Promotions Today & Tomorrow

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Published on October 31, 2008

Author: nielsenwire

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www.nielsenwire.com

Promotions Today & Tomorrow Todd Hale, SVP Consumer & Shopper Insights Nielsen Consumer Panel Services September 23, 2008 as seen on: nielsenwire.com

Todd Hale SVP, Consumer & Shopper Insights Nielsen Consumer Panel Services 30 years of experience in the area of consumer panel analysis 24 years at Nielsen in various marketing & sales management positions Involved in the development of innovative consumer panel applications for both manufacturers & retailers Prepares topical presentations using consumer shopping/buying behavior & attitudes to provide insight to facilitate brand, category, & retail sales growth Numerous speaking engagements each year @ client & industry events MBA & BA in Business from Wright State University Promotions Today & Tomorrow Page

30 years of experience in the area of consumer panel analysis

24 years at Nielsen in various marketing & sales management positions

Involved in the development of innovative consumer panel applications for both manufacturers & retailers

Prepares topical presentations using consumer shopping/buying behavior & attitudes to provide insight to facilitate brand, category, & retail sales growth

Numerous speaking engagements each year @ client & industry events

MBA & BA in Business from Wright State University

Agenda Economic Outlook & Gas Price Impact U.S. Retailing Trends Today’s Promotions Coupon User Dynamics Tomorrow’s Promotions Promotions Today & Tomorrow Page

Economic Outlook & Gas Price Impact

U.S. Retailing Trends

Today’s Promotions

Coupon User Dynamics

Tomorrow’s Promotions

U.S. Economic Outlook: How Rocky Is The Road? Promotions Today & Tomorrow Page Page

The Answer Is…..….Pretty Rocky – Federal Open Market Committee Statement August 5, 2008 Promotions Today & Tomorrow Page “ Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports . However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions , the ongoing housing contraction , and elevated energy prices are likely to weigh on economic growth over the next few quarters…. Inflation has been high , spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain…”

– Federal Open Market Committee Statement

August 5, 2008

Forces at Work: Consumer Wallet Pressures Promotions Today & Tomorrow Page Personal debt servicing Home energy Transportation Food Healthcare Education Home & stock portfolios losing value Tighter credit Flat income in existing jobs Unemployment rate increasing Weak dollar Average U.S. Consumers Getting Squeezed Lower Spending Power Falling Wealth, Income & Credit Rising Costs Rising Living, Household Expenses

Personal debt servicing

Home energy

Transportation

Food

Healthcare

Education

Home & stock portfolios losing value

Tighter credit

Flat income in existing jobs

Unemployment rate increasing

Weak dollar

Overall Cost of Living Rising Sharply Consumers Can Not Keep Up With Necessities Promotions Today & Tomorrow Page Source: U.S. Department of Labor Statistics (Consumer Price Index; U.S. City Average); USDA, NAR-home prices, BLS-Employment cost index Fuel Oil Gasoline Dairy Cereal & Bakery 3% Wages Housing - 6% 12 Month Percentage Increase, Selected Items (June 2008 vs. June 2007) Fruit & Veg Food & Bev Edu 61% 33% 10% 9% 5% 8% 6%

Consumer Confidence At Relevant Levels Promotions Today & Tomorrow Page Source: The Conference Board Last time < 65: 2003 Iraq war Lowest Reading Since 1992 Rebound as gas prices fell 40 cents since July

Global Demand Pushes Gas to $4/Gallon; Can $5/Gallon Be Far Off? Promotions Today & Tomorrow Page Source: Dept of Energy

Forces at Work: CPG Margin Pressures Promotions Today & Tomorrow Page Commodities at all time highs Barley (+47%) Corn (+59%) Wheat (+63%) Full Prices at record levels Transportation of goods plus pressure on the consumers wallet Pricing Decisions Value Retail Expansion—competitors must hold/lower prices in their path Growth of private label Discount food retailers Margin Pressures on both CPG Manufacturers & Retailers! Retail Prices Weaker U.S. Dollar Walmart growth Discount player emergence Rising Commodity Prices Ingredient Cost Transportation Cost Packaging Cost

Commodities at all time highs

Barley (+47%) Corn (+59%) Wheat (+63%)

Full Prices at record levels

Transportation of goods plus pressure on the consumers wallet

Pricing Decisions

Value Retail Expansion—competitors must hold/lower prices in their path

Growth of private label

Discount food retailers

So, Tough Times for Growth & How Important Are Value, Variety & Convenience to You? How are you equipped to compete against Value, Variety or Convenience? Are you providing Value, Variety & Convenient solutions to category consumers & retail shoppers? An integral part of these themes is innovation Promotions Today & Tomorrow Page

How are you equipped to compete against Value, Variety or Convenience?

