“While Europe’s challenging economic conditions in the second half of 2011 bought renewed vulnerability and fragility to consumers and financial markets globally, some of the most positive news last quarter came from the world’s two largest economies—the U.S. and China—where confidence rebounded to Q1 2011 levels,” said Dr. Venkatesh Bala, Chief Economist at The Cambridge Group, a part of Nielsen. “Buoyant domestic consumption also maintained confidence levels in the large emerging economies of India, Indonesia and Brazil. However, slowing GDP growth within emerging economies and inflationary pressures would suggest some degree of caution for the year ahead.”

The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, tracks consumer confidence, major concerns and spending intentions among more than 28,000 Internet consumers in 56 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

Personal finances are improved, but spending is still restrained

More than half (52%) of global online consumers described their personal finances for 2012 as excellent/good, up from 50 percent in Q3 2011, but 65 percent indicated it is not a good time to buy, up one percent from the previous quarter.

“Overall, consumer discretionary spending will remain restrained and cautious in the first half of 2012,” said Dr. Bala. “Despite consumers becoming more confident about their personal finances for the year ahead, there is still a reluctance to spend, especially in the West; rising tensions in the Middle East and their impact on gasoline prices could further compound global consumer concerns and spending plans,” added Dr. Bala.

Consumer concern for the economy increased as a top fear among 18 percent of global respondents—an increase of six points from last quarter, which resulted in nearly two-thirds (64%) of consumers around the world indicating they believe they are in a recession, up from 62 percent last quarter. A growing number of online respondents in Asia Pacific (53%), Europe (74%), Middle East/Africa (74%) and Latin America (47%) indicated they believe they are in a recession. And while 86 percent of North Americans feel they are in a recession, it was the only region to report an improvement from 88 percent in third quarter.

• For more detail and insight, download Nielsen’s Q4 2011 Consumer Confidence report.

With half of respondents claiming to be overweight, it’s logical that half (48%) are also trying to lose weight. And for more than three-quarters (78%) of these consumers, the way to shed unwanted pounds is through diet. But do consumers understand what they are eating? Not necessarily. The study finds that half (52%) of consumers around the world understand nutritional information panels on food packaging only in part. Four-of-10 consumers understand nutritional labels “mostly” and seven percent say they do not understand them at all.

And what about trust—do consumers believe that claims on product packaging are accurate and truthful? Here too is ambiguity in the minds of consumers. Of 10 different product claims studied, only three received a complete believability rating by more than 20 percent of consumers (calorie content 33%, vitamin content 28% and fat claims 23%), highlighting a need to better educate consumers.

Support for Calorie Counts on Restaurant Menus

Consumers around the world show support for calorie counts on restaurant menus, with half (49%) of global respondents reporting that fast food restaurants should always include calorie information on menus, and 31 percent indicating that fast food restaurants should sometimes do so. Twenty percent of global online consumers think fast food menus should never include calorie data.

Consumers around the world have healthy eating on their minds and consumer packaged goods (CPG) marketers have an opportunity to help. Consumer-friendly nutritional labeling can be a powerful marketing tool as consumers are hungry for easy-to-understand information. Clearly there is a need and an opportunity for more education to help reduce the skepticism that is apparent around all parts of the globe. And there is a need to offer tasty and healthful options to satisfy both the mind and body.

• For more country-by-country insight and a look at healthy eating trends around the world, download Nielsen’s Global Report on Food Labeling Trends.

Just a few years ago, a major bank predicted that Indonesians would, on average, earn US$3,000 per capita by 2020. At the beginning of 2011, Indonesia hit that mark, beating the prediction by nearly a decade. While other countries in the region and around the globe have been affected by significant economic uncertainty, Indonesia’s economy is running at full bore, with a rapidly expanding middle class that is now the third-largest in the world. At 48 percent of the population and accounting for 44 percent of all FMCG spending in the country, middle class consumers are shaping today’s retail scene. Recently, during its 35^th Annual Marketing and Media Presentation in Jakarta, Nielsen provided nearly 1,000 clients and stakeholders with a snapshot of what Indonesia’s middle class is doing in terms of media usage and shopping patterns, and how companies can reach them effectively.

