Marketing to the Mobile Shopper

+ America’s most important shopping partnerA mobile shopper research study 2011 Leo Burnett & Arc Worldwide

Before too long, all shoppers are going to become mobile shoppers. The answers about how to win withmobile shoppers are not about technology. It’s not about mobile sites vs. apps, iPhone vs. Android or even retailers vs. manufacturers.The answers are found by looking through the eyes of the mobile shopper.The sheer volume of mobile shopping has increased dramatically Goal About Arc Worldwideover the last few years, and it is expected to continue growing Introduce you to mobile shoppers – who they are and how they use Arc Worldwide is the global marketing services company of theat a rapid pace. This growth is largely driven by the increase in their mobile phones to help them shop. Leo Burnett Group and a specialist in cross-channel activation.Smartphones. By the end of the year, Nielsen tells us to expect With expertise in digital, direct, promotion and shopper/retail50% of US wireless subscribers to own one. Shopping, of course, includes many more activities than simply marketing, Arc moves people everywhere they move – to making a purchase. Shopping encompasses everything from experience, to purchase, to recommend and to return. ByWith all of these technologically advanced phones in peoples’ searching for an item, comparing products, and evaluating prices unearthing a deeper understanding of how and why people dopockets and purses wherever they go, the way people shop is – to researching benefits, gathering information about where to what they do, Arc develops award-winning creative solutionschanging. Shoppers are beginning to develop preferences for buy it, and actually completing the transaction. The shopping that measurably impact behavior on behalf of the world’s leadingretailers that enable them to use their mobile phone to shop, but experience can also include activities done after the purchase, such marketers – including McDonald’s, The Coca-Cola Company,retailers are still playing catch-up. as returning or servicing a product. Mobile shopping includes using Procter & Gamble, MillerCoors and many others. your phone to facilitate any part of the shopping experience, fromResearch conducted by Brand Anywhere and Luth tells us 51% looking up a store address, to reading reviews, sharing productof consumers are more likely to purchase from retailers that have Contact for more information photos, tweeting price details, or using virtual shopping tools to helpa mobile-specific website – but that only 4.8% of retailers actually Molly Garris visualize the product.have one. And web retailers who have a mobile-specific website molly.garris@arcww.comcan increase consumer engagement by 85%. Process For copies of this white paper visitMobile phones are proving important in-store as well. Accentureconducted research that shows that 73% of mobile shoppers We conducted a nationwide quantitative survey interviewing 1800 http://leolens.leoburnett.com/favor using their phone to take care of simple tasks in a store, mobile phone owners. We used these quantitative findings towhile only 15% favor interacting with an employee. identify the different types of mobile phone owners. From this, we uncovered which types use their phone for shopping and which don’t; which use it a lot, and which just occasionally; how theyThere is simply no escaping the reality that use their phones within the shopping process; in what productpeople are using their mobile phones to shop. categories the mobile phone is used and in what ways.While it’s clear that the phone is quickly becoming an important We conducted qualitative research with 30 mobile shoppers. Theseshopping partner, as we looked around, we found that very little people used webcams and flip video to share their stories withwas clear about when, where, how and why people us. We also shopped with them as they used their phones in andmobile shopped. around the retail environment. This qualitative research helped us to better understand why they do what they do; what they like about the experience, and what they don’t; and what they’ll do in one category versus another. ©2011 Leo Burnett & Arc Worldwide | 2

KEY FINDINGS 1 THE path to purchase is dead. Now there are MANY paths to purchase. 6 Not all categories are mobile shopped to the same extent and in the same way. 2 As mobile changes the way we shop, category norms may also need to be re-examined. 7 Certain categories deliver a more satisfying mobile shopping experience than the others. 3 8 Even though half of all mobile phone owners Many drivers of positive and negative mobile are mobile shoppers, not all mobile shopping experiences are similar regardless shoppers are created equal. of the category shopped. As mobile shopping moves from a fringe to a 4 mainstream behavior, we need to look to a small group of Light Mobile Shoppers whose needs represent the future role for mobile in shopping. 9 There is a need for mobile sites and apps. 5 10 Shoppers look to retailers first, but they use Mobile shopping is not one activity, it is many. manufacturers for specialized support Not all mobile activities are created equal. when they shop. ©2011 Leo Burnett & Arc Worldwide | 3

