Targeting Emerging Consumer Segments The Budget-Driven Consumer

Introduction

Although Budget-Driven consumers have perhaps been impacting most unfavourably by the recession, they nevertheless display key attitudes and behaviours which mean they remain a valuable segment for FS providers to target as economies look forward to recovery. FS providers must therefore understand what these consumers want and how their Budget-Driven status may influence their behaviour.

Scope

*Using data from our global FSCI survey this report profiles the attitudes and behaviours of the emerging Budget-Driven consumer segment

*The report identifies these consumers and analyses the drivers of their future behavior

*The report provides concrete actions for FS providers to position themselves competitively in order to capture a share of the Budget-Driven wallet.

Highlights

Budget-Driven consumers are not necessarily just price-consciousness. More importantly, they are value-consciousness, meaning that value in sought in product choice not only through monetary returns, but also through other factors such as green or ethical credentials.

The wider effects of the recession on national economies have been found to have very little bearing on the emergence of Budget-Driven behaviour rather, consumers have been found to be influenced more by specific incidents personal them, such as recent unemployment.

Budget-Driven consumers are relatively negative about the future given that they have experienced relatively bad last 12 months, but are surprisingly motivated than the average consumers to pay more into their savings, at least for the short-term.

Reasons to Purchase

*Access the results of Datamonitor's Global FS Consumer Insight survey in order to profile this key emerging Budget-Driven segment.

*Identify why the Budget-Driven consumers are potentially the most profitable segment and predict their future behaviors.

*Identify strategies you can take to effectively gain share of the Budget-Driven wallet.


