J. Walker Smith Executive Chairman Follow jwalkersmith on Twitter

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1 J. Walker Smith Executive Chairman 2010 The Futures Company

2 Unlocking Futures Global Energies Global Streetscapes Future-facing research Activation workshops Embedding platforms for innovation & communication Scenario planning Tracking trends & futures 20 Countries 5 Continents 27,000 Respondents 2010 The Futures Company 1

3 Economic Indulgence to Consequences Technological PCs to Mobile-Social Three cycles coming to an end all at once And opening up onto new eras Demographic Boomers to Millennials 2010 The Futures Company 2

4 Economic Dynamic: Three Key Ideas Strong growth opportunities continue o o Notwithstanding the fits and starts of a schizophrenic global consumer marketplace Many brands thriving, in both strong and sluggish economies Necessary to dissect shift in consumer value perceptions o o Find the dynamic consumer spending power that endures Varies across markets, and even within markets, but yields a number of common opportunities Give up any expectation that the marketplace will cycle back to where it was before the downturn o Reconstruct your understanding of the value that must be delivered by brands 2010 The Futures Company 3

5 U.S. Consumer Spending: Percent Change Year-Ago 2010 The Futures Company 4

6 U.S. Consumer Spending: Total Expenditures 1995-Today 2010 The Futures Company 5

7 U.S. Consumer Spending: Total Expenditures 2007-Today 2010 The Futures Company 6

8 How Does $9 Trillion+ in 2009 U.S. Consumer Spending Compare to the Top Global GDPs? 2010 The Futures Company 7

9 Global Consumer Mindset (Economic) Era of Indulgence Trading Up Accumulation Exuberant Bullish Recessionary Downturn Economizing Frugality Anxious Sober Era of Consequences Responsibility Prioritization Vigilant Resourceful Return of Economic Risk 2010 The Futures Company 8

10 Lately, I've become more likely to consider the potential risks of each decision I make (%) Agree Disagree The Futures Company 9 Source: The Futures Company Global MONITOR 2010 (Standardized data)

11 Prioritization Dynamism Cachet 2010 The Futures Company 10

12 54% agree (vs. 18% who disagree) I feel less secure about my financial future than I did a year ago 58% agree (vs. 11% who disagree) Since the global economic crisis, I m more aware of how the global economy can affect me 69% agree (vs. 7% who disagree) These days I tend to be more thoughtful about the purchases I make 2010 The Futures Company 11 Source: The Futures Company Global MONITOR 2010 (Standardized data)

13 The economic downturn has helped me prioritize what's most important in my life (%) Agree The Futures Company 12 Source: The Futures Company Global MONITOR 2009 (Standardised data)

14 2010 The Futures Company 13

15 I ve got all the material things I need (%) The Futures Company 14 Source: The Futures Company Global MONITOR 2010 (Standardized data)

16 Which of these five main human resources time, money, energy, information or space is most valuable to you in everyday life? Country Increasingly valuable (compared to 2008 levels) Decreasingly valuable (compared to 2008 levels) USA Energy Time Canada Energy Time Mexico Energy Time Brazil Energy Information Time Money UK Energy Time Ireland Energy Money Time France Energy Money Time Spain Energy Money Time Germany Energy Time Information Italy Energy Time Space Russia Time Turkey Money Time Information China Money Time India Money Information Japan Energy Time Money Australia Energy Time Money 2010 The Futures Company 15

17 The Key to Success Especially in Downturns: Innovation 2010 The Futures Company 16

18 Prioritization Dynamism Cachet 2010 The Futures Company 17

19 A Bifurcated Global Marketplace But is it quite this simplistic, i.e., developed vs. developing? Across Western Europe, the lifestyle superpower, the assumptions and gains of a lifetime are suddenly in doubt. The deficit crisis that threatens the euro has also undermined the sustainability of the European standard of welfare With low growth, low birthrates and longer life expectancies, Europe can no longer afford its comfortable lifestyle, at least not without a period of austerity and significant change. New York Times in the Observer 30 May 2010 Going forward, there are a lot of great opportunities around the world The most attractive place to invest probably right now is the emerging markets. They did not go down as much as they traditionally do and they rebounded much more rapidly than the developed markets have. As a result, China, India, Brazil, are all attractive places to invest as are Korea, Taiwan, Turkey, Saudi Arabia and Russia much more attractive in terms of growth rates than the developed markets of Western Europe, Japan and the United States. David Rubenstein of the Carlyle Group at the World Economic Forum, Davos, 27 January The Futures Company 18

