Georgia Zhuang, Head of Auto Research, Nielsen Greater China

Chinese consumers are becoming more realistic when it comes to purchasing an automobile, with the majority of respondents in Nielsen’s 2010 China Auto Trends Monitor Report citing both ‘quality of life’ and ‘ease of transport’ as the most important factors when making the decision to buy an automobile.

As a result of the decreasing impact of government stimulus policies and rising house prices, overall intention to buy an automobile in the next 12 months has fallen 21% year-on-year to only 32%. Meanwhile, 40% of those potential automobile owners said they would spend only RMB 80,000 – 120,000 (roughly $12-18K U.S.) on purchasing an automobile. This change in behavior is reflected in consumers’ financing methods: most consumers will still pay in full with cash; subsequently, the number of consumers who would choose to seek a bank loan to finance the purchase of a new automobile has increased since last year—up four percentage points to 29%. While consumers have returned to a more rational approach to purchasing, Chinese brands have been expanding their lines and launching intensive marketing campaigns over the past year, quickly overtaking American and Japanese brands as the top choice for potential automobile buyers.

Stylish and Sporty Selections
Demand for private ownership of automobiles has become a symbol of quality, of a person’s values and of their personality. Sixty-five percent of respondents think that design is the most important factor in a new automobile. While demand for comfort based on a safe design is gradually increasing, a stylish and sporty look is favoured most highly among consumers, with women preferring a stylish look, and men preferring something sportier.

In particular, the ’stylish’ element should be most prominent in the front of the automobile, as over 70% of consumers, and especially potential owners, said they would judge how fashionable an automobile is by looking at the front. Nearly half of those who responded think that the rear of an automobile can also represent how ‘fashionable’ it may be. Similarly, consumers believe that both the front and rear ends of an automobile are best for displaying its ’sporty’ features.

A car’s body type is also able to satisfy consumer demand for a sporty or fashionable look, and there is huge potential for innovation from all brands across the market. For first-time buyers, a sedan is no longer the only option for a family automobile, and SUVs, hatchbacks and many other styles are now equally considered. Provided that companies and brands alike meet consumer needs and show a sense of creativity, there is a huge opportunity for stylish and sporty designs in everyday automobiles, SUVs and sports cars.

Environmental Considerations
As consumers are becoming more aware of the importance of environmental protection, their interest in alternative energy technologies is also increasing, with attitudes changing in particular towards alternative energy sources for automobiles. The majority of respondents said they would consider buying an alternative energy car in the future—in particular they would change from a traditional petrol-run car to a smaller, hybrid car—as they feel the impact of this change on current automobile driving behaviour would be quite small. In reality, this kind of thinking has not fully developed into actual behaviour and an understanding of alternative energies available on the market is still very low.

There are three other main factors that determine a consumer’s decision when choosing an alternative energy use car: ease of use, maturity of the technology and the cost of purchase and maintenance. Introducing subsidies to promote the use of these kinds of cars is therefore, a must. Nielsen discovered that an average of 20% of consumers cited government subsidies as a reason for choosing an alternative energy car and a subsidy of 30% of the cars’ ticket price is enough to satisfy a vast majority of people.

Factors that hinder consumer purchasing can be dealt with through marketing communications. Manufacturers have a responsibility to not only strengthen consumer understanding of alternative energy technology—through effective advertising and marketing events, but also to make alternative energy more practical and accessible through continuous breakthroughs in, and improvement of, technology.

As the government and manufacturers continue to work together on incentives and infrastructure, consumers will come to have more trust in alternative energy automobiles, which will translate into an increase in buying behavior.

In 2007 we couldn’t open a magazine, turn on the television or nip to the shops without being hit with messages about being green. It was the year that ethical consumerism went mainstream. It was the year that we started using reusable shopping bags, stopped resenting our local councils for making us recycle our rubbish and started showing interest in our carbon footprint.

2008 started in much the same way. In the February of that year free range chicken sold out in supermarkets after the ‘Hugh’s Chicken Run’ series aired on Channel 4. Later on in 2008 M&S began charging shoppers for carrier bags as part of the Plan A strategy and other retailers continued to message on their own ethical credentials. And then the credit crunch, that had been affecting the American economy for some time, hit our shores. House prices tumbled, and with them consumer confidence. Meanwhile increasing demand on commodities pushed cost prices up and food inflation began to rocket. The nation became worried about their jobs, their homes, their pockets and suddenly being green no longer made the headlines.

Two years on and there is a willingness and an amount of concern about ethical issues – at the end of 2009 about three-quarters of people polled in Great Britain said they were concerned about environmental issues. Climate change, packaging waste and air pollution were the environmental issues that people said they were most concerned about. But this concern does not necessarily convert to action in terms of changing buying behavior.

