confidential & proprietary copyright © 2007 the nielsen company npd: problems and opportunities...

Confidential & Proprietary Copyright © 2007 The Nielsen Company

NPD:problems and opportunitiesSeeking profitable growthJonathan Banks, Business Insight Director

7 March 2007


•Consumers: changes and concerns •Product Development–growing mature brands–private label–price and promotion•Benchmarks

Agenda


Demographics: the aging population

Life expectancy: •Swaziland 33, UK 78, Andorra 83

420

830

230

1975 2000 2025

Population of over 65s (millions)

Source: UNSource: CIA World Factbook 2006


Change• 1981 IBM PC• 1985 Windows• 1989 Berlin Wall falls• 1990 Nelson Mandela released; Windows 3.0• 1991 1st web site• 1993 1st Browser

• 80,000,000 websites• iPods, podcasting, wikipedia, blogs• Feb 05: YouTube – 65k uploads, 1m downloads per day

•www.climatecare.org•www.thecoolhunter.net/news•www.trendwatching.com•www.superfuture.com/city/home


Growth of Internet domains...86 million active

0

100

200

300

400

500

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

m

Sources: www.domaintools.com; Internet Systems Consortium, Inc. (http://www.isc.org/)


Internet usage•UK: 62%

millionsPopulation

Internet users

North America 335 232 69%Oceania / Australia 34 18 53%Europe 810 313 39%Lat Am/Caribbean 557 89 16%Asia 3,713 389 10%Middle East 193 19 10%Africa 933 33 4%WORLD TOTAL 6,575 1,094 17%

Sources: Nielsen//NetRatings, www.internetworldstats.com January 2007


Identify coming trendsDecline in volume of Atkins buzz preceded sales Sharp increase in negativity during late Q4

Source: BuzzMetrics research

0%

10%

20%

30%

40%

50%

60%

70%

80%

Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05

0%

2%

4%

6%

8%

10%

12%

Dieters Early Majority Panel

Q3, 2004

Low-carb sales peak and begin decline (ACNielsen)

Q4, 2003

Early majority buzz on Atkins

drops

Q2, 2004

Atkins buzz among Dieters, the last hold outs, drops.


0%

5%

10%

15%

20%

25%

30%

2nd biggest

biggest concern

Source: ACNielsen – Global Online Survey Nov 2006Consumer Confidence – UK results

What is your biggest concern over the next 6 months?


Changing attitudes towards health:

Source: Homescan Survey February 2000 and February 2006

70 75

2000 2006

“It’s important for me to eat healthily”

5067

2000 2006

“I prefer foods that are natural”

% agree


Moves towards “naturally healthy” and away from highly processed products

Source: Homescan Surveys, February 2004, 2005 and 2006

51%

23%

60%

27%

I avoid products that contain ahigh proportion of artificialingredients or preservatives

It's worth paying extra for organicfood

2004 2006

What we say and do might be 2 different things

% a

gre

e


Attitudes to healthy eating

24% 26%

24% 17%

20%20%

17%17%

15% 21%

2004 2006

Naturally Healthy

Goody Two Shoes

Snacking Dieters

Need for Function

No HealthConcerns

Health Focus Segment Sizes 2004 vs 2006

Source: Homescan Survey February 2004 and 2006

Worry about what they’re eating – but find fattening food comforting. Like the taste of low fat foods. Don’t worry about additives or salt

Think low fat tastes bad and won’t eat it – no interest in healthy eating

Pay more for low fat, and compromise on taste to have low fat. Foods that lower cholesterol are of interest.

Eat low fat products but compromise on taste. Very healthy diet – not into snacking. Choose to eat healthy foods

Not interested in functional or low fat foods, prefers natural food & avoids additives. Likes organic, concerned by food safety.

No health concerns


Indexed on All Households 25-34 yrs 35-44 yrs 45-64 yrs 65+ yrsVitality – feeling energised and good about yourself 144 130 90 50

Not being overweight/obese 129 106 94 74

Healthy heart and circulation 101 95 100 106Longevity, maintaining good health in old age 74 99 107 116

Avoiding cancer 58 79 102 153Healthy bones and joints 60 71 118 129

Being better at sport and exercise 201 84 81 65

Avoiding colds and flu 91 60 87 140Avoiding diabetes 64 63 114 143None of these 50 143 98 114

Life vs Death marketingMotivations change with age…

“Which of the following do you think is the main benefit of a healthy diet?”

