Consumer Confidence and Planned Spending Behaviour in the Recession. A Conversation with Asian Consumers by Omnicom Media Group
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Consumer Confidence and Planned Spending Behaviour in the Recession. A Conversation with Asian Consumers by Omnicom Media Group

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A selection of slides from an ongoing project we are doing with Asian consumers including both qualitative and semi quantitative measures. ...

A selection of slides from an ongoing project we are doing with Asian consumers including both qualitative and semi quantitative measures.

These slides were originally presented on a country level rather than a regional level, so there is a little bit of repetition in this composite version

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Consumer Confidence and Planned Spending Behaviour in the Recession. A Conversation with Asian Consumers by Omnicom Media Group Consumer Confidence and Planned Spending Behaviour in the Recession. A Conversation with Asian Consumers by Omnicom Media Group Presentation Transcript

  • A conversation with consumers about the recession in Asia and the marketing implications April 2009
  • A conversation about the recession • There are a lot of consumer sentiment surveys being conducted at the moment – and given the negative tone of most of the information people are getting, its not surprising that they are showing that consumers are quite concerned about the current situation • Rather than replicate these, we decided to hold an online conversation with people in some of the most important countries in our region • We asked a few direct questions, but mostly we asked for their comments on the recession, how it was affecting them personally, what they expected to happen, and their plans for the next 6 months • Overall, 581 people took part in our conversation, from China, Hong Kong, Taiwan, Philippines, Thailand, Malaysia and Singapore. We plan to check back with them every few months 2
  • Participants in the conversation • The people who participated in the conversation are younger (most of them are in the 25-39 yr age group) • They are better educated than average – most had been to university or had some other form of higher education • They tend to work in white collar, service and professional organizations, and as such have above average income for their age. They are urban based • So they are not a representative sample of country – but they do give an interesting insights into the day to day impact of the current crisis 3
  • Topics of interest • The conversation differed a bit from country to country • But in general we asked our participants to talk to us about  How their spending plans had changed in the last 6 months, and how they thought they would change in the next 6 months  The reasons behind this  Their opinion on the economy and the recession. how its affecting them personally, and how they thought that would develop in the next 6 months  The categories they will be cutting back on, and which they think they will be maintaining spend  And of course, their planned media behavior • What they told us is discussed in the rest of this report 4
  • Key Takeouts • It is clear that consumer confidence is fairly low, not surprisingly given the negative news they are being bombarded with • Consumers do feel a need to be more careful and rational in their spending, particularly in high involvement categories. But they will not at this stage be cutting spending across the board – there are categories where consumers will maintain or even increase their spend • In lower involvement categories, they will be tempted to trade down, and will be looking more critically at the value premium brands give them • Overall, they will respond to value messages and pay attention to brands that are offering value benefits. But consumers will also pay attention to brands that show them empathy and understanding, provide rational reassurance for their decisions, and make them feel that they are making a smart choice 5
  • Consumer Confidence in the region 6
  • The Economic data is mixed • China and India are slowing, but overall their economies remain relatively buoyant • Some ASEAN economies are also slowing but may avoid technical recession. Indonesia, Philippines and Thailand fall into this category • Economies heavily dependent on the export of manufactured goods are of course suffering the most. These include Japan, Korea, Hong Kong, Singapore and Taiwan • Australia and New Zealand are both also either in, or about to fall into recession with significant increases in the unemployment rate predicted • But in all Asian countries, private consumption is expected to fall  7
  • All the evidence suggests consumer confidence is down • With consumers more connected than ever, it is hardly surprising that bad news travels fast. • On the positive side, sparks of optimism will also spread quickly  8
  • Consumer Confidence • In the conversation we had, it seems clear that overall, consumers in China are the most confident. • They have some concerns for the next 6 months, about their job prospects and Source: OMD Navigating Challenges: Consumer their personal finances • But overall they are the most positive • In other countries there is negativity, and we found that overall it was consumers in Singapore and Malaysia that showed the most Sentiment negative sentiment 9
  • Spending: Most are spending less Spending behavior in the last 6 • Most of the people we talked to months had been spending more Malaysia 65 19 cautiously in the last 6 months • The impact has been least in Singapore 66 16 China – where more than a third of the people we talked to had not changed their spending Thailand 66 14 behavior • Singapore, Malaysia and Philippines 53 26 Thailand results were very similar – the vast majority had Hong Kong 59 9 spent less in the last 6 months, but only around 1 in 5 had spent a lot less Taiwan 53 7 • The Philippines had the most people who had spent a lot China 49 9 less, and this reflects the high inflation that preceded the A little more cautious economic downturn A lot more cautious Source: OMD Navigating Challenges: Consumer Sentiment 10
