Transcript Today

Network of Executive Women
Annual Leadership Conference “NALS”
Is Anybody Listening?
September 29, 2004
www.hoytnet.com
Don Testa
Wilton, CT
203.762.7092
[email protected]
Luci Sheehan
St. Petersburg, FL
727.360.4466
[email protected]
Nancy Swift
Scottsdale, AZ
480.513.0547
[email protected]
Today

The Consumer Landscape

How In Touch Are We?

Q&A
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To understand current consumer purchasing behavior, a good starting
point is to look at U.S. population income trends over the past 35 years:
Mean Income Trends By Population Fifths, 1967 – 2003
(2003 CPI Adjusted Dollars – Per Household)
160.0
140.0
$147.1
(+75.6% )
$68.9
(+49.2% )
$43.5
(+31.9% )
$25.6
(+24.1% )
$10.0
(+31.6% )
120.0
100.0
80.0
Top 20%
$83.8
60.0
40.0
20.0
0.0
2nd 20%
3th 20%
4th 20%
5th 20%
$46.2
$33.0
$20.7
$7.6
1967
2003
Source: US Census, Bureau of Labor Statistics, 2003. All data adjusted for inflation.
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Today, the U.S. population appears to be segmenting into “haves” and “havenots” as the upper two quintiles continue to gain faster than the others
2003 Distribution of Total U.S. Income By Population Fifths
Quintile
I
20%
% Distribution of Income
49.8%
40%
Mean Income
$147.1
73.2%
II
20%
23.4%
$68.9
III
20%
14.8%
$43.5
IV
20%
V
20%
60%
8.7%
26.8%
3.4%
Total U.S. Mean
$10.0
$43.3
Source: US Census Bureau. 2003; Dept. of Commerce. Figures do not add to 100 due to rounding.
NEWSeminarR7.ppt
$25.6
4
The fact is, however, that since 1970 general prosperity has risen significantly, thereby
opening-up opportunities to market higher priced “Mass Affluence” products such as White
Strips, Swiffer, MP3s and DVD Players
Mass Affluence – Marketing’s New Opportunity, 1970 - 2000
Source: Selling To The Monied Masses, HBS Review, July - Aug 2004, Page 97
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Nonetheless, the result of continuing economic pressure for the majority of consumers is
that Value Shopping has become a national obsession, leading to escalating disloyalty as
consumers switch back and forth among different channels for low prices and best values
Exclusive
Paper Products
Snacks
Oral Hygiene
12
Carb Beverages
Pet Food
Cookies
Cough & Cold
Disp. Diapers
Cereal
Coffee
Fzn Prepared Foods
4+ Channels
35
17
34
20
20
31
41
18
29
25
10
42
20
26
40
24
26
9
27
9
44
29
24
39
26
38
8
24
45
6
23
39
47
6
22
42
41
7
26
32
26
6
25
42
28
7
31
39
SS Juices/Drinks
Vitamins
3 Channels
33
Detergents
Hair Care
2 Channels
5
17
39
61
12
36
% of Category Dollars
Total US. – 52 w/e 12/28/02 – upc-coded products; Grocery w/SC, Mass, Drug, Club & Dollar Store channels only
Source: ACNielsen, Total U.S.
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3
2
3
One Result: Massive migration from Traditional to Value Discount
channels
One Point = 109.3MM Trips
Shopper Trips By Channel (1996 – 2004)
(Avg. # Trips/Household/Channel/Year)
Traditional
Value Discount
Total Trips
Down 2.7 Billion
Trips in Eight Years
167
156
*Includes Target, Wal-Mart and Kmart Supercenters
Source: AC Nielsen Homescan, 2003
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Another Result: Expert predictions that the defections will not
only continue but accelerate over the next five years:
Projected CPG Volume and Share Changes By Channel: 2003 – 2008 ($B)
2003
Channel
∆ 2003 – 2008
2008
$(B)
Share
$(B)
Share
Share
Retail $
Gain/Loss ($B)
Supercenter
$85.2
11.3%
152.6
17.0%
+5.7
+$51.1
Clubs
$51.9
6.9%
$77.9
8.7%
+1.8
+$16.2
Dollar Stores
$10.7
1.4%
$26.3
2.9%
+1.5
+$13.5
$147.8
19.6%
$256.8
28.6%
+9.0
$80.8
Value Discount
Value Discount Total
Traditional
88%
Grocery
$422.8
56.3%
$433.9
48.3%
-8.0
-$71.8
Mass
$49.9
6.6%
$47.6
5.3%
-1.3
-$11.7
C-Stores
$93.5
12.5%
$107.8
12.0%
-0.5
-$4.5
Drug Chains
$33.2
4.4%
$46.6
5.2%
+0.8
+$7.2
$599.4
79.8%
$635.7
70.8%
-9.0
-$80.8
$4.2
0.6%
$5.1
0.6%
–
–
$751.4
100.0%
$897.6
100.0%
–
–
Traditional Totals
Military
Totals
Source: Willard Bishop Consulting – Channel Blurring Redefines the Grocery Market, June 2004
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In addition to income considerations, it is clear that the days of “Ozzie &
Harriet”, “Leave It To Beaver” and “Father Knows Best” are histoire:

