Tag Archives: consumers

02.07.2013 | Do Brazilians or Russians Work Shorter Hours?

Brazil or Russia?

Who tends to work shorter hours?
Who takes longer lunch hours?
Who watches more TV?
Who is more likely to sleep 8 hours or more each night?

Brazil was the correct answer to every question.

My source of data was a Jana emerging markets survey. Gathering information during 2011 and 2012 from 11,687 respondents, their goal was to demonstrate how different cultures define “The Good Life.”

For me, though, the information illustrated just how much developing economies differ. Far from “one-size-fits-all,” the world economy has cultures that work harder and those that lunch more. In some places, 4 hours are an average night of sleep while elsewhere 8 are more typical. Also, where you vacation and how often you watch TV vary. It all depends on what you call home.

I wonder how much the information in Jana’s infographics (below) correspond to these World Bank growth projections for the developing world. Compared to the higher income nations, you can see that emerging markets could be fueling the world economy during the next several years. But might our specific data provide clues about which nations will lead?

Sources and Resources: I suggest looking at more of the Jana infographics here and here. For a more academic perspective, the World Bank report has the details and was the source of my growth table.

Posted by: adminEcon
Tags: Brazil, businesses, consumers, developing nations, emerging markets, India, Jana, lunch hour, night's sleep, Philippines, Russia, TV watching, vacation trips, work hours
Comments (0) Add a Comment

12.13.2012 | Packaging Matters

How much do you think a package affects your buying decisions?

In 2009, Pepsi changed Tropicana’s packaging. It was disastrous. Within 2 months, sales plunged 20% and they quickly switched back to their traditional orange with a straw.

Some consumers said the new design looked too generic. Others thought the new package was ugly and made it difficult to distinguish among Tropicana’s different juices and from other brands. In letters and emails, juice drinkers expressed anger and called the change “stupid.”

The old (left) and new (right) Tropicana containers

For beauty and personal care products, consumers said it was not the aesthetics that mattered. Instead, according to surveys taken after the Great Recession began, they cared most about getting that last drop out of a jar, a tube, or a bottle.

I thought the following info about how much we leave behind in containers was fascinating. (From WSJ.com)

The result? We are seeing “airless pumps” that empty 98% of the bottle. The Container Store sells a tube squeezer (Squeeze Ease). Luxury beauty cream makers are including a spatula for scraping residue.

Our bottom line? Thinking of the 4 basic competitive market structures–perfect competition, monopolistic competition, oligopoly and monopoly–packaging counts when firms need to distinguish their products. That means packaging will matter most for businesses that compete in monopolistically competitive markets (that have many relatively small firms like supermarkets and dress stores) and oligopolistic markets (that have a few large firms like soda and cereal makers).

Sources and Resources: The source of many of my facts, this WSJ article, “Why We Crave the Last Drop,” is a good read but it is gated. Also interesting, this academic paper looked at packaging and this NY Times column discussed the Tropicana fiasco.

Posted by: adminEcon
Tags: competitive market structures, consumers, containers, cream pumps, empting a container, jars, monopolistic competition, oligopoly, packaging, Pepsi, retail competition, retail surveys, Thom Blischok, Tropicana, tubes
Comments (0) Add a Comment

10.24.2012 | Big Macs and Currency Manipulators

In China, a Big Mac costs close to the equivalent of $2.44. That same burger in the US is $4.20. The basic idea is PPP, purchasing power parity. The dollar can buy more when the yuan is undervalued. And President Obama and Governor Romney have both indicated that an undervalued yuan displeases them.

Actually, they probably would not mind if price fluctuated naturally in foreign currency markets. Instead though, they say currency manipulation might be occurring because a government is intentionally, over a long time period, affecting the demand for and/or supply of its money. And by impacting demand and/or supply, they are shaping its price.

China, though, is not the only one. We could add to the list, Denmark, Hong Kong, Israel, Japan, Singapore, Taiwan, Korea, Switzerland, Argentina, Bolivia, Malaysia, Philippines, Thailand, Angola, Algeria, Libya, Saudi Arabia, Azerbaijan, Russia. Some overvalue and others undervalue. But all, according to the Peterson Institute, are engaging in “currency manipulation.”