KEY FINDING 1 THE path to purchase is dead. Now there are MANY paths to purchase. The shopping journey is no longer predictable, A planned decision can be over-turned in the store as the shopper accesses new information. Shoppers are doing their linear nor straightforward homework a little more casually. The mobile phone is the most proximate shopping option for First, people asked a friend’s people. It’s the “anywhere device” that people always carry with opinion before going to a store to buy something. them. Without the limits of sitting at a computer or stepping in a A planned decision to purchase They make can be over-turned with the store, there are many different triggers for and moments people shopping decisions benefit of more information. “real-time” will consider mobile shopping. We like to call this a “shopping blip”. 1 2 3 planned decision to purchase If you have a few free moments while you’re waiting to pick up your child after school you might do some “bite-size” shopping May need to improvise They take advantage of on-the-spot where you’re looking at a Groupon deal of the day. Or maybe Then, people could access information and read the reviews or you are in the doctor’s office and just passing the time with some deals later in the process. products online. “down-time” shopping. The mobile phone provides an “always on” opportunity. Think of it as the 21st century version of Before using mobile, shoppers did most of their checking for window shopping. product availability before they ever went to the store. Now we see that there is a large group of shoppers that are shifting this deals of the day towards the middle of the shopping process. This trend is also ‘Bite-size’ happening with other activities like using a search engine or in the shopping checking a retailer’s website. We are seeing the shift happeningdoctor’s office with browsing for coupons too. With the economy the way it’s been, and the offers we’ve given them to entice them to buy, ‘Down-time’ we have trained people to continue looking for a deal throughout 1 2 shopping their shopping process. And with mobile, they can and do. IMPLICATION watching your Always ‘on’ bid on ebay shopping Now, people can use their mobile Give people the access they want, when they want it. phones to digitally solicit opinions from friends and strangers while Understand that there are now many paths to purchase. What’s shopping in the store. the user experience if they start their shopping journey on the mobile site and they are looking for broad information? What Mobile is forging shoppers’ digital and if they visit the mobile site mid-journey looking to see if a analog worlds into one retailer carries a specific brand? Or, what if they’ve made their Before, people would browse a circular at home and bring a product selection and are just looking to score a deal? Each of coupon to the store. People searched and used coupons online. Mobile is allowing people to shop on the spot these shoppers is looking for something different, but all are important and need to come away with a positive experience. Now, people can browse online, download on a phone, and use What once was a planned purchase, now may be less Make information available to shoppers in meaningful ways a coupon in-store. Everything can be done at the same time. It’s pre-planned at home. Information is continually gathered and and important places. Don’t assume you know when your not such a sequential plotted path. The mobile phone is allowing decisions are altered as people move through the shoppers will interact with your mobile sites and apps. Make shoppers to extend the steps along the path to purchase beyond shopping process. sure you are creating relevant mobile interactions that can their traditional confines. happen early, mid, late or repeatedly in the process. ©2011 Leo Burnett & Arc Worldwide | 4

KEY FINDING 2As mobile changes the way we shop,category norms may also need to be re-examined. IMPLICATIONConsidered becomes casual Casual becomes consideredCategories that were shopped with great consideration may now The opposite is also happening. Categories that may have gotten Think outside of category norms.see a more casual approach. For instance when shopping for minimal consideration before, now receive more attention. Take If you assume shoppers are well-planned, they may not be.appliances, people do their “homework” to shortlist, but often something as simple as getting coffee. It’s no longer just a matter Be prepared for a more casual, improvised and real-timeneed to improvise or access more information in-store anyway. of walking into a coffee shop. At Starbucks, people can look up interaction. If you think shoppers are not involved - think againThe model they have selected may not be on the floor and now locations, load up their reward card, explore nutritional information - they may be up for a more engaging shopping experiencethey need to re-evaluate their choice and learn about a similar and even pay in select stores. than we currently offer.model or a competing brand. With gas prices the way they are today, people are giving thisBefore, this shopper may have returned home to conduct more category a lot more consideration as well. The GasBudyy app helpsresearch on the computer or he may have relied solely on in- shoppers find the cheapest gas nearby.store customer service to make his choice. Now he has accessto new information through his phone. This helps shoppers bea bit more casual about what they need to have in place beforeentering the store.Take Volkswagen for example. They recently launched the GTIexclusively with an iPhone app. It became the number onedownloaded app in 36 countries. It was an idea that seamlesslyintegrated the brand with play and utility for a real measureablereturn and it redefined how a car can be sold in the digital age.People casually browsed for a car just because they could. { Casual } { Considered } + { Casual } + { Considered } ©2011 Leo Burnett & Arc Worldwide | 5

