Consumer Confidence and Planned Spending Behaviour in the Recession. A Conversation with Asian Consumers by Omnicom Media Group

A conversation with consumers about
the recession in Asia and the
marketing implications
April 2009

A conversation about the recession
• There are a lot of consumer sentiment surveys being
conducted at the moment – and given the negative
tone of most of the information people are getting, its
not surprising that they are showing that consumers
are quite concerned about the current situation

• Rather than replicate these, we decided to hold an
online conversation with people in some of the most
important countries in our region

• We asked a few direct questions, but mostly we
asked for their comments on the recession, how it
was affecting them personally, what they expected to
happen, and their plans for the next 6 months

• Overall, 581 people took part in our
conversation, from China, Hong
Kong, Taiwan, Philippines, Thailand, Malaysia and
Singapore. We plan to check back with them every
few months

2

Participants in the conversation

• The people who participated in the conversation are
younger (most of them are in the 25-39 yr age group)

• They are better educated than average – most had been
to university or had some other form of higher education

• They tend to work in white collar, service and professional
organizations, and as such have above average income
for their age. They are urban based

• So they are not a representative sample of country – but
they do give an interesting insights into the day to day
impact of the current crisis

3

Topics of interest

• The conversation differed a bit from country to country

• But in general we asked our participants to talk to us about
 How their spending plans had changed in the last 6
months, and how they thought they would change in
the next 6 months
 The reasons behind this
 Their opinion on the economy and the recession. how
its affecting them personally, and how they thought that
would develop in the next 6 months
 The categories they will be cutting back on, and which
they think they will be maintaining spend
 And of course, their planned media behavior

• What they told us is discussed in the rest of this report

4

Key Takeouts

• It is clear that consumer confidence is fairly low, not surprisingly given the
negative news they are being bombarded with

• Consumers do feel a need to be more careful and rational in their
spending, particularly in high involvement categories. But they will not at this
stage be cutting spending across the board – there are categories where
consumers will maintain or even increase their spend

• In lower involvement categories, they will be tempted to trade down, and will be
looking more critically at the value premium brands give them

• Overall, they will respond to value messages and pay attention to brands that
are offering value benefits. But consumers will also pay attention to brands that
show them empathy and understanding, provide rational reassurance for their
decisions, and make them feel that they are making a smart choice

5

Consumer Confidence in the region

6

The Economic data is mixed

• China and India are slowing, but overall their
economies remain relatively buoyant

• Some ASEAN economies are also slowing but may
avoid technical recession. Indonesia, Philippines
and Thailand fall into this category

• Economies heavily dependent on the export of
manufactured goods are of course suffering the
most. These include Japan, Korea, Hong
Kong, Singapore and Taiwan

• Australia and New Zealand are both also either
in, or about to fall into recession with significant
increases in the unemployment rate predicted

• But in all Asian countries, private consumption
is expected to fall



7

All the evidence suggests consumer confidence is down

• With consumers more connected than ever, it is hardly surprising that bad
news travels fast.
• On the positive side, sparks of optimism will also spread quickly


8

Consumer Confidence

• In the conversation we had, it seems
clear that overall, consumers in China
are the most confident.

• They have some concerns for the next
6 months, about their job prospects and
Source: OMD Navigating Challenges: Consumer

their personal finances

• But overall they are the most positive

• In other countries there is
negativity, and we found that overall it
was consumers in Singapore and
Malaysia that showed the most
Sentiment

negative sentiment

9

Spending: Most are spending less
Spending behavior in the last 6 • Most of the people we talked to
months
had been spending more
Malaysia 65 19 cautiously in the last 6 months
• The impact has been least in
Singapore 66 16 China – where more than a third
of the people we talked to had
not changed their spending
Thailand 66 14
behavior
• Singapore, Malaysia and
Philippines 53 26
Thailand results were very
similar – the vast majority had
Hong Kong 59 9 spent less in the last 6
months, but only around 1 in 5
had spent a lot less
Taiwan 53 7
• The Philippines had the most
people who had spent a lot
China 49 9 less, and this reflects the high
inflation that preceded the
A little more cautious economic downturn
A lot more cautious
Source: OMD Navigating Challenges: Consumer Sentiment
10

Spending: And plan to cut back even more in the next 6
months
• Chinese consumers are the most positive. Although most are going to cut back on
their spending, they think they will be a little more cautious.
• But in Malaysia, Singapore, Taiwan and Philippines in particular, many people plan
to be a lot more cautious
Spending behavior in next 6 months
Thailand 67 26

