Consumers Planning to Spend More, Save Less, Pay Off Debts

According to the latest American Express Spending & Saving Tracker, more than half of adults are planning to spend more (14%) or the same (40%) in 2011 than they did last year, with the majority of that spending focused on themselves.

Personal savings rates are still well above pre-recession levels and consumers will remain focused on saving, but they will set aside less than they did in 2010. After setting aggressive savings goals for 2010, $14,000 on average, consumers are paring back their savings target this year to a more modest $2,600.

Pamela Codispoti, senior vice present and general manager of Cardmember Services, American Express, says "...it's encouraging to see that (consumers) feel more optimistic about their finances...they're setting more realistic savings goals and...gained some financial breathing room to spend a bit more than in 2010."

In terms of where consumers will spend in 2011, maintaining their appearance is king. Top categories for "more" consumer spending in 2011 include:

• Grooming (73%)
• Health/fitness (70%)
• Clothing for themselves (61%)

Categories at the bottom of the list include:

• Video game systems and games (34%)
• Jewelry (34%)
• Portable media players (32%)
• Tablet computers or e-book readers (30%)

Similar to 2010, consumers cited "exercising more" and "losing weight" as their top three and four New Year resolutions, respectively, behind saving money and spending more time with friends and family. However, 28% of consumers who are starting the year with a savings strategy would sacrifice a portion of their savings to achieve their goal weight.

Forty-seven percent of consumers plan to spend more on health and fitness in 2011, primarily on:

• Gym memberships: average of $131 per month
• Fitness equipment: average of $127 per month
• Personal trainer: average of $127 per month
• Eating programs: average of $75 per month
• Fitness-related video games: average of $60 per month

While saving money was the top New Year's resolution for 2011, fewer are setting financial goals: 83% in 2011, down from 89% in 2010. For those who set financial goals, significantly reducing or paying off debt before the end of the year tops the list at 17%. Other financial goals include:

• Save a percentage of household income each month (15%)
• Only buy what they can afford (14%)
• Find a better or higher paying job (10%)
• Save enough money to travel (6%)

The research was completed online among a random sample of 2,025 consumers aged 18+.

(Source: The Center for Media Research, 01/18/11)

Pay For Your Next Latte With Your iPhone!

Starbucks is rolling out a new pay-by-phone service at coffee counters across the country, delighting caffeine addicts who can now pay for their Trenta iced coffee with their BlackBerry or iPhone.

The pay-by-phone service has been in testing at Starbucks locations in Seattle and New York for some time and the company is rolling out the option to pay with your smart phone to 6,800 Starbucks stores, including an additional 1,000 stores located inside Target stores.

Unlike many pay-by-phone programs that require a special phone or a special case, the Starbucks solution is an app for the iPhone, iPod Touch and select BlackBerry devices. The app allows users to manage their Starbucks cards and with the push of a button, choose to pay with a card that is tied to their account.



The Starbucks Card Mobile App will display a barcode that the barista can scan to deducting the cost of your purchase. The app will not allow you to connect to a credit card for payment, so you will need to keep funds on your card, funds can be added with a credit card or by PayPal.

Starbucks isn't the first company to bring this type of functionality to your phone with an app. Target launched a gift card app in early 2010 that allows users to carry their gift cards on their phones and use the barcode to pay for in-store purchases.

While Apple and Google are pushing to include Near Field Communication (NFC) support in future versions of the iPhone and Android devices, which would make it easier to pay by phone in a method similar to how some credit cards currently work, the use of apps and software solutions means that users can enjoy the convenience of paying by phone without the need to buy a brand new device.

Hopefully, we'll see more retailers add this functionality to their apps. Who knows, it could cut down on gift card spoilage that comes from always leaving your Best Buy gift card at home.

Rising Gas Prices Expected to Impact Consumer Behavior

With gas prices rising to their highest mark in two years, consumers can be expected to repeat many of the same shopping and spending patterns they employed when the average price of gas reached $4.11 per gallon during the summer of 2008, according to Todd Hale, Nielsen senior vice president, consumer and shopper insights.

