consumers

Consumers Willing to Drive More than an Hour for Their Best Deal

38% of U.S. auto buyers are willing to drive more than an hour for their best deal, highlighting the importance of aggressive advertising by dealers. The Fall 2009 Ad-ology Media Influence on Consumer Choice survey also found online media is now more influential than social or traditional media on auto purchasing/leasing decisions.

Manufacturer Web sites influenced nearly half of recent purchasers. Search results and online video were also influential, and nearly twice as many males as females reported influence from online video. Traditional media is still influential for automotive sales. Newspaper was the most influential traditional media overall, particularly so for older demographics, Asians, and African Americans.

Social media had the most effect on buyers under the age of 54, females, and higher-income consumers. Auto purchasers who use Twitter say social networks influenced their purchase more than users of other social networks.

“The growing influence of online media has created the opportunity for price-sensitive consumers to shop beyond their own backyard,” said C. Lee Smith, president and CEO of Ad-ology Research. “Dealerships must promote themselves consistently because they have more competition than might be readily apparent,” Smith said.

Other key findings from the survey:

• 63% of consumers contacted more than one dealer during the decision-making process.
• Nearly 16% of U.S. consumers intend to purchase a new or used vehicle within the next year.
• After the vehicles themselves, the topics most researched online by auto purchasers were: Trade-in values, auto insurance, and gas mileage.
• Television was the most influential traditional media for 25- to 34-year-old auto buyers.
• Blackberry and iPhone users were more than twice as likely than other mobile phone users to have their auto purchase influenced by support of a cause or charity.

consumers

Deal-Seeking Consumers Still Turning to Private Label Even as Economy Shows Signs of Stabilizing

Today, the economy is showing glimmers of stabilizing, energy prices have receded, and food prices are increasing at a much slower rate, but the growth of private brands continues, creating strong opportunities for retailers and serving as a cautionary tale for manufacturers. According to the latest “IRI Times & Trends Report: Game-Changing Economy Taking Private Label to New Heights,” private label unit share has grown 1.2 points to 22.8 percent and dollar share has grown 0.7 points to 17.6 percent across all outlets in the past 12 months. Despite this success, two questions are emerging as the economy continues to improve: will shoppers continue to purchase private brands in ever larger quantities, and how will name-brand manufacturers respond?

“The popularity of private brands will continue as a result of several factors,” says IRI Consulting and Innovation President Thom Blischok. “These products offer a very strong value proposition based on quality as well as price. In addition, shoppers will continue their frugal shopping patterns long after the recession ends. And, retailers’ increasingly sophisticated private brand strategies will attract a larger and more diverse shopper base.”

Many private label brands, such as Target’s Archer Farms, Safeway’s O Organics and Supervalu’s Wild Harvest, are now viewed as similar, perhaps even superior, to brand named CPG products. In many categories, private brands are able to compete on quality as well as price, and retailers continue to increase the breadth and depth of their store brand offerings. Kroger, for example, is growing its brands across three tiers: private brands (premium tier), banner brands (mid-tier) and value brands (value tier).

Despite remarkable strides made during the past several years, private label sales are concentrated in the hands of a relatively small number of consumers. The top 50 private label categories, representing 17 percent of CPG categories, account for 69 percent of store brand sales. As a point of comparison, the top 50 national brands represent less than half of total dollar sales. Even heavy private brand buyers allocate just 22 percent of their CPG budget to store brands.

As consumers continue to look at affordability through a new lens, private label penetration in categories such as toilet tissue, ice cream/sherbet and butter are seeing substantial penetration increases. However, private label is losing share in 26 percent of the top 100 CPG categories, with national brands entrenched in categories, such as paper towels, weight control and cat food. And, national brands are gaining ground in key categories, including dog food, sugar and frozen plain vegetables.

