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The New Consumer Economy: What to watch and What to do

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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The New Consumer Economy: What to watch and What to do

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  1. The New Consumer Economy:What to watch and What to do James Russo, Nielsen

  2. 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

  3. 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)

  4. 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

  5. US MEDIAN HOUSEHOLD INCOME ON DOWNSLIDE Source: U.S. Census Bureau; The New York Times & USA TODAY/Sentier Research

  6. 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

  7. 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

  8. 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+

  9. WHEN DESIGING ADS, THE SMART MONEY IS ON: HUMOR, NARRATIVE, SENTIMENTALITY 2006 - 2007 2008 - 2009 2010 - 2011

  10. 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

  11. 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

  12. 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%

  13. 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

  14. 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

  15. KEY TRENDS THAT WILL IMPACT BEHAVIOR Increasingly Multicultural Older but Wiser Stagnant Population Increasingly Urban Declining Families Smaller Households

  16. ETHNIC HOUSEHOLDS WILL BE THE MAJORITY BY 2050 54% 35% Source: US Census

  17. BUT THE OPPORTUNITY IS TODAY AFRICAN- AMERICAN HISPANIC AMERICANS 17th 12th ASIAN AMERICAN LARGEST ECONOMY LARGEST ECONOMY 27th LARGEST ECONOMY

  18. CONNECTED BUT CONNECTED = ENGAGED HISPANICS AFRICAN AMERICAN ASIAN AMERICAN view text talk

  19. THE GAP New Product Ad Spending Hispanic African American

  20. HOW WE GET THERE REACH RESONATE

  21. KEY TAKEAWAYS • A successful ad is a successful ad • Everybody responds to humorous storylines • Prioritize universal drivers over cultural nuances

  22. 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

  23. MULTICULTURAL DRIVERS African-Americans respond to humor 42% 96% OF TOP ADS ARE HUMOROUS AND RELATABLE OF BOTTOM ADS ARE NOT HUMOROUS OR RELATABLE

  24. MULTICULTURAL DRIVERS Hispanics prefer family references 41% 95% OF TOP ADS FOCUS ON THE FAMILY OF BOTTOM ADS DON'T FOCUS ON THE FAMILY

  25. TOP PERFORMING GENERAL AD RESULTING IN 41% INCREASE IN HISPANIC MARKET SALES

  26. KEY TRENDS THAT WILL IMPACT BEHAVIOR Increasingly Multicultural Older but Wiser Stagnant Population Increasingly Urban Declining Families Smaller Households

  27. You need to adjust to accommodate different shopping and product preferences It’s an age AND it’s an attitude This Not this

  28. 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

  29. 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

  30. HOW WE CONNECT WITH CONSUMERS IS EVOLVING

  31. 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

  32. 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.

  33. 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

  34. BREAKING THROUGH THE SOCIAL MEDIA AUDIENCE

  35. 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

  36. 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

  37. 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

  38. Economic Outlook WHAT’S NEXT?

  39. 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

  40. 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

  41. THE CONSUMER IS IN CONTROL Brands Retailers Consumer

  42. SUCCESS RELIES ON EVEN GREATER COLLARBORATION Collaboration Trust Loyalty

  43. The New Consumer Economy:What to watch and What to do James Russo, Nielsen

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