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Jim Taylor Jim Taylor Presentation Transcript

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  • The New Economy Rag: Media, Recession and Shoppers Digital Publishing & Advertising Conference Dr. Jim Taylor Harrison Group www.harrisongroupinc.com October 28, 2008
  • Shopping Through the Ages
    • The beginning:
      • Arbitrage by theft
  • Shopping Through the Ages
    • Theft
    • Rise of Trade
      • Arbitrage by conquest
  • Shopping Through the Ages
    • Theft
    • Conquest
    • Market
      • Arbitrage by barter
  • Shopping Through the Ages
    • Theft
    • Conquest
    • Barter
    • Rise of the Market
      • Arbitrage by money
      • Supply auction markets
  • Shopping Through the Ages
    • Theft
    • Conquest
    • Barter
    • Market
    • Rise of the Consumer
      • Arbitrage supply
  • Consumer Economy: The Golden Age of Supply
    • Golden Age of Supply
      • Impulse-based
      • Rise of mass merchandising
      • Sequential Consumption
      • Power in the middle
      • Producer “BOM” pricing
    • Demand Auctioning
      • Multi-tier, multi-price inventory turn economics
      • Purchase science at home
      • Personal Control
      • Choice
    And Today…
  • Four Keys to Keep In Mind…
      • Identify “Best Customers” and keep them happy
      • Affluent consumers are thinking more deeply about purchases
      • Increase the “values” sell-in
      • More than ever, the front line is critical
  • BUT FIRST…
  • Today’s Economy Yes 75 % No 25 % Recession? Steady since April
  • Optimism Still Declining September Results 17 25 46 55 Sept 2008 % 14 27 Not Asked 78 2006 % 26 30 67 70 Dec 2007 % 21 24 59 62 April 2008 % 18 24 53 60 June 2008 % 93 Your own future Not Asked The future of your children 60 The future of America Not Asked The future of the world 2005 % Extremely/Very Optimistic About…
  • Prepared for a Long Haul How long do you think the recession will last? September Results 60 36 4 Sept Total % September 53 61 55 Longer than a year 6 7 7 6 months or less 41 33 38 7-12 months June Total % Bedrock % Pinnacles %
  • Due Diligence Now a Fact of Life September Results 82 April Total % 83 Sept Total % 82 June Total % September 67 Dec 2007 Total % 72 89 I usually wait for something to go on sale before I buy it Pinnacles % Bedrock %
  • Valuing Value I would buy a really expensive item, like jewelry, at a store like Costco or Sam's Club 2007 26 % 2008 45 %
  • Greater… Appreciation for Sales Relationships I have close relationships with a few salespeople that I count on 2007 48 % 2008 61 %
  • Spending Smart Dominates September Results 71 Sept Total % 76 June Total % September 68 April Total % 66 74 I am looking closely at every spending category to see where we can save Pinnacles % Bedrock %
  • Everyone Has Been Affected September Results 68 72 71 Recent financial crises have significantly impacted my overall financial portfolio 71 Total % 69 72 The recent real estate and banking crisis has affected my sense of financial security Bedrock % Pinnacles %
  • Impact on Portfolios September Results 19 16 15 16 Has stayed the same 18% 15% 13% 14% Average increase (percent) 17% 17% 17% 17% Average decrease (percent) -10% -11% -13% -12% Total average portfolio change in past year How portfolio has changed in the past year: 73 11 Pinnacles % 72 10 Wealthy % 79 77 Decreased in value 6 8 Increased in value Sept Total % Bedrock %
  • Trend Beginning Before 2009 September Results 41 April % 59 Sept % I worry that at some point I could run out of money
  • The Big Stuff Under the Microscope September Results 62 Sept Total % 56 June Total % September 53 April Total % 53 66 I am buying fewer big ticket items now than I did 6 months ago Pinnacles % Bedrock %
  • …Taking Measures September Results 50 64 60 I have been changing the thermostat in my home to save money 56 69 64 I have been driving less to save on gas Total % Bedrock % Pinnacles %
  • Doing Fine Enough… September Results 20 37 31 Debt and other financial obligations don't leave me with much money for discretionary enjoyment at the end of the month 83 Total % 91 79 I am in good shape to endure this economic climate Bedrock % Pinnacles %
  • Have a Better Grip on Situation September Results 46 April Total % 41 Sept Total % 40 June Total % September 53 Dec 2007 Total % 36 43 I am not as on top of my finances as I would like to be Pinnacles % Bedrock %
  • Looking Forward to Next Year September Results 74 73 73 I am confident that 2009 will be a better year for me 86 84 84 I feel that recessions are cyclical 65 61 62 I am confident that 2009 will be a better year for America Total % Bedrock % Pinnacles %
  • Holidazed and Confused
  • Yes, Virginia, There is a Slight Possibility There is a Santa Claus
    • It was generally recognized that it was the affluent who kept Holiday sales afloat last year, while the lower and middle class cut back.
