A presentation on marketing forces and responses in Canada in 2009 from Ipsos Reid

1. What is happening in Canada
The Economy and Some Key Trends
June 2009 Nobody’s Unpredictable

2. Ipsos Trend Observer 2009
Trend Observer
• What motivates Interviews with
a global study that consumers today? young “trailblazers”
uncovers today’s • What consumer
trends and predicts trends should we Interviews with
cutting edge experts
their evolution into the prepare for in a
future. post-crisis world?
Trend Analysis
Advertising
A study in 3 Parts
Toward a Re-
invented World:
Reveals how trends,
Traces the Implications
coupled with the latest
development of trends for our
technologies, are
from before the current brands
changing the way
recession, revealing
consumers view several
their development and
of the pillars of our
evolution into the
society, including the
current recessionary
economy, community,
period and beyond.
self-image, and space.
2

3. Agenda
Economy
How are Marketers responding?
How are Consumers responding?
Questions / Discussion /
Your Experiences/ Anecdotes
3

4. Living in Turbulent Times - Its All About Arrows
4

5. And About … Images
5

6. And, … Headlines
6

7. Communication - The Old World
Influencers
Investors Family
Customers MESSAGES Employees
Prospects
Competitors
Press/Analysts Partners
7

8. Communication - The New World
Influencers
Investors Family
Customers MESSAGES Employees
Prospects
Competitors
Press/Analysts Partners
8

9. The Canadian Economy is in Recession
The Canadian economy has fallen victim to the global recession. The recession is expected
to run its course in 2009 and the economy will rebound into positive territory in 2010.
6 Real GDP
5
4
3
Annual % Change
2
1
0
Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 2009* 2010* 2011*
-1
-2
-3
-4
Source: Statistics Canada (Q1’07 to Q4’08) and *Bank of Canada (2009 to 2011 forecasts)
9

10. Unemployment is Rising Across Canada
Unemployment Rate in April 2009
Canada Nfld
BC
8.0% Alb
7.4% Sask Man 14.7%
6.0% Ont Que
5.0% 4.6%
8.7% 8.4% PEI
NB 12.4%
8.9% NS
9.2%
Source: Statistics Canada
10

11. Canadian real estate market hit its lowest level in a
decade in January 2009… looks like it is now rebounding
Residential Average Price Year-on-Year Percentage Change
9.7
5.7
4.8
4
1.6
0.1
-2.6 -3.2
-4.5
-5.3
-7.7
-8.9
-9.9 -9.8
-11 -11.2
Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr-
08 08 08 08 08 08 08 08 08 08 08 08 09 09 09 09
Source: Canadian Real Estate Association (CREA)
Canadian Financial Monitor 11

12. Personal bankruptcies have accelerated since the
financial meltdown in October 2008
Personal Bankruptcies Year-on-Year % Change
27% 35%
7% 17%
3%
27,542
24,956
22,412 22,776
20,466
Q1'08 Q2'08 Q3'08 Q4'08 Q1'09
Source: Office of the Superintendent of Bankruptcy Canada
12
Canadian Financial Monitor

13. The stock market has rallied about 35% from its
March low amid speculation of “green shoots” of
economic recovery.
Nonetheless, whether these are “green shoots” or just “weeds” remains an open question.
16000
S&P/TSX
14000
TSX all time closing
12000 high of 15,073.13 on
June 18, 2008
10000
8000
TSX fell 1738.19
6000 TSX hit a 5-year
points or 16% in its low of 7566.94 on
worst week in 68 years Mar. 9, 2009
4000
Aug-08
Jun-08
Apr-08
Apr-09
Jul-08
Sep-08
Nov-08
Jan-08
Feb-08
Mar-08
May-08
Feb-09
Mar-09
Jan-09
May-09
Oct-08
Dec-08
13

14. How Long Will We Be In This Recession?
Duration of Recessions
 Since 1870, there have been 255 examples
of recession:
• 168 lasted for less than one year
• 61 lasted 1 - 2 years
• 26 lasted for more than 2 years
14
Source: Trajectory

