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  • Performance matters: discerning consumers favour high-end features
    • 08/28/18
    • Technology
    • Global
    • English

    Performance matters: discerning consumers favour high-end features

    With customers becoming increasingly conscious about the performance of their devices, a trend towards high-end feature specifications is observable in smartphones, consumer electronics devices, home appliances and IT equipment.

    Why performance matters?

    On the consumer side, the expectation for rich experiences on their devices is growing. Share of respondents who strongly agree with “I value experiences more than possessions.” in the latest Consumer Life study increased to 45%. Processing-hungry applications are emerging and put pressure on the performance capabilities of the devices. These capabilities are becoming crucial for the seamless usage of the applications.

    HDR & OLED are on the rise

    4K resolution, bigger and better screens, superior front and rear cameras are a few of the key characteristics for a mobile device. 50”+ TV sets stood for 50% of the sales value in the first half of 2018 and grew significantly. The main technological advancements here are HDR & OLED, which are currently on the rise. The PC markets follow a similar trend to high performance, which is reflected, among others, in the growing value share of performance processors, 8+ GB RAM, solid state drives and full HD displays.

    Within in major domestic appliances big is beautiful. Capacity is the key-word that drives all major markets. This translates into increasingly larger loading capacities in washing machines, taller and wider refrigerators, as well as more spacious oven cavities.

    Consumers perceive high performance products as a long-term investment with a long lifecycle, which does not outdate too quickly. The buyers associate these devices with superior experiences and higher quality.

    Manufacturers are constantly on the rush

    On the industry side, manufacturers are constantly on the rush for the ‘next big thing’ and operate in a fierce competitive environment. High-performing products demonstrate their ability to innovate and generate more awareness for the brand. In times of decreasing margins, high-end products can act as turnover stabilizer, especially in volatile markets.

     

    This blog has been written by the Strategic Insights team.

     

    You can learn more about the trends driving innovation, check out our other insights.

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  • Always within reach: being connected is the new norm
    • 08/28/18
    • Technology
    • Global
    • English

    Always within reach: being connected is the new norm

    Being connected is the norm not only for consumers but in the meantime for devices as well. Connectivity has become an integral part of the everyday life. With smart features growing in popularity there is increasing opportunity for voice controlled user interfaces based on big data and artificial intelligence. Through expanding its presence, the AI might become the missing dot within the smart home.

    In the past, smart was offered as an overarching promise to turn everything in people’s homes smart. While the ‘smart’ promise in general resonated well with consumers, currently all indicates that well-crafted individual smart solutions are the way to commercialize it. Manufacturers of security cams or LED lamps first leveraged that trend and came up with handy to use, smartphone-controlled products.

    APAC consumers are taking the lead in connectivity

    Being smart and connected has found its place in both small and major home appliances and contributes to their increasing value turnover. The APAC consumers, are taking the lead in connectivity. Digitization is treated as a priority and consumers are openly taking on connectivity and integrated digital solutions. In the first half of 2018, China alone accounted for nearly 50 percent of all smart appliances sold, with growth rates still around 30 percent. In APAC, 23 percent of revenues came from smart appliances compared to only 10 percent in Western and Eastern Europe. Concrete use cases of smart home appliances are vacuum cleaner robots (more than +100%) and air cleaners.

    Smart TVs have conquered the living room

    Smart TVs have conquered the living room (85 percent value share in the first half of 2018), spurred by the on-demand revolution. Streaming music services also rely heavily on the connectivity and multi room devices (+11 percent Jan-Jun 2018), which allow to play different songs in different rooms are enriching the home entertainment experience.

    Embedded AI assistants further facilitate the control of the devices and contain the huge promise to become the smart home hub and consolidate all smart devices on one platform. One of the previous barriers for smart technology in turning our homes really smart was fragmentation of the user interface. Each smart device was only compatible with other smart devices within the manufacturer’s dedicated web or smartphone app. Arguably, whether voice or display-controlled, AI assistants show a potential to consolidate all smart devices on one platform. Once a system is set up this way, AI would be able to create a common language between these devices without being hindered through network standards, protocols or proprietary systems. By creating a suite of home applications on this basis, the concept of smart home could become an even stronger commercial opportunity.