Can We Afford To Be Ethical? Can We Afford Not To?
Nielsen research shows that as we come out of recession fewer people are prepared to change their behaviour based on ethical and environmental considerations. In mid 2008, 20% of consumers were considered to be ‘ethically enthused’ – these people are described as those who show a real willingness to change their behaviour to benefit the environment and support ethical issues – this dropped to 11% by 2010 with many more people being ‘ethically inert’ (people who care to a degree but are not prepared to change their behaviour) now than 2 years ago (increased from 4% to 9%). The other 80% are those who care somewhat but are not fully committed or ‘ethically ambivalent.’

While 43% of people still claim that they try to buy products that are kinder to the environment (unchanged since 2007), there has been a significant drop in people who say they are willing to pay extra for such products, from 37% in 2007 to 28% in January 2010. In fact, 68% of people say that they would like to buy environmentally friendly products but that they think they are too expensive and similarly, 65% said they would like to buy ethically produced products but found them too expensive.

There is also a definite drop in people who now say they would be willing to switch brands if they thought the alternative had better ethical credentials compared to 2007. For example, in 2007 46% of people said they would switch to another brand if they thought the company who made it was more environmentally friendly, but in 2010 this has dropped to 37%.

Organic has been one of the hardest hit casualties of the recession with sales of organic goods in Grocery Multiples in decline by 15% in 2009 compared with total food growth of 5% for the year. In January 2010 only 23% of people said that they tried to buy any organic food and 46% said they never buy it.

Save the planet and save money
However, embracing some practices that contribute towards sustainability has made sense in the economic climate. Food waste became a big area of focus and here consumers found they could make a contribution to the environment and save precious pounds by being more careful about how much food they throw away. With food inflation peaking at 10% in August 2008, consumers used strategies such as buying smaller pack sizes to save money. The proportion of products sold on (what could be seen as waste driving) multi-buy promotions fell in favour of price cuts.

Switching to low energy light bulbs was given a big lift when Tesco reduced the price of these in store before the recession hit but the benefit of energy efficiency really came into its own amongst the backdrop of the recession. In January 2010, 46% of people said they try to buy energy efficient appliances or products compared to just 27% in 2007.

Other areas where people have increased their ethical efforts in the past 3 years include people attempting to buy products that have little or no packaging which increased from 45% in 2007 to 52% in 2010. The number of people claiming they actively try to buy products in recycled packaging has also increased from 38% in 2007 to 43% in 2010.

There is a slight increase in the number of people who claim to try to buy local products, up one point to 49% in 2010 and 62% of people claim they actively try to buy British. 44% of people say they actively try to buy free range meat and eggs and 21% say they actively try to buy sustainable fish (these last three are new to the survey so no comparable data is available). The trend to ‘grow your own’ has enjoyed a revival and 23% of people claim to grow fruit and vegetables.

Before the economic downturn, being seen to be green was very en vogue. It was a trend and many speculated at the time that it may be a passing fad. But coming out of recession we have noted a change in the consumer that could well embed itself for the long term. Values have been re-assessed, austerity has been exercised, the wasteful consumerism and excessive spending of the last decade has been proven to be an unsustainable way of life. Though consumers are not as willing and not as able to pay premiums for ethically produced food or to pay more because it is the latest trend, going forward this type of product does have a new found synergy with the more cautious and considered consumer. There is plenty of scope for growth in this area and where a product can offer good value and even savings to the consumer in addition to having sustainable and ethical credentials there is sure to be a market for the foreseeable future.

SUMMARY: Chinese consumers have relatively high awareness and strong purchasing intention for electric vehicles, according to Nielsen’s China Electric Vehicle Market Report. Conservation and low operation costs are the key factors of consideration for Chinese consumers.

With global energy and conservation concerns, new energy vehicles are becoming the focus of all leading auto manufacturers. Though the electric vehicle is not at a mass production stage just yet, Nielsen’s China Electric Vehicle Market Report shows that there is still a high percentage (68%) of Chinese consumers showing awareness or familiarity of this developing technology.

And while the ever-developing lithium battery allows the electric vehicle industry to accelerate, leading auto manufacturers are concentrating on concept design and sample testing of electric vehicles. To uncover and answer questions regarding Chinese consumers’ needs and user behavior, Nielsen conducted a nationwide survey among 1,478 vehicle owners and potential vehicle owners.

High Interest Revealed
Chinese consumers hold a relatively high purchase intention to buy an electric vehicle. Nearly eight in ten respondents showed intent to buy an electric vehicle if price was not taken into consideration. Among the respondents, car owners that currently drive a car of 1.5 L displacement or less showed the highest intention (80%) to purchase the electric vehicle.

Deciding Factors
Among 1,104 existing and potential car owners with purchase intent, nearly nine in ten (88%) stated that they would take into consideration the fuel emission and how environmentally friendly the vehicle was. Second in importance was the low operational cost for no fuel consumption (81%).

Other key factors in a potential purchase decision include:

• Low engine noise and passenger room (66%)
• The appeal of new energy-source technology (61%)
• Potential government subsidy (48%).