KEY FINDING 3Even though half of all mobile phone owners are mobile Skew dramatically younger 67% are 18-34 yrsshoppers, not all mobile shoppers are created equal. 57% male Leaders and in-the-know More likely single They are more open-minded and willing to try more with their phones Likely to haveMeet the mobile shopper One size does not fit all the latest phones Funnel their lives, includingWhen we look at adults 18-64 in the US, we see that 10% don’t So let’s look at a few examples of the difference in activities. 93% of all their shopping throughhave mobile phones. We also see that an additional 40%, while their phones heavies look up store addresses, hours or locations. Only 47% of iPhone dominantowning mobile phones, are not mobile shoppers. Approximately lights do. And interestingly, this is the most commonly done activity 59% have at least50% of adults 18-64 in the US are currently mobile shopping. among the light users. That’s quite a gap. But the gap gets bigger. 2 shopping apps on phone Looking at shopping apps, we see that 55% of heavies use them More mobile shopping activities, Polar income levelsThese people fall into two groups, and there are some real once a week or more – and that 51% of light mobile shoppers use and in more categories - below $40K or over $75Kdifferences between them. The critical point to note is that a very them once a month or less. When we get to specialized activitiessmall group (around 20% of all mobile shoppers) are driving a the gap widens even more dramatically. Using gift guides on a { 20% of Mobile Shoppers are Heavy Mobil Shopper }majority of the mobile shopping activity volume. mobile is done by almost 7 times as many heavy mobile shoppers as light mobile shoppers. vs. Heavy Mobile Shoppers 10 % Light Mobile Shopper { 80% of Mobile Shoppers are Light Mobile Shopper } Once a 39.1 % Heavy Mobile Shopper Light Mobile Shoppers week 52% female Limited view of how to use or more mobile phone in shopping Mobile Non-Shoppers 40.6 % 57% are 25-44 yrs 55 % Lack of trust No Mobile Phone 10.3 % 93 % Handicapped by technology - BlackBerry and Less into both mobile% of Total US Adult Population, Age 18 - 64 and shopping Once a Android appsThe gap between heavy and light mobile shoppers is enormous, month 54 %and it centers around the nexus of mobile and shopping. Heavies 47 % or less 78% have downloaded an app, only half have used Engrained non-mobile behaviorslove their phones. They do things like share photos, download 51% 8% an app for shopping 27% own a BlackBerrymusic and check the news. They also love just plain shopping – 25% own an iPhone Look up store address, Use mobile Use gift guides onwhether it is at home, on a computer, or in the store. AND THEY hours or locations shopping apps mobileARE REALLY INTO MOBILE SHOPPING. When it comes to 40% earn $75K + High correlation between amount a categorymobile shopping, Heavies index 10 times higher than Lights. At the most fundamental level, light mobile shoppers have a rather is mobile shopped and level of satisfaction Mobile Activity Index General Shopping Index Mobile Shopping Index narrow outlook toward mobile with regard to shopping. They see it primarily as a mini-portable computer, and therefore primarily use 57 it in the car and on the go. 62% of light mobile shoppers told us it IMPLICATION 161 118 was just easier to go online from a computer vs. shopping on their phone. Future growth will come from the lightLight Mobile mobile shoppers.Shopper In contrast, Heavy mobile shoppers know and use mobile as a While heavy mobile shoppers have entirely driven the growth specialized tool for shopping. of mobile shopping thus far, the growth in the future is going to come from light shoppers who have a very different outlook 300 358 779 toward mobile today. Engaging them, and as a result, winning in the future, is going to require a very different approach thanHeavy MobileShopper what may have attracted the current group of heavy mobile shoppers. ©2011 Leo Burnett & Arc Worldwide | 6

KEY FINDING 4As mobile shopping moves from a fringe to a mainstream behavior,we need to look to a small group of Light Mobile Shoppers whose needsrepresent the future role for mobile in shopping. There are several factors that hold them back from converting their help this reframing. They are heavily promoting this app in theirLights shall inherit the future love for mobile and love for shopping into mobile shopping. Quite store windows and at store shelves.From the nearly 40% of light mobile shoppers there is a small simply, they have limited awareness of what the mobile phone cangroup of people that have the greatest potential of becoming do with respect to shopping. They get the basics, like search, andheavy mobile shoppers. will visit mobile sites. They also check their mail for deals they’ve received.Heavy Mobile Shoppers 10 % Their knowledge of shopping apps is limited. They aren’t evenLight Mobile Shoppers 39.1 % aware that many of their favorite mobile sites are also available as easily usable apps. And this is really no surprise when we visit the Apple app store, for example. There are over 300,000 apps to choose from. These apps are organized into categories, and shopping isn’t one of them. There were some apps grouped 5.8 % together over the holidays, and this may have helped some, but it’s High Potential Mobile Shopper not typical or permanent.These High Potentials share a similar level of engagement in Not all shoppers are the benefits of mobilemobile activities and shopping activities with the heavy mobile One example of the varied behavior between these two groups isshoppers. But they haven’t really converted their shopping how they behave when the store is out a product they are searchingactivities onto their mobile phones. for. The high potential heavy mobile shopper abandoned the sale when she got to the store and they didn’t have the product on the shelf. Alternately, the heavy mobile shopper jumped on his cell Mobile Activity Index General Shopping Index Mobile Shopping Index phone and bought the out-of-stock item from the store’s mobile website. 57 161 118 Converting these high potential mobile shoppers into heavyLight Mobile mobile shoppers requires reframing the perception of mobileShopper for shopping. Because these shoppers aren’t into the novelty and experimentation, they need to see the functional benefits of shopping with a mobile phone. 305 289 113 IMPLICATION The phone is a specialized shopping toolHigh Potential Reframe the perception of mobile for shopping. The challenge is to help the next generation of shoppers moveMobile Shopper Emphasize the functional benefits. Position mobile as a from thinking of mobile as “an inferior substitute for the computer” specialized shopping tool that helps save time and money. to “a tool that helps me save time and money, and enhances my Reinforce mobile’s ability to give more control and an enhanced shopping experience on the go and in the store”. If we look to 300 358 779 Sephora, for example, we see how they are helping shoppers shopping experience in the store and on the go. see the benefits of mobile. In a mailing sent to their currentHeavy Mobile customer base they communicate that they have a mobile app andShopper specifically speak to its benefits as a shopping tool, a clear effort to ©2011 Leo Burnett & Arc Worldwide | 7