     

    This blog has been written by the Strategic Insights team.

     

    To learn more about the key trends driving innovation across the tech industry, take a look at our insights section.

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  • What drives price movements of tech devices?
    • 08/20/18
    • Technology
    • Online Pricing Intelligence
    • Trends and Forecasting
    • Global
    • English

    What drives price movements of tech devices?

    It is a common assumption among consumers that the retail price of flagship tech devices and features will gradually drop over time. Moreover, it is often assumed that the release of new models accelerates the price decline for the, now obsolete, previous models.

    That means consumers often think it is better to wait a couple of months before buying the latest tech device. But how much is price affected? We looked at a huge range of online pricing over time, to answer this question.

    How far do the prices of tech devices and features really fall, over time?

    The worldwide TV market recently saw the introduction of exciting new display technologies, such as OLED and QLED. Looking at the average price of three 55 inch OLED/QLED TVs (Samsung, LG, Panasonic), we see that the average online price has fallen by 34% between October 2017 and July 2018.

    Other consumer electronics categories show similar trends, but to lesser extents. For example, the online retail price of a laptop featuring a Core i7 processor has fallen 8%, on average, since the beginning of the year. Similarly, the average price of a smart watch has fallen 6% year-on-year (YoY) to August 2018.

    Overall, there is a considerable degree of variation between different products, reflecting their peculiar product characteristics and strategies, but data suggests a general downward trend over time for ageing technology features.

    Do new model releases accelerate price declines for older models?

    Sim-free smartphones offer a great case study in this area. So, let’s look at the impact that the release of two flagship devices (Galaxy S9 and iPhone 8) had on the average online prices of previous models (Galaxy S8 and iPhone 7).

    The release of Samsung’s Galaxy S9 in March 2018 seems to have had a noticeable influence on the price of the Galaxy S8, which decreased 14% in the following 5 months. A similar, albeit weaker, dynamic applies to Apple. The iPhone 8 release in September 2017 induced a decline in the price of an iPhone 7 of 6% in the following 5 months.

    It is worth noting that the average online retail price of the Galaxy S8 and iPhone 7 does follows a long-term decline trend (the iPhone7 lost 7% and the Galaxy S8 lost 15% YoY, compared to July 2018 prices), but it seems clear that the release of new models certainly had an influence on price movements.

    However, this is only half of the story…

    The price variations we tracked during the considered period highlight a key contrast between the approaches of the two brands.

    Samsung’s device is subject to higher seasonal fluctuations, while Apple focuses on limited price variations in key periods (e.g. Black Friday). This shows that, although there is a long-term price trend in place, brand strategies and retail promotions can have a big influence on average prices and drive considerable discounts.

    This dynamic is even more apparent if we overlay the average online retail price and the lowest online retail price. We can see from the chart below how promotional prices can cut deep under average prices and anticipate the price decline trend by many months. For example, Galaxy S8’ lowest price touched £550 in November 2017, 6 months before the average price reached the same level.

    Conclusions

    The assumption is true, that there is a general trend of price decline over time key tech devices, which is influenced by the faster release of new and upgraded models. However, long-term price movements are also heavily influenced by brand strategies and retail promotions, which can drive deeper price cuts across a shorter amount of time.

    This has important implications for both consumers and marketers:

    For a consumer wanting to buy the latest technology or a newer model, looking out for key promotional periods is a better strategy than waiting for the price to drop over time.

    For Retailers and manufacturers bringing new technology and new ranges to market, the key lies in understanding consumers’ expectation that prices of older models will fall, and their consequent spending behaviour, based on that belief.

  • Map of the Month: Brick-and-mortar retail turnover, Europe 2018
    • 08/16/18
    • Financial Services
    • Retail
    • Geomarketing
    • Geodata
    • Picture of the month
    • Global
    • English

    Map of the Month: Brick-and-mortar retail turnover, Europe 2018

    Brick-and-mortar retail turnover is expected to increase nominally by +2.1% across the EU-28 in 2018.

  • The myth of Millennials – truly an unpredictable target group?
    • 08/06/18
    • Consumer Life
    • Global
    • English

    The myth of Millennials – truly an unpredictable target group?

