••• loyalty research
Loyalty programs flourishing but need tending
Watching out for ‘app-athy’ 
Enrollment levels in consumer loyalty programs have reached an all-time high as consumers continue to consider them valuable and credit them with influencing shopping behavior. According to a survey conducted by New York-based Bond Brand Loyalty, one-third of consumers agree they would not be loyal to the brand if it were not for a loyalty program and 70 percent of consumers modify when and where they shop to maximize points, up 13 percent over the past two years. In addition, loyalty programs were found to be a top contributor to brand loyalty, ranking higher than factors such as product and service availability, overall price and communications from the brand.
The survey engaged more than 10,000 consumers to uncover insights on brands and loyalty initiatives used in industries such as retail, consumer packaged goods, financial services, entertainment and dining. Key findings are included in the 2015 Loyalty Report, available for download at www.bondbrandloyalty.com.
While the number of programs in which members are enrolled continues to grow, from about 10 programs per person in 2014 to more than 13 per person in 2015, the number of programs in which members are active is not experiencing the same level of growth. “While points and discounts drive behaviors, companies need to engage with consumers at a deeper level if they want to extend program loyalty into genuine brand loyalty,” says Scott Robinson, senior director of loyalty consulting and solutions for Bond Brand Loyalty. “This necessitates thinking beyond a program’s monetary incentives to focus on how it can better serve customers or make their experience with the brand more enjoyable, including fulfilling customer needs.”
According to consumers, the three top functional-based satisfaction drivers in loyalty and rewards programs are the appeal of the rewards, the ease with which rewards can be redeemed and the amount accumulated per dollar spent. However, experience-based drivers are equally as weighty in terms of their influence on overall program satisfaction. The three top experience-based drivers are effort to participate, the program meeting needs and enjoyment of program experience.
“Brands with established loyalty programs now must make the shift to the future of loyalty and an experience-based model that is consistent with the overall brand,” says Bob Macdonald, president and CEO of Bond Brand Loyalty. “It’s more important than ever that companies focus on their best customers – and their data – to design a more personalized and authentic experience, which can help build stronger, more meaningful bonds with customers.”
When it comes to mobile, strategic and creative approaches to engage consumers are equally essential. Almost 50 percent of consumers want to engage with programs via mobile, yet the study reveals the presence of what may appropriately be termed “mobile loyalty app-athy.” While 12 percent of consumers have downloaded a program app (up 5 percent over last year), 61 percent of smartphone owners are still uncertain if the loyalty programs in which they are enrolled offer a mobile app.
Only 30 percent of consumers surveyed strongly agree that loyalty program experiences are consistent with their brand or company experiences and nearly one-fifth strongly agree that it would be easy to replace a program with one from the competition, further illustrating the need for brands to build more unique experiences.
This year’s study profiles over 100 loyalty programs. The overall top-rated loyalty programs as determined by customers who said they were very satisfied with the programs were Amazon Prime (71 percent) and Kroger Fuel (70 percent). Industry leaders included Food Lion’s MVP Card (59 percent) and Cabela’s Club Rewards (55 percent) in retail; L’Oreal Paris Gold Rewards (60 percent) and General Mills Box Tops for Education (51 percent) in consumer packaged goods; Subway’s Subway Rewards (54 percent) and TGI Fridays Give Me More Stripes (62 percent) in quick-service restaurants and casual dining, respectively.
Programs that experienced the biggest increases in year-over-year satisfaction, as defined by customers who were very satisfied with the programs, were Subway’s Subway Rewards (31 percent increase), Barnes & Noble Member (31 percent increase) and The Children’s Place’s myPLACE Rewards (30 percent increase).
Programs that experienced the biggest decreases in year-over-year satisfaction were Best Buy’s My Best Buy (27 percent decrease), Outback Steakhouse My Outback Rewards (19 percent decrease) and Dove’s Dove Insider (13 percent decrease).
••• hispanic research
Hispanic consumers not sold on newer payment methods
Mobile adoption lags
With the buying power of the U.S. Hispanic market now eclipsing $1.2 trillion annually, marketers are more focused than ever on attracting this lucrative consumer segment to their brands. However, as the number of payment options available increases, the connection between purchase and payment has far-reaching implications – from how marketing should be planned to how products are distributed and even to how sales are forecasted and measured.
When it comes to using financial instruments, Hispanics’ monetary habits differ from those of the total U.S. population. According to Nielsen’s Share of Wallet Study, 44 percent of Hispanics use debit cards most often, while 34 percent prefer cash or check. Only 19 percent use credit cards most often, compared with 35 percent nationally. Hispanics also trail in using new technology for payments – 5 percent of Hispanics shop, bank and pay using mobile devices and 20 percent of Hispanics are mobile payers/mobile payment users. Beyond payments, only 15 percent of Hispanics are mobile bankers, compared with 65 percent non-Hispanic whites, 11 percent African-Americans and 7 percent Asian-Americans, according to Nielsen’s Q2 Mobile Wallet Report.
