Tag Archives: consumer sentiment

August consumer confidence: Aussie dollar, Olympics, RBA create confidence yo-yo

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Despite being conducted just three days apart and using almost identical methodologies, consumer confidence figures from Roy Morgan Research and Westpac-Melbourne Institue (WMI) disagree on whether confidence is up or down in August.

Westpac’s chief economist Bill Evans expressed surprise at WMI’s 2.5% drop given media coverage had been more positive recently due to rises in retail spend, recent rates cuts from the RBA and somewhat of a stabilisation in Europe.

Gary Morgan, executive chairman of Roy Morgan Research alluded to the strong Aussie dollar and Olympics as potential factors behind the rise in Roy Morgan’s rating.

Read below the summary of this month’s results and comment from the studies’ economists.

Latest results

Roy Morgan Research Consumer Confidence Rating (weekly measure) – August 13/14, 2012

The rating has risen to 113.1 points, up 2.5 points in a week, and is now 3.3 points higher than a month ago and 5.3 points higher than a year ago.

 

 

Westpac–Melbourne Institute Index of Consumer Sentiment (monthly measure) – May 6-10, 2012

The index decreased to 96.6 points, down 2.5 points over the past month but 7.0 points higher than a year ago.

 
 NB: When reading the chart, please note that the numbers are not directly comparable due to slight methodological differences. Both are calculated from a neutral point of 100 plus the unweighted average of the difference between the proportion of respondents who give favourable versus unfavourable answers to five key questions. A score above 100 indicates that the number of optimists outweigh the number of pessimists and vice-a-versa for a number below 100.
 

 What are the pollsters saying about current confidence levels?

Gary Morgan, executive chairman, Roy Morgan

“As the London Olympic Games closed over the weekend Australian consumer confidence rose 2.1points to 113.1 — it’s highest for three months since May 12/13, 2012. Driving the rise was a strong increase in Australians saying now is a ‘good time to buy’ major household items — up 7% to 58%.

“Also contributing to the rise was increasing optimism about the Australian economy with 32% (up 1%) expecting ‘good times’ for the Australian economy over the next 12 months and 34% (up 2%) expecting ‘good times’ for Australia’s economy over the next five years.

“The RBA’s decision to leave interest rates unchanged last week at 3.5% – amongst the highest in the developed world – appears to have had little immediate impact on consumer confidence although it has strengthened the Australian Dollar which has traded clearly above US$1.05 in the past week.”

 

Bill Evans, chief economist, Westpac

“There has been enough positive news around since the last survey, and generally over the last few months, to have sustained an upswing in Consumer Sentiment. News that retail spending was boosted in the first half of the year; unemployment remains low; the Government has released $1.9bn in fiscal compensation over the May–June period; the Reserve Bank had cut the overnight cash rate by 0.75% in May/June; and the President of the European Central Bank has been promising to “do whatever it takes” to save the Euro has been unsuccessful in sustaining an upswing in sentiment.

“Indicative of a more positive global outlook the share market has risen by 2.9% and the Australian dollar has risen from around USD 1.02 to USD 1.05 since the survey in July, the latter also reflecting Australia’s attractive interest rate differential.

“This is the sixth consecutive month that the Index has registered below 100, averaging 96.2. This is unusual. The only comparable periods since the recession of the early 1990s are in 2000–01 when the Index printed an average of 96.5 over an eight month period and in 2008–09 when it averaged 88.0 over a 16 month period.

“Media reports that the Reserve Bank may have decided against future rate cuts are likely to have unnerved households. For example, despite rates staying on hold the confidence of respondents who hold a mortgage fell by 3.9%.

