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Marketing News

Every month we'll bring you local, regional and national marketing news to give you insight into the minds of shoppers. Looking for information specific to your business? Drop us an e-mail or give us a call and we'll research your industry and put together a customized marketing report.

DEMOGRAPHICS: Gen Y and the Future

COMPETITIVE MEDIA UPDATE: Newspapers Could Lose $4 Billion to Internet

FOCUS ON MARKETING: The New Affluent Consumer

CONSUMER NEWS: Shopper Study Challenges Traditional Retail Beliefs

ADVERTISING: Marketers Can’t Think Pink Anymore

SPECIAL FEATURE: Future Purchases

 

DEMOGRAPHICS: Gen Y and the Future
It is intriguing to look at the rising generation of consumers and how they shop online because their habits and preferences as teen shoppers hint at what we might expect from them as they age and enter the market for bigger-ticket items.

Generation Y is often considered the first “wired” generation. These young people are growing up with cell phones, computers, and the Internet. Harris Interactive’s YouthPulse syndicated research study of youths indicates that consumers under the age of 21 are spending some $22 billion online a year. That figure represents about 16 percent of their total spending.

Older youths in that demo (18-21) make the most online purchases each year: about 15. At least some of those purchases were at a site like eBay: About half of 18- to 21-year-olds have bought something in an online auction in the past year, according to the YouthPulse research. [See below for info on how your station can easily implement online auctions.]

What’s even more interesting is that while youths are spending that $22 billion online, they spend another $20 billion in traditional stores – making purchases that they’ve researched online. (Something to think about: One of the reasons older teens say they don’t purchase products online is because of shipping charges.)

Shopping habits, like brand loyalty and so many other preferences, are often formed during the teen years. It’s not a huge stretch to see how these young online shoppers will research and purchase products as they get older.

“The future of online commerce … seems promising. Our view is that there are aspects of the physical shopping experience that will be difficult to compete with online and that retailer shopping experiences will always hold a special place,” say Kelly Bagnaschi and John Geraci, editors of Harris Interactive’s Trends & Tudes, where the YouthPulse data was published. “Rather than try to replicate or compete with these experiences, online merchants should try to create their own unique experiences, using benefits of their medium that cannot easily be replicated in stores. [What better way than Radio to convey these benefits!] (Source: BedTimes, 3/05)

COMPETITIVE MEDIA UPDATE: Newspapers Could Lose $4 Billion to Internet
Newspapers' long-secure classified ads business has already eroded noticeably and could ultimately cost newspapers about 9 percent of its total ad revenues by 2007, two executives from consulting giant McKinsey & Co. told attendees of the Newspaper Association of America's annual conference earlier this week.

Luis Ubinas and Jochen Heck warned that newspapers could lose $4 billion of "highly profitable" classified revenue by 2007 -- or around 20 percent of newspapers' 2004 classifieds revenue and just under 9 percent of the $46.6 billion in total newspaper ad revenue last year -- if trends that afflict help-wanted classifieds spread to automotive and real-estate classifieds.

It's hard to overstate the importance of classifieds to newspapers' bottom lines. Those pages of pure agate type are so profitable that, according to Mr. Ubinas, one newspaper executive said classified ads were a "better business than printing dollar bills."

But the proliferation of online sites as diverse as monster.com, realestate.com and craigslist.com has substantially complicated newspapers' hold on the format. "Once upon a time, classifieds was the exclusive property of newspapers," said Mort Goldstrom, the NAA's vcie president of advertising. "That time is over."

The chilling part, Mr. Ubinas said, is that the key problem is not the competitors but rather what their pricing is doing to the entire classifieds model, calling it "price destruction." Another chilling fact: "Online is capturing all the growth," he said.

A McKinsey analysis, Mr. Ubinas said, showed that an "Internet effect" began affecting help-wanted classifieds as early as 1995 and has resulted in an ever-widening gap between what historical trends would portend as expected help-wanted linage and what help-wanted's true results were. In 2003, Mr. Ubinas reported, help-wanted classifieds were off 50 percent from levels that would be expected had decades of previous trend lines held true. The dire prediction of huge revenue losses by 2007 would occur if these trends spread to automotive and real estate classifieds.

"Newspapers have valuable assets" in the classifieds space, Mr. Heck said. "But online is replicating them." Newspapers could fight back, Mr. Heck said, if they adopted tactics like maintaining market share "at all costs"; putting compelling content around listings; automating many ad-ordering processes; and developing a finer understanding of what makes local markets tick. "It's not too late" to recover, Mr. Goldstrom said, "but the door of opportunity is closing quickly."