While all income groups have benefited from Indonesia’s accelerated growth, the middle class has enjoyed the most rapid advances in terms of spending increases and quality of life improvement, and increased demand in a range of consumer categories from home electronics and appliances to health and beauty products. The Indonesian middle class prefers to combine the convenience and fresh offerings found through traditional retail channels such as wet markets with the price-savings and expansive product offerings of the modern trade.

What are middle class Indonesians buying?
Some key facts about middle class shopping trends that retailers and manufacturers need to consider include:

• Fresh food makes up 37 percent of their monthly spending. Ice cream, noodles, and biscuits are the biggest movers thanks to product innovations.
• Value for money is key for nearly all (97%) middle class shoppers.
• 88 percent of middle class consumers said they want to experiment with brands.
• More than half (53%) shop in a modern trade outlet twice a month.
• They tend to visit the minimarket closest to their home, but promotions can disrupt their regular routine: 90 percent are looking for stores “with attractive and interesting promotions.” They also desire a diverse assortment of goods, friendly service and a comfortable environment.
• Mini-markets see the highest levels of spending, followed by supermarkets, with traditional retailers still highly important for fresh foods and the location convenience they offer.

What are middle class Indonesians watching?
Indonesians of all income levels love to watch TV, and nearly all (95%) middle class homes own a TV, with 96 percent watching programs every day. Other traditional media such as radio and newspapers are also popular, but are increasingly being consumed online, a trend driven primarily by Indonesian youth.  Internet usage and mobile phone ownership are surging, each increasing every quarter. Mobile penetration is already high, and purchase intent for smartphones is strong. These devices are fast becoming the primary platform for a variety of activities, such as watching video, accessing the Internet and connecting to social networks, opening a space for marketers and content providers to focus their efforts to include mobile in their content distribution. Nevertheless, relevancy and convenience to the consumers remain key to mobile content distribution.

Key media usage trends for middle class Indonesians include:

• Middle class Indonesian households watch an average of 4.5 hours of TV a day. Sports programming is the most popular, followed by drama series and other entertainment genres.
• Local content is appealing to middle class, which is why each city has its own newspaper.
• Almost a quarter (22%) of middle class consumers have Internet access, and spend 1.5 hours a day accessing the internet.
• Nearly three-quarters of middle class consumers in major cities (71%) have a mobile phone, with almost half saying they use the devices to access the Internet. More than one-third (35%) have a smartphone.
• Indonesians love social networking: 94 percent are connected to social networks, and 89 percent have a Facebook account.

Reaching the middle class
Given the abundance of opportunities in the marketplace, how can retailers, manufacturers, marketers and media companies connect with the middle class consumer? In a number of consumer goods categories, innovation has proven to be a growth engine. For example, in the ice cream category, the number of new varieties has surged by nearly 32 percent, with single packs the driver of sales. Volume sales of snack noodles surged 92 percent in the past year, thanks in large part to new flavors and a repositioning of the category (what used to be seen as a basic meal now is a great, convenient snack). The instant coffee market has expanded, and middle class consumers contributed 71 percent of volume growth within that category.  In contrast, categories that presented few innovations saw slower growth.

In addition to innovation, other trends seen among Indonesia’s middle class consumers include:

• Kids playing a role in modern shopping: 95 percent said that they “hardly ever refuse” the invitation from their kids to go to the minimarket.
• Convenience is key: today’s middle class consumers are pressed for time, with the demands of work and family life. Products that make life a bit easier are clear winners.
• Appeal to the fact that they are smart shoppers: Indonesians know how much items cost and where they are located in the store. Retailers must create a welcoming environment, promote value for money and win customers’ loyalty.
• Connect with consumers: they are increasingly online, and they discuss brands and products in that space. Retailers must strive to engage with them on social networks.
• Be relevant: tailor marketing – especially online and mobile campaigns – to consumers and their need-states.

The Global Consumer Confidence Survey, established in 2005, tracks consumer confidence, major concerns and spending intentions among more than 28,000 online consumers in 56 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism. Consumer confidence fell globally from 89 to 88, down for the seventh consecutive quarter. “We’ve been on a roller-coaster ride, with a lot of ups and downs and screaming along the way and the ride is not over yet,” said Carman Allison, director of consumer insights, Nielsen. “We’re about to hit another turn.”

