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Comscore — Best Practices for Combating "Buy Down" Behavior webinar (December 2011)

45 slides from Comscore's conference presentation, Dec 8, 2011

  1. Slide 1: Best Practices for Combating "Buy Down" Behavior

    Best Practices for Combating “Buy Down” Behavior December 8, 2011 Please Note: A copy of these presentation slides will be provided to attendees within 48 hours.

  2. Slide 2: Your Speakers

    Your Speakers Frank Findley VP Research & Development Diane Wilson Senior Manager Research © comScore, Inc. Proprietary and Confidential. 2

  3. Slide 3: Background

    Background  Annual studies covering the recessionary impact on brand loyalty and Buy Down since 2008  Each study focused on women who are purchasers in a variety of categories reporting:  buying the brand they want most  switching to brands on sale  converting to less expensive alternatives  I

  4. Slide 4: What is Buying Down?

    What is Buying Down? “Buy Down” is the act of switching purchases to less-preferred brands to save money. These can be “peer” brands on sale, lower tiered brands, or private label/store brands. © comScore, Inc. Proprietary and Confidential. 4

  5. Slide 5: What is Buying Down?

    What is Buying Down? Source: Wal-Mart Stores, Inc. 18th Annual Meeting for Investment Community. October 12, 2011 © comScore, Inc. Proprietary and Confidential. 5

  6. Slide 6: The Present: 2011 Findings Update

    The Present: 2011 Findings Update © comScore, Inc. Proprietary and Confidential. 6

  7. Slide 7: Overall "Buy Down" trend continues (though at slightly slower pace)

    Overall “Buy Down” trend continues (though at slightly slower pace) “I buy the brand I want most” (across six examined segments) 60% 54% 50% 50% 45% 43% 40% 30% 20% 10% 0% 2008 2009 2010 2011 © comScore, Inc. Proprietary and Confidential. 7

  8. Slide 8: No segment has been immune since the start of "Great Recession"

    No segment has been immune since the start of “Great Recession” “I buy the brand I want most” Net shift Segments 2008 to 2011 OTC -17% Health & Beauty Aids -13% Apparel -12% Food -11% Housewares -8% Household Products -6% © comScore, Inc. Proprietary and Confidential. 8

  9. Slide 9: Between 2010 and 2011 some categories stabilized while others declined

    Between 2010 and 2011 some categories stabilized while others continue to show declines “I buy the brand I want most” Segments Categories 2010 2011 Change OTC Cough/Cold/Allergy 43% 41% -2% Toothpaste 57% 55% -2% Health & Beauty Aids Mouth Rinse 44% 47% +3% Shampoo 52% 53% +1% Apparel Jeans 39% 42%

  10. Slide 10: Soup experienced heavy Buy Down recently

    Having been fairly stable, Soup experienced heavy Buy Down recently “I buy the brand I want most” Soup Category 60% “There is a palpable change 56% in consumer buying behavior 51% 52% 50% that is unlike anything we 44% have experienced certainly 40% for a few decades. Mom is not sending the teenager

  11. Slide 11: How is this trend of "surgically buying" playing out?

    How is this trend of “surgically buying” playing out? Overall Averages Across Six Examined Segments 2008 2011 NET SHIFT “I Buy the brand I want most” 54% 43% -11% “I sometimes buy a different 33% 38% +5% brand if it is on sale” “I buy less expensive brands to 14% 19% +5% save money” • Often they are

  12. Slide 12: Private labels capturing a sizable portion of switching

    Private labels are often capturing a sizable portion of this switching to “less expensive brands” (2010 data) “I buy less expensive Private Label Product Category brands to Unit Share* save money” Toothpaste 11% 1% Mouth rinse 20% 21% Shampoo 13% 3% Cough/Cold/Allergy 21% 34% Jeans NA NA Soup 12% 12

  13. Slide 13: How a shopper seeks out the lowest priced options varies by age

    How a shopper seeks out the lowest priced options varies significantly by age Which if any of the following do you use for comparison shopping when you are trying to find the best price for something ? (please check as many as apply) ` 50% 57% The Internet on computer 60% 63% 3% The Internet or apps

  14. Slide 14: The Past: Marketing Was Transformed by the Great Depression of the 1930s

    The Past: Marketing Was Transformed by the Great Depression of the 1930s © comScore, Inc. Proprietary and Confidential. 14

  15. Slide 15: The Great Depression transformed marketing during the 1930s

    The Great Depression transformed marketing during the 1930s  ClientsIndemanded Marketing The Thirties the same level of service from ad agencies even as they spent less  There were harder sells  Value messages became more explicit and direct  Price became the most prominent element  Contests, p

  16. Slide 16: Companies Had To Innovate To Survive

    Companies Had To Innovate To Survive American food brands introduced in the 1930s…  1930  1935 Birds Eye Frozen Foods Adolph's Meat Tenderizer Wonder Bread (Sliced) Kit Kat bar Hostess Twinkies Mott's Apple Sauce  1936 Snickers candy bars (Mars, Inc.) Betty Crocker (General Mills)  1931 Elsie th

