“ Our presentation references two studies: &quot;2011 COLLOQUY Cross-Cultural Loyalty Study” (November 2011) Sponsored by Epsilon and LoyaltyOne. LoyaltyOne is a leading provider of loyalty marketing publishing, research and education. Epsilon is a global marketing and analytics leader focused on helping brands deepen their relationships with customers. Study provides a timely and comprehensive window into current consumer attitudes toward loyalty amidst continued global economic turmoil.
LoyaltyOne President Bryan Pearson: &quot;Consumer sentiment is incredibly important bellwether. While there are many imminent concerns for business on the horizon, corporations, especially those that are banking on loyalty for growth, would be wise to heed two strong prevailing themes: Success in North America requires a rewrite of the rules of engagement, and emerging markets will not be won with a one-size-fits-all mentality.”
Kelly Hlavinka, Managing Partner of COLLOQUY: &quot;There are some incredibly compelling and eye-opening findings in our research including what's on the horizon for customer loyalty strategies,&quot; adds Hlavinka. &quot;I think chief marketing officers are going to be surprised with the trends and needs that are reshaping customer expectations and loyalty globally. There is vast loyalty opportunity to evolve how we engage customers in the developed markets. We've also uncovered a strong desire for special services & privileges in the emerging markets. Marketers would be well served to understand these trends and deploy strategies to capitalize on them.&quot;
Foreign vs. domestic brands: Shoppers in emerging nations are more welcoming of foreign brands and in some cases are more trusting of foreign/global brands. In China, nine out of 10 consumers say that global brands are more trustworthy than domestic brands. Chinese consumers are six times more likely than Americans to agree with the statement that competition from foreign companies is a good thing. CATMAN implication: Taking advantage of positive foreign bias when creating products to put on shelves. Create new exteriors with some goods inside the packaging?
Credit card usage: China, Brazil and India consumers are five times more likely than U.S. and Canadian consumers to say they will use credit cards for &quot;things you can't afford now.” CATMAN implication: When involved in creating new stores in the developing world, ensure that credit card technology is installed. Meet the consumer’s payment needs. Throw out mindset of “cash only” market places
Comfort with debt in Brazil has fueled the spectacular expansion of their credit industry with revenue growth rates exceeding 26% a year since 2001.
Privacy: 68% of Brazilian consumers are concerned about protecting their personal information, compared with 50% of consumers in the United States and Canada. This far outstrips China, where just 33% of respondents said they are concerned CAMAN implication: Presumed new credit card systems will have to be installed with need for security in mind. Or existing systems will have to be updated. CAMAN implication: Potential issues getting consumers to subscribe to loyalty programs.
Brand Loyalty Defined: Consumers almost universally define brand loyalty as telling friends or family to shop at a particular store, except in China, where loyalty is defined as shopping with a specific company for more than three years. CATMAN implication: Marketing strategies need to be oriented towards this word of mouth means of information distribution. Interesting fact: Only 12% of Americans and 10% of Canadians strongly agree that it pays to be loyal to your favorite brands.
2-3 x more in supporting
2-3 x more in supporting
Promotions – Multinationals will have to manage their promotions differently. In developed markets, promotional campaigns, for example, tend to be seasonal and product specific, but apparel retailers in Brazil use attractive credit offerings, such as installment payments, to entice customers. Hire Locally – Hire strong local Management Teams that not only understand the market and the consumer, but who also excel both at merchandising and at helping to craft competitive credit offerings. Private Label Credit Offerings – Brazil’s credit reporting system is pretty undeveloped. The country’s banks give the credit providers information about consumers who have defaulted on debts but not about their “positive” credit histories. Because of the absence of of comprehensive credit profiles, general-purpose credit cards are rare in Brazil, particularly among mass-market consumers. As we talked about earlier, Brazilians have a high proclivity to buy on credit if available to them. Retailers will face a competitive disadvantage if they restrict their customers to cash payments. Therefore any multinational company coming into Brazil will need to offer private-label cards
Consumer Behavior in emerging markets
Consumer Behavior inDeveloping and Emerging Markets Sabrina Fruehauf Eric Johnson Dan Kopelow
References• 2011 COLLOQUY Cross-Cultural Loyalty Study – Sponsored by Epsilon & LoyaltyOne – The study revealed stark contrasts in optimism between: • Three developed nations (U.S., Canada and Australia) • Three emerging markets (India, China and Brazil)• Organized Retail Comes of Age in India – McKinsey & Company• How Half the World Shops: Apparel in Brazil, China, and India – McKinsey & Company
Consumers in emerging marketsrespond differently to new brands and product opportunities than do their counterparts in developed nations. FA CT
Outline• One size does not fit all• Developed vs. emerging markets• In depth: The emerging Indian market• In depth: The Brazilian apparel market
One size does not fit all• "Consumer sentiment is incredibly important bellwether. While there are many imminent concerns for business on the horizon, corporations, especially those that are banking on loyalty for growth, would be wise to heed two strong prevailing themes: Success in North America requires a rewrite of the rules of engagement, and emerging markets will not be won with a one-size-fits-all mentality." - LoyaltyOne President Bryan Pearson
One size does not fit all• "There is vast loyalty opportunity to evolve how we engage customers in the developed markets. Weve also uncovered a strong desire for special services & privileges in the emerging markets. Marketers would be well served to understand these trends and deploy strategies to capitalize on them.” - Colloquy Managing Director Kelly Hlavinka
Developed vs. Emerging Markets• Foreign vs. domestic brands – Preference – Chinese statistics • Foreign trustworthiness • Likeliness to be favorable about foreign competition• Category management implication
Developed vs. Emerging Markets• Credit card usage: BRIC Countries vs. USA/Canada• Category management implication
Developed vs. Emerging Markets• Privacy Concerns: Brazil USA China• Category management implication – New credit card systems will have to be installed – Potential issues getting consumers to subscribe to loyalty programs
Developed vs. Emerging Markets• Brand loyalty• Category management implication – Marketing strategies need to be oriented towards this word of mouth means of information distribution• Canadian and American opinions on loyalty – Only 12% of Americans and 10% of Canadians strongly agree that it pays to be loyal to your favorite brands
The emerging Indian market$450 billion retailmarket by 2015( = Italy) 300 million shoppers Larger tax 1.6 millions retail base jobs Lower waste via Lower consumer Add $3-4 billions price 3-5% more efficient in GDP of five supply chains years
The Brazilian Apparel MarketWorlds 5th Largest7% Annual GrowthFashion ranks in the top 3 attributes at preferred stores 60% of Sales come from Domestic Retailers
Lessons for Multinationals• Hire Locally• Promotions• Private-Label Credit Offerings