15. Canada’s Top Concerns (March 2009)
Thinking about the issues presently facing Canada, which one do you feel should
receive the greatest attention from Canada’s leaders?
(Percentage of respondents)
Economy 51 63
Healthcare/Medicare 6 18
Jobs/Unemployment 7 16
Environment 5 14
Armed forces/Military/Defence 3 11
First mention
Education/Schools/Universities 1 8
International war/Conflict 1 6 Total mentions
Crime/Justice 2 5
Government/politics 14
Deficit/debt/spending 24
4
15

16. Canada’s Top Concerns – Trends
(July 1991 - March 2009)
Figures represent “Total Mentions”. Up to two issues were accepted from each
respondent, thus percentages will exceed 100.
Mar-09
16

17. Assessment of the National Economy
Today: May ’09 = 53%...The Turnaround…
All Canadians
Good Poor
100%
90%
80%
70%
60%
53%
50%
47%
40%
30%
20%
10%
0%
Sept/Aug 08
June 08
Jan 01
Aug 03
Feb 04
Feb 05
Feb 06
Jan 08
Feb 08
Feb 03
Sep 04
Sep 05
Aug 07
Aug 08
Jan '09
Jul 96
Jul 00
Apr 07
Oct 01
Apr 03
Apr 08
Mar '09
May 95
May 98
Nov 04
May 02
Nov 02
May 04
May 05
May 08
May 97
May 99
Nov 03
Nov '08
May '09
Jul 94
In terms of the current economic conditions in this country as a whole, how
would you describe the overall state of the Canadian economy right now? 17

18. 0%
10%
20%
30%
40%
50%
60%
Mar '91
Mar '92
Mar '93
Mar '95
Mar '96
May '97
May '98
May '99
Jul '00
Jul '01
Jul '02
Feb '03
Feb '04
Feb '05
Over the Next Year
Improve
May '05
All Canadians
Sep '05
Feb '06
Nov '06
Apr '07
Aug '07
Get Worse
National Outlook for Economy
Apr '08
Aug '08
Sept/Oct '08
Nov '08
Jan '09
Mar '09
May '09
18

19. Household Spending - % Cutting Back
Change from
last wave
Total 73% 1%
South Korea 88% 1%
Mexico 86% 3%
Argentina 85% 1%
China 81% 1%
France 81% 0%
Russia 81% 8%
India 78% 2%
Italy 77% 2%
The United States 77% -3%
Brazil 77% 1%
Turkey 76% -8%
Great Britain 75% -2%
Australia 74% -1%
Japan 73% 0%
Spain 72% 4%
Canada 68% -2%
Poland 67%
-1%
The Czech Republic 64%
5%
Belgium 64%
-6%
Germany 57%
-2%
J3. Given the current state of the global economy, have you and your family had to cut back on your household spending recently?
19

20. Specific Cut Backs
Average of all countries vs. Canada
76%
Entertainment 81%
73%
Vacations 79%
72%
Luxury items 78%
59%
Clothing 61%
53%
Energy consumption
61% All Countries
47% Canada
Gasoline/driving
60%
41%
Groceries
48%
33%
Cell Phone
27%
23%
Cable TV
25%
11%
Education
6%
J4. What are the specific things that you and your family are cutting back on these days? Base: respondents who have cut back in J3
20

21. Family Spending on Major Purchases in the
Next Year – some signs of recovery?
Now, thinking about major purchases such as buying a car or household appliances, or your
vacation spending, in the next year, do you expect that you and your family will be spending
No data for Aug 2008 or Apr 2007
21

22. Personal Day-to-Day Spending in the Next Year
– some signs of recovery?
And, thinking only about your personal day-to-day spending habits on things such as
groceries, clothing or other personal goods and services, in the next year, do you expect that
you and your family will be spending
No data for Aug 08 or Apr 07
22

23. Industry Sectors Have Reacted Differently
+ Sectors YoY Index:
 Brewers
 Utilities
 Food
 Personal care
 Tobacco
- Sectors:
 Insurance
 Mortgage Finance
 Gambling
 Automotive
 Consumer electronics
23

