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Nobody’s UnpredictableJune 2009
What is happening in Canada
The Economy and Some Key Trends
2
Ipsos Trend Observer 2009
Trend Observer a global study that uncovers today’s trends and predicts their evolution into the future.
• What motivates consumers today?
• What consumer trends should we prepare for in a post-crisis world?
• What motivates consumers today?
• What consumer trends should we prepare for in a post-crisis world?
Interviews with young
“trailblazers”Interviews with
cutting edge experts
Trend Analysis
Trend Analysis
Traces the development of trends from before the current
recession, revealing their development and
evolution into the current recessionary period and beyond.
Toward a Re-invented World:
Toward a Re-invented World:
Reveals how trends, coupled with the latest
technologies, are changing the way
consumers view several of the pillars of our
society, including the economy, community, self-image, and space.
Implications for our
brands
Implications for our
brands
A study in 3 PartsAdvertising
3
Agenda
Economy
How are Marketers responding?
How are Consumers responding?
Questions / Discussion / Your Experiences/ Anecdotes
Questions / Discussion / Your Experiences/ Anecdotes
4
Living in Turbulent Times - Its All About Arrows
5
And About … Images
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And, … Headlines
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Influencers
Employees
Competitors
PartnersPress/Analysts
Prospects
Customers
Investors Family
Communication - The Old World
MESSAGES
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Influencers
Employees
Competitors
PartnersPress/Analysts
Prospects
Customers
Investors Family
Communication - The New World
MESSAGES
9
The Canadian Economy is in Recession
The Canadian economy has fallen victim to the global recession. The recession is expected to run its course in 2009 and the economy will rebound into positive territory in 2010.
-4
-3
-2
-1
0
1
2
3
4
5
6
Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 2009* 2010* 2011*An
nu
al %
Ch
an
ge
Source: Statistics Canada (Q1’07 to Q4’08) and *Bank of Canada (2009 to 2011 forecasts)
Real GDP
10
Unemployment Rate in April 2009
Unemployment is Rising Across Canada
Canada
8.0%
Source: Statistics Canada
BC
7.4%Alb
6.0%Sask
5.0%
Man
4.6% Ont
8.7%
Que
8.4%NB
8.9%
PEI
12.4%NS
9.2%
Nfld
14.7%
11
9.7
5.74.8
4
1.60.1
-2.6-4.5
-5.3
-9.9 -9.8-11 -11.2
-8.9-7.7
-3.2
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
Residential Average Price Year-on-Year Percentage Change
Canadian Financial Monitor
Canadian real estate market hit its lowest level in a decade in January 2009… looks like it is now rebounding
Source: Canadian Real Estate Association (CREA)
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20,46622,412 22,776
24,95627,542
3% 7% 17% 27% 35%
Q1'08 Q2'08 Q3'08 Q4'08 Q1'09
Personal Bankruptcies Year-on-Year % Change
Canadian Financial Monitor
Source: Office of the Superintendent of Bankruptcy Canada
Personal bankruptcies have accelerated since the financial meltdown in October 2008
13
4000
6000
8000
10000
12000
14000
16000
Jan
-08
Fe
b-0
8
Ma
r-0
8
Ap
r-0
8
Ma
y-0
8
Jun
-08
Jul-
08
Au
g-0
8
Se
p-0
8
Oct
-08
No
v-0
8
De
c-0
8
Jan
-09
Fe
b-0
9
Ma
r-0
9
Ap
r-0
9
Ma
y-0
9
S&P/TSX
TSX all time closing high of 15,073.13 on
June 18, 2008
TSX fell 1738.19 points or 16% in its
worst week in 68 years
TSX hit a 5-year low of 7566.94 on
Mar. 9, 2009
Nonetheless, whether these are “green shoots” or just “weeds” remains an open question.
The stock market has rallied about 35% from its March low amid speculation of “green shoots” of economic recovery.
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How Long Will We Be In This Recession?
