Targeting Emerging Consumer Segments The Cautious Consumer

Targeting Emerging Consumer Segments The Cautious Consumer published by Datamonitor in December, 2009. This report consists of 80 pages and the price starts from US $ 4495.

Introduction

Abstract

Introduction

The recessionary environment is encouraging consumer segments to emerge and develop. Cautious consumers are now looking to shield themselves from future loss through making the correct financial decisions today. FS providers must therefore understand what these consumers want and how their Cautious status may influence their behavior.

Scope of this research

• Using data from our global FSCI survey this report profiles the attitudes and behaviors of the emerging Cautious consumer segment.
• The report identifies these consumers and analyses the drivers of their future behavior.
• The report provides concrete actions for FS providers to position themselves competitively in order to capture a share of the Cautious wallet.

Research and analysis highlights

Limiting exposure to loss is the chief concern of the Cautious consumer segment. Cautious consumers are always looking to reduce their downside on future financial transactions and are willing to spend time, money and effort in achieving this goal.

Older generations may be more resilient to changes in their finances, having a harder time altering lifelong habits. It could be this greater inflexibility that explains the higher representation of Cautious consumers among the younger demographics.

Through attracting young Cautious consumers with high earning potential and developed financial intelligence, advisors can effectively build a relationship that may last a lifetime.

Key reasons to purchase this research

• Access the results of Datamonitor' s Global FS Consumer Insight survey in order to profile this key emerging Cautious segment.
• Identify what drives Cautious consumer action and predict their future behaviors.
• Identify the opportunities Cautious consumers represent and advise strategies you can take to effectively gain share of the Cautious wallet.

Table of Contents

OVERVIEW

• Catalyst
• Summary
• Methodology

INTRODUCTION

• Customer segmentation is vital for an effective marketing strategy
  • The recessionary environment is forcing providers to make decisions
  • Cautious consumers are a valuable target for providers

THE FUTURE DECODED

• Trend: Geography does not directly influence the size of the Cautious segment
• Insight: Economic factors appear to influence Cautious consumer behavior, but perhaps not as expected
  • Italy has the highest percentage of Cautious consumers, followed by the BRIC countries
  • There appears to be a positive relationship between economic growth and the proportion of Cautious consumers

• Insight: The Mediterranean countries of Italy and Spain appear to be particularly Cautious, driven by negative expectations of future economic performance
  • (Untitled sub-section)

• Insight: Consumer confidence fails to strongly correlate with the proportion of Cautious consumers
  • (Untitled sub-section)

• Insight: Brazil and Indian Consumers are much more optimistic about their economic future and yet still display strongly Cautious traits
  • (Untitled sub-section)
  • Indian consumers are optimistic for the future but have felt the bite of the recession
  • Different economic conditions can still produce the same attitudinal responses,

• Insight: Cautious consumers are more prominent in the younger age groups
  • Demographic distribution of Cautious consumers varies greatly across different regions
  • Lifestage complexities highlighted by the recession have had an impact on the emergence of Cautious consumers to some degree
  • The distribution of Cautious consumers in the main reflects the distribution of all consumers by job status
  • Italy' s recently unemployed are particularly Cautious, even set against the elevated national average
  • Russian students are particularly reactive to the recession, unlike the country' s long-term unemployed and home workers

• Trend: Cautious consumers have a very similar appetite for FS products to the average person
• Insight: Cautious consumers are hesitant to act except when they are certain that the result will be beneficial
  • Cautious consumers are in fact more likely to act than the global average if they feel it will strengthen their financial position
  • Cautious consumers see spending money as rash in this time of uncertainty
  • The majority of countries mirror the global relationship, with Cautious consumers being more willing to save more

• Insight: Cautious consumers are intending to save more in the future but need guidance to channel their funds in the right direction
  • The majority of Cautious consumers use instant savers and are comfortable using online saving accounts
  • Cautious consumers see their bank as the first port of call for savings, but also favor insurance companies, the stock market and government schemes more than the global consumer
  • Commitment to saving via the banking channel is highly variable globally, with notable differences between the preferences of the Cautious consumer segment at a national level
  • Cautious consumers are much more likely to go to their primary banks for advice on saving

