Some Bright Spots For The Auto Industry

Two of the “Big Three” U.S. automakers have gone bankrupt.  Car sales continue to decline.  This would appear to be the most challenging period for the automotive industry in its history.  But despite the gloom, there are some bright spots for auto makers, according to new research from The Nielsen Company.

The re-designed Forester boosted sales for Subaru, while Hyundai and Kia launched new models appealing to younger drivers.  Existing models, such as the Sorento and Sedona posted strong sales growth (69% and 48%, respectively).  And Lincoln was the only U.S. brand to outperform the market (although sales remained in negative territory on a year-to-year basis).   Foreign automakers benefitted disproportionately from escalating gas prices because consumer perception that their vehicles, especially hybrids and diesel models, are more fuel-efficient.  Hybrids remain an exciting but emerging segment, as consumers take their time investigating the genre.  Meanwhile, consumer interest in the basic economy vehicle was solid when gas prices were high, but dropped sharply once gas prices dropped.

Read more about the positive developments in the auto industry in 2008, as well as consumer behavior with respect to shopping for and buying vehicles in the July edition of Consumer Insight

Finding High-Potential Customers

Now more than ever, marketers are trying to identify and reach profitable and discrete market segments that were previously overlooked in an effort to keep growing in difficult economic conditions.  Predictive analytics is one way to do that: it marries a range of consumer, transaction and media information and reveals the “who” and “how” of an effective go-to-market strategy.

Predictive analytics can help marketers in several ways:  It can provide a deeper understanding of customers to guide the marketing spend; it offers guidance on selecting messages and vehicles for communicating with them, and; it provides key metrics for measuring campaign impact.

Nielsen teamed up with Experian, the credit reporting agency, and dLife, the leading online resource for diabetics, to develop a program targeting the diabetes community.  Diabetes accounts for 31 percent of health care costs in the U.S. and approximately $175 billion in spending.  Using diabetics’ common interest - in this case - how their disease shapes their lives and influences their food purchasing patterns - the team was able to pinpoint high-value consumer targets, determine the best retail channels to reach them and deliver marketing materials that were specific to their needs.

Read the full case study on how predictive analytics shaped this campaign and can uncover the hidden treasure of consumer value in the current edition of Consumer Insight.

Sales Of Non-Prescription Meds Ailing In Recession

Almost half of consumers around the world say that the recession is changing how they buy non-prescription medications. Some (12%) say that they will use less of them, while others are switching to natural and traditional remedies.  According to a major new study from Nielsen, how consumers self-medicate and choose non-prescription medications varies widely by region.  For example, more than half of Europeans tend to look to their pharmacist for advice on which products to use, while only 13 percent of Americans do the same.

Most consumers said that they would continue to purchase non-prescription medications, although they may switch to cheaper products or use them less frequently. Americans, Germans and Scandinavians all indicated that they would be looking for less expensive products.

Overall, the survey highlights the importance of understanding local consumer needs, as regulatory, distribution and marketing framework vary greatly by country, and cultures have different approaches to what products they use and how they buy them.  Manufacturers that understand these nuances are better positioned to successfully ride out the recession and maintain some level of growth.

Read the full article about Nielsen’s landmark study of the global non-prescription medication market in the current edition of Consumer Insight.

Advertising Can Make Or Break A Movie

Slumdog Millionaire, the Oscar winner for Best Picture in 2008 was not a summer blockbuster.  Nor were any of the other nominees in that category.  But they all had a couple of things in common: they were primarily advertised in the second half of the year with a concentration in the fourth quarter, and they were all released in the months of November and December.  So while the summer blockbusters get a great deal of attention, it is those films that are released - and tend to advertise - during the last half of the year that get recognized by the Academy of Motion Picture Arts & Sciences, according to recent review by Nielsen.

A review of Best Picture winners over the past five years reveals that only one film - Crash, which took home the award in the 2005 - was released outside the fourth quarter (it was released in early May).  But summer flicks hold their own when it comes to winning awards: the top 10 movies in 2008, based on advertising spending from May through August, included four films with nominations in other categories.  Wall-E, which was ranked third after spending over $38 million in advertising during this period, was nominated in six categories - and raked in $63.1 million box office sales.