Finally though, I wonder whether currency “manipulation” is necessarily bad. One position says, “Yes.” An undervalued foreign currency lowers US demand for US made goods and destroys US jobs. The other side says that consumers and businesses that purchase Chinese goods benefit from their artificially low prices. Because consumers have extra money to spend elsewhere, jobs are created. In addition, businesses that buy Chinese metals and motors, for example, have lower costs.

Sources and Resources: To check out the PPP of other currencies, you might enjoy the Big Mac Index and also an econlife PPP explanation. For all the detail you could ever want about currency manipulation from many viewpoints, this Peterson Institute paper, this Treasury Department report and this Mark Perry blog are ideal complements.

Posted by: adminEcon
Tags: Big Mac Index, China, consumers, currency manipulator, demand, foreign currency markets, Governor Romney, job creation, overvalue currency, Peterson Institute, President Obama, supply, tariffs, The Economist, undervalue currency, unemployment, Wal-Mart, WTO
Comments (0) Add a Comment

09.01.2012 | Living Solo: Part 2

Soup and ready-made meals sales are soaring in Brazil. The reason is probably more singles. In the United Arab Emirates, if you are over 30 and female, there is a 60% chance you are unmarried. For Japan, 31.5% of all households are one-person.

Looking at Japan, we would see a contracting population but more households. The reason is a growing singles population that has a distinct economic impact. A person in an affluent nation who moves into a new apartment needs consumer durables (goods lasting 3 years or more) that include a refrigerator, furniture, a TV, maybe a washing machine. Single people tend to live in apartments rather than houses.

There are some universal causes of single living. People are getting married later, there is more divorce, we are living longer and marriage is no longer as attractive. In China and India, male baby selection results in too many bachelors looking for wives.

Where are we? While single person households are increasing around the world, we should be wary of generalizing. We can remember, though, that when more people live alone (please see graph below), it is a major demographic shift that affects demand for certain consumer goods and services.

This Economist article provides an excellent overview of the trend toward living alone around the world and was the source of my graph. It also led me to a Euromonitor report on Japan’s singles. For unmarried mothers specifically, this NY Times Magazine article was interesting because of its focus on 2 families and also provided a sound statistical base.

Econlife Living Solo: Part 1 is here.

Posted by: adminEcon
Tags: aging, Brazil, consumers, demand, demographics, divorce, durable goods, households, Japan, living alone, marriage, single women, United Arab Emirates, US
Comments (0) Add a Comment

07.26.2012 | Developing a Soda Habit

Why do Brazilians drink Coca-Cola?

Our story starts during 1990. Trying to cope with an 80% monthly inflation rate, Brazilian shoppers rushed to supermarkets early in the morning before higher price stickers replaced the old ones. In just one month, a $1 carton of eggs would cost $1.80.

You can imagine what a difference it made when Brazil got its staggering price increases under control. Purchasing power soared, the middle class grew and people bought more soda.

In a paper called, “Grab Them Before They Go Generic,” 2 researchers looked at Brazil’s new spenders. Curious about multinational consumer goods, they wondered whether demand would soar for a famous, heavily advertised brand like Coke as wealth grew in an emerging economy.

The researchers concluded that when the newly affluent started shopping, they had not yet formed a soda buying habit. If they initially bought a generic brand, they stayed with it, even when they could afford more. To get people to form a “premium habit” rather than a “frugal habit,” Coke cut its prices by 20% and according to the researchers, stopped the growth of Brazilian generics.

The paper from these 2 professors, one from Hebrew University and the other from Northwestern, applies far beyond Brazil to China, India, Turkey and Indonesia–to all emerging markets where the middle class is growing. Multinationals, they believe, should recognize the importance of shaping people’s buying habits as they develop.

If you want to listen to more about Brazil’s hyperinflation and how it was controlled, NPR’s Planet Money has a wonderful podcast. And here, The Economist quantifies the growth of the middle class in emerging economies. Finally, econlife looked at how Coca-Cola might have been too late in India for the newly affluent to form a premium habit when they selected Thums Up.

Posted by: adminEcon
Tags: Brazil, Coca-Cola, competition, consumers, emerging markets, established affluent, frugal habit, hyperinflation, middle class, multinationals, newly affluent, oligopoly, poor, premium habit
Comments (0) Add a Comment