Project Reboot Final Pres for Burning

8/4/2019 Project Reboot Final Pres for Burning

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Text

"Shopping is an afrmation that

there is a future, and that it willbe better than today. Whenpeople stop shopping, not onlyare the results economicallyruinous, but the culture issignalling that it doubts itsability to succeed."

Thomas Hine


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The UCT Unilever Institute of Strategic Marketingpresents

RebootForget what you knew about marketing.

The new economic landscape means that

consumers will never be the same again.


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Our Research Partner


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Sponsors


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Thank You

Bateleur Khanya Research Solutions

Alan Todd - BKRS: data analysis

B2 Strategic Marketing

Ogilvy

Instant Grass

Samantha Payne: Project Manager

Simon Wood: Videographer & Film Editor

Ashleigh Coull: Presentation compilationXanthe Botten: Presentation Design

Lucie Pavlovich: Imagery

Media 24 - images


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The Global Situation


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The world is in recession!

A recession is what takes place when your neighbour loses his job, but a depression is whenyou lose yours! US President Harry Truman


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Internationally

IMF predicts that the global economy for 2009 will grow by only 0.5%

The lowest growth rate since WWII


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Some of the worlds leading banks have been nationalised

Governments have spent $ trillions on company bail out and stimulus packages

Emergency G20 meeting to tackle growing crisis

Iceland is now ofcially bankrupt

Internationally


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The American Dream?

Last year 2.6 million US workers lost their jobs

The IMF has revised the global forecast for growth no less than ve times

The US has been in recession since the last quarter of 2007

In US the ofcial interest rate has been cut to almost zero

General Motors and Chrysler will not survive without government help


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And South Africa is not immune


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The SA Economic Situation

We are part of t he global family:

If demand falls in Birmingham, factories close in Beijing Trevor Manuel

As with the weather....economic trends do not stop at border posts, they carry no passports,yet they have the potential to wreak havoc. Tito Mboweni


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Reasons for SAs steady growth: 2001 - 2007

Consumption driven economy of:

Low interest rates

Available credit

Strong rand

Cheap imported products

Highly charged, amazingly condent consumers


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Video


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The Perfect Storm

The perfect storm of high interest rates, the national credit act and high prices have savedpeople from themselves.


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Impact on South Africa

GDP has fallen from 5% in 2007 to 3% in 2008

The SA economy is projected to contract by -1% in 2009

In the 1st quarter 2008, the economy contracted for the rst time since 1998

Business condence falls to its lowest level since 1998

Consumer condence starts to fall


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Jobs - South Africa expected to shed 300,000 jobs in 2009

Interest rates - interest rates rose ve basis points in recent years, although the reserve bankhas been cutting rates as the recession starts to bite

Ination - Ination continues to hover above the 6% target and remains sticky

140% increase in liquidations

Impact on South Africa


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Retail sales

Bureau of Economic Research; 2009

0

4

8

12

16

ValueTitle

11 11 11 1214

1515 16 17 16 17

17

10

9

7Early 2004

Mid 2004Late 2004

Early 2005Mid 2005

Late 2005Early 2006

Mid 2006Late 2006

Early 2007Mid 2007

Late 2007Early 2008

Mid 2008Late 2008


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0

4

8

12

16

ValueTitle

15 16

15

14

13

12

April 2008June 2008

December 2008Feb 2009

March 2009May 2009Year

%

Interest rates coming down



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0

2

4

6

8

2007

2008

2009

4.3

8.0

8.0

Year

%

Ination continues upward



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0

5

10

15

20

20032004

20052006

20072008

2009

16.2

2.01.3

Year

%

Food prices rise sharply

4.08.1

13.116.0



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Price comparison: Jan 2008 - Jan 2009

2008 2009

Toilet roll 38.49 45.99

Italian Plumtomatoes

7.99 11.99

Rice 14.99 42.99

Spaghetti 5.99 15.99

Lite coconut milk 6.99 14.99

This illustrates a 28.9% shopping basket increase between Jan 2008 and Jan 2009


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-5

0

5

10

15

20

2004

2005

2006

2007

2008

1520

17

Year

%

Private consumption expenditure

12

-3



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0

2

4

5

7

2.1

3.8

1.8

7

20052006

20072008

Year

%

Cost of transport

Transport (% change yr on yr)



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0

2.25

4.50

6.75

9.00Percentage(%)

2.9

5.0

7.37.0

8.8

4.720032004

20052006

20072008Year

PCE: Total (% Change YoY)



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036912151821242730

Percentage(%)

19.0

17.021.0

11.0

6.1

4.7 6

42005

20062007

2008Year

PCE: Semi-Durables and Non-Durables (% Change YoY)



Semi-Durables

Non-durables


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A complex response at corporate andindustry level


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New Clicks records over 9% increase in sales

Shoprite sales up 27%

Spar sales up 23%

Weylandts sales up 20%

Some South African companies thriving

Famous Brands sales up 9.3%

Spur prots up by R55 million

Group 5 reports exceptional results


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Revenue falls at credit retail chains

Fourth quarter sales at Ellerines fall by over 22%

HiFi Corporation struggles as sales of electronic goods come under pressure

In 2008, 1400 restaurants closed their doors

South Africa has lost 55,000 estate agents

South African company effects


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House prices have been falling in real terms for over a year

Residential building plans declining Jan 2008 (3765) vs Jan 2009 (2206)

In February car sales experienced their biggest drop in 25 years

Manufacturing sales down by 16%

South African response


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South Africa is a highly complexand fragmented society

One size does not t all, when it comes to understanding the behaviour of differentsegments of the South African market.


