Role Reversal – Mr. Mom Goes Shopping. Almost one-third of men in the U.S. are now the principal shoppers in the household, accounting for over $201 billion dollars—nearly 50% of consumer packaged goods annual spend. With more men in the aisles shopping, marketers need to rethink brand strategy.
Auto Industry’s Wild Ride is Getting Smoother. Fuel prices and the economic downturn have put the brakes on car sales—the lowest in 25 years. But hot spots surfaced like hybrids, luxury vehicles and exciting new designs and an uptick in purchase intent bodes well for future sales.
Now You’re Speaking My Language. Spanish-language networks not only delivered more viewers to advertisers; they also delivered a more advertising-receptive audience. For marketers trying to penetrate the burgeoning Latino market, the key to success resides with language.
Cost-Savings Innovation in a Downturn. Downsizing, upsizing, package material changes, and product reformulations are all ways to cut costs and streamline operations in a tight economy—but the right strategy for one may be completely wrong for another.
From Hayworth to Cansino: Turning the Tides in Latino Movie-Going Sensibilities. Hispanics contributed an estimated $1 billion to the U.S. box office in 2008 and are 24% less likely than the average American to cut back on movies during the recession. Trends demonstrate that a Latin sensibility can distinguish a blockbuster from a flop.
Organized Chaos: Global Data Harmonization. How do you support decisions on a global scale, when the data is not global? With 85% of individual item codes for consumer packaged goods unique to their country of origin, market-by-market analyses present unique challenges.
Home>insights>Consumer Insight>July 2009: Target>Role Reversal - Mr. Mom Goes Shopping
Role Reversal - Mr. Mom Goes Shopping
By: Peter Leimbach, V.P., Multimedia Sales Research, ESPN
CI SUMMARY: Over the past 20 years, the American household has changed and traditional roles have shifted with men now taking on a greater percentage of the household shopping than in the past. Today, almost one-third of men are now the principal shoppers in the home. With more men in the aisles, marketers need to better understand how they impact brand sales and how to reach this growing segment of principal shoppers.
The past two decades has seen a role reversal of sorts taking place: the traditional roles of men and women are being redefined to better reflect today’s social norms. Today’s American households are looking less like Donna Reed—the paradigm for the ideal 1950’s family—and more like Mr. Mom.
Traditional roles of men and women are being redefined...
Shifting norms Since 1985 there has been a dramatic shift in the composition of male principal shoppers in the U.S. Several factors are contributing to this trend. First, the traditional family unit has multiple variations today. From two working parents to single parent homes, a younger generation is being exposed to new norms. Second, Americans are waiting longer to get married. According to the U.S. Census Bureau, in 2008, the median age at first marriage was 27.4 for men and 25.6 for women vs. 25.9 for men and 23.6 for women in 1988. Lastly, Americans are living longer and as Baby Boomers retire, the men of that generation are shopping more than their fathers or grandfathers ever did.
Today, almost one-third of men are now the principal shoppers in the household. With more men in store aisles, marketers need to better understand how to reach this growing segment of shoppers.
Men’s share of retail shopping trips increased in all outlets...
Increasing presence Business Week reported in a September 2006 article, “Secrets of The Male Shoppers”, that “men buy, women shop: the sexes have different priorities when walking down the aisles”. This is an important distinction for marketers to consider when targeting male shoppers.
Nielsen data shows that while females dominate shopping trips in all channels except convenience/gas stores, their share of trips has declined in all outlets from 2004 to 2008/2009. On the other hand, men’s share of retail shopping trips has done just the opposite—increased in all outlets. The channels with the greatest relative importance to men include convenience/gas outlets, warehouse clubs and grocery stores.
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In Store Media Must Change with the Times The way consumers respond to in-store promotional messages and media is changing, with traditional appeals losing some potency, according to the results of a new poll that surveyed 999 shoppers shortly after completing a shopping trip.
A Shift in Shared Responsibility Setting up dad as the punch line is easy in a world where taboos have vanished and entertainment sells everything. But in that same world - one in which traditional gender roles are mutating and men are doing more domestic duties than ever - some say that advertisers who flip the bird at dad are, in effect, doing it at tomorrow’s core customer.
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And while females out spend male shoppers per trip across all retail channels, the average basket size spend differential is not as large as might be expected. The fact that women conduct more “planned” shopping trips than men is one explanation for the higher dollar amount..
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Overall, men are substantially increasing their average dollar basket size across all channels—especially in grocery where they have increased spending by 56% over a five year span. Additionally, while their share of spending is growing across all retail outlets, women’s share of spending has declined. In the grocery channel, men’s share of dollars increased from 30% to 38%—a 27% increase versus women’s decline of 11%.
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Not just beer and brawn A shopping report commissioned by ESPN to evaluate Nielsen sales data based on the presence of the male head of house as the primary or secondary shopper on a trip revealed some unexpected findings.
From 2006 to 2008, there has been an upward trend in both the amount of dollars spent by men and their shopping frequency. The occasions when males were the primary or primary/secondary shopper have increased by 4% and 3% during this two-year time period and the total dollars spent has increased by 8% and 7% respectively.
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And while a high percentage of dollars spent by men are in fairly predictable categories such as grooming care products and alcoholic beverages: men’s hair coloring (86%); men’s depilatories (84%); gin (83%); scotch (81%); and pre-shave cosmetics (80%), a peek inside their shopping basket reveals they are likely shopping for the family too.
More than half of the principal male’s shopping basket consists of items that indicate they are not just shopping for themselves. Examples include:
Impact on media strategy Advertisers need to evaluate the importance of men’s purchase volume for their brand and competitive brands and determine whether the current media mix appropriately reaches men purchasers. Traditional media tends to fall into 3 categories:
1. Programming that skew primarily female (network soap operas and female-targeted cable networks like Lifetime and Oxygen)
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2. Programming with evenly skews male/female (network prime time, broad-based cable networks like USA Network)
3. Programming that skews male (primarily sports networks)
Nielsen conducted an analysis to determine how well a given media schedule was delivering both male and female brand users for a leading brand in the cold remedy category. The findings revealed that men accounted for 48% of brand users and 48% of brand sales came from shopping trips where the male head of house was the primary/secondary shopper.
And while the advertiser’s schedule included a wide mix of broadcast and cable networks, it focused primarily on targeting women and adults. Sports networks accounted for only 2% of the schedule’s GRPs. This mix resulted in a schedule where only 38% of the brand target impressions fell against men—far less than their share of brand spend.
Continued quest The male as a principal shopper is not an emerging trend, as marketers have been struggling to understand this segment for over 20 years. But as marketers learn more about where and what this consumer segment buys, they are better able to guide brand positioning and media targeting to capitalize on this target when they are in the aisles.