Although the price of gas settled back to $1.61 per gallon by the end of that year, fuel prices have crept back up to $3.05 per gallon, and some analysts expect the price to rise to near 2008 levels, said Hale in a blog on NielsenWire.com.

At the time of the gas price peak in 2008, consumers responded by reducing shopping trips, eating out less, buying for value and using more coupons, according to Nielsen research.

"It was during that year that the 'staycation' came into existence as consumers cut-back on unnecessary travel and did more at home in an effort to save money," wrote Hale. "We saw a flurry of meal deals from food retailers and manufacturers as they aggressively fought to win trips that restaurants were losing."

Hale expects past consumer reactions to gas prices to come into play in 2011.

"A number of the habits consumers formed in response to the high gas prices then have remained in place, and are likely to accelerate if gas prices go much higher, including buying gas linked to spending levels at grocery stores and purchasing gas at outlets offering other incentives," wrote Hale.

Hale continued: "While it's not yet clear how high gas prices might go, any further rises coupled with elevated levels of unemployment are likely to drive consumers to take additional steps to save money. It's never too early to have the strategy in place to respond."

The Four Essential Phases of Social Media Adoption

When discussing social media with business executives, I'm frequently reminded of the fable of the elephant and the blind men. In the story, six blind men, hearing that an elephant has been brought to their village (and having no idea what an elephant is), go to the village square to investigate. One feels the elephant's side and proclaims that an elephant is like a wall. A second, feeling one of the elephant's legs, says it is like a pillar. A third, touching the tusk, describes the animal as being like a solid pipe.

Although each man's description was accurate, each perceived only part of the elephant; none had a perspective of the entire beast.

It's the same with many business executives and their views of social media:

"Social media? Twitter isn't appropriate for our market."

"Our company already has a Facebook page!"

"We don't have time to maintain a blog."

"Several of our people use LinkedIn."

Such statements reflect perceptions of "parts of the beast" -- components (tools) of social media. But using one or more of those tools, with no clear objectives for benefiting the company, doesn't constitute a strategy.

Here is a four-phase adoption model designed to reveal the entire elephant that is social media.

Phase I: Observation

As Yogi Berra famously noted, "You can observe a lot just by watching." A bit of research and observation up front will make your participation later much more productive and prevent false starts and missteps.

Some of the questions to answer in this phase:

• Where are people talking about our company, industry, and competitors? Which social media platforms do they congregate on?
• What are they saying? What are the hot topics?
• Who's doing the talking? Which voices seem to have the most influence?
• What opportunities do we have to respond and participate? What kind of content seems to be most popular?
• What questions are people asking that we can answer?

Social media monitoring tools are very helpful in answering those questions. Among free tools are Social Mention and Alterian's trial version of SM2. A wide range of tools is available with differing levels of cost and sophistication.

Phase II: Preparation

Every company with more than a handful of employees is already involved in social media -- whether those running the company know it or not. That's because nearly half of all Americans are now active on at least one social network, including two-thirds of 25-34 year-olds. And though employees may be using these networks primarily to share pictures of the kids or to plan which clubs to hit next weekend, most will bring up the workplace at some point:

"Our new CEO, John Doe, is an incompetent jerk."

"I sure hope our new product works because we've really skimped on the testing."

"If I owned any stock in this company, I'd dump it now before the earnings announcement next week. Last quarter was a bust."

Though employees may share positive thoughts about your company with their friends, family, and followers, they may also post comments like those above, leading to bad PR, reduced sales, and even legal action.

One common objection voiced by executives about social media is that it can't be controlled. That's true, but when it comes to what a company's employees are saying, it can, at least, be guided. Developing a social media policy is a crucial first step toward making social media a constructive, rather than dangerous, communication channel.

Fortunately, there's no need to start from scratch, as there are dozens of social media policies from major companies available online to serve as examples. Outlines vary greatly, but here are a few of the essential elements:

• The company's approach to social media. What are the goals, limits, and rules? A small restaurant will use social media much differently than a heavily regulated financial services company.
• Guidelines. What's acceptable and what's not? Don't rely on "common sense." Spell it out.
• Consequences and questions. Let employees know what will happen if guidelines are violated, and point them to someone who can answer questions for any "gray area" issues.

