The New Shopper - US Online Retail Research with Carat


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Read the blog post about our online shopping research conducted with digital agency Carat. Read insight into consumer shopping habits in the US and understand the journey online shoppers traverse for their retail therapy.

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The New Shopper - US Online Retail Research with Carat

  1. 1. The New ShopperToday’s Purchase Pathand the Media that Influences It
  2. 2. THE NEW SHOPPER JOURNEYS:How Touchpoints Lead to Purchase Shoppers’ purchase paths have changed, thanks to the This research collaboration between recession and the influence of digital. We set out to understand today’s purchase path and the media that Carat and Microsoft sought to define influences it. We surveyed shoppers on their most recent the structure of consumers’ paths shopping purchases across five key retail categories: apparel, quick service restaurants, groceries, home to purchase and how different touchpoints electronics, and home improvement. play a role in shaping decisions as to where This study is unique in the comprehensiveness of its data which address these business questions: and what to purchase. • What shapes people’s buying decisions? • How are shoppers influenced by both offline, online, and in-store media across key verticals? • What is the relative influence of Owned, Bought, and Earned media? • What innovative forms of advertising might shoppers be open to? The study was done in two phases by UK-based Essential Research. A qualitative study composed of interviews and shopper observations was fielded in late fall 2009. Its insights led to an online survey in March 2010 which queried shoppers about their last purchase occasion in each of the retail sectors covered. This quantitative phase was done just as economic recovery began to be felt. Thus the study uncovers new behaviors shoppers have adopted in reaction to tighter budgets. Further analyses reveal that many of these new behaviors will continue as shoppers have discovered the ease in which essential information can be accessed through the Internet. Here is a summary of these enduring value-seeking behaviors we found. HierarcHy of SHopperS’ New BeHaviorS Hierarchy of tactics for coping with the recession » Discount coupons used more often Seeking Better Value » Price more important than brand/quality » More time looking for special promotions » Visiting a number of retailers to find the best deal More Advance » Reading online forums/consumer Web sites Purchase Research » Discount stores » More online shopping/auctions Using Different » Mobile Channels » Fewer visits to retailers Reduced Volume » Peer reviews — 1:1 and through social media Word of Mouth1
  3. 3. WHaT SHaPES PEOPLE’S bUYiNg dEciSiONSThe process that shoppers go through has foreverchanged, becoming more complex and multifaceted. No Contacts dRivERS Oflonger do shoppers traverse a linear path; rather we see a Consumerhighly dynamic journey to purchase, one characterized by PURcHaSEreiterations in product considerations, i.e., a tumbler effect Contacts Contacts Category Context » Category » Product/Brandrather than a funnel. » Culture » Country » Contacts » TouchpointsWe identified five general drivers shaping shopper Culture » Context » Need statesjourneys, or Five C’s: the retail category, the culture of the » Consumer » Attitudes Contactsmarket, the contact points or channels, the context orneed states for buying, and the consumer’s attitude withinthe category.The study revealed three basic patterns in shoppers’ paths to purchase across all the retail sectors we examined: Habitual: The Impulse: Purchase Research: item is one was unplanned The shopper the shopper or did not have did some normally buys enough time research prior to research or to buying comparsion shop before purchasingThe distribution of these types of journeys varies by retail sector. Not surprisingly, the more involved categories likehome electronics and apparel tend to have more research journeys while lower involvement sectors like groceriesand quick service restaurants (QSR) invite more habitual journeys. THe DiSTriBuTioN of SHopper JourNey Type By reTail SecTor 17% Habitual 66% 60% 20% 43% 37% 28% Impulse 40% 22% 34% 63% 35% Research 12% 6% 17% Grocery QSR Home Apparel Home Electronics Improvement MoST coMMoN NeeD STaTe By caTeGory The specific context or need state can also influence the journey type as the following table shows: Category Most Common Trigger Split by Journey Type (% of all journeys) (Habitual/Impulse/Research) Groceries Replacement: 43% 85% / 9% / 6% Home Electronics Treat: 39% 15% / 17% / 68% Clothes, Shoes, and Accessories Treat: 36% 33% / 57% / 10% 2
