可口可樂美國市場報告

InsidethemindsandpocketsofLatinAmericanconsumers

HowconsumersbuildpriceperceptionanditsimpactonretailersTHECOCA-COLARETAILINGRESEARCHCOUNCIL–LATINAMERICATheCoca-ColaRetailingResearchCouncil–LatinAmerica(CCRRC-LA)isdedicatedtodevelopingabetterunderstandingofthefoodretailingandalliedmerchandisedistributionbusinessinLatinAmerica.Itconcentratesinidentifyingandthenstudyingselectedrelevantissues,presentingitsfindingstothemanufacturingandretailingcommunities,inordertoassistinthedevelopmentandenhancementofthefoodretailingbusiness.LatinAmericaCouncilMembersJonathanBergerCIESUSAHowardButtIIIHEBMexicoGuillermoD'AndreaCouncilResearchDirectorAnaMariaDinizGrupoPaodeAcucarBrazilPauloGoelzerIGA,Inc.BrazilAntonioCotoGutierrezDiaInternacionalArgentinaTimHammondsFMIUSANicolásIbá?ezD&SChileGonzaloRestrepoéxitoColombiaEduardoCastroWrightWal*MartMexico1REVIEWINGTHESTUDYGOALSANDOBJECTIVESUnderstandthedriversofconsumerpriceperceptioninLatinAmericaOverallgoalsandfocuslevelSpecificobjectivesUnderstandtheimplicationsofpricingapproachesonretailersandmanufacturersUnderstandhighlevelimplicationsforretailersintermsoforganization,supplychainandvendorrelationsUnderstandhighlevelimplicationsformanufacturersintermsofcapabilitiesandrequirementstodeliverunderdifferentretailerpriceapproaches** Source: TeamanalysisMatchconsumerpriceperceptionwithrealitytounderstandwhicharethemosteffectiveleversforretailersUnderstandtherelativeimportanceofdifferentdriversofconsumerpriceperception,acrossmajorconsumersegments,productcategories,shoppingoccasions*andselectedmarketsUnderstandhowpriceranksamongthekeyfactorsintheconsumerpreferredstoreselectionprocess*10%ofstudyfocus90%ofstudyfocus2THESTUDYLEVERAGEDTHREEMAINSOURCESOFINFORMATION * ACNielsenconductedthefocusgroupsinS?oPauloandthefieldresearchinallfivemarketsSource: Teamanalysis~15in-depthinterviewswithexecutivesofkeyretailersintheregionMethodologyQualitativesurveyFocusgroupstotestinitialhypothesisQuantitativesurvey~3,000,30-minuteinterviewsCorrelateconsumerresearchresultswithACNielsenscantrackinformationUnderstandretailerperspectiveonconsumerpriceperceptionObjectiveCaptureinsightsonconsumerpriceperceptionSegmentconsumersEnrichfindingswithACNielsenproprietarydatabasesMatchpriceperceptionwithactualpricesIn-depthinterviewsConsumersurvey*ACNielsendatabase3CONSUMERSURVEYDETAILS

Source: ACNielsen,teamanalysisBogotá673consumersurveys6retailers(90%marketshare)30categories(~3,500SKUs)Santiago600consumersurveys11retailers(95%marketshare)30categories(~3,700SKUs)BuenosAires600consumersurveys11retailers(70%marketshare)33categories(~2,500SKUs)S?oPaulo600consumersurveys13retailers(87%ofthemarket)30categories(~2,500SKUs)MexicoCity612consumersurveys6retailers(90%marketshare)30categories(~3,000SKUs)4ONLYCONSUMERSWHOSHOPREGULARLYINAT

LEASTONEMODERNFORMATSTOREARE

