While U.S. consumers continue to take measures to adjust to rising gas prices, these actions are not as drastic as those taken in previous years. Unlike 2008, when the average price for regular gas jumped above $4.00 a gallon, today’s improving job market and strengthening economy are helping consumers cope better than during this recent economic downturn.

In the spring of 2011, consumers have adjusted to a new spending reality, but actions taken to cut down on spending habits, such as eating out less, buying less expensive grocery brands and doing more things at home are less prevalent compared to the summer of 2008 and are similar to the actions taken in the summer of 2010 when prices were well below $3.00 a gallon.

Trip compression, however, continues to dominate as a key strategy for 67 percent of households looking to save on high gas prices. And while this level is down from 2008 levels (78%), it is up four percentage points from last year. Additionally, nearly half of consumers (46%) will continue to seek lower priced gas stations and eat out less (45%) and over one-third (36%) will shop closer to home to offset high prices at the pump. Coupon clipping is also part of the gas-price offset strategy for 36 percent of households in 2011 – up four percentage points from 2008.

Another positive sign that the economy is slowly heading in the right direction is that U.S. automakers reported a solid April, with the big three auto manufacturers posting healthy sales gains – up an average of 22 percent. Small, gas-thrifty vehicles were not necessarily the biggest sellers.

Shop-to-Save Strategies Decline

One in five households (21%) say they are reducing spending to a great degree, which is down from one in four (26%) in 2008. However, with gas prices about $.90 higher per gallon than year a ago, this is an increase from 18 percent of households reducing spending to a great degree in 2010 – indicative of how some households are still feeling considerable pain at the pump.

Also in decline are saving strategies consumers deploy to lower costs: 21 percent say they are shopping more at supercenters, which is down eight and five percentage points from 2008 and 2010, respectively. Currently, 12 percent say they are buying larger economy sizes – down four percentage points compared to 2008/2010 and ten percent say they are shopping at warehouse clubs – down three percentage points from 2008/2010.

More and more savvy shoppers are taking advantage of incentive programs linked to grocery spending to buy gas. 28 percent of consumers say they are using their grocery shopper loyalty cards to save up to 10, 20 and 30 cents on a gallon of gas by redeeming points at participating gas stations. This savings is not only helping to take the pain out of the pump for consumers, but it is also helping to drive traffic for retailers.

What’s Next

With four out of six households saying they are combining errands to reduce their driving and control their gas spending, some retailers and manufacturers will feel more pain than others. Eating out less and continued interest in at-home and value-oriented activities is a sure sign that it is time to turn the volume up on product solutions and merchandising activities to capture sales from at-home consumption.

Manufacturers and retailers should offer consumers meal deals, recipe ideas, at-home entertainment options and tips & tricks for at-home personal care and in-home cleaning products. Retailers with gas saving promotions are in the driver’s seat; those without programs need to pull other levers to offer value – be it convenient location, value proposition or unique offerings, now is the time to tout those benefits.

With recent declining global oil prices and falling demand as U.S. consumers are driving less to cope, gas prices may fall about $.50 cents by Memorial Day, which would be a welcomed change. However, if gas prices remain elevated throughout the summer, chances are that consumers will react with greater severity – just like they did in 2008.

Unlike its U.S. neighbor, where consumers are taking less drastic measures to deal with rising gas prices than in previous years, Canadians continue to feel the pain at the pump. A recent Nielsen study shows that 86 percent of Canadians indicate that rising gas prices are impacting driving and shopping habits – a 31 percent increase since 2010.

Gas prices in Canada have increased 30 percent in the past year, which is costing the average household an additional $73 per month for a monthly outlay of $300. The current average price for regular gasoline is $1.31 per litre, which is 30 percent higher than comparable U.S. prices. When prices exceed $1.75 per litre, the monthly gas bill will actually exceed the grocery bill (average monthly grocery bill is $403).

Gas prices vary by region, from a current average low of $1.22 per litre in New Brunswick to a high of $1.38 in Newfoundland. Consumers in eastern Canada are impacted the most.