Even though the electric vehicle is only in the market fostering stage, the fact that Chinese consumers already hold a high awareness and purchase intent for this new energy-source technology presents huge opportunities for manufactures. To effectively convert intention into action, it is important for manufactures to truly capture the consumers’ tipping points through understanding demand. How the right message engages the right demand target and where the right supply meets higher profit demands, are the keys to capturing a higher percentage of profitable demand.

Imposing Views
A few key factors are impeding consumers from purchasing the electric vehicle. Among 374 existing and potential car owners without purchase intention, 77% of consumers stated that the electric vehicles’ underdeveloped charging facilities and the inconvenience of battery charging are main concerns. Also, short running mileage after a single charge (67%), immaturity of new technology and potential fault in technology (64%), long charge times (43%), underdeveloped maintenance techniques (36%) and incomplete driving experience from a lack of boisterous engine (25%) were also mitigating factors when looking at consumer purchase intention.

Automobile manufacturers need to narrow the gap between electric and traditional gasoline-consuming vehicles to capture consumers’ hearts, and eventually their wallets. They need to accelerate the development and promotion of micro or small electric vehicles. Home-use vehicles with high mileage endurance, fast charging, long battery life and stable performance will be favored by most consumers of electric vehicles.

“These estimates help manufacturers and marketers better understand the markets that have ‘green’ potential, and help them focus their resources,” said Bruce Wilkinson, Vice President of Media and Communications for Nielsen Claritas. “Additionally, it helps them to plan media campaigns and determine inventory levels for each model, market-by-market.”

The research looked at the national ownership rates of high-mileage vehicles including the Honda Fit, Toyota Prius, Toyota Yaris and Mini Cooper. Using auto registration data from RL Polk and Nielsen’s PRIZM segmentation, the percentage of each segment owning these vehicles was calculated. Individual market potential then was calculated based upon the segment composition of each market.

The top ten was made up primarily of coastal metropolitan area, including Boston (4th), San Diego (5th), Chicago (6th) and Los Angeles (9th), all with populations of over one million. Two exceptions were the relatively small areas of Monterey-Salinas, CA (7th), which has a population of 234,000 and Honolulu, HI (8th), with a population of 442,000.

Places where gas guzzlers still rule the road tended toward the south and Midwest, with the states of West Virginia and Mississippi holding seven of the ten areas that had the lowest rates of green auto ownership.

Learn more about Segmentation & Targeting.

“Editors insist readers are still interested in green themes, although some said they are evolving coverage in response to green’s maturation. Hachette Filipacchi Media’s Elle—which made a statement by publishing its green issue on recycled paper this year—plans a water-themed issue in ’09, reminiscent of the blue issue of Rodale’s Women’s Health in 2007.

[Vanity Fair] editor Graydon Carter said, via e-mail, that while he may not devote his entire May issue to the environmental theme next year, he plans more eco-oriented coverage overall—“especially now that we have an incoming administration that is sensitive to the environment, knows what it means to be green and takes the science, and the science of global warming, seriously.”

Read the full story at Mediaweek.

Read Nielsen’s latest stories on global attitudes towards environmental issues.

Read Corporate Ethics And Fair Trading: A Nielsen Global Consumer Report.

The 51-country survey polled 28,253 online consumers in May 2008, providing the first global overview on consumer attitudes towards company ethics and corporate responsibility.

“From human rights to poverty and war, and most significantly, the environment – global consumers are collectively speaking out and demanding that corporations make a positive contribution to society,” Amilcar Perez, Vice President, Marketing, Latin America, Nielsen, noted.

Globally, the report indicates that marketing ‘ethical’ products could lead to economic benefit. Two in three global consumers said they would be interested in buying ethical products to support environmental and social causes. More than 75 percent of Greeks, Chinese, Portuguese and Filipinos indicated their support for such products.  While still showing a majority, North American consumers exhibited the least interest in buying ethical products at 57%.

Learn More: Nielsen Corporate Ethics & Fair Trade Presentation.

Read Reuters’ coverage of Nielsen’s findings.

According to a survey conducted by Nielsen after the closing ceremony, seven in 10 viewers across 16 countries and territories said Beijing appeared more “modern” and “high-tech” than they had expected.

Beijing also looked cleaner and greener than many viewers expected — 56% said the city’s physical environment exceeded their expectations.

Nine in 10 foreigners who visited Beijing for the Olympics also told Nielsen the city’s Olympics venues were “good” or “very good.”

View the full press release.

Read The Wall Street Journal’s coverage of Nielsen’s findings.

The Daily Texan writes that, according to a report by Nielsen and the Natural Marketing Institute, consumers with a green shopping agenda have generated $209 billion in profits this year so far.

If the trend continues, green consumers will likely generate $400 billion by 2010.

Read the full Nielsen press release on green consumers.