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Understanding African American Consumer Power – February 21 st

Upcoming Webinars. Understanding African American Consumer Power – February 21 st Digital Shopping: Topline on Online – February 28 th Hispanic Insights – TBD. What’s In Store: 2012. James Russo VP, Global Consumer Insights January 24, 2012. Today’s presenter. James Russo

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Understanding African American Consumer Power – February 21 st

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  1. Upcoming Webinars Understanding African American Consumer Power – February 21st Digital Shopping: Topline on Online – February 28th Hispanic Insights – TBD

  2. What’s In Store: 2012 James Russo VP, Global Consumer Insights January 24, 2012 What’s In Store: 2012

  3. Today’s presenter James Russo VP, Global Consumer Insights, Nielsen James Russo serves as Vice President, Global Consumer Insights for Nielsen and is based in New York. He has more than 19 years of experience in marketing, sales, business development and research across the retail and manufacturing industries. His responsibilities at Nielsen include taking a leadership role in integrating the company’s efforts to leverage and customize its broad array of insights and analytics to enhance growth strategies for its clients. James is one of the today’s leading experts on consumer attitudes and behavior, prominently and frequently featured in the nation’s top business outlets. He is a frequent contributor to leading media outlets such as: CNBC, Bloomberg News, Fox Business, Wall Street Journal and the Financial Times. James earned an MBA and BA from St. John’s University in Queens, New York.

  4. Do you think we are still in a recession? Yes No Not Sure Poll #1

  5. 2011: Markets and consumers driven by uncertainty HOME PRICES EQUITY MARKETS LABOR MARKETS FUEL COSTS INFLATION Source: Yahoo Finance; DQNews; ChicagoFed.org; EIA.gov

  6. Concerns continue and underscore a precarious state of recovery WHAT ARE YOUR BIGGEST CONCERNS OVER THE NEXT SIX MONTHS…… Economy 28% Jobs 17% Debt 15% Fuel prices 5% Work/Live Balance 5%

  7. In 2011 labor market improved 2000 2001 2004 2007 2008 2011 2002 2003 2006 2009 2010 2005 -3.63 mil 1.12 mil -4.74 mil 2.04 mil 2.46 mil 2.06 mil 1.07 mil 1.547 mil 87k -1.76 mil 1.95 mil -540k U.S. Annual & Monthly Job Losses/Gains Source: U.S. Government

  8. But contrasts in job situation impacting consumer segments differently Nov 2011 Unemployment Rates – Seasonally Adjusted Race/Ethnicity Asian 6.5% White 7.6% Hispanic 11.4% Afr-American 15.5% Age Group 20-24 14.2% 25-34 9.2% 35-44 7.0% 45-54 6.7% 55+ 6.4% Education Less than high school diploma 13.2% High school grad; no college 8.8% Some college, or assoc degree 7.6% Bachelor degree and higher 4.4% Gender (adults 20 +) Women 7.8% Men 8.3% Source: Seasonally Adjusted U.S. Total Non Farm Employment, Bureau of Labor Statistics U.S. Department of Labor

  9. As median household income continues a downslide Source: THE CINCINNATI ENQUIRER, The New York Times, Census Bureau & USA Today

  10. Ultimately reflective in U.S. consumer confidence near recessionary levels Nielsen Consumer Confidence Index Source: Nielsen Global Online Consumer Confidence and Opinion Survey 2Q11

  11. Sluggish confidence impacting retail sales Ttl Unit Sales 171 bill Ttl Unit Sales 170 bill Ttl Unit Sales 167 bill 2006 2007 2008 2009 2010 2011 The Conference Board, Nielsen Total FDM including WMT Unit Sales

  12. Slow growth in retail sales, driven by inflationary gains -0.6% 0.8% 2Q10 3Q10 4Q10 YTD 2011 1Q10 Source: dollar sales % chg 52 wks ending 12/27/10, total all depts, fdm inc wmt YTD thru June 2011

  13. Retail winners are innovating and communicating on more than just value % Change in Same-Store-Sales Stock-Up& Save Discretionary Spending Value & Convenience 24 26 13 8 15 8 15 15 15 3 15 8 16 22 2 Months Quarters Q Winning Streaks* M