No Place Like Home

Rising gas prices mean consumers are likely to opt for more stay-at-home activities. More than half (55%) of Canadians say they plan to do more things at home. One-third of households will consider grocery home delivery (32%), shop close to home (31%), seek out low-priced gas stations (31%), use lower grades of gas (31%) and 14 percent will eat out less often.

Nielsen data shows that with the recent rise at the pumps, overall consumer shopping trips are down. While dollars per trip are slightly up in the first quarter (+2%) compared to fourth quarter results, shopping trips have decreased five percent in the same time period. One coping mechanism to minimize drive time is using a carpool, which is being deployed by 24 percent of households.

Shop-to-Save Strategies

Consumers are taking measures to offset the rising prices at the pump. One in five (21%) plan to buy less expensive brands, 17 percent intend to purchase larger pack sizes, 15 percent will look for savings at warehouse club outlets, 12 percent say they will combine errands/trips, 11 percent aim to stock up the pantry and 4 percent are determined to save by using more coupons.

What’s Next

As household wages are not keeping pace with inflation, consumers are digging deeper into their pockets to pay for ‘everyday’ things. Retailers and manufacturers should look for opportunities to convert a likely decline in out-of-home eating and entertainment spending for more at-home options.

Value messaging continues to be important, but messaging should connect to consumers emotions with themes centered on family fun enjoyment, which in the end, is what matters most anyhow.

Grandparents are a family’s greatest treasure. They enrich the lives of their grandchildren with traditions, stories, home-cooked meals and unconditional love. For many, their greatest joy is to lavish with love and spoil with splendor. And considering grandparents represent a sizable target (69.6 million according to Grandparents.com), which will continue to grow another 11 percent between now and 2015, retailers and manufacturers would be wise to tap into the “multiplier effect” they represent.

Doting Dollars
Nielsen’s research reveals that grandparent households spend 4.4 percent more per year than all other households, which equates to an extra spend of more than $300 a year. Interestingly, having multiple grandchildren does not translate to more spending. In fact, grandparents in the survey with only one grandchild actually spend two times more than grandparents with 2–10 grandkids. The exception is grandparents with more than 10 grandkids – they actually spend $79 less per year than non-grandparent households.

Grandparents with one grandchild are likely younger and still working and may be more inclined to show their love with greater spending. Similarly, households with more grandkids are likely to be older and therefore have weaker spending power.

Fully 39 percent of grandparents in the Nielsen survey provide some kind of support to help their grandchildren. Nearly one in four (23%) buy clothing for their grandkids and one in five purchase food and beverages. Mom and dad benefit too, as grandparents help out with household and personal care purchases (16%), education expenses (10%), daycare costs (8%) and medical care/doctor visits (5%).

Retail Therapy
With more free time on their hands, grandparents shop more frequently than the average consumer on an all-outlet basis, but where they shop and what buy might come as a surprise considering the status of their empty-nest household. This is especially true for grandparents with just one grandchild who over index considerably for spending on toys and sporting goods, and all things baby: baby food, disposable diapers and other basic necessities. And, of course, no grandparent can resist showing off their beautiful grandchildren with a brag book full of photos.

Grandparent households spend more than average in a number of retail channels – especially those with greater gift-giving options. Supercenters, warehouse club outlets, dollar stores and convenience/gas chains all over index compared to non-grandparent households. With fewer mouths to feed, it is no surprise that they spend less than average in the grocery channel.  However, Nielsen’s research also showed how grandparents who see their grandchildren daily or several times per week (one-third of those surveyed) are bigger spenders, suggesting opportunities for grocers to take advantage of those frequent visits.

Accessible and Connected
If you want to reach grandparents, television is a good bet. Older populations watch more television than their younger counterparts. During fourth quarter 2010, Persons 65+ viewed over 46 hours of live television on a weekly basis (by far the most of any group). They also played back more than 90 minutes of recorded programming each week (the lowest of any group). By comparison, Persons 35-44 viewed over 30 hours of live television and played back more than three hours of recorded programming (the most of any group). With most grandparents free from navigating work schedules and busy households, more time at home is driving some of this behavior.