  • Spending: And plan to cut back even more in the next 6 months • Chinese consumers are the most positive. Although most are going to cut back on their spending, they think they will be a little more cautious. • But in Malaysia, Singapore, Taiwan and Philippines in particular, many people plan to be a lot more cautious Spending behavior in next 6 months Thailand 67 26 Malaysia 40 52 Singapore 53 39 Philippines 51 38 Hong Kong 53 28 Taiwan 33 40 China 55 14 A little more cautious A lot more cautious Source: OMG Navigating Challenges: Consumer Sentiment 11
  • Jobs prospects: Most are negative • We see that in most countries our participants are quite negative about their job prospects. • Confidence is lowest in the 3 hubs, Taiwan, Hong Kong and Singapore • Overall confidence in Thailand and China is relatively positive by comparison Your job prospects in next 6 months 45 38 32 24 17 14 11 -51 -47 -60 -63 -67 -63 -69 -4 -15 -9 -13 -17 -23 -20 Thailand China Philippines Malaysia Taiwan Hong Kong Singapore Positive Mildly Negative Strongly Negative Source: OMG Navigating Challenges: Consumer Sentiment 12
  • Personal Finances: A more positive outlook • In Philippines, in particular, the people we talked to are quite confident that their personal finances will not be adversely affected. But a majority of people we talked to in Malaysia and Thailand are also positive about their personal situation • Confidence is lowest in Taiwan, and to a lesser extent, China Your personal finances in next 6 months 72 55 51 46 44 37 23 -26 -2 -44 -49 -48 -51 -51 -57 -2 -6 -4 -13 -10 Philippines Malaysia Thailand Hong Kong Singapore China Taiwan Positive Mildly Negative Strongly Negative Source: OMG Navigating Challenges: Consumer Sentiment 13
  • Time to spend: A most positive outlook • For the recession to ease, consumers need to spend confidently. • At the moment, most consumers don’t believe it’s a good time to spend money. They are most positive in Thailand, Malaysia and Singapore • But in other countries, it seems that consumers want to hang on to their money for the time being. Is the next 6 months a good time to spend? 49 47 47 37 35 34 30 -47 -45 -46 -58 -53 -57 -50 -4 -8 -7 -5 -13 -9 -10 Thailand Malaysia Singapore Hong Kong China Philippines Taiwan Positive. Mildly Negative. Strongly Negative. Source: OMG Navigating Challenges: Consumer Sentiment 14
  • Spending Behaviour 15
  • Recession resistant categories • We asked consumers how their spending behavior would be affected in the next 6 months. What categories do they consider a luxury and what a necessity? And where do they plan to increase or maintain spend and where do they plan to cut back? • In a recession • As part of the • And it is still Subscription TV Home Internet Mobile Networks people can be cocooning process important to keep in expected to stay people also expect touch, so home more to be spending consumers expect • Home more time on the to maintain their entertainment Internet, for spending on mobile becomes more information or for communications important entertainment • And subscription TV • In this can be justified on environment, home value grounds internet subscription can also be justified on value grounds 16 16
  • Other recession resistant categories • Consumers plan to maintain or increase their communications spend. They also plan to maintain their spend on essentials • The amount people • Consumers may be • At this stage Medical Day to Day Banking Insurance are able to commit assuming that they consumers have no to longer term need to reduce their plan to reduce their investments may spending in some spend on essentials decline, but they areas, but they do such as medical plan to maintain not yet see any spend their spend on day need to reduce to day banking spend on insurance service products • In some markets, this includes credit card spend as consumers realize that they need to rely more on credit 17 17
  • Other recession resistant categories • Food, grooming and baby care items are also predicted to maintain or increase their spend • Although • Consumers • In most • Currently female QSR Groceries Baby Care Personal and Beauty Care consumers expect that their families, the consumers do not may down spend on mid children come have any plans to range and fine reduce their trade in some first, and this is cosmetics and categories, the dining will reflected in beauty spend or re is no overall decrease people’s their personal plan to reduce • But sharing food determination care spend their spend remains an to maintain or important social • We have all heard bond increase their spending on of the lipstick baby care effect – the need • So it is not items to make ourselves surprising that look and feel consumers good through the expect to • These include purchase of lower ticket items such maintain or infant as lipstick – and increase their formula, diaper this is coming out Quick Service s and other currently Restaurant baby care spend products 18 18
  • Longer purchase cycles • Consumers also told us that they were planning to maintain rather than replace when it came to bigger ticket items Spend Spend less on more on • Eg Auto • Eg repairs, Appliance Furnishing, Auto repairs Home mobile, Applianc maintenance es 19
  • The last spend to be cut Fine Dining Jewelry Which will be the last category of spend that you cut? Computer related Home furnishing Home maintenance Mobile Phone (new / replacement) New Car Toys Sporting Goods Investment Alcohol Home electronics Spas / Well being Travel Clothing / Shoes / Fashion QSR Cosmetics / Beauty Vehicle Maintenance Over the counter medication Cable TV Insurance Medical Check Ups Groceries Internet Day to Day Banking Source: OMG Navigating Challenges: Consumer Sentiment 20
