What does a brand’s wonderfulness say about its recession survival?
How “wonderful” a brand is may directly impact its ability to withstand economic downturn and garner customer loyalty. The 10 most wonderful (and perhaps recession-resistant) brands in the eyes of U.S. consumers are (in descending order): Hershey’s, Google, Sony, Kraft, Crayola, Kellogg’s, Scotch Tape, Wii, Rolls-Royce and Johnson & Johnson, according to a December 2008 study released by the Boston office of U.K.-based research agency Kadence. The company surveyed 5,500 educated, affluent consumers age 18-54 and asked them to rate their liking of brands using a seven-point scale, with 7 being a wonderful brand, 1 being a not-so-good brand and 4 representing a good brand. Perceptions of value, familiarity and usage of each brand were also solicited. The 10 least-wonderful brands are (from the bottom up): National Enquirer, AIG, Botox, Kia, alli, Hummer, O The Oprah Magazine, Dress Barn, ChemLawn and Direct Buy.
In terms of value, brands that were seen as offering the best ratio of wonderfulness-to-cost were Wal-Mart, Google, Amazon, Hershey’s, Target, Cheerios, Campbell, PBS, Yahoo and eBay. Brands that were seen as offering the worst ratio of wonderfulness-to-cost were Hummer, Botox, Prada, Land Rover, Gucci, AIG, Saks Fifth Avenue, Louis Vuitton, Maserati and Ferrari.
The research suggests a link between positive brand perceptions and company stock performance, says Owen Jenkins, CEO of Kadence. “Detailed analysis of responses shows a strong correlation between the level of consumer affection and stock performance in 2008. For example, corporations owning brands with a mediocre affection score of 4.5 out of 7 lost nearly 50 percent more stock equity last year than corporations owning brands with an affection score of 5.5. In other words, a small difference in how much a brand is loved makes a big difference in how it performs on the stock market.”
An examination of the data through the lens of respondents’ level of concern about the financial status of their households suggests that brands especially liked by those with the biggest financial concerns - such as Prilosec, Sunkist, Orville Redenbacher, Maybelline, Johnson & Johnson and Kool-Aid - may be the ones that profit most from a prolonged or worsening crisis. For more information visit www.kadence.com.
Hispanic Internet usage surpasses U.S. trends
Hispanic Internet users are 21 percent more likely to download digital content than the average adult online. Forty-two percent of Hispanic Internet users have downloaded some form of digital content during the past 30 days, compared to 35 percent of the total Internet population, and music is the top download category for both Hispanics and the total Internet population. Almost one-third of Hispanic Internet users and almost one-quarter of all Internet users have downloaded music during the past month, according to a study from Scarborough Research, New York.
Hispanics have been taking advantage of the national expansion of broadband, and their rate of adoption has mirrored that of the total U.S. population. Currently, 68 percent of Hispanic Internet users have a broadband connection in their household, an increase from 13 percent in 2002. This is roughly the same pace of broadband adoption of adult Internet users overall. Seventy-one percent of U.S. Internet users currently have broadband at home, growing from just 15 percent in 2002.
“Increased high-speed Internet access among Hispanics is opening the door for online businesses to establish brand loyalty with this consumer group,” says Gary Meo, senior vice president, digital media services, Scarborough Research. “Offering Hispanics new and creative ways to interact with a brand online - particularly via downloaded digital content - could go a long way in successfully marketing to the Hispanic adult.”
The majority (54 percent) of Hispanics are now online. In fact, Internet access among Hispanic adults has increased 13 percent since 2004. By contrast, Internet access by all consumers nationally grew 8 percent during this time period.
Miami is the top Hispanic market for broadband penetration. Seventy-six percent of Hispanic Internet users in Miami have broadband at home. By contrast, El Paso, Texas; Dallas; Fresno, Calif.; and Harlingen, Texas, are the markets in which Hispanic residents are least likely to have a broadband connection. Phoenix is the leading local market for Hispanics who download digital content. El Paso, Miami and Dallas are the markets where Hispanic Internet users are least likely to download digital content. For more information visit www.scarborough.com/freestudies.php.
Don’t underestimate American affinity for human contact
With continued development of technology, individuals around the globe are turning to new digital channels of communication. However, Americans are behind in the ever-growing trend of digital communication compared to their global counterparts, according Digital World, Digital Life, a study from Horsham Pa., research company TNS. Eight out of 10 Americans ranked face-to-face communication with family as the most important method of communication.
The survey also showed that even though Americans are adopting digital communication at a much slower rate than other global consumers, it is quickly becoming an accepted means of communicating. Americans ranked mobile phone (76 percent) and e-mail (72 percent) as their second and third methods of communication to family, which is quickly closing the gap on face-to-face communication (84 percent). When it comes to friends, 89 percent of Americans prefer face-to-face communication, although e-mail was a close second choice (82 percent), followed by mobile phone (73 percent).
In Canada, France, Finland and Italy, e-mail was used as much as face-to-face communication with friends. Other countries, such as South Korea, use mobile phones more than face-to-face communication with friends. In South Korea, 80 percent of respondents said that they communicate with friends by mobile phone, but only 61 percent said they communicate face-to-face.
