TNS Consumer Trends 2008

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    Consumer t rendsConsumer t rends

    Ralf MatthaesRalf Matthaes

    managing directormanaging director

    TNS VietnamTNS VietnamAMCHAM

    October, 2008

    Condensed version

    20082008

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    AMCHAM Consumer trends 2008AMCHAM Consumer trends 2008

    Key Consumer trendsKey Consumer trends19991999--20082008State of the nationState of the nation

    WealthWealth

    InflationInflation

    ConsumptionConsumption

    BrandingBranding

    My DreamsMy Dreams

    TechnologyTechnology

    Financial CrisisFinancial Crisis

    Stock MarketStock MarketMediaMedia

    Rural VietnamRural Vietnam

    ProductProduct

    RetailRetail

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    The state of t heThe state of t he

    Consumer Nat ionConsumer Nat ion

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    Vietnam Happiness IndexVietnam Happiness Index 20062006--20082008

    2006 Source: World value survey: 2008 source: TNS Vietcycle 2008

    53.5

    43.5

    3

    49

    44

    7

    0

    10

    20

    30

    40

    50

    60

    Very happy Quite happy Not happy

    2008 2006

    Vietnamese consumers continue to be a very happy lot,indicating that not much has negatively impacted their lives

    Hanoi & HCMC only

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    My standard of livingMy standard of living Hanoi & HCMC onlyHanoi & HCMC only

    0.4

    2

    2.2

    37

    40

    36

    49

    51

    52

    6

    5

    9

    0

    25

    VC-2004

    VC-2006

    VC-2008

    Much lower than today Somewhat lower than todayEqual to today Somewhat higher than todayMuch higher than today

    Wealthyhavereasontosmile

    Source: TNS / Gallup - Voice of People Survey

    The rich are getting richer & 2/3rd believe their lot will increase

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    Wealth TrendsWealth Trends

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    GDP per capita evolutionGDP per capita evolution -- USDUSD

    In USD

    Source: Vietnam Economic Times KINH TE 2007-2008GDP has doubled in 7 years

    289

    402412

    440

    491

    552

    639725

    835

    0

    100

    200

    300

    400

    500

    600

    700

    800

    900

    1995 2000 2001 2002 2003 2004 2005 2006 2007

    Source: GSOVN

    412412

    835835

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    I mpact of inf lat ionI mpact of inf lat ion

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    Source: Vietnam Economic Times KINH TE 2007-2008

    GDP & InflationGDP & Inflation

    impact on disposable incomeimpact on disposable income

    Inflation is decreasing Disposable income

    8%

    0.8

    18.6

    12.6

    4.0 3.0

    9.5 8.4

    3.60.1

    9.2

    6.6

    -5

    0

    5

    10

    15

    20

    1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

    Inflation % GDP Growth %

    -1.6

    %

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    How Vietnamese Combat inflation (by Income)How Vietnamese Combat inflation (by Income)

    63

    37

    20

    17

    7

    57

    49

    12

    25

    8

    60

    41

    18

    17

    8

    72

    30

    26

    13

    6

    Buy less

    Hold off on buying more expensive

    big ticket items to be able to afford

    inflationary increase

    Switch to cheaper brands

    Use some of savings to pay for

    higher price

    Just buy what I usually buy and

    don't worry about the price

    increase

    Total Class AB

    Class CD Class EF

    Most consumers are buying less to combat inflation& holding off purchasing big ticket items

    Source: TNS Gallup 2008 Voice of the People Survey

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    39.637.2

    -4.5

    11.2

    46.9

    14.5

    -17.2

    20.0

    All Households High Income Middle Income Low Income

    % Value Change 06 vs. 05 % Value Change 07 vs. 06

    Consumer Spend inflation ImpactConsumer Spend inflation ImpactTotal FMCG Total 4 key urban cities

    High income earners are spending more, but middleincome & low income earners are spending much less

    6.5 milvnd plus

    3.5 mil -6.5 vnd

    Below3.5vnd

    FMCG Trends % value Changes Source: TNS Worldpanel Asia

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    Consumpt ion TrendsConsumpt ion Trends

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    FMCG Growth in Asian countries (%)FMCG Growth in Asian countries (%) -- 20072007

