Our FindingsAt Parago, we work with hundreds of topbrands and their millions of customers, givingus an intimate understanding of the desiresof shoppers and consumers and what theyexpect from brands. A few years ago weestablished a benchmark in the industry forshopper insight as it relates to deal seekingbehavior. Price sensitivity, perception of dealmethodology and behavior drivers are criticalto influencing our customer recommenda-tions, technology improvements and strategydesign. These insights influence our recom-mendations to our customers and are criti-cal for any marketer that reaches consumerstoday.We surveyed more than 1,000 everydayconsumers and uncovered some fascinatingresults – some reinforcements of what wehave seen in the past, some exciting new op-portunities, and some challenges for brandswanting to rise out of the race to the bottomthat the recession has forced many compa-nies into.
There is good news: • Consumers are willing to do more to get more. Promotions such as rebates are being sought after by consumers.Takeaway: Leverage redemption-based rewards to gather consumer insight, build a database of active consumers and drive loyalty –while gaining the financial benefit of a rebate or redemption-based program.But there is also not-so-good news: • Consumer spending has not rebounded and price sensitivity remains. Unemployment numbers and the housing market may be creeping backto normal, but shoppers’ sensitivity to price has actually increased in the last 12 months. This is due to the collaborating perception that theirpurchasing power has decreased in the last 12 months. Consumers are digging further into the recessionist mentality and are fortified for along winter of seeking out savings.Takeaway: Marketers should not migrate too quickly from aggressive pricing strategies. The opportunity lies in who can best navigatethe fickle grounds of short-term promotional strategy and long-term loyalty. Savvy marketers have figured out how to use the short-term to drive the long-term by building a stockpile of data, communications and engagement for when spring returns.And there are multiple opportunities for marketers: • Mobile deal finding has yet to be adopted. People look at circulars 600% more than their smart phones for sales and deals and they don’t relyas heavily on the web as we thought for finding deals. Most shoppers look for deals the same way we did twenty years ago, before anyonehad ever heard of an iPhone. So, we’re not there – but how do we capitalize on the opportunity? Clearly marketers need to bridge the gapbetween the new, efficient technology consumers want and the entrenched habits they are exhibiting.• Women actively seek out deals. They are more price sensitive than men, they are more aggressive hunters for value – yet the majority oflarge promotions (like large electronics, appliances, software and gadgets) are offered to the male shopper. But, women are also more apt toparticipate in a loyalty program. So, we have two misses here – what are marketers doing to capitalize on the woman’s predisposition to priceshop, research and look for rebates and other promotions? And, how are we creating a captive, known consumer and then turning her into aloyal customer? There is a wide-open door for redemption-based and creative acquisition strategy that dovetails into long-term female affin-ity.
Market LandscapeThe August 2009 Nielsen Consumer Insight Report revealed that 80% of Americans were stressed over the economy, prompting nearly 88% ofthem to change the way they shopped. The January 24, 2012 Gallup Economic Confidence Index reflected a very similar perception of the econo-my as the previous year. All in all, it determined that U.S. Economic Confidence was, at that time, the best it had been since the previous May.Now it’s 2012, and the economy and job markets are rebounding. USA Today reported in their article “Dec. unemployment rate lowest in nearly3 years” on January 6, 2012 that economists surveyed by the Associated Press project the economy will generate an average of 175,000 jobs permonth this year, an increase from average monthly gains of 130,000 last year and 78,000 in 2010. Growth exceeded an annual rate of 3% by thefinal quarter of 2012, a marked improvement over the 1.8% growth seen during 3Q11.Interestingly however, the average consumer’s perception of her purchasing power and the changes in shopping behavior resulting from this per-ception seem contrary to the positive shift in the economy. What does the average consumer perceive to be the state of the economy? How dothese perceptions influence shopping behaviors and buying habits specifically with respect to deal and promotions? How have these behaviorschanged over the last few years? And what does it all mean to you?Parago set out to find some of these answers. What we learned might surprise you.