Are you providing Value, Variety & Convenient solutions to category consumers & retail shoppers?

An integral part of these themes is innovation

Promotions Today & Tomorrow Page U.S. Retailing Trends

Value & Convenience Winning As Evidenced By Increased Store Count Promotions Today & Tomorrow Page U.S. Store counts Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company But, 670 fewer stores since end of 2007

Variety Winning As Evidenced By Increased Stores from Category Killers Promotions Today & Tomorrow Page U.S. Store counts Competitive pressure has had a negative impact on Toy Stores & Electronics Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company * Counts reflect chains – not independents

Some Big Players Going w/Smaller Grocery Format Promotions Today & Tomorrow Page Half the Size of a Neighborhood Market Recent Trademarked Names for Possible Private Label “ City Thyme” & “Field & Vine”

Half the Size of a Neighborhood Market

Recent Trademarked Names for Possible Private Label

“ City Thyme” & “Field & Vine”

Walmart & Target Leading Store Expansion versus Major Grocers Promotions Today & Tomorrow Page *Includes Division 1, Supercenters, Neighborhood Markets & Sam’s Club U.S. Store counts Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company

Niche Grocery Store Count Growth From Natural/Gourmet & Deep Discounters Promotions Today & Tomorrow Page U.S. Store counts Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company

Rapid Store Growth From Leading Drug Chains; Warehouse Stores Growing too Promotions Today & Tomorrow Page U.S. Store counts Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company

Promotions Today & Tomorrow Page Pain at the Pump! Gas Price Monitor

Promotions Today & Tomorrow Page Source: Homescan® Total ShopperView, a service of The Nielsen Company―Total US―52 weeks ending 06/28/2008; Average Weekly Gas Prices http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html Household-based Measures of Gas Buying As Prices Increase, Consumers Have Less to Spend & Must Make Trade-Offs November & December holiday or holiday shopping weeks

Changing Behaviors as Economy Weakens Promotions Today & Tomorrow Page 2Q08 vs 2Q07 Percent Change Source: Homescan®, a service of The Nielsen Company Excludes gas only trips Trip Generators Trip Optimizers Trip Avoiders

Low Income Taking More Drastic Trip Cuts Promotions Today & Tomorrow Page 2Q08 vs 2Q07 Percent Change Source: Homescan®, a service of The Nielsen Company Shopping Trips By Hhld Income Excludes gas only trips At Risk Tax Rebates provide some growth. More affluent driving increased Supercenter, Club, Dollar & Liquor Store trips Trip Generators Trip Optimizers Trip Avoiders

Retailers Performing Well In Tough Economy Costco July sales rose 14%, same-store up 10% BJ’s July same-store sales up 16.7%, excluding gasoline, same-store up 7% Dollar Tree posted 12.5% increase in sales during fiscal 2nd qtr, comp-store up 6.5% Kroger 1 st qtr sales up 11.5%, identical supermarket sales up 9.2% with fuel & 5.8% without Dollar General 1 st qtr same-store-sales grew 5.4% Family Dollar July sales rose 7.2%, same-store up 4.6% Walgreen Co. July sales up 10.7%, same-store up 4.1% Walmart 2 nd qtr sales up 10.1%, same-store up 4.5% Promotions Today & Tomorrow Page Source: Industry e-newsletters & company web sites = Stock-up & Save Consumer Motivation

Costco July sales rose 14%, same-store up 10%

BJ’s July same-store sales up 16.7%, excluding gasoline, same-store up 7%

Dollar Tree posted 12.5% increase in sales during fiscal 2nd qtr, comp-store up 6.5%

Kroger 1 st qtr sales up 11.5%, identical supermarket sales up 9.2% with fuel & 5.8% without