  • China Sentiment 21
  • Reasons for reducing spend • People told us that the main reasons for reducing their spend was to protect their existing income, to buffer them against potential job losses • Although it’s interesting that there is a perception that prices will increase, whereas in fact inflation will probably reduce, or there may even be deflation Top 5 Reasons for Reducing Spend 1. I need to increase my savings 2. Prices are rising 3. I’m afraid of losing my job or someone else in the family losing their jobs 4. I want to use less credit 5. My investments / stocks have lost value 22
  • How is the recession affecting you personally? • Most people told us that they were feeling some negative impact, although there were a few people who felt that this was a good time to be investing and a good time to take advantage of cheaper prices • But most were seeing a negative impact on their finances Top 5 Impacts on me personally 1. I am being more cautious with my spending 2. I am going to invest very cautiously 3. Reduced pay / reduced bonus / increment freeze 4. I know some people who have lost their jobs 5. My job feels less secure 23
  • China Spending Behavior 24
  • Recession Proof Categories • In any recession in some categories are more resilient than others. In most countries in the region, consumers are suggesting that they will reduce their spend in both high and low involvement categories • But in China, spending intention is more robust. In many categories, consumers think they will either maintain or increase their spend. • And it is only in very discretionary areas of spend – such as travel , or fine dining – that there is significant intent to cut back at the moment 25
  • In China, consumers think they will maintain their spend in many categories Planning to reduce / Planning to delay spend maintain Internet Day to day banking Insurance Automobile maintenance QSR Normal cosmetics Home improvement / renovation Investments Computer related Handphone Home electronics Real Jewelry Automobile Domestic travel Fine Dining Source: OMG Navigating Challenge Consumer Sentiment: China 26 26
  • In China luxury purchases will be delayed, but there will be a limited reduced spend on perceived necessities Fine Jewelry Planning to reduce / delay spend Car Jewelry (Gold /silver ) Travel Abroad Fine Dining Spa / Massage Premium Cosmetics/ beauty Home Decor Mobile phone Home Improvement Home Electronics Investments Alcohol Car maintenance ToysTravel Domestic Sport Insurance Computing OTC Pharma Mid to low end Cosmetics/ beauty Fast Food Soft drinks Luxury mid to low level restauran / Fashion Clothing Necessity Medical visits Banking Cable TV Internet Grocery Source: OMG Navigating Challenge Consumer Sentiment: China Planning to maintain 27
  • Purchasing less, or trading down? • In a recession, spending behaviour will differ by category. In some categories people will reduce or stop their spend, in others they will make a discretionary down trade to a cheaper brand. • In China, though, even in those categories where there may be some reduction in levels of spend, consumers are showing a clear inclination for down trading rather than reducing category involvement Trade Down vs Decrease Purchase Clothing / Fashion -40 8 Alcohol -23 15 Soft drinks -24 12 Sporting Goods / Equipment -24 14 Every day cosmetics -23 13 Groceries -19 3 High end cosmetics -19 17 OTC health -16 8 Trade Down Decrease Purchase Source: OMG Navigating Challenge Consumer Sentiment: China 28
  • Actions taken to counter the recession • A smart consumer is always looking for a good deal. So even though they are not looking to overtly reduce spend in many categories, Chinese consumers will be looking for a bargain and for value Which of these will you do in the next 6 months Use coupons 84 Look for best deals 82 Only buy necessities 79 Buy generic / house brands 77 Trade down on high priced items 76 Eat at home 72 Stick to the shopping list 65 Trade down on low priced items 60 Avoid high priced products 57 Use credit cards 57 Source: OMG Navigating Challenge Consumer Sentiment: China 29
  • A need for explicit value messages In the next 6 months I am likely to 75 46 -2 -24 Pay more attention to ads Pay less attention to with cost savings messages ads for luxury brands Agree Disagree Source: OMG Navigating Challenge Consumer Sentiment: China 30
  • Hong Kong Sentiment 31
  • Hong Kong consumers plan to reduce spend in the next 6 months • Hong Kong consumers believe that they will be spending money more cautiously in the next 6 months, although only just over a quarter feel they will be spending a lot more cautiously Spending behavior in next 6 months Thailand 67 26 Malaysia 40 52 Singapore 53 39 Philippines 51 38 Hong Kong 53 28 Taiwan 33 40 China 55 14 A little more cautious A lot more cautious Source: OMG Navigating Challenges: Consumer Sentiment 32 32
  • Reasons for reducing spend • People told us that the main reasons for reducing their spend was to protect their existing income, and to buffer them against potential job losses • Although it’s interesting that there is a perception that prices will increase, whereas in fact inflation will probably reduce, or there may even be deflation Top 5 Reasons for Reducing Spend 1. I need to increase my savings 2. I’m afraid of losing my job or someone else in the family losing their job 3. Prices are rising 4. My investments have lost value 5. I want to reduce my debts 33
  • How is the recession affecting you personally? • Most people told us that they were feeling some negative impact, although there were a few people who felt that this was a good time to be investing and a good time to take advantage of cheaper prices • But most were seeing a negative impact on their finances Top 5 Impacts on me personally 1. I am being more careful with my spending 2. I am cutting back on savings and investments 3. My income or bonus has reduced 4. Prices are going up 5. I am going to cut back on travel and holidays 34
