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ECR Russia Forum ‘09. Shopper

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Shopper is the king. He/She votes with feet and money Shopper’s behavior is changing, especially in crisis period. The revenues are declining, people are less sure about bright future. Market leaders …

Shopper is the king. He/She votes with feet and money Shopper’s behavior is changing, especially in crisis period. The revenues are declining, people are less sure about bright future. Market leaders should not just follow the trends but foreseen them and create the Shopper’s strategies accordingly. Consumers are moving fast in this uncertain economy. Are they moving in your direction? Are sure you know your new consumers and address their needs? Are you sure you effectively spend your marketing dollars? Are you sure you chose the right strategy to live through the tight times and come out re-newed and stronger?
Ekaterina Manakhova, Commercial Area Manager for Russia, Ukraine, Kazakhstan – Retail Measurement Services, Nielsen Russia

Published in: Business, Technology

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  • 1. Consumer 360 – integrated approach Ekaterina Monakhova Regional Business development manager Nielsen Retail Measurement service 22nd of April, 2009 Confidential & Proprietary • Copyright © 2009 The Nielsen Company
  • 2. Consumer 360 Consumer Place of purchase CONSUMER BEHAVIOUR CONSUMER DICTRIBUTION PROFILE ATTITUDE TO ASSORTMENT INTEGRATED ADVERTIZING INSIGHTS MODELLING & PRICE FORECASTING CATEGORY INNOVATIONS INSIGHTS Trends Product Topic of Presentation April 27, 2009 Page 2 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 3. Consumer confidence index in Russia : decline continues Global Average – 77(March 2009) 112 105 107 104 106 104 99 103 88 82 75 1st Half 2nd Half 1st Half 2nd Half 1st Half 2nd Half 1st Half Sep. 08 Nov. 08 Feb 09 1st Half 05 05 06 06 07 07 08 09 (March) Change% ▼12 ▲6 ▲2 ▼3 ▼1 ▲3 ▼2 ▼16 ▼6 ▼7 Source: Nielsen Сonsumer Confidence Index Study Topic of Presentation April 27, 2009 Page 3 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 4. Job Security is the major concern Loosing Job Loosing the source of income Changes in consumption habits Changes in life style Source: “Russia through crisis” Nielsen consumer research, 1st wave November-December 2008 Topic of Presentation April 27, 2009 Page 4 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 5. 14% of consumers claim that their incomes considerably decreased over last 3 months Q5: Which of the following statements best describes your family income changes (in rubles) over the last 3 months? 1% No answer 14% My family income has decreased appreciably over the last 3 months 21% My family income has slightly decreased over the last 3 months My family income has not changed 44% My family income has slightly increased over the last 3 months My family income has increased appreciably 18% over the last 3 months Total: all respondents, 524 1% Source: “Russia through crisis” Nielsen consumer research, 1st wave November-December 2008 Topic of Presentation April 27, 2009 Page 5 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 6. 45% of responders noticed that FMCG prices were increasing over last 3 months В13: In your opinion, have FMCG prices changed В14: In your opinion, what has been the average over the last 3 months? increase in FMCG prices over the last 3 months? The prices have not 5% changed over the last 5% increase and 3 months less 13% 28% 49% The prices increased 11% -15% increase 16% slightly over the last 3 months 20% 21% -25% increase 6% The prices on 45% 9% average increased 31% increase and considerably over the more 8% last 3 months Total: all respondents, 524 Total: respondents who noted a price growth of FMCG products, 497 Source: “Russia through crisis” Nielsen consumer research, 1st wave November-December 2008 Topic of Presentation April 27, 2009 Page 6 