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Macro Trends versus Micro Realities

Most published research on the recession talks in general and global terms. Our researchunpacks the reality on the ground in South Africa

Often, changes in behaviour are subtle, yet highly meaningful for marketers.


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We are experiencing the panic ratherthan the reality of a recession

For some people, the panic is a result of reality, whereas for others it is largely anticipatory


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As an emerging economy, there are expectations of even greater decline

BUT

National Credit Act

Tightly regulated banking system

Good monetary and scal policy

Why SA is less affected by the recession


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Were we saved by the credit act?

Last year they introduced the national credit act this is what saved thesituation as bad as it is - it would have been much worse


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The future

The recession will not go on forever

Interest rates have fallen

Cost of petrol ha gone down

Social grants


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The number of visitors to SA continues to buck international trends

SA secures the lucrative IPL Cricket

The future


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The FIFA World Cup 2010

Huge investment

Estimated over 350,000 overseas visitors

The event will increase GDP by 1%

Huge optimism generally and around the event

The future: 2010


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Nobody knows ... but

The recession will end and the world will be a different place

There is opportunity now

How you react to recession today will shape your future

When will it end?


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Approach


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Qualitative Research

12 focus groups across segments and country


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Qualitative Research

Video interviews with experts and consumers from each segment

Extensive research on all available recession research and data

Instant Grass 24/7 communication with national network of grasses


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Quantitative Research

1000 face to face interviews conducted nationally with South Africas urban economically activepopulation, drawn from the ranks of LSMs 5 - 10 in October 2008

Tracked using a matched sample of 1000 in March 2009

Further Reboot Hypothesis were quantied using a matched sample of 500 in April 2009


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Overall Insights


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The consumer response: Video


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The end of the world as marketers know it

A new consumer mindset emerges


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For the last 15 years, marketers will not have encountered consumers with this mindset

The fundamentals of consumer decisionmaking have changed

For the last 15 years, marketers will not have encountered consumers with this mindset


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Nearly 80% say they are more cautious with their spending as a direct result of the recession

Consumers are rebooting


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Conspicuous Consumption becomesConsidered Consumption

All purchase decisions (even low involvement ones) have become high considerationand high involvement decisions


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Careful is Clever


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South African consumers are impacted by the recession very different ways

21% say they have not felt any recessionary impact

Nearly 80% say that their personal income has not fallen in the last 6 months

Consumer response


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But,

45% say they feel under more nancial pressure

34% indicate that they are struggling to maintain their lifestyle

A third of South Africans say the recession is putting a strain on their personal relationships

Consumer response


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However, nearly all consumers are experiencing the recession

76% think the economic situation is going to get worse

70% think that the economic downturn is going to continue for many years to come

Consumer sentiment


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Shopping habits are changing as a result

59% say they have changed their shopping habits

65% say they are planning their shopping more carefully

57% say they are likely to buy fewer unplanned items

Impact on consumer behaviour


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Attitudes towards credit are also changing

Consumer debt levels have fallen in recent months due to a number of factors

65% say they are spending more responsibly in in reaction to or in anticipation

Impact on consumer behaviour


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Two Key Barometers

Financialexibility

Condence


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Strugglers Youth Start Me Up

Young FamiliesBlack Diamond

EstablishedPrime Timers

The segments

Size

Value

52%

39%

12%

7%

10%

12%

Size

Value

6%

6%

5%

11%

16%

25%


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Who were we speaking to?

LSM 5 -10

50% of South Africas population accounting for 88% of spend


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Strugglers


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Strugglers

Denition : All races, LSM 5 - 7

Size 52%

Value 39%


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Strugglers: Financial Flexibility

Very low

2.7


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Very low

1.7

Strugglers: Condence


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Strugglers: Impact

Black: Will I ever recover from this heavy credit hangover?

White: For a while I had a few extras, but now Im back to surviving


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Strugglers:Response

Black : Live from day to day while clinging to a hope for the future

White: Hanging on for dear life with nowhere to go

These consumers are hardest hit as they had few luxuries to cut out of their lives and the pressure has been directly felt on

essentials

They are struggling financially because of high food and transport costs

Hopes and dreams have been shattered

Heavy credit hangover: at the mercy of the money lenders

Anxious, depressed, worried, sad

Experiencing significant financial hardship

Live from day to dayCash scarce and time poor


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Strugglers:Lifestyle

73% struggling to maintain basic lifestyle

Focusing on food, transport, rent and the kids - nothing left over after this

Little entertainment, very few gadgets in home (53% WCI cancelling DSTV)

Most likely to have to spend more time at home (82%)

No money to buy treats for children

Absolutely nothing discretionary, no holidays, new clothes, meals out

72% using public transport wherever possible


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Signicant compromises taking place on the home front

Fixing interest rates on bond repayments (WCI 60%)

Renting cheaper houses (58%) and moving in with others (28%)

Letting domestic worker go and doing own housework (59%)

However, many (56%) cant postpone home improvements


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Signicant compromises taking place on the home front

Fixing interest rates on bond repayments (WCI 60%)

Renting cheaper houses (58%) and moving in with others (28%)

Letting domestic worker go and doing own housework (59%)

However, many (56%) cant postpone home improvements


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Im not worried about what Zumasdoing, Im more worried about feedingmy family!


