Marketing Digest 27 October 2006

27 OCTOBER 2006

Radio Race Day

It's that time again - the six-monthly arrival of the latest radio statistics. We'll leave the details of individual station performances to the radio organisations - who, curiously, can usually find asterisk-laden successes for every station - and just report on a few of the overall trends that caught our eye in the minutes since the data hit our computers. All data courtesy Research International's RADIOS national survey No 2 2006, just released (compared with No 1 2006). And, we should note, our comments below relate specifically to one-week cumulative audience patterns for weekday breakfast (6-9am).

Interesting to note that:

* Our youngsters are listening less at breakfast. Cumulative audiences for 10-17s were down significantly in Auckland (down from 59.4% to 49.9%), Manawatu (was 59.2%, now 46.6%) and Northland (was 70.8%, now 56.4%). Tauranga, reversing the trend, showed an increase from 57.9% to 67.7%; minor fluctuations (ups and downs) in other centres. * Wellington commercial radio continues to under-perform as a result of the strong presence of National Radio & Concert FM, especially with the Over 25s. Cumulative commercial audiences tend to hover around 59% for 25-54s (vs 70% nationally). * Cumulative audiences across all radio stations nationally show an interesting trend: 53.9% for 10-17s, 60.1% for 18-24s, 70.4% for 25-39s, 71.6% for 40-54s and 59.8% for those 55 Plus. In other words, 25-54s are the most regular listeners to breakfast radio - younger and older audiences are less attentive. Whether this reflects busy lives, sleeping later or the cult of the white earbuds remains to be seen (or, perhaps, heard).

On a more detailed basis, here's what the Radio Bureau is reporting about the latest results:

National

Commercial Radio listenership has gone up by 8,600 listeners nationally (All 10+). The introduction of "The Breeze" into Auckland has led to a huge increase in its national audience, a growth of 93,300 listeners and 1.8% market share growth among all people 10+.

Auckland

Radio listenership within the Auckland market has grown both survey on survey and year on year reaching on average 793,600 AP 10+.

Wellington

The battle for the top spot in Wellington has been tight, with this survey round seeing The Breeze and ZM swapping the top spot. The Breeze is Number 1 with a 16.7% 10+ share.

Christchurch

The Rock has taken the top position with a 14.5% total share of all commercial listening for all people 10+, and growth of 1.2% over survey 2/05.

Having radio surveys arrive en masse twice a year may be administratively convenient but it does tend to allow little time for careful consideration of the results. There's a huge heap of data, and the rush is on to just get it out, faster, faster, faster.

We're not immune to the pressure, so we'll simply cut to the chase and say: the stats are out, talk to us if you want more detail for your demographic of choice.

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Skylights Fresh from Sky's Annual Report, the latest headlines from our pay television operator:

The Numbers

* Subscriptions up 48,102 to 667,270 (42% of Kiwi homes) * Churn down to 13.5% (was 15.8% in 2005) * MySky subscribers 8345 as at 30 June * Average monthly viewing hours for Sky: 123 (up 6%) * 11.4% growth in Sky's share of TV viewing * 9% increase in viewing hours, Super 14 2006 vs. Super 12 2005 * 25% increased channel capacity on the new Optus D1 satellite * Second decoders in subscriber homes 58,806 (UHF 29,503, satellite 28,806) * 56% of MySky subscribers kept their satellite decoder as an additional outlet * 9% retained their UHF decoder

Sky plans to:

* broadcast HDTV (High Definition Television) within two years * introduce an integrated satellite/internet decoder (to deliver content either via satellite or internet) * increase Pay Per View movie offerings once the D1 satellite is fully commissioned * enhance video services offered to mobile operators as 3G penetration continues to increase * go fully digital in their studio facilities within the next two years * provide television content on Wi-Max in partnership with Woosh Wireless

Fuel Marks The virtually simultaneous release of competing Food-For-Fuel deals from both Progressive and Foodstuffs this week simply underlines how competitive the supermarket category remains - and that both companies are prepared to fight hard to retain market share.

Progressive were first off the mark, announcing a 4-cents-a-litre discount off fuel for shoppers at Woolworths, Foodtown or Countdown stores who spend more than $40 in a single session, the deal available from this coming Monday via Shell and Gull. Foodstuffs responded within hours, matching the deal for both New World and Pak'nSave (in partnership with BP) but promising an "early November" start.