Home>insights>Consumer Insight>July 2009: Target>Auto Industry's Wild Ride is Getting Smoother
Auto Industry’s Wild Ride is Getting Smoother
By: Julie Enzweiler, Automotive Research Director, The Nielsen Company
CI SUMMARY: In economic terms, the auto industry was hit by the perfect storm: high gas prices, tight consumer financing, plant closings, brand reductions, dealership pruning, employee layoffs, longer vehicle retention, surplus inventory, manufacturer bankruptcies and waning consumer confidence. Despite a 37% decrease in total auto sales over 2008, bright spots persisted: the redesigned Forester revved up Subaru sales while price leaders Hyundai and Kia gained traction from new models. Online media has changed the rules of the road for auto marketing by placing consumer generated media squarely in the driver’s seat.
Unprecedented. Unbelievable. Unfathomable. The state of the auto nation is shaky at the moment, but all is not lost. Offsetting the unrelentingly negative news are 2009 highlights like a 69% spike in Sorento model sales, a 48% increase in Sedona sales, and the successful launch of the economically-priced Hyundai Genesis and Kia Soul, both targeting younger drivers.
Conversely, luxury vehicles that attract middle-aged consumers managed to outpace the market, although the category experienced a long tail effect, a two to three month delay from shopping to closing the sale. Only one domestic car manufacturer—Lincoln—outperformed the market, even though sales remained in negative territory on a year-to-year basis.
Offsetting the unrelentingly negative news are 2009 highlights...
Fueling sales The Nielsen online panel, comprising 250,000 individuals representing the U.S. online population, detected another hopeful sign for new vehicle sales based on Internet new vehicle shopping patterns. While online new car shopping downshifted by 9%, this represented a mere fraction of the precipitous 37% sales decline, suggesting the existence of pent-up demand. Consumers sought out roadworthy vehicles like the new Ford Fusion, proven gas sippers like the Toyota Prius and Honda Civic, or buttoned up their wallets and opted to maintain their current car or buy used.
Foreign automakers benefited disproportionately from escalating gas prices because of the consumer perception that their vehicles—especially hybrid and diesel models—are more fuel-efficient. German and Korean automakers realized the largest gains in online vehicle shopping activity, posting 1.7 and 2.2 percentage point share increases respectively, while their U.S. counterpart slid 5.5 percentage points. The Volkswagen Jetta and CC models, BMW 1- and 3-series and Mercedes-Benz E class were among the variants driving shopping inquiries.
The biggest disappointment proved to be the basic economy vehicle...
Model behavior Sport utility vehicles, with some 61 models available, continue to hold the “most shopped” position and rank number one in the U.S. for share of new vehicle shopping. Although activity waned with rising gas prices, consumers appeared to be hedging their bets, shopping longer in the hopes that gas costs would plummet and justify the purchase. And while the government is putting pressure on automakers to reduce these larger vehicles from their fleet, demand at the moment is not supporting this mandate.
The biggest disappointment among model types proved to be the basic economy vehicle, which peaked with a nearly 30% online shopping share in May 2008 when gas prices were at the highest (around $4.00/gallon), and dropped to half that a year later when gas prices declined to about $2.00/gallon.
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Behind Mercedes’ $75 Million E-Class Push With the launch of a $75 million campaign for Mercedes-Benz’ 2010 E-Class, U.S. VP, Marketing Steve Cannon discussed the psyche of Mercedes owners, the role of 'rational red meat' in the ads and why the automaker is creating mobile apps for the first time. The following are excerpts of an interview with senior reporter Andrew McMains.
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Upper middle car models like the Fusion, Camry, Accord and Altima maneuvered into the second most shopped segment by April 2009, with hybrid variants moving the sales needle. Hybrids remain an exciting, but emerging segment, as consumers wrap their heads around the concept and take their time investigating the genre. Luxury entrants cruised along with steady sales, experiencing a boost from the Hyundai Genesis introduction. Luxury models attract aspirational buyers who savor the shopping experience and take their time to consider price before taking the plunge, elongating the buying cycle.
Trading places Rankings of the Top 25 automakers based on online shopping activity wheeled in some interesting changes, with Kia jumping 11 slots from number 24 last April to number 13 in
Kia jumped 11 slots from number 24 last April to number 13...
April 2009. Volkswagen leapfrogged seven spots from number 15 to number eight courtesy of the CC—their most-searched vehicle on the Internet. The redesigned Forester sparked consumer interest as well and elevated Subaru to the number 22 slot, up from 27.
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Saturn fell out of orbit, dropping 13 spots to number 23, followed by Buick’s 12 point decline, GMC’s six point downslide and Pontiac’s five point plunge. A heads-up to Volkswagen, the beneficiary of online buzz over the curvy CC: while initial online interest spikes rapidly, it can quickly taper off. The trick is to sustain interest over time and keep the vehicle top of mind with prospective buyers.
Setting your sites The auto industry enjoys a relatively unusual electronic landscape, with a host of powerful, established third party shopping sites available to consumers like Yahoo! Autos, Kelleybluebook.com, AutoTrader.com and cars.com to name a few. Manufacturer or OEM web sites need to maintain a polished look and feel with robust content to stay in the game, offering complementary information and highly interactive features like build-a-car customization tools, 360° rotating car views, dealer information, engaging games that keep customers returning to
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the site, virtual experiences, testimonials and incentives.
86% of online shoppers rely on third party sites for price information...
While 86% of online shoppers rely on third party sites for price information, OEM sites are the preferred source for visualizing build-outs, researching special offers and obtaining financing information about tax incentives, special offers and government programs. The combined use of both third party and OEM sites actually enhances the consumer shopping experience, providing complementary rather than competing information.
Value of video Kia Soul, one of the year’s most successful launches, earned kudos for an exciting web site that features techno pop music, robot animation, a personalized video from the chief designer about his “rhino with a backpack” vision, a floating picture gallery, build-a-soul feature and “Escape from Hamsterdam” game, which leverages the primary advertising visual—hamsters. Of course, the under $14,000 price tag and 31 MPG green angle helped jump start things.
Nothing engages consumers like real-life clips from owners and test drivers...
Video streaming is playing out across the computer screens of America, with 124% annual growth overall, and a turbocharged uptake rate of almost 200% for Ford videos. At last count, there were more than 80 million videos available on YouTube, and that video library is growing by some 200,000 clips per day. Nothing engages consumers like real-life clips from owners and test drivers sharing their experiences. In addition to posting videos on OEM sites, manufacturers can enhance both reach and impact by pushing out digital clips to social media outlets like YouTube, Hulu, iTunes, Facebook and others.
