QDS

1
Study of changes in consumer behavior and
motivation during financial crisis
2
Project history

• At the present moment the whole world in general
  and Russia in particular is experiencing a
  situation of financial crisis. Certainly, crisis
  phenomena which, first-of-all, have affected the
  financial sector, further to some extent will
  affect all other business processes. Russian
  companies which have recently recovered from the
  crisis of 1998 know about it firsthand.
• Certainly, it is premature to assert how closely
  today's global financial crisis effects will
  coincide with the ones of 1998. But it is
  necessary to take advantage of this experience in
  order to propose some hypotheses.
• One of the hypotheses implies that a rapid change
  takes place in times of crisis. Everything
  changes relation to products, criteria of
  choice, relation to advertising, relation to
  brands, shopping frequency and many other things.
  In this connection, all business process
  participants (companies which are engaged in
  manufacture, retail, promotion of products or
  services) find themselves in situation of
  uncertainty, fatal to any business.
• We, as researchers long time engaged in gathering
  and analysis of the information on consumer
  behavior in various markets, will try to lower
  this uncertainty level.

3
Hypotheses tested

• Within the limits of our research we tested the
  following hypotheses
• In conditions of financial crisis, consumer
  behavior will change as follows
• At the initial stage of crisis, consumers will
  change their places of purchase (to where the
  products/brands are cheaper)
• Then changes will come in the approach to stock
  and amounts of purchase
• After that there will be switch to cheaper price
  segments.
• Most people have already felt the crisis effects
  themselves.
• Changes in consumer behavior at the initial stage
  of the crisis will not affect their usual brand
  preferences.
• Products under Private Label (retail networks
  own brands) will become more popular among
  consumers.
• Product and service promotion with pre-crisis
  methods will become ineffective, and the new ways
  of consumer stimulation will be needed.
• Initial crisis effects will not affect financial
  instruments and attitude towards consumer credits
  in particular.

4
Summary

• Conclusions below demonstrate to which extent the
  chosen hypotheses have been confirmed or denied
  by results of the research.
• Hypothesis
• At the initial stage of the financial crisis,
  consumers will change their places of purchase
  (to where the products/brands are cheaper)
• Then changes will come in the approach to stock
  and amounts of purchase
• After that consumers will switch to cheaper price
  segments.
• Result
• The hypothesis proves to be true.
• Remarks
• The results of the research have shown that at
  the present moment the majority of people have
  not felt the influence of crisis on themselves
  and stick to their former consumer habits, i.e.
  they prefer products of the same brands, as
  earlier they are guided by the price level they
  are used to and they adhere to former criteria of
  choice of products and services.
• But thus, trying to keep adherence to their usual
  products / brands, people gradually turn to
  shopping places where these products cost less.
• Considering that the crisis effects are in their
  first phase, further more cardinal changes in
  consumer behavior can be expected.
• The following proves to be true
• In spite of the crisis consumers continue to make
  purchases judging by quality and assortment.
  Price has is a defining criterion for no more
  than a third of consumers (see Segmentation of
  consumers).
• The majority of people by the current moment try
  to save money, buying the goods and services in
  places where they cost less.
• In spite of the fact that financial crisis
  strongly affected financial instruments,
  respondents show high readiness to take consumer
  credits.
• Besides that, people show low interest to the
  information on crisis that illustrates their low
  involvement into the changes taking place.

5
Summary

• Hypothesis
• The majority of people have already felt the
  effects of financial crisis on themselves.
• Result
• The hypothesis proves to be true.
• Remarks
• The majority of the respondents have felt the
  crisis to some extent. However, hardly more than
  half of the respondents felt its effects on
  themselves personally. In particular, the crisis
  became apparent in reduction of salaries and
  nonpayment of bonuses. Answers to the question
  how the respondents were affected by the crisis
  indicate this.
• However, respondents answers about their
  consumer behavior show that the sense of
  financial crisis still does not entail major
  changes in their actions and consumer habits.
  I.e. changes in the purchase behavior are
  lingering and has not yet occurred to the full
  extent.
• The following proves to be true
• Criteria of choice remain the same
• People are not willing to sacrifice their
  consumer preferences and try to maintain the
  usual standard of life
• Respondents have shown high willingness to take
  consumer credits.