Once the decision is made to embrace social media, companies need to establish plans. Based on the research conducted in the Observation phase, the plan should address issues such as these:

• What are the objectives?
• Who will be involved?
• Which social media platforms will be used?
• How will results be measured?
• What types of content will be produced?
• Who will create the content?
• How will content be optimized across platforms? (e.g., executive profiles on LinkedIn link to the company blog; blog posts are tweeted and posted to LinkedIn Groups)

Phase III: Participation

With the groundwork laid, monitoring in place, and plans developed and approved, the company can begin "officially" participating in social media -- or, more likely, reassessing initiatives already in place, as many firms have already jumped into the social media fray without proper planning.

Less than one-third of companies in the Americas have a social media policy in place, and only half have a formal strategic plan.

Participation can take a variety of forms, from simple monitoring of and responding to brand mentions to actively creating thought-leadership, informative or entertaining content, and promoting across social media venues.

For companies that produce content, a blog is often at the center of the effort. More than half of B2C firms and nearly three-quarters of B2B vendors maintain company blogs. But blogs aren't the only option for sharing content through social media; among the content types are video on YouTube or Vimeo, presentations on SlideShare or myBrainshark, photos (Flickr, Photobucket), and PDF documents (Scribd, Docstoc).

Once posted, content can be promoted through microblogging sites (Twitter, Jaiku, Identi.ca), social-networking sites such as LinkedIn and Facebook, and social-bookmarking sites such as Digg, Mixx, and Reddit.

The key to successful social media participation is engagement. Sharing content shouldn't be viewed as broadcasting to the market but rather as seeking to start conversations. The point is to draw in interested parties, key influencers, and ultimately sales prospects by engaging them in discussions and building business relationships.

Phase IV: Integration

Most companies think of social media first in terms of marketing and PR activities, and they begin their social media efforts in those areas. But those at the highest level of social media maturity and integration are using social media for a variety of purposes across the organization.

Just as it would make no sense to provide telephones only for the sales force, or email access only to accounting, there's no need to limit social media interaction to the marketing department.

At this advanced stage, companies may be using social media not only in marketing and PR but also in a variety of other areas, including the following:

• Human Resources. HR departments use social media to recruit and prescreen candidates, improving new hire quality while reducing recruitment time and cost. Three-quarters of US corporations already use LinkedIn to conduct background checks, and nearly half do so on Facebook.
• Customer Service. While no organization should overly rely on social media to resolve customer-service issues, it can shorten the "time to answer" some customer queries and reduce costs. Large enterprises that have incorporated social media into their customer service options include Verizon, Intel, Best Buy and Dell.
• Sales. Social media has changed the buying cycle. Prospects are now much more informed before they even begin a dialogue with sales; they've researched alternatives, developed a short list of vendors, and know what key features they're after. The ability of buyers to do all of this before ever contacting a vendor has increased their expectations of salespeople as well; they expect sales pros to know what their company does and what challenges their industry confronts. Social media is valuable to the sales force not only for prospect research but also for generating leads and building credibility.
• Product Development. Whose input could be more valuable to product development efforts than your customers' and prospects'? The Wall Street Journal has described social networks as the new focus groups because of the high value and relatively low cost of use. Because of potential legal issues involved in using someone else's ideas, firms often use public networks for basic research and rely on their own branded online networks, with clear rules spelled out, for more direct suggestions.

Ideally, companies at the integration stage not only use social media across departments but also ensure that efforts and information are coordinated. For example, HR should be communicating the same value proposition to recruits that Marketing uses with prospective customers. Product designers should understand customer-service issues to help improve products or make them easier to use. Sales and Marketing should align social media activities to avoid duplicated efforts or inconsistent messages.

When it comes to cross-organizational alignment of social-media use, perfection can't be achieved. But as Lexus constantly reminds us, it can be pursued.

(Source: Tom Pick, Marketing Profs, 01/13/11.)

