Usable Future Innovation · Global & local knowledge: where culture is now and next Consultancy applications & techniques to make insights more actionable Mixture of hard & soft data

Usable Future Innovation

A presentation to the BCCC Technology Conference

Prepared by Chris Grantham

Date 26th March 2009

2© 2009 The Futures Company

What I’ll cover

• How to make the future usable

• Not how to make innovations usable .. that’s your job!

• Some of the future challenges and opportunities for innovation emerging in the consumer world


Who are The Futures Company?

• Future-Facing Research & Consultancy

• 50 years experience • Global intelligence

network • Offices in 3 global hubs:

US, UK, India

• Part of the Kantar group within WPP, one of the world’s largest insight, research & consultancy networks


We have a specialism of food and drink

Food and DrinkHealth & Pharma

Financial ServicesMedia & Entertainment

TechnologyTravel & Leisure

Retail


Our mission

Unlocking Futures


Our offer

Global Knowledge & Intelligence

Trends & FuturesConsultancy

Future-Facing Research(Qualitative, Quantitative)

Deeper understanding of consumers

Identifying future opportunities

Shaping & seizing

opportunities


A unique combination of capabilities

Global & local knowledge:where culture is now and next

Consultancy applications & techniques to make insights more actionable

Mixture of hard & soft data from quant & qual capabilities

Future-facing approach:opportunities for growth

A comprehensive view of consumer attitudes

and brand behaviours, now and into the future


The future isn’t fixed, it’s a series of possibilities

• Understanding the future gives you new opportunities for unlocking market space

• Clients typically over estimate change within 2 years and underestimate change within 10 years.

• It’s important we don’t see the future as ‘out there’and look for ways to connect with it

• We can see the future today, just not it’s exact shape


We can start to make the future usable when we draw out these two perspectives

The Usable Future

PresentForward

FutureBack

My focus today


PresentForward


Introduction

• A study to understand the impact of the economic crisis on consumer attitudes and behaviour

• Nationally representative online survey - over 2000 UK adults

• February 2009 fieldwork

• Attitudes and behaviour - economy and their personal finances

• Helping you to make the right strategic and marketing decisions over the coming 18 months


4 key headlines

• The world has changed – adjusting to a new reality

• A new consumer context for innovation– Protecting what’s important– Redefining value– Questioning consumption


• The world has changed – adjusting to a new reality• A new consumer context for innovation

– Protecting what’s important– Redefining value– Questioning consumption


Sobering up after the consumption hangover

• Aug ’08 vs. Feb ’09

• Impact on individuals, jobs and the UK economy

• Prices are falling – food, petrol, gas, electricity

• A different phase as consumers have taken steps to adjust their behaviour and immediate price pressures have easedFeb 09

Adjusting to a new reality and adopting a variety of approaches to cope


Perception of ‘the big picture’ has understandably worsened since August ‘08

90

36

84

51

96

55

91

63

01020304050

60708090

100

Things are going badly for the UK economy

Things are going verybadly for the UK

economy

I'm worried about a (long) recession

I'm worried about a (further) decline in the stock market

August 2008 February 2009

Source: The Futures Company, Feeling the Pinch 2009

% % agreeing


Immediate cost pressure has eased

6862

43

31

4349

35

24

0

10

20

30

40

50

60

70

80

Cost of petrol The cost of food Rising interest rates Rising mortgagerates

How worried are you about the following issues? (% agreeing ‘I am very/fairly worried about…’)

August 2008 February 2009%



Long term issues are coming to the fore

• 1 in 4 are now worried about the possibility of losing their job

• 43% of consumers are worried about ‘having enough money to retire on’

• 60% of people are now worried about the possibility of a long recession

• And who to trust? Over 70% decline in trust of CEO’s, the government and banks



Anxiety about day-to-day affordability has shifted

2534

2930

2219

23 17

0

10

20

30

40

50

60

70

80

90

100

Aug-08 Feb-09

Placid Perturbed Pressured Panicked%



Men are six months more relaxed than women

1930 30 38

30

32 2929

2420 21

19

27 19 20 14

0102030405060708090

100

Aug-08 Feb-09 Aug-08 Feb-09

Female Male

Placid Perturbed Pressured Panicked%






Yes, the majority of consumers do have an eye on the price of their groceries over the next 12 months

How much more or less likely are you to pay more attention to the price of grocery products that you are buying in the next 12 months given your financial situation?