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This nancial crisis has caused us to behealth conscious so we cut out redmeat and cut down on things like oil


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Some nd the benet in greater sense of community to survive tough times (church andstokvels)

While divorce and separation and relationship stress are sometimes caused by nancialpressure (70%)

Some Black strugglers spoke of attending funerals being curtailed

Entertaining (sharing and ubuntu) is under signicant pressure (47%)


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Strugglers:Money

Money management via transactional accounts, debit cards and cash

65% struggling to pay debts

No vehicle nance or credit cards

Some save by participating in a stokvel and have funeral policies (AVBOB) but 77% nd itdifcult to save anything

Tend to rotate who they pay from month to month to keep going

Car, life and medical insurance compromised to save money for food


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We dont visit each other anymore because its expensive togo there we only see each other at funerals.In the olden days there was Ubuntu but nowadays we cantafford that. I dread to see the uninvited guest because I cantfeed them or give them coffee so I dont go to them becausethey are in the same boat.


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Strugglers:Shopping

Highly resourceful to stretch their money

Bargain hunters

Low brand loyalty; high price sensitivity; 75% have stopped buying the brands they love

No more bulk buying - smaller pack sizes

Pre-paid cell phones still essential

Sellsumers trend evident


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We have to look and not touch when wereshopping for clothes.


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We now buy own brandproducts instead of branded.


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Strugglers: Marketing Implications

The good news is that marketing opportunities still exist


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Inspire condence in times of need:

Let us help you through the night

Emphasise the value of the corporate brand

A role for great PR

Strugglers: Marketing implications


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Focus on basic needs

Cheaper protein alternatives

Switch to vegetables (informal trade growth)

Recognize that the brand moment is most likely to be at home


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Enable nancial exibility by:

Focusing on price, price, price

The battle of the broadsheets

Reduced pack sizes

Multiple use products

Payment terms - the return of the lay bye

Example: The battle of the broadsheets


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Youth


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Youth

Denition: all races,16-24 years, no children, LSM 5 +

Size 12%

Value 7%


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Youth: Financial Flexibility

Low but few nancial responsibilities

1.0


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Youth: Condence

High

7.9


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Youth: Impact

Text

Curtail my fun


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Youth: Response

Employing creative strategies to maximise my lifestyle


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Youth arent feeling the pinch, theyre preparing for it

Short term benets are in; long term commitment is out

Trust is with a few anchor brands, accessorized by me brands

Its not about information, its about verication (the source)

Consumer inuence is resting on the power of word of mouth

Youth: Lifestyle

h if l


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Signicant stats...

More than half would consider living in the townships

Overwhelming majority would postpone buying a new car (85%)

Almost all (96%) are worried about not nding employment

Youth believe themselves to be invincible; 83% would use generic medicines, and a thirdwould cancel their medical aids

Youth: Lifestyle


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Student living at an all time high:

61% would let their domestic worker/gardener (75%) go to save money

55% would do away with armed response

74% would postpone home decorating

Youth: Lifestyle


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Risk taking increases:

Cashing endowment policies (42%), dipping into life savings (52%), letting cellphoneinsurance lapse (39%) and sourcing insurances with cheaper premiums (62%)

Stopping investing in shares/unit trusts (51%)

Stop saving altogether (34%)

Trying to make more money from existing job (88%) or get another job (86%)

Youth: Money


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"The general consensus amongst my peers is that we actually haven't really felt it thathard just yet. We see the news telling us that we are in for it, we see ads saying its time toknuckle down, we get reminded every 30 minutes that the US and UK are panicking with thecredit crunch etc etc etc but to be honest - thanks to Trevor Manuel - we're not in too muchtrouble. We might be preparing for a big blow, but it hasnt quite hit us just yet.

"The general consensus amongst my peers is that we actually haven't really felt it thathard just yet. We see the news telling us t hat we are in f or it, we see ads saying its time to knuckledown, we get reminded every 30 minutes that the US and UK are panicking with the credit crunchetc etc etc but to be honest - thanks to Trevor Manuel - we're not in too much trouble. We might bepreparing for a big blow, but it hasnt quite hit us just yet.

There was a time (like 8 years ago) when the brandt th lti t VIP i Wh


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party was the ultimate VIP experience. Wheneverything was free and you could go to a party andspend nothing. Not anymore! We've been spendingmore and more time at our friend's homes, partyingthere and splitting costs for supplies..


