consumer confidence and planned spending behaviour in the recession. a conversation with asian...

April 2009

A conversation with consumers about the recession in Asia and the

marketing implications

2

• There are a lot of consumer sentiment surveys being conducted at the moment – and given the negative tone of most of the information people are getting, its not surprising that they are showing that consumers are quite concerned about the current situation

• Rather than replicate these, we decided to hold an online conversation with people in some of the most important countries in our region

• We asked a few direct questions, but mostly we asked for their comments on the recession, how it was affecting them personally, what they expected to happen, and their plans for the next 6 months

• Overall, 581 people took part in our conversation, from China, Hong Kong, Taiwan, Philippines, Thailand, Malaysia and Singapore. We plan to check back with them every few months

A conversation about the recession

3

• The people who participated in the conversation are younger (most of them are in the 25-39 yr age group)

• They are better educated than average – most had been to university or had some other form of higher education

• They tend to work in white collar, service and professional organizations, and as such have above average income for their age. They are urban based

• So they are not a representative sample of country – but they do give an interesting insights into the day to day impact of the current crisis

Participants in the conversation

4

• The conversation differed a bit from country to country

• But in general we asked our participants to talk to us aboutHow their spending plans had changed in the last 6

months, and how they thought they would change in the next 6 months

The reasons behind thisTheir opinion on the economy and the recession. how

its affecting them personally, and how they thought that would develop in the next 6 months

The categories they will be cutting back on, and which they think they will be maintaining spend

And of course, their planned media behavior

• What they told us is discussed in the rest of this report

Topics of interest

5

Key Takeouts

• It is clear that consumer confidence is fairly low, not surprisingly given the negative news they are being bombarded with

• Consumers do feel a need to be more careful and rational in their spending, particularly in high involvement categories. But they will not at this stage be cutting spending across the board – there are categories where consumers will maintain or even increase their spend

• In lower involvement categories, they will be tempted to trade down, and will be looking more critically at the value premium brands give them

• Overall, they will respond to value messages and pay attention to brands that are offering value benefits. But consumers will also pay attention to brands that show them empathy and understanding, provide rational reassurance for their decisions, and make them feel that they are making a smart choice

6

Consumer Confidence in the region

7

The Economic data is mixed

• China and India are slowing, but overall their economies remain relatively buoyant

• Some ASEAN economies are also slowing but may avoid technical recession. Indonesia, Philippines and Thailand fall into this category

• Economies heavily dependent on the export of manufactured goods are of course suffering the most. These include Japan, Korea, Hong Kong, Singapore and Taiwan

• Australia and New Zealand are both also either in, or about to fall into recession with significant increases in the unemployment rate predicted

• But in all Asian countries, private consumption is expected to fall

8

All the evidence suggests consumer confidence is down

• With consumers more connected than ever, it is hardly surprising that bad news travels fast.

• On the positive side, sparks of optimism will also spread quickly

9

Consumer Confidence

• In the conversation we had, it seems clear that overall, consumers in China are the most confident.

• They have some concerns for the next 6 months, about their job prospects and their personal finances

• But overall they are the most positive

• In other countries there is negativity, and we found that overall it was consumers in Singapore and Malaysia that showed the most negative sentiment

Sou

rce:

OM

D N

avig

atin

g C

halle

nges

: Con

sum

er

Sen

timen

t

10

Spending: Most are spending less

• Most of the people we talked to had been spending more cautiously in the last 6 months

• The impact has been least in China – where more than a third of the people we talked to had not changed their spending behavior

• Singapore, Malaysia and Thailand results were very similar – the vast majority had spent less in the last 6 months, but only around 1 in 5 had spent a lot less

• The Philippines had the most people who had spent a lot less, and this reflects the high inflation that preceded the economic downturn

China

Taiwan

Hong Kong

Philippines

Thailand

Singapore

Malaysia

49

53

59

53

66

66

65

9

7

9

26

14

16

19

Spending behavior in the last 6 months

A little more cautiousA lot more cautious

Source: OMD Navigating Challenges: Consumer Sentiment

11

Spending: And plan to cut back even more in the next 6 months• Chinese consumers are the most positive. Although most are going to cut back on

their spending, they think they will be a little more cautious.• But in Malaysia, Singapore, Taiwan and Philippines in particular, many people plan

to be a lot more cautious

Source: OMG Navigating Challenges: Consumer Sentiment

China

Taiwan

Hong Kong

Philippines

Singapore

Malaysia

Thailand

55

33

53

51

53

40

67

14

40

28

38

39

52

26

Spending behavior in next 6 months

A little more cautious A lot more cautious

12

Jobs prospects: Most are negative

• We see that in most countries our participants are quite negative about their job prospects.