Since 1870, there have been 255 examples of recession:
• 168 lasted for less than one year
• 61 lasted 1 - 2 years
• 26 lasted for more than 2 years
Source: Trajectory
Duration of Recessions
15
51
6
7
5
3
1
2
2
1
1
63
18
16
14
11
8
6
5
4
4
4
Economy
Healthcare/Medicare
Jobs/Unemployment
Environment
Armed forces/Military/Defence
Education/Schools/Universities
International war/Conflict
Crime/Justice
Government/politics
Deficit/debt/spending
First mention
Total mentions
(Percentage of respondents)
Canada’s Top Concerns (March 2009)
Thinking about the issues presently facing Canada, which one do you feel should receive the greatest attention from Canada’s leaders?
16
Figures represent “Total Mentions”. Up to two issues were accepted from each respondent, thus percentages will exceed 100.
Canada’s Top Concerns – Trends (July 1991 - March 2009)
Mar
-09
17
Assessment of the National Economy Today: May ’09 = 53%...The Turnaround…
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jul 9
4
May
95
Jul 9
6
May
97
May
98
May
99
Jul 0
0
Jan
01
Oct
01
May
02
Nov
02
Feb
03
Apr 0
3
Aug
03
Nov
03
Feb
04
May
04
Sep
04
Nov
04
Feb
05
May
05
Sep
05
Feb
06
Apr 0
7
Aug
07
Jan
08
Feb
08
Apr 0
8
May
08
June
08
Aug
08
Sept
/Aug
08
Nov
'08
Jan
'09
Mar
'09
May
'09
Good Poor
In terms of the current economic conditions in this country as a whole, how
would you describe the overall state of the Canadian economy right now?
All Canadians
47%
53%
18
National Outlook for Economy Over the Next Year
0%
10%
20%
30%
40%
50%
60%
Ma
r '9
1
Ma
r '9
2
Ma
r '9
3
Ma
r '9
5
Ma
r '9
6
Ma
y '9
7
Ma
y '9
8
Ma
y '9
9
Ju
l '0
0
Ju
l '0
1
Ju
l '0
2
Fe
b '0
3
Fe
b '0
4
Fe
b '0
5
Ma
y '0
5
Se
p '0
5
Fe
b '0
6
No
v '0
6
Ap
r '0
7
Au
g '0
7
Ap
r '0
8
Au
g '0
8
Se
pt/
Oc
t '0
8
No
v '0
8
Ja
n '0
9
Ma
r '0
9
Ma
y '0
9
Improve Get Worse
All Canadians
19
Household Spending - % Cutting Back
73%
88%
86%
85%
81%
81%
81%
78%
77%
77%
77%
76%
75%
74%
73%
72%
68%
67%
64%
64%
57%
Total
South Korea
Mexico
Argentina
China
France
Russia
India
Italy
The United States
Brazil
Turkey
Great Britain
Australia
Japan
Spain
Canada
Poland
The Czech Republic
Belgium
Germany
J3. Given the current state of the global economy, have you and your family had to cut back on your household spending recently?
1%1%3%1%1%0%8%2%2%-3%1%-8%-2%-1%0%4%-2%-1%5%-6%-2%
Change from last wave
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Specific Cut BacksAverage of all countries vs. Canada
76%
73%
72%
59%
53%
47%
41%
33%
23%
11%
81%
79%
78%
61%
61%
60%
48%
27%
25%
6%
Entertainment
Vacations
Luxury items
Clothing
Energy consumption
Gasoline/driving
Groceries
Cell Phone
Cable TV
Education
All Countries
Canada
J4. What are the specific things that you and your family are cutting back on these days? Base: respondents who have cut back in J3
21No data for Aug 2008 or Apr 2007
Now, thinking about major purchases such as buying a car or household appliances, or your vacation spending, in the next year, do you expect that you and your family will be spending
Family Spending on Major Purchases in the Next Year – some signs of recovery?
22No data for Aug 08 or Apr 07
And, thinking only about your personal day-to-day spending habits on things such as groceries, clothing or other personal goods and services, in the next year, do you expect that you and your family will be spending
Personal Day-to-Day Spending in the Next Year – some signs of recovery?