6
Summary

• Hypothesis
• Changes in consumer behavior at the initial stage
  of financial crisis will not affect their usual
  brands.
• Private Label products (retail networks own
  brands) will become more popular among consumers.
  
• Result
• Hypothesis has been confirmed in relation to
  consumers purchasing places and has not been
  confirmed with relation to Private Label
  products yet (as changes in consumer behavior are
  not considerable enough yet to affect their
  relation to Private Label products).
• Remarks
• At present moment, the majority of consumers
  tries to keep their usual standard of life. In
  each category of products and services there are
  well-known, popular brands which became an
  integral part of consumers' life, their image. In
  spite of the fact that financial crisis,
  first-of-all, was reflected in financial aspects
  (wages, bonuses), people do not wish to reduce
  their level of life. Therefore, first-of-all,
  consumers try to cut down their expenses buying
  products/services in places where they cost less,
  or try to reduce the amount and/or frequency of
  consumption of their usual products/brands.
• Purchasing of Private label goods is perceived
  as decrease in level of life and consumers are
  ready to buy them only if they are absolutely
  sure of quality (as, for example, pastry sold
  right at the bakery) or in categories where there
  is no steady attachment to brand (bread,
  groceries).
• The following proves to be true
• The most popular ways of saving money today are
  the search of places where the usual
  products/brands cost less and purchasing some
  categories less often or in smaller amounts.
• As a whole, Private Label products are not
  popular among consumers yet two thirds of the
  interviewed do not buy them at all, or buy
  extremely seldom.

7
Summary

• Hypothesis
• Promotion of products and services with the
  pre-crisis methods will become ineffective, and
  the new ways of consumer stimulation will be
  needed.
• Result
• At the current moment the hypothesis does not
  prove to be true.
• Remarks
• Probably, the reason is the fact that financial
  crisis is not felt to the full extent yet, but at
  present people are ready to spend money with the
  same motives as earlier - to please their
  relatives, to indulge themselves, to maintain
  their image, to get something as a gift or to
  celebrate some important event.
• Besides, there is hardly less than one third of
  consumers who are guided by discounts and promo
  actions while shopping (see segmentation of
  consumers).
• Further, probably it is necessary to expect
  smaller consumer sensitivity to the usual ways of
  promotion, and it is required to search for new
  ways of consumer motivation. But at the initial
  stage of crisis former consumers' motives are
  still actual.
• It proves to be true that
• Going by the above-stated motives to some extent
  is relevant for all categories of products and
  services. Only essential products can make an
  exception.
• One of consumer segments Pragmatist - differs
  from the others. Their criteria of choice are
  mainly based on the price of the product/service
  and most likely they will buy something with the
  sale or 3 for the price of 2 sticker.

8
Summary

• Hypothesis
• The initial effects of the crisis will not affect
  financial instruments, in particular -
  willingness to take consumer credits.
• Result
• The hypothesis proves to be true.
• Remarks
• The results of the research have shown that
  people are not afraid to take consumer credits.
  In the last years credits have become an integral
  part of our life and the majority of people, in
  spite of the crisis phenomena, express a wish to
  take advantage of credits if they have such
  opportunity.
• It is important to note, that consumers are ready
  to borrow money not only to cover their urgent
  needs (short-term loan payments, municipal
  services expenses, buying food, etc.), but also
  for such expensive purchases as real estate and
  home appliances.

9
Summary

• Financial crisis is a long and lingering
  phenomenon. As the results of the first wave of
  the study have shown, not everybody has felt the
  crisis tendency yet, and even those who have, are
  not yet ready to change their former,
  "pre-crisis" habits. Consumers preserve a
  confidence in the future and support the illusion
  of their former life.
• Meanwhile people remain loyal to their usual
  products and brands they are ready to pay more
  money for an opportunity to indulge themselves or
  their relatives they still desire to spend more
  money than their income allows by taking loans.
• Most likely, their level of involvement into
  crisis will change a little bit later. Crisis
  effects will become larger and will affect a
  greater number of people. When that happens, more
  changes in consumer behavior will take place.
• This research is the first evaluation and it
  reflects the current situation. But, certainly,
  it cannot reveal all tendencies in the market in
  connection with the crisis. Later on we plan to
  proceed with the study based on the results of
  the first wave.