  4. 4. If we understand the interplay across these drivers we can determine the shopper journey type which in turn canguide more effective creative and media strategies. Indeed, when we break up a journey into stages, we can get abroad view of how different touchpoints influence shopper decisions. THe New STrucTure of SHoppiNG JourNeyS Word-of-Mouth Feedback Loop Need State Research Purchase Post Purchase In-store Research ‘Pre-tailing’ Retailing ‘Post-tailing’What is noteworthy is the significance of the post-purchase stage which can influence future shopping especially inhighly-researched categories like home electronics. It is also at this stage where digital media are key enablers. Sothe new schematic in shopper journeys is one where post-purchase activity, typically word of mouth, loops back toinfluence succeeding purchases.WiSdOm fROm PSYcHOgRaPHicSFor new shopper journeys, one of the most useful approaches to determining the proper media mix is throughsegmentation analyses which layer attitudinal variables over behavior. To understand how attitudes may furtherimpact touchpoints’ influence, we segmented shoppers according to their relationship with technology:1) Cutting Edge, 2) Early Adopter, 3) Judicious Timer, and 4) Laggard.3
  5. 5. We also looked at the touchpoints that influence these segments.From this analysis, we found that Cutting Edge shoppers were receptive to a wider array of channels while EarlyAdopters were more likely to be influenced by word of mouth particularly from experts as the following tablereports. The large differences in media consumption by segment have clear implications for media strategists. ToucHpoiNTS raNkeD By iNflueNce aT TriGGer STaGe (iNDeX) uS HoMe elecTroNicS SHopperS 100=All US Cutting Edge Early Adopter Judicious Laggard Home Electronic Shoppers Timer 19% 23% 32% 25% Advertising 145 119 83 68 Word of mouth 100 132 100 71 Something seen while shopping 151 99 90 75 Newsletter/E-mail 162 108 97 49 TV ads 182 111 65 72 Internet ads 150 131 70 70 Newspaper ads 144 130 96 43 Expert reviews online 108 149 114 30 Seeing someone with item 157 156 60 55 Past experience 129 122 78 85 Promotion seen while shopping 165 94 96 61 Something read/seen online 125 105 113 60 Q: What influenced you to start thinking about your purchase?When we combine behavioral and attitudinal variables, we get a more comprehensive view of the entire purchasepath. The following model depicts how consumers and contacts lead to the final purchase decision. THe New DyNaMic fraMework for uNDerSTaNDiNG THe purcHaSe paTH Consumer Behavioral Differentiation Attitudinal Fine-Tuning by Vertical Thinking about the last time Multivariate segmentation based you bought . . . upon category-specific psychographics which statement best describes your actions? For Example: Three types of journeys: Home Electronics: Apparel: • Habit • Expert • Fashionista • Impulse • Novice • Clueless • Research • Trend-Chaser • Quick and Easy Contacts Extensive, granular touchpoints including online, social media, word of mouth, situational settings, traditional media and advertising Consideration Touchpoints Purchase Venue • Initial Media Impetus • Various Retail Outlets for Purchase Process Online and Offline Research Source Mobilization Post-Purchase Behavior • For Information and Inspiration • Feedback and Word of Mouth Factors on Final Decision through Social Media and • Price, Location, Availability, etc. Interpersonal Channels 4
  6. 6. THE ROLES Of OffLiNE aNdONLiNE TOUcHPOiNTS Now that we have a framework that helps us understand how purchase decisions are made, we can begin to map the appropriate touchpoints along the shopper’s journey. The type of journey will indicate which touchpoints hold sway at specific points along the path. We found that offline and online media serve truly differentiated roles. This underscores the need for both in order to drive purchase. Here is an illustration of how channels serve different points along the three types of journeys in the purchase of computers/laptops: iNflueNTial TriGGerS for HoMe elecTroNicS – HaBiTual Print media are most NeeD STaTe purcHaSe poST-purcHaSe influential in pre- purchase while mobile advertising: phones