    • Will they save Christmas again this year?
  • The Power of Choice: The Discretionary Economy
  • The Decision “Funnel” PRICE REINFORCE PURCHASE RECEIVE DISCOVER STUDY
  • High Touch vs. High Tech HIGH TOUCH HIGH TECH 30 % 70 % Aware Aroused Transact (Bricks & Clicks) Compare (Clicks) Aware Aroused Transact (Mostly In Person)
  • High Touch
    • Shopping alone
    • Salespeople
    • Finding new things
    LOVES… … shopping is an art form.
  • High Touch Drivers Easy return policy Warranty Knowledgeable salespeople Comfortable atmosphere
  • 5 Sales Tips
    • Sales “docents”
    • Detail Storytelling
    • Love of job
    • Best in Class Purchasing
    • Discovery
  • Internet Drivers Had a price of at least 30% less Is more convenient Greater selection of merchandise Shipping and handling fees
  • Internet Drives Bricks Total Agree Affluent % Super Affluent % Wealthy % Total % UMC % The quality of the store's website impacts whether I choose to shop at their retail store 48 50 39 46 55
  • Yet, Due Diligence Dictates I research the items on the web I am going to buy to make sure that I am not taken advantage of 2007 72 % 2008 81 %
  • Top 10: Assessing Needs Basis for making choices
    • Self-Examination
    • Point of Sale
    • Friends and Family
    • Magazines
    • Internet
    • Objective Expert
    • Physical Environment
    • Popularity/Trendy
    • Promotions
    • Other Print Media and Traditional Broadcast Media
  • Margin Drivers Uniqueness ( ρ =.14) Experience ( ρ =.14)
  • Upping the Value of Retail? Uniqueness of product of the feeling provided Experience of salesmanship of atmosphere of delight
  • In a Nutshell
    • 6-seat private jet hourly rate (G2) $2,800 $1,275 54%
    • 1.5-carat G color, VS clarity quality solitaire diamond (with platinum band) $19,700 $11,600 41
    • Two weeks vacation (Atlantis Resort) $10,340 $5,800 44
    • Gold Cartier LC Tank watch $9,100 $7,371 19
    • St. John’s cardigan sweater $285 $99 65
    • High performance stereo (Bang & Olufsen) $1,325 $820 38
    • Hermes bangle bracelet $345 $240 30
    • Burberry rain coat $575 $199 65
    • Mont Blanc pen $495 $370 25
    Luxury Retail Online Savings TOTALS $44,965 $27,774 Average Online Savings 38 % It’s a… Demand Auction Economy: “ I’m going to buy; how do I get the best terms?” “ My price-value equation includes consideration of the service, selection and environmental pleasures of retail… I trade these off against the price efficiencies of on-line.”