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 7. Consumption is shifting towards more economy channels like Hypermarkets, Discounters and Cash & Carry В19: Has the amount of FMCG that you personally buy from the following types of stores changed; i.e., have you started to buy more from them, less, or the same amount over the last 3 months ? Get to buy less now than 3 months ago Get to buy more now than 3 months ago Buy the same amount now as 3 months ago In hypermarkets [n=426] 19 22 59 In discounters [n=406] 20 16 64 In kiosks/ pavillions [n=273] 22 7 71 In minimarkets [n=373] 24 6 70 In marketplaces [n=346] 25 14 61 In supermarkets [n=380] 26 10 64 In Cash&Carry stores [n=166] 27 14 60 In food stores [n=340] 28 7 65 Total: respondents who generally shop in these channels Source: “Russia through crisis” Nielsen consumer research, 1st wave November-December 2008 Topic of Presentation April 27, 2009 Page 7 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 8. Importance of discounters grows in Beer, Milk, Chocolate, Mineral Water Volume Share Nielsen Key Account Index, Moscow & S.-Petersburg 19,7 19,7 19,7 27,5 24,7 23,0 18,1 18,4 18,4 20,1 20,7 20,7 16,7 18,4 15,1 22,0 22,7 31,5 31,2 31,5 29,6 28,7 28,7 32,3 34,4 36,0 31,5 32,3 45,7 46,1 46,1 25,3 39,7 42,6 42,6 35,8 37,2 36,6 35,1 36,9 37,8 37,8 57,1 57,5 57,5 43,7 48,1 49,0 30,3 29,0 55,6 56,4 47,5 50,1 52,6 31,2 32,2 33,4 33,5 33,5 33,5 23,2 22,7 22,7 28,8 27,2 28,0 36,2 35,5 35,5 42,4 35,3 35,0 40,2 36,7 36,7 22,4 20,9 Dec Jan Feb Dec Jan Feb Dec Jan Feb Dec Jan Feb Dec Jan Feb Dec Jan Feb Dec Jan Feb Dec Jan Feb Dec Jan 08 09 09 08 09 09 08 09 09 08 09 09 08 09 09 08 09 09 08 09 09 08 09 09 08 09 Drinkable Mineral Water Vodka Beer Tea Packed Chocolate Coffee Milk Yoghurt chocolate tablets pralines Hypermarkets Discounters Supermarkets *Milk including pasteurized & sterilized Source: Nielsen Retail Index Topic of Presentation April 27, 2009 Page 8 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 9. Change in FMCG purchase volume over the last 3 months В8: Which of the following statements best В9: Could you please estimate (in per cent) describes how your FMCG purchase volume has how much less FMCG you buy now than 3 changed over the last 3 months? months ago? I/my family buy more FMCG now than 3 months ago Cut down by 5-15% I/my family buy less FMCG products now than 3 months ago Cut down by 20% I/my family buy the same amount of FMCG products now as 3 months ago Cut down by 25% and more 10% 29% 33% 21% 69% 38% Total: respondents that buy less FMCG now than 3 Total: all respondents, 524 months ago, 111 Source: “Russia through crisis” Nielsen consumer research, 1st wave November-December 2008 Topic of Presentation April 27, 2009 Page 9 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 10. Purchase of FMCG: Money-saving strategy В20: Did you personally become more thrifty when buying FMCG now than 3 months ago? Surely not 5% 23% Most likely not 47% Most likely yes Surely yes 26% Total: all respondents, 524 Source: “Russia through crisis” Nielsen consumer research, 1st wave November-December 2008 Topic of Presentation April 27, 2009 Page 10 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 11. Consumers in Russia are not reluctant to switch from brands they got used to in order not loose in quality В18: For each of the following products please tell us, if you buy the same brands as 3 months ago, or you started to buy more expensive or cheaper brands? I buy cheaper brands I buy more expensive brands I buy the same brands as 3 months ago Drinking/mineral water [n=395] 9% 6% 85% Cigarettes [n=279] 10% 7% 83% Tea [n=512] 11% 11% 78% Face cream [n=386] 12% 16% 72% Vodka [n=216] 13% 8% 79% Chocolate (tablets/bars) [n=448] 13% 8% 80% Beer [n=311] 13% 7% 80% Milk [n=478] 13% 6% 81% Coffee [n=431] 13% 9% 78% Drinkable yogurt [n=372] 14% 8% 77% Shampoo [n=502] 14% 14% 72% Cakes [n=380] 17% 4% 78% Laundry detergents [n=505] 18% 5% 77% Total: respondents who purchased goods from these categories 3 months ago and continue to buy them now Source: “Russia through crisis” Nielsen consumer research, 1st wave November-December 2008 Topic of Presentation April 27, 2009 Page 11 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 12. Private Label Share did not change in comparison to September 2008 and Remains at low level 12 Nielsen Key Account Index, Moscow& S.