In 2002, only 23.6% of U.S. households could be considered “traditional families” –
that is, consisting of a married (male and female) couple with at least one child
under 18 – versus 44.3% in 1960 – a decline of 39%.

60% of women 16 years and older are now in the workforce and unavailable for
cooking leisurely meals at home – a 39% increase since 1970.

Singles in total now comprise 86MM souls or 41% of the adult population – and are
the biggest eat-away-from-home consumers.

The percentage of women at age 44 with four children or more plummeted from
36.0% in 1970 to 11.0% in 2000.

10% of the adult population says it will never marry.

Unmarried adults now head nearly 50% of total American households and will soon
constitute a new “unmarried majority”
Source: U.S. Census Bureau, August, 2004
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How traditional households have changed: 1960 – 2002
% of Total U.S. Households
(2002 vs. 1960)
1960 (52.8MM)
2002 (109.3MM)
Traditional
90.0%
TV
advertiser’s
traditional
target
85.0%
80.0%
74.4%
68.0%
70.0%
60.0%
Non-Traditional
Note that the # of 1 person HHs now
actually outnumbers the # of married
couples with children under 18
51.9%
50.0%
44.3%
40.0%
32.0%
30.0%
26.3%
23.6%
20.0%
15.0%
13.1%
10.0%
9.9%
2.3%
0.0%
Family HHs
Married CouplesMarried Couples Non-Family
with Children
Households
<18
Source: U.S. Census Bureau, June 12, 2003
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1 Person HHs
1 Parent
Families
While the traditional family continues to fragment, growing ethnic segments
each require specialized marketing and merchandising approaches
U.S. Ethnic Trends As a % of Total Population, 2000 – 2050
Segment
2000
2010
2020
2050
∆ vs. 2000
White Alone, Non-Hispanic
68.7
64.3
60.4
48.9
7.4
Hispanic
12.5
15.2
13.5
23.8
187.9
Black
12.6
12.9
13.3
14.3
31.3
Asian
3.7
4.6
5.3
7.8
212.9
A/O (1)
2.5
3.0
3.5
5.2
217.1
TOTALS
100.0
100.0
100.0
100.0
50.9
BASE (MM)
284.9
312.8
340.9
430.1
(1) American Indian, Native Hawaiian, Alaskan Native and other Pacific Islanders
Source: U.S. Census 3/18/2004
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It is estimated that Hispanic buying power will exceed $1 trillion by
2010 and $2 trillion by 2020:
Hispanic Buying Power (1997 - 2020)
(in billions)
2,155
344
377
416
444
481
523
569
618
672
731
794
860
929 1,004
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2020
Source: The Hispanic Consumer Market in 1999 and Forecasts to 2020, Standard & Poor’s DRI, 1999
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But there is not much time to think about this: Hispanic shoppers already make
more trips to Target, SAM’s and Costco than non-Hispanics and just as many trips
to Wal-Mart
Trips Per Shopper Per Year:
Hispanics vs. All Shoppers, Leading Accounts, Summer, 2003
(Average # Trips/HH/Year: All Shoppers)
25
Total
19.3 19.3
20
15
Hispanic
13.3 12.7
10.5
10
6.6
7.2
11.6
8.2 8.5
8.2
5.8
5.5
5
4.6
0
Wal-Mar t
Tr aditional
Km ar t
Tr aditional
Targe t
Wal-Mar t
Supe rce nte r
Source: IRI InfoScan
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Km ar t
Supe rce nte r
SAM's
Cos tco
America’s Aging Population and the Rapidity With Which This Is Growing
Also Require Different Marketing and Merchandising Approaches:

Between now and 2010, a baby boomer will turn 50 every 7 seconds.

Between 1990 and 2010, the number of Americans 55 years and older will jump
from 52.4MM to 81.1MM – an increase of approximately 29MM souls or 55%.
• This is over twice the rate of the growth of the total population in general during
this period which will increase only 21% or about 1% per year

By 2025, the 55+ group will comprise the largest single segment of the U.S.
population at 32.7% and those 65+ will comprise 20.8% (vs. 13.9% in 2000 and
9.8% in 1960)

Life expectancy in this country is now 76.4 years for those born in 1998 vs 68.2
years for those born in 1950 and 70.8 years for those born in 1970

By 2010, 45 - 64 year olds will outnumber 25-44 year olds and comprise the largest
single segment of the U.S. population
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Ask yourselves: How does the following profile change your
marketing or merchandising approaches, if at all?
% Population By Age Group: 2000 – 2050
2000
2010
2025
2050
Under 5
6.8
6.7
6.7
6.7
5 – 14
14.6
13.1
13.2
13.1
15 – 24
13.9
14.3
12.9
13.1
25 – 34
14.2
13.0
12.7
12.5
35 – 44
16.0
45 – 54
13.4
55 – 64
8.6
65+
12.4
13.2
18.5
20.3
85+
1.5
1.9
2.2
4.8
100+
N/A
0.0
0.1
0.3
281.4
289.9
337.8
403.7
Base (MM)
30.2
13.2
26.2
14.7
22.0
11.8
15
25.5
11.3
26.5
Source: U.S. Census, Department of Commerce, From the 2004 World Almanac, Pg. 379
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12.8
11.9
12.3
24.8
11.3
23.2
10.8
22.1
Underpinning These Trends Is a Feeling That There Isn’t Enough Time In The Day
To Get Everything Done, Especially Cooking Family-centered Home-style Meals:

The number of families with both parents working has grown from 50-77% of the
population since 1970.

The average family spends less than 20 minutes per day in meal preparation:
• More than 33% of shoppers bring home ready-to-eat dinners at least twice a
week
• 35% of shoppers say they “use a microwave almost all the time”
• 47% of shoppers say they “only cook because they have to”

By 2005, many Americans will never have cooked a meal from scratch.