74

7

0

10

20

30

40

50

60

70

80

More likely Less likely



But consumers are employing smart tactics – “trading off”rather than “trading down” in order to maintain their lifestyle

6%

4%

3%

3%

2%

1%

-6%

-13%

-15% -10% -5% 0% 5% 10%

No Frills

Borrowing

Reducing Ethical consumption

Managing Money

Spending Wisely

Trading down

Lifestyle Sacrifices

Consuming Less

% Change (August 2008 - February 2009)


Spending strategies between August 2008 – February 2009



Different strategies to cope

19%Lifestyle Sacrifices

39%Managing Money

19%Borrowing

50%Trading Down

36%Reducing Ethical Consumption

45%Consuming Less

54%No Frills

60%Spending Wisely

Total

% more likely to do the following actions in the coming year



Making choices rather than across the board cuts

August 2008: How likely are you to cut down on the following things in the next 6 months (% Agree)?

February 2009: Which of the following have you done in the past 6 months to save money (% Agree)?

6356 56

514850

42 4439

21

0

10

20

30

40

50

60

70

Put off buying somethinguntil the sales

Eating and drinking out less often

Look for cheaper options when eating and

drinking out

Shop for fun and pleasure

Choose cheaper optionswhen going on holiday

Aug 2008: Next 12 months Feb 2009: Past 12 months%



Do I need this? Is it worth it?

Aug 2008: Next 12 months Feb 2009: Past 12 months

73

62 61

72

59 61

0

10

20

30

40

50

60

70

80

Pay more attention to the price of grocery products that I am buying

Buy supermarket own label products where I would have

bought branded products in the past

Buy fewer new clothes

August 2008: How likely are you to cut down on the following things in the next 6 months (% Agree)?

February 2009: Which of the following have you done in the past 6 months to save money (% Agree)?

%



Consumers’ personal concern for ethics and the environment has not fallen during the recession

8782

73

57

88 87

77

58

0

10

20

30

40

50

60

70

80

90

100

Being able to recycle your rubbish

Reducing the packaging on the products you buy

Being able to buy locally produced goods

Being able to buy ethically produced goods

Aug-08 Feb-09

‘The following are important to me personally’

%



But about a third of these consumer also claim to be cutting back in these areas

%

Aug-08: I am less likely to buy these products over the next 12 months in order to save moneyFeb-09: I am less likely to buy these products over the next 12 months in order to save moneyFeb-09: I have stopped buying these products in the last 12 months in order to save money

3229

3532

911

0

5

10

15

20

25

30

35

40

45

50

Fairtrade products Environmentally friendly products



The things we are most willing to sacrifice in order to save money

62 61

32 32 3128

17 1613

8

0

10

20

30

40

50

60

70

80

Big Name Brand Organic EnvironmentalBenefits

Convenience Made in UK Family Favourite

SuperiorTaste

Authenticity Health Benefits

Natural Ingredients

Total

‘When thinking about food and drink products you buy, which of the following are you most willing to sacrifice to save money’’






Value is about more than price even in a recession with consumers adopting a more pronounced credit-debit approach to consumption

… consumers can then continue to spend in the areas which matter most

By seeking out better Value products in low engagement areas…

… consumers canthen continue

to spend in the areas which matter most


Confident brands lead the market

A brand that does not lower its price during current economic crisis

• 67% “It is popular”

• 31% “Already better value”

• 28% “Better quality than those that lower prices”



Short term actions may have unexpected consequences

…resisting immediate sales pressure may be a better long term approach

A brand that lowers its price during current economic crisis

• 71% “The brand is normally overpriced”

• 36% “Getting less product than before”

• 28% “The quality has been reduced”



Consumers are looking to trade off, rather than trade down


Fun

Lifestyle

• Entertaining and eating in home, rather than out

• Premium options in a value setting

• Home-made, rather than ready made

• Little treats, rather than expensive excesses

• Consumers seek familiar, comforting, ‘family’and trusted brands


‘Value’ means more than just price


It’s more important than ever to optimise your mix of ‘messages’ to deliver ‘best’ value (at a fair price to me)

