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L’Oreal. Regional TV Effectiveness Review. June 2011. RTM is the marketing bureau for Regional free t o a ir TV. www.regionaltvmarketing.com.au. Regional TV covers all areas outside capital cities and reaches 36% of population. QLD . DIARY. REG. WA. NNSW . SNSW . VIC . TAS .

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l oreal

L’Oreal

Regional TV Effectiveness Review

June 2011

slide4

Regional TV covers all areas outside capital cities and reaches 36% of population

QLD

DIARY

REG. WA

NNSW

SNSW

VIC

TAS

regional tv coverage includes large cities and fast growing coastal suburbs
Regional TV coverage includes large cities and fast growing coastal suburbs

Gold Coast

Newcastle & Central Coast

Canberra

Wollongong & Illawarra

d iary markets a diverse mix of urban and rural
Diary markets: A diverse mix of urban and rural

Darwin

Satellite

Regional WA

Mildura

Griffith

Port Pirie/ Broken Hill

Loxton/Mt Gambier

populations of major regional tv markets are comparable with the metros
Populations of major regional TV markets are comparable with the metros

NNSW 2,079

SNSW 1,410

People

Source: ATR & OZTAM 2011, Nielsen Media Research 2010

slide8

Australian population moving North and to the coast. Over 30% growth in 10 years in some regional areas

QLD NSW VIC TAS METRO

National average

Population Increase: 2001 vs. 2011

Source: ATR & OZTAM 2011

urbanisation and high population growth changing the profile of regional australia
Urbanisation and high population growth changing the profile of regional Australia
  • Seachange: Baby boomers and young families
  • Lower cost of living and lifestyle are main attractions
  • Rural populations moving to regional hub towns
  • Less than 4% of households depend on farming
seachange
Seachange…

… for baby boomers

…for families

typical seachanger ryan 36 wollongong nsw
“Typical” SeachangerRyan, 36. Wollongong NSW

Made the seachange from the “Shire” to the “Gong”. Owns a small business in building trade

Above average income & primary focus is kids and lifestyle.

Loves footy , cars and teaching kids surfing.

regional consumers can be main growth driver for l oreal during next 12 18 months
Regional consumers can be main growth driver for L’Oreal during next 12-18 months

Two years of sales and advertising response prove regional can contribute up to 40% of growth

Relatively small realignments of TV spend to regional have made a positive impact for L’Oreal and key rivals

Regional consumer spending is leading the recovery – greater affluence in regional – 40yrs + key growth demo

slide13

Regional consumers have similar demographic profile to metro

Source: Roy Morgan Single Source (12mths to Dec 2010)

slide14
Regional willingness to spend been very consistent through GFC and in 2011 still positive vs. national downward trend

Regional

+9% YOY

$ Spent per $1000

-12% YOY

Metro

Dollars allocated for spending from discretionary $1000

Source: foreseechange 2005 – 2010: annual average, 2011: June 2011 survey

slide15
The important Profligate Spender group has increased since late 2010 in regional while declining in metro

Metro

Regional

% of Pop.

Profligate spenders are people both willing and able to spend

% Pop. who are profligate spenders

Source: foreseechange 2005 – 2010: annual average, 2011: June 2011 survey

doubling in number of wealthy people living in regional australia in past five years
Doubling in number of wealthy people living in regional Australia in past five years

People 18-54 with HHI $130k+ or Investments $500K+

Source: Roy Morgan Single Source (12mths to Sep 2010, 2009, 2008, 2007, 2006, 2005 )

slide17

Why has regional spending been more stable and the outlook more positive?

  • Lower cost of living – less debt
  • Huge investment in infrastructure
  • Population growth driving development of local economies
  • Resources growth impacting many parts of regional: NSW, QLD, WA, SA.
slide18
Culturally Australia is a divide nation: Regional is representative of the dominant suburban lifestyle

YouthfulTechnologicalEnergetic

Upwardly MobileMaterialistFamily Focused

Outer Metro

41%

PragmaticFunctionalPatriotic

InnerMetro

23%

Regional

36%

ExperientialInternationalLibertarian

PracticalCommunitarianSelf Reliant

ConservativeInstitutionalSelf-Controlled

slide20

3

3

%

of all Skincare sales are from regional consumers

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide21

Total Skin care sales for Sept 2007 to July 2008 – Regional is 33%+ of national sales

Total Skin Care category sales: Sept 2007 to July 2008

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

during fyr 08 l oreal had same market share in regional as metro
During FYR ‘08 L’Oreal had same market share in regional as metro

Brand shares of total category sales: Sept 2007 to July 2008

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

in the prior year 07 l oreal had higher share in regional olay main beneficiary
In the prior year (’07) L’Oreal had higher share in regional – Olay main beneficiary

Brand shares of total category sales: Sept 2006 to Aug 2007

Source: Scan Data (4 W/E 3/09/06-02/09/07) Coles /Woolworths/Bi Lo (excluding NT)

slide24

3

3

%

of national L’Oreal sales are to Regional women

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide25

L’Oreal DE regional sales are 33% of national but Reg. NSW bigger than Brisbane

Total L’Oreal Dermo Expertise Skin Care sales: Sept 2007 to July 2008

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

l oreal bdi in regional nsw is 11 above national average growth opportunity in qld
L’Oreal BDI in Regional NSW is 11% above national average – growth opportunity in QLD

L’Oreal Dermo Expertise share of total skin care category sales:

