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More Optimistic Consumers Loosen Purse Strings

May 3, 2011

More Optimistic Consumers Loosen Purse Strings

More Optimistic Consumers Loosen Purse Strings

• Fewer consumers are switching brands to catch a sale and trading down to private label options, hinting at glimmers of optimism in a marketplace still marked by high levels of caution and frugality, according to findings of a new survey from SymphonyIRI. However, the number of consumers engaging in preplanning activities, such as coupon clipping and list making, remain virtually unchanged and are very much a part of consumers’ grocery shopping rituals.

These results point to conservative, yet cautiously optimistic, shopping strategies that characterize SymphonyIRI’s inaugural MarketPulse survey, which is an evolution of its Competing in a Transforming Economy analysis series. SymphonyIRI released survey results at its Summit 2011 conference, which was held at Miami Beach’s Fontainebleau Hotel.

“An economy in transition to recovery is as tricky to navigate for CPG, retail and healthcare leaders as an economy moving into recession,” said John Freeland, president and chief executive officer, SymphonyIRI. “Some shoppers are retaining their frugal ways, others are spending more freely across the board and others still are spending more on some types of products, but remaining tight fisted about others. They are also re-evaluating where they purchase their products and updating their definition of value.”

“This review of product and retail value proposition provides an outstanding opportunity for manufacturers and retailers willing to analyze carefully discrete shopper microsegments and understand the motivations and drivers of each,” continued Freeland. “SymphonyIRI’s new quarterly MarketPulse survey will provide decision makers with an important barometer on shopper activities.”

Statistics from SymphonyIRI’s MarketPulse survey point to consumers holding the purse strings just a bit less tightly in their day-to-day lives:

• 52% try to make personal care products last longer, versus 63% in 2009; and

• 49% visit hair salons less often, as opposed to 55% last year.

Still, grocery shopping is characterized by very deliberate and well thought out behaviors. For example, two out of three shoppers today are making shopping lists prior to visiting the store, which is consistent with trends in 2010. Other survey results indicate that consumers are shifting back to their favorite brands, though value remains essential:

• 38% of consumers in 2011 are giving up their favorite brands to save money, versus 46% in 2010;

• 64% in 2011 state price has become a more important consideration than convenience in brand purchases, a decline of six points versus 2010; and

• 36% of consumers are actively seeking private label brands to save money today, versus 44% in 2010.

SymphonyIRI’s MarketPulse survey also researched respondents’ predictions regarding their personal financial situations during the next 12 months. In other findings, consumers are beginning to embrace new media, such as social networks and brand websites. In the coming year, nine percent of consumers expect that their brand decisions will be influenced by information gathered via website or e-mail, versus five percent for blogs or social networking sites. These figures remain largely unchanged versus 2010.

SymphonyIRI will provide new survey results at the end of each calendar quarter, covering shoppers’ behaviors and attitudes as it directly relates to their strategies for learning about, purchasing and utilizing CPG and healthcare products, as well as information regarding perceptions of economic conditions and the ability to provide for their families.

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A Banner Year for Coupons

• Forget about 2010 being the year of the Golden Tiger — it was the year of the coupon.

Consumer packaged goods (CPG) manufacturers offered recession-weary consumers some $485 billion in savings via coupons, according to a report on 2010 coupon usage. This represents a 13.9% increase over the prior year and 47.4% growth compared to five years ago, according to the NCH Marketing Services 2010 Coupon Facts Report.

“We have seen significant changes to shopping patterns, which have now been established as new habits and routines,” said Suzie Brown, chief marketing officer at Valassis, parent company of NCH Marketing Services. “Consumers’ continued interest in coupons and savings has been influenced by concerns over their own personal economic situations, and as a result, they are using more coupons, seeking savings wherever they can, combining print and digital offers and permanently becoming strategic shoppers.”

In 2010, marketers once again distributed more CPG coupons than the prior year, reaching 332 billion — the largest single-year distribution quantity ever recorded in the U.S., exceeding the prior record set in 2009 by 6.8% or 21 billion coupons.

Nearly two-thirds of all coupons distributed in 2010 were for grocery products, up 8% from the prior year to 216 billion coupons. The remaining coupon offers in 2010 — 116 billion coupons — were for health & beauty care (HBC) products, up 4.5% from the prior year. According to the report, seven of the top 10 categories with the highest growth are non-food categories, which can be attributed to marketers’ desire to make these often-times discretionary purchases more desirable.