• Confidence is lowest in the 3 hubs, Taiwan, Hong Kong and Singapore• Overall confidence in Thailand and China is relatively positive by comparison

Thailand China Philippines Malaysia Taiwan Hong Kong Singapore

45 38 32 24 17 14 11

-51 -47-60 -63 -67 -63 -69

-4 -15-9 -13 -17 -23 -20

Your job prospects in next 6 months

Positive Mildly Negative Strongly Negative


13

Personal Finances: A more positive outlook

• In Philippines, in particular, the people we talked to are quite confident that their personal finances will not be adversely affected. But a majority of people we talked to in Malaysia and Thailand are also positive about their personal situation

• Confidence is lowest in Taiwan, and to a lesser extent, China

Philippines Malaysia Thailand Hong Kong Singapore China Taiwan

7255 51 46 44 37 23

-26 -44 -49 -48 -51 -51 -57-2-2 -6 -4 -13 -10

Your personal finances in next 6 months

Positive Mildly Negative Strongly Negative


14

Time to spend: A most positive outlook

• For the recession to ease, consumers need to spend confidently.• At the moment, most consumers don’t believe it’s a good time to spend money.

They are most positive in Thailand, Malaysia and Singapore• But in other countries, it seems that consumers want to hang on to their money for

the time being.

Thailand Malaysia Singapore Hong Kong China Philippines Taiwan

49 47 47 37 35 34 30

-47 -45 -46 -58 -53 -57 -50

-4 -8 -7-5 -13 -9 -10

Is the next 6 months a good time to spend?

Positive. Mildly Negative. Strongly Negative.


15

Spending Behaviour

16

Recession resistant categories• We asked consumers how their spending behavior would be affected in the next 6

months. What categories do they consider a luxury and what a necessity? And where do they plan to increase or maintain spend and where do they plan to cut back?

Subscription TV

• In a recessi

on people can be expecte

d to stay

home more

• Home entertainment

becomes more importa

nt• And subscription

TV can be

justified on

value ground

s

Ho

me

Interne

t

• As part of the

cocooning

process people

also expect to

be spending

more time on

the Internet,

for information or for entertain

ment• In this

environment, home

internet subscription can also be justified on value grounds

Mobile Networks

•And it is still important to keep

in touch,

so consumers expec

t to maintain

their spending on mobil

e communications

16

17

Other recession resistant categories

• Consumers plan to maintain or increase their communications spend. They also plan to maintain their spend on essentials

Day

to Da

y Banking

• The amount people

are able to

commit to longer

term investments may decline, but they plan to

maintain their

spend on day to

day banking service

• In some markets,

this includes

credit card

spend as consumers realize that they need to

rely more on credit

Ins

urance

• Consumers

may be assuming that

they need to reduce

their spending in some areas,

but they do not yet

see any

need to reduce spend

on insuran

ce product

s

Medical

• At this

stage consumers have no

plan to

reduce

their spend on

essentials such as

medical

spend

17

18

Other recession resistant categories

• Food, grooming and baby care items are also predicted to maintain or increase their spend

Groceries

• Although consumers may down trade in some categories, there is no overall plan to reduce their spend

QSR

• Consumers expect that their spend on mid range and fine dining will decrease

• But sharing food remains an i

mportant social bond

• So it is not surprising that consumers expect to maintain or increase their Quick Service Restaurant spend

Baby Care

• In most families, the children come first, and this is reflected in people’s determination to maintain or increase their spending on baby care items

• These include infant formula, diapers and other baby care products

Pers

onal

and

Beauty Care

• Currently

female consumers do not have

any plans to

reduce thei

r cosmetics

and beauty spend or

their

personal

care

spend

• We have all heard of

the lipstick effect – the need to make ourselves

look and feel goo

d through the purchase of

lower

ticket items such as

lipstick –

and this is coming

out currentl

y

18

19

• Consumers also told us that they were planning to maintain rather than replace when it came to bigger ticket items

Longer purchase cycles

Spend

less on

Spend

more on

• Eg Furnishing, Automobile, Appliances

• Eg Auto repairs, Appliance repairs Home maintenance

20

Day to Day BankingInternet

GroceriesMedical Check Ups

InsuranceCable TV

Over the counter medicationVehicle Maintenance

Cosmetics / BeautyQSR

Clothing / Shoes / FashionTravel

Spas / Well beingHome electronics

AlcoholInvestment

Sporting GoodsToys

New CarMobile Phone (new / replacement)

Home maintenanceHome furnishing

Computer relatedJewelry

Fine DiningWhich will be the last category of spend that you cut?

