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THE PRICE FOCUSEDSHOPPER: REALITY ORFAIRYTALE© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick   1
GfK: Who buys what, where, when, howmuch…?© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick   2
GfK: 1 in every 900 Belgian households ismonitored across total FMCG Hypermarkets                    Supermarkets         ...
At the end of this session…We’ll answer the following question together:Does the price focused shopper exist?             ...
How we will try to answer the question                                How price aware are you?                            ...
How we will try to answer the question                                How price aware are you?                            ...
WHAT IS MISSING HERE?© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick                      7
How price awareon sensitivities Segmentation based                    are you?                     Expected PRICE         ...
How price aware are you?                    What about your price sensitivity…?© GfK 2012 | Price sensitivity in FMCG | Ko...
How price aware are you?                 Would you be able to rank the                following products on their price   ...
How price aware are you?    3                                                                                      6      ...
How we will try to answer the question                                How price aware are you?                            ...
Some Macro-Economics                                                            Paradigm : Indexed salaries Vs Increase of...
Some Macro-Economics                        35                                           PL shares    Inflation           ...
Some Macro-Economics                               Downtrading of some sectors can represent growth potential 4 Retail in ...
How we will try to answer the question                                How price aware are you?                            ...
An eye on price elasticity    SOFTDRINKS | BREAD  SPREADS |FEMALE HYGIENE© GfK 2012 | Price sensitivity in FMCG | Koenraad...
An eye on price elasticity                                      Very elastic, Elasticity > 1                              ...
An eye on price elasticity            Elasticity                                       Bread Spread                       ...
How we will try to answer the question                                How price aware are you?                            ...
Price as a driver for Aldi’s growthAldi has been growing in Sales value and market penetration since 2004. 2 questions can...
© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick   22
Price as a driver for Aldi’s growth                                      Offers                                           ...
Price as a driver for Aldi’s growth                                              α* Price  Sales results                  ...
Price as a driver for Aldi’s growth                                              α* Price  Sales results                  ...
Price as a driver for Aldi’s growth                                                  α* Price/Quality  Sales results      ...
Price as a driver for Aldi’s growth                                                            Sales Aldi = Basic sales – ...
Price as a driver for Aldi’s growth                    Further improvements on the price                     quality ratio...
Price as a driver for Aldi’s growth                                                            Actual sales data   Predici...
Price as a driver for Aldi’s growth© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick   30
Price as a driver for Aldi’s growth© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick   31
Price as a driver for Aldi’s growth© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick   32
Price as a driver for Aldi’s growthAldi continuous to improve or expand its assortment© GfK 2012 | Price sensitivity in FM...
Price as a driver for Aldi’s growthAldi continuous to improve or expand its assortment© GfK 2012 | Price sensitivity in FM...
Price as a driver for Aldi’s growth   The price gap is big enough for   Aldi, they are not generating   additional sales b...
How we will try to answer the question                                How price aware are you?                            ...
Impact of price promotionsSegmentation based on sensitivities   NO DEALS NO PLEASURE                                      ...
Impact of price promotionsSegmentation based on sensitivities                                                            N...
Impact of INTO PROMOTION EFFECTIVENESSDEEP DIVE          price promotionsTOTAL SALES                                      ...
Impact of INTO PROMOTION EFFECTIVENESSDEEP DIVE          price promotions                Brand Switching                  ...
Buying development – Black Friday                                                            Black Friday                 ...
How we will try to answer the question                                How price aware are you?                            ...
Segmentation based onClassification of the Belgian HouseholdssensitivitiesIn biology, specimen areclassified based on thei...
Segmentation based onClassification of the Belgian HouseholdssensitivitiesIn biology, specimen areclassified based on thei...
Classification of the Belgian HouseholdsSegmentation based on sensitivities                                           PRIC...
Segmentation based on sensitivitiesSegmentation based on sensitivities                                                    ...
High                                                                       promo                  Early:Classification of ...
Shopper decision hierarchySegmentation based on sensitivities                                                         Pric...
How we will try to answer the question                                How price aware are you?                            ...
At the end of this session…We’ll answer the following question together:Does the price focused shopper exist?             ...
More information?           Koenraad Dierick (BE)          Consultant Advanced Business         Made by Sanne Van Hoef    ...