-Petersburg, 110 Private Labe Trends 10 90 73 73 76 8 67 70 51 55 6 51 50 38 4 32 30 2 10 2,3 2,3 2,1 1,8 3,9 3,6 4,7 4,9 3,0 3,1 7,6 6,9 4,2 4,7 0,3 0,3 0,1 0,4 0 -10 Tea Instant CSD Juice Mineral Soft Sweet Drinkable Gum Coffee Water Cakes Buisquit Yoghurt PL Volume Share, Sept08 PL Volume Share, Dec08 Price Index, Dec08 (%) Source: Nielsen Retail Index Topic of Presentation April 27, 2009 Page 12 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 13. 19% of consumers state, that assortments has narrowed over last 3 months В15: In your opinion, has the FMCG assortment in stores where you usually shop changed over the last 3 months? The FMCG assortment has narrowed significantly over the last 3 months 2% 19% The FMCG assortment has somewhat narrowed over the last 3 months The FMCG assortment has not changed over the last 3 months 68% The FMCG assortment has somewhat widened over the last 3 months The FMCG assortment has widened significantly over the last 3 months 10% Total: all respondents, 524 Source: “Russia through crisis” Nielsen consumer research, 1st wave November-December 2008 Topic of Presentation April 27, 2009 Page 13 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 14. Nearly half of outlet owners/representatives have faced with the issue of Purchases Prices Change over last 3 months, and one quarter of the respondents have suffered from the restrictions in the payment terms What problems have you faced in the last 3 months? 45 29 24 10 15 9 9 8 Purc hasing Nothin g o f Paymen t Neces sary Don t Deliv ery Delivery pric es ab ove lis te d te rms a ssort.de l. know/Difficult p ostponeme n volume cha nged chan ged problems to an swer p roblems Source: Nielsen survey “Distribution channels: struggling through crisis”,January 2009 Topic of Presentation April 27, 2009 Page 14 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 15. Assortment Change: The Assortment was less affected than stock volume by Crisis Environment - only 19% of respondents have claimed that they have reduced the variety of products on shelves. However the reduction seem not to be very significant– mainly not more than 15%. Have you reduced assortment in the How have assortment changed in last 3 months? the last 3 months ? Reduced by not more than 58 15% No 81% Reduced by 15% -30% 24 Yes 19% Reduced by more than 8 30% Dont know/Difficult 10 to answer Source: Nielsen survey “Distribution channels: struggling through crisis”,January 2009 Topic of Presentation April 27, 2009 Page 15 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 16. The Assortment Change Scale: The most significant decrease in assortment was recognized in Mini/Supermarkets How have assortment changed in the last 3 months ? Total 58 24 8 10 HoReCa 86 0 14 OM 58 17 11 13 Households 63 19 6 13 Drug Specials 52 29 7 12 Kiosks/Pavilions 71 19 36 Food Stores 60 20 8 12 Mini / Supers 36 48 16 0 Reduced by not m ore than 15% Reduced by 15%-30% Reduced by m ore than 30% Dont know /Difficult to answ er Source: Nielsen survey “Distribution channels: struggling through crisis”,January 2009 Topic of Presentation April 27, 2009 Page 16 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 17. In case of assortment decreasing, importance merchandising is increasing: example of Nielsen Merchandising service project • Recommendations for energy drinks in supermarkets X Proposed Plan A Proposed Plan B Plan А Calculations Target Actual % +/- Calculations Target Actual % +/- Projected Sales £947.36 £984.98 4.0% Projected Sales £940.52 £990.02 5.3% Projected Lost Sales £49.86 £12.24 