If you think that older consumers aged 50+ are not digitally savvy, you are mistaken. In fact, in December 2010, Nielsen reports that consumers aged 50+ in the U.S. comprised roughly one-third (32%) of the active Internet audience on average taking into account usage at both home and work locations. And older consumers spent nearly 62 hours online in that month. Sending and receiving email is the most popular online activity, with 82 percent of grandparents finding this mode of communication fast and easy. Paying bills, checking the weather, printing maps and directions, reading the news, visiting social network sites, accessing personal health care information and playing online games are activities enjoyed by a surprisingly high number of older consumers.

Mobile phone usage, while significantly lower for consumers aged 65+ compared to the younger set, it is rapidly catching up. On a monthly basis, they made 104 calls, but only sent or received 41 text messages. Perhaps the hand dexterity of older consumers may contribute to the minimal usage of short message service capabilities – an opportunity for mobile providers to specially design phones for fingers that may not be so nimble anymore. The mobile behavior of the next generation of grandparents is clearly in the “texting” camp.

Redefining Old Age
Today’s older consumers are active, connected and big spenders. And while this segment represents a disproportionate share of marketplace consumption, they are often overlooked in marketing plans. There is a tremendous opportunity to dig deeper to understand what the older set watch and buy. Developing targeted programs designed around their varied needs and desires will prove beneficial for the savvy marketers that tap into these lucrative households.

“Yuppie couples are educated, well-employed and represent the next generation of Indonesia’s affluent consumers,” said Suryanata.  “But retailers and consumer products manufacturers need to know how to specifically appeal to them if they want a greater share of their Rupiah.”

So what exactly makes a “yuppie couple?” They are young – below 30 – and have university or higher education.  They reside in an apartment or a middle-up housing complex located in the city or suburbs.  They work as professionals, typically at the managerial level, in fields such as banking and finance, energy, consulting or marketing, and are focused on their careers.

They live by the motto “work hard, play hard,” and like to socialize with colleagues in cafes, restaurants, bars or at mall.  They also like to reward themselves with expensive fashion brands or with trendy electronic gadgets as a way to compensate themselves for their hard work, their career achievement and their busy life.

In short, yuppie couples believe hard work to be personally meaningful, emotionally satisfying, and a vehicle for self-expression. Nicknamed “DINKs” (Dual Incomes, No Kids) in the West, yuppie couples have postponed having children for the sake of their careers, and have discretionary income which they can use for future investment.

The role of women is important within yuppie couples: the female spouse has the right to express her opinion and her own preferences. In the long run each spouse will develop a mutual taste since they influence each other.

The following facts illustrate the economic power of the yuppie couple:

• 19 percent read newspapers and 67 percent access news online.
• 15 percent traveled overseas in the past two years and most go to Bali at least once every two years for vacation.
• Visit a mall twice a week and spend an average of Rp. 120,000 for food during their visit.
• 88 percent own microwaves.
• 100 percent own refrigerators, air conditioners and washing machines.
• 63 percent own cars, with penetration even higher among those living in suburbia.
• 100 percent cellular phone penetration, with 50 percent using more than one handset; monthly spending for each phone averages Rp. 127,000.
• 84 percent own a PC.

“When deciding what to buy, yuppie couples place the greatest importance on the quality of the product, recommendations of friends, online reviews, as well as influencing each other,” noted Suryanata.