  • How is the recession affecting you at work? • And most people feel a negative impact from the recession at work as well, although not in terms of working longer hours; many people in Hong Kong work long enough hours as it is Top 5 Impacts on me at work 1. Revenues and incomes are down 2. There feels like there’s more pressure on me 3. Staff benefits have been reduced 4. Morale is lower than it was previously 5. We’ve lost some major clients 35
  • Hong Kong Spending 36
  • In Hong Kong, fast food is the most recession proof category, followed by personal care products and mobile networking services Planning to reduce Planning to / delay spend maintain Fast Food Personal care products Mobile network Contrary to the rest of the Household Grocery region, in Hong Kong Pay TV may not be recession proof due Skincare/ Cosmetics to high subscriber costs Contact Lens Pay TV subscription Mass fashion brands Health supplements products Household electrical appliances Personal electrical products Jewelry & Watch Source: OMG Navigating Challenge Consumer Sentiment: Hong Kong 37 37
  • Trading Up or Trading Down • In a recession, in some categories people will trade down, in others they will maintain their current brand or even trade up. • At the moment contact lenses, personal care and skincare / cosmetics appears to be the categories most resilient to down trading Planned brand behavior in selected categories Contact Lenses -6 91 3 Personal Care -13 79 8 Skincare / Cosmetics -15 74 11 Mobile Network Services -20 76 3 Fast Food -21 75 3 Health Supplements -23 69 9 Fashion -23 68 9 Personal Electric Appliances -23 62 14 Personal Electronic Products -26 60 14 Pay TV subscription -27 68 5 Grocery -35 58 7 Jewelry and Watch -49 37 14 Maintain Trading Up Trading Down Source: OMG Navigating Challenge Consumer Sentiment: Hong Kong 38
  • Reasons to stay with current brands • People told us that product/ service quality, brand trust and likability toward the brand are the key drivers of commitment to current brands • Price, though important, is not yet the dominant factor in engaging brand loyalty, despite the Jewelry Skincare/ recession Personal House- Personal Household Health Mass Pay TV Mobile Contact & Fast Food care hold electrical electrical supple- fashion subscript- network Cosmetics Lens Watch products Grocery products appliances ments brands ion service Trust- Trust- Don't Trust- Trust- Convenient Good Good Convenient Good Good Brand worthy worthy bother to worthy worthy to buy quality quality to buy quality quality suits me brand brand change brand brand Trust- Trust- Trust- Don't Good Good Good Brand Good Good Good Good worthy worthy worthy bother to quality quality quality suits me quality quality quality quality brand brand brand change Trust- Trust- Trust- Good Brand Brand Brand Brand Brand Convenient Brand Brand worthy worthy worthy quality suits me suits me suits me suits me suits me to buy suits me suits me brand brand brand Reasons for using the same brands in the coming 6 months (Top 3 factors) Source: OMD Navigating Challenge Consumer Sentiment: Hong Kong 39
  • Actions taken to counter the recession • People will be looking to save and keep their money close at hand • So they will be looking for value deals, and they will be spending more time at home • But they will also be looking to retain as much normal behavior as possible Which of these will you do in the next 6 months Apply for a loan 8 Increase life insurance protection 11 Invest in property 16 Use my credit card more 21 Travel by taxi as usual 22 Invest in stock 27 Go on vacation as usual 34 Subscribe to Pay TV 37 Dining out as usual 51 Eat at home more 64 Use discount coupons 69 Save More 77 Source: OMG Navigating Challenge Consumer Sentiment: Hong Kong 40
  • A need for explicit value messages In the next 6 months I am likely to 62 34 -5 -20 Pay more attention to ads Pay less attention to with cost savings messages ads for luxury brands Agree Disagree Source: OMG Navigating Challenge Consumer Sentiment: Hong Kong 41
  • Taiwan Sentiment 42
  • Taiwan consumers plan to reduce their spend in the next 6 months • Taiwanese consumers believe that they will be spending money much more cautiously in the next 6 months, with 4 in 10 saying they will spend a lot less. Spending behavior in next 6 months Thailand 67 26 Malaysia 40 52 Singapore 53 39 Philippines 51 38 Hong Kong 53 28 Taiwan 33 40 China 55 14 A little more cautious A lot more cautious Source: OMG Navigating Challenges: Consumer Sentiment 43
  • Reasons for reducing spend • People told us that the main reasons for reducing their spend was to protect their existing income, to buffer them against potential job losses • Although its interesting that there is a perception that prices will increase, whereas in fact inflation will probably reduce, or there may even be deflation Top 5 Reasons for Reducing Spend 1. I need to increase my savings 2. Prices are rising 3. I’m afraid of losing my job or someone else in the family losing their jobs 4. I want to use less credit 5. My investments / stocks have lost value 44
  • How is the recession affecting you personally? • Most people told us that they were feeling some negative impact, although there were a few people who felt that this was a good time to be investing and a good time to take advantage of cheaper prices • But most were seeing a negative impact on their finances Top 5 Impacts on me personally 1. I am being more prudent with my spending 2. I know people who have lost their jobs 3. I feel insecure at work 4. I have cut back my entertainment spend 5. I am going to cut back on my travel spend 45