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People are very innovative in SA. My friend is just one example.She parks her car behind her roommates every day to avoidpaying for a parking. These days thats how you have to be.

Scooters and bikes have grown in popularity


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Dont feel like the train and taxis are thebest modes of transport because ofthe PERCEPTIONS attached (Itsimportant to show that you havearriveddoesnt go well with a taxi).

Little has changed with transport given its necessity Big brands are at the core here. So Ill have my VW and I wont trade it in, Ill just drive it onthe weekends because I cant drive it every day.


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Except for a small niche of advertisers, advertising is completely lacking for meand my friends. We dont t any of the known target markets so it makes sense toask the people you know with experience.


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Credit cards used as debit cards to lower bank charges

ATM charges avoided by withdrawing from Pick n Pay till points

Doing everything to stay with the cheapest accounts

Youth: Money Management


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Im considering a credit card and using it as a debit card by transferringmoney over. Thats what more and more youth are doing these days whichI think is a trend.

So last we checked people (who qualified) were starting to hate their credit cards. This time around we have found that more peopleare using their credit cards (not for the credit) but as a pre paid debit card by putting in more money than before and using it fortransactions. This apparently lowers most charges and..welllooks good. The notable differenceeven the mid market peeps aredoing this.


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Im looking for cheaper ways of getting my money. I started this when I noticedthat a lot of people are using a handy new trick - drawing cash from PicknPay cozits cheap

This is a great example of how understanding what consumers mindsets are relates to understanding why they are doing what they are doing. In this example the perception that it is cheaper to withdraw from Pic n pay is what is important. Whether they areactuallysaving is not of concern as we will see in the rest of the presentation.

WATCH out big banks - here comes Pick 'n Pay and they're offering your customers transmission and savings accounts which carry lower charges and higher interest rates.South African banks are among the most profitable in the world, but here at last is some competition - which is sure to squeeze the banks' profit margins to the benefit of all consumers.In September, supermarket chain Pick 'n Pay will launch their financial services division, and their first banking product.

The Pick 'n Pay launch mirrors the international trend of retailers muscling in on the traditional turf of banks and insurance companies. In the UK, Marks and Spencer, Tesco, Sainsbury and other chains are successfully selling financial products to their customers.Nicky Bicket, managing director of Pick 'n Pay financial services, says their products will offer convenience, security and value for money."We've capitalised on the opportunities given to us by conventional financial institutions that are generally expensive, unfriendly and bureaucratic," says Bicket.Pick 'n Pay's first product offering is a savings/transmission account, which will feature a high interest rate (up to double the rate you'll earn on a similar bank account, says Bicket) and lower transaction costs.The account will also offer a debit card function at Pick 'n Pay stores, which will allow you to pay for your groceries with your card - the payment is immediately deducted from your account. The benefit to the customer is that this obviates the need to carry wads ofcash (most Pick 'n Pay customers still pay for their groceries with cash).Account holders will be able to use Pick 'n Pay till points as ATMs - and the cash withdrawal fee will be the lowest in the market, says Bicket. They will also be able to use any Saswitch ATM.A telephone banking system will be available to facilitate most account transactions - for instance, to authorise debit and stop orders, pay your bills and check your balance.Future plans, says Bicket, include unit trust funds (to be sold at discounted initial and annual management fees), mortgages, and insurance products. A loyalty programme to reward customers for buying Pick 'n Pay's financial products is also in the pipeline.Bicket stresses that Pick 'n Pay does not see itself as a manufacturer of financial services products.

"Our philosophy exploits our skills as a distributor and hence our decision to select a bank to provide the product for us, but to our specifications," says B icket.Boland Bank will provide the banking licence, take the risks and manage the accounts.


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I dodged the graduate card bullet for 2 yrs (a record amongst peers). Had abank student card & they didnt nd me out until I had to go in for a missingcard.

I almost died when the lady came back with a graduate account card. I wishedI was still at university because you know those cards are nothing but moreexpensive..


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Youth doing more shopping and less buyingBecoming more streetwise in fear of recession

Youth: Shopping


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Im not into the whole big brand thing quite as much unless we are talkingabout the essentials (jeans and shoes). Its a bit hard to indulge, so these form

the core of my gear around which I accessorize with cheaper clothing andlocal brands.

consumers still want to look their best, and shopping will still make them feel better in this tough time. (Small Indulgences) But when they domake fashion purchases, they will be more careful, selecting apparel and accessories that can be worn multiple ways for multiple seasonsand/or items that are extra-special and this will be a balance of high end core brands accessorised with the locally hip and the cheap..


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Options of R5 and R12 have been a Godsend in my life, I wont lie, R5 airtimeallows me to Mxit with my buddies for at least 3 days where R12 airtime allows

me to check my mail

Prepaid over contract. Although this is perceived as a financial benefit it actually isnt. Infact a lot of our grasses having gone through theprocess of calculating how much they have actually spent found that they spent more which is being reflected in recent reports from the cellindustry.


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Samples samples samples. I guess this is shady but I'll be honest with you. Illwalk into a store looking to try out the samplesjust to see how much free stuff

I can get out of it.