Various Nielsen studies have yielded critical insight in how to market to this segment:

1. Quality is paramount
   Yuppie consumers appreciate hard-work and they have a high expectation on quality of a product or a service. However, the real challenge is their sensitivity to the image of a product or a service. If a product or service fails to deliver or perform well, the yuppie couple will never use those products or services again – and they do not hesitate to let their friends, colleagues and family know about their disappointing experiences.
2. Willing to pay a bit extra for convenience
   Yuppie couples tend to value their time since they have a busy lifestyle.  As a result, they are willing to pay a bit extra for conveniences such as valet parking services, online reservations and special VIP counters at a service center, to name a few examples.
3. Are modern and liberal
   Yuppie Couples are not conservative. They like the concept of a modern family where each spouse still has privacy for “Me Time” where he or she can do his or her hobbies, activities or vacation with friends or colleagues without the presence of their spouse. However, they are expected to conduct their “Me Time” responsibly.
4. Like brands with “his & her” designs
   They love to be seen as a perfect couple and sometimes have a need to convey this message to the world.  One way they can do this is by wearing a matching fashion items.  Or they use gadgets from one brand only with a different color and design (his & her design).
5. Online marketing is effective in reaching them
   They have such a desire to succeed, hence spend much of their life at work which often requires a lot of time online and exposure to advertising there.
6. They are business savvy, and require credible, convincing communications
   Communicate your product or service message with realistic explanations. Do not over promise and under deliver.  Establish a professional customer service center that is tactful and focused on problem solving. Give consumers the freedom to decide and choose. Listen and understand them, but don’t teach them.
7. They stay atop contemporary trends
   Stay tuned to the latest trends such as healthy living, organic food, generosity, dynamic discounts, exotic destinations, smartphones, and the concept of sharing and staying connected.

“The yuppie couple is in many ways the consumer product industry’s ideal customer.  They have discretionary income to spend, and they are eager to do so.  But they are discerning consumers, and marketers need to know precisely how to reach them.  These seven principles provide a solid framework around which marketing campaigns towards yuppie couples can succeed,” concluded Suryanata.

According to a new report, “Focusing on the 3DTV Experience,” released by The Nielsen Company in cooperation with the Cable & Telecommunications Association for Marketing, consumers expressed a “wait and see” attitude toward the technology. Key issues were the cost of the 3DTV set (68%), having to wear 3D glasses (57%) and the relative scarcity of 3D programming/content (44%). Despite these concerns, the research suggested that if these issues are satisfactorily addressed by set manufacturers and content producers, consumers might embrace the technology.

Nearly three-fifths (57%) of viewers agreed that 3DTV made them feel like they were “part of the action” and 48% felt it made them more engaged with what they were watching.

Nearly half of consumers (47%) said 3DTV would make them watch programs they wouldn’t normally watch.

Attracting video gamers will be important to spurring initial growth: 42% of respondents cited interest in playing video games in 3D, with 71% of hardcore or regular gamers interested in experiencing video games in 3D.

It was the rare household that didn’t change spending habits over the last 18 months. Faced with unemployment (or even the prospect of it), higher expenses and crushing debts, consumers around the globe used a number of tactics to stretch their money further to get the most bang for the buck.

The Nielsen Company conducted an online survey in March 2010 of more than 27,000 consumers in 55 markets from Asia Pacific, Europe, Latin America, North America and the Middle East/Africa (consisting of countries from Saudi Arabia, Pakistan, United Arab Emirates, Egypt and South Africa) to get a better sense of the steps being taken to save money in view of uncertain economic conditions.

What’s more, while recovery has taken hold in some regions (Asia Pacific and Latin America in particular), in other regions it has been tentative. Regardless, one thing remains clear: habits picked up during the recession are likely to survive even after economic recovery is in full-swing.

Value Strategies Help Savvy Consumers Save
In addition to a shift toward private label products, global online survey respondents saved money on household expenses in a number of ways, including:

• Buying items on sale (a 57% global average)
• Using coupons (40%)
• Shopping at value retailers (37%), such as supercenters and dollar stores
• Purchasing value packs (35%)
• Shopping close to home/work (25%)
• Stocking up (22%)
• Switching to cheaper health and beauty products (18%)
• Purchasing smaller packs with a lower unit price (17%)

One in 10 consumers in the online study reported no belt-tightening practices in their household.

North Americans led the world in cost-cutting strategies and adopted a host of budget-shrinking tactics. Seven in ten respondents said they bought items on sale, which is 13% more than the global average. Both Asia Pacific (46%) and North American (59%) consumers indicated they presented coupons at a checkout, outstripping the 40% global average.