Dollar General 1 st qtr same-store-sales grew 5.4%

Family Dollar July sales rose 7.2%, same-store up 4.6%

Walgreen Co. July sales up 10.7%, same-store up 4.1%

Walmart 2 nd qtr sales up 10.1%, same-store up 4.5%

Retailers Performing Well In Tough Economy Costco July sales rose 14%, same-store up 10% BJ’s July same-store sales up 16.7%, excluding gasoline, same-store up 7% Dollar Tree posted 12.5% increase in sales during fiscal 2nd qtr, comp-store up 6.5% Kroger 1 st qtr sales up 11.5%, identical supermarket sales up 9.2% with fuel & 5.8% without Dollar General 1 st qtr same-store-sales grew 5.4% Family Dollar July sales rose 7.2%, same-store up 4.6% Walgreen Co. July sales up 10.7%, same-store up 4.1% Walmart 2 nd qtr sales up 10.1%, same-store up 4.5% Promotions Today & Tomorrow Page Source: Industry e-newsletters & company web sites = Value Seeking Consumer Motivation

Costco July sales rose 14%, same-store up 10%

BJ’s July same-store sales up 16.7%, excluding gasoline, same-store up 7%

Dollar Tree posted 12.5% increase in sales during fiscal 2nd qtr, comp-store up 6.5%

Kroger 1 st qtr sales up 11.5%, identical supermarket sales up 9.2% with fuel & 5.8% without

Dollar General 1 st qtr same-store-sales grew 5.4%

Family Dollar July sales rose 7.2%, same-store up 4.6%

Walgreen Co. July sales up 10.7%, same-store up 4.1%

Walmart 2 nd qtr sales up 10.1%, same-store up 4.5%

Retailers Performing Well In Tough Economy Costco July sales rose 14%, same-store up 10% BJ’s July same-store sales up 16.7%, excluding gasoline, same-store up 7% Dollar Tree posted 12.5% increase in sales during fiscal 2nd qtr, comp-store up 6.5% Kroger 1 st qtr sales up 11.5%, identical supermarket sales up 9.2% with fuel & 5.8% without Dollar General 1 st qtr same-store-sales grew 5.4% Family Dollar July sales rose 7.2%, same-store up 4.6% Walgreen Co. July sales up 10.7%, same-store up 4.1% Walmart 2 nd qtr sales up 10.1%, same-store up 4.5% Promotions Today & Tomorrow Page Source: Industry e-newsletters & company web sites = Value & Convenience Consumer Motivation

Costco July sales rose 14%, same-store up 10%

BJ’s July same-store sales up 16.7%, excluding gasoline, same-store up 7%

Dollar Tree posted 12.5% increase in sales during fiscal 2nd qtr, comp-store up 6.5%

Kroger 1 st qtr sales up 11.5%, identical supermarket sales up 9.2% with fuel & 5.8% without

Dollar General 1 st qtr same-store-sales grew 5.4%

Family Dollar July sales rose 7.2%, same-store up 4.6%

Walgreen Co. July sales up 10.7%, same-store up 4.1%

Walmart 2 nd qtr sales up 10.1%, same-store up 4.5%

Retailers Performing Well In Tough Economy Costco July sales rose 14%, same-store up 10% BJ’s July same-store sales up 16.7%, excluding gasoline, same-store up 7% Dollar Tree posted 12.5% increase in sales during fiscal 2nd qtr, comp-store up 6.5% Kroger 1 st qtr sales up 11.5%, identical supermarket sales up 9.2% with fuel & 5.8% without Dollar General 1 st qtr same-store-sales grew 5.4% Family Dollar July sales rose 7.2%, same-store up 4.6% Walgreen Co. July sales up 10.7%, same-store up 4.1% Walmart 2 nd qtr sales up 10.1%, same-store up 4.5% Promotions Today & Tomorrow Page Source: Industry e-newsletters & company web sites = Value & 1-Stop Shop Consumer Motivation

Costco July sales rose 14%, same-store up 10%

BJ’s July same-store sales up 16.7%, excluding gasoline, same-store up 7%

Dollar Tree posted 12.5% increase in sales during fiscal 2nd qtr, comp-store up 6.5%

Kroger 1 st qtr sales up 11.5%, identical supermarket sales up 9.2% with fuel & 5.8% without

Dollar General 1 st qtr same-store-sales grew 5.4%

Family Dollar July sales rose 7.2%, same-store up 4.6%

Walgreen Co. July sales up 10.7%, same-store up 4.1%

Walmart 2 nd qtr sales up 10.1%, same-store up 4.5%

Other Retailers Struggling Gelson’s Markets “…rising costs for food & fuel may have caused some customers to make some or all of their purchases from our competitors,” 2 nd qtr same-store sales declined 2.7%* Target Corp July sales up 4.7%, same-store off 1.2% Safeway 2 nd qtr identical-store, excluding fuel, off 0.3% “ Whole Foods Market weak 3 rd qtr sales … worst comp-store sales gains in 28-year history — up 2.6% — predicted comp-sales for the 4 th qtr would rise 1.5%”* Promotions Today & Tomorrow Page * Source: Supermarket News Source: Industry e-newsletters & company web sites High- or higher-end retailers not immune