The last spend to be cut


21

China Sentiment

22

• People told us that the main reasons for reducing their spend was to protect their existing income, to buffer them against potential job losses

• Although it’s interesting that there is a perception that prices will increase, whereas in fact inflation will probably reduce, or there may even be deflation

Reasons for reducing spend

Top 5 Reasons for Reducing Spend

1. I need to increase my savings

2. Prices are rising

3. I’m afraid of losing my job or someone else in the family losing their jobs

4. I want to use less credit

5. My investments / stocks have lost value

23

• Most people told us that they were feeling some negative impact, although there were a few people who felt that this was a good time to be investing and a good time to take advantage of cheaper prices

• But most were seeing a negative impact on their finances

How is the recession affecting you personally?

Top 5 Impacts on me personally

1. I am being more cautious with my spending

2. I am going to invest very cautiously

3. Reduced pay / reduced bonus / increment freeze

4. I know some people who have lost their jobs

5. My job feels less secure

24

China Spending Behavior

25

• In any recession in some categories are more resilient than others. In most countries in the region, consumers are suggesting that they will reduce their spend in both high and low involvement categories

• But in China, spending intention is more robust. In many categories, consumers think they will either maintain or increase their spend.

• And it is only in very discretionary areas of spend – such as travel , or fine dining – that there is significant intent to cut back at the moment

Recession Proof Categories

26

In China, consumers think they will maintain their spend in many categories

Fine DiningOverseas travelDomestic travelFashion jewelry

AutomobileTop end cosmetics

Real JewelryHome furnishing / décor

Home electronicsSpa / Well being

HandphoneAlcohol

Computer relatedToys

InvestmentsSporting goods

Home improvement / renovationClothing / FashionNormal cosmetics

Soft drinksQSR

Dining Out (mid level)Automobile maintenance

OTC healthInsurance

Medical Check UpsDay to day banking

GroceriesInternet

Cable TV subscription

Planning to maintain

Planning to reduce / delay spend

Source: OMG Navigating Challenge Consumer Sentiment: China26

27

In China luxury purchases will be delayed, but there will be a limited reduced spend on perceived necessities

Source: OMG Navigating Challenge Consumer Sentiment: China



Luxury

Fine Jewelry

Fine Dining

Car

Jewelry (Gold /silver )Travel AbroadSpa / Massage

Premium Cosmetics/ beauty

Investments Alcohol

Mobile phone

Toys

Home Improvement

Home Decor

Travel DomesticCar maintenance

InsuranceSport

OTC Pharma

Home Electronics

Fast Food

Mid to low end Cosmetics/ beauty

Soft drinks

Computing

mid to low level restauranClothing / Fashion

Medical visits Banking

Cable TV

Grocery

Internet

Necessity

28

• In a recession, spending behaviour will differ by category. In some categories people will reduce or stop their spend, in others they will make a discretionary down trade to a cheaper brand.

• In China, though, even in those categories where there may be some reduction in levels of spend, consumers are showing a clear inclination for down trading rather than reducing category involvement

Purchasing less, or trading down?

OTC health

High end cosmetics

Groceries

Every day cosmetics

Sporting Goods / Equipment

Soft drinks

Alcohol

Clothing / Fashion

-16

-19

-19

-23

-24

-24

-23

-40

8

17

3

13

14

12

15

8

Trade Down vs Decrease Purchase

Trade Down Decrease Purchase


29

Actions taken to counter the recession

• A smart consumer is always looking for a good deal. So even though they are not looking to overtly reduce spend in many categories, Chinese consumers will be looking for a bargain and for value

Use credit cards

Avoid high priced products

Trade down on low priced items

Stick to the shopping list

Eat at home

Trade down on high priced items

Buy generic / house brands

Only buy necessities

Look for best deals

Use coupons

57

57

60

65

72

76

77

79

82

84

Which of these will you do in the next 6 months


30

A need for explicit value messages

Pay more attention to ads with cost savings messages

Pay less attention to ads for luxury brands

75

46

-2

-24

In the next 6 months I am likely to

Agree Disagree


31

Hong Kong Sentiment

32

Hong Kong consumers plan to reduce spend in the next 6 months

• Hong Kong consumers believe that they will be spending money more cautiously in the next 6 months, although only just over a quarter feel they will be spending a lot more cautiously