  • More Fact, Less Feeling Strongly/somewhat agree 80 85 81 Allow me to do something good 84 69 75 Have a reputation for design 82 72 78 Have a reputation for technology 95 89 91 Have a reputation for service 96 90 93 Reflect high craftsmanship 97 92 94 Have a reputation for the best quality Total % Lower Middle Class % Super Affluent % I Like Brands That:
  • More Fact, Less Feeling Strongly/somewhat agree 34 39 37 Are preferred by my friends 38 44 40 Communicate to others that I'm loved and appreciated 44 37 41 Help me feel like a leader 45 36 39 Help me feel privileged 31 41 36 Help me feel loved 44 41 42 Are preferred by my children and their friends 52 34 43 Communicate to others that I'm successful Total % Lower Middle Class % Super Affluent % I Like Brands That:
  • Technology 80 % Technology important to my success 80 % Technologically intelligent
  • Are You in Control? 98 % I can get information faster on the Internet than dealing directly with a company's customer service representative
  • Device Ownership Deloitte Media Democracy – 2008 International Study 10 33 60 75 49 Videogame console system 78 77 73 74 75 Radio 83 80 74 76 78 VCR 73 75 83 83 79 Mobile phone 88 85 81 82 83 Desktop computer (PC or Mac) 83 86 87 89 87 DVD player (in home) 53 53 58 71 Total % 54 37 53 70 Matures % 52 49 59 65 Boomers % 50 52 60 70 Xers % 54 65 58 77 Millennials % Digital camera or camcorder Stereo system Laptop computer (PC or Mac) Non-Flat Panel TV TOP 10:
  • Top Internet Activities Deloitte Media Democracy – 2008 International Study 68 79 76 72 74 Seeking personal interest information (entertainment, travel/leisure, sports) 82 84 81 60 76 Reading national/world news, weather or current events 86 86 87 66 80 Reading about local news, weather or current events 90 91 91 92 91 Using search engines like Google, Yahoo or Ask.com 60 68 70 Total % 37 69 76 Matures % 51 72 77 Boomers % 66 73 76 Xers % 78 59 57 Millennials % Purchasing products Seeking product reviews, conducting shopping research Watching/listening to content created by others (Web sites, photos, videos, music and blogs)
  • Top Internet Activities (cont.) Deloitte Media Democracy – 2008 International Study 23 34 59 78 52 Socializing (via social networking sites, chat rooms or message boards) 26 39 65 82 56 Searching, downloading and listening to music 27 49 59 76 57 Researching for business or school 49 50 59 69 58 Visiting online game sites, where you can actually play games 41 41 49 Total % 45 29 24 Matures % 44 38 37 Boomers % 48 46 60 Xers % 31 46 66 Millennials % Watching movies and other videos online Using web portals Seeking financial/investment information
  • Mobile Control Own a cellular phone 96 % Text messaging 71% Digital camera 67 Internet access 31 Games 28 Download Music 16 GPS (global positioning service) 12 None of these 16 Cell Phone Features Use Vs. 79% for Landline Phone
  • Access 13 4 7 Online newspaper access 15 4 8 Online subscription music services 30 7 17 Satellite Radio 69 26 46 Newspaper subscriptions 68 55 61 Cable TV (basic) 81 50 64 Magazine subscriptions 40 15 26 Interactive & On Demand services 30 19 27 Satellite TV (basic) 62 20 40 Paid premium channels 10 4 5 Online magazine access Affluent % Lower Middle Class % Total % Services subscribe to:
  • Age Plays a Factor in Ways of Being Tuned In 5 8 10 21 28 30 41 49 58 68 35-50 % 9 5 7 Online newspaper access 7 5 8 Online subscription music services 20 9 17 Satellite Radio 66 24 46 Newspaper subscriptions 68 60 61 Cable TV (basic) 65 58 64 Magazine subscriptions 22 28 26 Interactive & On Demand services 26 23 27 Satellite TV (basic) 48 33 40 Paid premium channels 7 3 5 Online magazine access 51+ % <35 years old % Total % Services subscribe to:
  • The Enlightened Shopper
  • The Enlightened Shopper Process Desire Discovery Friends & Family Assessing Needs Delivery & Ownership The Purchase While Shopping Research
  • What’s Going On: It’s a Momocracy On a scale from 1-10… Mom Dad Female Step Parent/Guardian Male Step Parent/Guardian
  • Taking Complete Financial Control In the end, my opinion determines the family financial decisions. 73 % Women Study
  • Women are responsible for most financial decisions in the household… 2007 Q.20/Q.16 Based on your experience at the U.S. Open Championship, are you more likely than before to do any of the following? *Multi-select question with no scale breakout