Projected Lost Sales £49.50 £0.00 Projected Units 1,373 1,428 4.0% Projected Units 1,351 1,422 5.3% Projected Lost Units 72 17 Projected Lost Units 71 0 Sales/Section Mtr £388.26 £403.68 4.0% Sales/Section Mtr £385.46 £405.74 5.3% Allocated Products 31 31 Allocated Products 29 29 Zero Movement 0 2 Zero Movement 0 2 Per store with this plan: Per store with this plan: Incremental Sales / Week £45.59 Incremental Sales / Week £50.63 Incremental Sales / Year £2,370.68 Incremental Sales / Year £2,632.76 If in 460 stores: If in 460 stores: Incremental Sales / Year £1,090,512.80 Incremental Sales / Year £1,211,069.60 Plan’s analyzing Plan B Both plans promise rising sales of energy drinks up to 1 mln £ Plan B is recommended (sales increase according to plan B is higher than according to plan A) Source: Nielsen Merchandising Service data Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 18. Consumers in Large Russian Cities are Receptive to Innovations In Moscow, ~25% of consumers claim that like trying new products and always look for new brand and product offers. I love trying new things - I'm always I seldom try new on the lookout for things - I find it is new brands and far better to know products what you want 26% I sometimes buy rather than risk new brands or buying something products - but that may not work usually stick to my out favourites 20% 54% Source: Nielsen BASES data Topic of Presentation April 27, 2009 Page 18 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 19. Comparing with Europe, in Russia it’s more difficult to build distribution of new product, during first periods after launch distribution grow rate in Russia is much lower Median Year 1 distribution build - Russia vs. Europe 80 70 Average weighted distribution 60 RUSSIA* 50 France 40 UK 30 Italy Spain 20 Germany 10 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Year 1 periods Source: Nielsen BASES data Topic of Presentation April 27, 2009 Page 19 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 20. Nielsen global data: how do consumers react on inflation? What Shoppers ‘do’ What Shoppers ‘say’ What could be to limit impact of they do to limit happening in Inflation across impact of Inflation Russia? Europe Try Not Reduce their 1. to change 1. Go Less in Stores 1. Basket Look for easy Switch 2. Alternatives 2. Reduce their Basket 2. Channels Switch 3. Switch 3. Switch Channels ? 3. brands? Source: Nielsen Europe CPS data Topic of Presentation April 27, 2009 Page 20 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 21. Consumer Behavior Strategies High share Wait-and-see Gathering and studying information for «Observers» position defining further strategies «I do not know what will happen further on, that is why I do not make fuss.». Withdraw cash from bank deposits and cards so as to avoid losses in Preventive case of devaluation or denomination «Panic-stricken» activities Attempt to save their assets: diversify deposits and change the currency of their deposits «Devaluation may occur tomorrow, that is why we cashed all our accounts to invest the money in purchasing.» Getting Cutting on consumption «Pessimists» prepared for Getting thrifty the worst «I remember queuing up for foods and fearing to have nothing to feed my kid with. Now I have stocked up some food: sugar, Low share condensed milk, cereals. Just in case. You never know ....» Source: Quality research “Current Economic Situation Perception and Influences”, November – December 2008 Topic of Presentation April 27, 2009 Page 21 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 22. In the initial crisis period, consumption frequency decrease without brand change Initial crisis Deeper crisis Consumption will not Consumption frequency Switch to cheaper Abstention from change will decrease without products/ brands category brand change • Milk • Chocolate • Milk, kefir • Specialties • Poultry • Cheese • Premium sausage • Juices and bottled • Sausages • Meat and fish