KEY FINDING 5Mobile shopping is not one activity, it is many.Not all mobile activities are created equal. The Target app creates tools that are helpful broadly across a variety of categories. For example, when you set your Target store, the app will tell you if Heavy Mobile ShopperActivities are influenced by mobile and your store has the item you want in stock Light Mobile Shopper and even what aisle to find it in.shopping behaviorsThere are some well-adopted activities and others that are Native Mobile Activitiesused much less frequently. Some of these activities are highlyinfluenced by mobile behaviors. Others are strongly influenced by 93%shopping behaviors. 70% 47%Mobile shopping activities can be grouped into four quadrants. 15% Shoppers like to price compareAt the top of this chart we see activities that are born out of Look up store address, hours, location Receive, share photos of products Retailers need to look at how they provide this capability. Inmobile behaviors. Activities on the bottom of the chart are the absence of a custom retailer solution, shoppers will turnderived from fundamental shopping behaviors. Within this to an app like amazon price checker or red laser. With these astructure there are more adopted and less adopted activities. CORE MOBILE TASKS SPECIALIZED MOBILE TASKS retailer risks losing the sale to a competitor. However, Target,The less adopted tend to be more specialized or advanced. CORE SHOPPING TASKS ADVANCED SHOPPING TASKS More Adopted Less Adopted Best Buy and Toys R Us are examples of retailers that have built a price check feature into their own app. With this, they Native Mobile Activities have the opportunity to not only provide pricing information but 83% also provide product information that is seen as valuable to the 63% shopper and can potentially keep the sale within your store. 20% 9% CORE MOBILE SPECIALIZED Look for deals for nearby stores Use gift cards Retailers have the opportunity to get their inventory in front of TASKS MOBILE TASKS local shoppers by partnering with Milo, a local shopping search engine. Milo searches the shelves of local stores to find the Native Shopping Activities best prices and availability, thus satisfying the need of instant gratification for shoppers.More Adopted Less Adopted CORE SHOPPING ADVANCED IMPLICATION TASKS SHOPPING TASKS Leverage existing platforms for the native mobile shopping behaviors and design proprietary mobile solutions for native shopping behaviors. Native Shopping Activities The Home Depot app is highly Core mobile tasks: Cover the basics such as optimizing email and customized to meet the needs of search functionalities with technology vendors such as google. the do-it-yourself home repair person. Core shopping tasks: Create proprietary retailer solutionsSome activities are done more than others based on core shopping behaviors and customized by category.Stepping back, we see through these four examples how Specialized mobile tasks: Partner with industry leaders suchactivities that are basic are most adopted, particularly those as facebook or YouTube.native to mobile. Penetration drops off the most when we move Advanced shopping tasks: Take core shopping activities andinto the advanced activities derived from native enhance them within your own platform. Understand that theseshopping activities. shoppers are looking for functional benefits. ©2011 Leo Burnett & Arc Worldwide | 8