Malaysia 40 52

Singapore 53 39

Philippines 51 38

Hong Kong 53 28

Taiwan 33 40

China 55 14

A little more cautious A lot more cautious

Source: OMG Navigating Challenges: Consumer Sentiment
11

Jobs prospects: Most are negative

• We see that in most countries our participants are quite negative about their job
prospects.
• Confidence is lowest in the 3 hubs, Taiwan, Hong Kong and Singapore
• Overall confidence in Thailand and China is relatively positive by comparison
Your job prospects in next 6 months

45 38 32 24 17 14 11

-51 -47
-60 -63 -67 -63 -69
-4 -15
-9 -13
-17 -23 -20

Thailand China Philippines Malaysia Taiwan Hong Kong Singapore
Positive Mildly Negative Strongly Negative


12

Personal Finances: A more positive outlook

• In Philippines, in particular, the people we talked to are quite confident that their
personal finances will not be adversely affected. But a majority of people we talked
to in Malaysia and Thailand are also positive about their personal situation
• Confidence is lowest in Taiwan, and to a lesser extent, China

Your personal finances in next 6 months

72
55 51 46 44 37 23
-26
-2 -44 -49 -48 -51 -51 -57
-2 -6 -4 -13 -10

Philippines Malaysia Thailand Hong Kong Singapore China Taiwan
Positive Mildly Negative Strongly Negative


13

Time to spend: A most positive outlook

• For the recession to ease, consumers need to spend confidently.
• At the moment, most consumers don’t believe it’s a good time to spend money.
They are most positive in Thailand, Malaysia and Singapore
• But in other countries, it seems that consumers want to hang on to their money for
the time being.
Is the next 6 months a good time to spend?

49 47 47 37 35 34 30

-47 -45 -46 -58 -53 -57 -50
-4 -8 -7
-5 -13 -9 -10

Thailand Malaysia Singapore Hong Kong China Philippines Taiwan
Positive. Mildly Negative. Strongly Negative.


14

Spending Behaviour

15

Recession resistant categories
• We asked consumers how their spending behavior would be affected in the next 6
months. What categories do they consider a luxury and what a necessity? And
where do they plan to increase or maintain spend and where do they plan to cut
back?

• In a recession • As part of the • And it is still
Subscription TV

Home Internet

Mobile Networks
people can be cocooning process important to keep in
expected to stay people also expect touch, so
home more to be spending consumers expect
• Home more time on the to maintain their
entertainment Internet, for spending on mobile
becomes more information or for communications
important entertainment
• And subscription TV • In this
can be justified on environment, home
value grounds internet subscription
can also be justified
on value grounds

16 16

Other recession resistant categories

• Consumers plan to maintain or increase their communications spend. They also
plan to maintain their spend on essentials

• The amount people • Consumers may be • At this stage

Medical
Day to Day Banking

Insurance
are able to commit assuming that they consumers have no
to longer term need to reduce their plan to reduce their
investments may spending in some spend on essentials
decline, but they areas, but they do such as medical
plan to maintain not yet see any spend
their spend on day need to reduce
to day banking spend on insurance
service products
• In some
markets, this
includes credit card
spend as
consumers realize
that they need to
rely more on credit

17 17

Other recession resistant categories
• Food, grooming and baby care items are also predicted to maintain or increase
their spend

• Although • Consumers • In most • Currently female

QSR
Groceries

Baby Care

Personal and Beauty Care
consumers expect that their families, the consumers do not
may down spend on mid children come have any plans to
range and fine reduce their
trade in some first, and this is cosmetics and
categories, the dining will reflected in beauty spend or
re is no overall decrease people’s their personal
plan to reduce • But sharing food determination care spend
their spend remains an to maintain or
important social • We have all heard
bond
increase their
spending on of the lipstick
baby care effect – the need
• So it is not items
to make ourselves
surprising that look and feel
consumers good through the
expect to • These include purchase of lower
ticket items such
maintain or infant as lipstick – and
increase their formula, diaper this is coming out
Quick Service s and other currently
Restaurant baby care
spend products

18 18

Longer purchase cycles

• Consumers also told us that they were planning to maintain rather than replace
when it came to bigger ticket items