Businesses should focus their investments on the core brand offering rather than spread existing resources too thin. Unless you have a bigbase to strat off with brand extensions during recession need to be cautious. Aggressive trial-building activities like sampling will likely paydividends, provided they do not undermine the perceived quality and desirability of the brand. That said speak about desire vs want and howmuch it gets people in store.


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"I nd the 'hard times' ads annoying. Just give us a good product and a decentprice. when they start getting sympathetic i start feeling like Im being conned

somehow and my guard goes up.

Its all about the tone. I think the main thing with ads at the moment is people just dont believe them. This goes as far as annoyingpeople especially when everything is about the pinch. The opportunity here is to show that ads arent working and to push wordof mouth. Heres some examples.

I have found is that there a lot more ads talking about "the pinch" and how using their service (Outsurance, Hollard, Sunlight, Pick nPay etc) can save you money. Do i believe it - NO!


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With the exception of anchor brands, loyalty is out, deals are in. Most brands in most

categories are in play

Package your value for a short-term mindset

Resist the urge to sympathise - it can be seen as patronising

Let the Prosumer work out the value for themselves

Put your information in the hands of trusted sources, and let the power of word-of-mouth takeover

Youth: Marketing Implications

Its all about the product. Products should sell themselveswithout ad execs trying to trick me or guide my thoughts

or pump me full of subliminal verses because of the times.


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or pump me full of subliminal verses because of the times.Im too smart to fall for it."

Advertising should stress superior product and superior price performance, not necessarily just corporate image.


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Start Me Up


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Start Me Up

Denition: Young, ambitious, single professionals25-40 years, all races, no children, LSM 8-10

Size 10%

Value 12%


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Start Me Up: Financial Flexibility

High, but some restricted by extended family demands

9.4


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Start Me Up: Condence

Very High

10


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Start Me Up: Impact

Momentarily slowed my progress

Credit was the means to achieve a luxury lifestyle on a modest income now they are employing smarter tactics to mimic their previous lifestyle

The diferences

Black Diamond: the most relaxed, feel their jobs are most secure, many have not yet bought homes, so have higher levels of disposable income. The

biggest debt is their car. Still willing to use taxis if they have to. The big diferences are the level of confidence in the future, job security and slightly

lower credit dependence

Few had rich parents to fall back on

See future in such a positive light

White: feeling anxious and concerned. Going overseas as a way out is no longer a meaningful option. Public transport is not an option

Coloured: more bufered from the recession as they tend to live at home.


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Start Me Up: Response

Small sacrices for now, big dreams unaffected

Shopaholics anonymous


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Start Me Up: Lifestyle

Its all about me, me, me

And the now versus the never

Mortgaging the future for the present

Money saving activities only at the margins and to enable them to continue to spend onthemselves

However, WCI Start Me Ups are fearful of losing their jobs

My clothes, my self image, my car, my friends and my parties


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Start Me Up: Lifestyle

My home is my playground: socialising moving home more

Less likely than any other segment to postpone home improvements or redecorating

100% will not leave the suburbs

Signicantly less likely to use public transport, and least likely to postpone buying a new car

My clothes, my self image, my car, my friends and my parties


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Start Me Up: Money

Strong move to debit cards (referred to as cash) and away from any form of credit

Cynical about savings and nance seen previous generations save and fall

Saving still a painful and difcult process as it constrains lifestyle

A signicant 37% of WCI Start Me Ups considering selling shares/unit trusts

Scepticism about long term retirement planning

Saving I tried that butI didnt like it so I gave


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gup (Start Me Up)


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Start Me Up: Shopping

Change the outlet not the brand move towards factory shopping

Signicantly fewer would buy cheaper clothes (64%) or use less make up/fragrance (51%)

Hair and nails still far less likely to be compromised for Black Diamonds (59%)

Grocery broadsheets suddenly more appealing

Mall avoidance to reduce temptation

If I shop, my heart beats faster, it actually kills me notto be able to buy something if I like it. So now, I dontgo to shopping centres because I cant bear it.


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Ill give up anything rather than stop having my hairdone. Even if it means borrowing money from mymum. (White Start Me Up)


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Start Me Up: Marketing

Text to build

Dont compromise on brand image but try to enable affordability

Bite sized brands

Brand relevance is key the war is on

Feed self-absorption: what is your brand doing for me?