• Insight: Cautious Consumers' trust in their primary banks has been particularly damaged by the global economic downturn
  • Cautious consumers trust their primary bank less than they did before the credit crunch and believe that there is little that the firm can do to regain their faith
  • Cautious consumers have had more negative experiences at a personal level
  • Higher primary bank trust globally disguises some exceptions at the national level
  • Cautious consumer trust in the UK and India, among others, has proved more resilient compared to the general population

• Trend: Primary banks must not be complacent, as Cautious consumers are looking elsewhere for their banking products
  • German Cautious consumers are particularly concerned with securing their money over the next six months

• Insight: Cautious consumers are concerned about their pension prospects and are willing to act now to improve their futures
  • Cautious consumers have more trust for both their provider and the pension industry than their peers
  • Cautious consumers have had their trust damaged more than their peers and feel that their pension providers could have done more
  • Cautious consumers are knowledgeable about the pension industry; they are not afraid of the unknown, but simply expect better from their providers
  • Cautious consumers are more likely to pay more into their private pension over the next six months and have longer-term investment ambitions

• Insight: Cautious consumers are already more financially aware than their peers, but strive to improve even further
  • Cautious consumers look to increase their financial knowledge as a result of the financial crisis
  • Cautious consumers are less depressed and confused by the financial news than the global average

• Insight: Cautious consumers are not only looking expand their financial knowledge, but armed with this information take a sensible and prudent approach
  • Cautious consumers take a more active interest in their financials and pay particular attention to the risks they are taking
  • Cautious consumers are more concerned with cost rather than brand, a trend that is visible across all countries within the sample
  • Singapore' s Cautious consumers have a very different outlook on the risk/return relationship from that seen globally

• Insight: Cautious consumers follow the global average in seeking out financial stability before price
  • The global economic crisis has led to the stability of financial organizations featuring heavily in decision-making
  • Cautious consumers are less inclined to purchase FS products online than the general population, and this difference is amplified within certain countries

• Insight: Cautious consumers have a higher level of trust for financial institutions across the board
• Insight: Cautious consumers are not comfortable making financial decisions before seeking professional financial advice
  • Cautious consumers wish to leave no stone unturned in their quest to limit their risk and as such see professional advice as an important part of managing their finances
  • Cautious consumers in every country within the survey are more likely to seek professional financial advice than their peers
  • Cautious consumers cite their preference to go direct or take advice from a person as the chief drivers for not using price comparison sites

ACTION POINTS

• Action: Datamonitor' s Megatrend Framework can help to identify strategies for targeting the Cautious consumer segment
  • Cautious consumers desire elements of the Comfort and Authenticity Megatrend in their financial needs
  • The Comfort Megatrend is concerned with seeking reassurance and protection, key emotional drivers of the Cautious consumer segment
  • The Authenticity Megatrend should be used to reassure Cautious consumers of the stability and trustworthiness of their institutions

• Cautious consumers are a countertrend to Financial Intelligence Complexity
• Action: Financial institutions must appreciate the chief motivation of Cautious consumers, which is guarding themselves against loss
• Action: The remuneration model used by financial advisors is key to winning or losing the trust of Cautious consumers
  • Cautious consumers will be particularly receptive to doubts over their financial advisor
  • Financial advisors need to move towards a fee-based financial advice model if they are to earn the trust of the Cautious consumer

• Action: Savings institutions need to meet Cautious consumer demands for information or be prepared to face the consequences

APPENDIX

• Definitions
• Definitions
  • Emerging consumer segments
  • The Datamonitor FSCI Megatrend Framework

• Methodology
• Further reading
• Ask the analyst
• Datamonitor consulting
• Disclaimer