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Some details of this project
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Segmentation of consumers Segment 1

• Questions about the respondents attitude towards
  the choice of food, nonfood products and services
  were asked as a basis for segmentation. As a
  result 3 segments were formed, which differ in
  terms of attitude towards brands, value,
  discounts, and differ in socio-demographic
  characteristics. They are Expert, Pragmatist
  and Enthusiast.

• Expert
• These are rather conservative people who approach
  their way of shopping seriously they buy either
  products familiar to them, or products which have
  been recommended by friends or relatives. They
  try to choose the best products for their
  families.
• Quality of the product is critical to them.
• Price of the product does not really matter.
  Moreover, they are inclined to doubt the quality
  of goods if they are too cheap.
• In connection with financial crisis they do not
  plan to change the price range of their
  purchases, i.e. to switch to more expensive or
  cheap brands.
• It is the youngest segment.

12
Segmentation of consumers Segment 2

• Pragmatist
• Representatives of this segment always pay
  attention to the products price.
• If they have an opportunity to buy a product with
  the same quality, they will always prefer the
  cheaper one, without paying attention to brand,
  packaging, etc.
• Product brand for them is not a matter of
  principle.
• Representatives of this segment will be happy to
  buy products which are subject to discount or
  sale. For example, 3 for 2.
• This segment is more widespread in Moscow and
  Moscow region than other ones.

13
Segmentation of consumers Segment 3

• Enthusiast
• These are active people for whom it is important
  always to have a share of novelty in life, to try
  something new, unusual.
• The priority criteria in shopping for them is
  comfort, convenience of product.
• The most typical characteristics of this segment
  - making spontaneous purchases and a desire to
  indulge themselves.
• They are careful about products quality and
  often are willing to disregard price for better
  quality.
• This is the largest segment within the research.
• Enthusiast is the eldest segment.

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Summary food products

• Ways of saving money the main directions of
  saving on food are to search for retailer outlets
  where the usual brands/products cost less (41)
  to shop less frequently and/or buy less amount
  (35).
• Expenses cut downs are distributed as follows
  between product groups
• Search for retailer outlets where the usual
  brands/products cost less characteristic for
  all groups of products.
• Shop less frequently/in smaller amounts
  liquors, sweets, caviar.
• Transitions to cheaper brands ready-to-cook
  products, frozen food.
• Wholesale shopping grocery and pasta.
• Essential goods are not considered a product to
  save money on bread, dairy products, eggs,
  groceries.
• Risk zones during crisis
• Zone 1 Products, on which consumers tend to save
  first-of-all pasta, ready-to-cook products,
  canned food, frozen food.
• Zone 2 Products with a sustainable price level
  perception, i.e. they are not to be saved on, but
  also they are not the ones to be spent more money
  on - bread, dairy products, vegetables, tobacco,
  spices, eggs, groceries.
• Zone 3 Products of unsustainable demand
  consumers will save on them first-of-all, but
  under certain conditions are willing to pay more
  for them - liquors, caviar, sausages, cheese,
  seafood, meat products, soft drinks, bakery,
  sweets.
• Zone 4 Products outside of risk zone Consumers
  are not inclined to save on them and are ready to
  pay more baby food, tea, coffee, cocoa, fruit.
• Criteria for expensive purchase the most actual
  motive for an expensive purchase to please
  children or other members of the family.
• Goods out of expensive zone essential goods
  bread, eggs, pasta, groceries.

15
General ways of cutting down expenses on food
products

• The most popular way of saving on food products
  during financial crisis is search for point of
  sales where the usual products/brands cost less.
• Also, a popular enough way of economy on products
  is the purchase of some categories less often or
  in smaller amounts.
• Large packages and small wholesale are the least
  popular way of saving money on food products
  during the crisis.