Ad impressions Nielsen data show local magazines, national newspapers and local radio taking the biggest hit with shrinking ad budgets, accounting in large part for the precipitous 31% downtrend in total first quarter auto ad spending from 2008 to 2009. Online ad impressions ramped up during Q1 of 2009, stabilizing at approximately five billion impressions per month during the March to May period, with a correspondingly constant spend rate of $35 million per month.
“Intent to buy” is rebounding from an all-time low in the Spring of 2009...
Following a classic advertising paradigm, exposures may indeed be rekindling demand. Nielsen surveys suggest that “intent to buy” is rebounding from an all-time low in the Spring of 2009 to a more historic level as seen in summer’s past. It seems that consumers have been kicking the tires, but doing so via virtual showrooms.
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Listen and learn “Listening” is the new marketing. To succeed in a multi-media world, automakers will need to engage and interact with shoppers, delivering a complete experience from initial contact through post-purchase. In the process, they’ll need to leverage the power of search and social media, developing a cadre of independent reviewers and product evangelists willing to spread the word about their cars, without filters.
Search engines represent the first point of contact for many shoppers, and carmakers would do well to influence the tone of the conversation and their placement on the page one rotation. Deploy the power of Web 2.0 on OEM sites, incorporating quotes, surveys, reviews, testimonials, buyer videos, interactive games, audio and video feedback loops, special offers and incentives that hook the consumer and give them a reason to keep coming back.
Home>insights>Consumer Insight>July 2009: Target>Now You're Speaking My Language
Now You’re Speaking My Language
By: David Kaplan, SVP Research and Product Development, Nielsen IAG
CI SUMMARY: Spanish-language ad spending is on the rise—posting gains in just about every major product category in 2008. What is the best strategy to reach an audience whose language proficiencies and preferences range from Spanish-only through various degrees of bilingual skills to English-only? Language holds the key to success as a strong emotional link is forged with the Hispanic consumer when ads are rendered in their native language.
The Spanish-language sector increased by 3%, posting gains across every major product category...
Even as the U.S. gears up for a formal census expected to validate the size and scope of its Hispanic population, advertisers are way ahead of the learning curve. While 2008 national TV advertising grew at a slower rate than prior years, the Spanish-language sector increased by 3%, posting gains across every major product category with the exception of automotive offerings.
Together, advertiser spending within the Top 10 Spanish-language product categories expanded by 8% over prior year results, reaching $2.9 billion in 2008. Leading the way on a dollar basis were pharmaceuticals at $663 million, followed by automotive (factory and dealer associations) at $530 million, wireless telephone services at $315 million, department stores at $307 million and quick service restaurants at $300 million.
The fastest growing segment reflects the rising digitization of the Hispanic population: satellite communication services increased their spend on Spanish-language TV stations by 124%, dwarfing the gains by runners-up auto insurance at 39% and pharmaceuticals at 32%.
And this dollar shift accompanies a rise in audience sizes for the Spanish-language networks in the 2008/09 television season. The two major Hispanic networks, Univision and Telemundo, garnered 11% more viewers overall last season, and reported a 6% increase in the coveted
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Putting on Brave Faces Relentless optimists, the two major Hispanic broadcast networks, Univision and Telemundo, continue to aggressively pitch the power of national TV - or at least their particular brand of it - to advertisers in the current upfront sales marketplace.
Coke Tells Hispanics: 'Unleash Your Dreams' Coca-Cola began airing a new campaign targeting the U.S. Hispanic market last week that translates the beverage company’s 'Open Happiness' theme in its general marketing campaign to 'Destapa La Felicida.'
Telemundo Upfront: Deal With Televisa Expands With record ratings (up 32% among adults 18 to 49) under its belt this season, Spanish-language broadcast network Telemundo announced a batch of new shows for the 2009-10 season.
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adult 18-49 primetime audience demographic (based on Live+7).
But audience size is only part of the story. As an advertiser trying to reach the burgeoning Latino market, it’s also critical to target Hispanics with a high-quality ad in an environment where they are most engaged and receptive to the commercial message. And to do that successfully, from both a media and creative perspective, all signs point to language.
Bilingual preferences Nielsen IAG measures the impact of advertising among Hispanics of all acculturation segments across English- and Spanish-speaking primetime television every day. Much recent attention has been placed on the emerging segment of bilingual Hispanics, who can seamlessly switch from English to Spanish and surf from Criminal Minds on CBS to Cuidado con el Angel on Univision without losing much in translation. But as an advertiser, where can you more effectively communicate with this consumer?
Viewer response is significantly stronger on the Spanish-language networks...
Reach and cost considerations aside, research shows that viewer response is significantly stronger in general on the Spanish-language networks. Bilingual consumers report 30% higher recall rates for advertising creative executions and the advertised brand when commercials are seen on Spanish-language programming (on Univision and Telemundo) rather than English-language broadcast networks.
Language advantage Part of the advertising performance advantage can likely be attributed to the unique characteristics of the Spanish-language networks that offer reduced ad clutter and increased ad exposure frequency, as well as Hispanic media consumption factors like lower DVR penetration.
But that doesn’t account for one of the most powerful
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Ads on Spanish-language TV rated 62% on the likeability scale...
points of difference: likeability, a key ad effectiveness measure. Ads on Spanish-language TV rated 62% on the likeability scale on average versus just 41% for spots featuring the same brand on English-language TV among bilingual consumers.
On the recall measure, Spanish-language TV ads achieved a 35% brand recall score versus 27% for English-language ads. In many cases, these substantial gaps were seen even for “translated” spots, where the ad executions mirrored the version airing on general market TV, suggesting that the difference lies in something other than the creative treatment or content.
Emotional connection The performance differential points to a strong emotional link forged between the consumer and their native language. Spanish-language networks uniquely provide a “language outlet” for bicultural Hispanics—many of whom may be speaking English in their daily professional lives, but prefer Spanish in their private or family lives. The television viewing experience, when delivered in Spanish, allows viewers to connect with their culture, history and identity in a way that may not be readily available elsewhere. The translation for marketers: it appears that the bilingual consumer’s appreciation for in-language experiences results in a more favorable impression of those commercials which deliver them.
Ads created specifically for the Hispanic market outperform...
And the power of language becomes even more evident when evaluating creative-level differences. Ads created specifically for the Hispanic market on average outperform those that are merely lifted or translated from general market TV spots, earning 16% higher brand recall results and 22% better message recall. The factors behind improved performance appear to be culturally relevant cues embedded in the advertising such as Hispanic characters, music and themes.
Character counts But more than any other element, the inclusion of a Spanish-speaking character(s) in the ad appears to be the driving critical success factor. Consistently, these types of ads resonate more with viewers, receiving higher brand recall and message communication scores than those without such characters. The finding holds for both Hispanic original spots (+29% higher brand recall) and translation spots (+37% higher brand recall), underscoring the benefit of incorporating more relatable talent who speaks the language in the ad.