    11

    16

    -2

    2

    9

    -2

    2

    Urban

    Vietnam

    National

    China

    National

    Thailand

    National

    Taiwan

    National

    Malaysia

    National

    Korea

    National

    Philippines

    Vietnam is experiencing the second fastest FMCG growth in Asia.However, growth has dropped from 21% in 2006 to 11% in 2007

    FMCG Trends % value Changes Source: TNS Worldpanel Asia

    11

    20

    -22

    9

    -2

    2

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    72% Price is the most important

    factor when grocery shopping

    70%I always compare prices betweenbrands before buying

    63%I know the shelf prices of theproducts I want to buy

    Mini Life Style 2007 - TNS Worldpanel Vietnam

    Consumers are Very PriceConsumers are Very Price--Conscious!Conscious!

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    17.0%

    11.4%

    10.3%

    7.9% 7.7% 7.4%

    6.4%5.6%

    5.1%4.7%

    Khong

    do

    Vinamilk Trang

    Tien

    Sting

    (Pepsi)

    Maggi C2 Tw ister

    (Pepsi)

    Vinh Hue Chinsu Aji-Ngon

    20072007 10 fastest growing brands10 fastest growing brands

    Source: TNS Worldpanel

    Five of the ten fastest growing brands were Vietnamese in 2007

    V VVV V

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    20082008 -- 10 fastest growing brands10 fastest growing brands

    Gillette

    (Razor)

    Wonderfarm

    (Vegtable

    juice)

    Pulppy (Hand

    Towel)

    C2 (RTD Tea) Vinamilk

    (Drinking

    Yoghurt)

    Sting (Energy

    Drink)

    Gift (Glass

    cleaner)

    Maggi (Soy

    sauce)

    Trang Tien

    (Ice Cream)

    Cholimex

    (Ketchup

    Tomato) (

    Share (%) gain in MAT Jun/08 vs. MAT Jun/07

    17%

    14%13%

    10%

    21%

    17%

    14%

    22%

    10%

    20%

    Thus far in 2008, four of the fastest growing brands wereVietnamese and 8 were launched in the last 36 months

    Source: TNS Worldpanel 2008 (urban only)

    V V VV

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    My dreamsMy dreams

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    3027 26

    23 2320 19

    24

    37

    2

    22

    37

    32

    38

    49

    29

    0

    20

    41

    36 34

    0

    20

    40

    60

    Hou

    se/Pr

    oper

    ty Car

    LCD/Pl

    asma

    TV

    Airc

    ondit

    ioner

    Washing

    mac

    hine

    PC/

    Desk

    stop

    Motor

    bike

    VC 2008, n=857 VC 2004, n=1,315 VC 2001, n=1,232

    Top Desired PurchasesTop Desired Purchases All SECAll SEC

    Source: TNS VietCycle 2001-2008

    Aspirational purchases are in decline as manyconsumers have already fulfilled their dreams

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    AspriationalAspriational PurchasingPurchasing the personal touchthe personal touch

    I will choose a mobile phone

    brand which can tell peoplethat Im youthful, fashionableand proactive

    I only buy brands that

    make me look more

    mature, sophisticated andconfident

    Iwanttoberecognizedasawealthyandup-to-

    dateperson,soIbuyhigh

    qualitybrands

    Source: TNS 2007-2008 FGDs

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    Brand impactBrand impact

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    4335

    30282221

    SEC A SEC B SEC C SEC D SEC E SEC F

    Preference of Vietnamese brands

    Stage 1:Basic needs

    Stage 2:Upgraded

    needs

    Stage 3:

    Social recognition

    Stage 5:Self-fulfillment

    Stage 4:Esteem

    TodayTodaysConsumer

    sConsumer

    Advertising Brand Consumer CycleAdvertising Brand Consumer Cycle

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    Vietnamese brand perceptions are changingVietnamese brand perceptions are changing