  • How is the recession affecting you at work? • And people are also feeling a negative impact at work as well, especially in terms of feeling obligated to work harder Top 5 Impacts on me at work 1. I am working harder or I have a greater workload 2. Pressure on pay – no pay rises, pay cuts or no bonuses paid 3. Job insecurity 4. Less business / clients with less money 5. Other job opportunities hard to find 46
  • Taiwan Spending Behaviour 47
  • Recession Proof Categories • In any recession some categories are more resilient than others. Some will be high on consumers list of areas to cut back on, in other areas spend will be maintained • But in Taiwan, as the next chart shows, consumers are planning to cut back in almost every category • Cable TV, and Internet are not going to be cut back. Neither will OTC medicine or banking services. Automobile maintenance spend will be steady or increase • And interestingly consumers have no plans to cut back on skin care, but may cut back on cosmetics 48
  • In Taiwan, almost every category of spend may decline Planning to reduce / Planning to delay spend maintain Cable TV Skin Care Automobile maintenance Day to Day banking services Home Internet Groceries OTC medicine Disposable Contact Lenses Contact Lens / Spectacles Insurance Baby Products Newspaper Subscriptions Mobile networks Soft drinks Beer Movie / Cinema Computer related Video / DVD / VCD QSR Home electronics Cosmetics / Beauty Magazine Subscriptions Automobile Toys Investments Brandy Whisky Leisure Travel Source: OMG Navigating Challenge Consumer Sentiment: Taiwan 49 49
  • Consumer will be cutting back both luxuries and necessities Planning to maintain Cable57 TV Internet subscription Grocery Banking 22 17 15 Car Maintenance 6 Luxury Skin Care -3 -1 Product Mobile CommunicationBaby -8 Disposed CL Necessity -11 Insurance Glasses/CL -10 NP -15 OTC Medicine -21 -20 Beer Brandy -28 -32-31 -35 MG Whisky DVD -43 -54 -50 Soft Drink -52 QSR Movie Car -51 -57 Toy -59 Cosmetics Home electronics -64 -76 Computer -73 Investment -95 Travel Source: OMG Navigating Challenge Consumer Sentiment: Taiwan Planning to reduce / delay spend 50
  • Purchasing less, or trading down? • When consumers cut back, they make a decision as to whether to reduce or stop their spend, or to make a discretionary down trade to a cheaper brand. • In Taiwan, consumers are prepared to down trade on Baby Products, Grocery, Disposable Contact Lenses, Soft Drink, QSR and OTC Healthcare rather than reduce their frequency or quantity of purchase Trade Down vs Decrease Purchase QSR -53 13 Grocery -43 3 Soft Drink -40 13 OTC healthcare -27 14 Baby Products -23 3 Disposable Contact Lens -23 3 Cosmetics / Fragrances -23 33 Whisky -23 50 Contact Lenses / Glasses -20 17 Skincare -17 30 Beer -17 40 Brandy -17 47 Trade Down Decrease Purchase Source: OMG Navigating Challenge Consumer Sentiment: Taiwan 51
  • Actions taken to counter the recession • A smart consumer is always looking for a good deal. But in the next 6 months Taiwanese consumers will be looking hard for bargains and deals Which of these will you do in the next 6 months Use coupons 83 Look for best deals 80 Trade down on high ticket items 77 Avoid high priced products 77 Trade down on low ticket items 67 Use credit cards to pay 63 Drink less alcohol 63 Eat at home 63 Stick to my shopping list 60 Only buy necesities 57 Buy generic / private labels 46 Source: OMG Navigating Challenge Consumer Sentiment: Taiwan 52
  • A need for explicit value messages In the next 6 months I am likely to 80 53 -3 -10 Pay more attention to ads Pay less attention to ads with cost savings messages for luxury brands Agree Disagree Source: OMG Navigating Challenge Consumer Sentiment: Taiwan 53
  • Singapore Sentiment 54
  • Singapore consumers plan to reduce spend in the next 6 months • Singaporean consumers believe that they will be spending money more cautiously in the next 6 months, with nearly 40% feeling that they will be spending money a lot more cautiously Spending behavior in next 6 months Thailand 67 26 Malaysia 40 52 Singapore 53 39 Philippines 51 38 Hong Kong 53 28 Taiwan 33 40 China 55 14 A little more cautious A lot more cautious Source: OMG Navigating Challenges: Consumer Sentiment 55
  • Reasons for reducing spend • People told us that the main reasons for reducing their spend was to protect their existing income, to buffer them against potential job losses • Although its interesting that there is a perception that prices will increase, whereas in fact inflation will probably reduce, or there may even be deflation Top 5 Reasons for Reducing Spend 1. Worries about job losses and experience of friends / family losing money 2. Needing to save more as a buffer against poor economy 3. Prices are rising 4. Need to show prudence rather than extravagance 5. I want to reduce my debts 56
  • How is the recession affecting you personally? • Most people told us that they were feeling some negative impact, although there were a few people who felt that this was a good time to be investing and a good time to take advantage of cheaper prices • But most were seeing a negative impact on their finances Top 5 Impacts on me personally 1. I am being more careful with my spending 2. Need to work harder, demonstrate worth 3. Limited career / job opportunities – now a buyers market 4. Demoralization from constant negative news and negative tone 5. Unfavorable currency exchange 57
  • How is the recession affecting you at work? • Most people are also feeling the recession at work as well, in terms of both the business environment and the pressure to work harder Top 5 Impacts on me at work 1. Downward pressure on pay 2. Understaffed 3. Staff benefits have been reduced 4. Need to work harder and longer 5. Poor business environment, spend and investment down 58
  • Singapore Spending 59
  • Recession Proof Categories • In any recession some categories are more resilient than others. Some will be high on consumers list of areas to cut back on, in other areas spend will be maintained • But in Singapore, as the next chart shows, consumers are planning to cut back in almost every category • Banking and Insurance services are high on people’s list of category spend to maintain • Cable TV, and Internet are not going to be cut back either. Neither will OTC medicine. And as there is a reduction in spend on other forms of dining, QSR may benefit 60
