For foreign investors in the FMCG sector considering entering the Philippine consumer market consider reading this article from a respected local advertising guru, Bon Ororio.
Filipino consumers in high definition
COMMONNESS By Bong R. Osorio (The Philippine Star) Updated September 24, 2012
How do Filipinos like to spend their money and how happy are they?
Recently, media and consumer research groups Kantar Media, TNS Philippines and Kantar World Panel held an industry presentation at the Makati Shangri-La highlighting the importance of its rural data and research. Fresh information from Kantar Media’s new Rural TV Audience Measurement Panel, TNS Philippines Consumer Spending Barometer and Kantar World Panel’s 2012 Quarter 1 Urban Rural Home Panel gives us a glimpse of the Filipino viewer and consumer with wider coverage, broader understanding and richer insights.
The interrelated studies presented by Gabriel Buluran, general manager of Kantar Media Philippines, show the interplay of how the Filipinos spend, their current outlook on life and the prevailing fiscal climate. They are attempts to look at the Filipinos in high definition, to put things in perspective, and make us better understand the Filipino consumer. Here are the major take-aways from the presentation.
• PH Demography – The Philippines is close to having 100 million people, living on 7,100 islands, plus or minus a few, depending on how the Masinloc crisis will be resolved. Half of our people live in rural areas, four out of 10 have or claim to have work, eight of 10 have a television set, and 20 percent have used the Internet at least once.
• Happiness index – Twenty percent of Filipinos are extremely happy and 40 percent see themselves having better lives in the future. Barring calamities, the general outlook of Filipinos for the first quarter is good. We can attribute that to our resiliency, our indomitable spirit or our capacity to smile even when confronted with heavy burdens.
• TV ownership – Of the 19 million Filipino homes, whose members average between four and five, 80 percent are single-TV-set homes, seven of 10 have children in their respective homes. Twenty percent subscribe to cable and satellite television. In urban and rural Philippines, 40 percent watch television during primetime, spend an average of five hours watching TV during weekdays and can be reached by any one of the more than 8,500 advertisements aired on 136 television channels every day. The challenge that these figures present is how to understand and make sense of them: 97 million Filipinos, evenly spread across urban and rural areas, divided by water 7,100 times, reachable by television, cable/satellite, the internet and mobile phones; 90 percent are users of more than a dozen products, in a room with a television set on for five hours.
• Two out of 10 Filipinos have savings. Food expenses are pegged at P6,500 to P7,500 monthly. Total monthly household expenses are between P13,500 and P15,500.
• Income is what can be spent. Urban Filipinos spend a bit more, but what they spend is less than the rural Filipino when taken as a proportion of income. Rural Filipinos spend more than 92 percent of their monthly income. It is interesting to note that the amount spent on food for both urban and rural groups are at almost at the same level. The difference is less than P1,000. Prior to seeing this data, our belief was that food expense per household would be less in the rural areas. Things are indeed changing.
• What do Filipinos buy? The top categories Filipinos spend on are milk products, snacks, fabric cleaning, food seasonings, coffee, canned goods, noodles and hair care products. Household care and frozen foods make up the urban homes’ top 10 categories. Cooking oil and soft drinks complete the rural consumers’ top10 list. Milk products are on top for both homes, with each urban home spending P1,400 on the category for the quarter, while each rural home disbursed P900. Baby care items, snacks/biscuits and alcoholic beverages also ranked high in the “spend per buyer” figures. Rural homes are predisposed to spending more on seasonings and sauces.
• Products on the “vulnerable” list – Given the list of the top product categories Filipinos spend on, eight of the 10 are on the must-have list. That’s a relief to marketers. For urban homes, household products and frozen foods are on the “vulnerable” list, while soft drinks are on the rural home’s list. Are these products in trouble? Not necessarily at this point, since they made it to the top 10 products Filipinos spent on in quarter one. This means consumers have not given them climate.