According to Nielsen data, two-thirds (66 percent) of total persons 18+ have an individually-owned credit card. Among Asians that increases to 80 percent, while penetration among Hispanics is 57 percent and 62 percent for African-Americans.
However, Hispanic consumers comprise many different groups, from their language to their origins. These subgroups have different purchasing habits and preferred methods of payment that can vary significantly from other ethnic groups. When breaking down Hispanics by the primary language spoken in the home, the percentage of English-only Hispanics who have an individual credit card is equal to the national average, and ownership among all Hispanics who speak at least some English is over 60 percent.
“The Hispanic consumer provides a plethora of engagement opportunities,” says Monica Gil, senior vice president, multicultural affairs at Nielsen. “Marketers and brands may have an advantage in reaching this population group by providing products and services that meet the needs of this demographic.”
Nielsen’s Share of Wallet Study was administered as an online English-language survey to a general population survey between September and November 2014. The general population sample included 5,028 respondents aged 18 years or older, weighted by gender, age and race. Oversamples were conducted of 1,442 Asian-American, 1,499 African-American and 1,568 Hispanic respondents aged 18 years or older. The over-samples included CATI methodology for Hispanics and offered Hispanic respondents the opportunity to take the survey in English or Spanish.
••• lifestyle research
Kids and parents view neighborhood safety differently
A green, well-lighted space
Differences in the way children and adults perceive the world extend to their sense of safety in their social and physical environments and this in turn can impact their health, say researchers at the University of Montreal and its affiliated Research Centre at CHU Sainte Justine, a children’s hospital, as reported by Newswise. “While we knew that a child’s sense of safety is informed by his or her own parents’ sense of safety, we did not know how the child’s own perceptions of their environment contributes to this sense,” says first author Carolyn Côté-Lussier, of the University of Montreal’s International Center for Comparative Criminology.
Firstly, the research team surveyed 500 8-to-10-year-olds and their parents. The families live in the Montreal metropolitan area and were asked about their perception of their urban environment and their sense of safety. This was then correlated with various objective factors, such as the demographic makeup of the neighborhood, its traffic patterns, its lighting and the presence of trees and green spaces.
Overall, children’s perceptions parallel those of their parents: If parents consider their neighborhood to be safe, so do their kids. However, kids’ feelings are not drawn from their parents alone. Children see the objective factors in their environment differently from their parents. “Parents consider high rates of single-parent families, a lack of trust among neighbors and the presence of graffiti, rundown buildings and heavy traffic as being indicative of an unsafe environment, while children feel safer than their parents if the streets are better lit and if there is more greenery,” Côté-Lussier says. She believes this is due to the fact that children are scared of the dark and because vegetation can reduce stress. “Planting trees is not just good for the environment, it also has a positive effect on the health and wellbeing of the population,” she says.
These same human and physical factors are also correlated with a sense of not feeling safe among teenagers at school. In a second study, involving 2,120 teenagers from across Quebec, the research team observed that poverty (whether chronic or occurring after the age of 10) only partially explains a sense of insecurity among teens.
“Poverty is a factor that increases the risk of victimization at school, but, youths’ feelings of a lack of safety are also linked to living in neighborhoods that parents describe as being demarked by the presence of litter, drug use and sales and groups of youth causing trouble. A high rate of single-parent families and a lack of green spaces also play a role,” Coté-Lussier says, noting that these environmental factors must also be addressed when intervening to reduce insecurity in schools.
The findings are important because feelings of safety can be a pathway linking poverty, the local environment and health. “Lower family incomes are associated with lower perceptions of safety in the neighborhood and at school, and this perception is in turn linked with a greater rate of health problems such as obesity,” Côté-Lussier says.
Studies also show that a low sense of safety is indicative of a poor quality of sleep, asthma, psychological distress and a lack of physical activity. “If the neighborhood is perceived as being less safe, children will be less likely to take physical exercise outdoors and more likely to spend time in front of a screen. Moreover, feeling unsafe could contribute to a deregulation of the endocrine system and to poorer health,” Côté-Lussier says.
••• financial services
Number of world’s ‘unbanked’ declines
Women are still underserved
Access to financial services and products has expanded rapidly across the globe in the past few years. The number of adults worldwide who report having an account at a formal financial institution or through a mobile device grew by an estimated 700 million between 2011 and 2014. Now, 62 percent of the world’s adult population has an account, which is up from 51 percent in 2011.
As reported by Gallup Inc.’s Peter van Oudheusden and Jan Sonnenschein, these results come from the 2014 Global Financial Inclusion (Global Findex) database, which measures the extent of account penetration, the use of mobile money payments and saving and borrowing practices in more than 140 countries. It updates the original Global Findex, which the World Bank launched in 2011 in cooperation with Gallup and is funded by the Bill and Melinda Gates Foundation.
Account penetration – defined as having an account at a formal financial institution or a mobile money account – remains highly unequal across regions. It is almost universal in high-income Organization for Economic Cooperation and Development (OECD) economies (94 percent), while slightly more than half of adults (54 percent) in developing economies have an account. Although many adults in developing economies remain excluded from the formal financial system, there is good news: Account penetration in the developing world is up 13 percentage points from 41 percent in 2011.