16
Attitude towards the choice of food products

• With regards to the choice of food each of
  consumer segments has a clearly distinguished
  profile.
• Representatives of the Pragmatist segment
  prefer cheaper products, while they do not pay
  attention to the brand.

• The Enthusiast segment is distinguished for
  their spontaneity of choice and aspiration to try
  new things.
• People from Expert segment are more
  conservative in the choice of products and always
  closely read the labels on them. They try to find
  as high-quality and healthy products as possible,
  regardless of their price.

Question Specify, how much do you agree with
each of statements. Sample 1000 people
17
Summary non-food products

• Ways of saving money main ways of saving money
  on non-food products search for places where
  usual products/brands cost less (55).
• Expenses cut downs are distributed as follows on
  product groups
• Search for places where usual products cost less
  typical for all product groups.
• Shopping less often/in smaller amounts jewelry,
  leather goods, video and audio equipment,
  household and kitchen appliances.
• Switching to cheaper brands maintenance
  products, household chemicals.
• Buying a large volume of non-food items is not
  relevant.
• Respondents dont save on child care products and
  medicines.
• Risk zones during the crisis
• Zone 1 Products, on which people try to save
  first-of-all, are household and kitchen
  appliances, furniture, textiles for home,
  maintenance products and products for cars,
  household chemicals, household goods.
• Zone 2 Products with a sustainable price
  perception level, i.e. they are not to be saved
  on, but they are not the ones to be spent more
  money on - plastic windows, cars, motorcycles,
  personal heath aids.
• Zone 3 products of unsustainable demand -
  clothing, video and audio equipment, jewelry,
  leather goods, computers, laptops, mobile phones.
• Zone 4 Products outside of risk zone - consumers
  are not inclined to save on them and are ready to
  pay more footwear, child care products, drugs
  and medicines, perfumes and cosmetics.
• Criteria for expensive purchase the most actual
  motive for an expensive purchase to please
  children or other members of the family.
• Products out of the expensive zone household
  products, maintenance products and household
  chemicals.

18
General ways of cutting down expenses on non-food
products

• The most popular way of saving money on non-food
  products during financial crisis is the search
  for retailer in which the usual products cost
  less.
• Other ways of saving are less popular for
  non-food products during crisis.

19
Attitude towards the choice of non-food products

• With regards to the choice of non-food products,
  each segment has a clearly distinguished profile.

• In contrast with food products, concerning the
  non-food stuff general preferences for the
  segments are as follows
• Enthusiast and Expert prefer to buy their
  usual brands they are not ready to purchase
  them more expensive or cheaper.
• Pragmatist and Enthusiast are willing to pay
  more for products convenience of usage.

Question Specify, how much do you agree with
each of the statements. Sample 1000 people
20
Summary services

• Ways of saving money the main directions for
  saving on services are to search for places where
  usual services cost less (15) to use services
  less often and/or in less amount (13)
• The savings are distributed on product groups as
  follows
• Cutting down on the amount of services used
  billiards, bowling, nightclubs, cafes,
  restaurants, cinemas, theaters, etc.
• Using services in bigger amounts cleaning
  services, bank deposits and non-state education.
• Search for places where usual services cost less
  insurance, car maintenance, consulting
  services, beauty salons.
• Respondents do not save money on cellular
  communications, Internet service providers and
  private health facilities.
• Risk zones at crisis
• Zone 1 Services on which people try to save
  first-of-all consulting services, repairs, car
  maintenance.
• Zone 2 Services with a sustainable price
  perception level, i.e. they are not to be saved
  on, but also are not the ones to spend more money
  on bank deposits, cleaning, insurance, cellular
  communications and Internet service providers.
• Zone 3 Services of unsustainable demand on
  them respondents will save first-of-all, but
  under certain conditions they are willing to pay
  more for those party organization, travel
  agencies, fitness centers, cafes, bars,
  restaurants, movie theaters, theaters, night
  clubs.
• Zone 4 Services outside the risk zone -
  consumers are not inclined to save on them and
  are ready to pay more private health and
  education facilities, beauty salons, hairdressing
  salons.
• Criteria for expensive purchase the most actual
  motive for an expensive service purchase to
  please children or other members of the family
  equally popular reason for expensive purchase is
  the desire to indulge oneself.
• Services outside the risk zone repairs, bank
  deposits and car maintenance.