The deals came as no surprise - they're common as muck offshore despite the damage they do to supermarket margins. What they can do, however, according to the US trade mag Progressive Grocer, is:

* Drive new traffic to the store, and help retailers compete on a new level. * Reward customers with a tangible, valuable incentive. * Create excitement and attract positive media attention. * Be used creatively to help drive other businesses, specific initiatives, and/or particular categories in the store.

The basic premise of these programmes is that by letting shoppers earn discounts toward petrol purchases when they shop in the supermarket, retailers will gain more loyal shoppers and a broader customer base. Grocers with on-site petrol pumps, and even those without, are testing the waters with specials that tie into specific product categories and/or private label programmes, and in many cases link up with existing loyalty card programmes. In the US one-third of supermarket companies surveyed by the Food Marketing Institute say that at least some of their stores offer gasoline service.

As we've seen with FlyBuys, these sorts of incentive programmes can be leveraged into bonus points, product and category specific items and other sales promotional features (paid for by suppliers rather than supermarkets wherever possible, naturally). US-based Giant Eagle, considered one of the leading retailers in the fuel rewards domain, has evolved its programme to provide additional rewards for items as diverse as dry-cleaning purchases, for other retailers' gift cards, and for purchases at their in-store pharmacy.

In 2002 in the UK, Safeway tied its discount scheme to basket size, offering increased discounts for higher spends (from 2p a litre for a spend of £25 up to 20p a litre for spending £150 at Safeway). The company was of course buying market share. This was their explanation:

"We are aiming to drive sales and increase individuals' spend. The fuel promotion will encourage customers to increase their current spending levels from the average £80 a basket, and may also pull in customers who usually shop with competitors If the promotion generates high levels of sales it will fund itself, so we could keep it going for some time. But it is a promotion."

Our friends across the ditch also indulge in fuel rewards practices. Interestingly, such conduct, known as third line forcing, is prohibited under the Australian Trade Practices Act 1974, unless immunity is granted by the Australian Competition and Consumer Commission (ACCC). The ACCC carried out an assessment* and concluded in February 2004 that:

... there are significant benefits to consumers from shopper docket petrol discount schemes. In particular, the ACCC considers the proposed arrangements, along with initiatives by competitors in response, will benefit consumers in a number of ways, including:

* Lower petrol prices for consumers: The ACCC considers that the shopper docket petrol discounts will bring lower petrol prices for consumers, and that the involvement of such significant participants as Coles/Shell and Woolworths/Caltex would mean a greater availability of cheaper fuel because there will be more petrol sites offering the shopper docket discounts. In addition, the conduct is generating a culture of discounting, as demonstrated by the competitive response by many independents who are offering their own discounts. * Increased non-price competition: The petrol and grocery sectors are already seeing some variety in the types of loyalty programs being devised in response to those proposed by Woolworths and Coles, notably Metcash/IGA's loyalty scheme. Further, some competitors to the Coles/Shell and Woolworths/Caltex arrangements are considering a number of other innovative responses to attract and retain custom.

Perhaps the most significant feature of the New Zealand foray into fuel rewards is that the scheme has been implemented across the board by the supermarket groups - into Pak'n'Save and Countdown as well as their more costly counterparts. Did modelling suggest that the deep discount operators would lose too many customers once the reward scheme was in action? Is this simply a recognition of the fact that some New World and Pak'n'Save stores, already offering fuel discount deals, have both demonstrated significant benefits from their schemes? Or is it perhaps a groupwide initiative aimed at gaining market share for one of the giants, simply matched by the other? One day, we'd love to find out.

Okay, shoppers, stop your engines. Wait until Monday if you're Progressively inclined, until early November if you're a Foodstuffs supporter. Then get that shopping cart out and fill 'er up.

*PS We have an electronic copy of the ACCC report, if you're interested. Just drop us an email to mcarney@grey.co.nz .

Eating Late Have you ever wondered if there's enough business around to justify staying open 24-7? Or are you just grateful there are such places? Denny's that culinary centre of America, recently announced the results of its nationwide US survey of late-night diners that revealed America's nocturnal appetites. Whether respondents craved eggs and hamburgers or crab legs and cheese curds, regardless if they are young or old, male or female, a night owl or an early bird, they expect the same variety of food and quality of service as their daytime counterparts.