China

Taiwan

Hong Kong

Philippines

Singapore

Malaysia

Thailand

55

33

53

51

53

40

67

14

40

28

38

39

52

26



32

33

• People told us that the main reasons for reducing their spend was to protect their existing income, and to buffer them against potential job losses

• Although it’s interesting that there is a perception that prices will increase, whereas in fact inflation will probably reduce, or there may even be deflation




2. I’m afraid of losing my job or someone else in the family losing their job


4. My investments have lost value

5. I want to reduce my debts

34





1. I am being more careful with my spending

2. I am cutting back on savings and investments

3. My income or bonus has reduced

4. Prices are going up

5. I am going to cut back on travel and holidays

35

• And most people feel a negative impact from the recession at work as well, although not in terms of working longer hours; many people in Hong Kong work long enough hours as it is

How is the recession affecting you at work?

Top 5 Impacts on me at work

1. Revenues and incomes are down

2. There feels like there’s more pressure on me

3. Staff benefits have been reduced

4. Morale is lower than it was previously

5. We’ve lost some major clients

36

Hong Kong Spending

37

In Hong Kong, fast food is the most recession proof category, followed by personal care products and mobile networking services

Fast Food

Personal care products

Mobile network

Household Grocery

Skincare/ Cosmetics

Contact Lens

Pay TV subscription

Mass fashion brands

Health supplements products

Household electrical appliances

Personal electrical products

Jewelry & Watch


Planning to reduce / delay

spend

Source: OMG Navigating Challenge Consumer Sentiment: Hong Kong37

Contrary to the rest of the region, in Hong Kong Pay TV may not be recession proof due to high subscriber costs

http://www.gettyimages.com/detail/85375028/Photographers-Choice

http://www.gettyimages.com/detail/82587854/Iconica

http://www.gettyimages.com/detail/85071914/Photodisc


http://www.gettyimages.com/detail/84490797/Digital-Vision


http://www.gettyimages.com/detail/10167238/The-Image-Bank

http://www.gettyimages.com/detail/sb10063505bw-001/Digital-Vision

38

• In a recession, in some categories people will trade down, in others they will maintain their current brand or even trade up.

• At the moment contact lenses, personal care and skincare / cosmetics appears to be the categories most resilient to down trading

Trading Up or Trading Down

Jewelry and Watch

Grocery

Pay TV subscription

Personal Electronic Products

Personal Electric Appliances

Fashion

Health Supplements

Fast Food

Mobile Network Services

Skincare / Cosmetics

Personal Care

Contact Lenses

37

58

68

60

62

68

69

75

76

74

79

91

14

7

5

14

14

9

9

3

3

11

8

3

-49

-35

-27

-26

-23

-23

-23

-21

-20

-15

-13

-6

Planned brand behavior in selected categories

Maintain Trading Up Trading Down

Source: OMG Navigating Challenge Consumer Sentiment: Hong Kong

39

Jewelry &

WatchFast Food

Skincare/ Cosmetic

s

Personal care

products

House-hold

Grocery

Personal electrica

l product

s

Household

electrical applianc

es

Health supple-ments

Mass fashion brands

Pay TV subscript-

ion

Mobile network service

Contact Lens

Trust-worthy brand

Convenient

to buy

Good quality

Good quality

Convenient to buy

Good quality

Good quality

Trust-worthy brand

Brand suits me

Don't bother to change

Trust-worthy brand

Trust-worthy brand

Good quality

Good quality

Brand suits me

Trust-worthy brand

Good quality

Trust-worthy brand

Trust-worthy brand

Good quality

Good quality

Good quality

Don't bother to change

Good quality

Brand suits me

Trust-worthy brand

Trust-worthy brand

Brand suits me

Trust-worthy brand

Brand suits me

Brand suits me

Brand suits me

Convenient to buy

Brand suits me

Good quality Brand

suits me

Reasons for using the same brands in the coming 6 months

(Top 3 factors)

Reasons to stay with current brands • People told us that product/ service quality, brand trust and likability toward the brand are the

key drivers of commitment to current brands

• Price, though important, is not yet the dominant factor in engaging brand loyalty, despite the recession