Sept 2007 to July 2008

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide27

L’Oreal DermoExp.regional BDI is very sensitive to relative weight of TV investment

2008 Jan-Jun

Total TV: $2.0m

Reg share: 14%

2007 Jul-Dec

Total TV: $2.4m

Reg share: 11%

4 W/C Period

Dermo Expertise share of total sales vs. TV Spend

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide28

R

O

I

3

x

Cost efficiency and ROI from L’Oreal regional TV is 3 times better than metro TV

Source: Aztec/Nielsen, Sept 07 – July 08 Grocery channel

slide29

Olay market share in regional lagged metro until Nov ‘07 when regional share of TV budget grew

TV spend p/month

Category share by value

Jan-Oct 2007 TV Spend: $5.8m

RTV share: est. 4%

Nov ‘07 –Jun ‘08 TV Spend: $2.7m

RTV share: est. 16%

4 W/C Period

Olay share of total sales vs. TV Spend

Source: Scan Data (4 W/E 16/9/07 to 22/06/08) Coles /Woolworths/Bi Lo (Excludes NT)and NMR AdquestMillenium

slide30

0

4

%

Of Olay national sales growth came from realignment of TV budget to regional … and 3 times rate of ROI

Based on 4pt growth to June 2008 in RTV markets and 3pt growth

in metro markets for 12 months sales of Olay brand

Sources: Aztec/Nielsen, Retail World , AdquestNov 07 – June 2008

slide31

Regional women 30+ more likely to have children but still very involved with skincare

Source: Roy Morgan Single Source (12mths to December 2008)

slide32

Wrinkle Decrease regional BDI grew relative to metro in ‘08 with RTV share

2008 Jan-Jun

Total TV: $335k

Reg share: 17%

2007 Jul-Dec

Total TV: $1.1m

Reg share: 11%

4 W/C Period

L’Oreal Total Wrinkle Decrease share of total sales vs. TV Spend

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide33

Collagen Definer product highly responsive to TV and RTV share of budget

2008 Jan-Jun

Total TV: $335k

Reg share: 17%

2007 Jul-Dec

Total TV: $1.1m

Reg share: 11%

4 W/C Period

L’Oreal Collagen Definer share of total sales vs. TV Spend

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide34

Total Wrinkle Decrease sales for Sept 2007 to July 2008. Regional is 33% of total

L’Oreal total Wrinkle Decrease skin care sales: Sept 2007 to July 2008

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide35

Australian women 40+ have same profile regardless of location

Source: Roy Morgan Single Source (12mths to December 2008)

slide36

DE Revitalift sales show skew to regional equal 35% + of national value

Dermo Expertise total Revitalift skin care sales: Sept 2007 to July 2008

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide37

Regional women very responsive to Revitalift TV

2008 Jan-Jun

Total TV: $694

Reg share: 15%

2007 Jul-Dec

Total TV: $911k

Reg share: 12%

4 W/C Period

L’Oreal Total Revitalift share of total sales vs. TV Spend

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide38

Regional women 55+ are affluent consumers and just as engaged with skincare

Source: Roy Morgan Single Source (12mths to December 2008)

slide39

Regional women highly responsive to Perfect and Re-Perfect TVC’s

2007 Jul-Dec

Total TV: $1.04m

Reg share: 10%

4 W/C Period

L’Oreal Age Perfect & Re-Perfect share of total sales vs. TV Spend

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide40

Total Age Perfect & Re-Perfect sales. Regional is 36%+ of total

L’OrealTotal Age Perfect & Re-Perfect skin care sales: Sept 2007 to July 2008

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide41

Regional sales in the growing 55+ segment are 40%+ of national value

Reg. NSW was no.1 market by value in FYR ‘07 for Re-Perfect

L’OrealTotal Age Perfect & Re-Perfect skin care sales: Sept 2007 to July 2008

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide42

Garnier Re-Density: Reg. NSW is No. 1 market and total Reg. almost 40% of national

Garnier Re-density sales: Sept 2007 to July 2008

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide43

Garnier: Grew YOY & higher regional BDI shows long term RTV investment (15%+ avg.)

TV spend:$2.7m

RTV share: 15%

4 W/C Period

Garnier share of total sales vs. TV Spend

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide44

STV test for Neutrogena in Reg. QLD generated minimal response vs. Free RTV

QLD STV Only

4 W/C Period

Neutrogena Rapid Clear share of total sales vs. TV Spend

Source: Scan Data (4 W/E 16/9/07 to 20/7/08) Coles /Woolworths/Bi Lo (Excludes NT)

slide45

Regional share of skin care category TV grew in FYR ‘08

Period: Jan to Dec 2008

Category: Food (Dairy & Dairy Substitutes) & Beverages (Milk)

Source: Nielsen Media Research AdEx

Category: Skin Care - All

regional tv cpm rates are half metro equivalent guarantees higher roi
Regional TV CPM rates are half metro equivalent – guarantees higher ROI

Index

TV market CPM indices

National average CPM P18+ = 100

Source: Regional TV Agency Survey 2008

a relatively small realignment of tv to regional circa 20 share will deliver higher growth and roi
A relatively small realignment of TV $ to regional - circa 20% share will deliver higher growth and ROI

Regional NSW and QLD are clear opportunities for growth

L’Oreal mature age brands should be returning 40% of sales from regional women

Ideal time to target regional as consumers increase discretionary spending