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Creating a specific spot from scratch for the Hispanic market, which incorporates culturally relevant themes and Spanish-speaking characters, generally results in stronger impact, but may not always be practical given production costs and timing considerations. As an alternative, utilizing bilingual actors in ads that are merely “re-purposed” from the general market appear to have some benefit. In this scenario, the creative content and narrative plays out identically to the English-language version (with cultural adaptations where necessary), but the script is verbalized in Spanish. In other words, in the absence of any other cultural cues, an ad where the characters are at least speaking in one’s native language is more likely to grab the viewer’s attention and drive brand impact—regardless of whether it was designed exclusively for the Hispanic market.
Screen scene Hispanic consumers have become a force to be reckoned with across screens large and small, fixed and mobile. According to Nielsen May 2009 universe estimates, 82% of Hispanics have cable plus (expanded cable package that does not require a cable box)—a usage level which has risen by 12 percentage points from just four years ago and significantly narrowed the gap with non-Hispanics (89%). One-third of Hispanics have wired digital cable, another 33% have direct broadcast satellite subscriptions, 21% are DVR owners and 88% have DVD players.
Two-thirds of Hispanic households have personal computers, with six in ten also signed up for Internet access at home. Nearly seven in ten of those Hispanic Internet households have high speed broadband access—almost identical to the general population percentage. While all Internet users average 28.5 minutes online per day, Hispanic households log slightly less time at 21 online minutes per day.
Latinos who are online are more likely to download music...
Nielsen reports that Latinos who are online are more likely to download music than the general Internet population—32% of Hispanics download music online versus 24% of all Internet users. The same pattern holds true for video downloads, with 17% of online Hispanic households pulling video off the web, versus 14% of all Internet users; 9% of online Hispanics downloading movies versus 6% of the general Internet population; and 8% of Hispanics accessing TV shows online versus 7% of all Internet users.
Wired Hispanics trail the general Internet population when it comes to online shopping. While 70% of Internet users shop online, spending approximately $861 per year, just 62% of Hispanics purchase products on the web and spend $762 annually.
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Latinos receive or make more phone calls per day than any other ethnic group...
Dialing in Mobile phones have made tremendous inroads in the Hispanic community, which trails only the African-American segment in number of minutes per month (783 minutes versus 811 minutes respectively). Although Latinos don’t spend as much time on the phone, they receive or make more phone calls per day (14) than any other ethnic group, and have the phone bills to prove it—$94 per month compared to African Americans $89, Asians $82 and Whites $80. Roughly two-thirds of Hispanics used text messaging services in the last 30 days, about one-fourth utilized mobile Internet, and the same percentage sent an email in the past month.
What’s clear is that Hispanics represent a viable and growing segment in the electronic marketplace. Their increasing “three screen” media consumption as well as their favorable predisposition to advertising make them an audience that can be harnessed on new platforms to boost brand impact.
Home>insights>Consumer Insight>July 2009: Target>Cost-Savings Innovation in a Downturn
Cost Savings Innovation in a Downturn
By: Mike Fridholm, V.P., Client Consulting, The Nielsen Company
CI SUMMARY: Based on an examination of over 100 client engagements related to cost innovation conducted over the past five years, Nielsen illuminates the right way to navigate this challenge and highlights important principles to adhere to in embracing the risks and rewards of downsizing, upsizing, changing the package material, and making product reformulations.
Manufacturers are feeling the pinch in demand in many categories as a result of consumers’ tightening wallets. As many also face increasing costs in areas such as health care, energy, and materials, some must consider cutting costs in an effort to maintain sales and profitability. These changes include increasing price, revising package size or materials, and changing the product formulation.
Now is not the time to pull back on innovation or marketing support...
If there’s one overarching message for manufacturers, it’s this: Now is not the time to pull back on innovation or marketing support. Indeed, Nielsen research reveals that brands that continued to invest in innovation and provide marketing support during past economic downturns have performed significantly better after the economy recovers than their peers. As manufacturers pursue innovations that involve cost savings, careful attention to consumer reaction is critical for success.
Consumers are extremely savvy—they notice changes to products they care about and are increasingly vocal, particularly on social networks, blogs, and on-line discussion boards. All the attention given these days to the media “groundswell”—and the high-profile nature of products getting lauded or attacked on YouTube, Twitter or other consumer-generated media—ups the ante for manufacturers to link changes to packaging or product to more substantial benefits as they pursue this strategy.
Four important principles help manufacturers make wise cost-reduction decisions...
Guiding principles Based on Nielsen’s examination of over 100 client engagements related to cost innovation conducted over the past five years, four important principles illuminate the way to help manufacturers make wise cost-reduction decisions that will drive successful consumer acceptance in the marketplace.
● Downsizing the Package Size: a somewhat risky change, especially evident to a brand’s heavy users, which can best be mitigated if additional auxiliary benefits are conveyed with the change.
● Upsizing the Package Size: a preferable consumer option, which still has pitfalls if pricing crosses a consumer threshold, or if the consumer has a difficult time perceiving the relevance of the larger package beyond solely “more for the money.”
● Changing the Packaging Materials: a margin-enhancing move that may also be leveraged for positive consumer good-will; yet must not erode functionality, structural integrity, or brand equity.
● Changing the Ingredient Formulation: a high-risk move that must not compromise the consumer experience, perceived quality, or product efficacy.
Downsizing and downcounting alone can be a risky strategy...
Downsizing the package size Based on 40 Nielsen BASES studies of cost savings innovation and 59 packaging studies, Nielsen found that downsizing and downcounting (i.e., moving from a 6-pack to 4-pack) alone can be a risky strategy. Over time, that data shows that even when manufacturers consider
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Betting on the Uncertain If you think hard, you might be able to remember the good old days of, say, this past summer - back when some economists still had an argument for using terms like 'slowdown' or 'softness' in place of the dreaded 'r' word. How quickly things change.
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adding a smaller size to an existing product line, the resulting increase in purchase frequency of the new smaller size is not enough to offset the negative transaction size impact to the business.
A few exceptions to this trend include when the smaller package added: a) unique, incremental channel distribution, b) new consumers to the franchise, or c) a unique usage occasion that was independent of the prior large package.
The most important success factor to downsizing is to combine it with innovations that yield additional positive consumer benefits or experience with the product. What’s more, these benefits do not necessarily add cost. Examples of successful strategies include adding a resealable benefit to the smaller pack along with new graphics and a different package shape, moving from glass to plastic containers, or combining “new news” with a sleek new convenient and easy-to-transport package. Presumably, these changes add perceived value to the product experience, offsetting a straight package downsizing which likely could have been viewed as negative on its own.