Source: OMD Navigating Challenge Consumer Sentiment: Hong Kong

40


• People will be looking to save and keep their money close at hand

• So they will be looking for value deals, and they will be spending more time at home

• But they will also be looking to retain as much normal behavior as possible

Save More

Use discount coupons

Eat at home more

Dining out as usual

Subscribe to Pay TV

Go on vacation as usual

Invest in stock

Travel by taxi as usual

Use my credit card more

Invest in property

Increase life insurance protection

Apply for a loan

77

69

64

51

37

34

27

22

21

16

11

8



41


Pay more attention to ads with cost savings messages


62

34

-5

-20


Agree Disagree


42

Taiwan Sentiment

43

Taiwan consumers plan to reduce their spend in the next 6 months

• Taiwanese consumers believe that they will be spending money much more cautiously in the next 6 months, with 4 in 10 saying they will spend a lot less.


China

Taiwan

Hong Kong

Philippines

Singapore

Malaysia

Thailand

55

33

53

51

53

40

67

14

40

28

38

39

52

26



44


• Although its interesting that there is a perception that prices will increase, whereas in fact inflation will probably reduce, or there may even be deflation





3. I’m afraid of losing my job or someone else in the family losing their jobs

4. I want to use less credit

5. My investments / stocks have lost value

45





1. I am being more prudent with my spending

2. I know people who have lost their jobs

3. I feel insecure at work

4. I have cut back my entertainment spend

5. I am going to cut back on my travel spend

46

• And people are also feeling a negative impact at work as well, especially in terms of feeling obligated to work harder



1. I am working harder or I have a greater workload

2. Pressure on pay – no pay rises, pay cuts or no bonuses paid

3. Job insecurity

4. Less business / clients with less money

5. Other job opportunities hard to find

47

Taiwan Spending Behaviour

48

• In any recession some categories are more resilient than others. Some will be high on consumers list of areas to cut back on, in other areas spend will be maintained

• But in Taiwan, as the next chart shows, consumers are planning to cut back in almost every category

• Cable TV, and Internet are not going to be cut back. Neither will OTC medicine or banking services. Automobile maintenance spend will be steady or increase

• And interestingly consumers have no plans to cut back on skin care, but may cut back on cosmetics


49

In Taiwan, almost every category of spend may decline

Leisure TravelWhiskyBrandy

InvestmentsToys

AutomobileMagazine Subscriptions

Cosmetics / BeautyHome electronics

QSRVideo / DVD / VCD

Computer relatedMovie / Cinema

BeerSoft drinks

Mobile networksNewspaper Subscriptions

Baby ProductsInsurance

Contact Lens / SpectaclesDisposable Contact Lenses

OTC medicineGroceries

Home InternetDay to Day banking services

Automobile maintenanceSkin CareCable TV



Source: OMG Navigating Challenge Consumer Sentiment: Taiwan 49

50

Source: OMG Navigating Challenge Consumer Sentiment: Taiwan

-95

-51

6

-64

-43

-76

57

22

-35

-15

-57

-1

15

-8

-73

-32-31-28

-59

-21-11 -10

-20

17

-54-52

-3

-50



Luxury

Necessity

Car

Car Maintenance

Travel

Home electronics

DVD

Computer

Cable TV

Internet subscription

MG

Toy

Baby Product

Banking

Insurance

Investment

Whisky

BrandyBeer

Skin Care

Cosmetics

Glasses/CLDisposed CL

OTC MedicineNP

Grocery

QSRSoft Drink

Mobile Communication

Movie

Consumer will be cutting back both luxuries and necessities

51

• When consumers cut back, they make a decision as to whether to reduce or stop their spend, or to make a discretionary down trade to a cheaper brand.

• In Taiwan, consumers are prepared to down trade on Baby Products, Grocery, Disposable Contact Lenses, Soft Drink, QSR and OTC Healthcare rather than reduce their frequency or quantity of purchase


Brandy

Beer

Skincare

Contact Lenses / Glasses

Whisky

Cosmetics / Fragrances

Disposable Contact Lens

Baby Products

OTC healthcare

Soft Drink

Grocery

QSR

-17

-17

-17

-20

-23

-23

-23

-23

-27

-40

-43

-53

47

40

30

17

50

33

3

3

14

13

3

13




52


• A smart consumer is always looking for a good deal. But in the next 6 months Taiwanese consumers will be looking hard for bargains and deals

