Credit card offers soar to record high; response rates drop to near-historic low

Credit card solicitations, which reached record levels last year, are soaring to even greater heights in 1995, according to Mail Monitor, the direct mail credit card acquisition tracking service managed by BAI (Behavioral Analysis Inc.), a Tantytown N. Y., marketing research and consulting firm.

The volume of credit card offers mailed to consumers climbed 37 percent to a record high 723.2 million pieces in the first three months this year, compared to the first quarter of 1994. The offers reached three out of every four families in the U.S. at least once each month, Mail Monitor found.

While banks and other card issuers are reaching more households than ever (up from 65 percent of households last year to 75 percent in the 1st quarter of 1995), consumer response to the direct mail offers fell to a near record low of 1.2 percent in the first quarter, says Robert G. Skolnick, executive vice president of BAI.

"As the acceptance rate continues to drop, the cost to banks to acquire new card holders continues to increase," Skolnick says. "This intense competition puts pressure on prices. resulting in lower APRs and increased offers.

"Consumers are the winners in the intensely competitive race among card issuers," Skolnick says. "They are getting good deals and have come to expect low interest rates. This will raise some interesting questions in the near future as introductory rates begin to expire, and card base rates climb. How will consumers react? Will they continue to use these cards? Will they switch? The jump in base rates may significantly affect their attitudes and loyalty to the cards they already hold."

In 1994, direct mail solicitations reached an historic high of 2.4 billion offers, representing an increase of nearly 60 percent over 1993. At the same time the response rate for 1994 decreased to a low of 1.6 percent. In actual numbers, however, 38 million new credit card offers were accepted by consumers in 1994, compared to 33 million in 1993.

"For 1995. the jump in offers in the first quarter portends the strong possibility that as many as three billion credit card offers will be mailed this year," Skolnick says.

"Historically, response rates decline as mail volume increases," Skolnick points out, "although not in direct proportion. The decline in response rates is generally smaller than the increase in mail volume, so that in the end you do see more credit cards issued."

The Mail Monitor study also found that:

  • The three out of four households receiving offers were getting, on average, 3.6 bank card offers each month.
  • For the first time in over a year, affinity/co-branded credit card offers did not produce a markedly higher response rate than traditional bank cards.
  • The first quarter in 1995 saw bank card mail volume (VISA/MasterCard) climb to 694 million pieces, a 37 percent increase overthe first three months of 1994, and significantly higher than the 613.5 million offers mailed in the second quarter of that year.

Mail Monitor, a joint venture of BAI and Market Facts, Inc., is a syndicated service based on the credit card solicitation experiences of a representative sample of households nationwide. Some 10,000 households are covered during the year and report on credit card offers on a monthly basis.

If you call them, they may switch

July's "Bruskin/Goldring Research Report" newsletter, published by Bruskin/Goldring Research. Edison. N.J., reported that during April May and June of this year more than four in ten (42 percent) adults said they received phone calls from telephone companies such as AT&T, MCI, or Sprint asking them to switch their long distance service. The calls seem to have worked: more than one quarter (27 percent) of people who received calls say they switched services as a result of the call.

Younger respondents, aged 18-24, are most likely (46 percent) to switch long distance services as a result of telemarketing calls, while those aged 50+ are more loyal to their current long distance company and are the least likely (13 percent) to switch. Southemers are somewhat more apt (29 percent) than people from other regions to make a change, and those from the West are the least likely (24 percent). Higher-income earners (household income of $50,000+) are more likely (32 percent) than others to try a new service, while respondents from households with incomes less than $20,000 are the least likely (25 percent) to switch.

Women see Colin Powell as a contender

As speculation of Presidential candidates grows nationally, Gen. Colin Powell ranks as the most popular contender among a majority of informed American women. The results of the first Lifetime Television/Chilton Lifestyles Poll monitoring women's issues surrounding the 1996 Presidential election conclude that 56 percent of all women polled give Powell a favorable rating compared to 53 percent for Clinton. Even more astonishing is that among just the 60 percent of women who feel they know enough about Powell to form an opinion, an overwhelming 92 percent give him a favorable rating, considerably more than any other potential candidate including Clinton, whose comparable favorability rating is only 58 percent.