Downsizing was received better than price increases...
Additionally, Nielsen analyses have shown that downsizing was received better than price increases. Successful downsizing with constant pricing typically works best under the following conditions:
● The manufacturer is a significant market share leader within the category. ● The downsizing includes a large number of SKUs within the category so as not to penalize
a small subset of the competitive frame of reference. ● The percentage package size reduction is less than 12%. ● The categories have highly expandable consumption.
Upsizing the package size Clearly, consumers like large economy packs. And for manufacturers, their appeal lies in economies of scale and more efficient use of plant capacity. Not to mention that consumers buying large quantities can stay out of the competitive shopping cycle for a longer period of time. Economy or bonus packs can be extremely well received, particularly when they add benefits beyond a better price per unit.
There are a few key stumbling blocks to a successful upsizing...
There are a few key stumbling blocks to a successful upsizing, including pricing an item too high or offering packaging that is too large to be convenient. In one case, doubling the size of a kitchen/bathroom surface cleaner produced better value perceptions, but no increase in purchase interest. One issue was the dilemma of home storage; the other, a concern that consumers didn’t need so much product. Other examples showed that while a product may have perceived functional advantages, concerns around the absolute price could exceed a cost threshold. Upfront consumer communication can make or break an up/downsizing effort. Manufacturers should consider including quick, simple communication, possibly at the point-of-purchase to reassure consumers of product benefits.
Another consideration is retail shelving. How will the package fit on retail category shelves, and will it be easy to achieve at least a full case pack out on the shelves? Additionally, choosing the right retail channel for distribution is an important factor as warehouse club shoppers, for example, may react less favorably to upsizing ideas since the packaging isn’t much different than the big boxes they already buy. Despite somewhat positive consumer reactions to the broad idea of upsizing, it is not always an easy decision to simply say “go”. Consulting retailers regarding these initiatives in advance may be especially helpful.
Changing the packaging Innovative packaging changes have the potential to not only create cost savings to the manufacturing process, but also generate positive good-will media buzz. Such innovations can include moving to a less expensive package closure or seal, reducing the amount of package material, or omitting a current element of the packaging. These innovations tend to be novel; so while such initiatives may present less risk to the portfolio, they are also harder to identify.
Similar to shifting away from a more expensive ingredient to a less expensive one, moving to less
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Packaging changes must not diminish brand equity perceptions...
expensive packaging material will produce a direct increase to margin. However, packaging changes must not diminish brand equity perceptions or the product experience. Some beverage testing has shown that a simple move from glass to plastic, while well-received by consumers, may have a long-term impact to equity. In some cases, the change can accompany a new benefit—but unlike most other cost-savings methods, a package change does not necessarily need to be coupled with “new news” to be successful.
Another avenue of package innovation is reducing the quantity of a particular material in the packaging. For example, Pepsi’s Aquafina brand received considerable favorable press regarding their removal of 20% of the plastic weight from their half-liter bottles. Not only did the consumer-centric focus not impair functionality, but this cost-savings initiative was viewed positively as a clear environmental benefit.
Changing the formulation With rising costs of goods and pressure to keep prices low, there may be a temptation to cut corners on product quality by decreasing the costs of production. However, when Nielsen asked consumers specifically about what they want manufacturers to do in a struggling economy “produce slightly lower quality products, but keep the price the same” was the absolute last thing they wanted to see happen.
By changing the product formulation, manufacturers risk impacting consumers’ experience...
Strong product performance is critical to long-term survival in the marketplace. By changing the product formulation, manufacturers risk impacting consumers’ experience with the product and ultimately their acceptance of it as well. And, while a strong product can yield consumer loyalty and much greater sales over the long-term, making formulation changes as a direct reaction to the economic climate may alienate
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consumers now, with little chance to win them back in the future without increased investment. As such, this strategy has one of the highest risk profiles of the various cost-saving strategies explored.
This does not mean that product formulation changes should be completely rejected as a potential cost saving strategy. There are manufacturers who have been successful, and there are a number of considerations which can help determine if a given situation merits consideration of a formulation change, such as:
● Will the change meaningfully affect the current consumer experience? ● Does the product have a simple or complex flavor profile? ● Can the product be moved to a higher concentrated formula? ● Can the formula change be framed in a positive way?
First and foremost, know your product. Specifically, know whether consumers find your product taste profile to be simple or complex. Chocolate provides a good example of a simple taste profile, where there is one primary flavor and modifying the formulation would likely change that flavor. A more complex product example is frozen pizza, where lots of flavors work together and changing one element might not have as great an impact on the end consumer experience.
Another reformulation consideration is to move to a higher concentrated formula. Increasing the concentration may allow for less packaging or fewer ingredients, which can lead to cost savings in production and positive consumer efficacy perceptions. The laundry care category has embraced this trend successfully, where the bottles are easier to handle/store, and the detergents provide the same cleaning power as their former counterparts. This strategy is not limited to laundry care. Other household care categories like cleaners and dish soaps, personal care categories like body wash, or even food and beverage categories like powdered drink mixes and sauces are all potential candidates.
Consumers seek value In the end, it is all about the consumer seeking more value for their currently limited dollar. And value is more than price. It begins with a product satisfying a need and takes into account the alternatives available to satisfy that need. This requires work on the part of the manufacturer to ensure that the product continues to deliver and the brand remains relevant in a changing environment.
Cost-saving product innovations, when done in isolation, tend to lead to declines in perceived value and consumer appeal. Manufacturers need to know their consumers and ensure that cost-saving changes are still providing additional positive auxiliary benefits. In doing so, potential declines in perceived value or appeal will be mitigated, and opportunities for sustained sales or growth will be increased.
Contributing writers to this article include: Mark Leiter, Emma Kronick, Matt Cahill and Jeff Day.
Home>insights>Consumer Insight>July 2009: Target>How Do I Approach Pricing in this Economic Environment?
How Do I Approach Pricing in this Economic Environment?Today’s economic environment raises many questions about pricing. Given inflation a year ago, recession since then and stressed consumers, many CPG marketers are completely re-evaluating their pricing strategy and asking “What are the new pricing fundamentals?” Just ask Nielsen.
In this audio podcast, two of Nielsen’s foremost authorities on price strategy will answer the most popular questions they been receiving from CPG manufacturers about pricing in today’s economic climate.
Click here to listen: Pricing (Duration: 10:57 minutes)
● What has this recession changed for marketers thinking about price? ● Are size changes better than price changes? ● Given the economy and the growth of Walmart, Dollar stores and other value retailers,
isn’t cross-store price elasticity something we should focus on? ● What are some rules of thumb on how to change price? ● What is more important – my own price or my price vs. competition? ● What factors cause some items to be more sensitive to price than others?