23
Industry Sectors Have Reacted Differently
+ Sectors YoY Index: Brewers Utilities Food Personal care Tobacco
- Sectors:
Insurance Mortgage Finance Gambling Automotive Consumer electronics
24
Marketing in A Recession – Voices from the Past
All launched in a Recession by Marketing clientsWhat connects these products? … a clue
19201920
19821982
19741974
19291929
Launched in:
Creating Creating a new a new
categorycategory
First ever First ever Store Label?Store Label?
Resourceful Resourceful PremiumisationPremiumisation
Industry Joint VentureIndustry Joint Venture
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How Are Marketers Responding to This Recession?
Buy a truck and get a car free
Pay what you can / what you think it is worth
Consuming differently
• Swap/share (zwaggle.com)
• Rental (zipcar.com)
The end of supersize
Little luxuries
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Value Reframing
“Says its hybrid electric water heater ... will save consumers approximately $250 annually.
Says that switching to its latest models of water-conserving shower heads, toilets and faucets saves a family of four between $90 and $200".
The Stimulus package is a Value Reframing - replace your old product with a new product which will save you money!
How Are Marketers Responding to This Recession?
Bring your travel mug instead of their paper cups and receive 20 cents off.
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only use what you need / what is good for you
Value Sizing
Right size the product to the specific need (e.g. Single use)
How Are Marketers Responding to This Recession?
Down count, down size; smaller package; Compacted so you use it
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Increasing marketing spending during a recession greatly speeds recovery post-recession.
Source: Roberts, Keith. What Strategic Investments Should You Make During a Recession to Gain Competitive Advantage in the Recovery, Journal of Strategy & Leadership, Vol. 31, Issue 4
10% 9% 8%
0%
5%
10%
15%
20%
Cut Maintain Increase
Marketing Spending
-0.8
0.6
4.3
-3-2-10123456
Cut Maintain Increase
Marketing Spending
ROI During Recession (%) Increase in ROI During Recovery (% pts.)
Marketing Spend does not damage ROI significantly in a recession and helps set the platform for strong recovery
How Are Marketers Responding to This Recession?
29
Delivery - In Store Fundamentals
Fundamentals are critical when a recession exists.
Ensure your in-store fundamentals are working:
• POS materials
• Category line-up
• Shelf – location
• Return to basics in store!
How Are Marketers Responding to This Recession?
30
Price Optimization
Costs have increased and retailers are demanding more and competing harder. Fully understand price to optimise your profit!
The need to try and ensure your product is priced at the right price point for the consumer context and channel.
How Are Marketers Responding to This Recession?
31
Discounting
Offer Steep Discounts
Post Discounts
What to do?
• Generate ideas for discounting things peripheral to your brand rather than your core competency/brand.
Auto makers – financing rather than the vehicle.
Retailers – rather than the product itself free shipping or discount the warranty.
Carbo beverage – regular price for single, adjacent to deal for 36.
Harvard Business Review Jan 19, 2009
Preserve the value of your brand while delivering the greater value that consumers want during tough times.
Profits Evaporate
Impacts Sales
How Are Marketers Responding to This Recession?
32
SKU & Portfolio Optimization
Range• Do we need all the different skus? Rationalise to
increase efficiency
• Clear the clutter, non-performing sku’s/ brands
How Are Marketers Responding to This Recession?
33
Optimize Packaging
Improving impact and communication on-shelf will pay back FAST
How Are Marketers Responding to This Recession?
Your products speaks for you at shelf, the consumer connection point.
Get Recognized!
34
Sustainability
Product & Refills
Fuel Efficiency (Home, Car, Electronics)
Package - neutral carbon footprint
Monitor & Proclaim your contribution
Consumer & Employee Engagement
How Are Marketers Responding to This Recession?
35
Concentration of Power in Retailing
The business of retailing is continuously reinventing itself
How Are Marketers (Retailers) Responding to This Recession?
36
Control Label Brands
How Are Marketers (Retailers) Responding to This Recession?