  • In Singapore, almost every category of spend may decline Planning to reduce / Planning to delay spend maintain Day to day banking Internet Insurance Groceries Cable TV OTC healthcare QSR Automobile Maintenance Investments Toys Cosmetics / Beauty / Fragrances Alcohol Sporting Goods Automobile Computer related Spas / Well being Handphones Home Furnishing / Décor Real Jewelry Home Improvement / Renovation Home Electronics / Appliances Clothes / Fashion Leisure Travel Fine Dining Source: OMG Navigating Challenge Consumer Sentiment: Singapore 61 61
  • Consumers will be cutting back both luxuries and necessities Jewelry Travel Planning to reduce / delay spend Home Improvement Fine Dining Mobile Handset Home Electronics Spa Home Furnishing Computing Car Sport Clothing / Fashion Toys Alcohol Investments Cosmetics/ beauty Car maintenance Medical visits Fast Food OTC Pharma Luxury Necessity Cable TV Insurance Grocery Internet Banking Source: OMG Navigating Challenges Consumer Sentiment: Singapore Planning to maintain 62
  • Purchasing less, or trading down? • People have a choice as to whether to reduce or stop their spend, or whether to make a discretionary down trade to a cheaper brand. • In Singapore, consumers are showing a willingness to down trade rather than reduce their consumption Trade Down vs Decrease Purchase Clothing / Fashion -73 16 Fine Dining -66 29 Cosmetics / Beauty / Fragrance -50 19 Alcohol -39 23 Groceries -33 0 Sporting Goods -23 39 Trade Down Decrease Purchase Source: OMG Navigating Challenge Consumer Sentiment: Singapore 63
  • Actions taken to counter the recession • A smart consumer is always looking for a good deal. But in the next 6 months Singaporean consumers will be looking hard for bargains and deals Which of these will you do in the next 6 months Look for best deals 91 Avoid high priced products 89 Only buy necesities 83 Trade down on low ticket items 82 Eat at home 81 Use coupons 77 Trade down on high ticket items 76 Stick to my shopping list 72 Buy generic / private labels 64 Use credit cards to pay 54 Drink less alcohol 30 Source: OMG Navigating Challenge Consumer Sentiment: Singapore 64
  • A need for explicit value messages In the next 6 months I am likely to 83 66 -1 -12 Pay more attention to ads Pay less attention to ads with cost savings messages for luxury brands Agree Disagree Source: OMG Navigating Challenge Consumer Sentiment: Singapore 65
  • Malaysia Sentiment 66
  • Malaysian consumers plan to reduce spend in the next 6 months • Malaysian consumers believe that they will be spending money more cautiously in the next 6 months, with more than half feeling that they will be spending money a lot more cautiously Spending behavior in next 6 months Thailand 67 26 Malaysia 40 52 Singapore 53 39 Philippines 51 38 Hong Kong 53 28 Taiwan 33 40 China 55 14 A little more cautious A lot more cautious Source: OMG Navigating Challenges: Consumer Sentiment 67
  • Reasons for reducing spend • People told us that the main reasons for reducing their spend was to protect their existing income, to buffer them against potential job losses • Although its interesting that there is a perception that prices will increase, whereas in fact inflation will probably reduce, or there may even be deflation Top 5 Reasons for Reducing Spend 1. The future is looking uncertain 2. I want to save more 3. Prices are rising 4. My job is not as secure as previously 5. I want to reduce my debts 68
  • How is the recession affecting you personally? • Most people told us that they were feeling some negative impact, although there were a few people who felt that this was a good time to be investing and a good time to take advantage of cheaper prices • But most were seeing a negative impact on their finances Top 5 Impacts on me personally 1. I am being more cautious with my spending 2. I know people who have lost their jobs 3. I am putting off some major purchases 4. I am being cautious with investing 5. I am being cautious with travel plans 69
  • How is the recession affecting you at work? • People are also feeling a negative impact at work, either in terms of a reduced volume of business, or a downward pressure on wages. Top 5 Impacts on me at work 1. Downward pressure on pay 2. Less money coming in, business dropped off 3. Business does not want to invest 4. Need to work harder and longer 5. Insecurity about future job prospects 70
  • Malaysia Spending 71
  • Recession Proof Categories • In any recession some categories are more resilient than others. Some will be high on consumers list of areas to cut back on, in other areas spend will be maintained • But in Malaysia, as the next chart shows, consumers are planning to cut back in almost every category • As might be expected, there is no predicted decline on infant / baby related categories • And home Internet subscriptions will continue to be important • But in most other categories, Malaysians see a potential decline 72
  • In Malaysia, almost every category of spend may decline Planning to reduce Planning to / delay spend maintain Automobile maintenance Infant formula Internet Toiletries Diaper Day to Day banking Insurance Coffee / Tea / Hot Drink Pet Food Personal care OTC medicine Alcohol Toys Massage equipment Snacks Branded Stationery Credit Card Investments Cosmetics Automobile Air Freshener QSR Jewelry Spas / well being treatments Handphone Computer related Home furnishings Clothing / Fashion Home electronic appliances Electronic gadgets Leisure Travel Source: OMG Navigating Challenge Consumer Sentiment: Malaysia 73 73