Gelson’s Markets “…rising costs for food & fuel may have caused some customers to make some or all of their purchases from our competitors,” 2 nd qtr same-store sales declined 2.7%*

Target Corp July sales up 4.7%, same-store off 1.2%

Safeway 2 nd qtr identical-store, excluding fuel, off 0.3%

“ Whole Foods Market weak 3 rd qtr sales … worst comp-store sales gains in 28-year history — up 2.6% — predicted comp-sales for the 4 th qtr would rise 1.5%”*

Circuit City 1 st qtr sales off 7.4%, comp- store down 11.3% Williams-Sonoma 1 st qtr total comp-sales off 9% Home Depot sales for their 1 st qtr were off 3.4%, comp- store off 6.5% Barnes & Noble 1 st qtr sales up 1.1%, comp-store off 1.5% Macy’s 1 st qtr sales off 2.9%, same-store off 2.6% Softness in Alternative & Specialty Channels Promotions Today & Tomorrow Page Source: Industry e-newsletters & company web sites Anyone care to forecast the holiday season for these retailers?

Circuit City 1 st qtr sales off 7.4%, comp- store down 11.3%

Williams-Sonoma 1 st qtr total comp-sales off 9%

Home Depot sales for their 1 st qtr were off 3.4%, comp- store off 6.5%

Barnes & Noble 1 st qtr sales up 1.1%, comp-store off 1.5%

Macy’s 1 st qtr sales off 2.9%, same-store off 2.6%

Promotions Today & Tomorrow Page Gas Price Impact – Attitudinal Insights

Consumers Combining Trips, Eating Out Less, Staying Home, Cutting Spending @ Alarming Levels! Promotions Today & Tomorrow Page 78% combining shopping trips & errands (+ 10 pts from YAGO), 52% eating out less (+ 14 pts), 51% staying home more often (+ 12 pts) & 63% of U.S. consumers are reducing spending (+ 18 pts)! Nielsen Homescan Gas Impact Study

Consumers Combining Trips, Eating Out Less, Staying Home, Cutting Spending @ Alarming Levels! Promotions Today & Tomorrow Page 78% combining shopping trips & errands (+ 10 pts from YAGO), 52% eating out less (+ 14 pts), 51% staying home more often (+ 12 pts) & 63% of U.S. consumers are reducing spending (+ 18 pts)! Nielsen Homescan Gas Impact Study Saving Money in What & How they Buy & Where They Shop Impact higher gas prices had on driving & spending habits? Check all Jun/Jul ‘05 Jun/Jul ‘06 Jun ‘ 07 Jun ‘ 08 Buy less expensive grocery brands 17% 22% 19% 35% Use more coupons 20% 24% 21% 32% Shop more @ Supercenters 22% 26% 23% 28% Buy Larger, Economy Size 10% 11% 10% 16%

Nielsen Economic Impact Segmentation Promotions Today & Tomorrow Page In April 2008, 47,000 Homescan panelists were surveyed & subsequently scored into 8 segments based on their proclivity to change their shopping behavior across 36 categories during an economic downturn Numbers reflect % of U.S. Households

Segmentation Composite Action Scores Promotions Today & Tomorrow Page * *Read as: Recession Indifferent segment would not change how they shop in 22.8 of the 36 categories N = % U.S. Households Recession Indifferent Recession Insensitive Switch to Private Label Light Coupons & Sales Stock-Up & Save Switch Stores for Best Deal Brand Disloyal/ Promo Sensitive Panic Stricken (5,854) (10,100) (5,305) (10,479) (5,868) (3,193) (3,575) (2,657) 12.4% 21.5% 11.3% 22.3% 12.5% 6.8% 7.6% 5.6% Composite Score - 36 Categories Not change how I shop 22.8 10.0 4.5 4.7 1.7 3.3 3.0 1.3 Switch to generic or store brand 1.4 3.3 12.6 3.7 4.0 5.5 15.8 15.9 Switch to less expensive name brand 1.0 3.2 7.9 3.3 4.2 5.6 14.9 17.1 Stop buying this product 0.2 0.9 2.4 1.0 0.7 1.6 1.8 1.7 Buy this product less often 1.7 4.4 4.6 4.6 5.1 6.6 7.9 10.9 Limit use of this product 0.1 0.5 0.7 0.6 0.7 1.0 1.1 2.0 Use coupons 1.0 4.2 3.1 9.7 22.4 14.9 16.8 23.7 Buy on sale 1.4 5.4 4.1 15.2 24.2 18.0 17.9 24.3 Switch stores for savings 0.3 1.4 1.5 1.6 4.4 16.3 3.3 22.3 Stock up 0.7 2.6 1.6 4.1 9.4 6.6 6.5 13.9 Do not purchase 7.3 9.1 6.5 7.9 6.3 7.5 6.3 5.4 Avg Action (excluding not change) 0.9 2.9 4.3 4.9 8.4 8.5 9.6 14.6