20 The Dynamic Marketplace How can upside potential be identified and captured? Using Global MONITOR data, organize countries into groups of more or less dynamic markets o Each group of markets requiring a distinctive approach to unlocking the dynamic potential, whether large or small, that endures in those markets Even in hard-hit markets, dynamic potential endures o o A two-fold measure of dynamism: 1. Today: The size of the Best-Case Mindset Consumers unaffected and undaunted 2. Tomorrow: Combined with a measure of the level of concern about the future There is untapped dynamic potential within every market Some markets stronger than others, but no market without potential 2010 The Futures Company 19

21 Best-Case / Worst-Case Mindsets Two opposing mindsets define the upper and lower boundaries of the recovery A Best-Case Mindset: Not planning for the worst in coming year Personal financial situation going well Not concerned about keeping up with cost of living Not concerned about level of debt A Worst-Case Mindset: Planning for the worst in coming year Personal financial situation not going well Concerned about keeping up with cost of living Concerned about level of debt 2010 The Futures Company 20

22 (19% 2%) (17% 8%) (14% 11%) (14% 13%) (12% 3%) (12% 12%) (12% 16%) (12% 17%) % Best- Case (11% 3%) (11% 13%) % Worst- Case 2010 The Futures Company 21

23 % Best- Case (9% 10%) (6% 7%) (5% 7%) (6% 9%) (5% 11%) (7% 15%) (2% 21%) % Worst- Case 2010 The Futures Company 22

24 % Best- Case (7% 5%) (8% 6%) (6% 5%) % Worst- Case 2010 The Futures Company 23

25 Low Concern Moderate Concern High Concern % Best- Case % Worst- Case 2010 The Futures Company 24

26 Dyna-max Low Concern Dyna-mod Moderate Concern High Concern Best-Case Dyna-min Worst-Case 2010 The Futures Company 25

27 The New World Order Unlocking the enduring dynamic opportunity in the marketplace Dyna-min Dyna-mod Dyna-max Ave. Best-Case: 7% Ave. Best-Case: 10% Ave. Best-Case: 13% 2010 The Futures Company 26

28 The New World Order Unlocking the enduring dynamic opportunity in the marketplace Dyna-min Dyna-mod Dyna-max Marketing in the global economy is not just a dichotomy of low-growth vs. high-growth markets. Even in struggling markets, there is dynamic potential & aspiration to target & inspire. Ave. Best-Case: 7% Ave. Best-Case: 10% Ave. Best-Case: 13% 2010 The Futures Company 27

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30 Best-Case Mindset Worst-Case Mindset I usually choose the cheapest products available 21% 53% 50% 52% I like to splurge on some products and services even if it means I have to economize more radically in other areas I feel less confident about my future than I did a few years ago 20% 85% 41% 39% I am increasingly attracted to brands that convey a sense of optimism in their marketing and advertising 2010 The Futures Company 29

31 Prioritization Dynamism Cachet 2010 The Futures Company 30

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33 Extremely/very important in your personal life today Being in control of your life 82% Looking after your health 82% Striving to reach your full potential as a person 69% Having fun 68% Scheduling down time or me time 68% Making the world a better place 65% Getting the best price on everything you buy 60% Living life to the maximum 59% Expressing your creative side 55% Using products and services that offer the greatest convenience 51% Celebrating traditions 47% Being part of a close community 39% Paying a lot of attention to your appearance 38% Purchasing luxury products 12% 2010 The Futures Company 32 Source: The Futures Company Global MONITOR 2010 (Standardized data)

34 Extremely/very important in your personal life today Best-Case Mindset Worst-Case Mindset 89% 89% Being in control of your life 92% 91% Looking after your health 2010 The Futures Company 33

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36 Business Imperatives Innovate o to strengthen the connection with consumers in order to stay at the top of the priority list Focus o on unlocking the dynamic potential within every market in the global economy Reinvent o the cachet at the heart of your brand proposition to connect with the new value equation of tomorrow 2010 The Futures Company 35

37 Thank you! 2010 The Futures Company 36