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GfK -vlerick fmcg conference - the price sensitive shopper reality or fairy tail

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Presentation shared at the vlerick fast moving consumer goods conference 2012 by Koenraad Dierick

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GfK -vlerick fmcg conference - the price sensitive shopper reality or fairy tail

  1. 1. THE PRICE FOCUSEDSHOPPER: REALITY ORFAIRYTALE© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 1
  2. 2. GfK: Who buys what, where, when, howmuch…?© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 2
  3. 3. GfK: 1 in every 900 Belgian households ismonitored across total FMCG Hypermarkets Supermarkets Discounters Proximity Special Outlets Other Food •TECNO •Peter-Goovers •Oth.Supermarkets (1-2 checkouts) •Foreign Supermarkets •Louis Delhaize Super • Rob • Delhaize Superette •…………. • Alma • Prima •Bio Planet • Deli Traiteur • Caddy Home, Delhaize •Supra Direct/Wineworld •Spar (excL. Eurospar) •Ecomarché •Carrefour winkel Online • Petrol stations •Profi Total Belgium = Hyper + Super + Discounter + Proximity + Special Outlets + Other Food© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 3
  4. 4. At the end of this session…We’ll answer the following question together:Does the price focused shopper exist? Option 1: YES, every shopper is price focused Option 2: YES, and it concerns a large portion of the population Option 3: YES, and it concerns a small portion of the population Option 4: No, but this will very likely change in the near future Option 5: No Option 6: I have another opinion© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 4
  5. 5. How we will try to answer the question How price aware are you? Some Macro-economics An eye on price elasticity Price as a driver for Aldi’s growth? Impact of price promotions Classification of Belgian Households The closing question© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 5
  6. 6. How we will try to answer the question How price aware are you? Some Macro-economics An eye on price elasticity Price as a driver for Aldi’s growth? Impact of price promotions Classification of Belgian Households The closing question© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 6
  7. 7. WHAT IS MISSING HERE?© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 7
  8. 8. How price awareon sensitivities Segmentation based are you? Expected PRICE I love this Last time BRAND it was GAP price X Posted PRICE Posted PRICE 40% does not notify the gap between the expected price and Purchase the posted price Purchase consideration consideration I’m used to This time it is buying this more product. Purchase expensive40% © GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 8
  9. 9. How price aware are you? What about your price sensitivity…?© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 9
  10. 10. How price aware are you? Would you be able to rank the following products on their price per liter / Kilo?© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 10
  11. 11. How price aware are you? 3 6 10 9 8 4 1 5 2 7€ 1,53 € 2,59 € 3,63 € 6,6 € 12,12 € 12,18 Price per volume (Kg / L) € 13,10 € 13,9 €15,95 © GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 11
  12. 12. How we will try to answer the question How price aware are you? Some Macro-economics An eye on price elasticity Price as a driver for Aldi’s growth? Impact of price promotions Classification of Belgian Households The closing question© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 12
  13. 13. Some Macro-Economics Paradigm : Indexed salaries Vs Increase of costs PURCHASE POWER : Reality for private HH = Increase of Cost of living© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 13
  14. 14. Some Macro-Economics 35 PL shares Inflation 15 Private 34 13Label Value Shares 33 11 Western 32 9 Europe 31 7 30 5 29 3 28 1 27 -1 26 -3 Q1 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Source Europanel consumer index – 10 countries © GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 14
  15. 15. Some Macro-Economics Downtrading of some sectors can represent growth potential 4 Retail in FMCG ? Channels Assortment Brands CONSUMER Crisis Crisis Neutraal Crisis Resistant Neutral Prone© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 15
  16. 16. How we will try to answer the question How price aware are you? Some Macro-economics An eye on price elasticity Price as a driver for Aldi’s growth? Impact of price promotions Classification of Belgian Households The closing question© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 16
  17. 17. An eye on price elasticity SOFTDRINKS | BREAD SPREADS |FEMALE HYGIENE© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 17
  18. 18. An eye on price elasticity Very elastic, Elasticity > 1 Perfect elasticity, elasticity = 1 Δ% Volume Non elastic, elasticity < 1 Δ % Price© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 18
