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 GROWTH

1. REACH: An increasingly economically divided consumer2. CONNECT: With consumer need states 3. LEVERAGE: The redefinition of value4. TARGET: Economically powerful consumer segments5. UNDERSTAND: New viewing habits

INCREASINGLY ECONOMICALLY DIVIDED CONSUMERS

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

1 in 7 Americans rely on food stamps

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

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

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

RETAIL SPENDING DRIVEN BY AFFLUENT HOUSEHOLDS

Retail Spending: 2 year trend

Approximately20% of HHs earn

over $100k

Approximately20% 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

-1%-1%

< $20K $20K - $29K $30K - $39K $40K - $49K $50K - $69K $70K - $99K $100K +

Household Income

What’s In Store: 2012

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”

Conventional Retailers can no longer be …conventional

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

Conventional Retailers can no longer be …conventional

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

KEYS GROWTH

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

2006 - 2007 2008 - 2009 2010 - 2011

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

KEYS GROWTH

VALUE IS NOT JUST ABOUT PRICE, IT’S ABOUT THE BALANCE OF PRICE AND BENEFITS

Value Consumer = Price Value Consumer = Benefits/Price

All other Yogurt Greek YogurtAvg Price +107% higherUnit Sales 134%

Unit Sales -8%

Unit Sales 6% Premium Chocolate Avg Price 83% higher Unit Sales 10%

Mainstream Chocolate

Pound Sales 1% Healthy PastaAvg Price 57% higher Pound Sales 5%

Pasta Excluding Health

Unit Sales -4%

Premium CoffeeAvg Price 18% higher Unit Sales 5%

Mainstream Coffee

Source: Nielsen Homescan Survey – February 2012

NEARLY HALF OF CONSUMERS HAVE SHOPPED AT ALTERNATIVE VALUE FORMATS

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

<= $49K $50K to $99K $100K+

75% 72%66%

52% 46%56%Shopped In the past 3 months

Plan to shop in the next 12 months

KEYS GROWTH

KEY TRENDS THAT WILL IMPACT BEHAVIOR

Increasingly Multicultural Older but Wiser

Declining FamiliesIncreasingly Urban Smaller Households

Stagnant Population

ETHNIC HOUSEHOLDS WILL BE THE MAJORITY BY 2050

Source: US Census

BUT THE OPPORTUNITY IS TODAY

HISPANICAMERICANS

12th LARGESTECONOMY

AFRICAN-AMERICAN

17th LARGESTECONOMY 27th

LARGESTECONOMY

CONNECTED BUT CONNECTED = ENGAGED

HISPANICS AFRICAN AMERICAN ASIAN AMERICANtext talk view

THE GAP

New Product

Hispanic

Ad Spending

African American

REACH RESONATE

HOW WE GET THERE

KEY TAKEAWAYS

• A successful ad is a successful ad

• Everybody responds to humorous storylines

• Prioritize universal drivers over cultural nuances

MULTICULTURAL DRIVERS

* Likability Index versus average Asian Ad likability* Likability Index versus average Asian Ad likability

Asian Americans like product features

46% 85%OF TOP ADS DISCUSS PRODUCT FEATURES

OF BOTTOM ADS DON'T DISCUSS FEATURES

MULTICULTURAL DRIVERSAfrican-Americans respond to humor

42% 96%OF TOP ADS AREHUMOROUS AND RELATABLE

OF BOTTOM ADS ARE NOT HUMOROUS OR RELATABLE

MULTICULTURAL DRIVERSHispanics prefer family references

41% 95%OF TOP ADSFOCUS ON THE FAMILY

OF BOTTOM ADS DON'T FOCUS ON THE FAMILY

41%INCREASE IN HISPANIC

MARKET SALES

TOP PERFORMING GENERAL AD RESULTING IN

KEY TRENDS THAT WILL IMPACT BEHAVIOR

Increasingly Multicultural Older but Wiser

Declining FamiliesIncreasingly Urban Smaller Households

Stagnant Population

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

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

Sameneeds

DifferentPeople

PatientPatient ConsumerConsumer

KEYS GROWTH

HOW WE CONNECT WITH CONSUMERS IS EVOLVING

USING NEW AND TRADITIONAL WAYS

3.5 Hours

74%Internet

penetration

74%Internet

penetration

DEVELOPED

21% of North

Americanshave TV’s

with internet connection

21% of North

Americanshave TV’s

with internet connection

Source: Nielsen Global Survey Q3 2011

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

Source: Nielsen Q2 2012 Connected Devices report

44% of simultaneous

tablet+TV viewers visited

a social networking site

during the program

86% tablet owners

and 84 % of smartphone owners use their device

while watching TV

BREAKING THROUGH THE SOCIAL MEDIA AUDIENCE

SOCIAL ADS GENERATE A 55% GREATER LIFT IN RECALL

52% Opportunity to save

37% Free service or app.

36% Exclusive information

33% News of interest

26% Charitable purpose

Consumers will provide their personal information for:

New Product Input

Product Reviews

Join Manufacturer Group

Receive/Share Recipes

Join Retailer Group

Receive Coupons

Join Loyalty group

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

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

Consumers are willing to

get more involved

TRUST IN A SOCIAL MEDIA WORLD

Completely Completely/somewhatBrand 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%

TraditionalMedia

Completely Completely/somewhatBranded 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%

NewMedia

Completely Completely/somewhatRecommendations from people you know 28% 91%Consumer Opinions posted online 9% 70%Editorial Content (Newspapers) 7% 59%

Friends&

Family

Source: Nielsen Global Online Consumer Confidence Survey 3Q2011

Economic Outlook

WHAT’SNEXT?

24% 22%

Source: NGCCI

MostOptimistic

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

Source: Nielsen Global Omnibus Consumer Confidence Survey 1Q2012

LOOKING FORWARD, COPING MECHANISMS REMAIN CONSISTENTWHEN 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

ConsumerConsumerBrandsBrands RetailersRetailers

SUCCESS RELIES ON EVEN GREATER COLLARBORATION

Collaboration

Loyalty

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

James Russo, Nielsen

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

Documents

What is “Community Speed Watch”?

Gant time consumer watch catalouge 2014 ss

What movie to watch?

Menken - Newsies - Watch What Happens

What is WATCH D.O.G.S.?

Booklet | Consumer Guarantees Act Your consumer rights …...Your consumer rights (Goods) 2 Watch your language Consumer: ... Extra loss or damage 28 Taking the matter further 31

Commercial Genre Unit Why we watch what we watch (or read )

What happened throne? - Watch Jerusalem

What do you see? (1) Watch what happens

Atlantic-Watch | Consumer Catalog 2015

Consumer Businesses Adapting to the New Normal...Future Watch –Consumer business USA Seamless Shopping Experience Research Project JAPAN Consumer trends Lifestyle, Ethical living

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

What Anime to Watch?

NIELSEN SPORTS INSIGHTS - Nielsen - What People Watch - What

What Aninem to Watch?

Menken Newsies Watch What Happens

Fiji Consumer Council - Consumer Watch - December 2011 Edition

What to watch for in 2014

What We Eat: Watch Out

What is Watch Keeping