 

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Consumer confidence surges to start the new year

Posted on January 13, 2012 by Marketing

Australians are feeling good about the new year according to this week’s Roy Morgan Consumer Confidence Rating. Confidence jumped 9.4 points to reach its highest peak in eight months. But although it hasn’t been higher since May 2011, the confidence rating is still 5.3 points lower than the same time last year. Read more…

Consumer confidence up or down? Rival measures disagree

Consumer confidence has always been hard to track, and at the moment even the researchers seem to be struggling. Rival measures, the Roy Morgan Consumer Confidence Rating and The Westpac/Melbourne Institute Index of Consumer Sentiment, disagree on whether confidence is up or down despite being conducted in the same week of December. Read more…

Recent articles

Study reveals consumer climate in emerging markets

While Brazilians are big spenders, the Chinese are saving, Indians are study geeks and the Russians are on a downer, brands are looking at exponential growth in emerging markets over the next few years as consumers look to ‘trade up’ in these nations. In a look at current consumer behaviour in key emerging markets Read more…

Consumer Confidence Yo-Yo

Australians are a confused country of consumers, if the Roy Morgan Weekly Consumer Confidence Rating is anything to go by. Research from last week showed that there was a 2% drop in Australian consumer confidence about their personal financial situations from the week before Read more…

Australian consumer confidence on the up again

Australian consumer confidence is on the up and up. This week’s Roy Morgan Consumer Confidence rating has risen to 118.8pts (up 3.3pts in a week). However, that figure is still 6.6pts lower than this time a year ago. Read more…

 

Consumer confidence up or down? Rival measures disagree

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Consumer confidence has always been hard to track, and at the moment even the researchers seem to be struggling. Rival measures, the Roy Morgan Consumer Confidence Rating and The Westpac/Melbourne Institute Index of Consumer Sentiment, disagree on whether confidence is up or down despite being conducted in the same week of December.

Roy Morgan claims that confidence is up following interest rate cuts – recording a small rise of 2.2 points – while Westpac/Melbourne Institute found a sharp drop of 8.3% for December.

The rival reports cite the competing ‘perspectives of confidence in the resilience of the Australian economy’ and ‘general concerns about global economic conditions’ as the key factors behind the results.

Executive chairman of Roy Morgan, Gary Morgan, says the rise was driven by increasing confidence in the Australian economy’s prospects over the next five years with 38% of Australians expecting ‘good times’, and over the next twelve months with 31% expecting ‘good times.’

Westpac chief economist Bill Evans believes the impact of global pressures is more telling, commenting that respondents’ sentiment seemed to reflect general concerns about global economic conditions.

Evans also states that, “the likely explanation is that respondents’ concerns over the reasons behind the rate cut may overwhelm the perceived benefits of the cut itself.”

In offering an explanation for the dip it found, Westpac/Melbourne Institute’s report did describe its results as surprising given analysts had expected the index to show a rise for the month: “On face value it should be a surprise that the Index has not risen following a second rate cut from the Reserve Bank, which was eventually passed on in full by the major banks to mortgage borrowers,” Evans says.

“However the history of previous easing cycles shows that rate cuts do not guarantee an improvement in sentiment.”

Morgan goes on to say that, “despite the good news late last week, worries have returned this week about whether the European crisis has really been fixed and the All Ordinaries has fallen 3% this week while the Australian Dollar has again fallen below parity with the US Dollar.”

So how then is the Christmas shopping season expected to fare? The National Retailers Association (ANRA) believes the December rate cut should encourage consumers as they head into the Christmas season.

“The extra room in family budgets created by the cash rate cuts of November and December give breathing room to consumers and they will aim to celebrate this Christmas in good cheer,” ANRA CEO Margy Osmond said.

“Most Australians will feel safe enough heading into the last week of Christmas shopping unlikely to go overboard with spending but happy to buy additional gifts to celebrate the season in style in 2011,” Osmond said.

Roy Morgan’s Consumer Confidence Rating was conducted on December 10 and 11 while The Westpac/Melbourne Institute Index of Consumer Sentiment was conducted during the week of December to 5 to 11.

 

Homepage image courtesy of UggBoy[heart]UggGirl, via Flickr

Corporates risk consumer backlash

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A peak in anti-corporate sentiment by Australian consumers signals a significant threat to established brands, both in Australia and globally, with 70% believing that corporations are money hungry and too focused on profits.

