MANG6228 Session 2, 5/11/2009

Online Consumer Behaviour and e-Retail MANG6228 5 th November 2009

Summary from last week
Online marketing appears to be less affected by recession than traditional marketing, and may even benefit from reduced marketing budgets
Trend is towards interaction and engagement between business and customers, facilitated by web 2.0 tools
This also allows customers to engage with each other
Customers now more likely to take recommendations from a stranger than one directly from the supplier
Companies can no longer control the content of their message, but can influence the dialogue to some extent
Opportunity or threat?

Plan
Review of summary postings on Ning site
Online consumer behaviour
Exercise 1
E-retail
Exercise 2

Online Consumer Behaviour

Customers are looking for products & services customised to their needs
Customers expect to be delighted and will use word-of-mouth to praise products and services
Customers are influenced by the global market place
Domestic lifestyles have evolved as well as attitudes to work and leisure
Customers know how to mobilise their power
Organisations concerned with competitive advantage respond pro-actively and imaginatively to customers
Even organisations not operating in a competitive environment are now customer-focused
Some market truths…

Characteristics of online consumers
The ‘Martini’ effect - rising expectations (24/7)
More powerful - switching barriers are low
‘ Information customers’ who are smart, demanding and have little time
Less trustworthy and less loyal
Expectation of ‘mixed mode buying’
More likely to trust a 3 rd party recommendation (known or unknown) than a supplier website

Who are tomorrow’s customers?
See full article for this week’s reading:
The death of the queue
Some customers are more equal than others
‘ Mind the gap’ between standard automated services and premium personalised ones
‘ Technology catch up’ as the “digital natives” gain power
Customer service is everyone’s job
The all seeing, all knowing employee
Customer service is the new advertising

“ Word of Mouse”
People can “spread the word” and share information far more easily via “peer to peer” (P2P) communications
Email referrals
Online forums
Customer reviews encouraged by merchant websites
Social networking
Challenges the company’s ability to CONTROL promotional strategies – Apple video

Shifts in control
Previously the marketer could anticipate when a mailing or phone call was effected and could exert some degree of control when a response would be generated.
Consumer interaction with suppliers and with each other has reduced this element of control.
A marketer can no longer engineer when a contact may wish to encounter his message, proposition or brand, or come across it on the web.
Consumers are more likely to trust a recommendation from another customer than they are to believe the claims of the supplier (Rubicon, 2008)

Growing influence of WOM Source: Rubicon Consulting, Sept 2008

Getsatisfaction.com

www.lovelewisham.org

www.colorzip.jp
Bar-code based mobile service popular in Japan, Korea and Singapore
User simply points mobile phone at a Colorzip logo to download the content
Logo may be displayed on websites, clothing, TV, newspaper adverts, billboards…even a cake!
Prompts emotional response as these services are exciting to use and provide instant feedback

Harnessing the ‘e-fluencials’
Public opinion leaders who ‘punch above their weight’ online by generating ‘buzz’ about brands
Also known as ‘connectors’ (Gladwell, 2000) whose value depends on degree of influence , not just ‘early-adoption’
One e-fluencial shares an experience with 14 people on average (Kirby and Marston 2006)
E-fluencials are dynamic web users who regularly
Forward news to others
Email companies
Post to bulletin boards
Write and contribute to blogs
Company websites should provide a forum for e-fluencials to ‘spread the word’

Exercise 1
What types of products/services do you purchase online?
What factors make you trust/distrust a site enough to influence whether to purchase?
What is the role (if any) of the offline store in your purchase decision?

E-retail

Amazon lead the way in data management Google ads: Improvements in relevance Amazon.com recommendation engine: Leveraging data Source: Amazon.com, Google What other customers are thinking What other customers are buying What other customers are doing What other customers are saying

Multi-channel marketing
PC-based Internet
Retail stores
Telephone call centres (eg customer services, technical support)
Mobile internet
Interactive TV
Social media
Virtual worlds

E-retail: Christmas 2008
Next, which was the most searched for sale online, was forced to install a "virtual queue" for customers because of the unprecedented demand.
Boxing Day was the busiest day for online retailers this year, but sales were down 4.0% on last year (Hitwise figures)
More high street stores than ever opened on Boxing Day, triggering a 12.5% rise in footfall v last year (Experian figures). John Lewis sales were up 7% on 2007.
http://www.netimperative.com/netimperative/news/2009/january/top-10-uk-online-retailers-christmas-2008

Hitwise category data

Hitwise UK Christmas Retail Review 2008
Online sales for Dec 08 increased by 14.2% over Dec 2007
Traditional retail brands did particularly well online (John Lewis, Argos, M&S, Next)
Fashion was the fastest growing retail sub sector
Searches for vouchers more than doubled over 2007