21
General ways of cutting down expenses on services

• The search for places where usual services cost
  less and using services less often/in smaller
  amounts are almost equally popular ways of saving
  money on services category.

22
Attitude towards the choice of services

• In general, each segment concerning services has
  shown its own special criteria of choice.
• Meanwhile it is common for all segments with
  relation to services to be not ready to pay more
  for them, but also not switch to cheaper ones.

Question Specify, how much do you agree with
each of the statements. Sample 1000 people
23
Summary crisis influence

• Crisis influence More than half of the
  respondents have felt the crisis effects on
  themselves to some extent. In general, crisis
  became most apparent in financial aspect -
  reduction of salaries and nonpayment of bonuses.
• Attitude towards credits in spite of the crisis
  more than two thirds of the respondents are
  willing to take consumer credits. Most of them
  would be using credit money to cover essential
  needs and pay off short term loans.
• Private label such products are not very popular
  among consumers two thirds of the respondents
  either do not buy them, or buy them very seldom.
• Information on crisis Most people do not
  specifically seek information on the crisis but
  pay attention to randomly encountered data on the
  topic. The main sources of information about the
  crisis are television, news and information
  sites, as well as the respondents friends,
  acquaintances, relatives.
• Business press Nearly two thirds of the
  respondents have been reading business press
  prior to the crisis, and in response to crisis
  this number increased by 6. The majority of
  respondents have been visiting news and
  information sites prior to the crisis, and in
  response to crisis this number also increased by
  6.

24
Crisis influence in general

• More than half of the respondents have felt the
  crisis effects on themselves personally.

Crisis manifestations

• In general, crisis became apparent in financial
  aspect - reduction of salaries and nonpayment of
  bonuses.
• In consumer aspect, no more than 16 of the
  respondents have felt the crisis effects some
  companies have stopped working, certain products
  and types of package have disappeared from the
  stores.

Question To what extent the economic crisis in
the country and in the world affected you and
your relatives? How did it affect you
specifically? Sample 1000 people.
25
Criteria for taking credits
Readiness to take credit

• More than three quarters of the respondents are
  willing to take consumer credits.

For what purpose

• Of those who expressed a willingness to take
  consumer credits, most would use borrowed money
  to pay for essential needs.
• About a third of the respondents willing to take
  consumer credits, would use the money to cover
  their short term loans.

Question Please indicate for what purpose you
(your family) will be ready to take consumer
credit? Sample 1000 people
26
Contacts

• Qualitel Data Services
• Natalia Pluhina, Chief Executive of Qualitel Data
  Services
• n.pluhina_at_norman.ru, nataplu_at_gmail.com,
• 7 916 656 40 97, 7 901 526 15 05
• Svetlana Miroshnikova, Head of Quantitative
  Research Department
• s.miroshnikova_at_norman.ru
• 7 926 532 24 13
• Ekaterina Lavrentieva, Head of Qualitative
  Research Department
• e.lavrentieva_at_norman.ru
• 7 916 631 09 77
• Anastasia Lobada, Head of Desk Research
  Department
• a.lobada_at_norman.ru
• 7 903 610 10 32
• Natalia Karchazhkina, Head of Marketing
  Consultancy Divisionn.karchazhkina_at_norman.ru7
  916 507 93 86
• Profi Online Research
• Victoria Sokolova, Research Director
  victoria_at_profiresearch.ru7 495 930 06 93
• Anastasia Dmitrenko, Account Director 7 495 938
  20 26anastasia_at_profiresearch.ru

27
Contacts
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street. Tel [phone] Fax 7 (499)
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street. Tel [phone] Fax 7 (812)
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Universitetsky pr. Tel [phone] Fax
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