In a report from advertising firm Grey and Sweeney Research entitled ‘The Grey Sweeney Trust Scale Survey’, corporations buoyed by recent economic recovery should be realising that the global financial crisis has altered the way many consumers view business imperatives.

The report found that 54% of Australians surveyed could think of an organisation or brand they no longer trusted, though 59% placed more trust in Australian companies than overseas corporations.

Banks and telecommunications companies have experienced the biggest decline in consumer trust, with around 20% of people pointing to them as organisations they no longer trusted.

Of trusted occupations, nurses not only topped the list, closely followed by pilots, but came well before doctors, judges ahead of lawyers, charity workers ahead of priests and all of them came ahead of politicians and real estate agents.

“The research points to an erosion in the levels of trust consumers place in well-known organisations and household brands. This trust, which is based on hard, demonstrable actions, rather than softer strategies such as community involvement and loyalty programs, is difficult to rebuild once lost,” Grey executive chairman Paul Gardner told a gathering of Australia’s top corporate leaders in Sydney recently.

“If businesses do not adapt to this shift in consumer thinking and understand where it is coming from, then they risk losing ground. It is not enough to disguise a bad offer with freebies or clever marketing – consumers want proof that a company is what it purports to be.

Marc L’Huillier from Sweeney Research indicated that a couple of well-known brands had come out on top in the survey.

“The Salvation Army is the most trusted brand in the country, followed by Google, Australia Post and Medicare. By business sector, airlines are the most trusted, outranking food manufacturers, sporting bodies and supermarket chains. Australians are now looking for certainty and, emotionally, they are looking for a throwback to some of the more traditional values that may have been downplayed in recent times. They trust brands and organisations that understand this dynamic,” said L’Huillier.

Great creative salves media budget cuts

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A Millward Brown survey has found alarming consumer sentiment toward discretionary spending.

The survey revealed 67% of Australians are being more careful or actively reducing their spending. Also, 53% of men were more likely to simply buy less, while only 37% of women considered this option. Women were more likely to maintain brand loyalty and wait for price promotions, with 52% describing this behaviour versus only 35% of men.

Less than a third of consumers are switching to cheaper brands or stores’ own brands.

Ben Dixon, managing director of Millward Brown Australia, said the survey illustrates the power of strong brands, as it demonstrates consumers would prefer to wait for their favourite brand to offer ‘specials’.

“Meat and Livestock Australia’s Sam Kekovich Australia Day executions perfectly illustrate the benefit of impactful creative. These ads deliver three times the punch of the average Australian advert and consequently triple the MLA’s effective media spend through great, memorable creative,” Dixon said.

Of the 33% of respondents not actively reducing their spending or being more careful, 30% say the economy has little impact on their spending. However, only 3% feel comfortable increasing their spending.

The GFC has impacted most households, irrespective of income with 71% of low income and 61% of middle income earners being more careful or reducing their spending. Of high income earners, 57% report the same.

Those in their forties were most likely to buy less and those in their thirties were most likely to buy their favourite brands but wait for price promotions. Under thirties were most likely to simply buy cheaper branded products.

Research reveals consumer trust is key

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APN Outdoor’s research has identified brand trust and familiarity as the most influential factors on consumer purchasing decisions.

The ‘Path to Purchase’ study explored motivating factors for consumer purchases in the FMCG, highly considered and every day categories.

The report claims, in the FMCG category, trust and familiarity are most important when selecting pain relief products, shampoo and breakfast cereal. These factors were least important when choosing clothing, beer or potato chips.

APN Outdoor found that familiarity was very important when purchasing expensive products or those that require greater consideration, including cars or home loans. 85% of consumers confirmed familiarity was a deciding factor in these purchases.

Everyday products bought on trust and familiarity included telecommunications, fast food and make-up, the report found.

78% of respondents saw shopping centres as cluttered environments, with 73% agreeing that store location was more likely to influence their purchasing behaviour than shopping centre advertising. Nearly 50% rarely noticed advertising in a shopping centre.