Employment is Up – But So is Pessimism
A key component of national confidence is how Canadians perceive the job market. Fifty four percent rated job prospects as good or excellent, better than the global average (43%), but down from 58 percent in Q2 of 2011. Canadians also continue to grow more negative about how they view their personal finances. Globally, 51 percent of respondents felt good or excellent about the state of their finances over the next 12 months. That’s up one percent from the Q2 survey. Yet Canada trends in the opposite direction, with 54 percent of Canadian respondents rating their finances as good or excellent, down from 61 percent just three months earlier. “Canadians may be feeling more optimistic than the global average, amidst some positive economic trends in this country over the past year. Yet a combination of recent factors, such as rising prices of goods, stock market turbulence and bad economic news from the U.S. and Europe, are affecting consumer confidence,” noted Allison.

Discretionary Spending Flat
When asked what they are doing with spare cash, 37 percent of Canadians said they direct spare cash to paying off debts and another 30 percent pour it into savings. “Households are showing increasing fiscal responsibility. Spending is also hampered by this new reality; almost one-quarter of consumers (23%) report that no spending money remains after they’ve paid for the essentials,” Allison said.

• For more insights, download Consumer Confidence: A Canadian Perspective – Q3 2011

The growth rates of disposable resources in rural Russia are impressive. Even considering inflation rates of 8.8 percent (both in 2009 and 2010), real disposable resources of rural households grew by about 10 percent since 2008. Rural Russia is transforming. And this has awakened the interest of marketers looking for expansion opportunities.

Signs of Growth
If the maturity of telecommunication infrastructure is one of the key growth indicators for market development today, Russia’s rising Internet and mobile phone penetration rates show positive signs. Since 2009, the number of Internet users in Russia increased 30 percent, according to the International Telecommunications Union.

And while the highest Internet penetration of users is still found in urban Russia, development of Internet usage in rural Russia is growing rapidly. Growth rates in rural households are almost twice as high as in urban homes, which can be attributed to the recent deep transformations in rural Russia.

A Changing Retail Landscape

Retail infrastructure in rural and urban Russia differs considerably—an important factor when considering marketing and distribution strategies. There are almost twice as many retail outlets in urban Russia than there are in rural regions. And while the majority of retail stores in rural Russia are introduced as minimarkets and food stores of traditional trade, an interesting dynamic is emerging as growth rates of modern trade formats in rural Russia are high and they sometimes even surpass modern trade development in urban Russia.

In 2011, two of the biggest retail chains announced plans for further expansion in small communities. Expanding the modern trade universe in rural Russia will offer tremendous potential for FMCG-businesses to establish positions in the rural market.

And while the establishment of a strong market position in the rural landscape can be challenging due to logistical distribution difficulties, rural Russia is not an isolated part of the market. Market concentration levels in rural Russia, as well as the main market players for the majority of categories analyzed by Nielsen, are generally similar to the urban market, indicating that rural Russia is aligned with—not separate from—urban Russia.

The Battle for Shelf Space
Most retail outlets in rural areas are traditional stores and the sales area is typically limited, which makes the distribution of goods a battle for shelf space. To succeed, a deeper understanding of rural consumer demand is necessary.

Given the restricted shelf space in rural Russia, an increase in the number of brands and SKUs in retail outlets is limited. Increasing share in rural areas is mainly possible through product range streamlining and replacing brands and SKUs with new ones that are in higher demand. It is becoming increasingly important to better understand how rural and urban consumer choice differs. A comparison of the top 10 SKUs in urban and rural Russia suggests at first glance that consumer choice does not differ much.

On average seven out of the top 10 SKUs are the same in rural and urban Russia. However, the penetration of brand leaders in the urban market is significantly lower in rural Russia. This disparity between the demand of rural consumers and the supply of rural Russia generates a potential for those manufacturers who are able to enter the market with the product range that can satisfy the unmet demand of rural consumers.

“Fair” Price
As the average disposable resources of rural households per household member are only about 60 percent of those in urban households, rural consumers are price sensitive. However, a shopper in a rural store actually pays from one to 11 percent more than they would in an urban store. More challenges for direct distribution, a longer supply chain and higher transportation costs drive prices up in rural stores.