Spend Spend
less on more on

• Eg Auto
• Eg
repairs, Appliance
Furnishing, Auto
repairs Home
mobile, Applianc
maintenance
es

19

The last spend to be cut

Fine Dining
Jewelry Which will be the last category of spend that you cut?
Computer related
Home furnishing
Home maintenance
Mobile Phone (new / replacement)
New Car
Toys
Sporting Goods
Investment
Alcohol
Home electronics
Spas / Well being
Travel
Clothing / Shoes / Fashion
QSR
Cosmetics / Beauty
Vehicle Maintenance
Over the counter medication
Cable TV
Insurance
Medical Check Ups
Groceries
Internet
Day to Day Banking

20

Reasons for reducing spend

• People told us that the main reasons for reducing their spend was to protect their
existing income, to buffer them against potential job losses
• Although it’s interesting that there is a perception that prices will
increase, whereas in fact inflation will probably reduce, or there may even be
deflation

Top 5 Reasons for Reducing Spend
1. I need to increase my savings
2. Prices are rising
3. I’m afraid of losing my job or someone else in
the family losing their jobs
4. I want to use less credit
5. My investments / stocks have lost value

22

How is the recession affecting you personally?
• Most people told us that they were feeling some negative impact, although there
were a few people who felt that this was a good time to be investing and a good
time to take advantage of cheaper prices
• But most were seeing a negative impact on their finances

Top 5 Impacts on me personally
1. I am being more cautious with my spending
2. I am going to invest very cautiously
3. Reduced pay / reduced bonus / increment
freeze
4. I know some people who have lost their jobs
5. My job feels less secure

23

China Spending Behavior
24

Recession Proof Categories

• In any recession in some categories are more resilient
than others. In most countries in the region, consumers
are suggesting that they will reduce their spend in both
high and low involvement categories

• But in China, spending intention is more robust. In many
categories, consumers think they will either maintain or
increase their spend.

• And it is only in very discretionary areas of spend – such
as travel , or fine dining – that there is significant intent
to cut back at the moment

25

In China, consumers think they will maintain their spend
in many categories
Planning to reduce / Planning to
delay spend maintain

Internet

Day to day banking

Insurance

Automobile maintenance

QSR

Normal cosmetics

Home improvement / renovation

Investments

Computer related

Handphone

Home electronics

Real Jewelry

Automobile

Domestic travel

Fine Dining
Source: OMG Navigating Challenge Consumer Sentiment: China
26 26

In China luxury purchases will be delayed, but there will
be a limited reduced spend on perceived necessities
Fine Jewelry Planning to reduce / delay spend
Car
Jewelry (Gold /silver )
Travel Abroad
Fine Dining Spa / Massage
Premium Cosmetics/ beauty
Home Decor
Mobile phone
Home Improvement Home Electronics
Investments Alcohol
Car maintenance
ToysTravel Domestic
Sport
Insurance Computing

OTC Pharma Mid to low end Cosmetics/ beauty
Fast Food Soft drinks
Luxury mid to low level restauran / Fashion
Clothing Necessity

Medical visits Banking

Cable TV Internet

Grocery

Source: OMG Navigating Challenge Consumer
Sentiment: China Planning to maintain
27

Purchasing less, or trading down?

• In a recession, spending behaviour will differ by category. In some categories
people will reduce or stop their spend, in others they will make a discretionary down
trade to a cheaper brand.
• In China, though, even in those categories where there may be some reduction in
levels of spend, consumers are showing a clear inclination for down trading rather
than reducing category involvement
Trade Down vs Decrease Purchase

Clothing / Fashion -40 8

Alcohol -23 15

Soft drinks -24 12

Sporting Goods / Equipment -24 14

Every day cosmetics -23 13

Groceries -19 3

High end cosmetics -19 17

OTC health -16 8

Trade Down Decrease Purchase

28

Actions taken to counter the recession
• A smart consumer is always looking for a good deal. So even though they are not
looking to overtly reduce spend in many categories, Chinese consumers will be
looking for a bargain and for value
Which of these will you do in the next 6 months
Use coupons 84

Look for best deals 82

Only buy necessities 79

Buy generic / house brands 77

Trade down on high priced items 76

Eat at home 72

Stick to the shopping list 65

Trade down on low priced items 60

Avoid high priced products 57

Use credit cards 57

29

A need for explicit value messages
In the next 6 months I am likely to

75

46

-2
-24

Pay more attention to ads Pay less attention to
with cost savings messages ads for luxury brands

