consumer behavior hn and hcm

Confidential & ProprietaryCopyright © 2009 The Nielsen Company

Confidential & Proprietary Copyright © 2009 The Nielsen Company

HCMC v HANOIUnderstanding

consumerdifferences

Presented byVaughan Ryan

V


Confidential & ProprietaryCopyright © 2009 The Nielsen CompanyConfidential & Proprietary Copyright © 2009 The Nielsen Company

Sibling rivalry across the globe

New York vs Los Angeles

Beijing vs Shanghai

Madrid vs Barcelona

Sydney vs Melbourne

HCMC vs Hanoi


Executive Summary

• Attitudes of both markets can be defined as individualistic forthe Saigonese while Hanoians have a collective mindset

• Saigonese live for the moment while Hanoians are morecalculated and planned

• The role of advertising is more critical in Hanoi. Pricepromotions alone won’t appeal to Saigonese

• Is the Hanoi market really more premium?– Yes but you will need substantial marketing investment in Hanoi to

achieve success

• How has the tougher economy impacted behavior?– It differs by market and more importantly by category– Saigonese in general have been more affected but have not made

drastic changes in their consumption habits


• Setting the Scene• Research Design• How do consumers in HCMC and Hanoi make decisions?– Individualism vs Collectivism

• How can we impact purchasing behaviour?– Influence factors…and consumers’ willingness to adopt new

products• Is the Hanoi market really more premium?• How has the tougher economy impacted behaviour?• Key Findings and Implications

Agenda


19% use internetevery day

Setting the scene

Source : Government Statistical Yearbook of Vietnam ; Nielsen Vietnam Surveys and Nielsen Vietnam Omnibus

43% of people haveAirCon &/or heaters in

their home

13% of people haveAirCon &/or heaters

in their home

Hanoi

HCMC

Population: 3.3 mil

50/50 Male/Female

20-24 age group =20% of population

Population: 6.3 mil

48% Male52% Female

20-24 age group =13% of population

$344Average

Monthly Householdincome

$368Average

Monthly Householdincome

9% total VietnamGDP from Hanoi

20% total VietnamGDP from HCMC

26% use internetevery day74% Mobile

Ownership

51% MobileOwnership



How do consumers inHCMC and Hanoi make

decisions?Individualism vs Collectivism


Top 5 Consumer Concerns

Source: Nielsen Vietnam Omnibus May 2009

1) Health

2) Increasing Bills

1) Increasing Food Prices

3) Increasing Bills 3) Job Security

4) Work Life Balance

2) Job Security

4) Price Increases in Petrol

5) Debt 5) Children’s Welfare

$

$

HanoiHCMC


Individualism V Collectivism

Page 9

Other opinions do affect my actionsand behaviours

Hanoians

It’s my decision that counts. Iuse other opinions for reference

only

Saigonese

“When I came to the storeto buy an LCD, I had

already decided to buySamsung brand beforegoing there. I just asked

others’ opinions forreassurance’’

“For example, I want tobuy a new TV and if some

of my neighbors tell methat the TV is not highquality, then I would beturned off that TV right

away”

Source: Nielsen Regional Differences Qualitative Study


The Hanoi consumer is a complex beast formarketers

• Want it all but are willing to wait

• Want the best and will tell you theprice

• Seek others reaffirmation of theirpurchases

• Ask others opinions prior topurchase

• Love promotions and are aware ofprices

• But are conservative in theirpurchasing behavior displaying moreloyalty

“It’s not ok when yourfriend is using a premiummobile phone while youuse a cheap one. Peoplewill look down on you andjudge you”

Source: Nielsen Regional Differences Qualitative & Quantitative Studies


Saigonese and the push for individualism

• “I don’t care so much what othersthink”

• If they need it they will buy it

• Live for today and worry abouttomorrow later

• Do listen to others but in the end willmake their own decision

• Less impacted by marketing

• Lower loyalty to brands

“Everyone commentsthat my phone looks uglybut I don’t really care. It'snot that important…ifpeople like something, Idon’t necessarily followthem”



The influence from others is significantlyhigher in Hanoi

* Significantly higherQ 23b: Please rate those statements based on importance (1 to 5).Top 2 Boxes

94% 99% Recommendations from myfamily members

How important are each of these groups in making your purchase decisions?

Base: All respondentsSource: Nielsen Regional Differences Quantitative Study

71% 91% Recommendations from myfriends *

52% 83% Recommendations fromcolleagues/ partners *

42% 94% Recommendations from myneighbors

*


Page 13

But why?The role of public opinion and social conformity does differbetween the two cities and seems to influence Hanoians more

They don’t just live for themselvesand they do care what others thinkof them. Appearance is key.

They feel a responsibility to obeycertain standards and disciplines

Page 13

They just live for themselvesand don’t care “much” about

what others think.

Saigonese

“When I go out with myfriends, I don’t need to wearpremium luxurious brands”

Hanoians

“There’s a saying in theNorth which is: Tell me whatmotobike you are riding, thenI would tell you who you are”




How can we impactpurchasing behavior?

Influence factors…and consumers’willingness to adopt new products


How important are each of these factors ininfluencing purchase decisions?