Nothing artificial✔100% fish ✔

A natural source of

Omega 3 ✔= Best in category value


Using our ‘mental wallets’ to prioritise spending

Fun

Basic essentials -

relatively low engagement

Day-to-day little luxuries and treats‘Essential’

lifestyle spending

Frivolous or more

indulgent spending


Indulgent

Lifestyle

Sanity

Basic


Many ‘everyday’ categories are likely to be “basic” or “sanity”spends

34%22%20%11%Beer

38%27%8%12%Health drinks

37%25%12%16%Ready meals

38%16%27%15%Confectionery

53%20%13%7%Takeaway food

31%23%25%13%Alcohol for drinking at home

10%18%18%50%Soft drinks and juices

IndulgentLifestyleSanityBasic



Let’s take an example…

Basic Sanity Lifestyle Indulgent

815

16

28

28

17

4840

0

10

20

30

40

50

60

70

80

90

100

Going to the cinema Confectionery

%



Position your brand as ‘lifestyle’ or ‘sanity’, not indulgent

Spending Maintained

Basic IndulgentSanity Lifestyle

Going to the cinema Confectionery

Spending Decreased

Spending Increased






The Reconstructed Consumer

• Optimism

• I want it all

• Indulgent

• Risk taking

• Accumulation of stuff

• Trading up

• Packing it in

• Realism

• I’m clearer on what I need

• Considered

• Caution and Protection

• Making more of what I’ve got

• Trading off

• Downtime and release


Your consumers are planning for the long haul – are you?

Of those asked, 47% said the

recession would last for 2 years

‘When I look ahead in 2009, I am worried about the possibility of a long recession’

55

76

8692

0

10

20

30

40

50

60

70

80

90

100

Placid Perturbed Pressured Panicked

%



Have we reached a cross-roads for consumption?

• 44% believe that “the recession will change consumer culture forever”

• 58% agree “the world before the recession was a consumption mad throw away society”

• 53% agree “it was a greedy spend spend culture”



Blocks of color w/textArial 18pt

Delete the line space to shrink box length

This is just text, no bullets; next slide has bullet setup

Ethics and environmental

issues

Need to be more responsible

Health and wellbeing

Seeking authenticity

Consolidation

A new consumerapproach?

A return to business as usual?

2008 2009/10

The recession has accelerated changes to consumer society – will this momentum bring lasting change?

Disruption


By dovetailing longer term trends with recessionary impacts a new picture emerges

• We are what we eat – How has recession accelerated long term value changes?

– A desire to reconnect food, community and family

– Local is better

– Love your leftovers

– Thrift is good for the planet

– Pleasure also found in restraint and frugality

– Food must be more than fuel but also better value in terms of fresher, tastier and healthier

– The importance of a home-made approach to food, influenced by the overall mood of control and frugality


Looking ‘Future Back’ also offers us a powerful future lens for innovation as it allows us to pick up on the impact

of longer term trends


Future drivers 10 -15 years out

• Uncertain future health scares

• Rising understanding of resource footprint of foods

• Uncertain raw material costs

• Use of nanotechnology in food

• Nutrigenomics and personalised nutrition

• Growing sophistication and use of GM foods

• New entrants in functional food market from other categories e.g. pharmaceutical companies

• Consolidation of food industry

• Increasing focus on waste

• Uncertain future talent pool

• Aging population

• Increasing popularity of local food

• Growth in preventative health and healthy lifestyles

• Greater consumer self-education

• Growth in “diabesity”

• Increasing regulation on health claims in food products

• Change in media environment from mainstream broadcast to targeted media


Cross impact analysis of the drivers forms divergent future scenarios which can help prepare for the longer term future – where will you play?

‘Natural’Benefits

Fragmented

The

Com

petit

ive

Land

scap

e

Consolidated

PromotingScience

Health Agenda

Health protectionism

A return to nature A sweetshop of health solutions

A ‘space race’ offunctional foods


And then we create ‘range’ concepts against these future scenarios


When the future comes together

The Usable Future

PresentForward

FutureBack


The future isn’t fixed, it’s a series of possibilities

• Understanding the future gives you new opportunities for unlocking market space

• Clients typically over estimate change within 2 years and underestimate change within 10 years.

• It’s important we don’t see the future as ‘out there’and look for ways to connect with it

• We can see the future today, just not it’s exact shape



Thank you

Documents

Usable Future Innovation · Global & local knowledge: where culture is now and next Consultancy applications & techniques to make insights more actionable Mixture of hard & soft data