  19. 19. An eye on price elasticity Elasticity Bread Spread Soft drinks 1 Price per volume Female Hygiene 0© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 19
  20. 20. How we will try to answer the question How price aware are you? Some Macro-economics An eye on price elasticity Price as a driver for Aldi’s growth? Impact of price promotions Classification of Belgian Households The closing question© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 20
  21. 21. Price as a driver for Aldi’s growthAldi has been growing in Sales value and market penetration since 2004. 2 questions canbe asked what will they do in 2013 and what have been the main drivers for this growth? 1600000 Sales Value (€1000) Penetration (%) 78 1400000 76 74 1200000 72 1000000 70 800000 68 600000 66 400000 64 200000 62 0 60© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 21 21
  22. 22. © GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 22
  23. 23. Price as a driver for Aldi’s growth Offers Prices Quality Assortment Fresh Cleanliness Friendliness 10 8 6 4 2 0 2004_Summer 2004_Winter 2005_Summer 2005_Winter 2006_Summer 2006_Winter 2007_Summer 2007_Winter 2008_Summer 2008_Winter 2009_Summer 2009_Winter 2010_Summer 2011_Winter 2011_Summer 2011_Winter 2012_Summer Sales Value (€1000) ? Penetration (%) 1600000 78 1400000 76 1200000 74 1000000 72 70 800000 68 600000 66 400000 64 200000 62 0 60© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 23 23
  24. 24. Price as a driver for Aldi’s growth α* Price Sales results Performance β* Offers γ * Quality δ* Assortment ε * Fresh δ* Cleanliness ε* Friendliness© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 24 24
  25. 25. Price as a driver for Aldi’s growth α* Price Sales results Performance β* Offers γ * Quality Price / Quality δ* performance Assortment ε * Fresh δ* Cleanliness ε* No significant impact Friendliness© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 25 25
  26. 26. Price as a driver for Aldi’s growth α* Price/Quality Sales results performance β* Assortment γ * Fresh The sales performance of Aldi can be δ* Adjusting for explained by the amount of Belgian seasonality Households that visit the Aldi stores per season and their evaluation of the price / δ * Adjusting for quality ratio, the available penetration assortment, and the performance of the fresh department!© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 26 26
  27. 27. Price as a driver for Aldi’s growth Sales Aldi = Basic sales – A * Price/Quality + B * Assortment + C * Fresh department - D * Winter/Summer + E * Penetration Adjusted R² = 0.95 Actual sales Sales Model 3 1680000 1480000 1280000 1080000 880000 680000 480000 280000 80000© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 27 27
  28. 28. Price as a driver for Aldi’s growth Further improvements on the price quality ratio have not resulted in additional sales. Or any negative changes in the price performance evaluation did not negatively affect the sales of Aldi The assortment has been a driver of Aldi’s success – A * Price/Quality + B * Assortment The fresh department has been a driver of + C * Fresh department Aldi’s success – D * Winter/Summer Aldi performs less good during the summer© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 28 28
  29. 29. Price as a driver for Aldi’s growth Actual sales data Predicition Sales 1680000 +2.5% 1480000 1280000 1080000 880000 680000 480000 280000 80000© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 29 29
  30. 30. Price as a driver for Aldi’s growth© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 30
  31. 31. Price as a driver for Aldi’s growth© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 31
  32. 32. Price as a driver for Aldi’s growth© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 32
  33. 33. Price as a driver for Aldi’s growthAldi continuous to improve or expand its assortment© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 33
  34. 34. Price as a driver for Aldi’s growthAldi continuous to improve or expand its assortment© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 34
  35. 35. Price as a driver for Aldi’s growth The price gap is big enough for Aldi, they are not generating additional sales by lowering their prices. As a matter of fact they might have some potential to increase prices on “must buy” products: e.g. female hygiene© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 35
  36. 36. How we will try to answer the question How price aware are you? Some Macro-economics An eye on price elasticity Price as a driver for Aldi’s growth? Impact of price promotions Classification of Belgian Households The closing question© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 36
  37. 37. Impact of price promotionsSegmentation based on sensitivities NO DEALS NO PLEASURE • Consumers react to uncertainty in the marketplace • Focusing on saving • Purchasing items on promotions • Increased share of PL • Specific group starts to buy more frequently • Actually feel better doing so • Pleasure of getting deals • Obsessive deal seekers • These are: • More knowledgeable • Brand conscious • Price sensitive© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 37