“The ideal formula for sales success is to build trust and familiarity during the customers’ path to purchase then remind them of this relationship at the point of sale,” said Paul McBeth, general manager of marketing with APN Outdoor.

Fool’s gold?

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Social media monitors (SMMs) trawl the web to find mentions of your brand, or whatever it is that youre interested in monitoring. There are many SMM products and services available: some free, some that you pay for.

Here’s a very basic example: www.whostalkin.com

If you type in the name of a brand or topic of interest, you’ll get an idea of the kind of information SMMs return.

Depending on the level of sophistication built into the SMM you use, you can refine your search with key words, run analytics etc.

There’s a lot of hype around SMMs. Not surprising really. The idea of getting feedback on the cyber-buzz around your brand, product or service is timely and sounds quite marvelous!

Kind of. Until you think about it a bit more. Which I have. And wearing my qualitative researcher’s hat, SMMs fail in two important ways:

  1. Sample definition
  2. Sentiment

Sample definition

What constitutes a SMM sample?

In a nutshell, a SMM sample comprises the searchable/findable content sourced from various online channels. Thats as precise as you can get really. The truth is, you just cant know whos represented (or not) within that content.

For example, SMMs can’t identify and screen out marketers who may be posting from domains that havent been identified as such. This means that in many cases, SMMs can’t distinguish between content generated by marketing folk and content generated by non-marketing folk.

And lets face it, quite a lot (most?) of the brand chatter out there is actually generated, nurtured and sent bouncing around the interwebs by marketing folk. People like us. The kind of people we try very hard to screen out of market research samples.

It’s also worth noting that SMMs can’t automatically, distinguish between content generated by core customers, infrequent customers or non-customers. This means that all customer/brand relationship variations are automatically given the same share of voice and weight in the analysis.

Another factor to consider is that the sample will be skewed. And while a sample skew, in itself, is not necessarily a problem, its certainly a problem when you don’t know how its skewed. Which is the case here.

Without being able to define the sample, and without knowing how the sample is skewed, theres no foundation or context for meaningful content analysis.

Sentiment

Sentiment is the very essence of what were trying to understand through market research. And this is something that SMMs dont gauge very well.

Although automated sentiment analysis is often sold with the SMM package, there are two things about it that trouble me:

  1. Accuracy
  2. Specificity

Accuracy

There seems to be considerable scope for error in the labelling.

For example, how would automated sentiment analysis label a statement such as F&*#ing brilliant!?

Depending on the context, this statement could be:

  1. Dripping with irony
  2. An exclamation of genuine excitement and joy
  3. A description of a high-wattage light bulb

So, would it be labelled as negative, positive or neutral?

Notably, some SMMs claim to be contextually savvy, and that they can identify positive, negative or neutral sentiment with 90% accuracy (is 90% good enough?).

BUT…

Specificity

BUT (note caps), even with 90% accuracy, these labels are still seriously wanting. They dont provide me with information thats of much use – if any – because theyre too vague.

It’s the finer points of sentiment; the despair, frustration, excitement, boredom, curiosity etc. underlying the positive or negative sentiment labels that I’m interested in. This is the level of sentiment I need if I’m to understand what’s going on with any effect. And to get to this level of sentiment, I really need to dig a bit deeper.

Where’s the gold?

I need to dig deeper, but where do I begin? Back to my earlier point about SMM sample definition and skews; I dont know where the real gold (vs. fools gold) lies.

Without spending the time and effort to sort through each and every buzzversation (easily in the thousands), I cant distinguish between content of import and that of little consequence. I just dont know where to drill deeper in a meaningful, robust kind of way.

So its virtually back to square one.

Itching

SMMs are an exciting idea and Im itching to find a way to use them.

From a PR or customer service point of view, I imagine theyre worth their weight in (real) gold.

But in my qualitative market research business, I cant (yet) use them with either confidence, or pragmatic effect.

Sentiment aside, the sample scope/limitations and the unknown skews preclude the output from forming anything approximating a solid foundation for analysis.

Bit of an issue for me.