In the U.S. in particular, manufacturer coupon redemption hit record highs in 2009 after years of no growth or declining growth. Meanwhile, Canadians continued to shift spending to discount or value retailers—now accounting for over one-third of total grocery sales—as their neighbors to the south have done so over the past several years.  Whether prompted by high gas prices or environmental sensitivity, North American respondents were also the most likely to say they shop in stores close to home or the office.

Value packs and stock-up shopping trips were a popular option across regions, with consumers in Middle East/Africa/Pakistan and Europeans lagging slightly behind the global benchmark. Middle East/Africa/Pakistan consumers also had the lowest incidence of using coupons (11%), shopping on promotion (42%), patronizing value retailers (21%) or stocking up to save (12%). The use of coupons as a promotion tool is not a popular marketing method in the region. Additionally, the dearth of established retailers in the Middle East and Pakistan explains the low incidence of patronage.

Roughly one-quarter of Latin (23%) and North Americans (24%) said they sacrificed beauty at the budget altar by switching to cheaper health and beauty products. Asia Pacific and Middle East/Africa/Pakistan respondents were less likely than average to say they made such a switch to save money (15%).

Cash is King; Dining In Trend Heats Up
Consumers found other ways to cope with the cash crunch as well. While 19% of the regions admitted to using credit cards more often, North America at 10% and Europe at 11% were well off that global average pace. Further supporting the belt-tightening approach, 31% of North Americans and 30% of Latin Americans said they recorded less credit card utilization versus the prior year, while only 20% of Europeans did, despite a precarious economic picture.

Foregoing credit was just one consumer coping mechanism. Based on survey findings, restaurants in some countries must be hungry for clients, as more than half of survey respondents said they ate out of the home less often than the year before. The dine-in trend was particularly strong in Latin America, North America, Europe and the Middle East.

Roughly one-fourth of residents of Indonesia, China, the Philippines, Hong Kong and India indicated that they were eating out more often than usual. Asia Pacific as a whole showed a 5% higher rate for eating out than the global average.

Dining out cutbacks appear to correlate with private label purchase patterns, with five of the top 10 “dining out less often” countries also landing on the top 10 “purchased more private label” list: Greece, Ireland, Spain, Turkey and Portugal—countries that continue to face significant economic challenges even as other parts of the world resume growth.

Note about online survey methodology
While online survey methodology allows for tremendous scale and global reach, it provides the perspectives on the habits of existing Internet users, not total populations. Where noted, the Nielsen Global Online Survey data is supplemented with consumption data by market.

Shoppers around the world took many steps to stretch their budgets during the recession such as eating at home more frequently or cutting back on vacations.  While improving economies may prompt consumers to return to restaurants or take a vacation, one trend that looks likely to remain—and perhaps even grow—is the shift to private label goods.

A 2010 global online survey conducted by The Nielsen Company reveals that 60% of consumers across 55 countries from Asia Pacific, Europe, North America, Latin America and Middle East/Africa (consisting of countries from Saudi Arabia, Pakistan, United Arab Emirates, Egypt and South Africa), say they are stocking cupboards with more store brands as a result of the economic downturn. Across the regions, Latin America led the way at 66% and the Middle East/Africa/Pakistan area trailed at 51%.

The highest levels of private label purchase intent during the economic downturn were reported by consumers in Colombia, Spain, Portugal and Greece at 80%, 79%, 74% and 70% respectively, reflecting recessionary realities, depressed export activity and raging deficits. Meanwhile, the lowest reported drift toward private label came from consumers in Sweden (70%), Thailand (62%), Hong Kong (60%) and Denmark (59%) who indicated they did not purchase more store brands during the recession.

While econometric pressures are driving many value-oriented consumer shopping decisions, it is just one factor influencing private label purchasing. A strong push from retailers and improvements in both quality and selection are contributing factors. It should also be noted that not all private label categories are alike. Store brand share varies widely by category and they still represent the minority stake when compared to premium brands.