KEY FINDING 6Not all categories are mobile phones either. Knowing which activities fall into this group and de-prioritizing such efforts can allow retailers and manufacturers to Apparel shoppers are very responsive to deals, hence they use their mobile phones to receive deals notifications all the time. Hereshopped to the same extent focus on the solutions that matter most to shoppers. too, shoppers are open to using the mobile phone to get real-time opinions of friends and family who may not be in the store withand in the same way. them, even if they may not be ready to use public social networks Each category has a unique activity radar. to do the same. And, because an in-person store visit is so Where each specific activity falls on this map will depend on the important to an apparel shopper to see the product fit and to feelWe looked at mobile shopping in 36 different product and service category being examined, such that each category would have a it, the relevance of public opinions may not have much relevance.categories and observed a remarkable difference in penetration unique imprint or “radar.” Some examples of activities for the fourlevels, with some categories like travel being significantly higher categories examined are shared here. Shopping for appliances is a complex, information-intensive, andthan categories like CPGs. Moreover, the relative gap between time-consuming process. Oftentimes, the products people find onheavy and light mobile shoppers also widened as category Core Considered the shop floor are different from the products they had shortlistedpenetration fell. Here you see in depth how those levels vary Locating Product/ Not Relevant Retailers in their desk research. Shoppers have shown the resourcefulnessfor four categories—restaurants, apparel, appliances, and a Getting Service/ Finding Coupons/ to whip out their mobile phones in-store and access the details ofcollection of CPGs. Support Offers/Sales new products as they encounter them. Using mobile phones to 20 Light Mobile Shopper make a shopping list is a different story, given the limited number Heavy Mobile Shopper 2 of items people are usually shopping for. 49 % 49 % Ordering and Paying Making Lists41 % 19 15 25 % 25 % 1 12 % 14 5 CPGs are truly different and, given their relatively low level of 2% 7% 4 10 adoption for mobile shopping, only activities such as searching 6 Restaurants Apparel Appliances Average CPG for coupons or making lists are something shoppers are currently 18 16 13 11 Earning Rewards Framing Options doing, and that too in a rather rudimentary fashion. There is 3 opportunity for retailers and manufacturers to bring someThere is a range of activity relevance. 9 12 7 advanced functionality with mobile apps to these activities and 17We also examined 33 different mobile shopping activities across to move additional items into the shopper’s consideration set. Choosing 8 Using and Givingthe four categories above, and developed a framework for From Options Ratings/Reviewsexamining activity relevance based on adoption levels and Some activities are so integral to shopping that their relevance Comparingactivity type. Prices is evident across multiple categories. Pricing information is so valuable to shoppers that this is an example of an activity Restaurants Apparel that shoppers would highly consider doing while shopping forSome activities are core to a category—they are intrinsic to how 1 Look up location, hours, etc. 5 Receive coupons & sales notificationspeople shop the category and therefore are activities shoppers 2 Make a shopping list 6 Gather ideas and information appliances (given the price tag), for apparel (given the possibilityhave naturally become adapted to doing on their mobile phones 3 Give a public review or rating 7 Ask opinions from friend/family of finding deals) and CPGs (given the ease). 4 Order for pick up and payment in store 8 Access public opinions 9 Scan barcode to compare pricesin some form or another. Manufacturers and retailers can offermobile solutions that improve the way shoppers are adopting In contrast, some activities may be well adopted in one category, Appliances CPGsuch activities. 10 Make a shopping list 15 Find coupons and deals but not relevant in another. For example, an activity such as using 11 Look up reviews and ratings 16 Gather ideas and information your mobile phone to place and order, and then later paying 12 Scan barcode to compare prices 17 Scan barcode to compare pricesThen there are considered activities that are relevant to the 13 Look up product information 18 Participate in retailer loyalty program and picking up in-store is already a core behavior in fast-foodcategory but not currently being done on the mobile phone. 14 Order for pick up and payment in store 19 Order for pick up and payment in store shopping. To create efficiency in their weekly routine behaviors, 20 Tweet for customer supportThe barrier to adoption is often a lack of awareness and CPG shoppers might also consider doing such an activity. But forunderstanding. Once exposed to such activities, shoppers appliance shoppers this has little relevance, since they want to In the restaurants category, for example, people use their mobile first see the product before they decide to purchase it.appreciate their utility and they are open to integrating such phone to locate restaurants and read reviews and ratings—activitiesactivities into their lives. Developing these types of solutions they might have previously been doing on their computers. Andoffers the greatest potential in changing behaviors and driving IMPLICATION because they use customer reviews and ratings, they are alsomobile adoption. open to giving such reviews and ratings themselves. Here, a mobile Mobile shopping solutions should be designed category up. phone can provide an effortless and fun way for shoppers to It’s not a one-size-fits-all. Underlying category behaviors areLastly, there are activities that are not relevant to the category and capture and share reviews real-time so as to avoid losing the review a good indicator of which mobile shopping activities will playhence something shoppers will not consider doing on their mobile a prominent role and which will not. in the time it takes to get home. ©2011 Leo Burnett & Arc Worldwide | 9

KEY FINDING 7Certain categories deliver a more satisfyingmobile shopping experience than the others. Overall, we see that light mobile shoppers are satisfied in fewer place to eat and the opportunity to read reviews from an activeLight mobile shoppers have less satisfaction categories. The category penetration levels tend to go hand-in-hand community of locals in the know.based on inexperience with the satisfaction levels. The lower the penetration, the lower theWe looked at mobile shopping satisfaction in 36 categories. We satisfaction. And in general, the satisfaction levels are lower than But with something like appliances or apparel, the shopper needssee that the satisfaction levels vary quite a bit between heavy those of a heavy mobile shopper. With heavy mobile shoppers, we to walk into the store to view the product. Seeing a washer orand light mobile shoppers. The horizontal access on this chart have to take a closer look at satisfaction levels. a pair of jeans on a phone will not provide enough informationshows mobile shopping penetration. The vertical access shows to make a confident and informed purchase decision. So eventhe percent of people satisfied with their experience. The dots though full service restaurants and apparel share a similarrepresent different product or service categories. Even with similar usage levels, penetration level, the apparel mobile shopping experience has people are more satisfied with experiences many fewer satisfied shopping experiences.Satisfaction with shopping experience in some categories than others(% Top-3-Box on 10-pt scale)80 Satisfaction with shopping experience IMPLICATION (% Top-3-Box on 10-pt scale) 80 In low involvement categories, you have to deliver exponential60 value vs. the required effort to change behavior. For instance, deliver deals that are only available on the phone, or provide tools that deliver greater efficiency.40 60 With higher involvement categories, mobile has to add value20 by enhancing the necessary in-store experience in order for satisfaction ratings to rise. For instance, in categories like 40 autos and furniture, provide ratings and reviews that are easily 0 accessible in the store to enhance shopping experience. 0 20 40 60 Light Mobile Product category penetration (% ever shopped with mobile phone) Shopper 20Satisfaction with shopping experience(% Top-3-Box on 10-pt scale)80 0 0 20 40 60 Heavy Mobile Product category penetration (% ever shopped with mobile phone)60 Shopper40 Why is it that even within the same level of penetration there are different levels of satisfaction? Take restaurants. Here we see high20 satisfaction levels, even with different penetration levels between quick service and full service restaurants. 0 0 20 40 60 With restaurants, people rely on the comments of others to predict Product category penetration a good dining experience. Apps like Yelp make it easy to set up Heavy Mobile Shopper (% ever shopped with mobile phone) a successful purchase experience with the ability to search for a ©2011 Leo Burnett & Arc Worldwide | 10