First-in Advantages
In the days of high competition, being proactive is one of the main secrets to success. The first to seize new opportunities will likely also be the first to profit the most. Rural Russia is no doubt a challenging market to satisfy, but it is also big and changing. And change always offers new opportunities to those who can see the latent and emerging demand and are proactive enough to satisfy it first.

Middle India, a region made up of approximately 400 towns each with a population of 1-10 Lac, are home to 100 million Indians and today constitute up to 20 percent of the country’s FMCG consumption. In fact, only the metros and Middle India have outpaced the all-India growth story in the last eight years. Even today, Middle India leads the pack across urban and rural segments for FMCG value growth rates.

Although some companies have partially penetrated the Middle India market, many tend to overlook smaller towns, ignoring the fact that these markets are perhaps easier to penetrate due to relatively sparse competition. Considering the expected growth of population in this area, rise in incomes and aspirations and the expected influx of people from even smaller towns to Middle India, this market is expected to create huge opportunities for marketers in the coming few years.

Why do Middle India cities matter?
These cities are ready to behave like the metros of tomorrow. Of the total INR 1.4 Trillion (280 Billion USD) in FMCG sales in 2010, goods worth about INR 287 Billion (5.74 Billion USD) were consumed by the Middle India population. This number makes up more than 20 percent of the overall FMCG sales, and 30 percent of the urban FMCG sales.

Middle India is also home to 30 percent of all urban stores, comprising over 900,000 million stores today. In addition to this, the annual per capita FMCG consumption of Middle India towns touched INR 2,800 (56 USD), which exceeded the national average by INR 1,600 (32 USD). This is a significant achievement for these smaller towns, considering the fact that the metros breached the INR 2,800 (56 USD) mark as recently as 2009.

Strong and vast market market potential
Out of 81 FMCG categories tracked by Nielsen, 49 product categories across personal care, over-the-counter drugs, household care, and food outgrew the all-India rate. Over 30 categories saw growth rates faster than 1.15 times the all-India rate. The top five fastest growing categories like diapers, scourers, liquid toilet soaps, acne preparations and air fresheners, which fared strongly in the past year, performed even better in 2011, indicating continued possibility of robust growth in the near future.

Interestingly, the focus on hygiene, health, personal grooming and convenience seems to be driving the rapid growth in these towns. Middle India is also accepting evolved categories like breakfast cereals, air fresheners, acne preparations, and liquid toilet soaps. The metros took on to many of these categories in a big way just a few years ago and Middle India does not want to be left out.

These developments bode well for FMCG companies, especially in light of the fact that this market is still in a nascent stage, and is expected to grow substantially in the next five years. The rise in demand for consumer products and relatively lower penetration of FMCG companies in these towns means that competition is not as fierce in these towns as would be in larger metros. A few major players with adequate capital and wide distribution networks are already cashing in on the opportunity. The annual turnover of the top ten FMCG players from the Middle India segment rose more than 42 percent by INR 35.8 Billion (716 Million USD) in just two years between 2009 and 2011.

For more detail and insight, download Nielsen’s Managing the Middle India Gold Rush report.

With 50+ million active social media users, Indians spend more time on social media than on any other activity on the Internet, according to Nielsen. In fact, 80 percent spend more than 15 minutes per day on social media every day. And social media usage on mobile phones is expected to exceed those accessing similar sites on personal computers in the coming year. But is this audience engaged?

At the Nielsen Consumer 360 Conference in New Delhi, India, Farshad Family, Nielsen Managing Director of Media, discussed how brands can effectively break away from the pack in order to differentiate and improve social media engagement levels.

More Consumers ≠ Higher Engagement
A Nielsen analysis among brands in the telecom, soft drink and auto categories reveals that a higher brand-page count does not translate to a higher level of engagement. In the study, engagement was defined as how a consumer interacts on the brand page: visiting, downloading and using an app on a page and/or sharing, commenting and “liking” updates on a timeline.

On a scale of one to 10, where a level of 10 is the most engaged, a Nielsen Engagement Index shows that all consumers in the study cluster around a score of seven—regardless of whether a brand page has one or 4.5 million fans. Clearly, brands are not differentiating on engagement levels. But how do I break away from the pack?

