Captivating Connections.

is content bad for your budget?

There's something about seamlessly buying and downloading content like music, movies, and books that makes you forget you're actually spending (real) money on it. I used to be a major offender of, um, filesharing music, and now I can't stop buying random songs from iTunes. It all seems pretty harmless - a song here, a song there - until I get my bill and I realize just how much I racked up.

For some reason, until I get the bill, I forget I'm actually spending money on the content, and probably don't need all these songs I won't listen to after a week. Part of me thinks "meh, it's less than 1 or 2 dollars," while another part of me thinks "isn't that how people ruin their budgets? By minor purchases here and there?"

I'm not the only one concerned about this. According to AICPA, "more than 40% of Americans download and pay for digital content, and they’re spending more money on them than they ever have."

But do they have this money to spend? Jordin Amin, chair of the AICPA’s national CPA financial literacy, says it best when he says, “one of the concerns we have is that it’s very easy to make these purchases without a budget or an overall financial plan.”

It's true. Do people not 'count' content they download as a real purchase because it's not in tangible DVD, book, or CD form? One could argue that it's cheaper to buy a song vs. an album, or a digital version of a book than a physical paperback, but do we justify more purchases when they are only a tap or swpire away?

What do you think?

as coupon use increases, marketers' tactics diversify.

While coupon popularity among consumers may be increasing, marketers may be slowly moving away from coupon offerings.

According to NCH Marketing Services, "food marketers drastically cut their use of coupons last year, issuing 13.1% fewer coupons than they did in the prior year. That amounted to 305 billion coupons, a decline of 8.1% in all categories." Howver, it should be noted that "2011 coupon distribution was comparable to 2007, with 20 billion more coupons -- a 7% increase jump -- available to shoppers. And the $470 billion of coupon value in 2011 is a 26% increase from 2007."

Thanks to the economic crisis and increased consumer savvy, there's definately a hunger for coupons among consumers; "coupon-craving consumers redeemed $4.6 billion in savings, a jump of 12.2% from the year prior, and a 58.6% increase from five years ago."

While marketers are responding in various ways, including changing the offerings, the savings, the redemption opportunities, and more, depending on the category, new tactics are being attempted. For example, I previously wrote about how retailers are testing different types of pricing strategies.

What other types of tactics have you seen?

smart(er) shoppers leading to smart(er) shopping.

The NY Times has a great article looking at how consumer smarts and tactics are increasingly impacting the shopping experience, including pricing. 

As the article explains, "pricing has always been a tug of war between retailer and shopper, with the retailer having more muscle." However, the Internet and the slew of apps that have hit our smartphones and browsers (incuding daily deals, coupons, price comparisons, etc.), have given consumers new weapons in the war on prices, and are forcing retailers to be more flexible in their pricing.

In this day and age, there's really no such thing as a set price anymore. 

Think about the last time you bought a pair of pants: Did it cross your mind to do one of the following?

1. Look up (online, on an app, in a circular) if they were on sale somewhere?

2. See if someone else offered it cheaper than the retailer you were looking at to make your purchase?

3. Search online to see if you could get it cheaper? The retailer's website? Ebay?

Apps and the Internet are making all of this easier for you, and more difficult for retailers. The new shopper mentaliy really has become "there's never a reason to pay full price." We're way too savvy for that.

As consumers become experts, brands are trying plenty of tactics. For example, "J.C. Penny has introduced a streamlined system: daily prices, lower monthlong specials and clearance prices. Mango, the fashion retailer, has cut all prices by one-fifth. Stein Mart, the specialty chain, has reduced its coupons. Supervalu, the grocery chain, has sworn off heavy promotions and lowered some prices. Even Walmart has pledged to match competitors’ prices if it sets its own too high."

The real result is an interesting game of cat and mouse, with each side trying to outfox the other. However, at what point do these tactics from retailers just consumer the customer to take a pass on their offerings? Aren't these consumers tools supposed to empower by providing simplicity, not forcing the retailer to increasingly 'complixify' their strategy?

What do you think of these pricing strategies? Do they impact your shopping habits?

consumers are savvier than ever (alleviating me of my high school shame).

In high school, I remember buying this really cute tank top at Target. Full disclosure: said tank top was purchased because I had spilled a frozen caramel machiatto on myself while driving to my friends house, and, while this isn't unusual for me, I didn't have anything else to change into. I got a lot of compliments on that tank top, but, I distinctly remember awkwardly changing the subject when asked where it was from. While I thought it was a STEAL at $10 for something that garnered so much attention, I was embarrased it wasn't from Nordstroms or Express (or something more respectable in those days).

This, my friends, was before the days of "Tar-jaaaaaaay" and before it was cool to get something at a great price or on sae. Now, it's pretty much a badge of honor to say you snagged something at a thrift shop, Gilt Groupe, or that it was "totally 30% off of the 60% off and I had a coupon!"

This isn't just for apparel. According to the American Pantry Study, a Deloitte and Harrison Group, consumers are savvier than ever before, and that they "expect discounts, shop for deals, know when the deals are and like (some) private-label brands just fine."

