Search pays for CPG makers
Researcher ComScore Inc., Reston, Va., has released findings from a study analyzing the role of online search in generating Web site traffic for a number of consumer packaged goods (CPG) categories, including baby care, personal care, home care and packaged food. The study, “The Digital Shelf: the Opportunity for Search Marketing in Consumer Packaged Goods,” was conducted in partnership with Procter & Gamble, Yahoo!, and the Search Engine Marketing Professional Organization (SEMPO) to help the CPG industry better understand the opportunity to grow sales using search marketing.
“While search marketing has long been recognized as an effective direct response vehicle, it’s been largely overlooked by CPG companies who focus on brand advertising and promotional efforts to drive in-store purchasing,” says Gord Hotchkiss, chairman of SEMPO. “This study seeks to demonstrate the potential brand-building impact of search for CPG marketers.”
Search appears to represent a significant marketing opportunity for CPG brands. The study found that a majority of U.S. consumers visited Web sites for CPG product categories during the three months ending April 2007, with search driving a significant percentage of visitors in all the categories. Food products represented the largest search marketing opportunity with nearly 44 million category site visitors searching. Baby products attracted 15.7 million searchers, followed by personal care products with 9.8 million and household products with 1.7 million.
The study also found that a substantial percentage of the visitors to category Web sites arrived as a result of a search query. Among visitors to baby products sites, 60 percent arrived via search, followed by 47 percent in food products, 27 percent in personal care products, and 23 percent in household products.
As part of the study, comScore conducted a survey to determine the attitudes of visitors to CPG Web sites, dividing respondents into two segments: those who use search to find these sites and those who do not. The survey revealed that searchers were significantly more involved in obtaining information and demonstrated higher category engagement than non-searchers. Specifically, 73 percent of searchers were motivated by product research, 64 percent were seeking help with the purchase decision, 47 percent were looking for promotions and just 29 percent were specifically looking for the company Web site. Conversely, non-searchers’ top motivation was to obtain information on promotions (59 percent), to conduct product research (58 percent) or to obtain help with their purchase decision (44 percent).
“Our deeper understanding of the motivations around search behavior underscores the opportunity to leverage search for more than just direct response marketing,” says Randy Peterson, search innovation manager at Procter & Gamble. “Search may be one of the most effective means of reaching qualified consumers when and where they are most receptive to learning about our brands. Ultimately this drives offline sales.”
In addition to quantifying the extent of search activity and measuring consumer motivations, the study also profiled consumers across a variety of dimensions, including category purchasing, attitudes and demographics. On every dimension analyzed, packaged goods category searchers represented a highly attractive target segment. Perhaps most compelling, searchers spent approximately 20 percent more than non-searchers across the four categories studied, further confirming the importance of search as a potential driver of offline purchase behavior. For more information visit www.comscore.com.
San Francisco, Seattle top cities for organics consumers
The West Coast is a stronghold for organics consumers, according to a recent analysis from Scarborough Research, New York. Scarborough found that 35 percent of San Francisco adults used organic foods during the past month, making it the top U.S. city for organics users. (Defined as adults who used any organic food product in their household during the past month.) Seattle (32 percent of Seattle adults used organic foods during the past month), Portland, Ore. (27 percent), Washington D.C. and Denver (26 percent, each) and San Diego (24 percent) round out the top markets for organics consumers. In the total U.S., 17 percent of all adults are organics users.
Out of the 79 local markets measured by Scarborough, 23 were identified as organics markets, or those markets that have an above-average percentage of organics consumers. Of these 23 organics markets, more than half (13 cities) are in the Western census region, more than one-quarter (six cities) are in the Southern census region, three cities are in the Northeast, and one is in the Midwest (Minneapolis).
“The top five markets for organics consumers have youth, higher than average annual household incomes, and a fitness mentality in common,” says Alisa Joseph, vice president, advertiser agency services, Scarborough Research. “Cities such as San Francisco and Seattle have long been known for active, healthful lifestyles and therefore it makes sense that these are the top markets for organics users. However, the industry should keep an eye on the Southern region of the U.S., as many markets there have a significant presence of organics consumers as well.”