Not all attendees were so optimistic. One, heading down the corridor after the presentation, was overheard telling a colleague he now feared the classifieds business "would never come back" to where it once had been. (Source: AdAge.com, 4/20/05)

FOCUS ON MARKETING: The New Affluent Consumer
Much has been written about what consumer researchers and marketers call the "New Affluent." Among other things, this group is often credited with helping drive the market for luxury goods.

But recently released results of a survey show something contradictory about the New Affluent. Apparently, despite their wealth and purchasing power, many prefer to think of themselves as middle class, and this has a dramatic impact on their shopping habits.

The New Affluent consumers have been defined in various ways. For its survey, Visa targeted individuals age 35-54 whose annual household incomes are at least $125,000. That’s only about 7 percent of the population, but they account for nearly half of all U.S. household income and hold nearly half the nation’s net worth.

Despite that wealth, some 90 percent of the people in this demo consider themselves “middle class” or “upper middle class.” And about three-quarters say they are “embarrassed by or dislike being identified by terms such as ‘wealthy,’” according to the survey.

Moreover, they say that “honesty and integrity” are the key values they’d like to pass along to the next generation. “Social status” and “money” ranked near the bottom.

These New Affluent consumers carry those modest attitudes with them when they shop. They are more likely than average Americans to clip coupons and about one-third of them have hunted garage sales or going-out-of-business sales for good deals. Additionally, two-thirds of the New Affluent report shopping regularly at club discount or warehouse stores, compared to only half of the general population.

“As the New Affluent bring their largely middle-class values and identity to bear in the way they believe, live, and shop, the rules for marketing to upper-income consumers are being rewritten,” says Michael J. Weiss, a demographic expert and author of The clustered World: How We Live, What We Buy, and What It All Means to Who We Are. “Their tastes are a lot more midscale than their wallets.” (Source: BedTimes, 3/05)

CONSUMER NEWS: Shopper Study Challenges Traditional Retail Beliefs
The study commissioned by CPG industry giant Unilever, "Trip Management: The Next Big Thing," (TM: TNBT), which illustrates where people shop and their different needs on different shopping trips, as well as how supercenters have changed the way consumers shop, topples long-held retailer assumptions, according to the company. Key findings of the TM: TNBT survey will be revealed at the 2005 FMI Show on May 1 to May 3, in Chicago.

The initial findings say that almost two-thirds of all shopping trips (62 percent) are quick trips, one-quarter are fill-in trips, while the classic stock-up is becoming more fragmented, accounting for only 13 percent of trips. Unilever is using the findings to develop, with its retail customers, solutions to demanding consumer needs. TM: TNBT the first in a series of studies on shopping trip motives and behavior commissioned by Unilever.

Michael Polk, group v.p. Unilever North America and president of U.S. Foods, noted in a statement: "Understanding how our consumers are shopping today is critical in building strong businesses together with our customers. This landmark trip management research is an example of the powerful retail activities we are undertaking to help us connect with our consumers and achieve positive sales growth for both our customers' and our company's business."

TM:TNBT delves into the motivational patterns behind how shoppers use the various retail outlets available to them. According to Unilever, it goes beyond previous research to show why more than 200 categories of products are bought at each kind of outlet on the different types of shopping trips that shoppers make, and, in some instances, deviates from established retailer beliefs. For example, the study says that 70 percent of all category-level purchase decisions are made before shoppers even enter the store. By connecting consumers' motives on each trip with the retail outlet that's selected and the particular products bought, retailers are able to see where opportunities for retail growth exist, Unilever says. The company adds that retailers can then understand the types of trips they're getting as well as those they're missing, and find out what they can do about it.

The study additionally found that shoppers treat each retail channel differently. When it comes to buying the more than 200 categories of food and nonfood items that can be purchased at a grocery store, clear patterns emerged. Shoppers value smaller-box stores differently from larger stores, and consequently they make different types of trips to each. The kinds of trips they take determine how much time and money they'll spend, along with which parts of the store they'll visit. The reason that a shopper makes a trip was the single best predictor of store selection and the items that were likely to be bought, according to the study. Also, TM:TNBT addresses the thorny issue of volume stagnation in the center store.

Among the projects that Unilever has devised as a result of the study's findings is a stand-alone meal solution center combining frozen, fresh/refrigerated, and shelf-stable meal components, which can be used to help satisfy shoppers' need for quick trips for meals, while at the same time help to deliver growth for the retailer, which wants to capture more of these kinds of trips.

