Consumer decision making - Offline and Online worlds

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Guest Lecture given to students of Consumer Behavior elective offered as part of PGSEM course at IIM, Bangalore on 23rd July 2011

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Consumer decision making - Offline and Online worlds

  1. 1. Consumer Decision Making Offline & Online worlds Anuradha Sridharan PGSEM class of 2010, IIMB Ex-Cleartripper, Ex-Yahoo
  2. 2. Next 90 min CDM Stages Personal experiences Experiences from online advertising / social media / web analytics Learnings from online travel / e-commerce Offline / Traditional shopping Online as an influencing medium Online Shopping / E-Commerce
  3. 3. Decision Making - Stages Dissonance Influencing factors: - Product Involvement - Purchase Involvement - Brand in consumer's consideration set Need Recognition Information Search Evaluation of Alternatives Purchase Post Purchase
  4. 4. Influencing factors Habitual CDM Extended CDM Limited CDM In consumer's consideration set Not in consumer's consideration set Disrupt Strategy Britannia Nutrichoice offer Maintenance Strategy RedLabel Nature Care Tea Capture Strategy Colgate toothpaste variants Intercept Strategy Hamam soap Preference Strategy Nokia mobile phones Acceptance Strategy Reva rental deal
  5. 5. Traditional/Offline shopping First Moment of Truth Second Moment of Truth Need Recognition Information Search Evaluation of Alternatives Purchase Post Purchase Stimulus Shelf Experience
  6. 6. “ The best brands consistently win two moments of truth. The first moment occurs at the store shelf, when a consumer decides whether to buy one brand or another. The second occurs at home, when she uses the brand — and is delighted, or isn’t." - A.G. Lafley, Ex-CEO, Procter & Gamble
  7. 7. New age of shopping First Moment of Truth Second Moment of Truth Zero Moment of Truth Ebook from Google - http://www.zeromomentoftruth.com/ Need Recognition Information Search Evaluation of Alternatives Purchase Post Purchase Shelf Experience
  8. 8. "today’s consumers know so much more before they reach the shelf. They find incredible detail online, from every possible source, about the brands and products that matter to them. They browse, dig, explore, dream and master, and then they’re ready to buy with confidence. And what they learn, they share with others." - Dina Howell, CEO, Saatchi & Saatchi X
  9. 9. "Pre-shopping before buying has become a huge, huge part of customer behavior. In the past, it was pretty much confined to big-ticket items like cars, or expensive electronics or homes. Now people engage in discovery before shopping on very small things. It’s crossed all categories of shopping behavior. It’s just the way people buy today.” — Bob Thacker Gravitytank Strategic Advisor and former CMO of OfficeMax
  10. 10. - the average shopper used 10.4 sources of information to make a decision in 2011, up from 5.3 sources in 2010 - 37% of shoppers find online social sources to be an influential driver when making decisions, up from 19% in 2010 Google – Shopper Sciences Study, April 2011
  11. 11. - 64% of users more likely to make a purchase from a business that answers questions on Twitter - 59% of adult Facebook users have “liked” a brand as of April 2011 http://www.emarketer.com/Article.aspx?R=1008444 http://techcrunch.com/2011/05/29/users-say-theyre-more-likely-to-buy-if-a-business-answers-their-question-on-twitter/
  12. 12. What are the strategies used by your organizations to be part of “ Zero Moment of Truth” of your consumer?
  13. 13. E-Commerce in India Source: http://articles.economictimes.indiatimes.com/2011-03-21/news/29171192_1_online-travel-market-e-commerce-travel-insurance
  14. 14. Market Share of OTAs Source: http://www.tnooz.com/
  15. 15. Consumer Motivations What is the best deal? Let me search in multiple sites Online payment is fine with me <ul>A flight ticket is a commodity; a holiday is a dream </ul>Let me search in multiple sites
  16. 16. More discounts More customers More bookings More PLBs from suppliers The vicious cycle
  17. 17. Holiday Packages / Vacations High Margin business unit Offline Presence Travel domain expertise Logistics/tie-ups with offline agents Dedicated call center / physical lounges / live chat Dream with High expectations Quality of service Customizations Research / Planning Comparative analysis Quick response to queries
  18. 18. Background <ul><li>Site launched on July 4 th , 2006
  19. 19. 20,000 bookings a day (as on July 4 th , 2011) </li><ul><li>13,000 air bookings
  20. 20. 5,000 train bookings
  21. 21. 1,000 hotel bookings
  22. 22. 1,000 bookings from Middle East </li></ul><li>70% of bookings from repeat customers
  23. 23. Key focus on mobile product
  24. 24. Doesn't offer travel packages as compared to competition </li></ul>Source: http://www.alootechie.com/news/cleartrip-completes-5-years-india-claims-currently-do-around-20k-transactions-day
  25. 25. Product design influencing decision making Clean, simple home page
  26. 26. Product design influencing decision making Total PAX fare display Current fares from airlines
  27. 27. Product design influencing decision making Round trip search results display
  28. 28. Key Challenge Brand awareness
  29. 29. Influencing factors Habitual CDM Extended CDM Limited CDM In consumer's consideration set Not in consumer's consideration set MakeMyTrip Yatra Cleartrip Expedia Travelocity
  30. 30. Cleartrip Marketing Campaign “Every trip has a purpose”
  31. 31. Campaign Microsite mypurpose.cleartrip.com
  32. 32. Non-travel e-commerce in India
  33. 33. Flipkart <ul><li>Books -> Music -> Movies -> Digital Cameras -> Computers -> Mobile Phones -> Personal care electronic products
  34. 34. Discount model to attract customers
  35. 35. Free shipping, prompt delivery
  36. 36. Excellent inventory
  37. 37. Superior customer service </li></ul>
  38. 38. “ We looked at how Chinese companies—where e-commerce is huge—did retail online. The US has an established credit card culture, while China (like India) is a cash-based economy with lesser credit card penetration. So looking at e-commerce models in China, we put in place a cash-on-delivery system. Today, more than 50% of their orders operate on a cash-on-delivery basis” Binny Bansal, COO, Flipkart
  39. 39. Do consumers make impulse purchases in Flipkart? Data points to analyze Books – best sellers, recommendations
  40. 41. Eyeballs/Page Views in 2000 Transaction volumes in 2011 Are discounts the only way to get attention from Indian consumers? Free shipping, access to wide variety, shopping from convenience of one's home – are these not valued by consumers?
  41. 42. Shopping in the Indian context <ul><li>Family ritual
  42. 43. Emotionally rewarding experience
  43. 44. Appreciate variety and a wide range of brands
  44. 45. Value and quality of the product – very crucial </li></ul>
  45. 46. How should e-commerce players cater to the customer's needs for products such as clothes, perfumes, fashion accessories, jewellery, shoes?
  46. 47. For further questions, Email – [email_address] Twitter - @anura

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