Here's some stats:

- 80% of shoppers like to see how much money they can save via coupon use or shopper loyalty cards

- 69% are disappointed when they discover that a brand recently purchased is on sale at another store

- About 50% of the items consumers buy on stock-up trips are sale items, and about a third estimate that 70% of the items they bought on those trips were deals

- 62% said that have a good idea when products they want to buy will be on sale

- 90% said they are becoming more precise in what they buy

- 80% said they have become more efficient at getting in and out of the store

- 87% of respondents cited several store brands that they think are just as good as national brands when it comes to saving money without giving up quality

- 90% said they have already figured out which store brands and private labels work for their families

So what's the bottom line for CPG brands (and brands in other industries as well)? According to Pat Conroy, vice chairman, Deloitte LLP and consumer products sector leader, “shoppers today expect to get a deal on the products they purchase. With this mindset it is critical that consumer products companies take measures to enhance brand loyalty by connecting early and often with key audiences in environments outside of the store.”

hispanic birthrates are slowing...but why?

Accordign to recent data, the economy is having a strong impact on Hispanic birthrates. In fact, "the number of babies born to Hispanics dropped below 1 million in 2010, a nearly 11% drop since 2007."

While this trend is impacting people of all ethnicities, it seems to be hitting Hispanics especially hard. As Kenneth Johnson, demographer for the University of New Hampshire's Carsey Institute, not-so-subtly put it, "Hispanic fertility is dropping like a stone."

So what's the reality of the situation?

"Hispanic birthrates tumbled 17.6% in three years — from 97.4 births per 1,000 women ages 15 to 44 to 80.3 last year, according to preliminary 2010 data released this month by the National Center for Health Statistics.

Non-Hispanic whites still deliver most U.S. births. Their birthrates fell too, but at a much slower pace — down 3.7% to 58.7 per 1,000 women in 2010.

The dramatic decline in births to Hispanics, who still have the highest fertility rates, raises the specter of a long-term drop in the nation's overall fertility — now higher than that of most other developed nations. It also crystallizes the impact of the economic downturn on Hispanics."

forget the 'lipstick theory'. it's all about the 'high heel' economic theory.

Last year we heard a lot about the 'lipstick theory', and how lipstick can be used as an economic indicator.

Now,  IBM Global Business Services argues that, "historically in economic downturns heels have tended to go up and stay up...as consumers look to compensate for dismal times with more flamboyant fashions."

Based on their social buzz study, IBM found that "mentions of heels finds they tend to be largely predictive of trends."

How so, you ask?

"Ominously, the average height of heels mentioned in social media soared from 3 inches in the first half of 2008 to 6 inches in the second half, just as the U.S. financial bubble burst and women's heels were ready to head toward their current heights. Heel buzz most recently peaked in the first half of 2009 at 7 inches, bounced around at 4 to 5 inches through early 2010 and plunged to 2 inches in the most recent IBM analysis from early this year.

IBM's cross analysis of heel-height buzz and macroeconomic data suggest a strong inverse correlation between heel-height buzz and economic growth."

Pretty cool, right?

can holiday ecommerce be a beacon of light in this economy?

According to multiple pre-holiday surveys, eCommerce may be the shining light at the top of the holiday shopping tree (sorry for the analogy, but I am a Jew after all, and not such a pro on Christmas analogies!).

Here's some stats and findings from eMarketer:

- "US retail ecommerce holiday-season sales, which include all retail ecommerce sales during November and December, will rise 16.8% this year to $46.7 billion."

- “Strong online holiday spending...will boost ecommerce sales to $195 billion for the year, up 16.5% over 2010.”

- "Overall retail sales growth during the holiday season is expected to be lackluster compared to ecommerce: firms range between 2.5% and 3.5% in their growth estimates for total holiday retail sales this year."

you're being used (or your brand is, at least).

According to Nielsen/McKinsey’s NM Incite, the main reason consumers “Like” or follow a brand via social media sites is to receive special offers or discounts. Apparently 60% of social media users visit sites like Facebook and Twitter to receive coupons or promotions; 23% of social media users say that they do so on a weekly basis.

 

 

 

is digital democratizing this holiday season?

According to Deloitte's Scott Erickson, when it comes to holiday spending, there's an interesting change this season. As he sums it up,  “when it comes to online and social media, we are seeing a bit of flattening of the bell curve. It used to be that we saw a much higher usage in Gen Y, and now we’re seeing that the people utilizing digital and online experiences are spread pretty widely across all age and income groups.”

Check out his interview on how Gen Y now differs here.

are your kids a part of the ‘app gap’?

Is the 'app gap' the new digital divide?

You’ve probably seen the video with the kid who doesn’t understand how to read a magazine, swiping it like you would a tablet. You may have laughed, you may have cringed, but you probably realized that this may be a part of children’s’ reality today.

 

According to research by Common Sense Media, not only are children under 8 are spending more time than ever in front of screens, but there’s an “emerging ‘app gap’ in which affluent children are likely to use mobile educational games while those in low-income families are the most likely to have televisions in their bedrooms.”

 

What’s this reality look like? Focusing on apps, thefirm found that “almost half the families with incomes above $75,000 had downloaded apps specifically for their young children, compared with one in eight of the families earning less than $30,000. More than a third of those low-income parents said they did not know what an ‘app’ — short for application — was.”