41% 91%* Advertising

42% 83%* Newspapers/Magazines

36% 67%* Recommendations from sellers/storeowners

22% 95%* Internet/other websites to compareinformation

22% 100%* Mfr/Distributor/Seller websites andforums

* Significantly higherQ 23b: Please rate those statements based on importance (1 to 5). Top 2 BoxesBase: All respondents

Source: Nielsen Regional Differences Quantitative Study


…and Hanoians are likely to respond better toin store promotions and after sales service

52% 69%* Want to buy products that are onpromotion

34% 57%* Are willing to pay more to get betterafter sales service


* Significantly higherQ 41: How much would you agree on the following statements? Top 2 Boxes


Promotion strategies need to cater to differentconsumer preferences

Increase volume/quantity

Attached gift

Reduce price

Reduce price1

2

3

1

HCMCSaigonese consumers favor multiplepromotion types

HNHanoians strongly prefer one type ofpromotion: PRICE

ShampooBeverage

ShampooBouillon

TVFridge

TV Food

Base: All respondentsSource: Nielsen Quantitative Study

Q 19b: Which promotion program do you prefer the most?Q19c: Which categories would you like this promotion program to be applied?


But does this translate into Adoptiveness?More Saigonese are early adopters

Hanoians are ‘proud’ ofthemselves, conservative and

are more of a challenge toconvince.

Hanoi is also more heavilyinfluenced by Chinese systemof feudal values meaning more

skepticism to change

1 in 5 people from HCMC are early adopters compared to 1 in 10 in Hanoi

People from the Southconsider themselves part of a

new world with strongpenetration of foreign culture/

investment.

They consider themselvesmore open minded and more

willing to experiment withnew things

Saigonese Hanoians

Source: Nielsen Regional Differences Qualitative and Quantitative Studies

Q 26: Which statement best describe you? SA



Is the Hanoi market reallymore premium?


Is the old adage true?

Saigonese earn 10 Dongand spend 11

Hanoians earn 10 Dongand spend 1



Hanoians do have a stronger desire to buypremium products

• Passionate about premium products

• Want to look good and impress others

• Willing to pay a higher price for premiumproducts

• Tend to be savers and think more longterm…hence have a better ability to affordpremium products when needed

“I am crazy about aLouis Vuitton bagwhich costs aroundUS$1,000. I really wantto look for a job thatearns 20million VND amonth so that I cansave enough moneyfor this LV bag“

59% 71%*I love luxury products


* Significantly higherQ 29: How much would you agree with the following statements? Top 2 Boxes


Saigonese are less desperate aboutpremium products

• I love luxury products, yet not too desperateto have them

• Prefer to buy what they like rather than buysomething that helps them show off

• During a tougher economy they are preparedto trade down to cheaper brands

• Tend to be impulse shoppers, hence lesscapable of buying premium products

B48%* 29% Purchasing premium branded products

is only for people who want to attractpeople's attention. I am not that kind ofperson

“I just want to feelcomfortable with

myself…I don’t needto rush and buy a

premium product justbecause others have

them”

Source: Nielsen Regional Differences Qualitative & Quantitative Studies* Significantly higher

Q 29: How much would you agree with the following statements? Top 2 Boxes


Higher willingness of Hanoians to pay higherprices for products they like

52% 64%* Willing to pay a higher price forproducts they like

79% 94%* Will buy quality products that willsave costs


* Significantly higherQ 41: How much would you agree on the following statements? Top 2 Boxes



How has the toughereconomy impacted

behavior?


More Hanoians claim to be influenced by thetougher economy than Saigonese

52% 72%*Saving habits

52% 93%*Shopping habits

38% 71%*Entertainment habits

How much are you influenced by the economic crisis?


* Significantly higherQ11a: How much are you influenced by the economic crisis on the following items?

Top 2 Boxes


However the net impact of the toughereconomy is higher in HCMC than in Hanoi

HCMC

22% of Saigonese life is affected, vs 14% of Hanoians life

I don’t cut down on foodexpenses but I just don’t spendas freely as I used to…I have to

save more

Q11b: How many % your life has been affected by the crisis?



Yet Saigonese have not made drastic changesin their consumption habits• Amongst 40 categories surveyed…

Only 1 category recorded a behavior of change above 20% (Clothes)

16 categories with the claimed change of behavior beyond 20%

Have you changed the way you spend, purchase or consume for Laundry and CSDs?

21% 66%*Carbonated Soft Drinks

18% 33%*Laundry


* Significantly higherQ14a: Have you changed the way you spend, purchase, or consume for the following categories?

Changed / Unchanged



Key Findings andImplications


Key findings and Implications

Homogeneity of consumers

Long term/complex thinkers

Initially it will take time and a largeinvestment

Easier to retain once you win theirheart

How?

Promotions should focus on price,without compromising quality

After sales service

Overplay and leverage WOM

Respect social and culturalboundaries especially in advertising

Hanoians

Diversity of consumers

High adoptiveness allows for easytrial.

Ongoing investment required tomaintain brand loyalty especially intougher economy

Live for the moment…less likely tosave to buy premium products

How?

Make their life easier to suit impulsebehavior

Distribution, promotions & display

Diversify marketing strategy…onesize won’t fit all

Saigonese


One size won’t fit all across Vietnam…

One size won’t fit all within HCMC…

One size tends to fit all in Hanoi

Final Thought



Thank you

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consumer behavior hn and hcm

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