••• consumer research
Corporate America finds favor
Amazon retains highest Reputation Quotient in three dimensions
As the U.S. economic recovery continues to show signs of improvement, the number of consumers who be-lieve corporate America’s reputation has improved has increased 25 percent over 2013 and doubled that in 2012, according to the 2014 Harris Poll Reputation Quotient (RQ) study from Rochester, N.Y., research company Harris Interactive, which surveys 18,000+ members of the U.S. general public to measure the reputations of the 60 most visible companies in the country.
While the overall perception of U.S. companies indicates room for improvement, the American public is slowly but steadily gaining confidence in corporate America. According to the RQ study, people now view corporate America more positively than they did prior to the start of the economic decline in 2008.
Another positive signal that the public’s faith in corporate America is being restored is an overall increase in RQ scores across the board. This year, scores ranged from 83.87 (Amazon.com) to 55.34 (Bank of America), with no companies falling in the “very poor” or “critical” stage. This marks the first time since 2007 that no companies in the study received a “critical” stage RQ score of less than 50. Nine companies achieved RQ scores above 80, the standard for “excellent” reputation.
The Harris Poll RQ study measures six dimensions that comprise reputation and influence consumer behavior. Topping the list again in 2014 is Amazon.com, which continues to transcend physical boundaries and dominate three of the six reputation dimensions measured in the survey (Emotional Appeal, Products and Services and Workplace Environment). Gaining high marks for attributes including trust, admiration and respect; high quality products and services; innovation; and being a good place to work, this is Amazon’s sixth consecutive year with an excellent rating.
The Coca-Cola Company jumped from sixth to second place this year and is the only company to be ranked in the top five on all six reputation dimensions. Demonstrating a nearly unmatched show of reputation consistency, The Coca Cola Company’s RQ score has hovered around 80 for all 15 years of the study.
Perhaps one of the most significant increases of the year is the Honda Motor Company, which jumped from the 25th spot in 2013 to rank in the top five in 2014. With an increase of 6.7 points, this puts Honda back in the top 10 for the first time since 2007. Honda’s rise is reflective of the automotive industry, which has seen an 11 percent increase in positive ratings since 2012.
On the tech front, Samsung, a relative newcomer to the RQ most visible companies list after appearing for the first time in 2012, landed in seventh place and achieved its first-ever excellent rating. Microsoft jumped from spot 15 to nine, achieving its 11th excellent rating in the last 15 years.
••• advertising research
In ads we trust
Which tactics work for creating convincing claims?
Consumers have grown skeptical of marketing and advertising claims but trust varies depending on both what tactics are used to make a claim and on the industry itself. According to a study from London research company YouGov, many of the common advertising tactics like comparative advertising, scientific endorsements and awards claims may be counterproductive, putting consumers on alert.
Although 16 percent of Americans think they are more likely to believe an advertising claim that includes the testimonial of a scientist or expert, that expert makes them 29 percent less likely to believe in an ad. Ads making comparisons with brand competitors are more likely to be believed by 15 percent but less likely to be believed by 26 percent.
By vertical, advertising from the restaurants, clothing stores and consumer electronics categories are the most trusted, with diet products, financial services, pharmaceutical and cars the least trusted. A quarter of Americans are inclined to believe that the advertising claims for casual dining restaurants realistically reflect the features and capabilities of the restaurants. Fast-food advertising is less well-trusted, with only 16 percent believing their advertisements accurately represent the restaurant chains, though this is still higher than many other categories.
Women (23 percent) are more likely than men (16 percent) to believe that clothing store advertising offers an accurate description of the features of the stores, whereas men (17 percent) are more inclined than women (12 percent) to feel consumer electronics advertising delivers a fair representation of product features.
Advertising campaigns for diet products are considered least trustworthy by one-third of Americans, followed by financial services products, which are distrusted by just over one-quarter. Men are particularly suspicious of financial services ads, with 31 percent of men compared to 22 percent of women dubious of claims made. Despite – or perhaps because of – the mile-a-minute pharmaceutical disclaimers, prescription medications didn’t fare well, as their ads are distrusted by 23 percent. Although 20 percent believe that auto ads are not to be trusted, 16 percent say they buy the cars despite not trusting the ad.
A take on teen shopping today
Food overtakes clothing as top spending category
While teen spending declined just 1 percent from the fall of 2013, compared to more substantial declines in previous years, across the upper and average income groups, teen male spending is up 4 percent and female teen spending has continued mid-single-digit declines, according to research from Minneapolis investment group Piper Jaffray. An increase in teen male spending more has historically signaled inflection in broader spending and for the first time in the survey history, food exceeded clothing as a percentage of the teen spending.
Overall, parent contribution to teen spending bounced back to the 65-percent-of-spend range, following a pe-riod of contraction. Teen unemployment remains elevated but off of peak levels. Time priorities have shifted, year-round single-sport/activities are more common and school years are starting earlier and ending later (short-ening the opportune summer employment period).