Featuring:
Mike Noonan, Managing VP, Global Price & Promotion Practice, Nielsen Mark Laceky, VP Price & Promotion Practice - North America, Nielsen Hosted by Jennifer Frighetto, Director Media Relations, Nielsen
Home>insights>Consumer Insight>July 2009: Target>From Hayworth to Cansino: Turning the Tides in Latino Movie-Going Sensibilities
From Hayworth to Cansino: Turning the Tides in Latino Movie-Going Sensibilities
By: Ruth Behr, Director of Client Consulting and Reny Diaz, Client Solutions Associate, The Nielsen Company
CI SUMMARY: Hispanics comprise a growing 15% of today’s American moviegoers and amounted to over 128 million of U.S. box office admissions in 2008. Latinos not only represent an opportunity to positively impact overall box office success, but they are an influential segment with the power to build brand awareness.
Denied her golden ticket to stardom, then obscure Margarita Cansino’s dreams were crushed when she found herself replaced by blond bombshell Loretta Young as the lead in Fox’s remake of the 1928 blockbuster Ramona. Cansino’s ethnic name and Latin features had evidently designated her impractical. It wasn’t until two years later, when Columbia Pictures changed Rita’s last name to Hayworth and dyed her dark hair to auburn, that she ever stood a chance of being noticed in Hollywood.
Latinos represent an overwhelming 28% of today’s heavy moviegoers...
Today, the movie industry’s attitudes toward Latinidad are quite the contrary: Though Latinos comprise an exponential 15% of the U.S. population, they represent an overwhelming 28% of today’s heavy moviegoers—a substantial contribution to any feature film’s box office success.
A growing audience About 26 million of today’s American moviegoers are Hispanic, most commonly between the ages of 12 and 34. Almost half of these young Latinos watch 11 or more movies in theaters every year, making them 100% more likely than the national average to be considered “frequent moviegoers”. Half of all Hispanics prefer to see a movie within the first ten days of a film’s opening. Understanding Latino consumption and entertainment habits can help studios and agencies maximize the success of a feature with this valuable segment of the movie-going population.
A family unit supersedes individual language preference...
Language lessons For Hispanics, in-home language preference—categorized as either English-dominant, Spanish-dominant or bilingual—plays a smaller role in the movie-going experience than might be expected. While language differences often exist among Hispanic families, the ability to participate in an activity as a family unit supersedes individual language preference.
Find Out More
Read more about Hispanic viewing patterns. If you are not already a Nielsen PreView member, you can register for free and link to the PreView articles.
Now You’re Speaking My Language - Consumer Insight, July 2009
- The majority of Hispanics are now online. Internet access among Hispanics has been increasing at a faster rate (13%) than it has among total adults (8%) in the U.S. (Scarborough Research) - Hispanics moviegoers are 63% more likely to have an account on an online social network that they log onto or update at least once a day. (NRG Benchmark 2008) - Outdoor advertising is favorably perceived by 43% of Hispanic moviegoers, making it 18% more likely to be well-received. However, outdoor advertising should be approached with caution at sporting events: Hispanic moviegoers’ attendance to live sporting events is the least popular choice of out-of-home leisure activities. (NRG Benchmark 2007)
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Hispanics are 77% more likely to take turns picking films within their movie-going party. For example, although one-third of Hispanic moviegoers in Spanish-dominant homes see movies with Spanish dubbing or subtitles in theaters, less than half prefer this format to a standard English-language experience.
And just as the majority of Spanish-dominants sit through—and presumably enjoy—English-only films, 18% of their English-dominant counterparts have seen a Spanish-dubbed or subtitled film in theaters1. The familial bent in Hispanic movie-going translates to greater instances of ticket and concession purchases per party, as Hispanic households are generally larger and more extended compared to the average movie-going family.
The main attraction Hispanics are worth an estimated $1 billion to the U.S. movie industry, representing 30% of moviegoers who see ten or more summer movies in theaters. Summer is the most important season for the industry, often accounting for 40% of the year’s box office revenue.
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Animated movies cross language dominances better than other genres...
The Family, Horror/Thriller, Romantic Comedy and Action Adventure genres attract the greatest interest from Hispanic moviegoers2. Family films, in particular, provide entertainment that crosses the generation and language preferences of Hispanic families. This is mainly evident with attendance to animated movies, as Hispanics can comprise over one-quarter of these audiences. Animated movies may cross language dominances better than other genres because not only can they be understood with varying degrees of English comprehension, but abuela is likely attending with her grandchildren as well.
Overall, Hispanics command the highest share of audience in the Horror/Thriller and Romantic Comedy genres. Their highest headcount contributions—in Action Adventure and Family—correspond to the highest-grossing genres in the U.S. market.
With regard to the 800 million DVD units sold in the U.S. last year, Hispanic households are 24% more likely to purchase them compared to the average American household. In fact, almost 79% of Hispanic moviegoers bought at least one DVD in 2008.
Spanish-language television is particularly effective in targeting Hispanic moviegoers...
TV ads engage and captivate As important contributors of movie-going audiences, Spanish-language and Hispanic-heavy English networks would be wise to not overlook their fair share of studio spend. On average, 1.5% of prime-time Spanish broadcast was time-shifted by moviegoers—7% less than the English-language counterpart’s average. This trend contributes to the boost in live commercial ratings for the average Hispanophone program, making Spanish-language television particularly effective in targeting Hispanic moviegoers.
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In addition to spending TV time differently, Hispanic moviegoers also internalize movie advertising more positively. Almost two-thirds of Hispanic moviegoers consider movie ads on television as “informative and eye-catching”, making them 7% more likely to think so compared to the average movie-going population3.
Spanish television represents an opportunity to target moviegoers...
Many Hispanic moviegoers still consider current amounts of movie advertising on Spanish television as “not enough”. In 2008, movie studios spent an estimated $103 million on Spanish-language network and cable television. This amount equates to 3% of reported spending for the motion picture category—a 13% increase from 2007 movie spending on Spanish-language TV. For a medium that tends to over-deliver the moviegoer target, Spanish television represents an opportunity to target moviegoers who may otherwise be inaccessible.
An analysis of Universal’s Fast and Furious television campaign demonstrates the added reach Spanish programming can provide. With an opening weekend audience worth $72.5 million—
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46% of which was reported Hispanic—the brand tapped Hispanic moviegoers for part of its success. Fully 11.3% of moviegoers saw spots on Spanish broadcast and cable—almost half of which would never have been reached with the rest of Universal’s campaign.
But Hispanic moviegoers don’t just watch Spanish television. While Univision elicits 20% of Hispanic moviegoer’s broadcast and cable viewing minutes, English-broadcast networks ABC, CBS, the CW, FOX and NBC together command over 15%. Networks ESPN, NICK, TBS, TNT and USA rule cable for Hispanic moviegoers, comprising 10% combined. English-language programming often occupies the majority of Hispanic moviegoers’ time spent on broadcast and ad-supported cable.