    The GfK Millennial Report is now available.

  • GfK appoints Warren Saunders as new General Manager for Northern Europe
    • 08/06/18
    • Global
    • English

    GfK appoints Warren Saunders as new General Manager for Northern Europe

    As of September 24, 2018, Saunders will take on responsibility for GfK’s business activities in this region and will report directly to GfK Chief Customer Officer, Christian Erlandson. 

  • Keep shoppers happy by tracking demand
    • 08/03/18
    • Point of Sales Tracking
    • Shopper
    • Global
    • English

    Keep shoppers happy by tracking demand

    By tracking demand using real sales data you can keep shoppers happy! Let our demand forecasts guide you.

  • July heatwave in UK but consumer confidence remains stubbornly sub-zero
    • 07/31/18
    • Global
    • English

    July heatwave in UK but consumer confidence remains stubbornly sub-zero

    UK Consumer Confidence dropped by one point in July 2018 to -10, despite increases in both measures for people's personal financial situation.

  • The winning formula for advertising around big sports events
    • 07/27/18
    • Global
    • English

    The winning formula for advertising around big sports events

    We ran different ad tests during the World Cup, including using biometric testing on 21 ads. The ad that ‘won’, in terms of greatest subconscious and conscious audience response, was the Ladbrokes’s advertisement, which is driven by verbal and visual humour. But what was it that resonated so well with the audience?

    Engage both sides of the brain with humour

    According to a recent study published in the journal ‘Cerebral Cortex’, visual humour engages parts of the brain responsible for vision, and verbal humour activates the language-processing areas. These big brain areas tend to be in different hemispheres of the brain (with some exceptions) – so an ad that is working both on a visual and linguistic level is engaging both hemispheres.

    Engaging both sides to the brain in a positive way (we confirmed positivity via the subjective accounts viewer gave to the Ladbrokes ad) improves the ad’s efficiency in grabbing and holding viewers’ attention, and creating a lasting impression of the brand.

    Match the audience’s mood

    Advertising needs to resonate with the audience’s current mood. While it is very hard to predict this in general, it is much easier with audiences focused on a major event. For ads aired before and during a major sporting event, for example, the audience’s mood is likely to be social, enthusiastic, emotional, and so forth.

    In our test, the ads that were projecting a relaxed state of mind with representations of peaceful lifestyle elements performed very poorly. They were not in line with the audience’s prevailing mood at that particular time and therefore triggered very little subconscious engagement and subjective liking.

    Similarly, such events are not the right context for ads that need the viewer to try hard in order to ‘get’ the joke or decipher the puzzle. People geed up for a big social event, and very focused on that, don’t want to be distracted by complex advertising. They respond better to the more obvious, or ‘slapstick’ type humour that doesn’t take their attention off their main purpose for watching.

    Beware of humour that pokes fun at the audience’s self-esteem

    Any threat to our self-esteem triggers withdrawal or prompts us to push back in defense of who we are. Therefore, advertising needs to be careful with any type of humour that is directed at people’s daily habits.

    This is especially so for audiences who are in a social, festive mood in anticipation of a big sports event; they are not in the mood to see humour in the mundane, awkward moments in their lives.

    In our test, the ad that portrayed that type of humour triggered relatively high emotional engagement, but the conscious responses showed it to be mainly negative. In fact, it scored 15.77 points below the average ‘performance score’ of all the ads tested before and at half time – which is a significant underperformance. In addition, it had only around half the amount of peak moments of strong emotional reaction compared to the average seen during this test. The ad was out of kilter with that audience’s present mindset and mood.

    Use ‘lack of connectedness’ sparingly

    Humans love to join the dots. We are intrigued by the lack of connectedness, because we are driven to make the connection – and this holds true in advertising. While we are intrigued by disjointed scenes, or unexpected pauses in the music or visual frames, we have a certain threshold of tolerating this. This threshold is even lower during times of emotional turbulence when the audience’s minds are focused almost wholly on anticipating a major event, such as a big sports game.