  • In Malaysia, consumers plan to reduce their spend on both necessities and luxuries Planning to reduce / delay spend Gadgetries Home Electronics Mobile phone Leisure Travel Jewelry Computer Home Furnishing Automobile Investment Spas/ General well Clothing/ shoes/ QSR being treatment Car/ Home fashion fragrance Day-to-day banking Branded Cosmetics Credit Card Stationary Massage Insurance equipments Over the counter Snacks medicine Toys for Alcoholic children Beverages Beverages (Chocolate/ malt drink, coffee) Adult milk Luxury Pet food powder Necessity Personal care Baby Diapers Home Internet Toiletries Children Milk Powder Maintenance of your current vehicle Planning to maintain Source: OMG Navigating Challenge Consumer Sentiment Malaysia 74
  • Purchasing less, or trading down? • If they are cutting back consumers have the choice to reduce or stop their spend, or to make a discretionary down trade to a cheaper brand. • In Malaysia consumers are showing a willingness to down trade rather than reduce their consumption Trade Down vs Decrease Purchase Alcohol -20 3 Beverages -37 6 Cosmetics / Beauty / Fragrance -39 21 Personal Care -45 6 Snacks -47 16 Clothing / Fashion -73 11 Trade Down Decrease Purchase Source: OMG Navigating Challenge Consumer Sentiment: Malaysia 75
  • Actions taken to counter the recession • A smart consumer is always looking for a good deal. But in the next 6 months Malaysian consumers will be looking hard for bargains and deals. And they will be trying to avoid using their credit cards if at all possible Which of these will you do in the next 6 months Look for best deals 96 Only buy necesities 94 Stick to my shopping list 87 Avoid high priced products 81 Use coupons 79 Trade down on low ticket items 77 Eat at home 72 Trade down on high ticket items 68 Buy generic / private labels 61 Use credit cards to pay 43 Source: OMG Navigating Challenge Consumer Sentiment: Malaysia 76
  • A need for explicit value messages In the next 6 months I am likely to 76 44 -3 -16 Pay more attention to ads Pay less attention to ads with cost savings messages for luxury brands Agree Disagree Source: OMG Navigating Challenge Consumer Sentiment: Malaysia 77
  • Thailand Sentiment 78
  • Thai consumers plan to reduce spend in the next 6 months • Thai consumers believe that they will be spending money more cautiously in the next 6 months, but only a quarter believe they will be spending a lot more cautiously, which makes Thai consumers relatively positive compared to most in the region Spending behavior in next 6 months Thailand 67 26 Malaysia 40 52 Singapore 53 39 Philippines 51 38 Hong Kong 53 28 Taiwan 33 40 China 55 14 A little more cautious A lot more cautious Source: OMG Navigating Challenges: Consumer Sentiment 79
  • Reasons for reducing spend • People told us that the main reasons for reducing their spend was to protect their existing income, mainly to buffer them against potential job losses • Although its interesting that there is a perception that prices will increase, whereas in fact inflation will probably reduce, or there may even be deflation Top 5 Reasons for Reducing Spend 1. General uncertainty because of the recession 2. The cost of living is getting higher 3. I am worried about my job status 4. Investments and savings have lost value 5. Want to save money to provide a buffer 80
  • How is the recession affecting you personally? • Most people told us that they were feeling some negative impact, although there were a few people who felt that this was a good time to be investing and a good time to take advantage of cheaper prices • But most were seeing a negative impact on their finances Top 5 Impacts on me personally 1. I need to be careful with my spending 2. I am going to buy necessities not luxuries 3. I am feeling more stressed about the future 4. Work is getting busier and more stressful 5. I am trying to save more money 81
  • How is the recession affecting you at work? • And most people felt that they were feeling a negative impact from the recession at work as well, especially in terms of the general decline in economic activity causing a loss of morale Top 5 Impacts on me at work 1. Less business makes me feel insecure 2. Need to work harder, but no increase in pay 3. Reduced benefits 4. Cost cutting and savings measures implemented at work 5. More difficult relations with clients 82
  • Thailand Spending 83
  • Recession Proof Categories • In any recession in some categories are more resilient than others. Some will be high on consumers list of areas to cut back on, in other areas spend will be maintained • But in Thailand, as the next chart shows, consumers are planning to cut back almost every category • It will come as no surprise that family staples such as food, baby care items and medicine are recession proof • But Thai consumers also have no plans for their pets to suffer. Pet food looks like being a recession resilient category 84
  • In Thailand, almost every category of spend may decline Planning to Planning to reduce / delay maintain spend Pet Food Baby Milk Toiletries Medicine / Supplements Food Petrol Hair Care UHT Milk Day to Day banking Maternity Milk Facial Care Body Care Non Life Insurance Life Insurance Baby Diapers Mobile Service Provider Non Alcoholic Beverages Automobile Credit card spend Mobile Handset Debit card spend Home Improvement Taxis Cosmetics / Fragrances Fast Food Snacks Real Estate Personal Loans Leisure Travel Home Appliances Alcohol Computer related Home Furnishing Clothing / Fashion Home technology Source: OMG Navigating Challenge Consumer Sentiment: Thailand 85
  • Thai consumers think they will be cutting back on both luxuries and necessities Necessity Toiletries Hair Care Planning to reduce / delay spend Medicine Alcohol Facial Care Milk Mobile Service Grocery Body Care Petrol Home Appliances Planning to maintain Life Insurance Banking Car Baby Milk Non Life Insurance Maternity Milk Pet Food Mobile Handset Computing Diapers Real Estate Taxi Non Alcoholic Drinks Personal Loans Home Improvement Cosmetics/ beauty Debit Card Fast Food Home Furnishings Credit Card Leisure Travel Home Technology Snacks Clothing / Fashion Luxury Source: OMG Navigating Challenge s Consumer Sentiment Thailand 86
