Global and Regional Mega-Trends: Understanding Consumer Attitudes

and Behaviors in Value

CS0010AB – Sample Pages May 2015

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Table of Contents

Key findings • Executive summary • Key findings from the Value Mega-Trend report

Introduction to Canadean’s consumer trend framework • Overview of the sub-trends • Overview of the sub-trends that form the Value trend

Pessimism and economic uncertainty • Consumer attitudes towards value for money • Financial concerns among consumers and its effect on consumer behavior • How economic and financial uncertainty will impact the search for better value for money products • Country and regional analysis regarding financial wellbeing • Impact of price consciousness among consumers • Country and regional analysis regarding short-term job security • Impact of improving economic conditions on value products • Country and regional analysis regarding • Key recommendations for manufacturers

Discount stores and their effect on the search for value • What consumers associate with better value for money • Brand competition in the market • Country and regional analysis regarding discounters • Discounters UK case study • Private label perceptions • Country and regional analysis regarding brand purchasing

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Table of Contents

Discount stores and their effect on the search for value (cont.) • Country and regional analysis regarding private labels • Impact of price on brand experimentation • Country and regional analysis regarding shopping habits • Attitudes towards products and promotions • Country and regional analysis regarding big grocery brands • Key recommendations for manufacturers

Retailer behaviour and competition in the market • Why consumers choose recognized brands • Country and regional analysis regarding consumer wellbeing and happiness • Categories consumers are likely to trade-up in • Country and regional analysis regarding trading-up • Key recommendations for manufacturers

Influence of price and promotion on consumer behavior • Impact of price and promotions • The rise of the savvy shopper • Country and regional analysis regarding money-saving techniques • Consumer use of price comparison websites • Country and regional analysis regarding price comparison • Country and regional analysis regarding promotional offers • Impact of price comparison websites on retailers • Price comparison website examples and analysis • Role of technology in helping provide value for money • Country and regional analysis regarding use of technology when shopping • Key recommendations for manufacturers

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Table of Contents

Trust and ethics vs. value • Impact of trust and ethics on value-seeking consumers • Country and regional analysis regarding trust in non-alcoholic beverages • Key recommendations for manufacturers

Appendix

• About Canadean

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Reasons to buy this report

This report brings together consumer analysis to provide actionable insight into the behavior of consumers. This is based on

Canadean’s unique consumer data – developed from extensive consumption surveys and consumer group tracking.

Consumer trends analysis An overview of the key demographic groups driving

consumption, and what their motivations are for doing so. It

helps formulate strategies that enhance customer loyalty at

the brand and retail level by understanding what genuinely

increases perceptions of maximum value

Future outlook The report provides insight to predict the "so what?"

implications, and analysis of how the need states of

consumers will evolve in the short-to-medium term future.

Recommended actions Strategic recommendations of how to capitalize on the

evolving consumer landscape are offered, allowing product

and marketing strategies to be better aligned with the

leading trends in the market.

Marketing strategies Determine new and innovative ways to target consumers

via promotional incentives that will encourage impulse

purchasing, particularly as current methods are becoming

increasingly less effective with consumers.

Demographic analysis Key demographic groups driving consumption within the

FMCG market are identified. The figures showcase what is

going on in specific age groups and genders and offers

insight into how to target these consumer groups.

Strategic analysis Develop strategies to either stave off the threat of private

label or help continue to improve favorable perceptions in

the eyes of the consumer. Develop strategies that offer

maximum value added for consumers but not at the

expense of damaging any premium credentials

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Canadean has identified nine mega-trends that drive consumer choice and these can be broken down into 20 sub-trends

Aspiration

Beauty

Better Value

Busy Lives

Changing Age Structures

Changing Life Stages

Connection

Experience Seeking

Fun & Enjoyment

Individualism

Indulgence

Media

Technology

Trust

Urbanization &

Migration

New Gender

Behaviors

Personal Space & Time

Quality Seeking

Health

Ethics

MEGA-TRENDS:

CHANGING

LIFESTAGES

CONNECTIVITY

CONVENIENCE

ETHICS

EXPERIENCE &

ENJOYMENT

HEALTH &

WELLNESS

INDIVIDUALITY

TRUST

VALUE

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XX% of

consumers in

the Asia-Pacific

are confident

about their

levels of

financial

wellbeing over

the next twelve

months

Key Findings from the Value Mega-Trend report

XX% of North American

consumers use vouchers or

coupons at the checkout to get

money off groceries

XX% of consumers in the

Middle East and Africa look to

take advantage of promotional

offers when grocery shopping

XX% of consumers in

South America think trust is

important when it comes to

choosing what non-alcoholic

beverages to consume

XX% of European

consumers shop at

discounters for groceries

XX% of European consumers are

more likely to choose cheaper

options compared to five years ago

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The Better Value sub-trend breaks down into a number of different types of attitude and behaviour traits

Focus on value

While always a major issue for consumers, the

importance of value for money has intensified in

recent years, having a significant impact on

consumption patterns.

While changes were originally seen as a knee jerk

reaction to the recession, it is now apparent it is a

long-term change driven by rising living costs, more

choice than ever, and greater trust in alternative

brands. Consumers are taking greater

consideration as to what constitutes good value for

money and are showing less brand and product

loyalty as they are willing to switch to alternatives

they associate with better value for money. This is

particularly problematic for brands, as trust in

private label and discount brands continue to rise.

Increased focus on value for money will be a long-

term trend, with consumers both willing to trade-up

and down for products they perceive to offer more

value.

As consumers place more emphasis on obtaining

maximum value for money, they are also looking to

get maximum use from the groceries that they

consume, looking to avoid any unnecessary waste

such as products going past their sell by dates or

disposing of products before they are fully used.

This is resulting in consumers looking for alternative

consumption methods, such as using products

more sparingly or being more creative with products

that they have at their disposal to avoid having to

throw them away. It is also making consumption

occasions more considered, with consumers trying

to cut back on consumption occasions they deem

non-essential, and considering how many

consumption occasions they can enjoy from a

product.

Enabling products to become less easily perishable

so that consumers can get maximum usage from

them will become of even greater importance in

order to help consumers feel they are receiving

value.

Waste management

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Consumers across the world will continue to seek the best value for money, given weak economic and financial conditions

More than seven years after the start of the global financial crisis, the squeeze

on finances and feelings of uncertainty are still very true and real for many

economies, with several countries continuing to record weak economic growth.

This has changed consumers shopping behavior, irrespective of the actual

health of their personal finances: confidence has declined, causing consumers

to cut back, and they are only slowly increasing their spending as the

economic news becomes more positive.

Weak consumer confidence has not been helped by rising food-price inflation

as well as an increase in the general cost of living. To combat this, consumers

have been on the search for products that offer better value for money. This is

true across the FMCG range, with shopping habits having transformed over

the last decade. There has been a rise in the number of ‘savvy shoppers’,

defined as being shrewd, meticulous, and constantly on the lookout for the

best deals. Consumers have felt the need to adapt their shopping habits to

manage their finances and stay afloat.

This is especially true in staple categories, with consumers most likely to feel

the effects of food inflation in these categories due to the frequency of

consumption. This is resulting in consumers becoming more price conscious

and showing a greater willingness to shop around for alternative brands.

Consumer attitudes towards store-own brands and also discounter stores

become increasingly favorable, as they successfully meet the demand for low

priced products.

Desire for better value

Squeeze on finances

Uncertain future

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Consumers in the Middle East & Africa feel that they face the greatest levels of financial concerns over the next twelve months

How confident are you about your levels of your

financial wellbeing over the next twelve months?

(Confident/ Very Confident)

While at least half of consumers in most regions are

satisfied with their financial outlook over the coming

year, this is significantly lower in the Middle East &

Africa. The outcome of this low level of confidence is the

search for products that are low in price but, at the same

time, provide excellent value. Family sizes in the Middle

East & Africa are usually large, which makes bulk buying

and stocking up important shopping tactics. This

provides value and means fewer shopping trips,

reducing impulse purchases.

While confidence is lowest in the Middle East & Africa,

results in other regions aren’t high either. Confidence

will increase as the global economy improves, but

consumers will remain value-focused for the next few

years.