TABLES

• Table: Economic growth rate against consumer confidence indicator
• Table: Percentage of Cautious/non-Cautious consumers across Europe, Asia Pacific, and America and Russia
• Table: Percentage of Cautious/non-Cautious consumers within each country in the FSCI sample
• Table: Percentage of Cautious consumers compared with economic growth rate across countries
• Table: Consumer confidence against the percentage of Cautious consumers in each country
• Table: Percentage of Cautious consumer segment by demographic
• Table: Percentage of Cautious consumers across differing job statuses
• Table: Percentage of consumers with two or more products of each product type
• Table: Average responses for likelihood of paying more into their savings over the next six months, across countries and split by Cautious and all consumers
• Table: Proportion of each consumer segment who save with a bank, across surveyed countries
• Table: Proportion of Cautious consumers and all consumers who agree or strongly agree with each statement concerning trust
• Table: Average response to the likelihood of consumers researching whether their money is safe, across consumer segments and countries
• Table: Average response to “I trust my primary bank”, across countries and comparing Cautious consumer segment and all consumers
• Table: Average response to “I trust my primary bank less than I did before the credit crunch”, across countries and comparing Cautious consumer segment and all consumers
• Table: Proportion of Cautious consumers and all consumers who agree or strongly agree with each statement
• Table: Average response for “I am more concerned by cost than by brand when making financial decisions”, across countries and comparing Cautious consumer segment and all consumers
• Table: Average response for “ I weigh up the risk and return of all investments I make”, across countries and comparing Cautious consumer segment and all consumers
• Table: Average response for each statement concerning financial decision-making
• Table: Average response for “I prefer to choose a product I can buy online”, across countries and comparing Cautious consumer segment and all consumers
• Table: Average level of agreement for each statement concerning financial advice
• Table: Average response for “ I seek professional financial advice before I make a financial decision”, across countries and comparing Cautious consumer segment and all consumers
• Table: Average response for “I will not use advice that I have to pay up front for”, across countries and comparing Cautious consumer segment and all consumers
• Table: Reasons for not using price comparison sties and the percentage of consumers who cite each one

FIGURES

• Figure: Economic growth and consumer confidence are closely linked but may not explain Cautious consumer behavior
• Figure: Similar consumer behavior across regions worldwide
• Figure: Italy and the BRIC countries host the highest proportions of Cautious consumers
• Figure: A weak positive correlation is revealed between economic growth and proportion of Cautious consumers
• Figure: There is no clear relationship between consumer confidence and the percentage of Cautious consumers
• Figure: The Cautious consumer segment is more prominent within the younger demographics
• Figure: The size of the Cautious consumer segment by demographic differs across countries
• Figure: Distribution of recession-proof consumers by job status reflects varying concerns
• Figure: The distribution of Cautious consumers by job status across countries is very diverse but indicative of the general consumer distribution
• Figure: Cautious consumers do not differ hugely in product holdings but reveal an acceptance of store cards
• Figure: Cautious consumers actually show more willingness to act than the global average
• Figure: Cautious consumers globally reveal a greater change in saving patterns, with few exceptions
• Figure: Cautious consumers still look to their bank for their saving needs
• Figure: Cautious consumers within some countries have very different bank saving behaviors to the rest of the population
• Figure: Cautious consumers have higher levels of trust in their primary bank, but their faith has also been damaged more by the effects of the credit crunch
• Figure: Higher levels of trust among Cautious consumers for their bank has some notable exceptions by country
• Figure: Cautious consumers have higher levels of trust in their primary bank, but their faith has also been damaged more by the effects of the credit crunch
• Figure: Cautious consumers are looking elsewhere with interest, but are still less likely to move their primary account
• Figure: Cautious consumers are more interested in whether their money is safe than the general population, consistent across all countries
• Figure: Cautious consumers are more financially aware than the global average
• Figure: Cautious consumers are less likely to avoid educating themselves for fear of the unknown
• Figure: Cautious consumers are more likely to make good financial decisions
• Figure: Cautious individuals across all nations are more concerned by cost than by brand, but less so than consumers generally in certain countries
• Figure: Singaporean Cautious consumers respond very differently compared to their peers and the global trend
• Figure: Financial stability is more important to Cautious consumers than price
• Figure: Cautious consumers are more reluctant than their peers to buy online , particularly so in Brazil and the UK, among others
• Figure: Cautious consumers are more trusting of financial institutions across the board
• Figure: Cautious consumers seek financial advice from a number of sources and are willing to pay for it
• Figure: Cautious consumers seek professional financial advice much more than their peers, particularly so where there is general support within the country
• Figure: Cautious consumers are more are willing to pay for financial advice upfront across, with Japan being the only exception
• Figure: Cautious consumers cite a number of reasons for failing to use PCSs
• Figure: first direct provides peace of mind to the Cautious consumer through a transparent feedback system
• Figure: C. Hoare & Co effectively emphasize their heritage, conveying the Megatrend of Authenticity
• Figure: Cautious consumers are minimizing the chance that they will face financial distress
• Figure: Cautious consumers are highly influenced by trust and are a very valuable consumer group if approached the right way
• Figure: MLP' s business model covers all aspects of consumer financial advice

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