Archive for December 11th, 2008

Just say "no" … 62.7% oppose Detroit 3 bailout loans … Dems split …Congress says "let's roll"

December 11, 2008
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    http://www.ibdeditorials.com/PollsPopUp.aspx?id=313629919786029

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    Excerpted from Rasmussen Reports,”14% Say Federal Government Will Run Big Three Better”, December 09, 2008

    Nonetheless, Congress and the White House are fast reaching a deal on a bailout plan for the Big Three that many suggest is just a step short of nationalizing the U.S. auto industry since it gives the federal government a say in how the automakers spend their money and what kind of cars they build.

    The short-term loan plan being worked out in Washington calls for the creation of a federal “car czar” who will develop benchmarks by which to measure the automakers’ restructuring and who will have the power to push management, unions, shareholders and others to implement changes

    A longer term bailout plan proposed by President-elect Obama goes even further. “It could mean that the government would mandate, or at least heavily influence, what kind of cars companies make, what mileage and environmental standards they must meet and what large investments they are permitted to make,”

    But only 14% of U.S. voters think the Big Three automakers will run better if they are run by the federal government.

    While voters display little confidence in government control of the automakers, 59% say senior managers of a company should be replaced if taxpayer funding is provided to keep the company afloat.

    Full article:
    http://www.rasmussenreports.com/public_content/business/general_business/just_14_say_federal_government_will_run_big_three_better

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Letting the Chicken Loose to Understand the Bottom of the Pyramid

December 11, 2008

Excerpted from WSJ, ” McCann Offers Peak Lives of Latin America’s Poor” By Antonio Regaldo, December 8, 2008

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During presentations at McCann Worldgroup’s office in Bogotá, Colombia, staffers have taken to letting a chicken loose to hunt and peck around clients’ feet. Racks of potato chips and other products on display in McCann’s Mexico City conference room, which has been designed to look like a bodega…

The point of these exercises: to give big marketers some insight into the lifestyles of Latin America’s low-income consumer…McCann’s move comes as multinational companies increasingly consider such “emerging consumers” as a big opportunity. But these consumers’ tastes, habits and needs remain largely an enigma to global marketers…

McCann’s research is helping Nestlé market Nido Rindes Diario, a brand of fortified powdered-milk product…one of Nestlé’s challenges was to overcome the perception that milk powder is a specialized formula for babies, and too expensive for the whole family to drink. McCann says its research helped position the product…

The idea of targeting low-income consumers may raise some eyebrows. But greater access to industrialized products like deodorant, and packaged food, can improve their physical and “psychological welfare…We do not pretend to be Mother Teresa”…

Advertisers say practical insights into low-income groups are hard to come by. “A lot of people talk about the emerging consumer, the bottom of the pyramid, but no one really has a structured approach…We have to do a lot for ourselves, and sometimes fall on our face doing it.”

In Mexico, Nestlé decided to sell Nido Rindes Diario exclusively through mom-and-pop stores, not supermarkets…That decision came after McCann found that local shopkeepers exert outsize influence in tightly knit, low-income neighborhoods. “It’s the shopkeeper who can recommend or disavow a product,” he says…

Some experts say marketing directly to low-income groups has yet to become a full-blown trend. “Usually multinationals just put out a Mexican version [of their product] that looks as American as possible”…But examples of products tailored to thin pocketbooks are increasing…

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According to the theory of the bottom of the pyramid, there is a combination of profit opportunity and social responsibility to be had by marketing to consumers at the bottom of the economic pyramid. Critics of the theory argue that the benefits of marketing to this group are overstated and that marketing to this group can be exploitive.  Whether the profit opportunity is real or a mirage, McCann is taking the right steps to help Nestle benefit from this group by working to understand the group’s purchase desire and developing tailored solutions for the market to ensure that consumers are able to access the product.

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http://online.wsj.com/article/SB122824726034173129.html

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Consumers Go Cheap as Brand Loyalty Suffers

December 11, 2008

Excerpted from WSJ “At the Supermarket Checkout, Frugality Trumps Brand Loyalty” by Ellen Byron, November 6, 2008 

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When Summer Mills visited her local CVS drugstore recently, to save a few dollars she bought the store-brand facial scrub rather than the Olay she normally uses.

“I thought I’d be able to tell the difference, but I couldn’t — I looked at the ingredients and they seemed almost the same,” says Ms. Mills…On her next shopping trip, “I’m going to buy the store-brand moisturizer and cleanser — it’s less money.”

Many Americans are changing their everyday purchases and abandoning brand loyalty, prompted by the persistent financial pressure of rising food, gasoline and electricity prices. Over the past 24 months, consumer prices have risen 7.8%…From coloring hair at home instead of at the salon to trying cheaper laundry detergents, new evidence indicates that Americans are modifying even minor household habits to save money.

Kimberly-Clark’s CEO noted that sales of the company’s potty-training pants, once one of the biggest sales-growth products in the baby aisle, have fallen off in recent months. “You’re seeing consumers leaving children in diapers longer…the diaper is less expensive per piece than a training pant”...Shoppers are even buying toilet paper differently. “When they get to the end of the month, and they’re out of paycheck, they may buy a smaller-count pack”…

To be sure, overall sales of name-brand goods are still higher than those of store brands. Still, about 40% of primary HH shoppers said they started buying store-brand paper products because “they are cheaper than national brands”…Store brands on average cost 46% less than name-brand versions, Mintel found…

Paper napkins suffered the steepest declines over the past year, followed by facial tissue and paper towels. “Not surprisingly, toilet tissue is holding up the best,” Mr. Lockwood says.  Laundry habits are changing, too. Early signs indicate shoppers are switching to cheaper detergents and softeners, a rare shift in one of the most brand-loyal product categories…

Though low-income consumers have been cutting back for the past several months, now upper-income shoppers — those with household incomes of $100,000 or more — also are making significant changes…

“This isn’t belt-tightening, it’s belt-notching…These ritual changes are much deeper and happening much faster than we expected”…

Shoppers’ changing behavior prompted P&G to alter its marketing approach and focus on in-store promotions. “More decisions are made in the store, and we have to be competitive,” CEO A.G. Lafley said…

[Household Spending Habits]
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Full article:
http://online.wsj.com/article/SB122592835021203025.html

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