“Face-to-face is still preferred in the U.S., but electronic forms of communication are rapidly becoming just as important,” says Don Ryan, vice president, technology and media, TNS. “I don’t think that the trend, as seen in South Korea, where mobile trumps personal face-to-face, will ever fully materialize here in the U.S., but there is certainly a trend in that direction. In the future we’ll see an increase in human intimacy as technology evolves to accommodate our desire to connect with each other. Face-to-face and electronic forms of communication are both important, so the challenge for service providers will be to provide a mixed form of interaction using an electronic means of communication as a basis.” For more information visit www.tnsglobal.com.
Customer satisfaction and stock prices coincide
Most retailers have seen falling stock prices, but those that improved customer satisfaction were punished less by investors. On average, retailers with improving American Customer Satisfaction Index (ACSI) scores lost about 30 percent of their market value in 2008, while those with declining ACSI scores lost nearly twice as much (57 percent). On the whole, Americans’ satisfaction with the goods and services they buy improved in the fourth quarter of 2008, according to the ACSI, which is compiled by the National Quality Research Center at the Stephen M. Ross Business School at the University of Michigan, Ann Arbor. The index climbed to 75.7 on the ACSI’s 100-point scale, up 0.9 percent from the previous quarter. Close to the end of the 2001 recession, an uptick in ACSI signaled that a rebound in the economy was near. But as the current recession has deepened, consumer behavior has changed much more than in earlier economic slowdowns. Consumer spending has continued to weaken while savings have gone up, suggesting that, at least for the short term, there will be less revenue for sellers and more pressure on profit margins and for cost reductions.
“For consumer spending to rebound, two conditions must be met: consumers must be favorably disposed to spend and have the means to spend,” says Claes Fornell, head of the ACSI. “The good news from ACSI is that the first condition has been met: customer satisfaction is looking up. But it remains to be seen to what extent the government stimulus plan will help translate stronger satisfaction into increased consumer demand.”
Customer satisfaction becomes even more important to individual companies, as they need to prevent customer defections and compete for shrinking dollars. Customer satisfaction with the retail sector gained 1.3 percent to 75.2. Lower gas prices pushed the ACSI score with service stations up by 5.7 percent to a score of 74, contributing to the overall improvement for retail, although department and discount stores (up 1.4 percent to 74) and specialty retailers also improved (up 1.3 percent to 76). Among department and discount stores, Nordstrom and Kohl’s led with an ACSI score of 80, the former on the strength of its customer service, the latter for its superior value. Deep-discount store Dollar General dropped 4 percent to score of 75, not from a decline in service, but from a migration of a higher socioeconomic group of consumers to the retailer - another effect of the recession - a group that tends to be harder to please.
Wal-Mart had mixed results, falling 4 percent for its supermarket business to an ACSI score of 68, well below the industry average, but rising 3 percent for its non-grocery discount business to 70. Wal-Mart’s Sam’s Club also rose 3 percent to 79. In the specialty retail category Home Depot climbed 5 percent to an ACSI score of 70, matching its best result in four years. However, the improvement failed to lift Home Depot from the bottom of the industry, and the home improvement retailer still trails rival Lowe’s (76) by a wide margin. Office Depot moved in the opposite direction, falling 4 percent to 75 amid store closings and layoffs. Supermarkets remained unchanged with an ACSI score of 76 even though food prices remain high. Publix is on top with a score of 82, the fifteenth straight year the supermarket chain has led the category. Safeway gained 4 percent to 75, its highest score since 2002.
The ACSI score for e-commerce fell 2 percent to 80. Online retail declined 1.2 percent to 82, driven mostly by drops for Amazon and eBay. But with a small dip, Amazon (down 2 percent to 86) remained the second-highest scoring firm of all companies in this release. The situation for eBay is different. Its ACSI score slumped 4 percent to 78, an all-time low. Revenues fell 7 percent in the fourth quarter, marking eBay’s first-ever negative year-on-year quarter, and its stock price lost almost 60 percent in 2008. Newegg leads the online retail category with a score of 88. For more information visit www.theacsi.org.
Economy takes its toll on the thriving green market
The economy is starting to cast a shadow over green living’s glow. After tripling the previous year, from 12 percent in 2007 to 36 percent in 2008, the number of Americans who say they almost always or regularly buy green products remains unchanged since last year, at 36 percent, according to survey data from Chicago research company Mintel.
“People’s priorities have changed because of economic hardship. A substantial number of shoppers are struggling just to provide the basics for their families, so green living is no longer top-of-mind for many Americans,” says Marcia Mogelonsky, senior research analyst at Mintel.
Cost remains an impediment to the green market’s growth. The majority of adults are willing to pay only a little extra for green products. Moreover, over half of respondents (54 percent) say they would buy more green products but the products are too expensive.
In other consumer surveys, Mintel has uncovered similar hesitance toward buying green based on price. An October 2008 report on organics revealed that nearly four in five adults (78 percent) say they would buy more organic food if the products were less expensive. Likewise, a January 2009 report on environmentally-friendly cleaners showed that 52 percent of shoppers who buy household cleaning products feel green cleaning products are too expensive. For more information visit www.mintel.com.