Read more about how advertising can make or break a film in the latest issue of Consumer Insight.

Technology Transforms Retail

Old-fashioned paper coupons have enjoyed a resurgence of interest in these difficult economic times, with manufacturer coupon redemption surging nearly 10 percent in the fourth quarter of 2008, according to Nielsen.  More than one-third of dollar sales at food, drug and mass merchandiser stores - or $133 billion not including coupons - were sold on promotion.

At the same time, technology is having a measurable impact on retail sales.  In a recent U.S. study, Nielsen measured more than 200 digital ad campaigns and found the following:

• Average of 32% sales increase
• $1.1 million hike in short-term incremental sales
• 157% return on investment
• 18% boost in penetration
• 14% surge in buying rate

In addition to online ads, retailers are using scanning technology to enable consumers to check-out faster, create and retrieve shopping lists and even find and print recipes.  Read more about how technology is transforming both the retail environment and consumer shopping experience in the new edition of Consumer Insight.

How To Leverage Online Advertising

Brand advertising budgets took a hit in 2008, with expenditures dropping 2.6 percent compared to 2007. While most media suffered, two bright spots were Hispanic cable TV, where ad spending grew 9.6 percent, and cable TV, where growth was 7.8 percent.  But what has happened to online advertising?

Perhaps the biggest challenge facing advertisers and web sites is the plethora of sites competing for scarce advertising dollars with little to offer in the way of differentiation.  Unfortunately, no single formula or strategy has emerged to guide advertisers looking to build brand loyalty, share of mind or unit sales when it comes to the online world.

Regardless, online media continues to have a tremendous amount of unrealized potential.  Roughly 57 percent of Fortune 1,000 companies advertised online in at least half the quarters from the past three years.  But the way they have been doing so points to a scatter-shot approach: 20 percent of Fortune 1,000 companies are distributing ad dollars across 32 or more web sites, while another 20 percent are hitting 8-31 outlets.

A number of companies are finding success: ConAgra, Exxon Mobil, Clorox, Cisco Systems, Foot Locker and Barnes & Noble each bought millions of online impressions in the fourth quarter of 2008, and got the most bang for their buck by concentrating more than 90 percent of their digital dollars on a single web site.  On the web site front, ESPN.com recently overhauled their entire site, moving easy-to-use streaming video and advertising to the forefront. The results have been impressive: 45 seconds per page, an audience of 19.5 million visitors and 29 percent of advertising utilizing non-standard formats.

Learn how to deploy effective online advertising strategies, including Nielsen’s four-point plan, in the current issue of Consumer Insight.

How To Reach The Recession-Proof Consumer

Few Americans have been untouched by the economic downturn gripping the country. But how we respond varies widely by demographics, according to a Nielsen study. Understanding how we differ in the ways we cut back can create opportunities for manufacturers and advertisers.

Nielsen created eight segments that divided households into groups based on their behavior and reaction to the decline.  Despite conventional thinking that these segments are based primarily on income, characteristics such as age, household size and location were important factors in determining groups based on how they cut back expenses.

Eight Household Groups To Watch In A Recession

• Recession Indifferent - those who do not alter their purchasing habits at all
• Recession Insensitive - those who will cut back on luxuries such as entertainment and dining out
• Switch to Private Label - younger, larger households that will buy generic brands or store labels
• Light Coupons & Sales - typically older and smaller households that will take advantage of discounts and promotions
• Stock-Up & Save - “empty nesters” who tend to remain loyal to name brands, but will depend on coupons and sales to stock up while they can
• Switch Stores for Best Deal - typically urban consumers who are willing to shop around for the best prices
• Brand Disloyal/Promo Sensitive - will easily switch from name brands to generics or sale brands for the best deal
• Panic Stricken - those who will greatly reduce living expenses in all categories and do whatever they can to save money

Advertisers can reach the least-affected segments by understanding what media these people consume.  For example, “Recession Indifferent” consumers tend to view sports and news programming while “Recession Insensitive” consumers prefer comedy and quiz shows.  By targeting and reaching an audience based on their purchasing habits during difficult economic times, marketers can make the most effective use of their ad spending.