Report Highlights

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Overview 1
Catalyst 1
Summary 1
Methodology 1
Table of Contents 2
Table of figures 3
Table of tables 4
Introduction 5
Customer segmentation is vital for an effective marketing strategy 5
The recessionary environment is forcing providers to make tough decisions 5
Identifying fads as opposed to long term trends is important 5
Budget-Driven consumers are a valuable target for providers 5
The Future Decoded 7
Trend: Fewer numbers of Budget-Driven consumers have emerged globally than expected 7
Insight: Financial pressures do not dictate Budget-Driven behaviors 8
Cultural attitudes towards spending in Brazil and China are driving Budget-Driven behavior 8
Brazilians place great importance on personal wealth 9
Traditionally prudent attitudes towards spending in China prevail 10
Relatively high numbers of Budget-Driven consumers emerging in the US are surprising 10
Singapore contains twice as many Budget-Driven consumers as Japan 11
Insight: Demographics have no bearing on the emergence of Budget-Driven behavior 11
Every age segment displays similar amounts of Budget-Driven behavior 11
The UK has the highest proportion of older Budget-Driven consumers, while the Netherlands has the highest proportion of younger 12
Lifestage complexities highlighted by the recession have had an impact on the emergence of Budget-Driven consumers to some degree 13
Lack of employment is not the main driver of Budget-Driven behavior in all countries 14
Australia and the UK contain relatively large contingents of retired/invalid consumers and part-time workers, but contain very different proportions of Budget-Driven consumers over 50 15
Trend: Budget-Driven consumers have a greater appetite for FS products than the average consumer 16
Though product holdings are higher on average, country-specific preferences are varied 17
Singapore and Japan are by far the biggest credit card users 17
Half of Russian and Spanish Budget-Driven consumers do not have an instant access savings account, as well as three quarters of Italians 18
Notice savings accounts are still relatively unpopular across all countries 18
Budget-Driven consumers in Brazil, Italy and Russia notably lack other types of insurance (travel, health, etc) 19
Insight: The difference between the Budget-Driven consumer and the average consumer is particularly obvious in value-driven products 20
Budget-Driven consumers are value-conscious, not necessarily just price-conscious 21
A 'bargain' is defined not by the price, but what the price includes 21
Budget-Driven consumers are actually more financially aware than the average consumer 22
Budget-Driven consumers across all countries are financially aware, though some are more confident than others 23
Europeans Budget-Driven consumers are not as financially intelligent as others 23
The Australian Budget-Driven segment have above average financial awareness but do not put it into practice 24
Brazilian and Indian Budget-Driven consumers are particularly financially aware 25
Insight: Budget-Driven consumers will look outside their primary bank for their FS needs 26
Chinese Budget-Driven consumers are either wholly loyal or wholly unloyal 27
France, Spain and Brazil show the strongest primary bank loyalty 27
Budget-Driven consumers in the US show particular preference for shopping around 27
There is huge opportunity for non-primary bank providers to capture share of the Budget-Driven wallet 28
Budget-Driven consumers are most likely to have instant access savings accounts as their second primary bank product across all countries 29
Budget-Driven consumers in the US and Singapore do not like to hold their credit cards with their primary bank 29
The French and Spanish Budget-Driven segments are happier than other European Budget-Driven consumers to have their mortgage provided by their primary bank 29
Budget-Driven consumers in Australia are equally likely hold a credit card with their primary bank as they are an instant access savings account 30
Chinese Budget-Driven consumers are above average receptive in the case of every product held with the primary bank 31
Insight: Budget-Driven consumers remain trusting of their primary bank but have lost trust in the industry 32
Budget-Driven consumers are financially aware but heavily influenced by external factors 32
Trust is important to Budget-Driven consumers 33
Across all countries Budget-Driven consumers are more affected by negative publicity surrounding the industry than rather than their primary bank 34
Budget-Driven consumers in the UK has been most strongly affected by negative publicity surrounding the industry 34
Brazilian Budget-Driven consumers are much less affected by publicity surrounding both the industry and their primary banks than others 34
Budget-Driven consumers in Germany and US have very different attitudes towards their banks and the industry 34
Insight: Budget-Driven consumers are receptive to advice, but do not consider it valuable enough to pay for 35
Spanish and Japanese Budget-Driven consumers are surprisingly nonchalant about using the online channel to seek advice 36
Budget-Driven consumers in the UK are particularly averse to going to their primary bank for advice 36
Australian Budget-Driven consumers appear more likely than average to pay upfront for advice 37
The Chinese Budget-Driven segment is particularly receptive to advice 38
For new players entering the industry, proof of financial stability is vital 39
Budget-Driven consumers in all countries value financial stability in addition to high returns 39
Budget-Driven consumers in Sweden value financial stability considerably less than others 39
The Budget-Driven segment shows surprising affection for green or ethical credentials 40
Trend: Budget-Driven consumers' are less optimistic about the future than the average global consumer 41
Budget-Driven consumers have had a more negative experience over the last 12 months 41
Insight: Budget-Driven consumers' future actions are not generally aligned with their outlook 42
Budget-Driven consumers are comparatively proactive in saving for the short-term 42
The proactivity of the Budget-Driven segment should not be overstated 44
In all countries, Budget-Driven consumers intend to pay more into their savings over investing more for the long term, but intentions were very different in each country 44
The emerging economies exhibited outlying behavior in terms of investing for the long term 45
Australia's Budget-Driven segment were aligned with the Budget-Driven average attitudes 45
Budget-Driven consumers in the UK and US do not want to save either for the short-term or long-term 46
Action Points 47
Action: Emerging markets can provide valuable lessons for FS providers 47
Action: Focus on value, not just price 48
ING Direct hemorrhaged deposits after launching on price and then bucking the interest rate trend 48
Financial stability is of huge value to the Budget-Driven segment 48
Target Budget-Driven consumers with innovative savings products 49
Action: Datamonitor's Megatrend Framework can help identify strategies for targeting this segment 52
Budget-Driven consumers desire elements of the Connectivity Megatrend in their financial needs 53
Harness new connective technology 53
Experiment more boldly with Web 2.0 technology 53
Ethical consumerism is a key component of the Connectivity Megatrend 55
Capture Budget-Driven consumers through highlighting the Convenience of the offering 56
APPENDIX 57
Data tables 57
Methodology 76
Definitions 77
The Datamonitor Financial Services Consumer Insight Megatrend Framework 77
Authenticity 77
Comfort 77
Connectivity 77
Convenience 77
Individualism 77
Wellbeing 78
Demographic Complexity 78
Financial Intelligence Complexity 78
Lifestage Complexity 78
Wealth Complexity 78
Further reading 78
Ask the analyst 79
Datamonitor consulting 79
Disclaimer 79
List of Tables
Table 1: Budget-Driven consumers and non Budget-Driven consumers, segmented by country 57
Table 2: Budget-Driven consumers and non Budget-Driven consumers, segmented by age 57
Table 3: Budget-Driven consumers, segmented by age and country 58
Table 4: Budget-Driven consumers and non Budget-Driven consumers, segmented by employment status 58
Table 5: Budget-Driven consumers, segmented by employment status and country 59
Table 6: Budget-Driven and global consumers with two or more of each product 60
Table 7: Credit card holdings amongst Budget-Driven consumers, segmented by country 61
Table 8: Instant access savings holdings amongst Budget-Driven consumers, segmented by country 62
Table 9: Notice savings account holdings amongst Budget-Driven consumers, segmented by country 63
Table 10: Other insurance holdings amongst Budget-Driven consumers, segmented by country 64
Table 11: Indicators of financial awareness amongst Budget-Driven and global consumers 65
Table 12: Indicators of financial intelligence amongst Budget-Driven consumers, segmented by country 66
Table 13: Primary bank non-current account product holdings amongst Budget-Driven and global consumers, and Budget-Driven consumers segmented by country 67
Table 14: Primary bank product holdings amongst Budget-Driven and global consumers, segmented by product 68
Table 15: Products held with primary bank amongst Budget-Driven consumers, segmented by country 69
Table 16: Steps before making financial decisions, for Budget-Driven and global consumers 70
Table 17: Sources of advice for Budget-Driven consumers, segmented by country 71
Table 18: Prioritization of financial stability versus high returns amongst Budget-Driven consumers, segmented by country 72
Table 19: Indicators of trust amongst Budget-Driven and global consumers 73
Table 20: Attitudes towards the FS industry versus primary bank amongst Budget-Driven consumers, segmented by country 74
Table 21: Experiences over the last 12 months and expectation for the future, amongst Budget-Driven and global consumers 75
Table 22: Intended actions for the next six months, for Budget-Driven and global consumers 75
Table 23: Attitudes towards short-term versus long-term savings amongst Budget-Driven consumers, segmented by country 76
List of Figures
Figure 1: Budget-Driven consumers represent a surprisingly low proportion of the global population 7
Figure 2: Budget-Driven consumers are represented equally in all age segments 12
Figure 3: The UK has the highest proportion of older Budget-Driven consumers 13
Figure 4: More Budget-Driven consumers have emerged in the recently and long-term unemployed segments 14
Figure 5: Australia and the UK contain relatively large contingents of retired/invalid consumers and part-time workers 15
Figure 6: Budget-Driven consumers have higher product holdings than the average consumer 16
Figure 7: Singaporean and Japanese Budget-Driven consumers are the biggest credit card users 17
Figure 8: French and Indian Budget-Driven consumers are the biggest instant savers 18
Figure 9: Notice savings accounts are unpopular amongst Budget-Driven consumers, but less so in Asia Pacific 19
Figure 10: Brazil and Italian Budget-Driven consumers notably lack travel, home, health (etc) insurance 20
Figure 11: Budget-Driven consumers are actually more finally aware than the average consumer 22
Figure 12: Europeans do not keep up with the financial news in order to make more of their money 24
Figure 13: The Australian Budget-Driven segment have above average financial awareness, but do not put it into practice 25
Figure 14: Indian and Brazilian Budget-Driven consumers are particularly financially aware 26
Figure 15: Budget-Driven consumers are marginally more loyal to their primary bank 27
Figure 16: Budget-Driven consumers in France, Spain and Brazil show the strongest primary bank loyalty 28
Figure 17: Product holdings with the primary bank are still very low amongst Budget-Driven consumers 29
Figure 18: Budget-Driven consumers in the US and Singapore do not like to hold their credit card with their primary bank 30
Figure 19: Budget-Driven consumers in Australia are equally likely hold a credit card with their primary bank as they are an instant access savings account 31
Figure 20: Chinese Budget-Driven consumers are above average receptive in the case of every product held with the primary bank 32
Figure 21: Budget-Driven consumers remain trusting of their primary bank but not of the entire FS industry 33
Figure 22: Budget-Driven consumers in the UK has been most strongly affected by negative publicity surrounding the industry 35
Figure 23: Budget-Driven consumers are receptive to advice, but do not want to pay for it 36
Figure 24: Spanish Budget-Driven consumers are surprisingly nonchalant about using the online channel to seek advice 37
Figure 25: Australian Budget-Driven consumers appear more likely than average to pay upfront for advice 38
Figure 26: The Chinese Budget-Driven segment is particularly receptive to advice 39
Figure 27: Swedish consumes value financial stability considerably less than others 40
Figure 28: Budget-Driven consumers are not overly optimistic about the future 42
Figure 29: Budget-Driven consumers are more inclined to save than the average consumer, but cannot invest for the long term 43
Figure 30: Budget-Driven consumers in China and India exhibited outlying behavior in terms of investing for the long term 45
Figure 31: SmartyPig has created an innovative savings platform 50
Figure 32: High value tools on Wells Fargo's online platform are attractive for Budget-Driven consumers 52
Figure 33: ING Direct has employed innovate use of Web 2.0 technology 54
Figure 34: SmartyPig has also harnessed Web 2.0 and social networking to appeal through Connectivity 55
Figure 35: Virgin's Climate Change ISA is a prime example of ethical and green credentials 56