Provide instant gratication whilst recognising their longer term dreams


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Recognise that bling still lives on (especially Black Diamond) but provide more bling for yourbuck

St t M U M k ti


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Be more light-hearted about the recession


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1

Young Family


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Young Family

DenitionParents of young children under the age of 12,All races, LSM 8-10

Size 6%

Value 6%

Black Diamond Young Families (2.31%) Black people, LSM 8-10, children under the age 12White, (Coloured and Indian) Young Family (3.9%) White (Coloured and Indian) people, LSM 8-10, children under the age of 12GROUP TOTAL Young Family 6.21%


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Young family: Financial Flexibility

Moderate

6.0

Young family: Condence


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Moderately high

8.6


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6

Just when the future looked bright, the storm hit

Young family: Impact

Young Family: Response


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7

Universal: Childrens needs come rstBlack Diamond: Striving to maintain better lifestyle for kidsOthers: Conscious down-trading as a whole family unit until things get better

Young Family: Lifestyle


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Trying to keep kids at private schools at all costs especially Black Diamonds

100% of suburban Black Diamond Young Family wont leave the suburbs

Least likely to sell their homes and buy a cheaper house

Socialising and eating out has been signicantly reduced

Entertaining (if at all) has moved back home and is a shared activity

Young Family: Lifestyle


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Focused on home maintenance rather than home improvements

Technology still features but on a pay as you go basis

DSTV Compact, MXit and Skype featuring noticeably

Least likely to stay at home for the holidays, but will stay with family or friends while away

Gym, hair and nails still vital for most Black Diamonds

Young Family: Money


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Young Family are the segment that are the most dependent on credit

Least likely to reduce their monthly payments (61%)

80% likely to ask for a pay rise at work

We dont want our kids to be like us, whenwe grew up. We didnt eat out when wewere growing up. You want your kids to beexposed to the world going out to eat,taking them to movies, paying for DSTV its


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10

a need now, its no longer a want. I wantmy kids to t in with the others too. They goto private schools so they need to feel thatthey are on the same level as the other kidsin their class.


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11

I often think about going back to Soweto because we are paying so many rates in thesuburbs but its not right for the children its not the safest place we have to give thema better life

I am afraid of going backwards. (Black Diamond Young Family)


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12

Its killing me to say no to my kids. I just cant do what I used to be able to do.

I feel so sad to be trading down, it makes me feel depressed. Ive got three children andI cant give them what they want. I have to keep on saying no to my children; they canthave a yoghurt from the fridge, or juice whenever they want to. Its bloody expensive. Icant tell them, go and help yourselves.(White Young Family)

Thats the one positive about thisawful nancial year we do


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13

awful nancial year we domore interactive things with the

family we go to a park with thekids and play together rather

than go the Aquarium.

We go camping now, because

its the only way we can afford togo away.

Im living on positive thinking.

White Young Family


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14

We only pay for DSTV when we need it like in theschool holidays, or when theres something specialhappening, like 2010 or the Grand Prix.

Our kids need the internet, for their homework. Mykids are using their cell phones and the internet.


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Considered consumption centresaround family essentials

Bargain hunting at discount outlets

Bulk buying is down

The brand versus no-name debatecentres around essentials (bakedbeans, tomato sauce, dishwashingliquid)

Young family: Shopping


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16

Strong negativity towards supermarket shopping experience and ever increasing pricesList-based shopping, on a need-only basis

Retailer switching: Woolworths, Pick & Pay, Shoprite

Trade-offs often not rational

PEP & Ackermans featuring strongly for kids clothes

Young family: Shopping


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Something that I am doing differently is the way I buymy food. I used to go and buy my groceries once amonth and buy in bulk. But now, I go to the market inParow every Friday, where all the grannies makebeetroot for R13 a jar, and I buy from them. They haveFarmers Markets there I take my child there, and Imake a day out of it. Going to the shops has been anegative experience for me, but now I really enjoy it, soI dont think I will change that.


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I look and think about what Im going to buy before I take it off the shelf. I look at the perlitre price. You think to yourself do I really need this, or is it just a luxury.

I dont want my money tied up in my pantry.

Young family: Marketing


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Recognise the importance of kids to this market

Decision making and trade-offs are more emotional as they are linked to children

Family values govern decision making: we rather than I

Young family: Marketing


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Desirable brands made accessible, accessible brands made desirable

Rise of list shopping: make sure your brand is on the list

Frequency of store visits on the decline


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26

Black Diamond Established


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27

DenitionOlder stable family, majority married with kids over 12Black Diamonds, aged 35+, LSM 8, 9 and 10

Size 5%

Value 11%



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Moderately high

7.7

Black Diamond Established: Financial Flexibility


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29

Moderately high

7.9

Black Diamond Established: Condence

Black Diamond Established: Impact


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30

These escalating costs are annoying, but not critical

Plans and dreams have been paused temporarily

Insecurity stems from lack ofnancial heritage

Impact

Secure, stable, not anxious about the future, men particularly quite positive about the future

Seem to be the most positive of all the target markets is this the most recession proof group?

Escalating food and transport costs are annoying, but not critical to this group

Increased interest rates directly impact home and car loans

Maintaining lifestyle is a challenge but can be maintained, as they are progressing in their careers at the same time

More secure in their jobs than most (the BEE efect)

Educated, so have a good understanding of the macro efects


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31

Maintaining middle class lifestyle at all coststhe alternative is unthinkable

Black Diamond Established: Response


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Middle class priorities: home loan, car nance, insurances, kids education

Layers of middle class-ness

Big dreams and aspirations still feature

Cars still very important but cant change so frequently

Black Diamond Established: Lifestyle


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Wont make compromises regarding their homes:

Wont sell their house and buy a cheaper one (81%)

Wont rent out a room on their property (80%)

Wont move in with other people (86%)

Wont let their domestic worker go (75%), and highly unlikely to give up garden service/gardener

Unlikely to postpone redecorating or refurnishing



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Compromising on parties, entertainment, drinking, eating out, unnecessary travelling

But not prepared to give up on too many home comforts e.g. drinking whisky athome rather than out

Technology Internet, cell phones, DSTV all considered essential

Only 29% would consider cancelling their DSTV/MNet subscription

Grooming a necessity not a luxury (women), not compromising on hair and skinproducts

Least likely of all segments to buy cheaper clothes for themselves (48%)



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For me I cant give up my home comforts now

Im into computers Ive internet and games and a very massive sound system in the houseand watching movies through the projector its very entertaining

There is too much embarrassment to move back in the township


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I have my hair done once a month I would not compromise on that.