North America

Europe Asia-Pacific South America

Middle East/Africa

Confident Very Confident

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Economic and financial uncertainty leads consumers to purchase products positioned around providing better value for money

A defining feature of the macroeconomic and financial

market situation since the start of the crisis in 2008 has

been an unprecedented level of uncertainty. Uncertainty in

the market has had a knock-on effect on consumer behavior

and consumption levels. While this is only one variable that

consumers consider when making decisions regarding

spending levels, its role and influence should not be under-

estimated. Uncertainty leads consumers,

regardless of background, to limit their consumption; for

example affluent consumers are also seen to be chasing

value for money products even though their finances remain

relatively robust, helping to widen the appeal of value

products and the brands and retailers that offer them.

Uncertainty in financial markets has abated in recent years

on the back of decisive policy measures, however indicators

suggest that uncertainty still remains unusually high. High

uncertainty gives consumers an incentive to substitute

products in favor of those that may be deemed as being

inferior products, thus depressing economic activity.

“Economic theory suggests that

uncertainty has a detrimental effect

on economic activity by giving

agents the incentive to postpone

consumption until uncertainty is

resolved”

- European Commission

report Assessing the

impact of uncertainty on

consumption, 2013

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Consumers in XXX and XXX are most confident regarding their short-term financial wellbeing

How confident are you about your levels of your financial wellbeing over the next twelve months?

(Very Confident/ Confident)

Canada

XX% XX% XX% XX% XX% XX% XX% XX% XX%

US Austria Belgium Bulgaria Czech R. Denmark Finland France

Germany Greece Hungary Ireland Italy Neth. Norway Poland Portugal

S Korea Argentina Brazil Chile Colombia Mexico Peru Venezuela

S Africa KSA UAE

Romania Russia Slovak R Spain Sweden Turkey Ukraine UK Australia

China Hong Kong India Indonesia Japan Malaysia N Zealand PHI Singapore

North America Europe Asia-Pacific South America Middle East/Africa

Thailand

XX% XX% XX% XX% XX% XX% XX% XX% XX%

XX% XX% XX% XX% XX% XX% XX% XX% XX%

XX% XX% XX% XX% XX% XX% XX% XX% XX%

XX% XX% XX% XX% XX% XX% XX% XX% XX%

XX% XX% XX%

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Key recommendations for manufacturers

Food Soft Drinks Alcoholic Drinks Cosmetics & Toiletries

Pro

du

ct

New

Formulation

Better

Positioning

Packaging

Development

Target

Occasions

Ensure products hit a

number of consumer

need states to reduce

price sensitivity and

make consumers feel

they are getting value

Position products as an

occasional treat to act as

both a reward and

coping mechanism for

daily stresses to justify

consumption

Packaging needs to be

upscale and emphasize

reward to capture

consumers and

encourage impulse

purchasing

Specifically focus on

mid-afternoon and

evening consumption

occasions when

consumers are more

prone to indulge

Manufacturers can use

exotic and nostalgic

flavors to help create an

emotional connection

with consumers and

enhance wellbeing

Positioning needs to be

around escapism and

nostalgia to remind

consumers of happier

times and help alleviate

feelings of stress

Packaging needs to be

both premium and

convenient so that

consumers can enjoy a

treat as a coping

mechanism anywhere

Manufacturers should

specifically focus on mid-

afternoon occasions and

focus on enjoying a

small treat to help break

up the day

Manufacturers need to

emphasize the use of

premium ingredients to

help products be

positioned as a genuine

treat

Positioning needs to be

around escapism and

relaxing from the

pressures of everyday

life, even if only for a

temporary moment

Packaging needs to help

emphasize premium

credentials such as the

temperature of the

beverage and the

freshness of the taste

Manufacturers should

encourage consumers to

enjoy a small indulgence

on a regular basis,

focusing on quality over

quantity

Products need to be

positioned with

ingredients that offer

maximum efficacy to help

maintain appearance in

times of stress

Products need to be

positioned around being

a coping mechanism to

help cope with everyday

stresses whilst

maintaining appearance

Packaging needs to be

positioned around

convenience so that

products can be applied

at any time in a stressful

situation

Products need to be

positioned as an

everyday survival tool to

help consumers

maximize appearance

when feeling stressed

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