Nationally, organics consumers spend an average of $127 on their weekly household grocery bill - 10 percent higher than the national norm of $115. This is not surprising, given that organics consumers tend to be in high income brackets. Their annual household income of $86,000 is 22 percent higher than the national average. Organics consumers tend to be young and have families - they are 19 percent more likely than the national average to be ages 18-34 and 13 percent more likely to have two or more children at home.
Whole Foods has the highest concentration of organics consumers in its aisles. Wal-Mart Supercenter, the leading grocery store in the country, is also the top grocery store for organics users. Twenty-nine percent of organics consumers shopped Wal-Mart Supercenter during the past week.
However, when it comes to retailers that have a special appeal to organics consumers, Whole Foods leads the pack. Organics consumers are 272 percent more likely than the average consumer to have shopped Whole Foods during the past week. By contrast, they are 21 percent less likely to have shopped Wal-Mart Supercenter during this timeframe.
Other grocery stores that have a higher than average concentration of organics consumers include Trader Joe’s (organics consumers are 180 percent more likely than the average consumer to have shopped Trader Joe’s during the past week); Safeway (72 percent more likely); Costco (70 percent more likely); and SuperTarget (50 percent more likely).
“An organics user’s local grocery store availability will dictate where they shop. Whole Foods and Trader Joe’s have established themselves in the organics market, and as such are more popular among organics users. However, a high percentage of organics users shop prominent U.S. stores such as Wal-Mart due to its significant local market penetration,” says Joseph.
Wine is a popular beverage among organics consumers. One in four organics users aged 21+ bought wine at a grocery store during the past month, and they are more likely than the total 21+ market to have bought all types of wine - from sparkling and white wines to reds and roses. Beer, particularly imported beer, is also a popular beverage item. Almost one-third (31 percent) of organics shoppers drank an imported beer during the past month, versus 20 percent of the total 21+ adult population. Organics consumers are 24 percent more likely to have bought beer at a grocery store during the past month.
The Scarborough data cited here is from Scarborough USA+ Release 1 2007 (six months only). All U.S. regions identified are census regions. All grocery store data is based on adults who shopped the individual stores during the past week. All alcoholic beverage data is based on adults ages 21+ only. For more information visit www.scarborough.com.
Fewer consumers prefer health plan that pays them back
When it comes to health care expenditures, losing money feels worse, dollar for dollar, than gaining money feels good. That’s the conclusion of researchers at Princeton University’s Institute for Advanced Studies who, in conjunction with Survey Sampling International (SSI), Fairfield, Conn., recently conducted a health care plan study. The survey found that people like to pay a standard monthly fee and co-pays for preventive tests when they are reimbursed for taking the tests.
SSI conducted an online survey of 1,000 U.S. respondents in June 2007. Participants were randomly assigned to two groups - half were asked to review a “prepay” plan and half were asked to review a “payback” plan.
One group of respondents was asked to compare a standard insurance plan - where the insured pays a monthly fee and co-pays for tests, visits to the doctor, etc. - to a payback plan where the insured pays a higher monthly fee and the insurance company pays the insured to get important health tests and screenings. The survey revealed that 58 percent preferred the standard plan and 42 percent preferred the payback plan.
The other group of respondents was asked to compare the standard plan with a prepay plan where participants pay the same monthly fee but they also prepay the co-pays for routine tests, screenings, etc. If they go to their health care appointments, they are reimbursed; if they don’t, the money is forfeited. In this survey, 44 percent preferred the standard plan and 56 percent preferred the prepay plan.
“This suggests to us that people like the element of self-control,” says Janet Schwartz, a Princeton researcher. “Payback is nice and reduces some of the negative emotion produced by having to pay for things that are unpleasant, but it’s not really enough to make the plan more attractive than the standard plan. Pre-payment confronts two issues: one, that people shouldn’t have to add the ‘pain’ of financial loss to the discomfort of having tests; and two, that the prepay plan addresses the issue of self-control. ‘If I don’t go for my mammogram, I lose $50.’”
The fact that people preferred the prepay plan over the payback plan is very interesting, says Schwartz. “It suggests that people are more attracted to plans that will motivate behavioral change and self-control than to pure economic incentives to engage in routine preventive care.”
“People have self-control problems,” says Princeton researcher Dan Ariely. “They want to do things that are good for them – like dieting, going to the gym or saving money – but they have a hard time executing their ideals. However, when people procrastinate on preventive health care, they sometimes suffer grave consequences.