I cannot compromise on my beauty - we have a group of girls and once a month wego to a restaurant and then we spoil ourselves.

l k d bl h d


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Rationalisingnancial services and insurance products to get the most value for money

Growing awareness of the need for nancial consolidation

Focusing on key priorities: life insurance and bond and debt repayments

Reluctance to accumulate further debt

85% trying to save more

Black Diamond Established: Money


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I am hopeful because it i s a global recession, but the interest rates are comingdown and we now use our money wisely the R200 that I save on my bond I cannow pay off on another debt.


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You tend to send money rather than going yourself to a familyfunction it is much cheaper.

Black Diamond Established: Shopping


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38

Compromising on the fringes big ticket items postponed

There is still money they are just more cautious about spending it now

90% are likely to have changed their shopping habits, fewer unplanned items bought (86%)

More price conscious when it comes to groceries, more planned shopping andlooking out for specials

Reluctant to compromise on quality: highly unlikely to buy cheaper brands of groceries/meat


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39

You look in your cupboards rst and then if you need sugar you go and buy itbut you dont buy the same quantities anymore before I just used to push atrolley around and ll it up

If you shop around you can get the same thing but better qualityThe specials I go for are not lesser quality they are just cheaper

Value means everything to me I wont compromise on quality

Black Diamond Established Marketing


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Youve arrived well help you stay there!

Provide reassurance and inspire condence

Self image and brand still important

Reinforce quality and real value. These are smart consumers who need smart solutions.

Enable them to invest in the future

Recognise the consolidation phase they are in

Black Diamond Established: MarketingImplications


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Prime Timers

Prime Timers


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DenitionWhite, Coloured and Indian, aged 40+, LSM 8-10

Size16%Value25%

Prime Timers: Financial Flexibility


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Prime Timers: Financial Flexibility

Highest of all

10

Prime Timers: Condence


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Prime Timers: Condence

Moderately high

7.2

Prime Timers: Impact


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51

Prime Timers: Impact

Im nancially freer than I was before(Cushioned by their stage in life and nancial heritage)

Prime Timers are cushioned from the efects of the recession by their stage in life.

The economic challenges had come at a time when their kids were leaving home, so expenses were dropping anyway, and cash was a bit more available. Their bonds were closer to being paidof. In fact they described feeling financially freer than they had before.

None had been hard hit, and only a few had had to make significant changes in their behaviour as a result of external financial stress.

These were perfect Prime Agers; relatively positive about the futuredespite the economic stress factors they all believed that things would eventually come right in the not too distant future

They felt that South Africa is currently cushioned from the full force of the global recession, but are bracing themselves in case it happens here in the near future (as they are aware the US and Europe are being afected.)

As a result, they are employing holding strategies, a wait and see type of approach to decision making and the future

The recession has made them smarter and more disciplined, rather than miserable: exercising more self discipline leads to enhanced self esteem

While they have all changed their behaviour, the recession is nibbling at the edges rather than afecting the fundamentals of their lives

They have delayed their dreams and future plans to cope with current realities

Luxury has regained its meaning and value

Quality of life overtakes quantity

Our lifestyle hasnt changed that much, we just eat out less and entertain more at home (Prime Timer White Female)

Im fighting the recession by going out for cofee and meals as often as I can. (Prime Timer White Female)

Prime Timers: Response


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Prime Timers: Response

52

Very aware of global recession, so employing holding strategies

For some, the recession signals an opportunity

Prime Timers: Lifestyle


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y

Life stage signals a new freedom to many

The recession encourages getting back to good values

Most likely to be able to maintain their lifestyle

Little luxuries become very important

using the recession as an opportunity to get back to good family values and the basics feeling like they are inthis together

Prime Timers: Lifestyle


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y

They remain health, environment and socially conscious and these have becomeentrenched parts of their behavior

Least likely to spend time at home - more likely to still go out and have fun

However, they are playing a wait and see game - most likely to postpone homeand building improvements

Least likely to join a lift club

Least likely to do away with garden services

using the recession as an opportunity to get back to good family values and the basics feeling like they are inthis together

v


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If you cant play a little, whats the point of living?

A few years ago, I would change my car quite regularly but I havent changed mycar for four years now.