Agree Disagree

30

Hong Kong Sentiment
31

Hong Kong consumers plan to reduce spend in the next
6 months
• Hong Kong consumers believe that they will be spending money more cautiously in
the next 6 months, although only just over a quarter feel they will be spending a lot
more cautiously

Thailand 67 26

Malaysia 40 52

Singapore 53 39

Philippines 51 38

Hong Kong 53 28

Taiwan 33 40

China 55 14


32 32


existing income, and to buffer them against potential job losses

• Although it’s interesting that there is a perception that prices will increase, whereas
in fact inflation will probably reduce, or there may even be deflation

the family losing their job
4. My investments have lost value
5. I want to reduce my debts

33


• Most people told us that they were feeling some negative
impact, although there were a few people who felt that this
was a good time to be investing and a good time to take
advantage of cheaper prices

1. I am being more careful with my spending
2. I am cutting back on savings and investments
3. My income or bonus has reduced
4. Prices are going up
5. I am going to cut back on travel and holidays

34

How is the recession affecting you at work?

• And most people feel a negative impact from the recession at work as well, although
not in terms of working longer hours; many people in Hong Kong work long enough
hours as it is

Top 5 Impacts on me at work
1. Revenues and incomes are down
2. There feels like there’s more pressure on me
3. Staff benefits have been reduced
4. Morale is lower than it was previously
5. We’ve lost some major clients

35

Hong Kong Spending
36

In Hong Kong, fast food is the most recession proof category,
followed by personal care products and mobile networking services
Planning to reduce Planning to
/ delay spend maintain
Fast Food

Personal care products

Mobile network

Contrary to the rest of the Household Grocery
region, in Hong Kong Pay TV
may not be recession proof due Skincare/ Cosmetics
to high subscriber costs
Contact Lens

Pay TV subscription

Mass fashion brands

Health supplements products

Household electrical appliances

Personal electrical products

Jewelry & Watch

Source: OMG Navigating Challenge Consumer Sentiment: Hong Kong
37 37

Trading Up or Trading Down

• In a recession, in some categories people will trade down, in others they will
maintain their current brand or even trade up.
• At the moment contact lenses, personal care and skincare / cosmetics appears to
be the categories most resilient to down trading
Planned brand behavior in selected categories

Contact Lenses -6 91 3
Personal Care -13 79 8
Skincare / Cosmetics -15 74 11
Mobile Network Services -20 76 3
Fast Food -21 75 3
Health Supplements -23 69 9
Fashion -23 68 9
Personal Electric Appliances -23 62 14
Personal Electronic Products -26 60 14
Pay TV subscription -27 68 5
Grocery -35 58 7
Jewelry and Watch -49 37 14

Maintain Trading Up Trading Down

38

Reasons to stay with current brands
• People told us that product/ service quality, brand trust and likability toward the brand are the
key drivers of commitment to current brands
• Price, though important, is not yet the dominant factor in engaging brand loyalty, despite the
Jewelry
Skincare/
recession
Personal House- Personal Household Health Mass Pay TV Mobile
Contact
& Fast Food care hold electrical electrical supple- fashion subscript- network
Cosmetics Lens
Watch products Grocery products appliances ments brands ion service

Trust- Trust- Don't Trust- Trust-
Convenient Good Good Convenient Good Good Brand
worthy worthy bother to worthy worthy
to buy quality quality to buy quality quality suits me
brand brand change brand brand

Trust- Trust- Trust- Don't Good
Good Good Brand Good Good Good Good
worthy worthy worthy bother to quality
quality quality suits me quality quality quality quality
brand brand brand change

Trust- Trust- Trust- Good
Brand Brand Brand Brand Brand Convenient Brand Brand
worthy worthy worthy quality
suits me suits me suits me suits me suits me to buy suits me suits me
brand brand brand

Reasons for using the same brands in the coming 6 months
(Top 3 factors)
Source: OMD Navigating Challenge Consumer Sentiment: Hong Kong
39

• People will be looking to save and keep their money close at hand
• So they will be looking for value deals, and they will be spending more time at home
• But they will also be looking to retain as much normal behavior as possible
Apply for a loan 8