Store brand share is typically strongest in commodity categories like milk, fresh eggs, rice, edible oil, vinegar and sugar/substitutes or in those with little differentiation (first aid and wrapping materials). Store brand share is usually the lowest among categories where there is strong marketing support for top brands (e.g., candy, gum, beer) and those where a high-level of innovation occurs (e.g., detergents, deodorant, cosmetics).

Staying Power
Fully 88% of shoppers globally said they intend to keep buying private label even after the economy improves, suggesting that store brand quality has reached parity with national brands and delivers on consumer expectations. While Latin American and Middle East/Africa levels were slightly less than the global average at 83% and 79% respectively, the overwhelming majority still intended to pursue a value strategy.

Countries with the most value-conscious consumers on the private label dimension included Austria, Germany and Sweden, all registering a better than 95% intent to continue purchasing private label, while more than one-quarter of shoppers in the Ukraine (31%), Pakistan (28%), the United Arab Emirates (27%) and Venezuela (27%) had no intention to buy private label in the future.

The economic downturn prompted many consumers to try private label goods for the first time, and once they did so, they discovered that not only was the pricing right, but the quality of the goods met or exceeded expectations. Regardless of the pace of economic recovery, retailers continue to have a tremendous opportunity to convert shoppers to private label for the long term.

Regional Round-Up

Asia Pacific
In most Asian markets, private label is still relatively undeveloped with only Hong Kong having a share above 5% overall. There has been significant investment by many leading retail chains into launching new private label products over the last five years and they are gaining acceptance particularly in the basic commodity categories. In these categories, such as cooking oil, rice, bathroom tissue, market shares can reach up to between 20% and 30% in some countries.

Asian consumers are still largely brand loyal and retailers will need to increase their private label marketing support to build consumer trust in their own brands. During the economic downturn in 2009, there was strong private label growth in many countries. For example, in Thailand, private label grew by over 25%, as shoppers increasingly looked for value when buying grocery products.

In the Pacific markets of Australia and New Zealand, private label is much more established with the majority of households regularly purchasing private label products, which account for up to one-quarter of all supermarket sales.

Latin America
Private label continues to have a stable presence in the region. In Chile, store brands represent 8.4% of the market as of April 2010. Market share remained relatively flat in Argentina and Mexico, reporting shares of 7.6% and 6.6% respectively during the rolling year ending April 2010. While Mexico’s private label market share was flat, sales grew 23% compared with the previous period (April 2009). Store brands in Brazil have 4.9% of importance (YTD April 2010).

The categories where private label market share are strongest varies dramatically by country. In Argentina, the top five categories are dominated by foods such as fish, pasta, ice cream and vegetables, while in Chile, four out of the top five are non-food categories (clothes hooks, candles, pots/pans and cotton swabs). In Mexico, sugar and pies hold the greatest market share, but disposable plates, glasses and place settings round out the top five.

Europe
Private label continues to show solid performance in most European nations, with Switzerland, the United Kingdom and Germany leading the way reporting 2009 store brand value shares of 46%, 43% and 32% respectively. While year-over-year growth was relatively flat or minimal, Turkey and Spain boasted the biggest year-over-year increases of 2.7% and 2.5% respectively.

North America
Private label has taken off in the U.S. For year ending July 2010, store brand unit sales reached an average 22% share across all departments, with share gains in all but dairy. Store brand unit shares range from a high of 40% in the dairy department to a low of less than 1% in alcoholic beverages.

In Canada, private label represented $11.4 billion in national sales for year ending July 2010, which is 18.3% of overall consumer packaged goods spend. Over the past year, private label share has declined slightly with overall dollar sales flat, while the total market increased +3%.

Middle East
Middle Eastern consumption patterns often run counter to the West for a variety of reasons, and respondents in the region indicated the least likelihood of purchasing private label today or after economic recovery. However, as awareness has increased over the last few years, volume is growing—albeit from a very small base. While only 18% of shoppers in the United Arab Emirates perceive private label as a better value for the money, certain categories such as household cleaners are regarded more favorably. Fully, one-fourth (26%) of shoppers in Saudi Arabia consider these store brands as worthy.

