GfK -vlerick fmcg conference - the price sensitive shopper reality or fairy tail
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Transcript of GfK -vlerick fmcg conference - the price sensitive shopper reality or fairy tail
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 1
THE PRICE FOCUSED SHOPPER: REALITY OR FAIRYTALE
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 2
GfK: Who buys what, where, when, how much…?
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 3
Total Belgium = Hyper + Super + Discounter + Proximity + Special Outlets + Other Food
Hypermarkets Supermarkets
• Rob
• Alma
•Bio Planet
• Caddy Home, Delhaize Direct/Wineworld
•Carrefour winkel Online
Discounters
•Ecomarché
•Profi
Proximity
•Louis Delhaize Super
• Delhaize Superette
• Prima
• Deli Traiteur
•Supra
•Spar (excL. Eurospar)
• Petrol stations
Special Outlets
•………….
Other Food
•TECNO
•Peter-Goovers
•Oth.Supermarkets (1-2 checkouts)
•Foreign Supermarkets
GfK: 1 in every 900 Belgian households is monitored across total FMCG
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 4
At the end of this session…
We’ll answer the following question together:
Does the price focused shopper exist?
Option 1: YES, every shopper is price focused
Option 2: YES, and it concerns a large portion of the population
Option 3: YES, and it concerns a small portion of the population
Option 4: No, but this will very likely change in the near future
Option 5: No
Option 6: I have another opinion
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 5
How we will try to answer the question
Some Macro-economics
How price aware are you?
Price as a driver for Aldi’s growth?
Classification of Belgian Households
An eye on price elasticity
Impact of price promotions
The closing question
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 6
How we will try to answer the question
Some Macro-economics
How price aware are you?
Price as a driver for Aldi’s growth?
Classification of Belgian Households
An eye on price elasticity
Impact of price promotions
The closing question
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 7
WHAT IS MISSING HERE?
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 8
Segmentation based on sensitivitiesHow price aware are you?
I’m used to buying this
product.
I love this BRAND
Last time it was
price X
This time it is more
expensive
Expected PRICE
Posted PRICE
GAP
Purchase
Purchase consideration
40%
40% does not notify the gap between
the expected price and the posted
price
Posted PRICE
Purchase consideration
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How price aware are you?
What about your price sensitivity…?
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 10
Would you be able to rank the following products on their price
per liter / Kilo?
How price aware are you?
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Price per volume (Kg / L)€ 1,53
€15,95
€ 6,6
1 2
€ 2,59
3
4
€ 12,18
5
€ 13,9
6
€ 3,63
78
9
€ 12,12
10
€ 13,10
How price aware are you?
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 12
How we will try to answer the question
Some Macro-economics
How price aware are you?
Price as a driver for Aldi’s growth?
Classification of Belgian Households
An eye on price elasticity
Impact of price promotions
The closing question
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 13
PURCHASE POWER :Reality for private HH = Increase of Cost of living
Paradigm : Indexed salaries Vs Increase of costs
Some Macro-Economics
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Q1 06
Q2 06
Q3 06
Q4 06
Q1 07
Q2 07
Q3 07
Q4 07
Q1 08
Q2 08
Q3 08
Q4 08
Q1 09
Q2 09
Q3 09
Q4 09
Q1 10
Q2 10
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
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-3
-1
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15PL shares Inflation
Private Label Value
Shares Western Europe
Source Europanel consumer index – 10 countries
Some Macro-Economics
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BRAND LEADERS – A-BRANDS – STORE BRANDS - BUDGET
PRESSURE upon some categories versus OPPORTUNITY for others
OOH – SPECIALITY STORE – SUPERMARKET - DISCOUNTER
Assortment
Brands
Channels?
CONSUMER
NeutraalCrisis Resistant
Crisis Neutral
CrisisProne
Downtrading of some sectors can represent growth potential 4 Retail in FMCG
Some Macro-Economics
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 16
How we will try to answer the question
Some Macro-economics
How price aware are you?
Price as a driver for Aldi’s growth?
Classification of Belgian Households
An eye on price elasticity
Impact of price promotions
The closing question
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 17
SOFTDRINKS | BREAD SPREADS |FEMALE HYGIENE
An eye on price elasticity
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 18
An eye on price elasticity
Δ % Volume
Δ % Price
Perfect elasticity, elasticity = 1
Very elastic, Elasticity > 1
Non elastic, elasticity < 1
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 19
1
0
An eye on price elasticity
Elasticity
Price per volume
Soft drinks
Bread Spread
Female Hygiene
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 20
How we will try to answer the question
Some Macro-economics
How price aware are you?
