network of executive women annual leadership conference “nals” september 29, 2004 don testa...
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Network of Executive Women Annual Leadership Conference “NALS”
September 29, 2004
www.hoytnet.comDon TestaWilton, [email protected]
Luci SheehanSt. Petersburg, FL
Nancy SwiftScottsdale, AZ480.513.0547
Is Anybody Listening?
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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)
$10.0
$25.6
$43.5
$68.9
$147.1
$7.6$20.7$33.0
$46.2
$83.8
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
1967 2003
5th 20%
4th 20%
3th 20%
2nd 20%
Top 20%
(+31.6%)
(+24.1%)
(+31.9%)
(+49.2%)
(+75.6%)
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 “have-nots” as the upper two quintiles continue to gain faster than the others
2003 Distribution of Total U.S. Income By Population Fifths
Quintile % Distribution of Income Mean Income
I 20%40%
49.8%73.2%
$147.1
II 20% 23.4% $68.9
III 20%
60%
14.8%
26.8%
$43.5
IV 20% 8.7% $25.6
V 20% 3.4% $10.0
Total U.S. Mean $43.3
Source: US Census Bureau. 2003; Dept. of Commerce. Figures do not add to 100 due to rounding.
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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
Source: Selling To The Monied Masses, HBS Review, July - Aug 2004, Page 97
Mass Affluence – Marketing’s New Opportunity, 1970 - 2000
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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
61
47
41
26
28
32
26
29
26
24
20
25
20
17
12
36
39
39
45
42
38
42
39
44
39
40
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41
34
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3
12
17
23
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31
26
29
31
35
2
3
5
6
8
6
7
6
9
9
7
10
18
20
Fzn Prepared Foods
Coffee
Cereal
Disp. Diapers
Vitamins
SS Juices/Drinks
Cough & Cold
Cookies
Pet Food
Carb Beverages
Hair Care
Detergents
Oral Hygiene
Snacks
Paper Products
Exclusive 2 Channels 3 Channels 4+ Channels
Total US. – 52 w/e 12/28/02 – upc-coded products; Grocery w/SC, Mass, Drug, Club & Dollar Store channels only
% of Category Dollars
Source: ACNielsen, Total U.S.
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One Result: Massive migration from Traditional to Value Discount channels
One Point = 109.3MM Trips
Source: AC Nielsen Homescan, 2003
Shopper Trips By Channel (1996 – 2004)(Avg. # Trips/Household/Channel/Year)
95
16
29
8 613
70
1521
11 13
26
0
10
2030
40
50
60
7080
90
100
Grocery Drug TraditionalDiscount
Clubs Dollar Stores Supercenters*
19962004
167156
Total TripsDown 2.7 Billion Trips in Eight Years
Traditional Value Discount
*Includes Target, Wal-Mart and Kmart Supercenters
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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 2008 ∆ 2003 – 2008
Channel $(B) Share $(B) Share Share Retail $ Gain/Loss ($B)
Value Discount
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
Value Discount Total $147.8 19.6% $256.8 28.6% +9.0 $80.8Traditional
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
Traditional Totals $599.4 79.8% $635.7 70.8% -9.0 -$80.8
Military $4.2 0.6% $5.1 0.6% – –
Totals $751.4 100.0% $897.6 100.0% – –
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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85.0%
68.0%
74.4%
51.9%
44.3%
23.6%
15.0%
32.0%
13.1%
26.3%
2.3%
9.9%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
Family HHs Married CouplesMarried Coupleswith Children
<18
Non-FamilyHouseholds
1 Person HHs 1 ParentFamilies
1960 (52.8MM) 2002 (109.3MM)
How traditional households have changed: 1960 – 2002
% of Total U.S. Households(2002 vs. 1960)
Note that the # of 1 person HHs now actually outnumbers the # of married
couples with children under 18
Note that the # of 1 person HHs now actually outnumbers the # of married
couples with children under 18
Source: U.S. Census Bureau, June 12, 2003
Traditional Non-TraditionalTV
advertiser’s traditional
target
TV advertiser’s traditional
target
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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 IslandersSource: 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:
344 377 416 444 481 523 569 618 672 731 794 860 929 1,004
2,155
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2020
Hispanic Buying Power (1997 - 2020)(in billions)
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)
13.3
6.6 7.2
19.3
5.5
8.2
10.5
8.2
4.6
8.5
11.6
19.3
5.8
12.7
0
5
10
15
20
25
Wal-MartTraditional
KmartTraditional
Target Wal-MartSupercenter
KmartSupercenter
SAM's Costco
Total Hispanic
Source: IRI InfoScan
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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
35 – 44
14.2
16.0
13.0
13.2
12.7
12.8
12.5
12.3
45 – 54
55 – 64
13.4
8.6
14.7
11.8
11.3
11.9
11.3
10.8
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
Base (MM) 281.4 289.9 337.8 403.7
Source: U.S. Census, Department of Commerce, From the 2004 World Almanac, Pg. 379
30.2
22.0
26.2
26.5
25.5
23.2
24.8
22.1
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Source: GMA, Opinion ‘98; U.S.B.L.S. 2000; Beverage Marketing, 1999
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.