In addition, the report found that the average face value of CPG coupons distributed in 2010 increased 6.6% to $1.46, and 26% of all CPG coupons issued in 2010 required the purchase of two or more items to obtain the offer discount.

According to the report, the average coupon face value distributed for HBC products was $1.94, up 6.6% from the prior year. However, just 13% of HBC coupons required multiple purchases to receive the discount.

According to the NCH Coupon Facts Report, overall, 87.7% of all CPG coupons were distributed in 2010 via the freestanding insert (FSI). Total FSI total growth in coupons was 19 billion, the largest volume increase of all media. The second largest share of coupons distributed was via in-store media, amounting to 5.2% of the 2010 total.

Digital coupons, including both paper and paperless formats, continued to grow in 2010 as marketers embraced these methods to reach a new audience. In total, NCH measured a 37% increase in the number of digital coupon offers, the largest increase of all coupon media types.

A Continued Shift to Less InvasiveCosmetic Procedures

• According to survey results released by the American Academy of Facial Plastic and Reconstructive Surgery (AAFPRS), 75% of the procedures performed by the Academy’s surgeons in 2010 were non-surgical, highlighting a trend that more people are choosing non-surgical procedures to delay more invasive surgical procedures.

The results were released at the AAFPRS Rejuvenation of the Aging Face Meeting held in January.

According to AAFPRS, the most common non-surgical procedures last year were Botox and hyaluronic acid injections. The most common non-surgical procedures for women under age 35 were Botox injections (65%, up from 58% in 2009), hyaluronic acid injections (51%), microdermabrasion (23%) and chemical peels (22%).

Women between 35-60 most commonly underwent brow lifts, facelifts, blepharoplasty (eyelids), Botox, chemical peels, and filler injections, which all showed at least a 5% increase from 2009. Filler injections and chemical peels increased 12% and 26%, respectively, since last year, said AAFPRS.A majority of surgical procedures, including facelift, revision surgery, rhinoplasty, forehead lift, chin augmentation, lip augmentation and scar revision, increased in cost from 2009, which may be one reason why people opted for less invasive surgeries, according to AAFPRS.

In addition, surgeons reported performing fewer lip augmentations, hair transplants and collagen/cosmoderm/cosmoplast procedures in 2010.

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Customer Loyalty in the Cosmetics Market

• For the brands tracked in the cosmetics category of the 15th annual Brand Keys Customer Loyalty Engagement Index (CLEI) survey, attributes relating to “experience” and “authentic innovation” in products and services are exerting the strongest impact on customer decision-making, category-expectations and engagement with brands.

According to the survey, conducted by New York-based brand and customer loyalty and engagement consultancy Brand Keys, brands in the cosmetics category that were best at creatingcustomer delight were Lancôme, Mary Kay, Elizabeth Arden, Clairol, L’Oréal, Aveda and Suave.

“This evolution has been accelerating for some time. Brand value has increasingly been defined not through the narrow lens of price, but in terms of the total experience that consumers have when they interact with a given brand. This year’s results demonstrate that concept has truly taken hold, showing its greatest increase in expectations in the purchase drivers centered on attributes that most strongly impact the customers’ overall experience,” noted Robert Passikoff, Brand Keys founder and president.

“The CLEI data is predictive of coming shifts in the consumer marketplace — 12 to 18 months before it shows up in traditional research. Given the levels of commoditization we’ve witnessed in product/service delivery and pricing/promotion strategies, it is no surprise consumers are looking for their favorite brands to make a real difference. Consumers know the brands, know what they do, and know what they’re willing to pay for them,” noted Passikoff. “They’re looking for delight.”

According to Passikoff, innovation is key, whether it’s innovation in the products themselves, or innovation in how those products are put into the hands of consumers — from rapid delivery to product introductions — and the after-life of service and support that the consumer experiences.

“And, consumers want meaningful innovation that results in a higher level of experience. Satisfaction has never been more cost-of-entry; delight is the new differentiator,” Passikoff said.

This year, consumers’ skyrocketing desire for experience and authentic innovation are exerting the strongest impact on customer decision-making and profitable engagement with the brand. Brands able to meet — even exceed — these expectations become category leaders.

“This only matters, of course, if you’re keeping score by counting sales and profits, and not merely tracking awareness levels,” noted Passikoff.

“At a time when cosmetic brands are struggling to differentiate themselves and find ways to profitably engage their customers, the changes this year serve as a real benchmark for marketers. Products and services that respond with a truly consumer-centric view of their category — delighting the customer — based on predictive loyalty metrics, stand to gain the most, and establish themselves as this decade’s brand leaders,” he concluded.

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