Price as a driver for Aldi’s growth?
Classification of Belgian Households
An eye on price elasticity
Impact of price promotions
The closing question
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 21
Aldi has been growing in Sales value and market penetration since 2004. 2 questions can be asked what will they do in 2013 and what have been the main drivers for this growth?
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78Sales Value (€1000) Penetration (%)
Price as a driver for Aldi’s growth
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© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 2323
2004_Summer 2004_Winter 2005_Summer 2005_Winter 2006_Summer 2006_Winter 2007_Summer 2007_Winter 2008_Summer 2008_Winter 2009_Summer 2009_Winter 2010_Summer 2011_Winter 2011_Summer 2011_Winter 2012_Summer
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Offers Prices Quality AssortmentFresh Cleanliness Friendliness
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60626466687072747678
Sales Value (€1000) Penetration (%)
?
Price as a driver for Aldi’s growth
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 2424
Sales resultsα* Price
Performance
β* Offers
γ * Quality
δ* Assortment
ε * Fresh
ζ * Cleanliness
η * Friendliness
Price as a driver for Aldi’s growth
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 2525
Sales resultsα* Price
Performance
β* Offers
γ * Quality
δ* Assortment
ε * Fresh
ζ * Cleanliness
η * Friendliness
Price / Quality performance
No significant impact
Price as a driver for Aldi’s growth
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 2626
Sales resultsα* Price/Quality
performance
γ * Fresh
β* Assortment
δ* Adjusting for seasonality
ζ * Adjusting for penetration
The sales performance of Aldi can be explained by the amount of Belgian
Households that visit the Aldi stores per season and their evaluation of the price /
quality ratio, the available assortment, and the performance of the fresh department!
Price as a driver for Aldi’s growth
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 27
2004
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er80000
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480000
680000
880000
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1280000
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1680000
Actual sales Sales Model 3
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Sales Aldi = Basic sales – A * Price/Quality + B * Assortment + C * Fresh department - D * Winter/Summer + E * Penetration
Adjusted R² = 0.95
Price as a driver for Aldi’s growth
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 2828
– A * Price/Quality + B * Assortment
+ C * Fresh department – D * Winter/Summer
Further improvements on the price quality ratio have not resulted in additional sales. Or any negative changes in the price performance
evaluation did not negatively affect the sales of Aldi
The assortment has been a driver of Aldi’s
success
The fresh department has been a driver of
Aldi’s success
Aldi performs less good during the
summer
Price as a driver for Aldi’s growth
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 29292004
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mer
2004
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ter
2005
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ter
2006
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2006
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2011
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2013
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80000
280000
480000
680000
880000
1080000
1280000
1480000
1680000
Actual sales data Predicition Sales
Price as a driver for Aldi’s growth
+2.5%
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 3030
Price as a driver for Aldi’s growth
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Price as a driver for Aldi’s growth
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 3232
Price as a driver for Aldi’s growth
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 3333
Aldi continuous to improve or expand its assortment
Price as a driver for Aldi’s growth
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 3434
Aldi continuous to improve or expand its assortment
Price as a driver for Aldi’s growth
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 3535
The price gap is big enough for Aldi, they are not generating additional sales by lowering their prices.
As a matter of fact they might have some potential to increase prices on “must buy”
products: e.g. female hygiene
Price as a driver for Aldi’s growth
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 36
How we will try to answer the question
Some Macro-economics
How price aware are you?
Price as a driver for Aldi’s growth?