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List of Tables
Table 1: Budget-Driven consumers and non Budget-Driven consumers, segmented by country 57
Table 2: Budget-Driven consumers and non Budget-Driven consumers, segmented by age 57
Table 3: Budget-Driven consumers, segmented by age and country 58
Table 4: Budget-Driven consumers and non Budget-Driven consumers, segmented by employment status 58
Table 5: Budget-Driven consumers, segmented by employment status and country 59
Table 6: Budget-Driven and global consumers with two or more of each product 60
Table 7: Credit card holdings amongst Budget-Driven consumers, segmented by country 61
Table 8: Instant access savings holdings amongst Budget-Driven consumers, segmented by country 62
Table 9: Notice savings account holdings amongst Budget-Driven consumers, segmented by country 63
Table 10: Other insurance holdings amongst Budget-Driven consumers, segmented by country 64
Table 11: Indicators of financial awareness amongst Budget-Driven and global consumers 65
Table 12: Indicators of financial intelligence amongst Budget-Driven consumers, segmented by country 66
Table 13: Primary bank non-current account product holdings amongst Budget-Driven and global consumers, and Budget-Driven consumers segmented by country 67
Table 14: Primary bank product holdings amongst Budget-Driven and global consumers, segmented by product 68
Table 15: Products held with primary bank amongst Budget-Driven consumers, segmented by country 69
Table 16: Steps before making financial decisions, for Budget-Driven and global consumers 70
Table 17: Sources of advice for Budget-Driven consumers, segmented by country 71
Table 18: Prioritization of financial stability versus high returns amongst Budget-Driven consumers, segmented by country 72
Table 19: Indicators of trust amongst Budget-Driven and global consumers 73
Table 20: Attitudes towards the FS industry versus primary bank amongst Budget-Driven consumers, segmented by country 74
Table 21: Experiences over the last 12 months and expectation for the future, amongst Budget-Driven and global consumers 75
Table 22: Intended actions for the next six months, for Budget-Driven and global consumers 75
Table 23: Attitudes towards short-term versus long-term savings amongst Budget-Driven consumers, segmented by country 76