    Again, our test showed that ads that include high levels of these elements (70% of the total copy) can prompt frustration and disengagement in viewers. In particular, the ads that showed partial body parts – i.e. legs or arms shown only partially – or where the music or visual element was interrupted for more than a second during the ad, scored up to 20 points less than the average performance score for all the ads tested. In addition, these ads triggered hardly any peak moments of strong emotional reaction, performing up to 40 points below the average for this metric, in this test.

    What would we have missed had we not used a combination stated response and biometric response?

    By layering stated responses with biometric testing, we can deliver strategic and tactical recommendations that are much more future-proofed. We find out not just what people say, but how they instinctively react – giving us the ‘what’ and also the ‘why’ on both conscious and subconscious levels. By analysing these layered findings, we get a holistic, as opposed to a one-angled, understanding of human behavior and human receptiveness in different situations. And that means you can do more successful planning, based on this better understanding.

    Conclusion

    For advertisers, the key message is that an ad that performs well during a ‘normal viewing’ situation could fail to resonate if screened around a specific type of event, where the audience is in an elevated frame of mind. To make the most of prime-time advertising, such as around a major event, we need to project the audience’s most likely mood and ensure the proposed ad dovetails with all the connotations of that mood.

    For more about ad and concept testing using biometrics, please contact Eszter.Boczan@gfk.com

    About the study

    GfK and Shimmer, a leading provider of wearable wireless sensor products, monitored the physiological responses of around 50 participants as they watched the live France-Peru World Cup game – including watching 21 advertisements from a variety of product categories that were shown before the game or at half time. The physiological response was recorded via a biometric device, which sits on a participant’s wrist and picks up the signals via two non-intrusive electrodes. As well as tracking the audience’s second-by-second skin response and heart rate as each advertisement played, GfK also recorded their stated response to each advertisement at the end of the session.

  • Consumer climate in Germany shows slight fall
    • 07/26/18
    • Retail
    • Consumer Goods
    • Global
    • English

    Consumer climate in Germany shows slight fall

    Findings of the GfK Consumer Climate Study for July 2018

  • Why are big advertisers still getting this wrong?
    • 07/23/18
    • Global
    • English

    Why are big advertisers still getting this wrong?

    We ran a test recently on some ads that were airing in the UK during the World Cup, all from the same product category (consumer electronics). Some of the advertisers were official World Cup sponsors; others had an alternative football sponsorship association – and we evaluated them using a new pre-test methodology that was co-created with major advertisers.

    All the ads employed a football theme and the results from our unforced exposure method proved this to be a strong hook that attracted – and held – viewer notice equally well across all the ads. Strong and consistent brand name presence in each ad also led to the viewers correctly recalling which brand each ad was promoting.

    What was missing?

    However, one key thing was not quite right in the majority of these executions. While the product was always clearly shown, it was not always the hero of the ad. The football theme was the dominant attraction, which meant that viewers too often lost sight of the product’s actual features and benefits. Ultimately, the connection between the product and the sport was not always clear to the viewers.

    Even more crucially, most of the ads were not driving a direct or indirect call to action – be that an interest to learn more about the product or brand, or a desire to go out and buy one.

    The key learning

    In this test we only focused on a small proportion of each brands’ advertising activity around the World Cup – however, it’s always worth remembering that, while a brand may be relevant to the event it sponsors, that relevance needs to be clearly communicated to the viewers, in order for the brand to benefit.

    Our Ad FIT method identified that the strongest performer for an ad that fascinates (grabs and holds viewers’ attention), imprints (leaves a positive, branded lasting impression) and triggers (generates a direct or indirect response from viewers) was not in this case the most ‘exciting’ execution. It was the one that clearly communicated the product’s benefits in a way that was relevant to the ‘big sports event’ theme – thereby driving a timely desire for the product.

    Read our linked press release: Humorous ads trigger greater response than sporty ads screened around a World Cup game

    For more information on how you can increase your ad performance with AdFIT pre-launch testing, please don’t hesitate to contact us.

  • Consumer sentiment in Europe improves slightly
    • 07/18/18
    • Retail
    • Consumer Goods
    • Global
    • English

    Consumer sentiment in Europe improves slightly

    Findings of the GfK Consumer Climate Europe Study for the second quarter of 2018