Increase life insurance protection 11

Invest in property 16

Use my credit card more 21

Travel by taxi as usual 22

Invest in stock 27

Go on vacation as usual 34

Subscribe to Pay TV 37

Dining out as usual 51

Eat at home more 64

Use discount coupons 69

Save More 77

40


62

34

-5
-20

Pay more attention to ads Pay less attention to
with cost savings messages ads for luxury brands

Agree Disagree

41

Taiwan consumers plan to reduce their spend in the
next 6 months
• Taiwanese consumers believe that they will be spending money much more
cautiously in the next 6 months, with 4 in 10 saying they will spend a lot less.
Thailand 67 26

Malaysia 40 52

Singapore 53 39

Philippines 51 38

Hong Kong 53 28

Taiwan 33 40

China 55 14


43


• Although its interesting that there is a perception that prices will increase, whereas in
fact inflation will probably reduce, or there may even be deflation

the family losing their jobs
4. I want to use less credit
5. My investments / stocks have lost value

44



1. I am being more prudent with my spending
2. I know people who have lost their jobs
3. I feel insecure at work
4. I have cut back my entertainment spend
5. I am going to cut back on my travel spend

45

• And people are also feeling a negative impact at work as well, especially in terms of
feeling obligated to work harder

1. I am working harder or I have a greater
workload
2. Pressure on pay – no pay rises, pay cuts or
no bonuses paid
3. Job insecurity
4. Less business / clients with less money
5. Other job opportunities hard to find

46

Taiwan Spending Behaviour
47


• In any recession some categories are more resilient
than others. Some will be high on consumers list of
areas to cut back on, in other areas spend will be
maintained

• But in Taiwan, as the next chart shows, consumers are
planning to cut back in almost every category

• Cable TV, and Internet are not going to be cut back.
Neither will OTC medicine or banking services.
Automobile maintenance spend will be steady or
increase

• And interestingly consumers have no plans to cut back
on skin care, but may cut back on cosmetics

48

In Taiwan, almost every category of spend may decline
Cable TV
Skin Care
Day to Day banking services
Home Internet
Groceries
OTC medicine
Disposable Contact Lenses
Contact Lens / Spectacles
Insurance
Baby Products
Newspaper Subscriptions
Mobile networks
Soft drinks
Beer
Movie / Cinema
Computer related
Video / DVD / VCD
QSR
Home electronics
Cosmetics / Beauty
Magazine Subscriptions
Automobile
Toys
Investments
Brandy
Whisky
Leisure Travel

Source: OMG Navigating Challenge Consumer Sentiment: Taiwan 49
49

Consumer will be cutting back both luxuries and
necessities Planning to maintain

Cable57
TV

Internet subscription
Grocery Banking
22
17 15
Car Maintenance
6 Luxury
Skin Care
-3 -1 Product
Mobile CommunicationBaby
-8 Disposed CL
Necessity -11
Insurance Glasses/CL -10
NP -15
OTC Medicine
-21 -20 Beer Brandy
-28 -32-31
-35
MG Whisky
DVD
-43
-54 -50
Soft Drink
-52 QSR Movie Car -51
-57
Toy -59
Cosmetics
Home electronics
-64
-76
Computer -73
Investment

-95
Travel

Source: OMG Navigating Challenge
Consumer Sentiment: Taiwan Planning to reduce / delay spend
50

• When consumers cut back, they make a decision as to whether to reduce or stop their
spend, or to make a discretionary down trade to a cheaper brand.
• In Taiwan, consumers are prepared to down trade on Baby
Products, Grocery, Disposable Contact Lenses, Soft Drink, QSR and OTC Healthcare
rather than reduce their frequency or quantity of purchase

QSR -53 13
Grocery -43 3
Soft Drink -40 13
OTC healthcare -27 14
Baby Products -23 3
Disposable Contact Lens -23 3
Cosmetics / Fragrances -23 33
Whisky -23 50
Contact Lenses / Glasses -20 17
Skincare -17 30
Beer -17 40
Brandy -17 47


Source: OMG Navigating Challenge Consumer Sentiment: Taiwan
51

• A smart consumer is always looking for a good deal. But in the next 6 months
Taiwanese consumers will be looking hard for bargains and deals
Use coupons 83


Trade down on high ticket items 77


Trade down on low ticket items 67

Use credit cards to pay 63

Drink less alcohol 63

Eat at home 63

Stick to my shopping list 60

Only buy necesities 57

Buy generic / private labels 46

52


80

53

-3
-10

Pay more attention to ads Pay less attention to ads
with cost savings messages for luxury brands