Instagram ranked as the most important social network, exceeding Twitter and Facebook for the first time. Ca-ble subscriptions are becoming less essential for teens at home, while online streaming is more critical. Out of home, IMAX continues to grow its share among teens. Music/radio listenership has grown for Pandora and local radio, largely at the cost of MP3s and CDs.
Influences remain consistent, with friends dominating both upper-income and average-income, followed by the Internet. The Internet first displaced television as the No. 2 influencer with teens in the fall 2010 survey and the report indicates that this uptrend will likely continue as social networking and online shopping drive teens online.
The teen food category represents restaurants and dining out. The study uncovered a modest increase in spending devoted to events (including concerts, festivals, etc.). Within the fashion category, clothing increased modestly at the expense of footwear and accessories. In addition, there has been a continuation of a life-style/participation-based trend in athletic fashion. These data points are evidence of a trend toward experiences versus items worn and a notable shift in perceived status spending.
Shopping frequency has declined from a peak rate of 38 trips per year to 29 trips per year (one every 1.75 weeks). Fall 2013 appears to have marked the low point at 28 trips. Mall traffic in the teen space has declined 30 percent cumulatively in the last 10 years. Teens are browsing more often via their mobile devices, shopping with purpose (conversion rates are up), buying when they have a real or perceived need and visiting the mall less for entertainment value.
Teens prefer off-price venues to traditional department stores for their fashion needs and are increasingly shopping online and on their phones. When asked about preferences between shopping in store and online, about three-quarters of the females polled prefer stores over sites but the males are closer to a 50/50 split. Moreover, when asked about preferences between pure-play e-commerce sites and sites associated with stores when shopping for clothing, only 14 percent of females and 24 percent of males prefer the pure-play e-commerce sites.
••• data privacy
Onus is on us
Consumers unsatisfied with current state of information protection
Time is ticking for companies to crack the code of online security. According to a study from Radius Global Market Research, New York, the issue ranks supreme on consumers’ social issues radar and they are ready to abandon brands that they feel cannot be trusted. Consumers largely feel it is a marketer’s responsibility to protect information and currently they don’t think anyone is doing it well.
Perhaps most startling is the degree to which consumers are personally concerned about protecting their per-sonal information. When asked which social issue is most important to them, online security (87 percent), online privacy (85 percent), identity theft (83 percent) and fraud (79 percent), topped the list ahead of health insurance (78 percent), unemployment (71 percent), obesity (51 percent), natural-disaster relief (62 percent), bullying (66 percent) and gun control (61 percent).
More than three-fourths of consumers indicated that they would stop doing business with companies that they felt had violated their privacy. A majority said that simply reading or hearing about a company’s security breach makes them less inclined to buy/shop there (69 percent). Consumers try to only do business with companies that they feel can handle their data (67 percent).
When asked which industry they feel is doing the best job at keeping their information safe, no clear leader emerged, with “no industry” ranking the highest (29 percent). Across every industry but one, consumers feel that the responsibility for online security falls squarely on the company. The single exception is with social media sites like Facebook, Twitter and Instagram, where more consumers feel it is their own responsibility to keep information secure.
In search of greener produce
Lower price and uncluttered aisles motivate consumers to switch grocers
One-third of subscribers surveyed by Consumer Reports said they had given the heave-ho to a nearby grocery store, as 43 percent left a grocer in search of lower prices (up 15 percentage points from a previous survey) and about 25 percent cited poor selection, long lines or lousy food. Another 17 percent blamed employee rudeness and 14 percent cited the crowds. High food prices and high unemployment are at least partly to blame for consumer willingness to switch stores.
Of the readers surveyed, more than half (56 percent) had at least one complaint about their current store; al-most one-third cited two or more. The biggest gripe overall: not enough open checkouts, followed by congested or cluttered aisles and advertised specials that were out of stock. Other irritants included inept bagging, missing prices and scanner overcharges.
No chain tried its customers’ patience more than Walmart Supercenter, where 80 percent of shoppers had at least one problem. Shoppers who frequented Walmart, the nation’s largest grocer and the chain with the most shoppers in the survey, were most likely to be miffed about the lack of open checkouts, out-of-stock regular items, indifferent employees, spotty pricing and a confusing store layout. Thirteen percent of respondents shopping at Shaw’s (New England) said they’d been overcharged, almost twice the average rate.
Fortunately, most consumers have several shopping choices and some supermarkets gave customers much of what they want. Among the top stores were national grocers Costco, Trader Joe’s and Whole Foods, as well as regional players such as Wegmans (East), Publix (South) and survey newcomer Sprouts Farmers Markets (in eight Western states), which showcases fresh and whole-grain food.
Walmart, despite its problems and subpar perishable foods, was praised for low prices. The chain’s ware-house-club sibling, Sam’s Club, outscored Walmart in key ratings categories (service, perishables, cleanliness and price).
Over the years, Consumer Reports’ supermarket ratings have been quite consistent. The 2013 survey marks the fourth straight survey (the earlier ones were in 2005, 2008 and 2011) in which Wegmans, Trader Joe’s and Publix have been at the top and Walmart, Pathmark (Northeast) and Shaw’s near the bottom.