Note about online survey methodology
While online survey methodology allows for tremendous scale and global reach, it provides the perspectives on the habits of existing Internet users, not total populations. Where noted, the Nielsen Global Online Survey data is supplemented with measurement of private label consumption by market.

Richard Reeves, Associate Director – Consumer Research, The Nielsen Company, Australia

Brand promotions are vital weapons in the sales and marketing arsenal, whether they are price discounts, multi-buys or additional quantity. In Australia, it is estimated that up to 30% of all grocery purchases are made on promotion and trends indicate that this could increase among key retailers. This proportion is similar to the U.K., where one-third of groceries are bought on promotion.

Nearby, our New Zealand kin are serious about promotions, with almost half (46%) of all grocery purchases being bought on promotion – reflecting the strong historical value focus of this market.

Just as there are differences between countries when it comes to promotions, there are even greater differences by category – this can range anywhere from 25% of volume being sold on promotion in one category, to a staggering 75% in another!

Clearly, for the manufacturer and retailer, promotions represent significant investment in time and money. So, the question is, how do these promotions affect the Australian shopper and what strategies or tactics can be employed to increase their effectiveness?

The Australian Shopper
Nielsen research has shown that the impact of the global financial crisis caused Australian consumers to re-assess how they spend and shop. We have witnessed a fundamental shift in shopper sentiment from the spendthrift, debt-driven early 2000s to a greater sense of caution and restraint post crisis. We have seen the rise of the “savvy shopper” who is happy to buy private label in one category and premium priced brands in another. We have also seen private label products being launched successfully in more and more categories. It would appear shoppers are becoming more willing to try and stick with these products where they perceive them to be just as good or just plain good enough.

Shoppers are increasingly using coupons and visiting more stores during their shopping trips as they search for the best value. This behavior has been observed in Australia with shoppers increasing their store repertoire. Furthermore, 30 per cent of Australian shoppers claim “they will still look for cheaper grocery brands even though the crisis is over” (Nielsen Global Consumer Confidence Survey, June 2010).

Given the shoppers’ search for value, a promotional strategy looks to be an excellent response. However, relatively speaking the Australian shopper is less sensitive to promotions than shoppers in other countries.

We see in this chart that nearly half the shoppers claim promotions rarely change their brand choices, or they only buy promotions when they already like the brand.

It is a minority who claim to regularly buy different brands because of promotions. These results are congruent with the view that shoppers tend to have a limited number of brands that they buy regularly even if their total repertoire is quite broad.

Australian shoppers’ knowledge of the prices they pay is relatively weak  with nearly half unsure of what they actually pay.

Nielsen research has found that in some heavily promoted categories such as beer and bread, (among consumers who have some knowledge of price); shoppers believe the promoted price is the normal price – not the shelf-price. So, it appears that the number and frequency of promotions has fundamentally shifted shoppers’ price perceptions.

There is also strong evidence that shoppers are aware that another promotion ‘will be along in a minute’ and are willing to wait. This can be seen across the grocery channel and in other areas such as the petrol market with the “cheap Tuesday” phenomenon, the automotive equivalent of pantry stocking, i.e., filling the tank.

So what options are open to the manufacturer in the face of these almost contradictory behaviors of the shopper, that is, being value-focused, but uncertain of the shelf price? We all know sales increase when brands are promoted, but are these additional sales profitable and is the promotion actually supporting the brand?

Key Considerations for Promotions

1. Is the promotion a tactical response to competitor activity? For example, is it a response to a new entrant into the category; or is it to take advantage of above-the-line support? The strength of the brand’s equity and percentage of volume sold on promotion versus its shelf price need to be understood. Relatively speaking, stronger brands tend to sell more at full price than their weaker competitors.
2. Does the promotion increase the number of households buying the brand (household penetration) or does it increase the amount spent on the brand per household (Average Weight of Purchase – AWOP)? If it is the latter, the promotion may be rewarding loyal buyers and protecting share, but may undermine a brand’s price premium in the long term.