Shoppers to Spend More, Stay Thrifty

Shoppers will continue to spend more this year, spurred by a slowly improving job market and an uptick in income, but enough shoppers are still struggling with their finances that any increase will be modest, a retail industry expert said.

Consumers returned to stores en masse in 2010 and gave retailers their best holiday season since before the recession.

But December sales at top retailers such as Macy's Inc and Kohl's Corp disappointed Wall Street as shoppers proved to be more sensitive to prices than expected and showed they were ready to take a break from shopping now that Christmas has passed.

"For those consumers that have jobs and are not underwater with their mortgages, there could be a slight uptick in spending," said Ira Kalish, director of global economic at consulting firm Deloitte.

The International Council of Shopping Centers expects same-store sales to be up between 3 percent and 3.5 percent in 2011.

"To the extent they spend, they will be very price sensitive and more apt to spend more on small things rather than big items," Kalish told Reuters on the margins of the National Retail Federation conference in New York this week.

Discount chains such as Target and dollar stores will continue to win shoppers so long as unemployment remains high, while home retailers, such as Home Depot, will struggle until the housing market rebounds, he said.

U.S. retailers' profits margins rose by 1 percentage point to 3.4 percent in the 2009 fiscal year, according to a Deloitte study released on Sunday. But just as their prospects seem to be improving, retailers face a major threat to their gross margins: the doubling in cotton prices in the past year that may force them to push up the pricetags on clothes even though shoppers are still very price conscious.

"They don't have much wiggle room," Kalish said of retailers who cater to modest income shoppers such as J.C. Penney Co Inc.

The National Retail Federation conference, which concludes today, featured chief executives of top retailers who discussed the prospects for retail spending in 2011 and how to contend with higher production costs.

(Source: Reuters, 01/09/11)

Pizza Chains Hope to Get a Bigger Piece of the Pie

A large pizza loaded down with toppings for 10 bucks.

An iPhone app to order your favorite pie.

A new recipe touting a tastier sauce, better cheese combination and flavored crust.

These are the latest weapons concocted by America's top pizza chains in what is becoming an epic pizza battle.

Papa John's, Domino's, Pizza Hut -- and all the big names in between -- are duking it out across counters and doorsteps, as ever-budget-conscious people still recovering from the recession continue to look for cheap fast food.

"They are intensive competitive marketers. They're going to try to mimic each other and one-up each other's offerings, whether they're competing on quality of ingredients and formulation or the latest deals," said Nancy Childs, professor of food marketing at St. Joseph's University in Philadelphia.

Americans are eating it up, especially at a time when they are watching their wallets.

In 2009, Americans spent close to $38 billion on pizza, remaining virtually flat compared with the year before as other restaurant sectors took a nose dive. To lure in some of that dough, pizza chains stepped up to the plate.

Little Caesar's in November introduced its Pizza! Pizza! Pantastic: Two Hot-n-Ready pizzas, one supreme and one pepperoni, for $9.99.

Papa John's, just last month, launched a free iPhone app that lets customers order everything on its menu no matter where they are.

Pizza Hut, the top-selling chain in the U.S. with $5 billion in sales in 2009, offered diners $10 pizzas any way they wanted them.

And Domino's revamped its pizza recipe in a much-discussed ad campaign that has translated into higher sales. Its 2010 third-quarter same-store sales were up 11.7 percent from the same period in 2009.

Brandon Solano, Domino's vice president of innovation, called the bad economy a headwind in Domino's gains but also stressed that the marketing campaign about his company's updated flavor profile impressed customers with its honesty.

"The pizza industry has seen a lot of competitors following one another," he said. "Coming out with a new recipe speaks to leadership, not followship. There were a lot of people who were looking for something better, and we gave it to them."

Plenty of consumers are turning to pizza, and a sluggish economy is enlarging the food's appeal beyond the traditional three C's -- college students, cheapskates and Cub Scouts.

"This is a good value meal, and people are looking for that," said Professor Childs. "If people can't afford a restaurant out, they can still afford the pizza to take them out of the kitchen. This is the time when you're looking to expand your market share to get more customers, so it makes it even more intense."