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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:
1960 – Mass Media Matures 2004 – Mass Media, RIP
TV channels per home:
5.7
Magazine titles: 8,400
Radio stations:
4,400
TV channels per home:
82.4
Internet broadcast stations:25,000+
Radio stations:13,500
Magazine titles:
17,300
4.4 billion pages
indexed by Google
Media Proliferation 2004 vs. 1960
% of Email Identified as Spam
June, 2003
July, 2004
49%
65%Source: Brightmail.com Aug. 2004
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Even when consumers do focus on media, more than 70% use different types of media simultaneously
Multi-Tasking Measured Media – October, 2003
TelevisionWhile watching:
RadioWhile listening:
NewspapersWhile reading:
OnlineWhile connected:
74%Read the newspaper
57%Go online
52%Watch TV
62%Watch TV
66%Go online
47%Read the newspaper
50%Listen to the radio
52%Listen to the radio
18%Watch TV
20%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
17.5
13.9 13.2
11.210.1
14.1
10.39.0
7.16.1
3.4 3.6 4.2 4.1 4.0
02468
101214161820
1960 1970 1980 1990 2003
Food Food at Home Purchased Meals & Beverages
Source: USDA, ERS, August, 2004
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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
Radio
Internet Ads
FSPs
Direct Mail
FSIs
In-Store TV
Network TV
Newspapers
DVD Trailers
High Impact Product PlacementsRetailtainment
Outdoor Signage
Coupons
Movie Theater Ads
Customer Service
Content Implants
In-Store Sampling
Mega-EventSponsorship
Cable TV
Permission-Based E-mails
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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
Women as primary shoppers America’s love of entertainment
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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
64
36
74
26
72
28
67
33
4753
62
38
78
22
0
10
20
30
40
50
60
70
80
90
Females Males
Grocery
Mass
Supers
Drug
Conv/Gas
WHC
Dollar
As males age, they handle increased share of trips
As males age, they handle increased share of trips
Share of Channel Trips By Gender, 2002
Source: ACNielsen Channel Blurring Study, 2002
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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
$84.45
$42.62
$35.81
$21.24
$12.17
$11.63
$80.64
$34.42
$26.96
$18.18
$9.01
$9.40
Warehouse Clubs
Mass
Grocery
Drug
Dollar Store
Conv/GasMalesFemales
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
Source: Bureau of Economic Analysis, U.S. Dept. of Commerce, 2004
U.S. Household Expenditures By Category (% Growth 1992 – 2002)
42.7 44.149.6
60.765.7
71.9
81.4 82.3 84.9
94.699.4 99.5
0
10
20
30
40
50
60
70
80
90
100
Food At Home Personal Care Clothing/Jewelry
HouseholdOperations
Housing Transportation Food AwayFrom Home
Medical Care Religion &Welfare
PersonalBusiness
Education &Research
Recreation
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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 ad-blocking 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?
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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 AssociatesConsumer Outlook, 4th Quarter, 2003
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Q&A
Thank YouWe have enjoyed our time with you and hope that this has been both informative and fun.
www.hoytnet.comDon TestaWilton, [email protected]
Luci SheehanSt. Petersburg, FL
Nancy SwiftScottsdale, AZ480.513.0547