The research for TM: TNBT was conducted in 2004, and data was uniquely collected from more than 2,400 shoppers in three key geographies where the supercenter format had a large presence, minimal presence, or no presence at all. Additionally, a panel of nearly 900 shoppers described in detail almost 4,500 store visits over a two-week period in personal online diaries. Store visits included activity at retail channels such as supercenters, supermarkets, chain drug, convenience stores, mass merchants, and wholesale clubs. The margin of error was +/-3 percent.

Unilever is committed to developing this initiative and plans to launch two other TM:TNBT studies in the United States later this year -- one concentrating on home and personal care, and the other on Hispanic consumers. (Source: Progressive Grocer, 4/14/05)

ADVERTISING: Marketers Can’t Think Pink Anymore
Many marketers are courting one of the most powerful consumer segments in society today: women. The voice of the female consumer, once ignored and overlooked by product manufactures in the past, is now being heard loud and clear.

According to Growth Strategies, women make or influence 80 percent of consumer purchases, buying 81 percent of electronics, 75 percent of over-the-counter drugs, and 65 percent of new cars. Women also handle 75 percent of family finances and account for nearly $2 trillion in consumer spending each year.

Connecting with Women Buyers - The power of the female consumer has changed the way many companies are branding and positioning their products in the marketplace. Even consumer categories that have traditionally targeted male consumers such as financial services, home improvement and automotive are wooing women buyers.

So how can marketers reach women more effectively? More companies are starting to seriously examine the lifestyles of women and come up with solutions that cater to their desires and needs.

Author Emily Fromm’s special report on marketing to women discusses the steps that companies are taking in order to reach this segment. Here are a few:

Product Development – Automaker, Volvo designed, the YCC and promoted the brand as “the first car designed by women for women”; Telecommunications company, Nokia designs and markets cell phones as a lifestyle necessity and fashion accessory. Radio Shack’s heart-rate monitors, Sony’s baby monitors and Epson’s scrapbooking tools are all products designed to appeal to women. Financial services like Wells Fargo, Merrill Lynch and Charles Schwab are targeting women with their products and services specifically created for female investors, entrepreneurs and executives.

Marketing Partnerships – Martha Barletta, author of Marketing to Women: How to understand, Reach and Increase Your Share of the World’s Largest Market Segment notes that women influence 80 percent of car purchases and make 65 percent of service and repair decisions. More automakers are creating marketing partnerships to reach women. Hyundai sponsors the Ladies Professional Golf Association and the Women’s United Soccer Association. Luxury automaker, BMW and the Susan G. Kormen Breast Cancer Foundation promote awareness with the “Drive for the Cure” program.

Thoughtful Advertising Creative – Marketers are creating advertising content which is much more friendly to women in content and tone. For example, ads for some electronic brands go beyond the technical aspects by emphasizing aesthetics and usefulness. A $350 million multi-media ad campaign from Home Depot depicted families and couples working on home-improvement projects together. (Source: Growth Strategies, February 2005)

 

SPECIAL FEATURE:BIGresearch: Future Purchases
High gas prices may have consumers thinking twice before making high-dollar investments…6 month purchase intentions for computers, furniture, home appliances, stereo equipment, TV, DVD/VCR, digital cameras all down in April compared to last month. Autos, major home improvement/repair up slightly, while house, jewelry/watch, and vacation travel flat.

Spring weather and foliage enticing consumers to get outdoors and spruce up their surroundings…lawn & garden is on the rise from last month and last year, according to the BIGresearch Diffusion Index (those who say they’ll spend less subtracted from those who’ll spend more). With Linens/Bedding/Draperies also up, it looks like they’re planning to improve the indoors as well:

Retail Merchandise Categories - 90 Day Outlook

(April 05 compared to March 05 and April 04)

Category	March 05	April 04	Category	March 05	April 04
Children's	DOWN	DOWN	Toys and Games	DOWN	DOWN
Women's Dress	DOWN	DOWN slightly	CDs/DVDs/Videos/Books	DOWN	FLAT
Women's Casual	DOWN	UP	Electronics	DOWN	FLAT
Men's Dress	DOWN	DOWN	Groceries	DOWN	DOWN
Men's Casual	DOWN	UP	Home Improvement	UP	DOWN
Shoes	DOWN	FLAT	Lawn & Garden	UP	UP
HBC	DOWN	DOWN slightly	Home Furniture	DOWN	DOWN
Dining Out	DOWN	DOWN	Decorative Home Furnishings	DOWN	FLAT
Sporting Goods	DOWN	DOWN	Linens/Bedding/Draperies	UP	UP slightly

(Source: BIGresearch, 4/15/05)