The IRI report recommends the following strategic action be considered regarding private label:

• Manufacturers should increase frequency of feature ad and display-based merchandising across key categories/brands with a heavy focus on affordability and unique product attributes.
• Retailers should develop best-in-class marketing, pricing and promotion strategies to ensure maximum relevance and impact among fiscally weary U.S. consumers.
• Manufacturers should evaluate partnership opportunities with key retailer partners to offer consumers solutions-based healthcare and meal solutions.
• Retailers should consider multi-tiered product development efforts to drive appeal across a broad segment of the stores’ key consumer segments.

consumers

Consumers Have Permanently Changed Their Saving and Spending Habits

A new nationwide survey issued today by Citi revealed that consumers across all socioeconomic levels and ethnic groups have made permanent spending and savings adjustments to adapt to the current economic situation. According to the data, 63 percent of Americans surveyed said the way they spend and save has been forever changed as a result of the economic downturn. Only 29 percent said spending and saving would go back to the way it was before the recession.

Citi conducted this nationwide poll as part of its ongoing effort to better understand changes in the needs of the consumers and communities the company serves.

The survey also found that consumers across all income levels and ethnic groups said they plan to continue their adjusted spending and saving habits. More specifically:

• Fifty-nine percent will continue to cut back on everyday expenses.
• Sixty percent will continue to save and invest more.
• Sixty-one percent will continue to cut down on credit card purchases.
• Sixty-three percent will continue to reduce the amount of money they owe.

Eric Eve, Senior Vice President, Global Community Relations at Citi, said, “This new survey points to a profound shift in the way people think about their saving and spending. The current economic environment is altering, perhaps permanently, the way we think about spending money. As Citi changes the way it does business to reflect the new economic realities, it’s important we continue to understand how our customers also have been affected by the economic challenges and pressures they currently face.”

Adjustments Being Made Across All Income Levels

People across all income levels and ethnic groups in the survey said they have made adjustments to the way they spend and save because of the current economic situation.

According to the data, across all income levels:

• Seventy-five percent have cut back on everyday expenses.
• Sixty-two percent have cut down on credit card purchases.
• Fifty-seven percent have reduced the amount of money they owe.
• Fifty-three percent have postponed the purchase of a major item such as an automobile.
• Forty-two percent are taking money out of savings or investments to help pay expenses.
• Thirty-four percent are saving and investing more.

More specifically, those who earn less than $50,000 were most likely to cut back on everyday expenses (80 percent), followed by 76 percent for those who earn $50,000 – $75,000. But even at the top of the income scale, people are making adjustments and cutting back on everyday expenses – 70 percent for those who earn more than $150,000 and 68 percent for those who earn $75,000 – $150,000.

In addition, those in the highest income level were more likely (33 percent) than those in the lowest level (27 percent) to think about postponing retirement due to their economic situation.

African Americans, Hispanics Have Made Greater Adjustments; 40 Percent Working Longer Hours to Make Ends Meet

Despite the spending and savings adjustments being made across all income levels, according to the survey, more African Americans and Hispanics than the national sample have cut back on credit card purchases and have taken money out of savings to pay for expenses. In addition, these ethnic groups said they have been working longer hours to make ends meet and have sought additional education to increase their employment opportunities.

• Sixty-eight percent of African Americans and 66 percent of Hispanics have cut down on credit card purchases (compared to 62 percent of the national sample).
• Forty-seven percent of African Americans and 45 percent of Hispanics have taken money out of savings or investments to help pay expenses (compared to 42 percent of the national sample).
• Forty percent of both African Americans and Hispanics are working longer hours to make ends meet (compared to 32 percent of the national sample).
• Eighty-two percent of African Americans have cut back on everyday expenses (compared to 76 percent of Hispanics and 75 percent of the national sample).
• Thirty-six percent of both African Americans and Hispanics have sought additional education to increase opportunities (compared to 21 percent of the national sample).

Eve added, “Keeping our finger on the pulse of how the economy is affecting our customers and the communities in which they live and work is especially important now, when people are changing the way they spend and save.”

consumers

48% of Consumers Interested in Purchasing a Plug-in Hybrid Electric Vehicle

Plug-in hybrid electric vehicles (PHEVs) are one of the most highly anticipated new product categories of recent years. Promising dramatically improved fuel economy over standard internal combustion engines, PHEVs are expected to drive significant benefits in the form of reduced carbon emissions and lesser dependence on foreign oil. According to a new survey from Pike Research, prospective consumer interest in the category is solid, with 48% stating that they would be “extremely” or “very” interested in purchasing a PHEV with a 40-mile range on a single charge.