24. Marketing in A Recession –
Voices from the Past
What connects these products? Marketing clients
All launched in a Recession by … a clue
Launched in: First ever
Store Label?
1920
Resourceful 1974
Premiumisation
1929
Creating
a new
category
1982
Industry Joint Venture
24

25. How Are Marketers Responding to This
Recession?
 Buy a truck and get a car free
 Pay what you can / what you think it is worth
 Consuming differently
• Swap/share (zwaggle.com)
• Rental (zipcar.com)
The end of supersize
Little luxuries
25

26. How Are Marketers Responding to This
Recession?
Value Reframing
Bring your travel mug instead of their
paper cups and receive 20 cents off.
“Says its hybrid electric water heater ... will save consumers
approximately $250 annually.
Says that switching to its latest models of water-conserving
shower heads, toilets and faucets saves a family of four
between $90 and $200".
The Stimulus package is a Value Reframing - replace your old
product with a new product which will save you money!
26

27. How Are Marketers Responding to This
Recession?
Value Sizing
only use what you need /
what is good for you
Down count, down size; smaller Right size the product to the
package; Compacted so you use it specific need (e.g. Single use)
27

28. How Are Marketers Responding to This
Recession?
Increasing marketing spending during a recession
greatly speeds recovery post-recession.
Marketing Spend does not damage ROI significantly in a recession and helps set the
platform for strong recovery
ROI During Recession (%) Increase in ROI During Recovery (% pts.)
20% 6
5 4.3
15% 4
10% 3
9% 8% 2 0.6
10% 1
0
5% -1
-2 -0.8
0% -3
Cut Maintain Increase Cut Maintain Increase
Marketing Spending Marketing Spending
Source: Roberts, Keith. What Strategic Investments Should You Make During a
Recession to Gain Competitive Advantage in the Recovery , Journal of Strategy & 28
Leadership, Vol. 31, Issue 4

29. How Are Marketers Responding to This
Recession?
Delivery - In Store Fundamentals
 Fundamentals are critical when a recession exists.
 Ensure your in-store fundamentals are working:
• POS materials
• Category line-up
• Shelf – location
• Return to basics in store!
29

30. How Are Marketers Responding to This
Recession?
Price Optimization
Costs have increased and retailers are demanding more
and competing harder. Fully understand price to
optimise your profit!
The need to try and ensure
your product is priced at
the right price point for the
consumer context and
channel.
30

31. How Are Marketers Responding to This
Recession?
Discounting
 Offer Steep Discounts Profits Evaporate
 Post Discounts Impacts Sales
 What to do?
• Generate ideas for discounting things peripheral to your
brand rather than your core competency/brand.
 Auto makers – financing rather than the vehicle.
 Retailers – rather than the product itself free shipping or discount the
warranty.
 Carbo beverage – regular price for single, adjacent to deal for 36.
Preserve the value of your brand while delivering the
greater value that consumers want during tough times.
31
Harvard Business Review Jan 19, 2009

32. How Are Marketers Responding to This
Recession?
SKU & Portfolio Optimization
 Range
• Do we need all the different skus? Rationalise to
increase efficiency
• Clear the clutter, non-performing sku’s/ brands
32

33. How Are Marketers Responding to This
Recession?
Optimize Packaging
Improving impact and communication on-shelf will pay back FAST
Your products speaks for you at shelf,
the consumer connection point.
cogn ized!
Ge t Re
33

34. How Are Marketers Responding to This
Recession?
Sustainability
 Product & Refills
 Fuel Efficiency
(Home, Car, Electronics)
 Package - neutral carbon footprint
 Monitor & Proclaim your contribution
 Consumer & Employee Engagement
34

35. How Are Marketers (Retailers) Responding to
This Recession?
Concentration of Power in Retailing
The business of retailing is continuously reinventing itself
35