Coupons & Sales an Important Tool for Many Segments Promotions Today & Tomorrow Page * *Read as: Recession Indifferent segment would not change how they shop in 22.8 of the 36 categories N = % U.S. Households Recession Indifferent Recession Insensitive Switch to Private Label Light Coupons & Sales Stock-Up & Save Switch Stores for Best Deal Brand Disloyal/ Promo Sensitive Panic Stricken (5,854) (10,100) (5,305) (10,479) (5,868) (3,193) (3,575) (2,657) 12.4% 21.5% 11.3% 22.3% 12.5% 6.8% 7.6% 5.6% Composite Score - 36 Categories Not change how I shop 22.8 10.0 4.5 4.7 1.7 3.3 3.0 1.3 Switch to generic or store brand 1.4 3.3 12.6 3.7 4.0 5.5 15.8 15.9 Switch to less expensive name brand 1.0 3.2 7.9 3.3 4.2 5.6 14.9 17.1 Stop buying this product 0.2 0.9 2.4 1.0 0.7 1.6 1.8 1.7 Buy this product less often 1.7 4.4 4.6 4.6 5.1 6.6 7.9 10.9 Limit use of this product 0.1 0.5 0.7 0.6 0.7 1.0 1.1 2.0 Use coupons 1.0 4.2 3.1 9.7 22.4 14.9 16.8 23.7 Buy on sale 1.4 5.4 4.1 15.2 24.2 18.0 17.9 24.3 Switch stores for savings 0.3 1.4 1.5 1.6 4.4 16.3 3.3 22.3 Stock up 0.7 2.6 1.6 4.1 9.4 6.6 6.5 13.9 Do not purchase 7.3 9.1 6.5 7.9 6.3 7.5 6.3 5.4 Avg Action (excluding not change) 0.9 2.9 4.3 4.9 8.4 8.5 9.6 14.6

Recession Indifferent – smaller households with higher income who are not likely to change how they shop. They feel more secure about their financial situation & making major purchases in the next six months. They show no desire to reduce entertainment expenses. Promotions Today & Tomorrow Page

Recession Indifferent – smaller households with higher income who are not likely to change how they shop. They feel more secure about their financial situation & making major purchases in the next six months. They show no desire to reduce entertainment expenses.

Panic Stricken – larger ‘Bustling Families’ will do whatever it takes to save money … switch stores, brands, take advantage of deals, stock up or use less. They are the least financially secure, will greatly reduce most living expenses, & will cut back in all departments across the store. Promotions Today & Tomorrow Page

Panic Stricken – larger ‘Bustling Families’ will do whatever it takes to save money … switch stores, brands, take advantage of deals, stock up or use less. They are the least financially secure, will greatly reduce most living expenses, & will cut back in all departments across the store.

Category Sales Opportunity & Promotion Support Required to Win in Soft Economy Varies by Segment Promotions Today & Tomorrow Page $ Buying Rate Index Deal Index Source: Homescan®, a service of The Nielsen Company Total US—52 weeks ending 03/29/2008 Nielsen Economic Impact Segmentation: Wine Frozen Pizza & Snacks Wine Frozen Pizza & Snacks Recession Indifferent 124 99 97 82 Recession Insensitive 111 95 90 73 Switch to Private Label 68 107 47 55 Light Coupon & Sales 105 94 119 119 Stock-up & Save 94 105 116 147 Switch Stores for Deals 86 95 105 117 Disloyal/Promotion Sensitive 83 111 96 104 Panic Stricken 85 110 101 129