“Plug-in hybrids match the driving requirements of most consumers we surveyed,” says managing director Clint Wheelock. “82% of respondents drive 40 miles or less per day, with an average daily driving distance of 27 miles.”

Other key findings of the survey are as follows:

• 85% of consumers stated that improved fuel efficiency would be an important factor when choosing their next vehicle.
• 65% of survey respondents interested in PHEVs expressed a willingness to pay a premium price, over and above the price of a standard gasoline vehicle, with an average premium of 12%.
• Consumers indicated that the availability of workplace, private, and public vehicle charging stations in their local area would be very important.
• 79% of consumers would be interested in investing in a fast-charging outlet for their home; however, willingness to pay is out of line with industry expectations.

consumers

Notebook Industry Growth Continues Despite Recession

Notebooks represented three out of four computers shipped to the U.S. consumer market during the second quarter of 2009 (2Q09). The preliminary figures from IDC’s PC Tracker indicate that the consumer appetite for mobile computers remains unchallenged despite the economic malaise affecting general demand in the U.S. market.

The preliminary data shows that the U.S. PC market, which includes desktops and laptops, contracted by just 1.4% compared to an earlier projection of -3.1%, and this result can be attributed entirely to the consumer notebook market.

Of the four major PC markets assessed in the preliminary results – consumer portables, consumer desktops, commercial portables and commercial desktops – only consumer portables managed positive growth while the others had moderate to severe contraction. What is even more indicative of unabated consumer attraction to mobile computing is that the consumer notebook growth is estimated at a solid 63% year on year. While the commercial desktop and notebook shipments fell by 25% as a result of substantially reduced IT budgets, and the consumer desktop market was down by 9%, the consumer notebook market expanded to a new record of more than 6.3 million units.

Although the performance of the consumer laptop market defies the economic realities facing the average consumer, several factors are conspiring to keep that market in positive territory. First is the fact that notebooks are must-have products that combine entertainment, communications, and productivity features required by consumers. As such, even with economic stress, consumers will continue to invest in such tools to enhance their entertainment, educational, and professional environments. The second factor stimulating demand is pricing. Notebook prices continue to fall with high-performance units available at bargain prices, often below $600. An environment of eroding prices has been made possible by continued improvements in manufacturing capabilities, a reduction in component prices, and tight competition among vendors. The third factor that is helping the consumer notebook market maintain momentum is the emergence of the mininotebook or netbook form factor. This is a product that is designed for maximum mobility at a fraction of the standard notebook price. Finally, the proliferation of activity in the consumer notebook market has led to the emergence of new channels, in particular the telecom carriers, who are now playing a critical role in the distribution of netbooks to their own customers in an effort to bundle new services or even as an incentive to sign up new customers.

With the desktop market severely cannibalized by laptops and relegated to niche markets, the U.S. mobile ratio, or the share of notebooks in total PC shipments, has reached the 58.9% mark in 2Q09. Within the consumer market alone, that ratio is now 74.6%, up from 69% in the previous quarter and 62% in the year-ago quarter. “With this type of performance, vendors will have to focus their attention on consumer segmentation and understanding user behavior so as to design products that meet the needs of specific demographics,” says David Daoud, research manager in IDC’s Personal Computing, PC Tracker and Green IT programs. “Vendors will also have to articulate more compelling strategies to market accessories, peripherals, software, and other products and services that enhance the consumer experience.”

consumers

Over 100 Million Consumers Worldwide are Word of Mouth Advocates

More than 100 million consumers worldwide are Word of Mouth Advocates, a massive, highly influential, yet under-leveraged sales and marketing force, according to research by Zuberance.