36. How Are Marketers (Retailers) Responding to
This Recession?
Control Label Brands
36

37. How Are Marketers (Retailers) Responding to
This Recession?
Fragmentation and Higher Cost of Communication
Video Technology Continues to Change and Expand
1995 2000
2000 2007 2010
TV Distribution TV Distribution TV Distribution
•Over-the-air TV •Over-the-air TV •Over-the-air TV
•Analog Cable
•Analog Cable •Analog Cable
•Digital Cable
“the right time to be touting
•Digital Cable •DTH Satellite
Personalization •DTH Satellite •Wireless Cable (MDS)
?
•IPTV
•VCR
•Specialty TV your products is when
Personalization
•Internet
shoppers TV
•Specialty are ready to buy.”
•VCR Personalization
•Pay TV •VCR
•Specialty TV
•Pay TV •Pay TV
•DVD Player •DVD Player
•PPV •PPV
•PVR
•VOD
Portable •Video downloads
•DVD Player •Video streaming
Portable
•DVD Player
•Digital Video Player
•Mobile phone
•Laptop computer
•Smart phones
37

38. How Are Marketers (Retailers) Responding to
This Recession?
The Evolution of Shopping
 Shopping has evolved from the activity of FULFILLING
DEMAND to an opportunity for CREATING DEMAND
Why?
The aisle is superior to out of store medium in providing
access to the target group of users at a critical time.
How and when will the evolution be complete?
When retail completes its current transformation from
distribution channel to a place that stimulates your senses
and emotions
38

39. How Are Marketers (Retailers) Responding to
This Recession?
39

40. How Are Marketers (Retailers) Responding to
This Recession?
Partnerships
Springboard - CONCIERGE®
CONCIERGE® is an interactive touch-screen com puter that
transform a shopping cart into a friendly assistant that guests
s
w t be able to live w
on’ ithout. The m ent the cart is put in
om
m otion, the LCD screen com to life offering help, new
es
products, how-to-tips, and recipes.
40

41. How Are Marketers (Retailers) Responding to
This Recession?
Partnerships
Springboard - CONCIERGE® …continued
 Personal Account Recognition
 Product Scanning
 Shopping List
 Weekly Flyer
 Recipes
 Product Finder
 Targeted Advertising
(both location and segment based)
 Shopping Cart Tracking
41

42. How Are Marketers (Retailers) Responding to
This Recession?
Core Benefits
 Enrich Customer Relationships
 Increase Customer Frequency
 Enhance Store Profile
 Generate Customer Insight
42

43. How Are Consumers Responding to This
Recession?
• Choosing different products
• Growing use of discounters
• Further erosion of Loyalty (both to brands / retail
banners)
• Premium and Cheap are Winning
• Switching to Private Label
43

44. How Are Consumers Responding to This
Recession?
SHORTER TERM
• Taking advantage of deals
• Reusability
MEDIUM TERM
• Seek durability
• Less willing to follow the fashion
– purchase cycles will get longer
44

45. How Are Consumers Responding to This
Recession?
• Apprehension of credit – either reluctance or forced
• Consumers will buy the central product… but they
may do without the peripherals warranty
monster cables
satellite
stand speakers
45

46. How Are Consumers Responding to this
Recession?
Feb 26, 2009
267,000
references
Today
7,210,000
references
46

47. Ipsos Can Help!
A Portfolio of Innovation, Brand & Communication Products
to Build Your Brand- Today!
Inno Evolution Forecasting Brand
InnoSpeed – Pack Evolution – Designor – Perceptor Plus – Brand
Volume
Advertising
Idea/concept Packaging forecasting range positioning and brand equity
generation optimization with of products Market Landscape –
InnoScan – eye-tracking Perceptual map of market to
Idea screening module identify white
InnoScreen – Line Evolution – space/optimize positioning
Concept Line optimization Brand Stretch –
screening Price Evolution – Assesses brand extension
InnoTrack – Price optimization potential
Post-launch Segmentation Toolkit –
tracking Best practice segmentation
Communications tools
ConsumerScape –
Next*Idea Brand*Graph – Needs-based seg tool to
Brand/Adv
Next*TV – Pre- Assessment understand subconscious
market Idea and motivations
Adv Assessment
47

48. Thank you for your time.
June 2009 Nobody’s Unpredictable