A Few Quick Facts:

* Over 80% of the respondents dine out between the hours of 10:00 p.m. and 6:00 a.m. on a weekly or monthly basis. * The majority of respondents (58%) prefer to satisfy their hunger in a sit-down restaurant over a fast-food drive thru. * Savoury food items declared victory over sweet dishes, with 67% of respondents choosing sandwiches and dinner entrees, while 6% choose desserts.

For classic late-night eaters, tastes do not stray far from traditional meals. Most wanted standard American fare: hamburgers, cheeseburgers, chicken strips and fries. Although this works most of the time, 70% of respondents did admit to less-conventional cravings such as fried tofu, turkey burgers, Thai duck, chocolate scones and even goat's milk.

The Changing Face of Late Night While once the domain of college students and young night-club goers, late night restaurants now accommodate a wide-variety of consumers. Nearly half of the respondents (47%) were over fifty years old and only 30% were completing a night of merry-making. "Our survey revealed that eating after 10:00 p.m. has become more commonplace as America becomes a 24-hour society. Many 'third-shifters' and those that are out late want real meals and do not want to settle for fast food snacks," said Peter Gibbons, Vice President of Product Development, Denny's.

Eat on, America. Just a word of caution - you might also want to study this article on "Effect of a late evening meal on nitrogen balance in patients with cirrhosis of the liver".

Senior Moments From the San Diego Transcript - but totally relevant everywhere: At 55, San Diego architect James Robbins isn't thinking about retiring anytime soon, but he recently made a lifestyle change with those golden years in mind. He sold his home in an outlying suburb and purchased a two-bedroom, two-bath condominium in a luxury high-rise development downtown.

In addition to the panoramic views and first-rate amenities, including pool and fitness centre, Robbins wanted a more urban environment close to cultural and recreational facilities, as well as a "lock and go" residence for when he does reduce his work load and increase his travel and leisure schedule.

Robbins is typical of many aging boomers who are seeking a different kind of housing, one that offers maintenance-free living not far from where they've worked and lived.

As the spectre of retirement and empty-nesting looms large for those born between 1946 and 1964, these so-called baby boomers are hardly entering old-age homes or assisted living facilities. From downtown condos to active adult communities to age-targeted apartments, developers are scrambling to find a housing type that fits the needs of this less than stereotypical greying market.

"Don't call them aging, don't call them seniors and certainly don't offer them early-bird specials," said Peter Dennehy of Sullivan Group Realty Advisors. "They don't like it."

For good reasons, he added. After all, this is a generation that expects to work past the traditional retirement age. It's also a group with active, healthy lifestyles that are in turn helping them have even longer and more productive lives.

According to Dennehy and many in the real estate industry, this is the perfect time for homebuilders and community developers to target the shifting housing needs of baby boomers -- the nation's richest age group -- as they enter the slowdown and semi-retirement era. This post-World War II generation is buying property as an investment and often as their "aging-in place" home.

Gopal Ahluwalia, staff vice president of research at the National Association of Home Builders (NAHB), said older buyers want a home with all the goodies but none of the maintenance. They are looking for places with less lawn to mow and less floor space to carpet and clean.

"The boomer -- who can travel, see the world and play golf or tennis when he so chooses -- is seeking to cut down on the amount of time and energy they have to expend on upkeep of their castles," said Ahluwalia. "This is a step between single-family and senior housing."

Lifestyle changes are the main reasons people over 55 decide to move into a new home, said Norman Cohen, chairman of the NAHB's 50+ Housing Council. "Because they are choosing to move based on creature comforts or changing circumstances, the older buyer is often less affected by the ups and downs of the housing market."

Many boomers expect to "age in place," given their active and affluent lifestyles. The number of seniors living outside of nursing homes and other assisted-living facilities is projected to more than double by 2030. There's also a shift of large numbers of older folks living in the suburbs. Previously, most elderly lived in cities.

Wherever they live, aging residents indicate that what they want from their homes and communities is the flexibility to accommodate a range of physical abilities and growing old needs -- along with other amenities, including accessibility to services, transportation and wired houses.

More importantly, boomers have an entirely differently mentality than their retiring parents. Today's 55-plus segment wants to downshift but not necessarily to be shipped out to the outskirts of town into a seniors-only community.

The challenge for planners, designers and builders is to create liveable neighbourhoods, with appropriate and affordable housing, adequate options for mobility and the community features and services that can facilitate personal independence and continued engagement in civic and social life.

ENDS

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