Advocates are people who frequently recommend brands and products. Empowered by Social Media, millions of Advocates are:

• Evangelizing their favorite brands and products on Facebook, Twitter, MySpace, Bebo, LinkedIn, and on other social networks, online communities, and forums
• Writing positive reviews on sites like Amazon.com, ePinions, and Angie’s List plus on e-tailers’ and manufacturer websites. (TripAdvisor boasts more than 20 million reviews while Yelp has 5 million user reviews with positive reviews outnumbering negative by 6:1.)
• Posting positive comments about brands and products on YouTube, on blogs like Engadget and Gizmodo or even creating advocate blogs like “Slave to Target”

In addition, millions of Advocates are spreading positive Word of Mouth about brands and products in face to face settings, such as offices, restaurants, golf courses, trade shows, and more.

“Army of Advocates”

“An army of Advocates is evangelizing companies, brands, and products online and offline, and these recommendations lead directly to purchases,” said Rob Fuggetta, Founder & CEO of Zuberance. “Yet many companies are missing a major opportunity to increase sales because they are not identifying and mobilizing these influential Advocates,” Fuggetta added.

In the U.S. alone, about 30 million U.S. adult Internet users are “Word of Mouth Influencers” – adults who are opinion leaders and whose advice is sought, trusted, and acted upon by other consumers, according to eMarketer.

Advocacy is a global phenomenon. According to GfK Roper, 80% of consumers surveyed in 25 countries across five continents frequently recommend brands and products to their friends and colleagues with the average consumer recommending 3.7 brands. The total adult population in the 25 countries included in the Roper study is more than one billion people.

Advocates are Brand’s Most Effective Salespeople

Advocates’ recommendations drive sales. Numerous surveys by independent market research firms have shown that Word of Mouth is up to five times more influential than advertising, email, and search engine marketing. According to a study by Forrester Research, Inc., 84% of business buyers said peers’ Word of Mouth recommendations influenced their purchase decisions while only 24% said blogs impacted their choices. In a global Neilsen survey, 78% of consumers said they trust Word of Mouth recommendations from other consumers while only 26% trust banner ads.

Key Findings of Zuberance Research

The Zuberance study found that:

• Approximately 40% of a company’s customers — a surprisingly high percentage — are highly likely to recommend the company and its products or services to friends or colleagues. Among the companies included in the Zuberance study, the percentage of company’s customers who are highly likely to recommend ranged from 25% for a business products company to 76% for a consumer electronics manufacturer.
• About 25% of a company’s customers are Advocates. This percentage can vary, depending on several factors including the type of company or product and how easy a company makes it for highly-satisfied customers to spread positive Word of Mouth.
• Depending on the size of its customer base, a company may have hundreds of thousands to millions of Advocates. For example, a consumer electronics company with 10 million customers may have approximately one to two million Advocates.

consumers

Consumers Willing to Pay More for Innovation Despite Hard Times

Contrary to expected buying behavior, Retrevo® Pulse, a live report that tracks pricing and demand data for consumer electronics, indicates consumers are willing to pay higher prices for new and innovative products. Trends suggest companies that innovate and develop customer-centric products attract more buyers than companies that simply lower prices and maintain the status quo.

“We’ve seen prices successfully rise for leading edge products that meet customer’s needs,” says Retrevo CEO Vipin Jain. “Despite a 15% year-over-year decline in the overall demand for consumer electronics, there are companies that are innovating and succeeding in driving demand up while raising prices.”

The Retrevo Pulse shows higher Average Selling Prices (ASP) and demand for digital cameras and DVD/Blu-ray players driven primarily by new and innovative features. As standard definition DVD players have become a low-priced commodity, consumers purchase the newer Blu-ray technology with a corresponding higher price tag, raising the overall ASP for video disc players by more than 20%. More than a third of video disc players now shipping are Blu-ray players. Similarly, more than 50% of digital cameras shipping now have optical image stabilization and face recognition technology enabling a higher price, driving up ASPs for digital cameras by more than 10%.

The Retrevo Pulse also indicates that one of the hot categories last holiday season, Home Theater Systems, is seeing a decline in both demand and price. Even though the category has gone through a product refresh cycle, there have been no significant product developments, dissuading consumers from making a purchase, and less than 5% of home theater system products ship with integrated Blu-ray players.