Top Six Drivers of Engagement
Company interaction and brand aspiration are the two most important drivers of social media engagement. Other key factors of engagement success include offering free giveaways, posting lively discussions and general updates about the brand, having a “hip” brand and being “liked” by friends.

The consumer is open and willing for engagement, but marketers need to experiment and innovate with brands in order to build commitment. A Nielsen survey reveals that one in six respondents want brands to share updates with them on new products and services. More than half (53%) want announcements on sales/discounts and half want to hear about the latest industry trends. Consumers also want brands to provide tips and tricks about how to maintain and use products/services (48%), conduct a greater number of contests (42%), resolve concerns (41%), create more utility applications/games (35%) and conduct more conversations (31%).

And engagement is influential in the buying process. Of the 39 percent of consumers who consider a friend’s recommendation for a product on a social networking site when making a purchase decision, three out of four will often/sometimes purchase the products based on the review.

During the session, Brad Smallwood, Global Head of Measurement & Insights at Facebook, shared four key insights into what makes a good social media campaign.
He said to start with the concept of social. “Social should be baked into everything.” Smallwood said to speak with an authentic brand voice and not try to be something you are not. “Nurture relationships and focus on understanding where they are in the lifecycle,” he said. “And continue learning – listen to the community and evolve the campaign accordingly.”

Mobile is Changing the Game
In India, mobile is going beyond voice and short-message-texting capabilities as the number of active mobile Internet users continues to climb. By the end of next year, while more than 40 million users will access social media sites via personal computers, over 60 million users will access the sites via their mobile phones. And as smartphone prices continue to fall, penetration levels will climb.

Indian consumers are willing to spend more on mobile handsets. A Nielsen mobile insights survey finds that non-smartphone users are willing to pay 7200 INR on their next handset, which is below the current average smartphone pricing of 5,500 INR, suggesting that a smartphone will likely enter the consideration set for consumers in 2012.

In fact, Internet and 3G rank highly among Indian consumers on features most sought after in their next phone. After camera and FM radio, Internet ranks third with almost one-in-four (23%) consumers indicating a desire for this capability. Today, social networking is already prevalent on the mobile screen. Among smartphone users, three-of-four use social networking and spend more than two hours browsing and downloading applications and entertainment.

“The Indian consumer’s quest for a new phone is almost entirely feature driven and while the camera and FM radio remain favorites, consumers are now also looking for Internet connectivity via their mobile phone, hoping to finally connect to the growing online community,” said Farshad Family, Managing Director of Media, Nielsen India. “It is evident that going forward, the Indian consumer’s aspiration to upgrade will also be a strong driver.”

The Future is Promising
A confluence of factors—a growing social media user base, an increasing smartphone penetration and a mounting consumer desire to connect—is creating a perfect storm of opportunity for brands to make social media an integral part of the marketing strategy with engaging programs that elevate and differentiate their brand from all the rest.

During the session, Family moderated a cross-industry panel of marketers to discuss how brands are using digital platforms to successfully drive better engagement for brands. Vikram Sakhuja, CEO, Group M, Anupama Ahluwalia, CMO, Coca-Cola India, Arpita Menon, Head of Media Planning & Buying, Star TV and Sahana Sarma, Partner, McKinsey & Company agreed that you need to make the interaction special for the consumer. “This is a long journey and there are no short-term solutions,” said Ahluwalia. “You need to take the consumer on board and continue on the journey with them.”

Innovation provided a strong underlying thread of discussion at Nielsen’s Consumer 360 event in India. Mitchell Habib, Nielsen’s operations and innovation chief, told attendees that disruptive innovation was critical to lasting business success and outlined ways it could open new markets in emerging economies. Deepak Gulati, CEO of Tata Docomo, and Banoja Acharya, Nielsen India’s VP, Client Services, shared specific examples and innovation strategies for India.

Launching New Products in India is a Long-Term Play
To succeed in India’s dynamic market, fast-moving consumer goods companies (FMCG) are investing in innovation to take advantage of the rapidly evolving retail landscape and the changing purchasing behavior of consumers.

While new consumer product launches and innovations have proliferated in India over the past decade, FMCG companies can better ensure successful launches with three-to-five year launch plans. “The truly innovative products, have a longer gestation period, need significantly higher investment and usually guarantee slower, but higher returns in the long run,” said Acharya.