KEY FINDING 8Many drivers of positive and negative mobile shopping experiencesare similar regardless of the category shopped. Difficulties in narrowing or refining a product search. :(Positive experiencesGenerally, people like sites that load quickly and give the essential Too much information to navigate on a small screen. :(information. They like the freedom of accessing informationanywhere. They like discovering new apps or sites that work well, Having to opt in and register for an app :(and when their expectations are exceeded that’s pleasing as well. before you know if you even want it, and filling in too many fields of information. Sites that load quickly Unmet reward expectations. :(:) Ability to make a purchase decision regardless of where:) you are Performance counts Instant access to product, inventory and price information Clearly, performance is critical. Here are some specific:) suggestions. The excitement of discovering a new mobile activity, app:) or mobile site that works well TEST across as many handsets, platform and browser combinations as possible using online testing tools and When experience exceeds expectations preferably, where possible, actual handsets.:) Sites that provide essential information CONSIDER limited memory resources and optimize to use the:) minimum amount of memory. REMOVE unnecessary code and features.Optimize the mobile user experience LOAD test to measure performance and scalability.Amazon does a great job of optimizing the user’s mobile Negative experiences CONSIDER power consumption to conserve phoneexperience. On the website, the new customer is asked to create battery power.a lengthy profile about herself and her preferences. But, on mobile, When it comes to negative experiences, people are annoyed byAmazon realizes the person is on the go and offers a streamlined technology bugs. They don’t like getting bounced from an app toexperience, so the user is only prompted to fill in basic fields. a site because the app isn’t fully useful. They dislike when they are IMPLICATION given information overload or have to opt-in too early in the process. All this means that it’s important to conduct rigorous QualityMacy’s did a great job of exceeding shopper expectations with They also don’t like having their rewards expectations go unmet. Assurance testing to eliminate bugs, and to ensure you’vetheir mobile site over the holidays. They had a special holiday designed your user experiences for a mobile phone, not afeature called “Macy’s Believe”. To unlock the magic, the user was computer. Provide consistent information across channels, and Technology bugs like slow loading sites, crashing apps, :(instructed to turn their iPhone horizontal. This unlocked different price scans that don’t work, limited phone reception. surprise and delight mobile shoppers.content. Macy’s then delivered a page refresh that surprisedshoppers with a fun and unexpected experience. Getting bounced from an app to a website. It’s only half :( useful. Inconsistent information between the store, mobile site :( and an app. ©2011 Leo Burnett & Arc Worldwide | 11

KEY FINDING 9There is a need for Mobile web can Apps have their advantages too bridge shoppers tomobile sites and apps. more functionality Mobile apps are necessary too. Downloading apps is a common activity for heavy mobile shoppers. Apps are pre-loaded to their The Mobile web is great at phones and offer custom information within a touch or two. achieving the basics but today’s And Apps deliver a predictable experience. Apps have their Smartphones have the ability to do unique advantages. They can take advantage of the phone’sMobile sites have their advantages so much more – like determining functionalities, like the accelerometer or use location-aware your location with GPS or functionality to deliver more customized engagements. Apps areMobile sites are necessary. Visiting mobile sites is one of the few capturing images with the phone’s built for specific platforms, so they can deliver a richactivities that light mobile shoppers do, and shoppers regularly cameras. As a result, to create app user-friendly experience.rely on mobile sites when apps crash. Mobile sites can deliver awareness and nudge shoppers toreal-time information. the optimized experience, brands IMPLICATION and retailers put banners on theirThe Mobile web has evolved. For phones like iPhone and Android mobile site for devices that have Offer a fluid and functional shopping experience thatthat use Webkit browsers, enabling retailers and brands to deliver an app available. recognizes the unique role for both. A strong mobile siteapp-like experiences without the need for an app download. should focus on delivering a simple experience, or shoppersFor other phones that can access the mobile web, similar will navigate elsewhere. Use an app to integrate the phone’sexperiences can be created to increase engagement. functionalities to automatically pull GPS coordinates or pull colors from photos.For example, the Bloomingdale’s mobile website can be viewedon a Blackberry or an iPhone. But for Blackberry users, the Know that shoppers may search for your mobile website ormenus are extended to mimic a scrolling Blackberry user. While Retailers and manufacturers need to treat apps open your app, without thinking about why they selected onethe iPhone site is more compact for quick touch navigation. differently than mobile web or the other, so be consistent with information. The heavy shopper, however, will clearly appreciate the more advanced Apps have to be treated differently than mobile websites. For customization and fun that your app delivers.These customized experiences help transfer current mobile example, Kraft uses their mobile website to deliver basic contentbehaviors to mCommerce sites. such as recipes. Their app, on the other hand, provides the opportunity to use a phone’s camera function to take pictures of• Eliminates the need for a download food items in the cabinet and add them to a shopping list. Coupons• Easily optimized for search can be scanned and added to loyalty cards.• Stronger reach ©2011 Leo Burnett & Arc Worldwide | 12