Source: ACNielsen Homescan Survey February 2006


Snack bars Chocolate bars

HealthierHealthyNutraceuticals


•“Salad options are less fattening”•“Organic (Bio) is better for me”•“GM is bad for me”•“Banning ads to kids will reduce obesity”•“I’m too busy to eat/exercise properly”•“Vegetarian options are healthier”•“I need to eat more fruit and veg, but:–an apple contains 4 tsp of sugar –a third of all produce contains pesticide residue – the fruit looks unappetising”

•“If it’s cheap it must be rubbish”•“Moving food half-way round the world is wrong”•“Fair trade can only be a good thing”

Consumer confusion


Prevalence of adult obesity

Source: IASO Data collected 2004 - England

Age 16+ Males Females25-30 44 3530+ 23 24

Ranking of fattest nations... Rank Country1 - 7 Pacific islands

9 US28 UK43 Germany

128 France194 Eritrea



Agenda


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brand leader category

% change: £ per kg or litre latest year v 2 years ago

Source: ACNielsen UK Data to Spring 2006 /

•Retail consolidation, Discounters• Private Label, Promotions, • Technology• Smuggling•Counterfeiting


ErgonEqua

Herman Miller chairs designed by Bill Stumpf

Sources: Malcolm Gladwell, Blinkwww.hermanmiller.com


Arms connect to back not seat

Aeron

Wider here

Transparent mesh

Back and seat not hinged but move independently

No soft cushion

Very low aesthetic scores

Sources: Malcolm Gladwell, Blinkwww.hermanmiller.com


Do the right research!

Exclusively drink... 1972 1982Coke 18% 12%Pepsi 4% 11%

Sources: Malcolm Gladwell, BlinkThomas Oliver, The Real Coke, The Real Story


Top 20 innovations of the 20th CenturyMore packaging innovation than flavours

1. Frozen food2. Pasteurised milk3. Sanitary products4. Microwaveable food5. Tea bags6. Instant coffee7. Ring pull cans8. Sliced bread9. Plastic bottles10.Disposable nappies

11.Powdered baby milk12.Chilled food13.Ready meals14.Vacuum-packed food15.Disposable razors16.Gravy granules17.Artificial sweeteners18.Tetra Pak cartons19.Pre-packed meat and fish20.Screw-top wine bottles

Source: The Grocer/HI Europe online survey December 2004


Packaging adding value…metals, plastics, shapes, formats, sizes, technology, rrp

Walk the whole store – not just your categories

Source: pack-track


Repackaging to add functionality and value

Source: pack-track


Beyond 2 in 1…

Finish and own label 5 in 1•Detergent•rinse aid•Salt•protector action (glass and silver)•power boost action (decrusting)


Branded vs Own Label – Grocery MultsYear on year growth (MATs)

Brands

Own label

Source: Nielsen Homescan – ‘defined grocery’ /

•50% own label already•Sub-brands extend reach to more parts of a category•And reach more categories than the biggest manufacturers•And get heavyweight marketing support


Understanding marginal benefit maximises category growth opportunities

C generates higher sales value but D adds more incremental value

Product D

Product A

Product B

Product A

Product B

Product C


Drivers of impulse purchases:

1 2 2 8 2

33 3929

4345

4743 56

37 42

19 17 14 12 10

UK France Italy Spain Germany

I never plan

I plan andalways buymore

I plan butsometimesbuy more

I plan & neverbuy more

Source : ACNielsen - Shopper Trends (Europe) - % agree

Promotions and displays capitalise on this.Hi/loEDLPEDLP + promotions

/


Defining a pricing strategy based on price elasticities

Strategy?

High price

Frequent promotion (“Hi-Lo”)

Strategy?

High price

Low/no promotions

Strategy?

Harvest price for profit

(Review brand cost structure)

Strategy?

EDLP (Every Day Low Pricing)

What happens when the brand CHANGES PRICES?

What happens when the brand PROMOTES?

Sales hardly change Sales change significantly

Sales change significantly

Sales hardly change


Elasticities can clearly help to determine a pricing strategy by brand/pack size/formatElasticities can clearly help to determine a pricing strategy by brand/pack size/format

BRAND APack: Single/Multipack

Format: Plastic

High price

Frequent promotion (“Hi-Lo”)

BRAND APack: Single

Format: Glass

High price

Low/no promotions

BRAND APack: Multipack

Format: Cans

Harvest price for profit

(Review brand cost structure)

BRAND APack: Single

Format: Cans

EDLP

What happens when the packs change REGULAR PRICE ?

What happens when the packs PROMOTE ?

Sales hardly change Sales change significantly

Sales change significantly

Sales hardly change

Defining a pricing strategy based on price elasticitiesExample: Drinks Portfolio


NPD: sales in year 2Only 24% of successful launches are worth more in Year 2 than Year 1

169 New Launches Used in sample

58

18

24

% Product Indexes

>120

80-120

<80

Index

Growing

Stable

Declining



Agenda


Summary

•Change–Consumers/Demographics– IT

•Consumer concerns–health, confusion, obesity

• deflationary price pressures• new/old product development–packaging; 2 in 1s, and beyond–private label–price/promotion strategy– think long term!


Thank you!

More details available from:•FDIN website•[email protected] 01865 732759•your Nielsen team

Good luck!

confidential & proprietary copyright © 2007 the nielsen company npd: problems and opportunities...

Documents

nielsen company source

nielsen company demographics

nielsen company consumers

nielsen company npd

nielsen company major

late q4 source

s millions source

volume of atkins buzz