Unit Sales 5%

Mainstream Coffee

Unit Sales -4%

Premium Chocolate

Avg Price 83% higher

Unit Sales 10%

Mainstream Chocolate

Unit Sales 6%

Pasta Excluding Health

Healthy Pasta

Avg Price 57% higher

Pound Sales 5%

Pound Sales 1%

nearly half of consumers have shopped at alternative value formats

Shop

NEARLY HALF OF CONSUMERS HAVE SHOPPED AT ALTERNATIVE VALUE FORMATS

75%

72%

Plan to shop in the next 12 months

66%

56%

Shopped

In the past 3 months

56%

52%

46%

$100K+

<= $49K

$50K to $99K

Defined as: Thrift, 2nd hand/used goods, consignment, & pawn stores; Craigslist website; check cashing establishment

Source: Nielsen Homescan Survey – February 2012

slide14

KEYS

TO

GROWTH

  • REACH: An increasingly economically divided consumer
  • CONNECT: With consumer need states
  • LEVERAGE: The redefinition of value
  • TARGET: Economically powerful consumer segments
  • UNDERSTAND: New viewing habits
key trends that will impact behavior
KEY TRENDS THAT WILL IMPACT BEHAVIOR

Increasingly Multicultural

Older but Wiser

Stagnant Population

Increasingly Urban

Declining Families

Smaller Households

but the opportunity is today
BUT THE OPPORTUNITY IS TODAY

AFRICAN-

AMERICAN

HISPANIC

AMERICANS

17th

12th

ASIAN

AMERICAN

LARGEST

ECONOMY

LARGEST

ECONOMY

27th

LARGEST

ECONOMY

connected but connected engaged
CONNECTED BUT CONNECTED = ENGAGED

HISPANICS

AFRICAN AMERICAN

ASIAN AMERICAN

view

text

talk

the gap
THE GAP

New Product

Ad Spending

Hispanic

African American

slide20

HOW WE GET THERE

REACH

RESONATE

slide21

KEY TAKEAWAYS

  • A successful ad is a successful ad
  • Everybody responds to humorous storylines
  • Prioritize universal drivers over cultural nuances
slide22

MULTICULTURAL DRIVERS

Asian Americans like product features

46%

85%

OF BOTTOM ADS DON\'T DISCUSS FEATURES

OF TOP ADS DISCUSS

PRODUCT FEATURES

* Likability Index versus average Asian Ad likability

slide23

MULTICULTURAL DRIVERS

African-Americans respond to humor

42%

96%

OF TOP ADS ARE

HUMOROUS AND RELATABLE

OF BOTTOM ADS ARE NOT HUMOROUS OR RELATABLE

slide24

MULTICULTURAL DRIVERS

Hispanics prefer family references

41%

95%

OF TOP ADS

FOCUS ON THE FAMILY

OF BOTTOM ADS DON\'T FOCUS ON THE FAMILY

slide25

TOP PERFORMING

GENERAL AD

RESULTING IN

41%

INCREASE IN HISPANIC MARKET SALES

key trends that will impact behavior1
KEY TRENDS THAT WILL IMPACT BEHAVIOR

Increasingly Multicultural

Older but Wiser

Stagnant Population

Increasingly Urban

Declining Families

Smaller Households

you need to adjust to accommodate different shopping and product preferences
You need to adjust to accommodate different shopping and product preferences

It’s an age AND it’s an attitude

This Not this

know the difference between age groups and generations
Know the difference between age groups and generations

Seniors Today

Seniors Tomorrow

  • More traditional
  • Less technological savvy
  • Conservative values
  • Conservative tastes
  • Requirements, conditions & ailments related to age
  • Less traditional
  • More technological savvy
  • Less conservative values
  • Willing to experiment
  • Requirements, conditions & ailments related to age

Different

People

Same

needs

Consumer

Patient

slide29

KEYS

TO

GROWTH

  • REACH: An increasingly economically divided consumer
  • CONNECT: With consumer need states
  • LEVERAGE: The redefinition of value
  • TARGET: Economically powerful consumer segments
  • UNDERSTAND: New viewing habits
using new and traditional ways
USING NEW AND TRADITIONAL WAYS

DEVELOPED

3.5

Hours

21% of North Americans

have TV’s with internet connection

+

DEVELOPED

74%

Internet penetration

Source: Nielsen Global Survey Q3 2011

cross platform viewing gaining
CROSS PLATFORM VIEWING GAINING
  • Average TV viewer is watching 6 fewer minutes per day of traditional television
  • Viewing is shifting to other devices, including to tablets. (Current penetration is 15% of US homes)
  • Nearly 36 million mobile phone owners in the U.S. watch video on their phones.
leverage simultaneous usage
LEVERAGE SIMULTANEOUS USAGE

86% tablet owners and 84 % of smartphone owners use their device while watching TV

  • 44% of simultaneous tablet+TV viewers visited a social networking site during the program

Source: Nielsen Q2 2012 Connected Devices report

social ads generate a 55 greater lift in recall
SOCIAL ADS GENERATE A 55% GREATER LIFT IN RECALL

Consumers will provide their personal information for:

52% Opportunity to save

37% Free service or app.

36% Exclusive information

33% News of interest

26% Charitable purpose

slide36

FOR OUR INDUSTRY…WHAT ARE CONSUMERS WILLING TO DO ON SOCIAL MEDIA?

Consumers are willing to get more involved

Source: 2011 Nielsen PanelViews Media Survey - Individual responses - Canada

slide37

Completely Completely/somewhat

Recommendations from people you know 28% 91%

Consumer Opinions posted online 9% 70%

Editorial Content (Newspapers) 7% 59%

Friends

&

Family

Completely Completely/somewhat

Brand Sponsorships 7% 47%

TV Ads 6% 48%

Radio Ads 5% 43%

Newspaper Ads 6% 46%

Magazine Ads 6% 47%

Ads before movies 4% 41%

TV product placements 5% 41%

Outdoor billboards 4% 46%

Traditional

Media

Completely Completely/somewhat

Branded websites 9% 57%

Emails I signed up for 6% 50%

Ads in search engine results 5% 40%

Online video ads 4% 36%

Online banner ads 4% 33%

Ads on social networks 4% 36%

Txt ads on mobile phones 3% 29%

Display Ads on mobile devices 4% 33%

New

Media

TRUST IN A SOCIAL MEDIA WORLD

Source: Nielsen Global Online Consumer Confidence Survey 3Q2011

economic outlook
Economic Outlook

WHAT’S

NEXT?

slide39

U.S CONSUMER IS CAUTIOUSLY OPTIMISTIC ABOUT THE FUTURE

DO YOU THINK YOUR COUNTRY WILL BE OUT OF A RECESSION IN THE NEXT 12 MONTHS? % SAYING YES

Most

Optimistic

Source: NGCCI

Source: Nielsen Global Omnibus Consumer Confidence Survey 1Q2012

looking forward coping mechanisms remain consistent
LOOKING FORWARD, COPING MECHANISMS REMAIN CONSISTENT

WHEN ECONOMIC CONDITIONS DO IMPROVE, WHAT DO YOU EXPECT YOU WILL CONTINUE TO DO……

Save on gas 51%

Reduce take-out 35%

Less on apparel 31%

OOH Entertainment 29%

Save on groceries 28%

Source: Nielsen Global Omnibus Consumer Confidence Survey 2Q2012

the consumer is in control
THE CONSUMER IS IN CONTROL

Brands

Retailers

Consumer

ad