Among Republicans, Sen. Robert Dole (R-Kan.), has the highest recognition and favorability rating, scoring the highest of all hopefuls with a 37 percent favorability rating among all women.

"It is common for many of the contenders to be still unknown to the majority of Americans at this point in the race," says Kirsten Zapiec, business manager of Chilton Research Services' Express Omnibus Survey. "It is impressive that Gen. Powell ranks fourth in recognition among the top ten candidates following Clinton, Ross Perot and Dole."

The least known possible candidates are New Jersey Governor Christine Whitman and Sen. Arlen Specter (R-Pa.) with 81 percent and 77 percent, respectively, of women surveyed saying they do not know enough about these candidates to form opinions.

The Lifestyles Poll also asked the sample of women to address the largest problems facing women as a group. Twenty percent labeled equal pay and 15 percent pointed to job discrimination as the top women's issues. Abortion appears 10th on the list registering only 4 percent.

The Lifetime Television/Chilton Lifestyles Poll was conducted by Chilton Research Services among a random national sample of 500 women, age 18 or older, between September 13-17,1995. Results have a margin of error of ±4.4 percent. Chilton Research Services is located in Radnor, Pa.

Americans' dietary habits conflict with their nutrition knowledge

According to a survey by CDB Research & Consulting Inc., New York, a majority of Americans (65 percent) find it very hard to eat a balanced diet. Although most Americans feel that they are very knowledgeable about nutrition (61 percent), they say that they are confused by news stories that report they should avoid eating certain foods (67 percent). Consumers reported they also have a hard time including the recommended number of servings of fruits and vegetables in their daily diet.

"As the results of this survey show, Americans are becoming more knowledgeable about nutrition. The next step is to incorporate the knowledge into their daily lives by practicing the basics of a healthy diet - moderation, balance and variety," says Dr. Larry Chiagouris, managing director of CDB Research & Consulting. In addition, says Penny Clark, M.S., R.D., and CDB's registered dietitian, "Americans should keep in mind that there are no 'good' or 'bad' foods and that by balancing different foods throughout the day and eating in moderation, all foods can be part of a healthy diet. You don't need to give up your favorite foods, just eat them in moderation."

Sixty-five percent of respondents agree they find it very hard to eat a balanced diet. More men found it harder to eat a balanced diet than women: 69 percent of men agree it is very hard, compared to 64 percent of women. Women under 40 years of age report they find it harder to eat a balanced diet (67 percent) than women 40 and over (61 percent).

Of those surveyed, 61 percent felt they were very knowledgeable about nutrition. Those respondents who felt they were most knowledgeable were women 40 and over (65 percent), followed by women under40 (60 percent), and then by men (54 percent). Confidence in nutrition knowledge seemed to correspond with their use of food labels: women 40 and over agreed most often that they read food labels (85 percent), followed by women under 40 (79 percent), and by men (77 percent).

A majority of Americans (67 percent) said they were confused by news stories that report they should avoid eating certain foods. More men than women claimed to be confused (71 percent versus 63 percent, respectively).

Of the 356 consumers surveyed, less than half (44 percent) eat at least five servings of fruit and vegetables every day, the minimum daily serving recommended by the National Cancer Institute and the USDA's Food Guide Pyramid. Women 40 and over were more likely to eat the daily suggested serving of fruit and vegetables than women under 40 (54 percent versus 38 percent, respectively), while men were least likely (36 percent).

"Many Americans feel overwhelmed by the recommendation to eat 3-5 servings of vegetables and 2-4 servings of fruit daily," says Clark, "but what they often don't realize is how small these recommended servings actually are. For instance, one serving of vegetables equals 1/2 cup of chopped, raw or cooked vegetables, and one serving of fruit is equal to one piece of fruit or 3/4 cup of juice or juice drink."

CDB Research's proprietary National Research Panel follows consumer attitudes and trends, including perceptions and experiences with food and health issues. Survey questionnaires were mailed to 1,030 panel members across the nation. A total of 356 completed and returned the survey, a response rate of 35 percent.