There are nearly 65,000 pizzerias in business. The 42 percent owned by the top 50 chains control 48 percent of the sales.

All the competition is promoting lots of ad spending by pizza chains to get the word out on deals. The U.S. pizza restaurant and delivery services industry, as a whole, spent more than $545 million on advertising in 2009, according to Kantar Media, a marketing and analysis firm.

And there will likely be more to come this year.

"It's going to remain a very competitive sector," said Mark Kalinowski, a research analyst specializing in restaurants for New York-based Janney Capital Markets. "Pizza's probably held its own in terms of total market share as compared to the rest of the restaurant industry. All in all, pizza's not in a bad place at all."

(Source: Indianapolis Star, 01/03/11)

Asian Brands Dominate Preference Among Hispanic Auto Buyers

Toyota, Honda and Nissan dominate new vehicle preferences among Hispanics in the U.S., according to a recent study by Polk.

The three companies account for 46.4 percent of the Hispanic market based on an analysis of new vehicle registrations for the first nine months of 2010. Toyota leads the market by far with more than 20 percent share of the Hispanic market, and 46 percent greater volume in registrations than its next closest competitor. Hyundai, Mazda and Kia are also included the top 10 list based on registrations by volume to Hispanics.

Only three domestic automakers are in the top 10, according to Polk. Chevrolet, Ford and Dodge represent a combined 21.2 percent of the Hispanic market. European brands have mixed performance with Hispanics, led by Volkswagen, with 2.8 percent of the Hispanic market.

Asian brands have grown in popularity among the Hispanic market over the past 10 years and many are growing their sales to Hispanics faster than sales to the overall population, representing a significant development.

Manufacturers have been engaging in increasingly important marketing programs geared specifically toward this audience, according to Polk.

"Toyota, Honda and Nissan all have specific Hispanic marketing strategies and agencies that focus their marketing efforts to Hispanics," said Mark Pauzé, senior solutions consultant at Polk.

"Tracking sales to this growing demographic and their loyalty, coupled with a specific marketing strategy, has an impact."

The Hispanic automotive market in the U.S. increased 6.5 percent during the first nine months of 2010, according to Polk, outpacing the overall U.S. auto market, which grew just four percent in the same time period.

Hispanic purchases now account for 8.7 percent of the total U.S. vehicle market, up from 8.5 percent just a year ago. Hispanics reached 10.6 percent of the market in 2006, but their share and volume decreased with the collapse of the automotive market in 2008. The Hispanic market was recovering more quickly than the overall market in 2010.

Buick's sales to Hispanics increased 83 percent in the past year, according to Polk. "Buick has focused on Hispanics because they prefer comfort and amenities in a family car at a reasonable price -- a sweet spot for Buick. Their attention to this market is paying off for them," said Pauzé.

Growth within this market is significantly higher than Buick's overall growth of 49.7 percent, and Chevrolet, Hyundai, Mazda and Kia also experienced more growth within the Hispanic market than overall for their respective brands. In addition, Cadillac, Hyundai, GMC, Kia and Infiniti also experienced more than 25 percent growth in their sales to the Hispanic market. Ford and GMC are not keeping pace in the Hispanic market, with overall growth for those brands exceeding Hispanic growth.

Half of the major European brands are growing or maintaining their sales to Hispanic consumers, Polk's analysis shows. Volkswagen, MINI and BMW lead, and Audi increased its sales to Hispanics 23.4 percent in the past year, though it continues to represent less than one percent of the market. About half of the European manufacturers are declining in Hispanic market share and none are growing more with Hispanics than the general population.

The top 15 brands, based on their share of the Hispanic market through the first nine months of 2010, were: Toyota, 20.3%; Honda, 13.9%; Nissan, 12.2%; Chevrolet, 9.1%; Ford, 8.9%; Hyundai, 4.1%; Dodge, 3.2%; Mazda, 2.9%; Kia, 2.9%; Volkswagen, 2.8%; GMC, 2.3%; BMW, 2.2%; Mercedes-Benz, 1.9%; Jeep, 1.9%; Lexus, 1.6%.

(Source: Polk, 12/15/10)