To understand if the additional sales are coming from new households (increased penetration) or increased AWOP, one needs to use actual purchase data from services such as Nielsen Homescan.

Nielsen has found in a number of categories that there are a proportion of shoppers who only buy on promotion. We have seen this group to be as high as 60% in some categories. While shoppers are loyal to specific brands, when their preferred brand is not on promotion it’s likely a competitive brand they know and may be partial to is. The role of the preferred brand in this situation is to ensure the competitor is only considered and not purchased.

This presents a dilemma for the brand. Above-the-line support may be needed to help reinforce the brand and its unique position, but if funds are diverted from in-store promotional support, it will lose significant share. Innovation within the category may be the only way to break the promotional cycle.

Additional Considerations

• How does the brand repertoire change when on and off promotion?
• What is the depth of the price cut, and how deep does it need to be to be effective?
• Is it better to have more frequent promotions with smaller price reductions or the opposite?
• Is the promotion reflective of historical practices? For example, if the brand has always had a promotion at Easter. Is this really the best time for the promotion?
• Is the promotion communicating the right message about the brand?
• And finally, will the promotion generate additional profit, as well as generating additional volume?

We know shoppers are looking for value, or at least value among their preferred brands, so communicating the promotion and using the best triggers is vital to maximize its impact. Therefore, are gondola ends and shelf labels enough to drive awareness of the promotion; or is it worth considering additional communication channels?

Given the importance of promotions, it is vital to treat them with the respect they deserve, as their correct use can drive the brand and profitability. Conversely, ill-considered promotions can weaken a brand and undermine a company’s bottom line. So, the question remains: Can you identify what purpose your promotion is serving?

Nearly nine in 10 Indians (86%) place ultimate responsibility for food safety on the food they consume at home on themselves.  More than six in 10 think that the food manufacturer has the main responsibility for providing them with safe food while only 8 percent think the retailer has the main responsibility.  The government is viewed as the most trusted entity when a food safety issue arises.

“Food contamination is a problem that Indians face every now and then.  Food supply in India is often fragmented involving a multitude of middlemen, which exposes it to various types of fraudulent practices.  In such conditions Indians are very careful of where they make purchases from and mostly go by the name of the manufacturer.  The retailer is not seen as the prima donna in India, the manufacturer is,” said Biswarup Banerjee, Associate Director, Marketing Communications, South Asia, The Nielsen Company.

Almost three-quarters (73%) believed that certain countries provide safer food than others, but most Indians agree that food grown in country is safer than imported food.  More than four in ten (42%) said that they try to actively buy locally made products to support the local farmer or producer, with 19 percent believing that local products are better for them and their family’s health.

“The post Christmas hangover was longer and deeper this year with snow and ice disrupting shopping patterns, resulting in fewer shopping trips being made.  Where shoppers did carry on shopping however, some spending was bought forward into the week ending 9^th January as consumers stockpiled.   As a result, sales in the following 2 weeks were more subdued.  Many seasonal lines also came off promotion and this would have impacted sales.  Retailers will need to encourage shoppers to keep spending over the next few weeks to lift momentum,” said Mike Watkins, senior manager retailer services at Nielsen.

“The ‘big freeze’ has highlighted some unusual shopping trends: in the 3 weeks ending January 16, sales of salt increased 128 percent overall and 185 percent in convenience stores.  Cat litter was widely recommended as an alternative to grit and sales of this jumped 31 percent during the snowy weeks.  Meanwhile, sales of basics like tea (+10%), coffee (+8%) and soup (+16%) also grew as shoppers stocked up and battened down the hatches.  Convenience stores also benefited from shoppers and commuters staying at home and treating themselves to breakfast.  Sales of eggs were up 33 percent, bacon up 24 percent, sausages up 33 percent and hot cereals up 39 percent.  And rather heartwarmingly, we looked after our wildlife – sales of bird food shot up 73 percent,” said Watkins.

12-Weeks to January 23, 2010 Share of Grocery Market Spend by Retailer and Value Sales % Change