  • Women are responsible for most household/children responsibilities… 2007 Q.20/Q.16 Based on your experience at the U.S. Open Championship, are you more likely than before to do any of the following? *Multi-select question with no scale breakout Those that are children focused are only among those with children
  • And for most of the household planning… 2007 Q.20/Q.16 Based on your experience at the U.S. Open Championship, are you more likely than before to do any of the following? *Multi-select question with no scale breakout
  • Strong Sense of Self-Leadership Resourceful 87 % 85% Decision Maker 82% Persuasive 82% Financially Tentative Based on factor analysis – strongly/somewhat agree
  • Contentment Not Tied To the Nest 11 12 11 Happy 2 4 4 Achieved dreams 3 4 4 Stressed No Kids Present % Kids Present % Total % Rate Extremely (Top box of 10-pt. scale) 19 19 19 Stressed 31 37 35 Achieved dreams 59 62 61 Happy No Kids Present % Kids Present % Total % Rate Extremely/Very… (Top 3 box of 10-pt. scale)
  • Empowered by the Internet 43 Total Weekly Media Hours 2 Reading magazines 3 Reading the newspaper 8 Listening to the radio 14 Watching television 17 Online/using the internet Total % Hours per week spend…
  • Hesitant to Engage Advertising 6 Click on ads that are on websites that are of greatest value to me 6 Click on advertisements/ sponsor links from search engines Total % Frequently…
  • What’s Going On: Decline of the Nuclear Family 54 % Both parents living together
  • Landscape
  • What’s Going On: Happiness is Fairly Constant Very happy 33% Pretty happy 55% Source: General Social Survey; Gallup Not too happy 12% US Happiness Levels Are Relatively High & Stable 2007 Satisfied with direction of the country Watergate Iran hostages Black Monday “ Generation X” Dot-com boom Iraq
  • What’s Going On: We worry about what is coming next Strongly/Somewhat Agree 81% Something bad is going to happen 80% World is deteriorating
  • What’s Going On: The Coming Generational Tsunami http://www.cdc.gov/nchs/data/statab/t941x01.pdf http://www.cdc.gov/nchs/data/nvsr/nvsr55/nvsr55_01.pdf US births per year (millions) X Xers about to be squeezed out of the political process? Y Will Millennials assert their political will? Boomers Will Boomers fix gov’t programs?
    • US life expectancy rose 57% during the 20 th century*
    • Families with 4 living generations are common
    • US HH with 3 generations grew 38% from 1990 to 2000**
    • Nearly 100,000 US centenarians
    What’s Going On: The Creation of an Aging World… Chart source: World Resources Institute http://earthtrends.wri.org . * Census. ** Census via http://www.nytimes.com/2006/05/25/us/25multi.html
  • What’s Going On: Oil Production Bomb Has Exploded
  • What’s Going On : We are changing the meaning of knowledge It's more important to know how to search for a fact than it is to know a fact. 60 %
  • Boys Eating Girls’ Dust
    • For every 100 girls/women who…
      • Graduate from high school... 96 boys graduate
      • Are suspended from public elementary and secondary schools… 250 boys are suspended .
      • Are expelled from public elementary and secondary schools… 335 boys are expelled .
      • Are enrolled in college… there are 77 men enrolled
      • Earn a bachelor’s degree… 73 American men earn a bachelor’s degree
      • Earn a master’s degree… 62 American men earn the same degree
      • Earn a doctor's degree… 92 American men earn the same degree
    Sources: National Center for Educational Statistics & U.S. Census
  • Magazines are Alive and Well Source: Deloitte’s 2007 “State of the Media Democracy” survey I enjoy reading printed magazines though I know I could find the same information online 72 % Pay greater attention to print advertising than internet advertising 64 % Internet ads are more intrusive than print 76 %
  • Percent of TV Watch “Filtered” Among DVR Owners General Population Upper Middle Class Wealthy 67 % 44 % 43 %
  • So… September Recontact What do we want?
  • LEADERSHIP…
  • HEROISM…
  • THINKMANSHIP…
  • IMAGINATION…
  • INTEGRATION…
  • APPRECIATION…
  • ENGAGEMENT…
  • AND CONFIDENCE
  • A New World… From: I W A N T
  • A New World… To: I N E E D
  • It’s Not About “Show Me the Money” … … It’s about getting them at Hello
  • Thank You www.HarrisonGroupInc.com CONFIDENTIAL, PROPRIETARY & TRADE SECRET INFORMATION This document contains confidential, proprietary and trade secret information of American Express Travel Related Services Company, Inc. (“American Express”) and its subsidiaries and affiliates, and must not be disclosed whole or in part to any third parties without prior written consent of American Express.