do well at the Online: 17% recommended: TV: 17% Brand: 48% point of purchase. Newspaper: 24% Retailer: 30% Habitual purchases are Magazine: 17% Used mobile phone: 54% fueled by loyalty. So it Newsletter: 19% Compared prices: 30% word of mouth online: makes sense that such Searched for info: 20% Blogged online: 11% in-store: Posted on journeys spur more Flyers: 13% social network: 11% active recommendation News story on TV: 11% Posted on a review: 11% and online postings word of mouth: post-purchase. Expert reviews online: 7% From friends: 15% iNflueNTial TriGGerS for HoMe elecTroNicS – reSearcH The Internet and word NeeD STaTe reSearcH purcHaSe poST-purcHaSe of mouth dominate across all phases of advertising: Used Internet: 64% the journey. Moreover Online: 16% advertising: recommended: nearly 2/3 of research TV: 15% Used mobile Online: 10% Brand: 36% journeys depend on the Newspaper: 13% phone: 26% TV: 14% Retailer: 19% Internet for information. Coupons: 11% Newspaper: 15% word of mouth Interestingly, having word of mouth: Compared In-store promo: 15% online: done a lot of research Expert reviews prices: 18% Posted on online: 12% word of mouth: prior to visiting a store, social network: 8% From friends: 28% To friends: 35% this journey type is least likely to be influenced by in-store channels. iNflueNTial TriGGerS for HoMe elecTroNicS – iMpulSe Advertising is least likely NeeD STaTe purcHaSe poST-purcHaSe to trigger intentions to shop; rather it is advertising: Online: 6% recommended: coupons or a store’s Brand: 37% TV: 12% sales personnel that Used mobile phone: 41% Retailer: 25% Newspaper: 12% can move shoppers Compared prices: 18% Coupons: 18% word of mouth online: Searched for info: 14% to purchase. Talked to Blogged online: 8% sales assistant: 18% Posted on word of mouth: social network: 0% From friends: 20% Posted on a review: 8%5
  7. 7. TOUcHPOiNTS fOR LOW vERSUS HigH iNTEREST caTEgORiESIn a highly engaging category like home electronics where research accounts for 68% of the journeys, theusefulness of online media is readily apparent. It is harder to understand online’s role in low involvement categorieslike groceries unless we have the data to explain it. Using our purchase path framework we can identify specificchannels’ roles at each point of the path. Here is an example from the US. As this analysis shows we can account forthe relative influence of various media channels, offline, online and in-store. uS woMeN Grocery SHopperS Shopping patterns pre-purchase purchase after-purchase by Shopper Types factors decided before Habitual buyers Factors that influenced after-purchase Behaviors research or shopping (72% of total): choice of store What did you do after purchase? Which items to buy 63% What inspired you to How much to spend 39% try different products or Proximity 66% Discussed the purchase brands? with friends/family 19% Location of the store 28% Price 63% Payment methods 23% Coupons 47% Recommended Speaking to Quality of products 44% the brand/product Number of items to buy 22% friends/family 41% Familiarity with to friends/family 17% Promotion seen the retailer 40% Recommended Need state while shopping 40% touchpoints focused Past positive experience 34% the retailer to on new product trial TV ads 37% friends/family 8% In-store coupons 35% Deals and promotions 35% Factors that influenced you Samples/product demo 28% Variety of products to purchase items that are available 32% new or different from what impulse buyers you normally buy (17% of total): Speaking to friends/family 46% What made you Coupons 45% make a purchase? Television ads 44% TV ads 40% Promotion seen Promotion seen while shopping 36% while shopping 35% Samples/product demo 34% Speaking to Sign/display, etc. friends/family 33% seen while shopping 31% Coupons 31% In-store coupons 27% In-store coupons 20% Sign/display seen while shopping 18% In-store flyers 16% researchers (11% of total): Sources mobilized for research Newsletter/leaflets/ coupons 60% Ads/sponsorship 49% Discount coupon 46% Internet 31% Word of mouth 31% Newspaper Ads 5% 6