  17. Slide 17: New Media thrived in the '30s

    New Media thrived in the ‘30s  Radio was the “new media” of the ‘30s  In the average household, radio was left on 4 hours a day  Radio was the top rated amusement  Soap Operas were invented by P&G  Bingo became popular in the ‘30s  Piano sales plummeted Source: Bob Heyman, Digital Automat © co

  18. Slide 18: The Future: Best Practices to Combat Buy Down

    The Future: Best Practices to Combat Buy Down and to Prepare for Post Recessionary Rebound © comScore, Inc. Proprietary and Confidential. 18

  19. Slide 19: What are some best practices for combating "buy down"?

    What are some best practices for combating “buy down”?  Continue advertising © comScore, Inc. Proprietary and Confidential. 19

  20. Slide 20: Advertising has both a short-term and long term effect

    Advertising has both a short-term and long term effect  Minimizes short-term erosion of share to less expensive brands  Positions your brand for a “bounce-back” when economy rebounds:  1.5 point increase in market share among businesses increasing ad spending during recessionary periods (Cahners

  21. Slide 21: Athletic footwear example: Reebok vs. Nike

    Athletic footwear example: Reebok vs. Nike  Throughout the 1980s, Reebok enjoyed extraordinary growth as they dominated the athletic footwear category  During the 1990 recession, however, Reebok took a very conservative approach to advertising to cut costs  Nike entered the recession a smaller co

  22. Slide 22: Ragu Pasta Sauce Market Share (1989-1992)

    Ragu Pasta Sauce (1989 -1992) Market Share Base Period 1988 1989 1990 1991 1992 • While Ragu aired over 30 executions, few were persuasive (i.e. low Lift in Share of Choice) • And Ragu lost roughly 19 share points from 1989 to 1992 © comScore, Inc. Proprietary and Confidential. 22 Source: “Observati

  23. Slide 23: Prego Pasta Sauce Market Share (1989-1992)

    Prego Pasta Sauce (1989 -1992) Market Share Base Period 1988 1989 1990 1991 1992 • Despite Ragu’s 30 ads, and marketing muscle, Prego’s share increased by airing 11 highly effective ads © comScore, Inc. Proprietary and Confidential. 23 Source: “Observations: The Long and Short of Persuasive Advertis

  24. Slide 24: Prego & Ragu (1989 to 1992)

    Prego & Ragu (1989 to 1992) Prego Ragu Total GRPs 15,034 20,400 Average Displays 22 43 Average Retailer Ads 29 37 Average Selling Price $1.80 $1.64 Average Lift in Share of Choice +7 +2 Δ Brand Preference (SOC) +11 pts -21 pts Δ Market Share (Units) +6 pts -16 pts Δ Sales (Units) +22% -19% Source: “

  25. Slide 25: What are some best practices for combating "buy down"?

    What are some best practices for combating “buy down”?  Continue advertising  Stretch your media budget…but do it carefully © comScore, Inc. Proprietary and Confidential. 25

  26. Slide 26: Manage advertising wearout

    Manage advertising wearout +10.9 +10.0 25.9 25.4 25.3 24.8 24.5 23.9 23.9 Market +5.8 23.1 23.1 23.3 share 22.0 21.5 21.6 21.4 20.9 20.5 20.4 19.6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Four-week period The pattern of commercial wearout and the success of refreshment is evidenced in this publi

  27. Slide 27: Utilize shorter television ads

    Utilize shorter television ads  On average :15s are 75% as sales effective as :30s but only cost ~60%  Some guidelines for effective :15 second ads – If possible, create original short form ads – If doing both short and long form, start with the short form – Reduce communication to a single idea –

  28. Slide 28: Case example effective :15 – Use of Images/Pictures Over Words

    Case example effective :15 – Use of Images/Pictures Over Words Case Examples for Other Guidelines Available for comScore Clients © comScore, Inc. Proprietary and Confidential. 28

  29. Slide 29: Layering digital with TV builds reach with identical investment

    Layering digital with TV builds reach with identical investment Impact of a 90/10 Budget Allocation Effective Media Plan GRPs Cost Total Reach Reach TV Only 1,000 $10,000 85.1% 67.8% TV + Digital Combination TV (90%) 900 $9,000 83.7% 65.8% Digital (10%) 500 $1,000 63.8% 44.0% TV + Digital 1,400 $10,

  30. Slide 30: What are some best practices for combating "buy down"?

    What are some best practices for combating “buy down”?  Continue advertising  Stretch your media budget…but do it carefully  Reconsider your selling strategy – brand differentiation – value claims © comScore, Inc. Proprietary and Confidential. 30