65% of Americans say that they are time pressured and that this feeling is growing
stronger while another 45% say they have less leisure time than they did two years
ago.
Source: GMA, Opinion ‘98; U.S.B.L.S. 2000; Beverage Marketing, 1999
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In addition to feeling constantly time-pressured, consumers are reeling from Information
Overload, causing most to “blank-out” on all but the most personal or relevant messages:
Media Proliferation 2004 vs. 1960
1960 – Mass Media Matures
TV channels
per home:
5.7
Radio
stations:
4,400
Magazine
titles:
8,400
2004 – Mass Media, RIP
4.4 billion
pages
indexed by
Google
TV channels
per home:
82.4
Internet
broadcast
stations:
25,000+
Radio
stations:
13,500
% of Email Identified as Spam
Source: Brightmail.com Aug. 2004
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June, 2003
49%
July, 2004
65%
17
Magazine
titles:
17,300
Even when consumers do focus on media, more than 70% use
different types of media simultaneously
Multi-Tasking Measured Media – October, 2003
Television
Radio
Newspapers
Online
While watching:
While listening:
While reading:
While connected:
74%
57%
52%
62%
Read the newspaper
Go online
Watch TV
Watch TV
66%
47%
50%
52%
Go online
Read the newspaper
Listen to the radio
Listen to the radio
18%
20%
Watch TV
Read the newspaper
Source: October 2003 BIGresearch SIMM survey
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While the foregoing presents numerous and often bewildering challenges to both CPG
marketers and retailers, these challenges are now doubly difficult because food has
deteriorated to such a relatively low involvement purchase
Food as a % of Personal Consumption $: 1960-2003
20
18
16
14
12
10
8
6
4
2
0
17.5
14.1
13.9
13.2
11.2
10.3
10.1
9.0
7.1
3.4
1960
Food
4.2
3.6
1970
1980
Food at Home
4.1
1990
4.0
2003
Purchased Meals & Beverages
Source: USDA, ERS, August, 2004
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6.1
19
Exacerbating all of these issues is media fragmentation which has forced both marketers
and retailers to replace traditional advertising approaches with “touchpoints” and seek-out
360º strategies to envelope consumer targets
Media Fragmentation Update – 2004

In the 1960’s, an advertiser could reach 80% of U.S. women with a spot aired simultaneously
on the three national TV networks but to duplicate this today would require 100 TV channels.

Prime time ratings of TV broadcast networks fell from approximately 51MM viewers in 1977 to
30MM today – a drop of 41.5%.

The average U.S. household now receives 100 TV channels compared with 27 in 1994.

Cable TV channels now command a 52% audience share in prime time or 8 share points
greater than broadcast TV at 44%.

Digital video recorders will be in 20% of U.S. households by 2008 and in nearly 50% by 2009.
Between 65 and 75% of current DVR households now fast forward through commercials.

Daily newspaper readership has fallen from 81% of households in 1964 to 55% in 2002.

And so on – you get the point.
Source: http://www.backchannelmedia.com/newsletter/20040728/04=print.html
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Touchpoints: Communicating Is No Longer a Clean Shot
PermissionBased E-mails
Radio
Internet Ads
Print
Cable TV
FSPs
Mega-Event
Sponsorship
Direct Mail
In-Store
Sampling
FSIs
Content
Implants
In-Store TV
Customer
Service
Network TV
Movie
Theater Ads
Newspapers
Outdoor
Signage
DVD Trailers
Coupons
Retailtainment
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High Impact
Product Placements
The Good News: In spite of the changes – and the new and often unfamiliar
approaches required to cope with them – some things remain the same
America’s love of entertainment
Women as primary shoppers
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To confirm a fact you all know – women are the primary shoppers in all channels
but Convenience and Gas which has always been male-dominated
Share of Channel Trips By Gender, 2002
As males age, they handle
increased share of trips
90
74
80
70
64
72
78
67
62
53
60
47
50
36
40
26
30
28
33
22
20
10
0
Females
Males
Source: ACNielsen Channel Blurring Study, 2002
NEWSeminarR7.ppt
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38
Grocery
Mass
Supers
Drug
Conv/Gas
WHC
Dollar
In addition to being primary shoppers, women consistently
outspend men in all channels, including Convenience and Gas
Avg. Expenditures Per Shopping Trip By Channel & Gender, 2002
Conv/Gas
$9.40
$11.63
Doll ar Store
$9.01
$12.17
Drug
Grocery
Mass
M ale s
Females
$18.18
$21.24
$26.96
$35.81
$34.42
$42.62
$80.64
$84.45
Warehouse Cl ubs
Average $ Basket Size
Total U.S. – 52 weeks ending 12/28/02
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The difference between women shoppers today and those of the 1960’s and 1970’s is that
they are significantly better educated and better informed, thereby challenging both
manufacturers and retailers to connect on deeper, more relevant and respectful levels
Educational Attainment By Gender: 1960 - 2003
(% of Population 25 years or older)
High School Graduates
Collage Graduates
Year
Male
Female
Totals
Male
Female
Totals
% Woman
To Total
1960
39.5
42.5
41.1
9.7
5.8
7.7
75.3
1970
55.0
55.4
55.2
14.1
8.2
11.0
74.5
1980
69.2
68.1
68.6
20.9
13.8
17.0
76.4
1990
77.7
77.5
77.8
24.4
18.4
21.3
86.4
2000
84.2
84.0
84.1
27.8
23.6
25.6
92.2
2003
84.1
85.0
84.6
28.9
25.7
27.2
94.4
Source: http://www.infoplease.com/ipa/A0779809.html
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Despite what Americans say about being time pressured, the fact
is that Americans will make time to have fun and be entertained:
In 2002, Americans spent a total of $620 billions on “recreation” – videos, movies,
amusement parks, spectator sports, rock concerts, wheel goods, boats and theater, etc.:

This $620B is almost 3 x’s more than Americans spent for education and research in
2002 ($186B) and 46% more than they spent for all clothing, accessories and
jewelry combined

This $620B is 25% more than what the BLS says Americans spent on Food At Home
in 2002 ($602B)

Americans spent an additional $415B on eating out in 2002 which is NOT included in
the “recreation” numbers.
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In addition, if one uses spending growth rates to judge what is really important to
Americans, having fun and being entertained is America’s #1 priority while eating at home is
last
U.S. Household Expenditures By Category
(% Growth 1992 – 2002)
100
94.6
90
81.4
80
82.3
99.4
99.5
84.9
71.9
65.7
70
60.7
60
50
49.6
42.7
44.1
40
30
20
10
0
Food At Home Pers onal Care
Clothi ng/
J ewel ry
Household
Operations
Housi ng
T rans portation Food Away
From Home
Source: Bureau of Economic Analysis, U.S. Dept. of Commerce, 2004
NEWSeminarR7.ppt
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Medic al Care
Reli gi on &
Wel fare
Pers onal
Bus ines s
Education &
Res earc h
Rec reati on
Net on the consumer landscape – the key issues as we perceive
them:

Capturing share in an atomized consumer market that defies traditional approaches.

Communicating effectively with this market in an age of media fragmentation,
information overload, time pressures, consumer indifference, multi-tasking and adblocking technology.

When to shift gears and reengineer to acknowledge that “niche” is now mainstream.

Insuring that one’s organization understands that diversity is no longer a diversity
issue but a market-driven necessity.
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How In Touch Are We?
NEWSeminarR7.ppt
29
On Making The Connection
“Everyone says they’re targeting women, yet most women don’t feel understood by
marketers. According to the Yankelovich Monitor, 59% of women feel
misunderstood by food marketers…”
Dori Molitor, from Marketing to Women
by Martha Barletta, pg. 158. Dearborn Trade Publishing, 2003
“More than two thirds (69%) of consumers say they feel retailers do not put their
needs first. There is a serious disconnect between what consumers need and how
they want it, and what retailers offer.”
Kurt Salmon Associates
Consumer Outlook, 4th Quarter, 2003
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Q&A
NEWSeminarR7.ppt
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Thank You
We have enjoyed our time with you and hope
that this has been both informative and fun.
www.hoytnet.com
Don Testa
Wilton, CT
203.762.7092
[email protected]
Luci Sheehan
St. Petersburg, FL
727.360.4466
[email protected]
Nancy Swift
Scottsdale, AZ
480.513.0547
[email protected]