“We wanted to see if people would be willing to sacrifice money to gain control over their lives,” Ariely says. “Would they be willing to pre-pay $250 for a colonoscopy and get the money back if they show up on time for the procedure? They are risking losing the money by pre-paying. We wondered if pre-paying could motivate people to get the preventive care.”
Survey Sampling will be fielding additional rounds of the study to help determine the optimal alternative health care plan. Ariely says he plans to take the “best” plan to a small company that pays for employees’ health care but does not do so through a health care organization. “We will ask them to implement this program for one year,” Ariely says. “Based on that outcome, we will approach health care providers.” For more information visit www.surveysampling.com.
Mortgage crisis leads to household spending cutbacks
A study by New York researcher TNS on consumer reaction to the subprime mortgage crisis in the United States found that one-third of adult Americans plan to cut back on spending because of the effects of the crisis, with consumers citing major cutbacks in home improvement/ furniture, travel for leisure/vacations, entertainment (e.g., movies, sports and concerts) and technology purchases.
Those with children under 18 years of age are significantly more likely to cut back on travel for leisure/vacations (21 percent) and home improvements (23 percent); only 2 percent of the population plans to cut back on their children’s education.
When laying blame, seven out of 10 Americans charge subprime mortgage lenders with creating the crisis, followed by the real estate/housing industry at 60 percent, the subprime mortgage borrowers at 58 percent and investors at 57 percent.
Research shows that 76 percent of consumers believe that the subprime mortgage crisis is “just as serious” or “more serious” than the dot-com crisis; however, there are other pressing issues on their minds. Another terrorist attack, the war in Iraq and the U.S. health care system were Americans’ top three concerns ahead of the subprime mortgage crisis, which came in sixth place.
These results show the subprime mortgage crisis will impact spending habits, says Bob Neuhaus, executive vice
president, financial services, TNS North America. “Coupled with the fact many people blame lenders, it is an opportune time for financial institutions to recalibrate their brand image and client interactions by tailoring services to address their customers’ financial anxieties.”
The study is based on a representative national sample of 2,500 people aged 18+ in the TNS 6th Dimension Access Panel. The Internet-based survey was conducted September 20-23, 2007. For more information visit www.tns-us.com.
Americans like American food when dining out
American adults have their choice of many different cuisines when it comes to eating out. From pasta to burritos, the choices are almost endless. But what do Americans choose when eating out? American food, of course!
Over one-quarter (28 percent) of U.S. adults say American food is what they are most likely to choose if they had the choice to go out to a restaurant and eat one type of food, according to a Harris Poll by Rochester, N.Y.-based Harris Interactive. Just under one-quarter (22 percent) say that they would most likely choose Italian while 17 percent would choose Mexican and 16 percent would choose Chinese if they had the choice to go out to a restaurant. Japanese is the next choice, as 7 percent say they would choose this type of cuisine. Much further down the list are Indian (2 percent say they would choose) and then French and Middle Eastern cuisine (1 percent would choose each). Finally, 4 percent say they would choose another type of food.
Americans in all regions know their preferences. One-third of Southerners and 27 percent of Midwesterners stick with American food. In the East, almost one-third (31 percent) say Italian food is their top choice while over one-quarter of Westerners (27 percent) pick Mexican. Japanese cuisine also gets a spike in the South as one in 10 Southerners say it is their top choice.
When it comes to age, there are also some differences. For matures (those aged 62 and older), American is tops as two in five (41 percent) say it is the food they are most likely to choose. Both Baby Boomers (those aged 43-61) and Generation Xers (those aged 31-42) also keep American food as their top choice (28 percent and 25 percent, respectively). But for Baby Boomers, Chinese moves into third place as almost one in five (19 percent) say it is the type of food they are most likely to choose. For Gen Xers, Mexican becomes their second choice as one-quarter (24 percent) would choose this type of cuisine. The youngest group, Echo Boomers (those aged 18-30) have a different top choice as 23 percent of this age group would choose Italian food followed by one in five (21 percent) who say American food.
Level of education also impacts choices. One-third (34 percent) of those with a high-school education are most likely to choose American food as would 26 percent of college graduates. One-quarter of those with some college education (24 percent) and with a post-graduate education (25 percent) say they are most likely to choose Italian food when they go out to a restaurant. For more information visit www.harrisinteractive.com.