I justify paying for (garden) services and having my car washed by saying that yourekeeping someone in a job

Prime Timers: Money


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Financially astute - previous experience of a recession

Pensions, retirement, saving, investing are key prioritiesThe segment with the lowest level of debt - least likely to struggle to pay off debt and/orreduce their monthly debt repayments

Having cash tops the priority list


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Spend today for tomorrow you may die, becomes, save today because tomorrow might beworse

Some deal seekers taking advantage of the nancial situationLikely to be the quickest to recover from the recession

Prime Timers: Money


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Im ghting the recession as hard as I can by going out for coffee and meals as oftenas I can


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I like this new, more disciplined way of doing things

This is the best opportunity of your life you just have to have the capital

Its like theres a sale on shares

Prime Timers: Shopping


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Signicantly less likely to change their shopping habits, however conscious shopping and

decision making are now a feature of daily life

Buying fewer discretionary items

Discerning and experienced consumers who understand quality and value

Brand image and labels were less motivating, but brand experience and product quality were

very important

From Best in class to smartest in class


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Have you ever tried swapping Kelloggs cornakes for the no name brand? It tastes likecardboard, so thats something I will never do. Id rather not eat cornakes.

Before, I didnt think about the price of the air tickets, now I agonise about all the decisions Ihave to make

Prime Timers: Marketing implications


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Recognise that this is your most attractive target audience in a recession

Focus on lifestage: Love your freedom, you deserve it.

Dont patronise these discerning individuals, speak to their experience

Prime Timers: Marketing Implications


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Brands need to acknowledge that experiences are more important than things to theseconsumers

Special service and treatment expected

Realise that these individuals have the greatest ability to take advantage of specials


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Conclusions


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The way forward for marketers

Strugglers


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Low on condence and nancial exibility

This group needs immediate help to get through the tough times

Its all about survival

Strugglers


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Lack ofnancial exibility contrains purchasing beyond essentials

What marketers do today will shape the future

Building trust now, the only confidence they will have is in the brand

Strugglers: Pointers


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Stress economy and added valueMay require product adjustment or repositioning e.g no waste,multi use, small economicalpacks, offering product bundlesProvide information that will help consumers make value based decisionsAssistance with debt consolidation will be welcomedLack of condence means highly extrinsic brand positioning lacks relevanceConsumers more concerned with brand reliability and performanceMore intrinsic approach required with focus on trust, heritage and reliability

Young Family


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High condence but low nancial exibility

An important future oriented marketCurrently making sacrices but no compromise when it comes to the kidsBut, does not want to lower standards

Young family: Pointers


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Make brand proposition accessibleChildren can act as a vehicle to tap into desires for the futureDont compromise on your childrens future - they are the futureCommunications that help build condence and offer assistance to get to the futureFlexible investment products to ease pain now and consolidate future loyaltye.g. maintain education policies but provide premium holidays on other policies

Youth


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High in condence but low in nancial exibilityWant to enjoy today - but cheaper - the future will look after itselfPrepared to make radical compromises in order to retain access to lifestyle and conspicuousconsumption

Youth: Pointers


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Recognise move to in-home entertainmentEnsure that brands remain accessible e.g. factory shopsCommunications that lever condence are likely to resonateSmall window of opportunity for alcohol brands

Prime Timers


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Lowish condence but high nancial exibilityBeen there, done that, got the T-shirtSitting pretty but are responding to the recessionMessages need to stress window of opportunity to combat inertia

Prime Timers: Pointers


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Recognise experience, knowledge and savvyYoure smart, you deserve the bestDo not want to think they are over consumingBrand proposition needs to convey subtlety and discernmentNot prepared to compromise on perceived value and qualityMessages need to stress window of opportunity to combat inertia

Start Me Ups


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High condence, high nancial exibility - or so they t hinkRecession not being felt but anticipated, (for some SMUs, a huge commitment to strugglers inextended family)For many, this stage is just a hiccupBrands, bling and lifestyle still the order of the day but some cutting backDont want to change lifestyleOffer new brand propositions but innovate less frequently

Start Me Ups: Pointers


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Still need the marketer to help them through the recessionExtrinsic brand attributes remain as important as everDo not compromise on brand values or erode condenceRemind consumers why your brand is still relevant in the context of cost-cuttingOffer new brand propositions but innovate less frequently



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Financialexibility and condence are relatively highDetermined that they will not slip backwards - have lived through hard times beforeHave become nancially very savvy and know how to manage their nances effectivelyAlso, under pressure to support extended families

Black Diamond Established: Pointers


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Enablement is keyRecognition of achievement is crucialDont compromise on quality and offer options for the discerning consumer

Consumers have changed their buying behaviour


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More disciplined, deliberate, discerning, less impulse buyingMore cynical, questioning, less trustingExpect added valueTesting brands - recession is the ultimate test!Shop, dont buyHome becomes the playgroundHelp me make it through the night

Consumers are changing their lifestyle


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Pressure on cultural traditions

Remittances redirect funds

Conclusions


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One size doesnt t allIf you lose customers now youll never get them backIf you gain customers now for the right reasons youll keep themGreater Expectations!Theres good news tooNew opportunities presented by increased movement between categories


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Documents

Project Reboot Final Pres for Burning