The Internet has changed purchase behaviour
Google’s UK ad revenue was £1.9 billion in 2008 – ITV’s TV ad revenue was £1.5 billion
Google has the highest awareness of any brand in the world (Nielsen 2009) – without any advertising
3.9 billion Internet searches in the UK in a month (ComScore June 2008)
1999 Google.co.uk 2009 Google.co.uk

Online Retail Trend Choice... “ ...the activity and processes for creating, communicating and delivering offerings that have value for customers...” High Street store typically stocks 800 lines Good Online Retailer in 2009 typically stocks 18,000 lines Good Online Retailer in 2010 will stock 30,000 lines

Online Retail Trend Returns are a differentiator..

Online Retail Trend In the current economic climate supermarkets can sell anything... ...and even cars...

Online Retail Trend Increased use of coupons & vouchers... Myvouchercodes.co.uk

Online Retail Trend The outside moves inside... Borders New Concept store Michigan US HMV New Format Store Dudley UK

Online Retail Trend The Internet is becoming more real-time...

Online Retail Trend Internet shopping is becoming more friendly and social... Buzzillions.com customer friendly taxonomy

Characteristics of online customers
The ‘Martini’ effect - rising expectations (24/7)
More powerful - switching barriers are low
‘ Information customers’ who are smart, demanding and have little time
Less trustworthy and less loyal
Expectation of ‘mixed mode buying’
More likely to trust a 3 rd party recommendation (known or unknown) than a supplier website

The Internet goes mobile…
10 million picture messages are sent every week in the UK (year-on-year growth 30%)
1.5 billion text messages sent every week
16.5 million people in the UK accessed the mobile Internet in May 2008. (25% growth since May 2006)
Growth driven by improved phone functionality, reduced usage costs and the introduction of popular brands such as the Apple Iphone
Source: Mobile Data Association (www.text.it)

Toshiba phones and barcodes
Take photo of a product barcode
Phone scans blogs for customer reviews and websites for best price and produces a report
Implications:
More power to the consumer
Vendors need to create product review blog and incentivise key customers to contribute
They need to index with search engines

Exercise
How do you feel about companies contacting you on your mobile phone?
Discuss some positive and negative examples from your own experience
What makes your examples “good” or “bad”?

Our relationship with the mobile phone
Can be very personal (private space, not for business to intrude upon)
May be ‘always with us’ and ‘always on’ (any time, any place, anywhere…)
Many phones now incorporate internet and email access, music, cameras…
Our phone numbers are unique to us as individuals
Master or servant?

Good marketing practice
Mobile advertisements should be:
Optional (meaning they are actively requested by users on an “opt-in” basis)
Personalised (“Hi Susan…”)
Moderate in volume
Free to receive
Easy to ‘unsubscribe’ if you change your mind

Examples
Text may include a ‘voucher’ (code) for obtaining a purchase discount on an item, for example concert tickets or movies
Text can include an embedded phone number to call for more information
Picture messages to provide added value (for example insurance claims or house sales)
Provide extra service to best customers (for example information about flight delays, remote flight check in)
Time-relevant information (for example resort specific ski conditions, football scores, share price changes, bank accounts approaching overdraft)

Exercise 2
http://www.youtube.com/watch?v=YO53xVAzsoM (Sony)
What can we learn from this video about how an established brand can adapt to new forms of marketing?

Reading/Watching
Who are tomorrow’s customers? (on Blackboard)
http://www.socialmediamarketinguk.com/video-shorty-marketing-through-the-decades
http://www.blogstorm.co.uk/the-top-10-viral-marketing-campaigns-of-all-time/
Hitwise Retail Report 2008 (on Blackboard)

Role of Web 2 technologies
a ‘net generation’ culture is emerging based on:
decentralised authority rather than hierarchy and control
online socialising and collaboration
user generated and distributed content (expert endorsement, product ratings, spoof videos etc)
open conversations, peer-to-peer sharing and global participation in communities and networks

Summary
There is growing cynicism and resistance to supplier-led brand messages, with the collective knowledge and feedback from social networks having a more important impact on customers’ purchasing decisions
Developments in web 2 technologies and environmental concerns are driving significant changes in customer behaviour, which will only increase as Gen Y gains in purchasing power and influence
Success in this new environment requires new ‘mindsets’ and innovative new approaches by marketers. We’ve examined a number of good examples of this today.

MANG6228 Session 2, 5/11/2009

by lisa harris on Nov 02, 2009

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MANG6228 Session 2, 5/11/2009 — Presentation Transcript