“Today’s shoppers aren’t just looking for the lowest price,” says Vipin Jain, President & CEO of Retrevo. “They’re looking for long-lasting technology and they’re willing to spend more to acquire innovative products. To compete, manufacturers need to deliver new and improved versions of products that meet their customer’s needs, not just their pocketbooks.”

consumers

Recession-Weary Consumers Willing to Spend on Green Products — if They Get Green in Return

Although worried about the economy, consumers are willing to buy energy-efficient products and services – if they see immediate savings, according to a national survey released today.

The survey, one of four annual surveys conducted by The Shelton Group, found that 71 percent of consumers cited saving money as a reason to buy energy-efficient products. Far fewer chose “to protect the environment” (55 percent) and “to protect the quality of life for future generations” (49 percent). That is a notable change from the surveys conducted by The Shelton Group in 2006 and 2007 – before the recession – when consumers cited “to protect the environment” most often.

“Americans are concerned about their jobs, their homes and their bank accounts. They’re now more focused on saving money than saving the Amazon,” said Suzanne Shelton, president of The Shelton Group, which conducted the study. “Yes, conserving energy is the greenest thing anybody can do, but consumers are not buying more efficient products because they want to save the world. They want products that can save them money in the long run.”

Shelton Group keeps a finger on the pulse of shifting consumer attitudes and behaviors about energy efficiency and sustainability through quarterly insight studies: Utility Pulse, Eco Pulse, Green Living Pulse and Energy Pulse. The latest study, Utility Pulse, shows the recession’s profound effect on consumers’ mindset.

“Now more than ever, Americans have a deep desire to be in charge of their lives,” Shelton said. “And seeing utility bills go down $10 to $20 a month brings a lot of peace of mind. It’s a huge motivator.”

According to the survey, consumers said they are likely to take a number of energy-efficient measures after learning they would save over the long term. Among them:

• 44 percent responded they are likely to buy a programmable thermostat; 32 percent already have;
• 43 percent responded they are likely to install insulation in their homes; 26 percent already have;
• 42 percent responded that they are to install a higher-efficiency water heater; 26 percent already have.

The study also showed consumers want results when they buy energy-efficient products, and they are disappointed if they do not see the return on investment they expected:

• Most (53.3 percent) of those who said they had purchased ENERGY STAR brand appliances, completed energy-efficient home renovations or participate in special utility programs had seen the reduction in their utility bill that they had expected.
• Almost a third (32 percent), however, said they had not. This is most likely due to their utility raising rates, or because they are using more energy, thanks to additional gadgets (computers, cell phones, etc.) that they have plugged in. Then there is the third possibility: the “Snackwells effect.”

“A lot of us buy a box of Snackwells and think, ‘They’re low fat, so I can eat all of them.’ Then we wonder why we haven’t lost weight,” Shelton said. “Buying an energy-efficient product can create the same type of effect. We’ll say, ‘I just got a high-efficiency air conditioner, I can lower the temp and make my home even cooler in the summer.’ Then we get frustrated that our new air conditioner isn’t reducing our utility bills.

“That’s why it’s important that utilities and energy-efficient product manufacturers make sure consumers understand what they’re getting and promote behavior change alongside product purchases,” Shelton added. “A high-efficiency heater doesn’t mean we can turn our home into sauna in the winter.”

The survey also found consumers are taking a variety of “green” measures. Here are the – top activities and percentage of consumers taking the action:

• Always turn off lights, unplug things, turn off power strips – 73 percent
• Adjust the thermostat and/or hot water heater setting to save energy – 71 percent
• Replaced most incandescent bulbs with CFLs – 57 percent
• Bought ENERGY STAR brand appliances, water heater, air conditioner, or furnace – 57 percent
• Completed energy-efficient home renovations; for example, added insulation, replaced windows, or caulked – 52 percent.

“Green” measures taken by the fewest consumers include:

• Installed natural / indigenous / low water landscaping – 13 percent

• Telecommute for work – 10 percent

• Participate in utility’s green power program – 9 percent
• Buy carbon offsets for plane trips or for home – 6 percent.