Accounts at financial institutions drove the increase in account penetration in all regions except sub-Saharan Africa, where almost one-third of account holders dial into the financial system using mobile money accounts. The rising popularity of these accounts helped push overall account penetration in the region to 34 percent, up from 24 percent in 2011. Outside sub-Saharan Africa, use of mobile money accounts remains limited, reported by 3 percent of adults in South Asia, 2 percent in Latin America and the Caribbean and less than 1 percent in all other regions.
South Asia and East Asia and the Pacific are home to about half of the world’s 2 billion “unbanked” adults. In South Asia, about 625 million adults lack account access and the same is true for about 490 million adults in East Asia and the Pacific. India, China and Indonesia alone account for 38 percent of unbanked adults globally. Sub-Saharan Africa has the next-largest population of unbanked adults, at about 350 million, or 17 percent of the global total.
Despite recent global growth, the gender gap in account ownership has not closed. Forty-two percent of women are unbanked, compared with 35 percent of men. Access to the formal financial system is also stratified by wealth. Half of the unbanked worldwide – 1 billion adults – belong to the poorest 40 percent of households. However, in developing economies, the gap in account ownership between adults living in the poorest 40 percent of households and those living in the richest 60 percent narrowed by six points in the past three years. But this decrease stemmed overwhelmingly from rising account ownership among the poor in East Asia and the Pacific; in all other regions, the gap remained about the same.
As in 2011, the most common reason cited for why adults remain unbanked is the lack of money. Fifty-nine percent list poverty as one of the reasons for being unbanked but only 16 percent cite it as the sole reason. In all developing regions except Europe and Central Asia, lack of enough money is the most commonly cited reason. It is important to add that just 4 percent say lack of need is the only reason they do not have an account, underscoring the unmet demand for financial services among the unbanked. Beyond this, the reasons residents are most likely to report vary according to local conditions. In sub-Saharan Africa, distance to financial institutions is the second-most commonly reported barrier, cited by 27 percent. In the Middle East, 41 percent of adults without an account say they cannot get one. This likely reflects prohibitive costs and documentation requirements for opening an account.
Three years ago, 2.5 billion adults worldwide were unbanked. Despite the progress since then, 2 billion adults remain excluded from the financial system with unmet needs and untapped market potential.
Findings also show that most of the unbanked do want to open an account. Two possible avenues to expand financial inclusion are digitizing payments – wage payments or government transfers – and formalizing saving practices.
Results are based on telephone and face-to-face interviews with approximately 1,000 adults per country, aged 15 and older, conducted in 2014 in more than 140 economies. For results based on the total sample of national adults, the margin of sampling error ranged from ± 2.5 percentage points to ± 5.2 percentage points at the 95 percent confidence level.
••• travel research
Luggage market poised for growth
Counterfeiters loom
According to a new report by New York-based Persistence Market Research, the global luggage market is expected to grow at a CAGR of 5.8 percent during 2014 to 2020 and to reach an estimated value of $43.4 billion in 2020.
Increasing urbanization and changing lifestyles are the key drivers for the global luggage market, according to the report, Global Market Study on Luggage: Travel Bags to Witness Highest Growth by 2020.
Technological advancements are further creating opportunities for luggage sales among high net-worth individuals, for whom safety is a major concern. Increasing travel and tours, rising business activities and growing numbers of educational courses are further propelling the demand for luggage. Luggage is sold through various types of distribution channels such as specialist retailers, factory outlets, supermarkets, hypermarkets and Internet sales. Owing to the boom in online commerce, luggage sales through the Internet have been growing at a significant pace.
To some extent, luggage is considered as a lifestyle product, especially in developing countries. Earlier, people in developing countries used one luggage for all purposes such as travel, touring and business. However, owing to growing urbanization and rising disposable income, their lifestyles have changed, which is also reflected in their usage of purpose-based luggage. Asian and African countries are expected to experience highest urban growth in the future. According to the China Development Research Foundation, the urban population in China is expected to increase from 52.6 percent in 2012 to 70 percent by 2030. Urbanization is growing at a swift pace across Asia-Pacific. Pacific countries such as Australia and New Zealand already have high urbanization.
The major players in the global luggage market include Samsonite International S.A., Tumi Holdings Inc., VIP Industries, VF Corporation, Briggs & Riley Travelware, Rimowa GmbH, MCM Worldwide, Louis Vuitton Malletier S.A., Goyard and ACE Co. Ltd.
The large, unorganized luggage markets in developing countries pose one of the greatest challenges for the organized luggage market. Countries such as China and India have large number of unorganized players. These regional players usually launch products with designs almost identical to those of the brands of global organized players. Unorganized players offer luggage at low costs as they save on costs of high-quality raw material, branding, advertisement and R&D. The low- and medium-income populations in developing countries are the largest consumers of such relatively inferior products, siphoning prospective customers from the established luggage brands. In the absence of a strong anti-counterfeiting framework in developing countries, these unorganized players are flourishing and restraining the growth of the organized luggage market.