InsidethemindsandpocketsofLatinAmericanconsumersHowconsumersbuildpriceperceptionanditsimpactonretailers THECOCA COLARETAILINGRESEARCHCOUNCIL LATINAMERICA TheCoca ColaRetailingResearchCouncil LatinAmerica CCRRC LA isdedicatedtodevelopingabetterunderstandingofthefoodretailingandalliedmerchandisedistributionbusinessinLatinAmerica Itconcentratesinidentifyingandthenstudyingselectedrelevantissues presentingitsfindingstothemanufacturingandretailingcommunities inordertoassistinthedevelopmentandenhancementofthefoodretailingbusiness LatinAmericaCouncilMembersJonathanBergerCIESUSAHowardButtIIIHEBMexicoGuillermoD AndreaCouncilResearchDirectorAnaMariaDinizGrupoPaodeAcucarBrazilPauloGoelzerIGA Inc BrazilAntonioCotoGutierrezDiaInternacionalArgentinaTimHammondsFMIUSANicol sIb ezD SChileGonzaloRestrepo xitoColombiaEduardoCastroWrightWal MartMexico REVIEWINGTHESTUDYGOALSANDOBJECTIVES UnderstandthedriversofconsumerpriceperceptioninLatinAmerica Overallgoalsandfocuslevel Specificobjectives Understandtheimplicationsofpricingapproachesonretailersandmanufacturers Source Teamanalysis 10 ofstudyfocus 90 ofstudyfocus THESTUDYLEVERAGEDTHREEMAINSOURCESOFINFORMATION ACNielsenconductedthefocusgroupsinS oPauloandthefieldresearchinallfivemarketsSource Teamanalysis 15in depthinterviewswithexecutivesofkeyretailersintheregion Methodology QualitativesurveyFocusgroupstotestinitialhypothesisQuantitativesurvey 3 000 30 minuteinterviews CorrelateconsumerresearchresultswithACNielsenscantrackinformation Understandretailerperspectiveonconsumerpriceperception Objective CaptureinsightsonconsumerpriceperceptionSegmentconsumers EnrichfindingswithACNielsenproprietarydatabasesMatchpriceperceptionwithactualprices In depthinterviews Consumersurvey ACNielsendatabase CONSUMERSURVEYDETAILS Source ACNielsen teamanalysis ONLYCONSUMERSWHOSHOPREGULARLYINATLEASTONEMODERNFORMATSTOREARERELEVANTFOROURANALYSIS Includeshypermarkets supermarkets mini marketsandsuburbansupermarketsSource Teamanalysis Consideredforouranalysis Consumerswhoonlyshopintraditionalformat Consumerswhoshopinitleastonemodernformat storeregularly Typicallylow endconsumersUsefultogaininsightsonthelow endmarket alreadystudiedbyCCRRCAnalysismoreusefulinastudytoincreasethepenetrationofmodernformat whatisnotthescopeofthisproject PrimarypopulationofinterestfortheCCRRCOnlyrespondentsabletoprovideanswersandcrossabledatafor AccuracyofpriceperceptionPriceperceptiondriversformodernformatEffectivenessofpromotionalactivityinpriceperceptionbuilding Oursampleisrepresentativeofmodernformatshoppers 21 34years 35 49years 50 years THECONSUMERSURVEYISREPRESENTATIVEOFTHEMAINSOCIO ECONOMICCLASSESANDAGEGROUPS Age BasedonACNielsensocio economicclassificationforeachmarketSource Consumersurvey Middle Low High Socio economicclass Resultstakeintoaccountthebehaviorandattitudesoflowincomeconsumers Source ACNielsen NationalMarketingAssociationsofeachcountry COUNTRY LEVELACCEPTEDSTANDARDSGUIDEDOURINCOMELEVELCLASSIFICATION WeadoptedtheprinciplessuggestedbytheNationalMarketingAssociationsofeachcountry S oPaulo BuenosAires MexicoD F Santiago Bogot KEYTAKEAWAYSFROMSTUDY LatinAmerica diversityofconsumers andnotjustinthedepthoftheirpocketsThefewkeyleversthatmatterinbuildingpriceperception andtheonethatdoesn tConsumers mostly gettingitrightintheirsearchforvalueRetailershaveanopportunitytogetitrightmoreoftenintheirsearchforabetterpriceproposition CONSUMERSINLATINAMERICACANBESPLITINTOFIVEMAINSEGMENTS Source Consumersurvey teamanalysis Avidbargainhunters Investalotoftimeandarewillingtovisitmultiplestoresforthebestdeals Qualityseekersandtimesavers Willingtopayaslightpricepremiumtosavetimeandhaveaccesstohighqualityproducts Indifferentshoppersonabudget Donotcareaboutshopping henceinvestlittletimeinit Range seekersonabudget Wanttobringhomethebestqualityproducts butlimitedbyatightbudget Highincomeconsumerswhoarewillingtovisitmultiplestorestofindthebestdeals High incomebargainhunters WERANATWO STAGECLUSTERANALYSISCOMBININGATTITUDINALANDSOCIO DEMOGRAPHICSELEMENTS Notethatnoneoftheelementsareunique however thismethodologyprovidesmanagerswithunprecedentedcontrolovertheprocess byallowingmaximummanagerialinputandthetestingofearlyhypothesisSource Teamanalysis Sampleof3 084consumersin5countries Twomainsegmentationdrivers Attitudinalelements mostcommonmethod CleanandintuitiveattitudesacrossallsegmentsLacksactionability difficulttofindconsumers Selected4mostrobustscenariosCrossedwithshoppingbehaviorKeybuyingfactorsAveragemonthlyspendFormatofmainstore Socio economic demographicsSimplewaytosegment facilitateidentificationLacksinsightsanddoesnotreflectattitudes Two stageclusteranalysisCombinesbothmethodologiestoreachmeaningfulandactionablesegmentsProcess developedandrefinedbyMcKinseyexpertsforsegmentationswithstrategicobjectives Ran20 statisticallyrelevantscenarios Selected1scenariowith5clusters ALLOWINGTHEIDENTIFICATIONOFSOMECONSUMERSTOWHICHSEGMENTTHEYBELONG Source Teamanalysis LowincomelevelAge21 34yearsoldOnlyonepersononthehousehold MiddleincomelevelLargeh