  14. Economic Outlook WHAT’S NEXT?

  15. U.S. Real GDP Projected to grow at a weak-to-moderate pace over the next several years Actual and Projected US GDP Growth (2006-2016) FORECAST PERIOD 2006 2007 2009 2008 2010 2011F 2012F 2013F 2014F 2015F 2016F Source: IMF World Economic Outlook, September 2011 Update; TCG Analysis

  16. Moderate forecasted growth will keep unemployment rate at elevated levels 9.3% 8.5% 7.0% 6.1% Avg 50 yr Un Rate 5.5% 5.5% 5.0% 4.8% 2015 2016 2000-2002 2003-2005 2006-2008 2009-2011 2012-2014 Pre Recession Period Forecast Period Recession Period Source: IMF, September 2011; TCG Analysis

  17. Strong GDP growth in emerging markets in 2012, with some developed markets lagging Projected Real GDP Growth Rates Avg. in 2012 – Major Developed/Emerging Markets 0-2% 2.1-4% 4.1-6% More than 6% Note: Country numbers denote real GDP growth forecast for 2011 Source: IMF, September 2011; TCG Analysis

  18. The U.S. consumer remains increasingly cautious 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

  19. Current behavior raises red flag for spending in 2012 ONCE YOU HAVE COVERED YOUR ESSENTIAL LIVING EXPENSES, WHAT DO YOU DO WITH YOUR SPARE CASH? I SPEND IT ON… Negative sign for 2012 consumer spending Source: Nielsen Consumer Confidence Survey

  20. Expect pragmatic consumer behavior to continue in 2012 Will Continue To Do Did This Past Year 52% Save on gas & utilities 40% Reduce take-out 37% Reduce entertainment 34% Spend less on clothes 33% Reduce grocery spend 23% use car less 17% Reduce phone expenses 54% Save on gas & utilities 34% Reduce take-out 28% Reduce entertainment 31% Spend less on clothes 32% Reduce grocery spend 23% use car less 20% Reduce phone expenses Source: Nielsen Global Online Consumer Confidence and Opinion Survey Comparison of 2Q10 vs 2Q 2011 - US

  21. As not so new normal behavior continues • Combining Trips: 66% • Shopping More Supercenters: 24% • Combining Trips: 75% • Shopping More Supercenters: 29% • Combining Trips: 66% • Shopping More Supercenters: 24% • Eating out less: 36% • More at home: 36% • Value Brands: 19% • Eating out less: 52% • More at home: 48% • Value Brands: 34% • Eating out less: 46% • More at home: 40% • Value Brands: 31% • More Coupons: 37% • More Coupons: 35% • More Coupons: 22% Post Recession 2010-2011 Pre Recession 2005-2007 Recession 2008-2009

  22. KEYS TO GROWTH IN 2012 • REACH: An increasingly polarized consumer • LEVERAGE: Redefinition of value • ALIGN: With consumer need states for ad effectiveness • ENGAGE: The connected consumer in ways they trust • TARGET: Economically powerful consumer segments

  23. Increasingly polarized 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)

  24. Polarized Consumers: Retail spending being driven by affluent HHs 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

  25. Polarized Consumers: Shopper trips correlating to HH Income Shopper Trips: 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

  26. KEYS TO GROWTH IN 2012 • REACH: An increasingly polarized consumer • LEVERAGE: Redefinition of value • ALIGN: With consumer need states for ad effectiveness • ENGAGE: The connected consumer in ways they trust • TARGET: Economically powerful consumer segments

  27. Redefinition of Value: Balance how you connect with consumers on Value & Emotion

  28. Value is not about price, it’s about the balance between price and benefits Value Consumer = Benefits/Price Value Consumer = Price All other Yogurt Greek Yogurt Avg Price +107% higher Unit Sales 134% 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%

  29. KEYS TO GROWTH IN 2012 • REACH: An increasingly polarized consumer • LEVERAGE: Redefinition of value • ALIGN: With consumer need states for ad effectiveness • ENGAGE: The connected consumer in ways they trust • TARGET: Economically powerful consumer segments

  30. Consumers’ sense of financial security has clearly been shaken KEY QUESTION FOR ADVERTISERS: To what extent, if any, has this attitude shift impacted consumer responsiveness to various creative tactics? Pre Recession 2006 - 2007 Recession 2008 - 2009 Post Recession 2010 - 2011 107 80 56 Consumer Confidence Source: Conference Board Consumer Confidence