specialties • Fish water • Butter/ oil • Fruit • Clothes and shoes • Cakes, pastries, • Vegetables • Coffee • Domestic biscuits • Tea • Wine appliances of urgent In case • Salty snacks and • Children’s goods • Cosmetics and personal necessity chewing gum • Manufactured pet care products • Jewelry food • Household detergents • Computers • Going to the theater (washing and cleansing • Holiday trips abroad • Fitness/ wellness detergents) • Restaurants/ bars centers (e.g. water • Beauty salons pool, solarium) • Renewal of clothes • Renewal of domestic appliances & electronics Source: Quality research “Current Economic Situation Perception and Influences”, November – December 2008 Topic of Presentation April 27, 2009 Page 22 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 23. Consumers switch from nice to have to basic need to have categories: during last 2 periods sales of milk were growing and sales of other dairy categories were stable/decreasing National Urban Russia – Sales volume 1000L/kg Source: Nielsen Retail Index Topic of Presentation April 27, 2009 Page 23 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 24. What and when influence consumer decisions? PRE-STORE IN-STORE Advertising Notice new brands Price / variants comparison Merchandizing Packaging Buzz Product Promotions Browsing Family preference Source: Shopper Modality Customized research (fieldwork in September 2008) Topic of Presentation April 27, 2009 Page 24 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 25. Auto-pilot mode shopping – Can it be broken? Thousands of brands in their heads Auto-pilot Delta Moments Delta Moments = No time to think Omega Ω rules new information, about them = habit promo, advertising etc. Source: Shopper Modality Customized research (fieldwork in September 2008) Topic of Presentation April 27, 2009 Page 25 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 26. Omega Delta ΩΔ profile of categories/brands: delta shoppers omega shoppers Open to new information, word Consumers who shop on of mouth, advertising, engage in habitual auto-pilot mode scrutiny mode shopping. •Omega shoppers •Delta shoppers •Average •54 •46 •Chocolate •31 •69 •Juice •36 •65 •Yoghurt spoonable •40 •60 •Beer •42 •58 •Mayonnaise •64 •36 •Sweet biscuits •64 •36 •Energy drinks •65 •36 •Cereals •69 •32 •Chewing Gum •72 •28 Source: Shopper Modality Customized research (fieldwork in September 2008) Topic of Presentation April 27, 2009 Page 26 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 27. Which shopping behavior is prevalent in categories? In-store Advertising Bargain Buzz Family preference Variety browsers activated hunters activated activated Seekers Chocolate 33% 44% 20% 19% 4% 3% Juice 35% 51% 26% 19% 5% 1% Yogurt spoon 32% 49% 23% 21% 6% 1% Beer 38% 59% 26% 30% 1% 4% Mayonnaise 33% 47% 26% 21% 2% 2% Sweet biscuits 35% 24% 16% 17% 3% 4% Energy drinks 28% 57% 22% 28% 2% 3% Cereals 28% 29% 19% 18% 5% 3% Chewing Gum 36% 40% 16% 19% 2% 3% Source: Shopper Modality Customized research (fieldwork in September 2008) Topic of Presentation April 27, 2009 Page 27 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 28. Macro-paradox of consumer market Dominating trends Topic of Presentation April 27, 2009 Page 28 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 29. Integrated approach to consumer analyzing Quantity researches Quality Census data researches Analyze of On line consumers: In store studies integrated observation approach New launch Analytical analysis- consulting BASES Retail measurement service Topic of Presentation April 27, 2009 Page 29 Confidential & Proprietary Copyright © 2009 The Nielsen Company
  • 30. Thank you for your attention! Please feel free to contact in case of any questions: Tel: + 7 495 6633683 E-mail: ekaterina.monakhova@nielsen.com Topic of Presentation April 27, 2009 Page 30 Confidential & Proprietary Confidential & Proprietary • Copyright © 2007 The Nielsen Company Copyright © 2009 The Nielsen Company