Synchronized sensibilities Considering that Hispanics comprise one-quarter of the most frequent moviegoers, Hollywood’s reversion from Hayworth back to Cansino is reflective of an era where Hispanic moviegoers are valued for precisely that which Rita Hayworth felt obliged to alter—cultural sensibility. Understanding the unique consumption habits of Hispanics will help the movie industry tailor a portion of its advertising to a box office constituency that can build brand awareness and success for movie features to come.
Hispanic Facts
● The majority of Hispanics are now online. Internet access among Hispanics has been increasing at a faster rate (13%) than it has among total adults (8%) in the U.S. (Scarborough Research)
● Hispanics moviegoers are 63% more likely to have an account on an online social network that they log onto or update at least once a day. (NRG Benchmark 2008)
● Outdoor advertising is favorably perceived by 43% of Hispanic moviegoers, making it 18% more likely to be well-received. However, outdoor advertising should be approached with caution at sporting events: Hispanic moviegoers’ attendance to live sporting events is the least popular choice of out-of-home leisure activities. (NRG Benchmark 2007)
Home>insights>Consumer Insight>July 2009: Target>Organized Chaos: Global Data Harmonization
Organized Chaos: Global Data Harmonization
By: Joe Palermo, V.P. Global Services Product Leadership, The Nielsen Company
CI SUMMARY: Think it’s impossible to truly harmonize data from multiple countries, given the variations in barcodes, brand names, packages, products and sizes involved? While meeting the challenges of global data differences is daunting, it can be accomplished with a unique combination of local data access, global understanding and a design and implementation plan that delivers action-oriented applications.
The data to make decisions is hardly global in nature...
Major fast-moving consumer goods manufacturers and retailers are making decisions about their businesses on a global scale, but the data they use to make their decisions is hardly global in nature. In fact, consumer-packaged goods data is often derived from multiple sources of information across as many as 100 countries in local languages with disparate product and category descriptions and even secondary desk-top research data included.
Distilling the differences So what options exist for a global manufacturer or retailer when faced with the reality that data doesn’t match across countries, divisions, or formats? Technology and applications are components of harmonization, but not the drivers. In light of the fact that global product catalogues are rare, coding within company divisions and across countries varies, and product ownership, manufacturer names and even product uses are not universal, data harmonization is a process that requires experts with local access and global experience to follow seven key steps.
A major obstacle to global data harmonization is multiple product codes...
Step One: Establish a detailed set of rules A major obstacle to global data harmonization is the confusion created by multiple product codes, descriptions, manufacturer names and categorizations. With 85% of the EAN (European Article Number) or UPC (Universal Product Code) codes in local databases unique to their country of origin, it can be next to impossible to report on a product’s sales from market-to-market.
Some brands have different owners in different countries, and manufacturer names can differ across borders. Manufacturers may use terms such as “multi-use” to mean 1- or 2-liter bottles in one market, but 750mL in another, based on the necessities of manufacturing.
Product usage also varies by market, and some markets describe a product as it physically appears—not how it is used. Chocolate sprinkles, for example, are used as a topping for cakes or ice cream in the United States and Belgium, but as a sandwich spread in the Netherlands. Likewise, compote is a dessert in southern European countries and a meal accompaniment in northern Europe. Local coders may miss these distinctions since they do not realize that a product is used differently elsewhere.
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The key to overcoming these challenges is establishing a clear set of rules for input coding in order to collect quality information. These rules must be generic and based on what the product actually is allowing for de-culturalization, but also must provide sufficient information to allow flexibility.
Eliminate the ambiguity that results from different interpretations...
Step Two: Avoid ambiguity The coding structure must be supported with detailed descriptions and definitions—particularly for multi-country coding—in order to eliminate the ambiguity that results from different interpretations. In addition, the coding structure must be in the local language with careful translations that use terminology understood within the local business community. For example, there are three words that could mean “ambient” in Germany: Raumtemperatur, Umgebungstemperatur or Konservierung bei Raum, but the local Nielsen business uses Kamertemperatuur as the best term for what would be identified as ”shelf stable” in the United States.
Mandate only one way of coding...
Step Three: Implement a system Once the detailed definitions are in place, it’s important to mandate only one way of coding any given item. This enforces the disciplined use of values assigned to product characteristics and ensures the same values are used consistently for the same product characteristics across countries.
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Step Four: Build in quality checking The coding system must include additional data for enrichment purposes from a variety of sources to address data gaps. Multiple approaches can be used, such as allowing copy facilities from similar products, or enriching centrally by facilitating coding of information which has not been supplied.
Distinguish each product using a set of characteristics and a unique numeric number...
Step Five: Establish a unique product identification Integral to the success of the global data harmonization system is the ability to distinguish each product using a set of characteristics and a unique numeric number. Barcodes and GTIN (Global Trade Identification Number) numbers have traditionally served this purpose, but for a number of reasons they’re not entirely reliable. Often, the same product is marked with different codes, or is coded the same as a product in an entirely different category. And in some cases, promotional packs are given the same barcode as a regularly-packaged product. For example, the Coca-Cola 330mL regular can has 30 different codes across Belgium, the United Kingdom and France. To truly harmonize data from multiple sources and locations, a unique identification number must be created and adopted.
Effective data harmonization requires a separate, central decision team...
Step Six: Create a global governance organization Effective data harmonization requires a separate, central decision team, with a direct link to local teams with experience, product knowledge and cultural understanding. That central governance team should be independent and consistent in order to manage the changes that result from product or category evolution.
When new and unique products enter the market, the governance board determines where they belong. For example, are under-arm absorbency pads deodorants or clothing protectors? What’s the best way to manage products and categories that are unique to one market, such as squash and cordials in the United Kingdom or Cuberdons in Belgium? How should unique packages be handled, such as mayonnaise in plastic bags, offered in Denmark, or pickled eggs in a jar, from the United Kingdom?
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Step Seven: Keep it simple and provide centralized support As databases can quickly fall out of sync without proper maintenance and updates, the data harmonization team must consistently assign global codes for new items in the market and a project manager to perform multiple ongoing tasks, including: ensuring that codes are properly applied and are consistent across countries; supplying new codes when necessary; resolving internal and external issues; clarifying borderlines, communicating results and assessing whether local country changes have impacted the data synchronization as a whole.
Think local, act global Harmonization is an ongoing process that requires strict governance and constant monitoring. But when the process is in place and is drawing from both local knowledge and global expertise, it provides high-quality information and a solid foundation for an integrated information system.