  31. What We Did • Selected a list of major CPG and Retail advertiser brands to include in the analysis • Please note: this is a sample of our database • 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+

  32. Key Findings • Humorous ads have consistently resonated best among viewers from 2006 through 2011 . . . people always like to laugh. • The performance of Narrative & Sentimental ads has improved since 2006, suggesting a consumer interest in harkening back to better times • Ads focused on product features and promotion/price do not resonatewith viewers . . . . even during tough economic times • Viewers respond to ads that make a connection. Advertisers should focus on creating ads that engage audiences with humor, sentimental/familythemes, and relatable/engaging storylines over those that tout price/promotion/product features

  33. Advertising Performance Index Since 2006:When designing ads, the smart money is on use of humor, narrative and sentimentality 2006 - 2007 2008 - 2009 2010 - 2011

  34. KEYS TO GROWTH IN 2012 • REACH: An increasingly polarized consumer • LEVERAGE: Redefinition of value • ALIGN: With consumer need states for ad effectiveness • ENGAGE: The connected consumer in ways they trust • TARGET: Economically powerful consumer segments

  35. Online consumption leading to online production 60% of online consumers create reviews about products and services online Nearly 70% of Americans use TV and the Internet simultaneously

  36. 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 Reaching an engaged consumer using strategies they trust… Source: Nielsen Global Online Consumer Confidence Survey 3Q2011

  37. KEYS TO GROWTH IN 2012 • REACH: An increasingly polarized consumer • LEVERAGE: Redefinition of value • ALIGN: With consumer need states for ad effectiveness • ENGAGE: The connected consumer in ways they trust • TARGET: Economically powerful consumer segments

  38. Consumers over 65 watch the most TV, close to 7 hours a day Only 5% of advertising targets them, despite being the top buyers in 94% of CPG categories Boomers showed less brand loyalty than their younger counterparts Satisfying their unique need fuels growthfor this consumer segment

  39. Women control $12 of $18 trillion in global consumer spending—close to 70% Women in 95% of countries sayquality is the #1 driver of brand loyalty Transitions strategic conversations frompricing to quality; includes production, marketing, packaging, in-store

  40. October 2011 the 7 billionth person was born By 2050, about 70% of the world’s population will live in cities By 2015, 50 mega cities will exist (over 5 MM pop) • Mega city consumers areexposed to more,making them more tolerant, experiencedand prone to try new things

  41. By 2020, theglobal middle class will be more than half of the world’s population By 2030, 79% of the middle class will be in the emerging world Business models move fromfixed to flexible

  42. Emerging markets growing 50% faster than developed markets In 2Q11, Asia Pacific contributed 62%of growth in global consumer spending Innovation accelerates growth in consumer spending within emerging markets; resulting in a true global marketplace

  43. Accessibility Availability Mobility Connectivity

  44. Considering the environment ahead, what will be your main analytical focus? Growth and Demand Innovation Marketing Effectiveness Shopper Marketing Social Media Intelligence Cross Platform Audience Measurement Poll #2

  45. 2012 GOAL: 1 New Customer A Day(Not exactly a BHAG!) 365 IN A YEAR $7,000 14 Avg retail banners shopped Avg Annual Retail Spend or 152 Avg Retail Trips $2.5 million The Power of One:It is not about the 1%, its actually about the 0.0000003%

  46. 47% of population on social network sites The Power of One:It is not about the 1%, its actually about the 0.0000003% 2012 GOAL: 1 New Customer A Day Avg facebook user has 130 friends =24,000 91% trust recommendations from friends and family At Stake…..$168,000,000

  47. 2012 GOAL: 1 New Customer A Day At Stake…..$168,000,000 The Power of One:It is not about the 1%, its actually about the 0.0000003%

  48. Q&A Thank you for attending • If you have follow-up questions or want more information, please contact your Nielsen Professional Services Representative. • If you are not a current Nielsen client, please contact us at: Phone: 800-553-3727 email:CPGSolutions@nielsen.com OR if you have any questions regarding the content of this webinar, you can also contact: James Russo, email:james.russo@nielsen.com • For insights specific to the Canadian market contact: Carman Allison, email carman.allison@nielsen.com

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