Consumers Remain Extremely Price SensitiveAs of the February 2012 Consumer Confidence report, there was a slight increase in the number of consumers claiming business conditions are“good” (up to 13.3% from 13.2% last quarter.) Further, the number of consumers claiming business conditions are “bad” changed more dramati-cally, decreasing from 38.3% last quarter to 31.2%. This positive shift in consumer confidence in business conditions, and the economy as a whole,appears to reflect more of a consumer perception than an actionable state of affairs. Despite having greater confidence in the economy, consum-ers are not yet ready to revert to their pre-recession spending habits.Although the general feel of the economic landscape improved in 2011, consumers are still extremely price sensitive. Parago’s research revealedthat 70% of consumers surveyed have grown more sensitive to price in the past 12 months. We further learned that 83% believe their purchas-ing power has decreased or remained constant over the same period1. This data is supported by the Aldata Post-Holiday Shopping Survey 2012,which revealed that 66% of consumers look for value prices because money is tight. These economic concerns are being reflected in the shop-ping behaviors of the general public, specifically via an increased willingness to bargain hunt and perform price comparison research prior toshopping.(1) Parago Shopping Behavior Survey, 02/2012
Consumers Shop Armed with Research about Price and PromotionsRecent research determined that 95% of consumers shop for price over brand or look for sales, deals, rebates or best advertised prices prior toshopping at least some of the time. Further, 94% of consumers now review circulars or other adverting to compare prices before shopping atleast some of the time2. In contrast, Parago’s 2011 Shopper Trend Report revealed that only 59% of consumers said they sometimes or alwaysresearched prices prior to shopping for essential/everyday items and 73% did so for discretionary items in 2010. This 35% uptick in price researchfor everyday items is one of the most telling discoveries. Clearly, consumers have grown more savvy and crave increased control over theirspending. By educating themselves, they are providing a powerful opportunity for marketers to establish early and strong touch points beforethe shopping experience even occurs.With 90% of consumers knowing what they’re buying before arriving at the store and 80% doing more research and entering into the purchas-ing process with a pre-determined price point and a potential savings amount in mind, 75% of consumers believe they are better shoppers todaythan they were one year ago3.(2) Parago Shopping Behavior Survey, 02/2012(3) 2011 Annual Pantry Survey by Deloitte, via The Consumerist: Shoppers Bite Back
Frugal Habits are EntrenchedThe long-term effects of recent economic events and consumer perceptions appear to include a potentially permanent move toward frugalityand away from the concept of conspicuous consumption. Specifically, Parago discovered that price has steadily risen as the primary driver ofconsumers’ purchasing decisions, from 60% in 2010 to 66% in 2012. Although 49% of American consumers describe their finances as excellent orgood (up from 43% in the previous quarter), 65% think it is not a good time to buy4.Elevated levels of long-term unemployment appear to have led to either the reality or the perception for consumers that they have no sparecash5. Further, debt was cited as a top concern for Americans in 20116.As a direct result of these perceptions, many consumers now prefer to research the best deals, go out of their way for the better price and makepurchasing decisions based on price, rather than brand or convenience7.(4) Nielsen Global Survey of Consumer Confidence Q4 2011(5) Nielsen Global Online Consumer Confidence Survey, Q4 2011(6) Nielsen Global Online Consumer Confidence Survey, Q3 2011(7) Parago Shopping Behavior Survey, 02/2012
Deal-seeking Remains Popular and Rebates have Staying PowerRebates have proven to have significant staying power. Aftera dramatic increase from 37% of consumers submitting re-bates in 2009 to 48% in 2010, that figure remained steady for2011. Additionally, a staggering 95% of consumers are at leastsomewhat interested in seeking out products that come withrebates – 22% of whom are extremely interested in doing so.We found that 90% of consumers are willing to travel five toten minutes out of their way for a $20 rebate and 91% con-sider rebates easy to redeem8.This affinity for rebates is mirrored by consumers’ continuedlove of coupons and deals. 79% of consumers at least some-times seek online coupons before purchasing. Further, 65% ofconsumers would like to receive a weekly email alerting themto coupon offers. With a staggering 91% of consumers indi-cating they are likely to register for deal sites, the message isclear. Consumers love a good deal, regardless of how they getit9.This data suggests the general public is ready to take advan-tage of the savings offered by rebates. Unfortunately, despitethis increase in consumer interest in rebates, 64% of peoplesay they have specifically not noticed more rebates offeredwhile out shopping in the past 12 months10.(8) Parago Shopping Behavior Survey, 02/2012(9) Consumer & Advertiser Coupons/Deals Survey, October 13, 2011(10) Parago Shopping Behavior Survey, 02/2012