Classification of Belgian Households
An eye on price elasticity
Impact of price promotions
The closing question
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 37
Segmentation based on sensitivitiesImpact of price promotions
• Consumers react to uncertainty in the marketplace
• Focusing on saving• Purchasing items on promotions• Increased share of PL
• Specific group starts to buy more frequently
• Actually feel better doing so• Pleasure of getting deals• Obsessive deal seekers• These are:
• More knowledgeable• Brand conscious• Price sensitive
NO DEALS NO PLEASURE
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 38
Segmentation based on sensitivitiesImpact of price promotions
NO DEALS NO PLEASURE
That is €42 of Rexona products for only €12
Example send in by GfK panel member NL
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 39
DEEP DIVE INTO PROMOTION EFFECTIVENESS
SALES BUMP IN PROMO
TOTAL SALES
NEUTRAL
PROMOTION EFFECTS
BRAND SWITCHING:“Buying something else”
TIMING EFFECT:“Buying earlier”
VOLUME UPLIFT:“Buying more”
CATEGORY SWITCHING
RETAILER SWITCHING
INCREASED CONSUMPTION
CANNIBALIZATION
COMPETIVE SWITCHING
INCREASED BUYING FREQUENCY
STOCKPILING
LONG TERM
SHORT TERM
DEFENSIVE
Impact of price promotions
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 40
DEEP DIVE INTO PROMOTION EFFECTIVENESSImpact of price promotions
Price promotion
coupon
Other Price
promotion
Volume promotion (e.g. 5+1)
Multibuy (e.g. 2+1
SKU)
Premium promotion
Retailer actions
(e.g. Pixar)
25% 24%17% 18% 18%10%
Brand Switching
25%
Extra volume
8%10%
20%23%
11%
Faster buying Shop Shifting
21%
35% 17%
20%23%
17%
10%
10%
10%
10%
15%
20%
42%
23%23%20%
45%30%
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 41
Buying development – Black Friday
Black Friday
• Radical deals on popular items
• To create publicity
• Encourage traffic into the store
• Increase the sales of other items on their shelves)
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 42
How we will try to answer the question
Some Macro-economics
How price aware are you?
Price as a driver for Aldi’s growth?
Classification of Belgian Households
An eye on price elasticity
Impact of price promotions
The closing question
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 43
Segmentation based on sensitivities
In biology, specimen are classified based on their characteristics.
We can apply the same methodology on shoppers
Classification of the Belgian Households
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 44
Segmentation based on sensitivities
In biology, specimen are classified based on their characteristics.
We can apply the same methodology on shoppers
SHOPPOLOGYClassification of the Belgian Households
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 45
Segmentation based on sensitivities
PRICE FOCUS
QUALITY FOCUS
BRAND FOCUS
PROMO SENSITIVITY
ADOPTING TO INNOVATIONS
MEDIA SENSITIVITY
PRODUCT SPECIFIC FEATURES
RETAILER
Classification of the Belgian Households
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 46
Segmentation based on sensitivities
150SPECIMEN FOUND IN
GFK DATABASE
Segmentation based on sensitivities
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 47
AD
OP
TIN
G T
O IN
NO
VA
TIO
NS
PR
OM
O S
EN
SIT
IVIT
Y
BR
AN
D
FO
CU
S
QU
AL
ITY
FO
CU
S
PR
ICE
FO
CU
S
Early: 30%
Late: 8%
Brand oriented: 42%
Not brand
oriented: 2%
Family of the price focussed quality seekers
Family of the price sensitive quality seekers
Family of the price indifferent quality seekers
Segmentation based on sensitivities
Indifferent:7%
Sensitive: 38%
Focus: 55%
Fair Quality:
3,5%
Premium
Quality: 3,5%
Fair Quality:
19%
Premium
Quality: 19%
Fair Quality:
11%
Premium
Quality: 44%
High promo sensitive: 38%
Low promo sensitive: 4%
High promo sensitive:11%
Low promo sensitive: 6%
High promo sensitive:8%
Low promo sensitive:2%
Early: 2%
Late: 7%
Early: 2%
Late: 5%
Early: 3%
Late: 8%
Early:2%
Late:4%
Early: 3%
Late:5%
Classification of the Belgian Households
High promo sensitive: 10%
Low promo sensitive: 7%
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 48
Segmentation based on sensitivities
Price Indifferent:7
%
Price sensitive:
38%
Price Focus: 55%
Price
Quality
Brand
Promotions
Innovations
Media
Product features
Price
Price
Quality
Product features Product features
Media
Media
Innovations Innovations
Promotions
Quality
Promotions
Brand
Brand
Rel
ativ
e im
po
rtan
ce in
pu
rch
asin
g d
ecis
ion
Shopper decision hierarchy
123
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 49
How we will try to answer the question
Some Macro-economics
How price aware are you?
Price as a driver for Aldi’s growth?
Classification of Belgian Households
An eye on price elasticity
Impact of price promotions
The closing question
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 50
At the end of this session…
We’ll answer the following question together:
Does the price focused shopper exist?
Option 1: YES, every shopper is price focused
Option 2: YES, and it concerns a large portion of the population
Option 3: YES, and it concerns a small portion of the population
Option 4: No, but this will very likely change in the near future
Option 5: No
Option 6: I have another opinion
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 51
More information?
Made by Sanne Van Hoef
Koenraad Dierick (BE)
Consultant Advanced Business
Solutions (ABS)02/558 0551 | 0473/33 47 70