Copyright © 2012 Nielsen. Confidential and proprietary Understanding African American Consumer...

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• Understanding African American Consumer Power – February 21st

• Digital Shopping: Topline on Online – February 28th

• Hispanic Insights – TBD

Upcoming Webinars

What’s In Store: 2012

James RussoVP, Global Consumer InsightsJanuary 24, 2012

Today’s presenterJames RussoVP, 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.

Poll #1

Do you think we are still in a recession?

1. Yes2. No3. Not Sure

2011: Markets and consumers driven by uncertainty

Source: Yahoo Finance; DQNews; ChicagoFed.org; EIA.gov

FUEL COSTS

EQUITY MARKETS LABOR MARKETSHOME PRICES

INFLATION

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%

In 2011 labor market improved

Source: U.S. Government

U.S. Annual & Monthly Job Losses/Gains

1.95 mil -1.76 mil -540k 87k 2.04 mil 2.46 mil 2.06 mil 1.07 mil -3.63 mil -4.74 mil

1.12 mil 1.547 mil

But contrasts in job situation impacting consumer segments differently

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%

Gender (adults 20 +)

Women 7.8%Men 8.3%

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%

Nov 2011 Unemployment Rates – Seasonally AdjustedNov 2011 Unemployment Rates – Seasonally Adjusted

Source: Seasonally Adjusted U.S. Total Non Farm Employment, Bureau of Labor Statistics U.S. Department of Labor

As median household income continues a downslide

Source: THE CINCINNATI ENQUIRER, The New York Times, Census Bureau & USA Today

Ultimately reflective in U.S. consumer confidence near recessionary levels

103 106 108 106100

83 8280 80

81 81 83

Source: Nielsen Global Online Consumer Confidence and Opinion Survey 2Q11

Nielsen Consumer Confidence IndexNielsen Consumer Confidence Index

Sluggish confidence impacting retail sales

The Conference Board, Nielsen Total FDM including WMT Unit Sales

20062006 20072007 2011201120082008 20092009 20102010

Ttl Unit Sales

171 bill

Ttl Unit Sales

170 bill

Ttl Unit Sales

167 bill

Slow growth in retail sales, driven by inflationary gains

Source: dollar sales % chg 52 wks ending 12/27/10, total all depts, fdm inc wmtYTD thru June 2011

3Q102Q10 4Q10YTD 2011

Retail winners are innovating and communicating on more than just value

QM Months QuartersWinning Streaks*

815 1515 15 15 16 2213 8824 26 3

% Change in Same-Store-Sales

Discretionary Spending Value & Convenience Stock-Up& Save

Economic Outlook

WHAT’SNEXT?

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

Source: IMF World Economic Outlook, September 2011 Update; TCG Analysis

20102009 2011F20072006 2008 2014F 2015F 2016F2013F2012F

Moderate forecasted growth will keep unemployment rate at elevated levels

Forecast Period

2000-2002 2003-2005 2006-2008 2009-2011 2012-2014 2015

Recession Period

Pre Recession Period

Avg 50 yrUn Rate 5.5%

Source: IMF, September 2011; TCG Analysis

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

2.1-4%

4.1-6%

More than 6%

Note: Country numbers denote real GDP growth forecast for 2011Source: IMF, September 2011; TCG Analysis

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11

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

MostOptimistic

Source: NGCCI

20%25%

40%45%

Savings Paying Debts

No sparecash

HomeImprov

Out ofHome Ent

Vacations Apparel TechProds

Retirement Funds

Investing

1Q11 2Q11 3Q11

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…

Source: Nielsen Consumer Confidence Survey

Negative sign for 2012 consumer spending

Expect pragmatic consumer behavior to continue in 2012

Will Continue To DoDid This Past Year

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

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

Source: Nielsen Global Online Consumer Confidence and Opinion Survey Comparison of 2Q10 vs 2Q 2011 - US

As not so new normal behavior continues

• Combining Trips: 66%

• Shopping More Supercenters: 24%

Pre Recession2005-2007

Recession2008-2009Recession2008-2009

PostRecession2010-2011

• Eating out less: 36%

• More at home: 36%

• Value Brands: 19%

• More Coupons: 22% • More Coupons: 35% • More Coupons: 37%

KEYS GROWTH

IN 2012

1. REACH: An increasingly polarized consumer

2. LEVERAGE: Redefinition of value

3. ALIGN: With consumer need states for ad effectiveness

4. ENGAGE: The connected consumer in ways they trust

5. TARGET: Economically powerful consumer segments

Increasingly polarized 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

Polarized Consumers: Retail spending being driven by affluent HHs

Retail Spending: 2 year trend

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

Polarized Consumers: Shopper trips correlating to HH Income

Shopper Trips: 2 year trend

over $100k

Source: Nielsen Homescan, 52 w/e 10/1/2011 versus 10/3/2009 excludes gas-only or Rx-only trips

-2%-1%

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

Household Income

KEYS GROWTH

IN 2012

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

Value is not about price, it’s about the balance between price and benefits

Value Consumer = 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

Value Consumer = Benefits/Price

KEYS GROWTH

IN 2012

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?

Consumer Confidence

Pre Recession 2006 - 2007

Recession2008 - 2009 Post Recession

2010 - 2011

Source: Conference Board Consumer Confidence

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+

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 resonate with 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/family themes, and relatable/engaging storylines over those that tout price/promotion/product features

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

KEYS GROWTH

IN 2012

Online consumption leading to online production

Nearly 70%

of Americans use TV and the

Internet simultaneously

of online consumers create reviews

about products and services online

Reaching an engaged consumer using strategies they trust…

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

KEYS GROWTH

IN 2012

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 growth for this consumer segment

Women control $12 of $18 trillion in global consumer spending—close to 70%

Women in 95% of countries say quality is the #1 driver of

brand loyalty

Transitions strategic conversations frompricing to quality; includes production,

marketing, packaging, in-store

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 are exposed to more, making them more tolerant, experienced

and prone to try new things

By 2020, the global 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

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

Availability

Accessibility

Connectivity

Mobility

Poll #2

Considering the environment ahead, what will be your main analytical focus?

1. Growth and Demand2. Innovation3. Marketing Effectiveness4. Shopper Marketing5. Social Media Intelligence6. Cross Platform Audience Measurement

The Power of One:It is not about the 1%, its actually about the 0.0000003%

2012 GOAL:

1 New Customer A Day (Not exactly a BHAG!)

2012 GOAL:

1 New Customer A Day (Not exactly a BHAG!)

365 IN A YEAR365 IN A YEAR

14Avg retail banners

shopped

14Avg retail banners

shopped

152Avg Retail Trips

Avg Annual Retail Spend orAvg Annual Retail Spend or$7,000

$2.5 million

Avg facebook user has 130 friends =24,000

91% trust recommendations from friends and family

At Stake…..$168,000,000

Avg facebook user has 130 friends =24,000

91% trust recommendations from friends and family

At Stake…..$168,000,000

2012 GOAL:1 New Customer A Day

47% of population on social network sites

2012 GOAL:1 New Customer A Day

At Stake…..$168,000,000At Stake…..$168,000,000

Q&AThank 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

Copyright © 2012 Nielsen. Confidential and proprietary Understanding African American Consumer...

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