    My children will be veryintelligent and grow-up faster

    as I feed her by a good qualitypowder milk. I feel that I am agood mother

    I always choose the most expensive

    detergent which I think it has the best

    quality and good for my families clothes.I feel happy when my husband says to

    others that I am a good housewife

    Source: TNS 2007-2008 FGDs

    PeoplesaythatIamamodern

    motherbecauseIchoosegood

    qualitybrandsformybaby.Itshows

    mygreatloveformychildren

    RECOGNITIONRECOGNITION

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    9188

    6770

    4347

    5044

    49

    0

    20

    40

    60

    80

    100

    1999 2004 1999 19992004 20042008 2008 2008

    I usually buy brands

    on promotionI switch brands

    just to try

    Country of origin ismore important than

    branding

    Vietnamese brand perceptionsVietnamese brand perceptions

    Source: TNS VietCyle 1999-2008 Urban (HN - HCMC)

    Vietnamese Brand perceptions are beginning to mirrormore developed countries, further stressing brand strategy

    91

    70

    50

    88

    43 44

    67

    47 49

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    Summarizing brandingSummarizing branding

    Branding in Vietnam is critical because consumers Young

    Wealthier

    Aspirational

    Want what is popular

    Want what is reliable

    More sophisticated

    Still price sensitive

    The key today is social recognitionsocial recognition

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    Technology TrendsTechnology Trends

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    81.7

    84.4

    51.3

    30.6

    28

    74

    53

    40

    28

    22

    16

    17

    21

    16

    1

    0 10 20 30 40 50 60 70 80 90

    Video disk VCD

    Mobile phone

    Personal computer

    Karaoke machine

    DVD player

    2008 2004 1999

    Mobile Phone ownership increased by 33% in 2 years

    Technology EmbracersTechnology Embracers HCMC & HanoiHCMC & Hanoi

    Source: VietCycle 1999-2008

    DVD Player

    Karaoke Player

    PersonalComputer

    Mobile Phone

    VCD Player

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    31

    43

    47

    39

    22

    28

    55

    5045

    20

    4650

    24

    354232

    39

    13

    16

    28

    25

    3335

    2328

    32

    5

    36

    47

    47

    59

    42

    43

    G lob

    al,n

    =134

    68

    China

    ,n=6

    97

    India

    ,n=4

    8 2

    Indo n

    esia,

    n= 3

    7

    Tha

    iland

    ,n=4

    57

    Vie

    tnam

    ,n=2

    45

    U SA ,

    n=8

    67

    UK,n

    =485

    R us s

    i a,n

    =500

    Braz

    il ,n=

    245

    Mex

    ico,n

    =299

    Using digital MP3 player on phone Using AM/FM radio on phone Nett - Using mobile music

    Mobile music usageMobile music usage By countryBy country

    Huge opportunities exist for Radio in Vietnam via Mobile

    Source: TNS 2007 GTI

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    48

    84 80

    7060 60

    55

    39 38

    25

    8

    Global, Idonesia,

    Frequency of SMS usageFrequency of SMS usage By countryBy country

    SMS marketing opportunities are enormous & need to be explored

    Source: TNS 2007 GTI

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    InIn--home Internet penetrationhome Internet penetration

    Source: TNS VietCyle 1999-2008 HCMC & Hanoi

    In 9 years, In-home internet penetration increased by over 1000%,opening up new marketing & information avenues in Vietnam

    3

    89

    21

    34

    0

    10

    20

    30

    40

    1999 2001 2004 2006 2008

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    Financial Cr isis !Financial Cr isis !

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    Total Expenditure & SavingsTotal Expenditure & Savings HCMC & HanoiHCMC & Hanoi

    Source: TNS VietCycle 1999-2008

    83

    86

    88

    91

    17

    14

    12

    9

    0% 20% 40% 60% 80% 100%

    VC-1999, n=1304

    VC-2001, n=1232

    VC-2006, n=441

    VC-2008, n=857

    Total expenditures Saving

    Savings continue to drop, showingVietnamese overall consumer confidence

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    Bank loan this yearBank loan this year

    614

    4 3

    9486

    96 97

    Total Class AB Class CD Class EF

    Yes No

    Only 6% have taken out loans in the last 12 months,while 14% of wealthier have classes have done likewise

    Source: TNS Gallup 2008 Voice of the People survey

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    Purpose of loansPurpose of loans

    43

    23

    18

    14

    13

    Investing in business

    Education

    Repairing/ Upgrading

    my house

    Buying real estate

    Buying transportation

    Most loans have beeninvested back into

    businesses (43%).while home repair /

    real estate (37%)have been other big

    investments

    43

    14

    18

    23

    13

    Source: TNS Gallup 2008 Voice of the People survey

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    VietnamVietnams Stock Markets Stock Market