RELEVANTFOROURANALYSIS * Includeshypermarkets,supermarkets,mini-marketsandsuburbansupermarkets Source: TeamanalysisConsideredforouranalysisConsumerswhoonlyshopintraditionalformatConsumerswhoshopinitleastonemodernformat*storeregularlyTypicallylow-endconsumersUsefultogaininsightsonthelow-endmarket,alreadystudiedbyCCRRCAnalysismoreusefulinastudytoincreasethepenetrationofmodernformat,whatisnotthescopeofthisprojectPrimarypopulationofinterestfortheCCRRCOnlyrespondentsabletoprovideanswersandcrossabledatafor:AccuracyofpriceperceptionPriceperceptiondriversformodernformatEffectivenessofpromotionalactivityinpriceperceptionbuildingOursampleisrepresentativeofmodernformatshoppers521-34years35-49years50+yearsTHECONSUMERSURVEYISREPRESENTATIVEOFTHEMAINSOCIO-ECONOMICCLASSESANDAGEGROUPSAge * BasedonACNielsensocio-economicclassificationforeachmarket Source: Consumersurvey%MiddleLowHighSocio-economicclass*Resultstakeintoaccountthebehaviorandattitudesoflowincomeconsumers6

Source: ACNielsen,NationalMarketingAssociationsofeachcountryCOUNTRY-LEVELACCEPTEDSTANDARDSGUIDEDOURINCOMELEVELCLASSIFICATIONWeadoptedtheprinciplessuggestedbytheNationalMarketingAssociationsofeachcountryHighincomeMiddleincomeLowincomeS?oPauloBuenosAiresMexicoD.F.SantiagoBogotáAABC1ABC+ABC1ClasealtaClasemédiaaltaBCC2C3CC2C3ClasemédiaDED1D2ED/EDClasebaja67%ofmodernformatshoppersinS?oPaulobelongtoclassesBandC,classifiedasmiddleincome7KEYTAKEAWAYSFROMSTUDYLatinAmerica:diversityofconsumers,andnotjustinthedepthoftheirpocketsThefewkeyleversthatmatterinbuildingpriceperception–andtheonethatdoesn’tConsumers(mostly)gettingitrightintheirsearchforvalueRetailershaveanopportunitytogetitrightmoreoftenintheirsearchforabetterpriceproposition8CONSUMERSINLATINAMERICACANBESPLITINTOFIVEMAINSEGMENTSSource:Consumersurvey,teamanalysis"Avidbargainhunters"Investalotoftimeandarewillingtovisitmultiplestoresforthebestdeals"Qualityseekersandtimesavers"Willingtopayaslightpricepremiumtosavetimeandhaveaccesstohighqualityproducts“Indifferentshoppersonabudget"Donotcareaboutshopping,henceinvestlittletimeinit"Range-seekersonabudget"Wanttobringhomethebestqualityproducts,butlimitedbyatightbudgetHighincomeconsumerswhoarewillingtovisitmultiplestorestofindthebestdeals"High-incomebargainhunters"9WERANATWO-STAGECLUSTERANALYSISCOMBININGATTITUDINALANDSOCIO-DEMOGRAPHICSELEMENTS……*Notethatnoneoftheelementsareunique,however,thismethodologyprovidesmanagerswithunprecedentedcontrolovertheprocess,byallowingmaximummanagerialinputandthetestingofearlyhypothesisSource:TeamanalysisSampleof3,084consumersin5countriesTwomainsegmentationdriversAttitudinalelements(mostcommonmethod)CleanandintuitiveattitudesacrossallsegmentsLacksactionability(difficulttofindconsumers)Selected4mostrobustscenariosCrossedwithshoppingbehaviorKeybuyingfactorsAveragemonthlyspendFormatofmainstoreSocio-economic/demographicsSimplewaytosegment,facilitateidentificationLacksinsightsanddoesnotreflectattitudesTwo-stageclusteranalysisCombinesbothmethodologiestoreachmeaningfulandactionablesegmentsProcess*developedandrefinedbyMcKinseyexpertsforsegmentationswithstrategicobjectivesRan20+statisticallyrelevantscenariosSelected1scenariowith5clusters10…ALLOWINGTHEIDENTIFICATIONOFSOMECONSUMERSTOWHICHSEGMENTTHEYBELONGSource:TeamanalysisLowincomelevelAge21-34yearsoldOnlyonepersononthehouseholdMiddleincomelevelLargehouseholdShopsprimarilyonhypermarkets84%probabilitythatthispersonisanAvidBargainHunter86%probabilitythatthispersonisaRangeseekeronabudgetEXAMPLE11INCLUDINGAHANDFULOFATTITUDINALSTATEMENTS,ONECANIDENTIFYMOSTCONSUMERSSource: TeamanalysisWouldyousacrificeserviceforlowerprices?Wouldyouspendalotoftimelookingforoffers?Probabilityof64%tobean““Indifferentshopperonabudget”YesNo21-3435-4950+AgegroupAhandfulofattitudinalstatementsallowustoidentifyover50%ofallconsumersEXAMPLE12AVIDBARGAINHUNTERSRelylessonmodernformatsWhenshoppingonmodernformats,tendtopreferdiscountersHowdotheybehave?Lowestaverageexpenditurewhencomparedwithothersegments(~12%belowmarketaverage)Lesslikelytodostock-uptripsAlwayscomparepricesatdifferentstoresTendtobetheleastloyalconsumersShoppingaroundforthebestdealsPurchasingonlyproductstheyhadplannedonWillingtosacrificeservicesforlowerpricesSpendingalotoftimelookingforpromotionsShoppinginlargernumberofstoresrecentlyWhatdotheynotvalue?PayingmoretoshopclosetohomePayingmoretosavetimePayingmoreforhigherqualityWhatdotheyvalue?Source: Consumersurvey,teamanalysisShoppingbehaviorMonthlyspendFormatTypicallylowincomeDisproportionatenumberofmalesandolderconsumers(50+yearsold)13AVIDBARGAINHUNTERS14HIGHINCOMEBARGAINHUNTERSTypicallyhighincomeconsumerAverageageandhouseholdsizeTendtospendmore(~16%)thantheaveragespendongroceriesRelymoreonmodernformatstoresTendtopreferhypermarketsandavoidshoppingondiscountersTendtohavehigherloyaltythanaverage(S?oPauloistheexception)Howdotheybehave?ShoppingbehaviorMonthlyspendFormatSource: Consumersurvey,teamanalysisShoppingaroundforthebestdealsStocking-upwhentheyfindattractivepromotionsGoingtoagrocerystoretheyhearisofferinggoodspecialsShoppinginmorestoresrecentlyWhatdotheynotvalue?PayingmorefortheconvenienceofshoppingcloserhomeWhatdotheyvalue?15HIGHINCOMEBARGAINHUNTERS16RANGESEEKERSONABUDGETTendtoshopmoreonhypermarketsFormatHighlypricesensitiveTendtomakefewertrips(S??oPauloistheexception)andstockuponceamonthNormallybelowaverageloyaltyHowdotheybehave?Tendtospendless(~6%)thanthemarketaverageongroceriesMonthlyspendShoppingbehaviorSource: Consumersurvey,teamanalysisTypicallyyoung,lowincomemothersLargehousehold(6ormorepeople)GettinggoodqualityproductsandalargeassortmentStocking-upwhentheyfindattractivepromotionsProvidingthebestpossiblequalityfortheirfamily,despitetheirtightbudgetWhatdotheynotvalue?SacrificingservicesforlowerpricesShoppingatupscalestoresWhatdotheyvalue?17RANGESEEKERSONABUDGET18INDIFFERENTSHOPPERSONABUDGETTypicallylow/middleincomeTendtospend~10%lessthanthemarketaverageongroceriesTendtorelylessonmodernformatstoresWhenshoppingonmodernformats,tendtochooseharddiscountersHowdotheybehave?TendtoshoplessfrequentlyDisplayrelativelyhighloyaltytotheirmaingrocerstoreShoppingbehaviorMonthlyspendFormatSource: Consumersurvey,teamanalysisSacrificeserviceforlowerpricesWhatdotheynotvalue?SpendingtimelookingfordealsStocking-upwhentheyfindgoodpromotionsReadingstorepamphletsWhatdotheyvalue?19INDIFFERENTSHOPPERSONABUDGET20QUALITYSEEKERSANDTIMESAVERSHowdotheybehave?Highestaveragebasket,~22%higherthanmarketaveragespendingongroceryshoppingRelyprimarilyonmodernformatstoresWillingtoshopmoreonsupermarketsTendtoshoplessfrequentlyTendtobethemostloyalsegmentinallmarketsRarelycomparepricesShoppingbehaviorMonthlyspendFormatSource: Consumersurvey,teamanalysisTypicallyhighincomeconsumersSmallfamiliesSavingtimeratherthenmoneyTheconvenienceofshoppingclosertohomeHigherquality,evenathigherpricesWhatdotheynotvalue?SpendingtimelookingforpromotionsShoppinginmanystorestopaylessWhatdotheyvalue?21QUALITYSEEKERSANDTIMESAVERS22AvidBargainHuntersIndifferentshoppersonabudgetQualityseekersandtimesaversHigh-incomebargainhuntersRELATIVESIZEOFTHESEGMENTSINTHEREGION100%=2,818NumberofrespondentsSource: ConsumersurveyRange-seekersonabudget23THEMARKETSSHOWSIGNIFICANTDIFFERENCESINSEGMENTBREAKDOWN%,numberofrespondentsQualityseekersandtimesaversRangeseekersonabudgetIndifferentshoppersonabudgetAvidbargainhuntersS.PauloB.AiresMexicoSantiagoBogotáSource: Consumersurvey,teamanalysisOverall5835685505515652,818Highincomebargainhunters100%S?oPauloandBuenosAireshaveadisproportionalshareof“Bargainhunters"segments“Qualityseekersandtimesavers”aremorerelevantinSantiagoandBogotá24DETAILEDSEGMENTDESCRIPTION–S?OPAULONumberofrespondents,R$000,%Source: Consumersurvey,teamanalysisAvidbargainhunters$spendRangeseekersonabudgetIndifferentshoppersonabudgetQualityandtimeHighincomebargainhunterNumberofconsumersRangeseekersonabudgetAveragespend:R$500Monthlyvisitstomodernformat:16Shareofwalletofmainretailer:63%IncomelevelHigh:0%Medium:70%Low:30%QualityseekersandtimesaversAveragespend:R$543Monthlyvisitstomodernformat:10Shareofwalletofmainretailer:74%IncomelevelHigh:20%Medium:75%Low:5%IndifferentshoppersonabudgetAveragespend:R$327Monthlyvisitstomodernformat:8Shareofwalletofmainretailer:71%IncomelevelHigh:6%Medium:63%Low:32%HighincomebargainhuntersAveragespend:R$516Monthlyvisitstomodernformat:11Shareofwalletofmainretailer:55%IncomelevelHigh:34%Medium:66%Low:0%249565StoreformatHyper:47%Super:19%Disc.:35%StoreformatHyper:57%Super:3%Disc.:40%StoreformatHyper:77%Super:12%Disc.:11%StoreformatHyper:79%Super:12%Disc.:10%AvidbargainhuntersAveragespend:R$429Monthlyvisitstomodernformat:7Shareofwalletofmainretailer:55%IncomelevelHigh:0%Medium:66%Low:33%StoreformatHyper:55%Super:14%Disc.:32%SignificantdeviationsfromaverageBold=MarketaverageAveragespend:R$441Monthlyvisitstomodernformat:9Shareofwalletofmainretailer:62%IncomelevelHigh:10%Medium:67%Low:23%StoreformatHyper:60%Super:12%Disc.:28%25ALTHOUGHOTHERFACTORSVARYINRELEVANCE,LOCATIONANDPRICEARETHETWOMOSTIMPORTANTFACTORSFORALLSEGMENTSSource: ConsumersurveyLocationPromotionsQualityofperishableproductsAssortmentOverallproductqualityIndifferentshoppersonabudgetRange-seekersonabudgetQualityseekersandtimesaversAvidbargainhuntersWhydidyouchoosetoshopatthatparticularstore?Price%ofconsumersthatselectedthefactorasimportantBrandvarietyServicelevelPrivatelabelqualityHighincomebargainhunters26BUTSEGMENTSVARYWIDELYINTHEFREQUENCYOFPRICECOMPARISON%,numberofrespondentsHighincomebargainhuntersIndifferentshopperonabudgetRangeseekeronabudgetQualityseekerandtimesaver100%Source: Consumersurvey,teamanalysisAvidBargainHunters493655530493636AlwaysOccasionallyHowoftendoyoucomparepricesbetweenstores?NeverVeryoften27FROMRETAILERS’STANDPOINT,SOMESEGMENTSAPPEARTOBEMOREATTRACTIVETHANOTHERSQualityseekersandtimesaversHighincomebargainhuntersIndifferentshoppersonabudgetRangeseekersonabudgetAvidbargainhuntersSource: ConsumersurveyLoyaltycomparedtoaverageShareofwalletofmainstoreMonthlyspendComparedtomarketaverage“Qualityseekersandtimesavers”and“Highincomebargainhunters”spendmorethananyothersegmentandtendtobemoreloyalcustomers“AvidBargainhunters”and“Rangeseekersonabudget”aretheleastloyalsegmentsandhavesmallbasketsizes%28BUENOSAIRESANDBOGOTáHAVETHELOWESTLOYALTYRATIOOFALLMARKETSS?oPauloSantiagoMexicoBogotaBuenosAiresAverageloyaltyratio** ShareofwalletofmainstoreSource: Consumersurvey29SHOPPINGBEHAVIORBYSEGMENTANDMARKETAveragebasketsize(verticalaxis)vs.loyaltyindex*(horizontalaxis)* ShareofwalletofmainstoreSource: ConsumersurveyS?oPaulo(R$)Santiago(CLP)Bogotáá(COP)Mexico(MXN)BuenosAires(ARS)QualityHIBHRangeAvidBHIndifferentQualityHIBHIndifferentAvidBHRangeQualityHIBHRangeIndifferentAvidBHHIBHQualityIndifferentAvidBHRangeQualityHIBHIndifferentAvidBHRangeQualityseekersandHighincomebargainhuntersspendmorethananyothersegmentacrossallmarketsandgenerallyhavethehighestloyaltyratioAvidbargainhuntersandrangeseekersonabudgettendtospendlessthanallothersegmentsandarealsolessloyalcustomersOnaverage,S?oPaulo,SantiagoandMexicohavethehighestloyaltyratioonallsegments30WHERETHEDIFFERENTSEGMENTSSHOP* Indicatestoreformatthatcaptureadisproportionalshareofthesegmentcomparedtothemarketaverage.H(Hyper),S(Super)andD(Discounters).DiscountersincludeBodegasinMexicoSource: TeamanalysisRangeseekersonabudgetAvidbargainhuntersFrustratedshoppersQualityseekersandtimesaversHighincomebargainhunters%,acrossallmetropolitanareasstudiedPercentagespentonmodernformatHigherincomesegmentsspendmoreonmodernformatPreferredformat*RangeseekersonabudgetAvidbargainhuntersFrustratedshoppersQualityseekersandtimesaversHighincomebargainhuntersSuperHyperDiscounterHigherincomesegmentsprefersuper&hyper;lowertendtowardsdiscounters&hyper31SOMERETAILERS““ATTRACT”DISPROPORTIONATESHAREOFCERTAINSEGMENTS(1/3)OverallABCD54374904793HighincomebargainhuntersRangeseekersonabudgetAvidbargainhunters100%Source: Consumersurvey,teamanalysisQualityseekersandtimesaversIndifferentshoppersonabudgetPercentageofprimaryshoppersbysegment,mainretailersS?oPauloBuenosAires322937151OverallABC32SOMERETAILERS““ATTRACT”DISPROPORTIONATESHAREOFCERTAINSEGMENTS(2/3)Overall410591145137HighincomebargainhuntersRangeseekersonabudgetAvidbargainhuntersSource: Consumersurvey,teamanalysisQualityseekersandtimesaversIndifferentshoppersonabudgetABCDBogotááSantiagoOverallAB521114316Percentageofprimaryshoppersbysegment,mainretailers33SOMERETAILERS““ATTRACT”DISPROPORTIONATESHAREOFCERTAINSEGMENTS(3/3)AverageABCDE49566203576835HighincomebargainhuntersRangeseekersonabudgetAvidbargainhunters100%Source: Consumersurvey,teamanalysisQualityseekersandtimesaversIndifferentshoppersonabudgetMexicoPercentageofprimaryshoppersbysegment,mainretailers34McKINSEYPROPRIETARYRESEARCHIDENTIFIEDSEVENSEGMENTSINTHEU.S.GROCERYRETAILMARKETShoparoundatmanydifferentstorestohuntdownthelatestspecialWantbroadselectionandnationalbrandsforalowpriceUsecoupons100%ofthetime,usuallyatastoreclosetohomePurePriceWillingtopaymoreanddrivefartherforqualityandserviceWantgreatserviceandambienceatanycostWillingtopaymoretogetinandoutquicklyatastoreclosetohomeUseeverymeansavailabletogetthelowestprice––willnotpaymoreforanythingBargainHuntersSelectionforLessCouponClippersQualitySuperiorExperienceConvenienceSource: McKinseyNorthAmericanRetailPractice35LATINAMERICASEGMENTSAREFAIRLYSIMILARTOTHOSEINTHEU.S.SelectionforLess(12%)CouponClippers(10%)Quality(14%)SuperiorExperience(20%)Convenience(22%)Source: TeamanalysisRange-seekersonabudget(22%)Qualityseekersandtimesavers(21%)UnitedStatesLatinAmerica()PercentageoftotalspendBargainHunters(10%)High-incomebargainhunters(20%)Avidbargainhunters(20%)InLatinAmerica,“morepriceorientedsegments”aresignificantlylargerthanintheU.S.,noticeably“BargainHunters”evenaddingthe“CouponClippers”intheUSSegmentsbroadlysimilarinkeycharacteristicsPurePrice(12%)Indifferentshoppersonabudget(17%)79%44%56%21%MorepriceorientedLesspriceoriented“Lesspriceoriented””segmentsintheU.S.moredefinedandsignificantlylargershareoftotalpopulationthaninLatinAmericaS36KEYTAKEAWAYSFROMSTUDYLatinAmerica:diversityofconsumers,andnotjustinthedepthoftheirpocketsThefewkeyleversthatmatterinbuildingpriceperception––andtheonethatdoesn’’tConsumers(mostly)gettingitrightintheirsearchforvalueRetailershaveanopportunitytogetitrightmoreoftenintheirsearchforabetterpriceproposition37MAINMESSAGESReferenceprice,rangearchitectureandpromotionsarethethreemostimportantleversindeterminingconsumerpriceperceptioninLatinAmericaReferencepriceisthemostimportantlever:inallconsumersegments,althoughotherlevershavedisproportionateinfluencedependingonthesegment,suchasrangearchitecturefor““Qualityseekersandtimesavers”and“Indifferentshoppersonabudget””.inallmarketsexceptMexicoCity,whererangearchitectureisslightlymoreimportantAlimitednumberofKVIsappeartoparticularlyimportantindrivingconsumers’perceptionofreferencepriceFrommatchingpriceperceptionwithpricereality,itisclearthatconsumersareabletoquiteaccuratelyidentifyretailerswithlowaveragepricesinmarketswherepromotionalactivityisrelativelylow.PromotionsdonotdrivepriceperceptioninanymarketandinfactobscurepricerealityinSaoPauloandBuenosAires.Thereareindicationshowever,bothinlowandhighpromotionalmarketsthatsomeretailersareabletogetmorecreditmorevaluethanthey““deserve”1234538HOWDOCONSUMERSDEVELOPTHEIRPRICEPERCEPTION?Source:Teamanalysis