Promotions Today & Tomorrow Page Today’s Promotions

Trade Promotions Measured by Nielsen Retail Measurement Services Promotions Today & Tomorrow Page FEATURE DISPLAY FEATURE & DISPLAY TPR

Over 35% of Dollar Sales Sold on Promotion Promotions Today & Tomorrow Page Source: Nielsen Strategic Planner, Total FDMx, 52 Weeks Ending 7/12/08 Percent of $ Sold Across All Categories Reported by Nielsen These numbers do not reflect manufacturer coupons Over $129 billion in promoted dollar sales in FDM

Drug Channel Slightly Less Promoted than Grocery Promotions Today & Tomorrow Page Percent of $ Sold Across All Categories Reported by Nielsen Grocery Channel Drug Channel Source: Nielsen Strategic Planner, Total FDMx, 52 Weeks Ending 7/12/08

Average Promotion Lift Highest for Feature & Display, but Lift Differs by Channel Promotions Today & Tomorrow Page Grocery Channel Drug Channel Source: Nielsen Strategic Planner, Total Grocery & Drug, 52 Weeks Ending 7/12/08

Base & Incremental $ Sales Spike Significantly Around December Holiday Season Promotions Today & Tomorrow Page Source: Nielsen Strategic Planner, Total FDMx, 52 Weeks Ending 7/12/08, All Categories (UPC-coded) Incremental Base Dollar Volume In Billions

Peak Promotional Sales During Key Holidays Promotions Today & Tomorrow Page Thanksgiving, 40% of all CPG sales tracked sold on promo Easter, 37% promo sales Memorial Day & 4 th of July Source: Nielsen Strategic Planner, Total FDMx, 52 Weeks Ending 7/12/08, All Categories (UPC-coded) Avoid non-seasonal products in seasonal ads

Categories with Large Increases in Promo Support % of Total Dollars Sold On Promotion Promotions Today & Tomorrow Page Unprep Meat/Seafood Frz Bottled Water Candy Breakfast Foods Battery/Flashlight Soft Drinks- Non Carb Nuts Tea Frz Novelties Liquor Source: Nielsen Strategic Planner, Total FDMx, 52 weeks ending 7/12/08

Categories with Large Decreases in Promo Support % of Total Dollars Sold On Promotion Promotions Today & Tomorrow Page Source: Nielsen Strategic Planner, Total FDMx, 52 weeks ending 7/12/08

Coupon User Dynamics

Coupon User Definitions Super Low Users Low Users Medium Users Heavy Users Non-Users .01% to 5.0% / 31,170 5.01% to 20.0% / 17,678 20.01% to 40.0% / 4,998 40.01% + / 1,590 0% / 7,332 Promotions Today & Tomorrow Page Source: Homescan®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08 – upc-coded products 67,725 Nielsen Homescan panelists segmented into five groups based on annual use of coupons on unit purchases across Nielsen-defined categories Coupon User Groups % Units on Coupon / Raw Sample

Super Low Users

Low Users

Medium Users

Heavy Users

Non-Users

.01% to 5.0% / 31,170

5.01% to 20.0% / 17,678

20.01% to 40.0% / 4,998

40.01% + / 1,590

0% / 7,332

Coupons Used by 86% of Households Who Drive 89% All-Outlet Dollar Sales Promotions Today & Tomorrow Page Source: Homescan®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08 – total basket ring dollars

Low & Super Low Users Represent the Trial & Overall Volume Opportunities Promotions Today & Tomorrow Page Source: Homescan®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08 – total basket ring dollars

Heavy & Medium Users Very Promotion Sensitive Promotions Today & Tomorrow Page Source: Homescan®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08 – upc-coded products

Coupons Make Up Significant Proportion of Deal Dollars for Heavy & Medium Users Promotions Today & Tomorrow Page Source: Homescan®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08 – upc-coded products 39 10 22 2 % Dollars on Coupon

Coupon Users Are Bigger Annual Spenders Promotions Today & Tomorrow Page Source: Homescan®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08 – total basket ring dollars

Heavier Users are Shopoholics Promotions Today & Tomorrow Page Source: Homescan®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08 – total basket ring dollars Lighter & Non-Coupon Users Offset Less Frequent Shopping w/Larger Baskets

Heavier Users Make Frequent Trips to Grocery & Drug Channels Promotions Today & Tomorrow Page Source: Homescan®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08

Low & Super Low Users More Frequent Mass & Supercenter Shoppers Promotions Today & Tomorrow Page Source: Homescan®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08 Gaining value without the need to clip coupons?