Buy generic / private labels

Only buy necesities

Stick to my shopping list

Eat at home

Drink less alcohol

Use credit cards to pay

Trade down on low ticket items


Trade down on high ticket items

Look for best deals

Use coupons

46

57

60

63

63

63

67

77

77

80

83



53


Pay more attention to adswith cost savings messages

Pay less attention to adsfor luxury brands

80

53

-3 -10


Agree Disagree


54

Singapore Sentiment

55

Singapore consumers plan to reduce spend in the next 6 months• Singaporean consumers believe that they will be spending money more cautiously

in the next 6 months, with nearly 40% feeling that they will be spending money a lot more cautiously


China

Taiwan

Hong Kong

Philippines

Singapore

Malaysia

Thailand

55

33

53

51

53

40

67

14

40

28

38

39

52

26



56





1. Worries about job losses and experience of friends / family losing money

2. Needing to save more as a buffer against poor economy


4. Need to show prudence rather than extravagance


57






2. Need to work harder, demonstrate worth

3. Limited career / job opportunities – now a buyers market

4. Demoralization from constant negative news and negative tone

5. Unfavorable currency exchange

58

• Most people are also feeling the recession at work as well, in terms of both the business environment and the pressure to work harder



1. Downward pressure on pay

2. Understaffed


4. Need to work harder and longer

5. Poor business environment, spend and investment down

59

Singapore Spending

60


• But in Singapore, as the next chart shows, consumers are planning to cut back in almost every category

• Banking and Insurance services are high on people’s list of category spend to maintain

• Cable TV, and Internet are not going to be cut back either. Neither will OTC medicine. And as there is a reduction in spend on other forms of dining, QSR may benefit


61

In Singapore, almost every category of spend may decline

Fine DiningLeisure Travel

Clothes / FashionHome Electronics / Appliances

Home Improvement / RenovationReal Jewelry

Home Furnishing / DécorHandphones

Spas / Well beingComputer related

AutomobileSporting Goods

AlcoholCosmetics / Beauty / Fragrances

Toys Investments

Automobile MaintenanceQSR

OTC healthcareCable TVGroceriesInsurance

InternetDay to day banking



Source: OMG Navigating Challenge Consumer Sentiment: Singapore61

62



Luxury Necessity

Jewelry

Fine Dining

Car

Home Electronics

Spa Home Furnishing

Alcohol

Home Improvement

Travel

Sport

Toys

Mobile Handset

Fast Food

Insurance

Cable TV

Grocery

Banking

Internet

Computing

Cosmetics/ beauty

Clothing / Fashion

Car maintenance

OTC Pharma

Source: OMG Navigating Challenges Consumer Sentiment: Singapore

Investments

Medical visits

Consumers will be cutting back both luxuries and necessities

63

• People have a choice as to whether to reduce or stop their spend, or whether to make a discretionary down trade to a cheaper brand.

• In Singapore, consumers are showing a willingness to down trade rather than reduce their consumption


Sporting Goods

Groceries

Alcohol

Cosmetics / Beauty / Fragrance

Fine Dining

Clothing / Fashion

-23

-33

-39

-50

-66

-73

39

0

23

19

29

16



Source: OMG Navigating Challenge Consumer Sentiment: Singapore

64


• A smart consumer is always looking for a good deal. But in the next 6 months Singaporean consumers will be looking hard for bargains and deals

Drink less alcohol





Use coupons

Eat at home


Only buy necesities


Look for best deals

30

54

64

72

76

77

81

82

83

89

91



65




83

66

-1-12


Agree Disagree


66

Malaysia Sentiment

67

Malaysian consumers plan to reduce spend in the next 6 months

• Malaysian consumers believe that they will be spending money more cautiously in the next 6 months, with more than half feeling that they will be spending money a lot more cautiously


China

Taiwan

Hong Kong

Philippines

Singapore

Malaysia

Thailand

55

33

53

51

53

40

67

14

40

28

38

39

52

26



68





1. The future is looking uncertain

2. I want to save more


4. My job is not as secure as previously


69





1. I am being more cautious with my spending

2. I know people who have lost their jobs

3. I am putting off some major purchases

4. I am being cautious with investing

5. I am being cautious with travel plans

70

• People are also feeling a negative impact at work, either in terms of a reduced volume of business, or a downward pressure on wages.