  38. 38. Impact of price promotionsSegmentation based on sensitivities NO DEALS NO PLEASURE Example send in by GfK panel member NL That is €42 of Rexona products for only €12© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 38
  39. 39. Impact of INTO PROMOTION EFFECTIVENESSDEEP DIVE price promotionsTOTAL SALES PROMOTION EFFECTS SALES CANNIBALIZATION LONG TERM BUMP IN BRAND SWITCHING: PROMO “Buying something else” COMPETIVE SWITCHING SHORT TERM INCREASED BUYING TIMING EFFECT: FREQUENCY DEFENSIVE “Buying earlier” STOCKPILING CATEGORY VOLUME UPLIFT: SWITCHING “Buying more” RETAILER SWITCHING NEUTRAL INCREASED CONSUMPTION© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 39
  40. 40. Impact of INTO PROMOTION EFFECTIVENESSDEEP DIVE price promotions Brand Switching Extra volume Faster buying Shop Shifting 20% 23% 23% 30% 45% 42% 10% 10% 15% 10% 20% 23% 10% 21% 20% 35% 17% 25% 20% 23% 17% 10% 8% 11% 17% 18% 25% 24% 18% 10% Price Other Volume Multibuy Retailer Premium promotion Price promotion (e.g. 2+1 actions promotion coupon promotion (e.g. 5+1) SKU) (e.g. Pixar)© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 40
  41. 41. Buying development – Black Friday Black Friday • Radical deals on popular items • To create publicity • Encourage traffic into the store • Increase the sales of other items on their shelves)© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 41
  42. 42. How we will try to answer the question How price aware are you? Some Macro-economics An eye on price elasticity Price as a driver for Aldi’s growth? Impact of price promotions Classification of Belgian Households The closing question© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 42
  43. 43. Segmentation based onClassification of the Belgian HouseholdssensitivitiesIn biology, specimen areclassified based on theircharacteristics.We can apply the samemethodology onshoppers© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 43
  44. 44. Segmentation based onClassification of the Belgian HouseholdssensitivitiesIn biology, specimen areclassified based on theircharacteristics.We can apply the samemethodology onshoppers© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 44
  45. 45. Classification of the Belgian HouseholdsSegmentation based on sensitivities PRICE FOCUS QUALITY FOCUS BRAND FOCUS PROMO SENSITIVITY ADOPTING TO INNOVATIONS MEDIA SENSITIVITY PRODUCT SPECIFIC FEATURES RETAILER© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 45
  46. 46. Segmentation based on sensitivitiesSegmentation based on sensitivities SPECIMEN FOUND IN GFK DATABASE© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 46
  47. 47. High promo Early:Classification of the Belgian sensitiv 2%Households based on sensitivitiesSegmentation e: 10% Late: 7% Low promo Fair sensitiv Early: Quality: e: 7% 2% 3,5% Indiffer High ent:7% Premiu promo Late: 5% ADOPTING TO INNOVATIONS m sensitiv Quality: e:11% Early: PROMO SENSITIVITY 3,5% 3% Low promo QUALITY FOCUS Fair sensitiv Late: 8% PRICE FOCUS Quality: e: 6% 19% Sensiti High ve: 38% Early:2% promo Premiu sensitiv m e:8% Quality: Late:4% 19% Low promo Early: sensitiv 3% Fair e:2% Brand Focus: Quality: oriented High Late:5% 11% BRAND FOCUS 55% : 42% promo sensitiv Premiu e: 38% Early: m Not 30% Quality: brand Low 44% oriented promo : 2% Late: 8% sensitiv© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick e: 4% 47
  48. 48. Shopper decision hierarchySegmentation based on sensitivities Price Price Price Focus: Indifferent:7 sensitive: 55% % 38% Quality Quality Price 1 Relative importance in purchasing decision Product features Price Quality 2 Brand Brand Promotions 3 Price Media Brand Media Promotions Media Promotions Innovations Innovations Innovations Product features Product features© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 48
  49. 49. How we will try to answer the question How price aware are you? Some Macro-economics An eye on price elasticity Price as a driver for Aldi’s growth? Impact of price promotions Classification of Belgian Households The closing question© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 49
  50. 50. At the end of this session…We’ll answer the following question together:Does the price focused shopper exist? Option 1: YES, every shopper is price focused Option 2: YES, and it concerns a large portion of the population Option 3: YES, and it concerns a small portion of the population Option 4: No, but this will very likely change in the near future Option 5: No Option 6: I have another opinion© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 50
  51. 51. More information? Koenraad Dierick (BE) Consultant Advanced Business Made by Sanne Van Hoef Solutions (ABS) 02/558 0551 | 0473/33 47 70 Koenraad.Dierick@gfk.com© GfK 2012 | Price sensitivity in FMCG | Koenraad Dierick 51

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