• Sachet marketing continues to rule. In terms of the number of trips to buy goods, snacks and seasonings topped the list followed by coffee, hair care, fabric conditioners and noodles. This data is a continuing testament to the success of sachet marketing or the “tingi” mentality in the country, where Filipino consumers do more trips, purchasing goods at lesser and more affordable volumes per trip: 26 to 31 trips to buy biscuits, 22 to 28 trips to buy seasonings, and 20 trips in three months to buy coffee. The frequency of visits presents a lot of opportunity to see and try what’s new on the market. It’s a test of consumer loyalty.
• The right use of media – Given these data, marketing and media people are faced with these questions: When do we intervene? How do we influence? Which among TV, radio, print, cable, Internet, mobile phones and other newfangled media would be the best carriers of our messages to connect to our targets? Filipinos in the urban and rural areas can be reached via these media at varying levels of effectiveness and efficiency, and at differing levels of engagement.
• Top brands – Monitoring no less than 250,000 commercials in June 2012 and 260,000 commercials in July 2012 covering hair shampoo, detergents, hair conditioner, toothpaste, facial care, milk, bakery products, entertainment, flavor enhancers and wireless telephony, the following information were culled: the spots aired in June involved very active corporate brands like Procter & Gamble, Unilever, Colgate-Palmolive, Nestle, Monde, Kraft, Unilab, Smart, Globe and Rebisco; spots aired in July came from pretty much the same brand names with Ovation Productions (a concert producer of foreign shows in the Philippines), and Universal Robina replacing Globe and Rebisco.
• Television viewing – The “shape” of the day remains the most important barometer in measuring TV viewing. It is so simple, straightforward and says a lot. In urban and rural Philippines, the shapes are the same during weekdays and during weekends, with two peaks very visible. Noontime and primetime are still the highest draws. As expected, viewing in rural Philippines is slightly lower than that of urban. But this is only true during daytime and late at night. Ratings from rural Philippines are higher during primetime. It peaks earlier than their urban counterparts and it is true for both weekdays and weekends. Also evident is that rural viewers retire a bit earlier than their urban counterparts. For the past two months, morning viewing in rural areas during weekends mimics the viewing pattern in urban areas.
• Relevance of rural data – For marketers and media planners, placements that are seen at the same time nationwide hit two sets of viewers at different heights and widths. Earlier peaks and earlier drops might require different plans and placements in the future. With rural data now available, adjustments in media plans and media buys will become necessary. Consumers nationwide are not just seen as “most likely” the same as Manila, or most likely the same as urban Philippines. Initial data show that consumers are hit by the ads differently at different times.
• Average TV time – An individual, on average, watches five hours of television a day. Housewives from the rural areas watch approximately an hour less television compared to their urban counterparts. Rural kids and teens watch 45 minutes less. If we focus on housewives, kids and teens, we discover that rural housewives watch significantly less television during the daytime. They only catch up with their viewing from around 6:30 p.m. to 8 p.m., after which a steep decline ensues. Urban housewives’ viewing pattern, on the other hand, climbs steadily from 5:30 a.m. to around 9:30 a.m. The difference in viewing widens till around 11 a.m., and then goes on a steep ascent after then.
Rural kids watch about the same amount of TV compared to their urban counterparts in the morning, which lasts up to 8:30 a.m. Then, just like the housewives, they watch less TV at noon and in the afternoon. Their viewing picks up and surpasses urban viewing at around 5:30 p.m. and lasts up to 8:30 p.m. This explains the difference among kids and teens in their choices as to the number-one program if you go urban versus rural. Urban kids watch Walang Hanggan more, while rural kids go for Princess and I more.
With rural Philippine data in hand, people in the marketing communication industry are given the bigger picture. We can now see urban and rural Filipinos better. When urban and rural data are used together, we are allowed to plan and to buy media for the whole of the Philippines more efficiently. They give us a view of Filipino consumers in higher detail and higher definition.
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