37
TV Distribution•Over-the-air TV•Analog Cable
Personalization•VCR•Specialty TV•Pay TV
1995 2007TV Distribution•Over-the-air TV•Analog Cable•Digital Cable•DTH Satellite•Wireless Cable (MDS)•IPTV•Internet
Personalization•VCR•Specialty TV•Pay TV•DVD Player•PPV•PVR•VOD•Video downloads•Video streaming
Portable•DVD Player•Digital Video Player•Mobile phone•Laptop computer•Smart phones
2000TV Distribution•Over-the-air TV•Analog Cable•Digital Cable•DTH Satellite
Personalization•VCR•Specialty TV•Pay TV•DVD Player•PPV
Portable•DVD Player
2000
Fragmentation and Higher Cost of Communication
Video Technology Continues to Change and Expand
How Are Marketers (Retailers) Responding to This Recession?
2010
?“the right time to be touting your
products is when shoppers are ready to buy.”
38
Shopping has evolved from the activity of FULFILLING DEMAND to an opportunity for CREATING DEMAND
Why?
The aisle is superior to out of store medium in providing access to the target group of users at a critical time.
How and when will the evolution be complete?
When retail completes its current transformation from distribution channel to a place that stimulates your senses and emotions
How Are Marketers (Retailers) Responding to This Recession?
The Evolution of Shopping
39
How Are Marketers (Retailers) Responding to This Recession?
40
CONCIERGE®
CONCIERGE® is an interactive touch-screen computer that transforms a shopping cart into a friendly assistant that guests won’t be able to live without. The moment the cart is put in motion, the LCD screen comes to life offering help, new products, how-to-tips, and recipes.
PartnershipsSpringboard -
How Are Marketers (Retailers) Responding to This Recession?
41
Personal Account Recognition
Product Scanning
Shopping List
Weekly Flyer
Recipes
Product Finder
Targeted Advertising (both location and segment based)
Shopping Cart Tracking
CONCIERGE® …continuedSpringboard -
Partnerships
How Are Marketers (Retailers) Responding to This Recession?
42
Core Benefits
Enrich Customer Relationships
Increase Customer Frequency
Enhance Store Profile
Generate Customer Insight
How Are Marketers (Retailers) Responding to This Recession?
43
How Are Consumers Responding to This Recession?
• Choosing different products
• Growing use of discounters
• Further erosion of Loyalty (both to brands / retail banners)
• Premium and Cheap are Winning
• Switching to Private Label
44
MEDIUM TERMMEDIUM TERM
How Are Consumers Responding to This Recession?
• Taking advantage of deals
• Reusability
• Seek durability
• Less willing to follow the fashion – purchase cycles will get longer
SHORTER TERMSHORTER TERM
45
How Are Consumers Responding to This Recession?
• Apprehension of credit – either reluctance or forced
• Consumers will buy the central product… but they may do without the peripherals warranty
speakersstand
satellite
monster cables
46
How Are Consumers Responding to this Recession?
Feb 26, 2009
267,000 references
Today
7,210,000 references
47
Ipsos Can Help!
InnoInno EvolutionEvolution
InnoSpeed – Idea/concept generationInnoScan – Idea screeningInnoScreen – Concept screeningInnoTrack –Post-launch tracking
Pack Evolution – Packaging optimization with eye-tracking moduleLine Evolution – Line optimizationPrice Evolution – Price optimization
ForecastingForecasting
Designor – Volume forecasting range of products
BrandBrand
Perceptor Plus – Brand positioning and brand equity Market Landscape – Perceptual map of market to identify white space/optimize positioningBrand Stretch –Assesses brand extension potential Segmentation Toolkit – Best practice segmentation tools ConsumerScape – Needs-based seg tool to understand subconscious motivations
CommunicationsCommunications
Brand*Graph – Brand/Adv Assessment
Next*Idea
Next*TV – Pre-market Idea and Adv Assessment
A Portfolio of Innovation, Brand & Communication Products to Build Your Brand- Today!
Advertising
Nobody’s UnpredictableJune 2009
Thank you for your time.Thank you for your time.