  8. 8. iNflueNce of oNliNe cHaNNelS Another interesting iN New Grocery proDucT iNTroDucTioNS finding was online 45% channels’ ability to 31% 30% influence the purchase of new brands. 14% 7% 6% a B c Q: Thinking about the last time you bought groceries and personal care products, did you buy anything that was new or different from the items you normally buy? Bought new items Didn’t buy any new items A Used cell phone in-store B Used the Internet during research C Exposed to online advertising during researchiNfLUENcE Of OWNEd, bOUgHT,aNd EaRNEd mEdia cOmPaREd HoMe elecTroNicS: A frequent conundrum for marketers is determining the right mix of reSearcH JourNeyS channel types. To simplify the analysis we grouped all the channels by type to see how and where they play within a journey as the % of those who changed their mind following table illustrates. about the brand after research owNeD 56% For example, among research journeys in the home electronics BouGHT 62% category we found that Bought media actually have a slightly earNeD 47% heavier influence than Owned or Earned media when it comes to % of those who changed their mind choosing brands or stores (contrary to conventional wisdom, this about the retailer after research study documents the value of Bought media advertising beyond the owNeD 64% usual considerations of audience reach). BouGHT 60% earNeD 47% The following table compares these three types of touchpoints in their ability to shift shopper choices.7
  9. 9. SOciaL mEdia cHaNNELS cOmPaREdSocial networks attract considerable attention among marketers because of the large audiences they draw and theirperceived lower cost. Our study found that when it comes to influence it is actually personal 1:1 conversations viaphones, e-mail, and instant messaging which are more heavily relied upon in purchase journeys than comments orreviews in social networks.Below lists the top three social media forms for each retail category. raNkiNG of Social MeDia % of all JourNeyS TypeS By uSaGe wiTHiN iNflueNceD By aN oNliNe reSearcH JourNeyS BloG poST, foruM coMMeNT, or SoMeTHiNG reaD oN a GROCERIES Social NeTwork 1 Home Phone (47%) 2 Social Net (39%) 5% 3 Mobile (31%) QSR 4% 1 Mobile (67%) 2 E-mail (58%) 3% 3 Social Net (43%) Apparel 1 Mobile (42%) 2% 2 Home Phone (38%) 3 E-mail (32%) 1% Home Electronics 1 E-mail (42%) 0% 2 Mobile (39%) 3 Home Phone (31%) Grocery (5%) Home Improvement Fast Food (2%) 1 Mobile (48%) Home Electronics (3%) 2 Home (38%) Clothing, Shoes, and Accessories (2%) 3 E-mail (30%) Home Improvement (1%) 8
  10. 10. REcEPTiviTY TO EmERgiNg fORmSOf cHaNNEL ENgagEmENTWe asked what newer forms of brand/store engagements shoppers would be most open to. We posed differentpossibilities to respondents and we found a greater acceptance of e-commerce followed by payments viamobile phones. % wHo woulD Be MoST williNG To Do iN THe fuTure (Top BoX MeNTioNS) 80% 60% 40% 20% 0%Shoppers are most interested in Make purchases online Use a mobile phone to interactonline purchasing. The next ranked Send pictures/videos with a billboards/displaysapplications in desirability involve of a potential purchase Ask for views from peoplemobile communications suggesting to friends or family you don’t personally know onlinenew opportunities to impact Use a mobile phone Make purchases from a mobile phoneshopper decisions closer to the to research information I would be interested in makingpoint of purchase. while at a store payments using mobile phone9
  11. 11. fiNaL WORdThe old Purchase Path is gone. Study results have clearly established the existence of a new, more dynamicPurchase Path that is driven by the power of differentiated touchpoints along a shopper’s journey. Further, thetype of journey depends on the segment that a consumer is in, so media must be planned accordingly.Only by fully taking into account the dynamics of the new Path, can today’s marketers attain the best ROI fortheir offline and digital investments.The New Shopper Journeys contains an exhaustive database of media behavior and the purchasing thatresults from it. As such, researchers at Microsoft Advertising, Carat, and their clients can mine these data todetermine effective channel mixes for offline, online, and in-store media on both global and local levels. offliNe oNliNe iN-STore MeDiaFor more information about this study, please contact:Beth Uyenco, Global Research Director, Microsoft Advertising, bethu@microsoft.comMike Hess, EVP for Insights & Analytics, Carat US, Mike.Hess@carat.comDeTailS oN MeTHoDoloGy• Qualitative Study: Fifteen in-depth shopper interviews and shopping observations were conducted in the US, United Kingdom, Mexico, France, Japan, and China covering the five retail sectors. In addition, respondents completed shopping diaries.• Quantitative Study: Online surveys among those aged 16 or older were completed in 17 countries. Sample size in the USA was 2,680. 10