Agree Disagree

53

Singapore Sentiment
54

Singapore consumers plan to reduce spend in the
next 6 months
• Singaporean consumers believe that they will be spending money more cautiously
in the next 6 months, with nearly 40% feeling that they will be spending money a lot
more cautiously

Thailand 67 26

Malaysia 40 52

Singapore 53 39

Philippines 51 38

Hong Kong 53 28

Taiwan 33 40

China 55 14


55


• Although its interesting that there is a perception that prices will
deflation

1. Worries about job losses and experience of
friends / family losing money
2. Needing to save more as a buffer against poor
economy
4. Need to show prudence rather than
extravagance

56


2. Need to work harder, demonstrate worth
3. Limited career / job opportunities – now a
buyers market
4. Demoralization from constant negative news
and negative tone
5. Unfavorable currency exchange

57

• Most people are also feeling the recession at work as well, in terms of both the
business environment and the pressure to work harder

1. Downward pressure on pay
2. Understaffed
4. Need to work harder and longer
5. Poor business environment, spend and
investment down

58

Singapore Spending
59


maintained

• But in Singapore, as the next chart shows, consumers
are planning to cut back in almost every category

• Banking and Insurance services are high on people’s
list of category spend to maintain

• Cable TV, and Internet are not going to be cut back
either. Neither will OTC medicine. And as there is a
reduction in spend on other forms of dining, QSR may
benefit

60

In Singapore, almost every category of spend may decline

Day to day banking
Internet
Insurance
Groceries
Cable TV
OTC healthcare
QSR
Automobile Maintenance
Investments
Toys
Cosmetics / Beauty / Fragrances
Alcohol
Sporting Goods
Automobile
Computer related
Spas / Well being
Handphones
Home Furnishing / Décor
Real Jewelry
Home Improvement / Renovation
Home Electronics / Appliances
Clothes / Fashion
Leisure Travel
Fine Dining

Source: OMG Navigating Challenge Consumer Sentiment: Singapore
61 61

Consumers will be cutting back both luxuries and
necessities
Jewelry
Travel Planning to reduce / delay spend
Home Improvement
Fine Dining Mobile Handset Home Electronics
Spa Home Furnishing
Computing
Car
Sport Clothing / Fashion

Toys
Alcohol Investments Cosmetics/ beauty

Car maintenance Medical visits
Fast Food OTC Pharma
Luxury Necessity
Cable TV

Insurance Grocery

Internet
Banking

Source: OMG Navigating Challenges
Consumer Sentiment: Singapore Planning to maintain
62

• People have a choice as to whether to reduce or stop their spend, or whether to
make a discretionary down trade to a cheaper brand.

• In Singapore, consumers are showing a willingness to down trade rather than
reduce their consumption


Fine Dining -66 29

Cosmetics / Beauty / Fragrance -50 19

Alcohol -39 23

Groceries -33 0

Sporting Goods -23 39


63

Singaporean consumers will be looking hard for bargains and deals





Eat at home 81

Use coupons 77





Drink less alcohol 30

64


83

66

-1
-12


Agree Disagree

65

Malaysia Sentiment
66

Malaysian consumers plan to reduce spend in the
next 6 months
• Malaysian consumers believe that they will be spending money more cautiously in
the next 6 months, with more than half feeling that they will be spending money a
lot more cautiously

Thailand 67 26

Malaysia 40 52

Singapore 53 39

Philippines 51 38

Hong Kong 53 28

Taiwan 33 40

China 55 14


67



deflation

1. The future is looking uncertain
2. I want to save more
4. My job is not as secure as previously

68



1. I am being more cautious with my spending
2. I know people who have lost their jobs
3. I am putting off some major purchases
4. I am being cautious with investing
5. I am being cautious with travel plans

69

• People are also feeling a negative impact at work, either in terms of a reduced
volume of business, or a downward pressure on wages.