To learn more about how to effectively reach optimal audience segments for your products, read more about Nielsen’s segmentation analysis in the current issue of Consumer Insight.

Americans No Longer On The Move

From 1947 to 1969, nearly 20 percent of the American population moved every year, as they relocated to new areas offering economic growth and opportunity.  Since then, mobility has steadily declined, to 15 percent in 2000, and to 11.9 percent in 2007 — a forty percent decline versus the average year between 1947 and 1969.  What has changed that has led to this decline?

First, the population of the country is getting older - and older people are less likely to move.  Second, the growing incidence of two worker couples impedes mobility: it can be much more difficult for two spouses to find new jobs in a new city.  But as the Baby Boomers start to retire in the next few years, mobility rates could increase as they decide where to spend their golden years.

The top five cities/markets with the greatest stability are:

1. Wheeling-Steubenville WV-OH
2. Johnstown-Altoona PA
3. Pittsburgh PA
4. Wilkes Barre-Scranton PA
5. Youngstown OH

Meanwhile, the markets with the least stability, that is, the highest levels of mobility, are:

1. Las Vegas NV
2. Palm Springs CA
3. Austin TX
4. Phoenix AZ
5. Reno NV

“The current economic downturn will certainly slow moving rates among parts of the population.  However, as the unemployment rate continues to rise, many workers may move in search of new opportunities.  High rates of unemployment will not only adversely impact sales of consumer products, but must-have staples still get purchased.  If those workers leave for new locales, even those purchases are removed from the market,” said Doug Anderson, Senior Vice President, Research & Development at Nielsen.

Read the full article about the economic impact of declining mobility and which markets have the least and greatest stability in the April edition of Consumer Insight.

State Of The Media: Content Is Still King

Consumers have more choices than ever from which to access media: traditional television, the Internet, and mobile devices like cell phones and iPods.  As more options exist, they serve to actually increase the amount of time people view media as opposed cutting into viewership of one format or another.  Despite the array of options, television continues to be the primary way Americans of all ages consume media.  In the last quarter of 2008, the average Nielsen household watched more than 151 hours of television per month.  Internet users logged on for 27 viewing hours a month and mobile subscribers consumed nearly four hours of video on a mobile phone and almost three hours on the Internet.

Other findings include:

• Despite 3 in 10 households owning a DVR, live TV continues to be the favorite way to watch TV.
• 54 percent of U.S. households have one or two TVs.
• Hispanic households are more than twice as likely as other groups to download movies.
• Fully 91 percent of households have Internet access, with 57 percent having high-speed connections.
• Viewers can be clustered into eight discrete segments based on gender, age, media consumption levels, ethnicity and social outlook.

“Media has become a digital funhouse: phones deliver TV programming. Computers enable phone calls. Televisions serve as gaming arcades. Consumers access video wherever and whenever they can.  But the fact remains that TV still dominates,” said Dave Thomas, President, Global Media Client Services at Nielsen.

Read a complete review of the state of the media in the current edition of Nielsen’s Consumer Insight.

What Global Restaurant Diners Want

No matter where one lives, going out to eat can be one of life’s great pleasures.  But what factors determine how global consumers choose restaurants? According to results from the Nielsen Global Online Survey of respondents in 52 countries across Europe, Asia Pacific, Americas and the Middle East, the prime driver is the type of cuisine, with 27 percent preferring their local cuisine over international fare.  The second most important factor is reasonably priced food (24%), although diners in several countries, notably Japan, Malaysia, the Philippines, the Netherlands and Belgium, said prices were the most important factor.  A convenient location was a distant third in importance.

After the local cuisine, most international diners ranked Chinese and Italian food as their favorites. But Australians and Singaporeans preferred Chinese food over their own native dishes, while Hong Kong diners’ favorite cuisine was Japanese.  Those countries most loyal to their own national cuisines? Italy, with 91 percent of respondents saying they prefer their own cooking, followed by Turkey and India.

Consumers in Asia dine out more frequently than others, but in Hong Kong in particular, nearly one-third eat at a restaurant one or more times every day.  Europeans were least likely to go out for a meal, with the Dutch most likely to eat out less than once a month at 57 percent.

More details from the survey can be found in the latest edition of Consumer Insight.