2. Less money coming in, business dropped off

3. Business does not want to invest

4. Need to work harder and longer

5. Insecurity about future job prospects

71

Malaysia Spending

72


• But in Malaysia, as the next chart shows, consumers are planning to cut back in almost every category

• As might be expected, there is no predicted decline on infant / baby related categories

• And home Internet subscriptions will continue to be important

• But in most other categories, Malaysians see a potential decline


73

In Malaysia, almost every category of spend may decline

Leisure Travel

Home electronic appliances

Home furnishings

Handphone

Jewelry

Air Freshener

Cosmetics

Credit Card

Snacks

Toys

OTC medicine

Pet Food

Insurance

Diaper

Internet

Automobile maintenance



Source: OMG Navigating Challenge Consumer Sentiment: Malaysia73

74

In Malaysia, consumers plan to reduce their spend on both necessities and luxuries

Source: OMG Navigating Challenge Consumer Sentiment Malaysia



Luxury Necessity

Alcoholic Beverages

Automobile

Children Milk Powder

Computer

Cosmetics Credit CardDay-to-day banking

Gadgetries

Home Electronics

Home Furnishing

Insurance

Investment

Leisure Travel

Maintenance of your current vehicle

Massage equipments

Mobile phone

Over the counter medicine

Personal carePet food

QSR

Jewelry

Snacks

Spas/ General well being treatment

Toiletries

Toys for children

Car/ Home fragrance

Branded Stationary

Baby DiapersHome Internet

Beverages (Chocolate/ malt drink, coffee)

Clothing/ shoes/ fashion

Adult milk powder

75

• If they are cutting back consumers have the choice to reduce or stop their spend, or to make a discretionary down trade to a cheaper brand.

• In Malaysia consumers are showing a willingness to down trade rather than reduce their consumption


Clothing / Fashion

Snacks

Personal Care


Beverages

Alcohol

-73

-47

-45

-39

-37

-20

11

16

6

21

6

3



Source: OMG Navigating Challenge Consumer Sentiment: Malaysia

76


• A smart consumer is always looking for a good deal. But in the next 6 months Malaysian consumers will be looking hard for bargains and deals. And they will be trying to avoid using their credit cards if at all possible




Eat at home


Use coupons



Only buy necesities

Look for best deals

43

61

68

72

77

79

81

87

94

96



77




76

44

-3-16


Agree Disagree


78

Thailand Sentiment

79

Thai consumers plan to reduce spend in the next 6 months• Thai consumers believe that they will be spending money more cautiously in the

next 6 months, but only a quarter believe they will be spending a lot more cautiously, which makes Thai consumers relatively positive compared to most in the region


China

Taiwan

Hong Kong

Philippines

Singapore

Malaysia

Thailand

55

33

53

51

53

40

67

14

40

28

38

39

52

26



80

• People told us that the main reasons for reducing their spend was to protect their existing income, mainly to buffer them against potential job losses




1. General uncertainty because of the recession

2. The cost of living is getting higher

3. I am worried about my job status

4. Investments and savings have lost value

5. Want to save money to provide a buffer

81





1. I need to be careful with my spending

2. I am going to buy necessities not luxuries

3. I am feeling more stressed about the future

4. Work is getting busier and more stressful

5. I am trying to save more money

82

• And most people felt that they were feeling a negative impact from the recession at work as well, especially in terms of the general decline in economic activity causing a loss of morale



1. Less business makes me feel insecure

2. Need to work harder, but no increase in pay

3. Reduced benefits

4. Cost cutting and savings measures implemented at work

5. More difficult relations with clients

83

Thailand Spending

84

• In any recession in some categories are more resilient than others. Some will be high on consumers list of areas to cut back on, in other areas spend will be maintained

• But in Thailand, as the next chart shows, consumers are planning to cut back almost every category

• It will come as no surprise that family staples such as food, baby care items and medicine are recession proof

• But Thai consumers also have no plans for their pets to suffer. Pet food looks like being a recession resilient category