List of Figures
Figure 1: Budget-Driven consumers represent a surprisingly low proportion of the global population 7
Figure 2: Budget-Driven consumers are represented equally in all age segments 12
Figure 3: The UK has the highest proportion of older Budget-Driven consumers 13
Figure 4: More Budget-Driven consumers have emerged in the recently and long-term unemployed segments 14
Figure 5: Australia and the UK contain relatively large contingents of retired/invalid consumers and part-time workers 15
Figure 6: Budget-Driven consumers have higher product holdings than the average consumer 16
Figure 7: Singaporean and Japanese Budget-Driven consumers are the biggest credit card users 17
Figure 8: French and Indian Budget-Driven consumers are the biggest instant savers 18
Figure 9: Notice savings accounts are unpopular amongst Budget-Driven consumers, but less so in Asia Pacific 19
Figure 10: Brazil and Italian Budget-Driven consumers notably lack travel, home, health (etc) insurance 20
Figure 11: Budget-Driven consumers are actually more finally aware than the average consumer 22
Figure 12: Europeans do not keep up with the financial news in order to make more of their money 24
Figure 13: The Australian Budget-Driven segment have above average financial awareness, but do not put it into practice 25
Figure 14: Indian and Brazilian Budget-Driven consumers are particularly financially aware 26
Figure 15: Budget-Driven consumers are marginally more loyal to their primary bank 27
Figure 16: Budget-Driven consumers in France, Spain and Brazil show the strongest primary bank loyalty 28
Figure 17: Product holdings with the primary bank are still very low amongst Budget-Driven consumers 29
Figure 18: Budget-Driven consumers in the US and Singapore do not like to hold their credit card with their primary bank 30
Figure 19: Budget-Driven consumers in Australia are equally likely hold a credit card with their primary bank as they are an instant access savings account 31
Figure 20: Chinese Budget-Driven consumers are above average receptive in the case of every product held with the primary bank 32
Figure 21: Budget-Driven consumers remain trusting of their primary bank but not of the entire FS industry 33
Figure 22: Budget-Driven consumers in the UK has been most strongly affected by negative publicity surrounding the industry 35
Figure 23: Budget-Driven consumers are receptive to advice, but do not want to pay for it 36
Figure 24: Spanish Budget-Driven consumers are surprisingly nonchalant about using the online channel to seek advice 37
Figure 25: Australian Budget-Driven consumers appear more likely than average to pay upfront for advice 38
Figure 26: The Chinese Budget-Driven segment is particularly receptive to advice 39
Figure 27: Swedish consumes value financial stability considerably less than others 40
Figure 28: Budget-Driven consumers are not overly optimistic about the future 42
Figure 29: Budget-Driven consumers are more inclined to save than the average consumer, but cannot invest for the long term 43
Figure 30: Budget-Driven consumers in China and India exhibited outlying behavior in terms of investing for the long term 45
Figure 31: SmartyPig has created an innovative savings platform 50
Figure 32: High value tools on Wells Fargo's online platform are attractive for Budget-Driven consumers 52
Figure 33: ING Direct has employed innovate use of Web 2.0 technology 54
Figure 34: SmartyPig has also harnessed Web 2.0 and social networking to appeal through Connectivity 55
Figure 35: Virgin's Climate Change ISA is a prime example of ethical and green credentials 56
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