Logistical Challenges
Distribution logistics in India hamper first-year sales, as availability levels to Indian consumers are between 75–200 percent lower than in fully developed markets. And, significant marketing support is required, as product launches in India generally require sustained high levels of advertising spending to reach the necessary threshold number of consumers for ROI targets.

After year one, and into years two, three, four, and beyond, however, successful new products and categories reach an inflection point when sales and volume start to rise exponentially. While it takes time to achieve inflection points, the benefits of waiting are certainly sweet—especially once new launches reach their maxima.

However, not all categories are alike. A Nielsen analysis of 100 new product launches shows that the growth curve is different across categories. New launches in the impulse food category have a shorter purchase cycle and typically generate higher interest among consumers. As such, they reach their point of maxima fastest—in as little as three–to–four months. Loyalty plays a big part in personal care products as consumers are less willing to switch brands. These products take the longest to develop—anywhere from seven to 24 months depending on the category. And household care products reach their maxima somewhere in between as these products are driven largely by benefit rather than emotion.

A Different Kind of Competitive Advantage
A unique phenomenon exists in a consumer-driven market like India where competition is not necessarily bad for new brands within the same category. “If multiple brands are introducing similar products with proper marketing support, the new category experiences a larger share-of-voice in the minds of Indian consumers,” said Acharya. “When this occurs, the category—and all the brands within it—can reach the inflection point much quicker on the product launch timeline.”

For example, as several brands entered the anti-aging category, ad spends combined to create a multiplier effect in share-of-voice, significantly boosting sales volume for the category and all the brands in it.

Serendipitous competition will not always be the case, and even when it exists, the product innovation timeline in India takes longer than in developed countries. To compete in India, FMCG companies must plan their launches and marketing budgets accordingly, availing themselves of all available tools to ensure their products—whether food/beverage, household, or personal care products—resonate for the long term.

Play to Strengths – Don’t Ignore Weaknesses
Whether launching a new product in India—or anywhere else in the world—you are only as strong as your weakest link. Based on Nielsen research and development over a five-year period of new product launches, there are 12 things that every new product must do to succeed. And while a product does not need to exceed expectations across all factors, it must do well enough on all to ensure success.

1. Offer true innovation
2. Get noticed
3. Land your message
4. Communicate with focus
5. Be relevant
6. Be better
7. Be credible
8. Limit the battles
9. Be in the right places
10. Win the value equation
11. Deliver on product promises
12. Be strong in the long run

Given the opportunity that India’s burgeoning middle class represents for both local and multinational FMCG operations, the strategic planning, marketing commitment, and patience required for new product success are surely worth the efforts and expenditures.

With the face of the United States changing, the attitudes and behaviors of women from all backgrounds is increasingly important. Hispanics are now the fastest growing ethnic group, a trend that has tremendous ramifications on media, retail and manufacturers now and in the years ahead. Optimism was highest among African American and Hispanic women, especially when it came to how they viewed the opportunities they have had compared with those of their mothers.

The optimism does not stop with the women of today: they are extremely positive about the outlook for the women of tomorrow – their daughters – and expect them to have more opportunities available to them than they themselves have now.

Media and Mobile
Despite the stereotype that men are the primary users of media and technology, American women are heavy users of technology – even if they aren’t early adopters. Women of all ethnicities use media in similar ways, with one key exception: smartphones. Just 33 percent of Caucasian women have a smartphone in their household, compared to penetration rates in the 60s for women of other ethnicities.

For more insights, download Women of Tomorrow: U.S. Multicultural Insights.

On the flip side, when budgets are reduced by 10 percent, discretionary spend—especially in the areas of ‘apparel’ (-21%) and dining out’ (-18%)—are reduced. Consumers also indicated a spending cut back on ‘electronics and appliances’ (-14%). “If the global economic climate worsens, these three sectors appear to be particularly vulnerable,” continued Dr. Bala.

In the event of having to make do with a smaller budget, respondents also indicated a reduction in savings/investment by 10 percent. “The asymmetry with expansion suggests that while respondents would like to preserve or add to their savings and investments, they also recognize that they may be bumping up against harder economic realities,” said Dr. Bala.

For more detail and insight, download Nielsen’s Q3 2011 Consumer Confidence report.