85

In Thailand, almost every category of spend may decline

Home technologyClothing / FashionHome FurnishingComputer related

AlcoholHome Appliances

Leisure TravelPersonal Loans

Real EstateSnacks

Fast FoodCosmetics / Fragrances

TaxisHome Improvement

Debit card spendMobile Handset

Credit card spendAutomobile

Non Alcoholic BeveragesMobile Service Provider

Baby DiapersLife Insurance

Non Life InsuranceBody Care

Facial CareMaternity Milk

Day to Day bankingUHT MilkHair Care

PetrolFood

Medicine / SupplementsToiletries

Baby MilkPet Food


Planning to reduce / delay

spend

Source: OMG Navigating Challenge Consumer Sentiment: Thailand

86

Pet Food

Baby Milk

Toiletries

GroceryPetrol

Hair Care

Milk

Banking

Non Life InsuranceMaternity Milk

Facial Care

Body Care

DiapersMobile Handset

Debit Card

Home Improvement

Taxi

Cosmetics/ beauty

Fast Food

Luxury

Home Technology

Home Appliances

Alcohol

Computing

Clothing / Fashion

Home Furnishings

Leisure Travel

Personal Loans

Real Estate

Snacks

Source: OMG Navigating Challenge s Consumer Sentiment Thailand

Pla

nni

ng t

o re

duce

/ d

ela

y sp

end

Plan

ning to maintain

Necessity

Life Insurance

Mobile Service

Medicine

Thai consumers think they will be cutting back on both luxuries and necessities

Car

Credit Card

Non Alcoholic Drinks

87


• A smart consumer is always looking for a good deal. But in the next 6 months Thai consumers will be looking hard for bargains and deals. And they will be trying to avoid using their credit cards if at all possible







Eat at home

Use coupons

Look for best deals

Only buy necesities

56

58

60

60

62

65

87

92

92

96



88




84

61

-16-39


Agree Disagree


89

Philippines Sentiment

90

Filipino consumers plan to reduce spend in the next 6 months• Consumers in the Philippines believe that they will be spending money more

cautiously in the next 6 months, with nearly 40% feeling that they will be spending money a lot more cautiously


China

Taiwan

Hong Kong

Philippines

Singapore

Malaysia

Thailand

55

33

53

51

53

40

67

14

40

28

38

39

52

26



91





1. General mood for greater frugality

2. Concerns about unemployment and benefits


4. Spending on practical things and neccesities

5. I want to save more and be prepared

92

• Most people told us that they were feeling some negative impact, although there were a few people who felt that there was little personal impact yet – and perhaps this is actually a good time to take advantage of cheaper prices

• But most were seeing a negative impact on their finances and were preparing for more bad news




2. Need to work harder

3. Increased price of goods especially basic staples and utilites

4. Know people who have become unemployed or are facing thereat of unemployment

5. Unfavorable currency exchange rate

93

• Most people are also feeling the recession at work as well, in terms of both the business environment and the pressure to work harder



1. Pressure on clients, less business activity

2.Fewer job opportunities, or options if become unemployed



5. Pressure to increase sales

94

Philippines Spending

95


• But in Philippines, as the next chart shows, consumers are planning to cut back in almost every category

• Medical and well being services are high on people’s list of category spend to maintain. This even applies to wellbeing services such as spas and similar therapeutic benefits

• Cable TV, and Internet are not going to be cut back either. Ways of staying connected will be important. And there are no planned cut backs on staples such as food


96

In Philippines, almost every category of spend may decline

Fine DiningLeisure Travel (International)

Real JewelrySporting Goods

AutomobileLeisure Travel (Local)

Computer relatedToys

Home Electronics / AppliancesHandphones

Home Improvement / RenovationReal Estate

Home Furnishing / DécorAlcoholSnacks

Clothes / FashionCosmetics / Beauty / Fragrances

InvestmentsSpas / Well being

InsuranceCredit cards

QSRAutomobile Maintenance

Cable TVDay to day banking

InternetMedical check ups

OTC healthcareGroceries



Source: OMG Navigating Challenge Consumer Sentiment: Philippines96

97

• People have a choice as to whether to reduce or stop their spend, or whether to make a discretionary down trade to a cheaper brand.

• In Philippines, consumers are showing a willingness to down trade rather than reduce their consumption


Sporting Goods

Alcohol


Clothing / Fashion

Snacks

Fine Dining

-17

-23

-36

-50

-51

-51

50

26

21

11

13

15



Source: OMG Navigating Challenge Consumer Sentiment: Philippines

98


• A smart consumer is always looking for a good deal. But in the next 6 months Filipino consumers will be looking hard for bargains and deals


Use more public transport




Use coupons


Eat at home


Look for best deals

Only buy necesities

38

57

72

72

81

81

81

83

83

92

94



99

A need for explicit value messages – but not closed to luxury brands



77

49

-23

-51


Agree Disagree


April 2009

Consumer Sentiment

consumer confidence and planned spending behaviour in the recession. a conversation with asian...

Business

months chinese consumers

consumer confidence

spending behavior

spending plans

online conversation

consumer sentiment10

information people

technical recession