Whatarethedifferentelementsthatcanhelpexplainpriceperception?Whataretheelementsthataremostrelevanttoexplainpriceperception?Arethesedifferentforthevariousmarkets?Arethesedifferentforvarioussegments?Howdoconsumersperceiveprices?DoLatinAmericanconsumersaccuratelyperceivelowpriceretailers?Aretheredifferencesinpriceperceptionaccuracywhenwelookatthedifferentregionalmarketsandsegments?Whatelementsmightexplainregionaldifferencesinpriceperception?Howdoespriceperceptionmatchwithpricereality?39THEREARESEVERALPOTENTIALDRIVERSOFPRICEPERCEPTIONSource:TeamanalysisReferencepricePromotionsRangearchitectureCommunicationsIn-storeenvironmentDriversLowpricesonitemsboughtmostoftenLowpricesonwell-knownitemsPricesareusuallylowFrequentdiscountsFrequentinterestingpromotions(e.g.,2x1,wowdeals)Lowpricedalternativesforeverydaybasics(i.e.,OPP)BroadrangeofpriceandqualitylevelsPrivatelabelwithgoodprice/qualityratioBelievablelowpriceadsFrequentpromotionpamphletsIn-storesignsthatclearlypointtosalesOverallstoreenvironmentAlotofpeopleshopping40PRICEPERCEPTIONINLATINAMERICAISDRIVENMAINLYBYTWOELEMENTS%totalweightSource:TeamanalysisReferencepriceisthekeyleverofpriceperception,withKVIsasaveryrelevantcomponentRangearchitecture–namelycheapalternativebrands(OPPs)–arealsoveryimportantTogethertheymakeupfor75%ofthewayaconsumersbuildspriceperceptionPricesareusuallylowCheapalternativebrandsUpscalestoreenvironmentFrequentdiscountsBelievablepriceadsPricesonwell-knownitems/boughtmostoftenBroadrangeofquality&pricelevelsReferencepriceRangearchitectureEnvironmentPromotionsCommuni-cations41DRIVERSOFPRICEPERCEPTIONBYMETROPOLITANREGION%totalweight* CausespoorerpriceperceptionSource:TeamanalysisS?oPauloBuenosAiresSantiagoMexicoD.F.BogotáReferencepricePricesareusuallylowLowpricesonitemsboughtmostoften/wellknownPromotionsGoodpromotionsFrequentdiscountsRangearchitectureCheapalternativebrandsBroadrangeEnvironmentUpscalestoreenvironment*CommunicationsBelievablepriceads42DRIVERSOFPRICEPERCEPTIONBYSEGMENT%totalweight*CausespoorerpriceperceptionSource:TeamanalysisAvidbargainhuntersHighincomebargainhuntersRangeseekersonabudgetFrustratedshoppersonabudgetQualityseekersandtimesaversReferencepricePricesareusuallylowLowpricesonitemsboughtmostoften/well-knownPromotionsGoodpromotionsFrequentdiscountsRangearchitectureCheapalternativebrandsBroadrangeEnvironmentUpscalestoreenvironment*CommunicationsPamphletsBelievablepriceads43INSIGHTSONDRIVERSOFPRICEPERCEPTIONACROSSSEGMENTSReferencepricePromotionsRangearchitectureEnvironmentCommuni-cationsLowoverallpricesandlowpricesonKVIsareimportantforallsegments.However,Higherincomesegments-HighincomebargainhuntersandQualityseekersarethosewhorelytheleastonKVIs,whicharethe"shortcut",infavorofthe"fullpicture““,oroverallpricesConversely,lowerincomesegmentsrelyproportionatelymoreonKVIsAvidbargainhuntersHighincomebargainhuntersRangeseekersonabudgetFrustratedshoppersQualityseekersAvidbargainhuntersareveryinfluencedbypromotionsanddiscountsOthersegmentscan"seethrough"promotionsinbuildingtheirpriceperceptionAvidbargainhuntersarewaryofnicestoresAnupscalestoreenvironmentdoesnotnecessarilytranslateintohigherpricesfortheothersegmentsBelievablepriceadsareverypowerfulinbuildingagoodpriceimagewithhighincomebargainhuntersandrangeseekers.TheladderarethesegmentthemostinfluencedbycommunicationsQualityseekers,toalesserextent,arealsoinfluencedbypriceadsCheapalternativebrands(OPPs)areveryrelevantacrossallsegments,especiallyforfrustratedshoppersAdditionally,qualityseekersratebetterstoreswithabroadproductassortment44AnupscalestoreenvironmentisaleadforhigherpricesinBuenosAires……IntensepromotionalactivitydropspricesofleadingbrandsandmakeOPPslessimportantinS??oPaulo…andalsoinMexicoD.F.ConsumersinSantiagoarethemostinfluencedbypriceadsINSIGHTSONDRIVERSOFPRICEPERCEPTIONACROSSGEOGRAPHIESReferencepricePromotionsRangearchitectureEnvironmentCommuni-cationsS??oPauloBuenosAiresSantiagoMexicoD.F.BogotááInS??oPauloandBuenosAires,wherepromotionalactivityismoreintense,KVIsarethemostimportantpricedriverIntheothercities,promotionsdonotseemimportantorrelevant,giventhelowerincidenceofavidbargainhuntersPromotionsanddiscountsareveryimportantinS??oPaulo,mostlydrivenbytheavidbargainhuntersOPPsareveryrelevantintheseothermarkets,accountingforabout??ofpriceperception.Additionally,consumersinMexicoD.F.arepositivelyinfluencedbyabroadrangeofpricelevelsSource:TeamanalysisConversely,overallpricesarethemostimportantdriverintheregionswherepromotionalactivityislessintense,tothetuneofKVIsbeingnotrelevantinBogotáá45ALIMITEDNUMBEROFKVIsAPPEARTOBEESPECIALLYIMPORTANTFORBUILDINGPRICEPERCEPTION*BasedonMcKinseypreviousexperienceSource:ConsumersurveyDoyoubaseyourassessmentofstorepricesonafewkeyproducts?Howmanyitemsdoyounormallymemorizethepriceoftoassessthepricelevelofastore?NoYesOverallBogotááBuenosAiresMexicoSan-tiagoS??oPauloAveragenumberofitemsconsumersclaimtomemorizethepriceontoassessretailerpricesDifferentconsumershavedifferentKVIs,asaresultanindividualstorecanhaveupto100KVIs*46KVIsAREASHORTCUTFOROVERALLPRICES––ANDCONSUMERSCANMEMORIZEONLYAFEWOFTHEMAvidbargainhunterHighincomebargainhunterIndifferentshoppersonabudgetRangeseekersonabudgetQualityseekersandtimesaversSource:ConsumersurveyOverallS??oPauloSantiagoMexicoBuenosAiresBogotááAveragenumberofitemsconsumersclaimtomemorizepricesontoassessretailerpricesHowmanyitemsdoyoumemorizethepricestoassessthepricelevelofastore?Abovemarketaverage47OURSURVEYHASIDENTIFIEDABOUT500KVIsINEACHMETROPOLITANREGION––ONLYABOUT150ARECOMMONTOMULTIPLESEGMENTS……NumberofdifferentKVIsmentioned––spontaneousresponses638545474474461BuenosAiresBogotááSantiagoS??oPauloMexicoD.F.Source:Consumersurvey,teamanalysisMentionedbyonly1segmentMentionedbyatleast2segments48…AND,OUTOFTHESE,ONLYADOZENAREULTRA-KVIsNumberofdifferentKVIsmentioned––spontaneousresponses154150139147130BuenosAiresBogotááSantiagoS?oPauloMexicoD.F.Source: Consumersurvey,teamanalysisUltraKVIsOnly2segments3or4segmentsAllSegmentsMentionedby:49TOPTENKVIsBYMETROPOLITANAREA%ofunaidedconsumerresponsesSource: ConsumersurveyS?oPauloSugarUni?o1kgRiceCamil5kgCoffeePil??o500gRiceCamil1kgRiceTioJo?o5kgDetergentOmo1kgRiceCamiltype15kgBeansCamil1kgOilLisa900mlDetergentOmoMultia???o1kgBuenosAiresSugarLedesma1kgMilkSachetLaSereníísima1literSugarDomino1kgDetergentAla800gSugar––nob