Heavy Users Addicted to Shopping Promotions Today & Tomorrow Page Source: Homescan®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08

> Annual Dept $ Spending Rates for Low & Super Low Users Promotions Today & Tomorrow Page Source: Homescan®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08 – upc-coded products Underdeveloped Overdeveloped Coupon User Index by Store Dept Annual $ Buy Rate Heavy Med Low Super Low Non Users Dry Grocery $1,321 88 99 104 103 83 Frozen $309 86 99 103 104 83 Dairy $348 90 104 105 102 80 Deli $76 89 103 104 102 84 Meat $31 78 85 93 107 98 Fresh Produce $91 84 99 111 101 78 Non-Food $481 90 101 105 103 80 Alcoholic Bev $215 93 102 106 101 82 General Merch $381 94 100 107 103 78 Health & Beauty $368 117 111 109 99 75

Poor People Need Low Prices, Rich People Love Low Prices Promotions Today & Tomorrow Page Source: Homescan®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08

Broad Coupon Appeal Across Household Types Promotions Today & Tomorrow Page Families Couples Singles Source: Spectra®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08 – upc-coded products Underdeveloped Overdeveloped Coupon User Index by Spectra BehaviorStage Heavy Med Low Super Low Non Users Start-Up 80 113 117 99 66 Small Scale 81 88 96 107 92 Younger Bustling 69 75 94 111 92 Older Bustling 79 97 83 111 99 Young Transitionals 94 104 102 101 91 Independent 131 106 90 93 135 Senior 92 105 112 87 122 Established 109 101 98 101 96 Empty Nesters 107 102 108 98 91 Senior 128 111 113 93 89

Broad Coupon Appeal Across Household Types Promotions Today & Tomorrow Page Families Couples Singles Source: Spectra®, a service of The Nielsen Company ― Total US—52 week ending 06/28/08 – upc-coded products Underdeveloped Overdeveloped How can you get high volume segments to use more coupons? Coupon User Index by Spectra BehaviorStage Heavy Med Low Super Low Non Users Start-Up 80 113 117 99 66 Small Scale 81 88 96 107 92 Younger Bustling 69 75 94 111 92 Older Bustling 79 97 83 111 99 Young Transitionals 94 104 102 101 91 Independent 131 106 90 93 135 Senior 92 105 112 87 122 Established 109 101 98 101 96 Empty Nesters 107 102 108 98 91 Senior 128 111 113 93 89

Promotions Today & Tomorrow Page Tomorrow’s Promotions The Race for Dominance

Our Predictions

Tomorrow’s Promotions – Technology Takes Charge Reduced reliance on paper-based feature & coupon circulation Race for dominance from computer-based internet applications, mobile phones, credit cards, frequent shopper cards & in-store applications Tracking or location-based technology (GPS, RFID, Eye Movement, etc.) will play a role in multiple areas Promotions Today & Tomorrow Page

Reduced reliance on paper-based feature & coupon circulation

Race for dominance from computer-based internet applications, mobile phones, credit cards, frequent shopper cards & in-store applications

Tracking or location-based technology (GPS, RFID, Eye Movement, etc.) will play a role in multiple areas

Tomorrow’s Promotions – Technology Takes Charge Check-out coupon systems evolve to deliver coupons via internet or mobile phones (prior to shopping trips) or as shoppers enter stores or store aisles Promotions Today & Tomorrow Page

Check-out coupon systems evolve to deliver coupons via internet or mobile phones (prior to shopping trips) or as shoppers enter stores or store aisles

Tomorrow’s Promotions – Technology Takes Charge Smart appliances & electronic shopping lists communicate with in-store systems to aid shopping activity Providing promotion support & assistance in meal preparation, household chores & personal/health care engagements Promotions Today & Tomorrow Page

Smart appliances & electronic shopping lists communicate with in-store systems to aid shopping activity

Providing promotion support & assistance in meal preparation, household chores & personal/health care engagements

Tomorrow’s Promotions – Technology Takes Charge In-store engagements In-store kiosks, shopper scanners, in-store TV networks become the norm Promotions Today & Tomorrow Page

In-store engagements

In-store kiosks, shopper scanners, in-store TV networks become the norm

Tomorrow’s Promotions – Technology Takes Charge In-store engagements In-store kiosks, shopper scanners, in-store TV networks become the norm Promotions Today & Tomorrow Page Technology link with coupon disbursement?