KEY FINDING 10Shoppers look to retailers first,but they use manufacturers for specialized support when they shop. L’Oréal partnered with Walgreens by creating endcaps featuringInformation found on retailer sites isn’t enough Manufacturers and retailers must work together Youth Code. Often times shoppers are overwhelmed withThey may go to retailers first and more often, but they don’t find While retailers have been leading the way with mobile product choices in the skincare category. With this display,all that they need so they also have to visit manufacturer sites to initiatives, they may not always have access to detailed product shoppers can use their phones to learn more about the product.find that information. Rather than risk losing shoppers, provide specifications, lists of matching accessories, warranty informationimportant manufacturer information within the retail experience. and other data that could influence their purchase.Some shoppers told us that with retailer websites they don’t findthe details they need to make a decision. And the information Here we see Target partnering with Giada to offer exclusivethey are given seems more like an ad. Mobile Shoppers are product. Using mobile, shoppers can scan a QR code found inlooking for a balance of retail and manufacturer data. a holiday gift guide to access relevant holiday recipes that are co-branded with Giada. This sits within the Target mobile site for Light Mobile Shopper quick access to other products. Heavy Mobile Shopper 91 % 31 % Visit retailer website IMPLICATION 79 % Manufacturers and retailers must work together. Retailers need to lead, but partner with manufacturers to deliver category- 21% specific content. Manufacturers that create content that directs shoppers to a specific retailer offer those same shoppers the opportunity to have a comprehensive experience that pulls them all the way through the purchase. Visit manufacturer website Scan for Giada De Laurentis’ Seafood Shrimp Cocktail recipe or visit Target.com/Giada for this recipe and more. ©2011 Leo Burnett & Arc Worldwide | 13

APPENDIx 1Non Mobile Shoppers primarily use their phonemaking phone calls and for text messaging. Non Mobile Shoppers% who do the following activities at least once a month from their mobile phone 100.00 97 75.00 70 50.00 33 25.00 16 16 16 14 13 12 12 10 9 7 6 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 lls S S ail t e g e s s es es es ce ic ne w ap m in in SM M ca em us sit sit vic er ne g g ga er /M m en sa m eb eb m g/ e r t se in ive or ng on or m a es in w .w ed ch e ay co ce g er gi d ph M ns th ed ar ad sa se en sa Pl th /re io or nt se ss e at es o ba ea rg es ct eiv a nl nd er g ce m a st re w M e w in n en c Se In us g Ac di io nk do re xt k e in g ec t ur Te e/ up ca ba us n er to o ct Ch ak lo us ok o ile Pi nt en M f or in e ob Lo sit st nt up PS Li M Vi co G ok re Lo a Sh ©2011 Leo Burnett & Arc Worldwide | 14

Us Lo e ok a up Re se ar st c ch or eiv e e en ad no gi dr ti ne es APPENDIx 2 ca du s, tio rin ho ns g ur 100 s 0 10 20 30 40 50 60 70 80 90 ab yo Vi ou ur or sit ti sh lo ca a n- st op tio re o pi n 47 ta re ng ile 93 rw pr pr Lo om oc Re ok eb es ot s 40 Lo fe at sit e io 94 rb pr (e ns Co ok ac ice g. /o m up k s be ffe to rs 32 pa on on st re a bu 85 re lin ta ph e ile re y.c ys pr re ta om od m ile ) 31 ica uc rs w 91 ls ail Re to ti nf s eb re yo ad or m u sit pr e 25 cu ice at ha io ve 93 st s Vi om w n sa Re sit w a er ith hi le ve d m 24 ce ra on ive an tin in 78 lin a /S uf ac gs e st ha or pr or re tu re ice e 23 te re vie s, 86 rw in xt s w ab eb s st sit of or e e 22 ou a tp (e 84 g. pr ro od du w uc hi ct rlp t 21 s oo 86 fro l.c m om fri ,) 21 Lo M en ds 79 Re ok ak fo e /fa ad rd a m cu sh ily 21 Ch ea op st ls 73 om ec pi er k fo ng on rn lis Co ra t 20 th ea Se m tin e rb 73 ar pa gs st y ch re or at st Re Ca els pr re us or es 20 ce lcu ew od vie of w 83 lat uc an ive /S e he re ts s or pr ab ha w fro m de r % who do the following activities at least once a month from their mobile phone 19 ice ou re he n 81 co co yo ta m th ur st nt en pa e m or Re ris pr e 19 ce ta od ob on ile 74 ive bo s uc /S ut fo ti ph ha pr rd s on ou e 19 re od iffe uc t-o 85 ph re ot ts nt f-s os /s siz to to ck e 17 re of s pr 82 Ch pr on od ec od uc k uc us ts in er 16 Br -s ts ge 67 ow to fro n. Us se re m sit av fri e co es 16 Us ail en ba e up ab 71 an on ds rc ilit /fa od ap s y m G es p fro of ily m 15 at he or or a 70 r/S sc m yo ur pr od ob ha an ile m uc re ni t 15 ng sh ob op ile 78 in Us to op io e pi ph ns a ge ng on tp e 14 ab co ap up ric 73 ou in pl Br ta on g ica ow fro or tio Pa pr m n 14 se od pr rti od 64 cip st uc yo uc Pl or ur ac at e e t/s to m ti nf e in o 13 cir re ob an a cu ile 59 sw lar fro Tw or de ee s m ph fro fri on ee ra ps m e 13 to ta en he 57 ke yo ds rt ad ur /fa ex s, m Us tp of ga m e m ily 13 ric tim ob re e e ile e 68 ta to or ile de pr ph rc ta en on ils su om e 11 om to re Some mobile shopping activities are more adopted than others ot 70 pa a io ris se e qu n Us on if of e ick fe 11 ,s th r gi e er 62 ft ele de pi ca ct al ck Us rd or is up e w 11 s, or gi re cu or 58 ft w st th gu ar d om w id hi le 10 es ca iza (e rd tio 61 g. Ad s, n lo d or to Co m ok a ol gi s 10 Ut pr ft pa fo od Vi re 65 iliz re ra ew e pa uc tt pr gi st vir gi tu ym ft o od rie 9 al un a s en w uc 63 sh tp de ish td op lan r$ em pi 10 lis 9 to os ng op 0 rf to tio 59 or av ol s ns a or th (e gi ite 9 at g. ft s he m fo 63 lp or rm yo tg om ag u 8 vis e ) ca 54 ua lcu liz e lat 8 th or e ) 61 pr od uc 6 t 52 Light Mobile Shopper Heavy Mobile Shopper©2011 Leo Burnett & Arc Worldwide | 15