Consumer optimism reigns in urban China

Over four in 10 consumers in China expect their standard of living to rise in the next 12 months, and a large majority seem predisposed to spend their earnings on Western goods, according to a new survey by SCMR (South China Marketing Research)-Research International.

"We deliberately conducted this survey in China's leading triad of markets- Shanghai, Guangzhou and Beijing- not only because these are the most important markets in China, but because these three markets are arguably harbingers of future trends," says Daphne Chandler, New York-based president of Research International World Service.

"In China, things are moving so quickly that to stay on top of them we need to use a different strategy than might be appropriate in more mature markets, where national surveys are often more helpful. In China, it's important to look for indicator markets that can help detect major trends rather than just describe the quickly out-of-date status quo," says Chandler.

The survey, based on 1,500 face-to-face interviews conducted earlier this year, showed very strong optimism at the consumer level. "People really seem to sense that things are continuing to get better," Chandler says. The proof, she notes, is the virtual absence of pessimism. "Only about one in 20 urban Chinese feel things will get worse before they get better. In my experience, that's really a very strong bulls-to-bears ratio."

A key finding of the SCMR-Research International study is the built-in predisposition toward products from the West. "Eight out of 10 Chinese consumers believe that articles made in the West are likely to be of higher quality than comparable products produced in China. And over 75 percent think that Western products will last longer and be more durable than similar items made in China," Chandler says. Even more importantly, the survey revealed that over seven in 10 Chinese think that Western goods are a better value for money than their locally produced equivalents.

However, Chandler cautions that this goodwill toward things made in the West may be very short-lived. "It's important to recognize that, for the most part, these beliefs are not as yet modified by reality. As experience becomes a greater component of these perceptions, the onus is clearly upon marketers to deliver," she suggests.

The China Clipper Survey, a twice-yearly omnibus, also probed the awareness of leading global brands. Over nine in 10 Chinese interviewed are aware of Coke, Pepsi and Sprite, as well as Marlboro and Nescafe. And not far behind are Sony, Panasonic, Kodak and Nestle. As might be expected, consumers in Beijing and Shanghai are more likely to recognize foreign brands than are those who call Guangzhou home.

"But beware," says Ms. Chandler. "While awareness is high when you use the Chinese names of Western brands, it falls off sharply when those same brand names are presented in English. Coke, for example, with 99 percent awareness in Beijing, drops 40 points to 59 percent when you present the brand name in English."

Do strong brands enjoy a special advantage beyond mere recognition in China? The China Clipper Survey strongly suggests they do. On average, 72 percent of the urban Chinese questioned agreed that it's best to buy famous brands; only 12 percent of Chinese consumers felt there was no advantage in buying famous brands.

While three-quarters of the consumers SCMR -Research Intemational talked with agreed that advertising was a good way to find out about brands and products, smaller proportions felt that ads were a trustworthy information source. In Beijing, in particular, doubts about the credibility of advertising were high. In that city, only 47 percent felt advertising is trustworthy, while 33 percent disagreed.

This wariness, suggests Chandler, may reflect the fact that the major "advertiser" has historically been the government, and the issue of trust undoubtedly raises the question of the veracity of political messages. However, it appears that the Chinese believe themselves to be capable of discounting messages. For example, a purposely negative query found that on average only 27 percent of the Chinese believe that advertising encourages people to purchase things they don't need, but 55 percent disagree.

"These patterns are amazingly similar to results of surveys Research International has made in Eastern and Central Europe," Chandler observes. "In Poland, for example, seven in 10 consumers told us that advertising was a good way of finding out about products. That was in 1991, when Poland's consumer economy was just emerging. By 1993, that figure had climbed even higher, to 85 percent."

Do Chinese consumers like advertising? It would seem so. Forty-six percent say that they generally enjoy looking at advertising, while just 21 percent disagree. And only 16 percent feel advertising gets on their nerves. Considering the lengthy commercial blocks typical of Chinese TV, where 20 or more commercials appear back-to-back, these positive reactions to advertising in general are encouraging.