2. Less money coming in, business dropped off
3. Business does not want to invest
4. Need to work harder and longer
5. Insecurity about future job prospects

70


maintained

• But in Malaysia, as the next chart shows, consumers are
planning to cut back in almost every category

• As might be expected, there is no predicted decline on
infant / baby related categories

• And home Internet subscriptions will continue to be
important

• But in most other categories, Malaysians see a potential
decline

72

In Malaysia, almost every category of spend may decline
Planning to reduce Planning to
/ delay spend maintain
Infant formula
Internet
Toiletries
Diaper
Day to Day banking
Insurance
Coffee / Tea / Hot Drink
Pet Food
Personal care
OTC medicine
Alcohol
Toys
Massage equipment
Snacks
Branded Stationery
Credit Card
Investments
Cosmetics
Automobile
Air Freshener
QSR
Jewelry
Spas / well being treatments
Handphone
Computer related
Home furnishings
Clothing / Fashion
Home electronic appliances
Electronic gadgets
Leisure Travel

Source: OMG Navigating Challenge Consumer Sentiment: Malaysia
73 73

In Malaysia, consumers plan to reduce their spend on
both necessities and luxuries
Planning to reduce / delay spend
Gadgetries

Home Electronics
Mobile phone
Leisure Travel
Jewelry

Computer
Home Furnishing
Automobile
Investment
Spas/ General well Clothing/ shoes/ QSR
being treatment Car/ Home fashion
fragrance
Day-to-day banking
Branded Cosmetics Credit Card
Stationary
Massage Insurance
equipments Over the counter
Snacks medicine
Toys for
Alcoholic children
Beverages Beverages (Chocolate/
malt drink, coffee)
Adult milk
Luxury Pet food
powder Necessity
Personal care
Baby Diapers
Home Internet

Toiletries
Children Milk
Powder Maintenance of your
current vehicle

Planning to maintain

Source: OMG Navigating Challenge Consumer Sentiment Malaysia
74


• If they are cutting back consumers have the choice to reduce or stop their
spend, or to make a discretionary down trade to a cheaper brand.
• In Malaysia consumers are showing a willingness to down trade rather than

Alcohol -20 3

Beverages -37 6


Personal Care -45 6

Snacks -47 16



75

Malaysian consumers will be looking hard for bargains and deals. And they will be
trying to avoid using their credit cards if at all possible





Use coupons 79


Eat at home 72




76


76

44

-3
-16


Agree Disagree

77

Thailand Sentiment
78

Thai consumers plan to reduce spend in the next 6
months
• Thai consumers believe that they will be spending money more cautiously in the
next 6 months, but only a quarter believe they will be spending a lot more
cautiously, which makes Thai consumers relatively positive compared to most in
the region

Thailand 67 26

Malaysia 40 52

Singapore 53 39

Philippines 51 38

Hong Kong 53 28

Taiwan 33 40

China 55 14


79

• People told us that the main reasons for reducing their
spend was to protect their existing income, mainly to
buffer them against potential job losses
• Although its interesting that there is a perception that
prices will increase, whereas in fact inflation will
probably reduce, or there may even be deflation

1. General uncertainty because of the recession
2. The cost of living is getting higher
3. I am worried about my job status
4. Investments and savings have lost value
5. Want to save money to provide a buffer

80

• Most people told us that they were feeling some
negative impact, although there were a few people who
felt that this was a good time to be investing and a good
• But most were seeing a negative impact on their
finances

1. I need to be careful with my spending
2. I am going to buy necessities not luxuries
3. I am feeling more stressed about the future
4. Work is getting busier and more stressful
5. I am trying to save more money

81

• And most people felt that they were feeling a negative
impact from the recession at work as well, especially in
terms of the general decline in economic activity causing
a loss of morale


1. Less business makes me feel insecure
2. Need to work harder, but no increase in pay
3. Reduced benefits
4. Cost cutting and savings measures
implemented at work
5. More difficult relations with clients

82

• In any recession in some categories are more resilient
maintained

• But in Thailand, as the next chart shows, consumers are
planning to cut back almost every category

• It will come as no surprise that family staples such as
food, baby care items and medicine are recession proof

• But Thai consumers also have no plans for their pets to
suffer. Pet food looks like being a recession resilient
category

84

In Thailand, almost every category of spend may decline
Planning to Planning to
reduce / delay maintain
spend Pet Food
Baby Milk
Toiletries
Medicine / Supplements
Food
Petrol
Hair Care
UHT Milk
Day to Day banking
Maternity Milk
Facial Care
Body Care
Non Life Insurance
Life Insurance
Baby Diapers
Mobile Service Provider
Non Alcoholic Beverages
Automobile
Credit card spend
Mobile Handset
Debit card spend
Home Improvement
Taxis
Cosmetics / Fragrances
Fast Food
Snacks
Real Estate
Personal Loans
Leisure Travel
Home Appliances
Alcohol
Computer related
Home Furnishing
Clothing / Fashion
Home technology
Source: OMG Navigating Challenge Consumer Sentiment: Thailand
85