0 25.00 50.00 75.00 100.00 Fu ll se rv .r 41 es ta 49 APPENDIx 3 ur Di an gi ts ta 41 lc on 44 te nt Ev en 38 tt ic 52 ke ts Tr 37 av 45 el Fo od or 36 be 46 ve H ra ot ge el s 36 or re 47 s or ts 26 Bo ok s 47 Ba rs 26 an d C 36 lu Ap bs pa re 25 l/c C lo 49 on th su es m er 24 el Q ec 47 ui ck t ro n ic se s rv 22 .r es 25 t au Ba ra n nt ki ng s 21 C se el 34 lp rv ho ic ne es C Se 17 om rv pu i ce 39 ter Pr ha ov % who do the following activities at least once a month from their mobile phone rd id w er 14 ar s e/ 30 ac c es s or 13 Sp ie or s 26 tin g H G om oo e 12 ds Fu Ap 25 rn p lia itu nc re es or 12 H om 32 e dé co r 11 Su Au 24 bs to c rip m tio ob ile n- s 10 b as 18 ed co nt G en 10 re t et 19 in g Re al ca H rd e st ai 7 s, at rc ar flo e w 22 e, er s ki s, n or ca 7 re gi ,b fts 22 ea ut Ed uc y pr 6 at od io uc na ts 18 lP ro du C 5 ct ar s In 16 su Sk ra in nc e Some categories are more heavily mobile shopped than others ca 5 re pr 19 od uc Pe ts 5 O ts ve up 10 r-t pl ie he s -c ou 4 nt er O m 15 th ed er ic (p at io le 2 as ns e 1 Pr em sp iu ec m ify ) 2 de si 9 gn er je a C ns 2 er 6 ea O l ra lc 2 ar e 7 pr od La uc un ts dr y 2 de C te 11 ar rg bo en na t te 2 Pr d 7 e- be pa ve ck ra ag ge s 1 ed or 9 ga ni En c f er oo 1 gy ds 6 dr Fe in m ks in in e 0 pr Light Mobile Shopper 3 ot Heavy Mobile Shopper N ec tio on e n of 20 th e 7 ab ov e©2011 Leo Burnett & Arc Worldwide | 16

APPENDIx 4Mobile Shopping Barriers Light Mobile High-Potential Heavy Mobile Shopper Mobile Shopper Shopper Percent of shoppers whoIt’s just easier for me to go to online from a computer than to shop on my mobile device. 62% 49% 35% checked the statementI am usually near a computer so I really don’t see the need to shop from my mobile device. 50% 46% 31%I think shopping from my mobile phone takes more time than shopping online. 48% 47% 29%I don’t have very many occasions when I need to shop from my mobile device. 46% 41% 22%The websites I access on my mobile device are much less user-friendly than the websites I access on my computer. 42% 36% 31%I really don’t have the need to shop from my mobile phone. 40% 27% 16%It’s just easier for me to go to a store than to shop on my mobile device. 37% 35% 25%Once I am actually in a store I have no need to shop from my mobile device. 37% 29% 20%The screen on my mobile device is too small to see things clearly. 37% 34% 20%I don’t think shopping from my mobile phone is very convenient. 35% 25% 21%The websites I access on my mobile device have much less of the same content, features and functionality. 33% 35% 26%It is difficult to search for products and/or services on my mobile device. 32% 25% 18%It is difficult to use and/or search for coupons on my mobile device. 31% 28% 27%I am worried about the security of mobile payment services. 27% 25% 25%The internet access on my phone is too slow to shop effectively on my mobile device. 27% 21% 18%I think shopping from my mobile phone would take just as much time as shopping online. 23% 18% 15%I am not certain that the transaction will be completed while shopping on my mobile device. 13% 15% 14%I am not certain that my phone number will be kept private while shopping on my mobile device. 12% 6% 16%None of the above. 9% 17% 20% ©2011 Leo Burnett & Arc Worldwide | 17

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Marketing to the Mobile Shopper

by Leo Burnett Worldwide

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