With extensive, worldwide experience, Nielsen’s global project teams are well versed in the harmonization process and are uniquely qualified to discern the global needs of both manufacturers and retailers, providing consistent views that support individualized client needs. “One size fits all” strategies just don’t work globally. Global harmonization provides the clarity needed to move beyond data differences toward integrated information that drives better decisions on a global scale.
Home>insights>Consumer Insight>July 2009: Target>Below The Topline: The United States in 2020 - A Very Different Place
Below The Topline: The United States in 2020 A Very Different Place
By: Doug Anderson, SVP, Research & Development, The Nielsen Company
CI SUMMARY: While the World is struggling with the economic hard times of late, the future poses a new set of challenges that do not stem from arcane financial investments, but from simple demographics. An aging population, a declining birth rate, and growing ethnic diversity will change the face and the spending behavior of consumers in the U.S. Gaining share among population groups that most marketers do not reach today—older and ethnic consumers—will require shifts in focus, tactics, and products.
Economic hard times to come stem from simple demographics...
The recession of 2007–2009 has placed a great deal of strain on marketers and retailers of consumer products. Price and value have become more and more important, challenging marketers to rethink product and distribution. Everyone just wants things to get back to normal, but will they? While discretionary spending will return to moderate levels as markets rebound, the economy of the United States—as well as the rest of the more developed World—is well on the road to longer-term difficult times. The economic hard times to come do not stem from the misuse of arcane investment instruments that can take a degree in calculus to understand, but rather from simple demographics. The emerging marketplace will be very different than today, and filled with wide-ranging challenges.
Tectonic demographic shifts Since the early 1970s, birth rates in the United States have been at least 40% lower than at the heights of the Baby Boom. When a falling birth rate is combined with a very large generation like the Baby Boom, the effect is a gradual aging of the population. The median age of the population increases as the large group grows older because there aren’t enough babies being added to balance them out. For much of the large group’s life cycle, they are typically a boon to the economy—especially when they reach their prime economic productivity years (usually from the early 40s into the middle 50s). However, as this large group continues to age, they stop being an economic asset and begin to become a burden—as the Baby Boom generation will become over the next several decades.
Aging populations place stress on an economy in two ways...
Aging populations place stress on an economy in two ways. First, if the generation is sufficiently large, retirement can lower the size of the labor force—particularly its most skilled and most experienced component—lowering overall economic productivity. Starting in the next two years until 2030, the number of persons who reach the retirement age of 66 will increase by over 100,000 each year throughout the Baby Boom retirement years. For many of the early years in that period, the number of persons who reach the age of 19 and enter the labor force will actually decline by more than 40,000 per year for the next decade.
The second impact of an aging population is perhaps larger—the costs incurred by society to care for a large number of retirees. Social Security will begin to run at a deficit in about eight years and will deplete its trust fund by 2041 unless changes are made now. At that point, money coming into the program would only cover about 70% of the money paid out each year. Medicare and Medicaid will deplete their trust funds in only about ten years and will be the largest component of all U.S. government spending by 2030.
Additionally, many private pension plans are currently under-funded, and given the current economic difficulties, may not have time to recover adding more people to the public dole. The Baby Boom generation has suffered a disproportionate share of the $11 trillion in lost market equity and $3 trillion in lost real estate value from the current recession and they will find it near impossible to retire and sustain their current standard of living—particularly the 38% who will be eligible to retire in the next ten years.
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Future impacts Nielsen created a set of long-term demographic and economic projections that model the potential impacts of the aging U.S. population. The projections make use of five groups of households (Struggling, Lower Mid, Upper Mid, Affluent and Wealthy), each accounting for 20% of total, using an income-to-poverty ratio.
Households in the Struggling group have incomes that are no more than 1.5 times the poverty threshold. For a single-person household under the age of 65, this equates to having a yearly income less than $15,732. For a six-person family with four children, this means having a yearly income less than $40,407. All together, the Struggling group has a median income of $12,201.
From now until 2020, the projections show that the Struggling and Lower Mid groups will be the only ones to gain share, with the Struggling group growing by over 10%. The lower affluence groups will grow at the expense of all other groups. By 2050, the projections show that the Struggling group will have grown in size by nearly 70%, pulling households from all other affluence groups—particularly those in the middle.
For families with children, the growth in Struggling households will be even stronger. By 2050, nearly one-third of all families are expected to fall within the Struggling group. In the same timeframe, nearly 40% of all households whose household head is over the age of 65 are
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The U.S. will experience very minor growth in per household spending...
A shrinking pie As the Baby Boom ages, and birth rates remain low, household sizes will decrease. Many aging Boomers will live alone or with one other person. The number of children per family will get smaller. Add in growth in the most economically-disadvantaged market segments, and pressures on per capita spending will be like nothing the U.S. has experienced in modern times. Between now and 2020, the U.S. will experience very minor growth in per household spending. But after that, spending on consumer products is expected to fall—and will continue to fall throughout the projection period in constant dollars.
Marketers in the U.S. and throughout the World are not accustomed to a shrinking pie, but rather are used to thriving marketplaces with robust spending growth. Broad marketplace growth enabled brands and categories to grow organically without increasing penetration or buying rate. In the near future— and for decades to come—this growth gravy train will be off the tracks. Growth will only come from increasing share against competition. The new consumer marketplace of the U.S. will bring new relevance to the phrase “share wars”.
Opportunity knocks Over the next four decades, the old U.S. consumer mass marketplace will continue to split into distinct groups with very different product needs. By 2037, nearly one in three households will be headed by a person over the age of 65. Of these households, nearly three-quarters will be non-Hispanic white, nearly half will be single persons, and the majority of persons in the 65+ age range will be women. Despite their economic woes, the Baby Boom will still be a strong consumer market and will provide substantial opportunity for marketers willing to design and market products to an older consumer franchise.
By 2025, over half of all families with children will be multi-cultural...
On the other side of the divide will be America’s new families. Because birth rates are low, these new families will be smaller on average than those who have come before. However, their most distinguishing characteristic will be their ethnic and racial makeup. In only a few short years, by at least 2025, over half of all families with children will be multi-cultural. Less than half will be native born non-Hispanic white. Within this multicultural marketplace, Hispanics will be the largest group, but Asians, African and Caribbean blacks, and others will make up significant shares. Though also beset by economic woes, this group will provide substantial opportunity, but only for marketers who can navigate diverse cultures, tastes, and languages.
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The future of the U.S. is a challenging one for marketers and retailers of consumer products. Gaining share among population groups that most marketers do not reach today will require shifts in focus, tactics, and products. Successfully reaching new markets like multi-cultural families offers a new set of opportunities. The breakdown of the mass market and the mass media that once served it, combined with certain economic difficulties, will make for challenging new times ahead.