Thai consumers think they will be cutting back on both
luxuries and necessities
Necessity

Toiletries
Hair Care
Planning to reduce / delay spend

Medicine
Alcohol Facial Care Milk
Mobile Service Grocery
Body Care Petrol
Home Appliances

Planning to maintain
Life Insurance Banking
Car Baby Milk
Non Life Insurance
Maternity Milk Pet Food
Mobile Handset
Computing Diapers
Real Estate Taxi Non Alcoholic Drinks
Personal Loans Home Improvement
Cosmetics/ beauty
Debit Card
Fast Food
Home Furnishings
Credit Card
Leisure Travel
Home Technology Snacks
Clothing / Fashion

Luxury

Source: OMG Navigating Challenge s Consumer Sentiment Thailand
86

• A smart consumer is always looking for a good deal. But in the next 6 months Thai
consumers will be looking hard for bargains and deals. And they will be trying to
avoid using their credit cards if at all possible



Use coupons 92

Eat at home 87







87


84

61

-16
-39


Agree Disagree

88

Philippines Sentiment
89

Filipino consumers plan to reduce spend in the next
6 months
• Consumers in the Philippines believe that they will be spending money more
cautiously in the next 6 months, with nearly 40% feeling that they will be spending
money a lot more cautiously

Thailand 67 26

Malaysia 40 52

Singapore 53 39

Philippines 51 38

Hong Kong 53 28

Taiwan 33 40

China 55 14


90


deflation

1. General mood for greater frugality
2. Concerns about unemployment and benefits
4. Spending on practical things and neccesities
5. I want to save more and be prepared

91

were a few people who felt that there was little personal impact yet – and perhaps
this is actually a good time to take advantage of cheaper prices
• But most were seeing a negative impact on their finances and were preparing for
more bad news

2. Need to work harder
3. Increased price of goods especially basic
staples and utilites
4. Know people who have become unemployed
or are facing thereat of unemployment
5. Unfavorable currency exchange rate

92

• Most people are also feeling the recession at work as well, in terms of both the
business environment and the pressure to work harder

1. Pressure on clients, less business activity
2.Fewer job opportunities, or options if become
unemployed
5. Pressure to increase sales

93

Philippines Spending
94


• In any recession some categories are more resilient than
others. Some will be high on consumers list of areas to
cut back on, in other areas spend will be maintained

• But in Philippines, as the next chart shows, consumers
are planning to cut back in almost every category

• Medical and well being services are high on people’s list
of category spend to maintain. This even applies to
wellbeing services such as spas and similar therapeutic
benefits

• Cable TV, and Internet are not going to be cut back
either. Ways of staying connected will be important. And
there are no planned cut backs on staples such as food

95

In Philippines, almost every category of spend may
decline

Groceries
OTC healthcare
Medical check ups
Internet
Day to day banking
Cable TV
Automobile Maintenance
QSR
Credit cards
Insurance
Spas / Well being
Investments
Cosmetics / Beauty / Fragrances
Clothes / Fashion
Snacks
Alcohol
Home Furnishing / Décor
Real Estate
Home Improvement / Renovation
Handphones
Home Electronics / Appliances
Toys
Computer related
Leisure Travel (Local)
Automobile
Sporting Goods
Real Jewelry
Leisure Travel (International)
Fine Dining

Source: OMG Navigating Challenge Consumer Sentiment: Philippines
96 96

• People have a choice as to whether to reduce or stop their spend, or whether to
make a discretionary down trade to a cheaper brand.

• In Philippines, consumers are showing a willingness to down trade rather than

Fine Dining -51 15

Snacks -51 13



Alcohol -23 26

Sporting Goods -17 50


97

• A smart consumer is always looking for a good deal. But in the next 6 months Filipino
consumers will be looking hard for bargains and deals




Eat at home 83


Use coupons 81




Use more public transport 57


98

A need for explicit value messages – but
not closed to luxury brands

77

49

-23
-51


Agree Disagree

99

Consumer Sentiment

April 2009

Consumer Confidence and Planned Spending Behaviour in the Recession. A Conversation with Asian Consumers by Omnicom Media Group

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