Social Networking and Mobile OpportunitiesThe data from this survey strongly suggests that the opportunity for mobile shopping applications is on the horizon, but not quite here yet. Welearned that 73% of consumers never utilize mobile applications for price comparisons or to search for rebates11. Cisco learned, however, that ofthe consumers who do use technology for shopping, 63% do so to find the best price12.Are consumers dissatisfied with the quality of existing applications? Are consumers simply not educated about or aware of these applications?If these questions can be answered, there is a decided opportunity here for marketers to reach the public with mobile applications and/or otherdevices to help consumers search for deals both prior to and while shopping.(11) Parago Shopping Behavior Survey, 02/2012(12) Cisco Internet Business Group Survey, “My Shopping My Way U.S., 2011
Men vs. WomenIn general, men and women responded fairly evenly to the survey, but there were a few notable exceptions. Our data revealed that women havebecome more sensitive to price over the past 12 months than men. A slightly higher percentage of women research prices and deals prior toshopping, at least some of the time. This data is illustrated in the table below13.Women vs. MenWomen MenI feel my purchasing power has decreased over the past 12 months. 56% 51%I have grown more sensitive to price over the past 12 months. 75% 65%I review circulars and advertising to compare prices before I go shopping at leastsome of the time.95% 92%I look for sales, deals, rebates and best advertised prices before I go shopping atleast some of the time.96% 93%I shop for price over brand at least some of the time. 96% 94%Interestingly however, we discovered that a higher percentage of men use online and mobile resources to find deals. 6% more men check onlineto see where they can get the best deal prior to shopping and ask their personal network for advice on deals and best prices. The percentage ofmen who use their smart phone to check prices while shopping is almost 10% higher than that of women. Finally, and perhaps most telling, welearned that rebates were submitted by 7% more men than women last year14.(13) Parago Shopping Behavior Survey, 02/2012(14) Parago Shopping Behavior Survey, 02/2012
Clearly, women are more sensitive to and place greater importance on price, however most rebates are offered on male-directed purchases likeelectronics, software and hardware. This presents a definitive opportunity to marketers to address the prevalent female price sensitivity by offer-ing rebates on products they buy most often. Further, as mobile and online applications are not currently appealing to women as much as men,marketers are challenged to find a way to connect with this powerful audience.In Summary….• 1,001 consumers have spoken – and they had a few things to say.• We’re resourceful and we research – but most of us might like todo it with a cup of coffee and the Sunday newspaper.• You (government reporting agencies) may be telling me that theeconomy is back, but I’m diving further into conservation mode.Maybe I’ve learned that frugal living is a smart way of life, or may-be I am still reacting to the poor economy. Only time will decide.• Price is king (or queen) and drives my decisions. I value savingsover convenience, and will actually incur inconvenience for thealmighty dollar.• I use my phone for email, Facebook, texting…and even to makecalls every now and then, but it is not my go-to for finding deals.• Women will work harder for deals, yet most marketers give themthe easiest deals. There is a large opportunity for redemption-based programs and rebates with women-oriented products.
About the Shopper Behavior SurveyAs a leading global provider of end-to-end engagement management solutions for consumers, sales channels and employees for a number ofFortune 500 clients, Parago delivers more than $2 billion in rewards annually. Because we engage over 50 million consumers each year, it is im-perative that we keep our finger on the pulse of the marketplace and monitor the changing tides of consumer perception and behavior. To thisend, each year, we perform an extensive survey on Shopping Behavior. Our third annual survey was completed in February 2012 by 1,001 consum-ers responding to a 50 question online survey of their shopping habits and economic perceptions.Parago Inc.700 State Highway 121 BypassSuite 200Lewisville, TX email@example.com