In-store engagements

In-store kiosks, shopper scanners, in-store TV networks become the norm

Tomorrow’s Promotions – Technology Takes Charge In-store engagements In-store kiosks, shopper scanners, in-store TV networks the norm Promotions Today & Tomorrow Page “ Wal-Mart to Roll Out 'Smart Network’” “ By 2010, retailer anticipates chain-wide deployment of 27,000 screens “… the first next-generation retail media network …. two years and $10 million in research and development to find the ideal placement of screens and optimal programming to engage consumers. “ ‘ We've built a network tailored to the way consumers shop our stores, delivering helpful, custom content closest to the point of decision that helps them shop smarter,’ said Stephen Quinn, chief marketing officer at Wal-Mart Stores. ‘ The Smart Network is intelligent too, because every screen and every message has a purpose and we will be analyzing point-of-sale data on an ongoing basis to deliver a shopper-centric communications platform .’” Source: Mediaweek

In-store engagements

In-store kiosks, shopper scanners, in-store TV networks the norm

Tomorrow’s Promotions – Technology Takes Charge In-store engagements In-store kiosks, shopper scanners, in-store TV networks become the norm “ Personal-hologram shopper guides” as shoppers enter stores Guides greet them throughout the store with buying ideas & promo offers Personalized shelf-talkers & offers Promotions Today & Tomorrow Page

In-store engagements

In-store kiosks, shopper scanners, in-store TV networks become the norm

“ Personal-hologram shopper guides” as shoppers enter stores

Guides greet them throughout the store with buying ideas & promo offers

Personalized shelf-talkers & offers

Tomorrow’s Promotions – Technology Takes Charge Promotions get personalized From household to person-based Day-of-week & time-of-day engagements Social-networks leveraged to build demand & drive sales Promotions Today & Tomorrow Page

Promotions get personalized

From household to person-based

Day-of-week & time-of-day engagements

Social-networks leveraged to build demand & drive sales

Tomorrow’s Promotions – Technology Takes Charge Promotions Get Really Strategic Shopper Marketing Becomes of Age & Leverages Technology to Drive Holistic Business Planning Processes that “Benefits the Brand, the Consumer, the Shopper, & the Retailer”* Promotions Today & Tomorrow Page * Source: Chris Hoyt & Company

Promotions Get Really Strategic

Shopper Marketing Becomes of Age & Leverages Technology to Drive Holistic Business Planning Processes that “Benefits the Brand, the Consumer, the Shopper, & the Retailer”*

Nielsen In-Store Provides Industry Standard Metric of In-Store Audience, Identifying All Marketing Vehicles Available & Measuring Return on Marketing Dollars Promotions Today & Tomorrow Page Gross Impressions Reach & Frequency Audience Demographics Displays Shelf Media In-Store TV, Radio “ Who’s in the store… and where?” Audience Measurement “ What’s in the store?” Presence of Marketing Stimuli

Gross Impressions

Reach & Frequency

Audience Demographics

Displays

Shelf Media

In-Store TV, Radio

A 4-week Walmart marketing program in all stores is equivalent to: 200 million trips to Walmart in that period Cumulative reach of over 60 million households Promotions Today & Tomorrow Page Just Think …… 4 Week Program = Equal to the combined audience of the 2007 & 2008 season finales of Greys Anatomy, Desperate Housewives and CSI

A 4-week Walmart marketing program in all stores is equivalent to:

200 million trips to Walmart in that period

Cumulative reach of over 60 million households

Equal to the combined audience of the 2007 & 2008 season finales of Greys Anatomy, Desperate Housewives and CSI

In-Home & In-Store GRPs: Different Roles Promotions Today & Tomorrow Page In-Home GRPs Drive reach, awareness & purchase intent Emotional Connection Brand Essence In-Store GRPs Drive frequency & purchase conversion Product News “ Buy Me NOW”

In-Home GRPs

Drive reach, awareness & purchase intent

Emotional Connection

Brand Essence

In-Store GRPs

Drive frequency & purchase conversion

Product News

“ Buy Me NOW”

Promotions Today & Tomorrow Page Page Nielsen In-Store tells you who , when , & where consumers shop; what in-store marketing they were exposed to & how they react. To Plan TODAY’S & TOMORROW’S PROMOTIONS! What Who Where How Much When

For daily news and the latest studies, reports, and whitepapers visit www.nielsenwire.com Thank you! [email_address]

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