  31. Slide 31: Brand differentiation and value messaging are time-tested strategies

    Brand differentiation and value messaging are time-tested strategies Percent of Ads Containing Element Digital Display Ads1 Television Ads1 (Rich Media, Banners, ) Brand Differentiating Key Message 17% 31% New Product/New Feature Information 19% 44% Product Convenience (explicit & stated) 0% 9% Comp

  32. Slide 32: Inclusion of value information in online ads enhance in-store sales

    Inclusion of value Information in online ads enhance in-store sales Percent Lift in Sales (Exposed vs. Control) 60.0% 48.9% 39.5% 40.0% 28.4% 26.8% 20.0% 0.0% No Value Information Coupon Only Free Sample Explicit Value Claim © comScore, Inc. Proprietary and Confidential. 32 Source: comScore blinded

  33. Slide 33: Value message & differentiation vs. a broader competitive context

    Value message & differentiation vs. a broader competitive context Source: http://www.montrealgazette.com/business/fp/Marketing+recession/1621325/story.html#ixzz1frclKVpR © comScore, Inc. Proprietary and Confidential. 33

  34. Slide 34: What are some best practices for combating "buy down"?

    What are some best practices for combating “buy down”?  Continue advertising  Stretch your media budget…but do it carefully  Reconsider your selling strategy – brand differentiation – value claims  Expand retail channels © comScore, Inc. Proprietary and Confidential. 34

  35. Slide 35: E-commerce provides opportunity for increased brand distribution

    E-commerce provides opportunity for increased brand distribution $255 billion will be spent online in 2011 +12% vs. 3X faster than growth year ago offline $160B $95B non-travel travel  SOURCE: COMSCORE E-COMMERCE MEASUREMENT, 2011 © comScore, Inc. Proprietary and Confidential. 35 © comScore, Inc. P

  36. Slide 36: E-retailers not immune to buy down

    E-retailers not immune to buy down… 75% of consumers would shift to another retailer at checkout if shipping not free. Share of All E-Commerce Transactions that Include Free Shipping Source: comScore e-Commerce Measurement 60% Average Order Value 27% Higher with Free Shipping 50% 50% 46% 45% 44% 45%

  37. Slide 37: E-commerce offers tremendous opportunities for differentiation

    E-commerce offers tremendous opportunities for differentiation Example: Expo TV User Generated Product Reviews Those watching reviews: + 40% “Product Unique & Different” + 30% “Willing to Pay More” Those just viewing thumbnails + 13% “Willing to Pay More” © comScore, Inc. Proprietary and Confidentia

  38. Slide 38: Group discount sites are experiencing terrific growth

    Group discount sites are experiencing terrific growth Monthly UVs (000) on Groupon and Livingsocial +108% vs. Q. Do you plan to shop/buy holiday gifts on Source: comScore Media Metrix U.S. Data any of the following websites this yr ago holiday season? Source: comScore Surveys – October 2010/2011 16,

  39. Slide 39: What are some best practices for combating "buy down"?

    What are some best practices for combating “buy down”?  Continue advertising  Stretch your media budget…but do it carefully  Reconsider your selling strategy – brand differentiation – value claims  Expand retail channels  Choose price-containment techniques wisely © comScore, Inc. Proprietary a

  40. Slide 40: Choose the preferred price containment action for your brand

    Choose the preferred price containment action for your brand Increase price Reduce quantity Reduce the quality Market Segment Product Category by 10% by 10% by 10% Toothpaste 35% 59% 6% Health & Mouth rinse 29% 64% 7% Beauty Aids Shampoo 34% 59% 8% OTC Cough/Cold/Allergy 34% 59% 7% Apparel Jeans 45%

  41. Slide 41: Downsizing can also lead to brand switching

    Downsizing can also lead to brand switching Reported effect of product downsizing on brand choice 60 54 50 40 32 30 20 14 10 0 no change occasionally usually change change • Four out of five respondents indicate noticing downsizing. • Of these, over half indicate occasionally changing their brand, a

  42. Slide 42: Case study: Premium brand launching mid-tier offering

    Case study: Premium brand launching mid-tier offering pre-recession to recession Change in Change in Unit Share % Preference (SOC) Premium Brands -1.9 -0.5 Mid-Range Brands +0.4 +0.1 Economy Brands +1.5 +0.4 • Overall, premium brands in this household goods category have experienced severe buy-down

  43. Slide 43: Case study: Premium brand launching mid-tier offering

    Case study: Premium brand launching mid-tier offering pre-recession to recession Change in Change in Unit Share % Preference (SOC) Leading Brand - All SKUs +1.9 +1.8 Leading Brand - Premium +0.3 +0.7 SKUs Leading Brand - Mid-range +1.6 +1.1 SKUs • But not so for the leading brand • By aggressively e

  44. Slide 44: Questions?

    Questions? Contact us… [email protected] [email protected] © comScore, Inc. Proprietary and Confidential. 44

  45. Slide 45: Thank You!

    Thank You! © comScore, Inc. Proprietary and Confidential. 45

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