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    5

    14

    4 3

    9586

    96 97

    Total Class AB Class CD Class EF

    Yes No

    Investment in Stock marketInvestment in Stock market 370 index370 index-- Oct 15, 2008Oct 15, 2008

    5% of urban consumers have invested in the stockmarket, but 3 times as many wealthy consumers have

    Source: TNS Gallup 2008 Voice of the People survey

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    33%

    22%

    45%

    I don't earn much money and I want to earn

    additional money through investment

    I have some free money and don't want the

    low interest rate of bank saving

    I see others people do it

    Reasons for investment in Stock marketReasons for investment in Stock market

    An emerging trend of Monkey see, Monkey do isImpacting all facets of Vietnamese consumers lives

    Source: TNS Gallup 2008 Voice of the People survey

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    Fullysatisfied

    4%

    Not very

    satisfied22%

    Not

    satisfied at

    all19%

    A little

    satisfied

    11%

    So-so

    44%

    Satisfaction with profits from Stock marketSatisfaction with profits from Stock market

    Only 15% of all investors are happy with their returns

    Source: TNS Gallup 2008 Voice of the People survey

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    Media TrendsMedia Trends

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    Source: TNS Media Vietnam

    RadioRadio 36% daily listenership

    fastest growing media medium in VN

    Radio & internet are becoming a genuine advertising opportunities

    InternetInternet

    Highly under utilized (US $6 mil. / year)

    Captivated and young audience

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    TelevisionTelevision

    Viewership

    F-T-A down

    Cable up

    growth at 16% in 08 vs. 20% in07

    Source: TNS Media Vietnam

    TV is over fragmented, while print is becoming more competitive

    PrintPrint

    713 daily and periodical publications

    77% urban population read last week All major newspapers also online

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    Though ad spend is down from 2006, with the continuation of FDI &local success, the industry should continue to grow at about 20%

    AsiaAsias Media Spend Growths Media Spend Growth 20072007

    18

    15

    4

    22

    34

    India Vietnam China Indonesia M alaysia Thailand Phil ippines

    Source: TNS AP offices

    23

    16% growth as of Sept. 2008

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    VietnamVietnams Rurals Rural

    ConsumerConsumer

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    4 Key Urban CitiesPopulation (%): 9.9

    GDP (%): 25.6

    Secondary CitiesPopulation (%): 13.6

    GDP (%): 11.9

    Rural Locations

    Population (%): 76.5

    GDP (%): 62.5

    The potential of Rural VietnamThe potential of Rural Vietnam

    Source: GSO VN

    2/3rd of GDP resides in Rural Vietnam, an untapped market

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    4,958,760

    1,546,280 1,279,6802,132,800

    17,243,688

    4,105,640

    1,231,692

    11,906,356

    Total available consumers 1.5mln - 3mln 3mln - 4.5mln > 4.5mln

    Urban Rural

    Consumers earning more thanConsumers earning more than

    1.5 m VND / Month1.5 m VND / Month

    Urban vs. Rural Household SpendUrban vs. Rural Household Spend

    There are 3 times more available consumerin Rural Vietnam than Urban Vietnam

    Source: TNS Rural Monitor Pilot

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    Rural Durable OwnershipRural Durable Ownership

    Many household items are permeating Rural Households

    9%

    Computer

    Internet

    1%

    @@Refrigerator

    30%

    32%

    Radio/ Cassette

    Color Television

    95%

    Electronic Cooker

    92%

    Mobile Phone

    33%

    Source: TNS Rural Monitor Pilot

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    33Major ProductMajor Product

    TrendsTrends

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    convenienceconvenience

    healthhealthindulgenceindulgence

    Vietnamese consumers are looking forVietnamese consumers are looking for

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    convenienceconvenience

    80% saidTime spentcooking is wasted

    Consumers looking forConsumers looking for

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    Source: TNS Worldpanel Vietnam Mini Lifestyle 2007

    indulgenceindulgence

    89% said I buybrands that are of

    good quality, evenmore expensive

    Consumers looking forConsumers looking for