  • Actions taken to counter the recession • A smart consumer is always looking for a good deal. But in the next 6 months Thai consumers will be looking hard for bargains and deals. And they will be trying to avoid using their credit cards if at all possible Which of these will you do in the next 6 months Only buy necesities 96 Look for best deals 92 Use coupons 92 Eat at home 87 Trade down on high ticket items 65 Avoid high priced products 62 Buy generic / private labels 60 Use credit cards to pay 60 Stick to my shopping list 58 Trade down on low ticket items 56 Source: OMG Navigating Challenge Consumer Sentiment: Thailand 87
  • A need for explicit value messages In the next 6 months I am likely to 84 61 -16 -39 Pay more attention to ads Pay less attention to ads with cost savings messages for luxury brands Agree Disagree Source: OMG Navigating Challenge Consumer Sentiment: Thailand 88
  • Philippines Sentiment 89
  • Filipino consumers plan to reduce spend in the next 6 months • Consumers in the Philippines believe that they will be spending money more cautiously in the next 6 months, with nearly 40% feeling that they will be spending money a lot more cautiously Spending behavior in next 6 months Thailand 67 26 Malaysia 40 52 Singapore 53 39 Philippines 51 38 Hong Kong 53 28 Taiwan 33 40 China 55 14 A little more cautious A lot more cautious Source: OMG Navigating Challenges: Consumer Sentiment 90
  • Reasons for reducing spend • People told us that the main reasons for reducing their spend was to protect their existing income, to buffer them against potential job losses • Although its interesting that there is a perception that prices will increase, whereas in fact inflation will probably reduce, or there may even be deflation Top 5 Reasons for Reducing Spend 1. General mood for greater frugality 2. Concerns about unemployment and benefits 3. Prices are rising 4. Spending on practical things and neccesities 5. I want to save more and be prepared 91
  • How is the recession affecting you personally? • Most people told us that they were feeling some negative impact, although there were a few people who felt that there was little personal impact yet – and perhaps this is actually a good time to take advantage of cheaper prices • But most were seeing a negative impact on their finances and were preparing for more bad news Top 5 Impacts on me personally 1. I am being more careful with my spending 2. Need to work harder 3. Increased price of goods especially basic staples and utilites 4. Know people who have become unemployed or are facing thereat of unemployment 5. Unfavorable currency exchange rate 92
  • How is the recession affecting you at work? • Most people are also feeling the recession at work as well, in terms of both the business environment and the pressure to work harder Top 5 Impacts on me at work 1. Pressure on clients, less business activity 2.Fewer job opportunities, or options if become unemployed 3. Staff benefits have been reduced 4. Downward pressure on pay 5. Pressure to increase sales 93
  • Philippines Spending 94
  • Recession Proof Categories • In any recession some categories are more resilient than others. Some will be high on consumers list of areas to cut back on, in other areas spend will be maintained • But in Philippines, as the next chart shows, consumers are planning to cut back in almost every category • Medical and well being services are high on people’s list of category spend to maintain. This even applies to wellbeing services such as spas and similar therapeutic benefits • Cable TV, and Internet are not going to be cut back either. Ways of staying connected will be important. And there are no planned cut backs on staples such as food 95
  • In Philippines, almost every category of spend may decline Planning to reduce / Planning to delay spend maintain Groceries OTC healthcare Medical check ups Internet Day to day banking Cable TV Automobile Maintenance QSR Credit cards Insurance Spas / Well being Investments Cosmetics / Beauty / Fragrances Clothes / Fashion Snacks Alcohol Home Furnishing / Décor Real Estate Home Improvement / Renovation Handphones Home Electronics / Appliances Toys Computer related Leisure Travel (Local) Automobile Sporting Goods Real Jewelry Leisure Travel (International) Fine Dining Source: OMG Navigating Challenge Consumer Sentiment: Philippines 96 96
  • Purchasing less, or trading down? • People have a choice as to whether to reduce or stop their spend, or whether to make a discretionary down trade to a cheaper brand. • In Philippines, consumers are showing a willingness to down trade rather than reduce their consumption Trade Down vs Decrease Purchase Fine Dining -51 15 Snacks -51 13 Clothing / Fashion -50 11 Cosmetics / Beauty / Fragrance -36 21 Alcohol -23 26 Sporting Goods -17 50 Trade Down Decrease Purchase Source: OMG Navigating Challenge Consumer Sentiment: Philippines 97
  • Actions taken to counter the recession • A smart consumer is always looking for a good deal. But in the next 6 months Filipino consumers will be looking hard for bargains and deals Which of these will you do in the next 6 months Only buy necesities 94 Look for best deals 92 Avoid high priced products 83 Eat at home 83 Trade down on low ticket items 81 Use coupons 81 Stick to my shopping list 81 Trade down on high ticket items 72 Buy generic / private labels 72 Use more public transport 57 Use credit cards to pay 38 Source: OMG Navigating Challenge Consumer Sentiment: Philippines 98
  • A need for explicit value messages – but not closed to luxury brands In the next 6 months I am likely to 77 49 -23 -51 Pay more attention to ads Pay less attention to ads with cost savings messages for luxury brands Agree Disagree Source: OMG Navigating Challenge Consumer Sentiment: Philippines 99
  • Consumer Sentiment April 2009