The New Shopper - Microsoft Advertising

The New Shopper
Today’s Purchase Path
and the Media that Influences It
THE NEW SHOPPER JOURNEYS:
How Touchpoints Lead to Purchase
This research collaboration between
Carat and Microsoft sought to define
the structure of consumers’ paths
to purchase and how different touchpoints
play a role in shaping decisions as to where
and what to purchase.
Shoppers’ purchase paths have changed, thanks to the
recession and the influence of digital. We set out to
understand today’s purchase path and the media that
influences it. We surveyed shoppers on their most recent
shopping purchases across five key retail categories:
apparel, quick service restaurants, groceries, home
electronics, and home improvement.
This study is unique in the comprehensiveness of its data
which address these business questions:
• 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 tactics for coping with the recession
Hierarchy of Shoppers’ New Behaviors
1
Seeking Better Value
More Advance
Purchase Research
Using Different
Channels
» Discount coupons used more often
» Price more important than brand/quality
» More time looking for special promotions
» Visiting a number of retailers to find the best deal
» Reading online forums/consumer Web sites
» Discount stores
» More online shopping/auctions
» Mobile
» Fewer visits to retailers
Reduced Volume
» Peer reviews — 1:1 and through social media
Word of Mouth
What shapes people’s buying decisions
drivers of
purchase
Contacts
Contacts
Consumer
We identified five general drivers shaping shopper
journeys, or Five C’s: the retail category, the culture of the
market, the contact points or channels, the context or
need states for buying, and the consumer’s attitude within
the category.
Category
Context
Contacts
The process that shoppers go through has forever
changed, becoming more complex and multifaceted. No
longer do shoppers traverse a linear path; rather we see a
highly dynamic journey to purchase, one characterized by
reiterations in product considerations, i.e., a tumbler effect
rather than a funnel.
Culture
Contacts
» Category
» Culture
» Contacts
» Context
» Consumer
» Product/Brand
» Country
» Touchpoints
» Need states
» Attitudes
The study revealed three basic patterns in shoppers’ paths to purchase across all the retail sectors we examined:
Habitual: The
item is one
the shopper
normally buys
Impulse: Purchase
was unplanned
or did not have
enough time
to research or
comparsion shop
before purchasing
Research:
The shopper
did some
research prior
to buying
The distribution of these types of journeys varies by retail sector. Not surprisingly, the more involved categories like
home electronics and apparel tend to have more research journeys while lower involvement sectors like groceries
and quick service restaurants (QSR) invite more habitual journeys.
The Distribution of Shopper Journey Type by Retail Sector
66%
60%
17%
20%
22%
12%
Grocery
34%
63%
6%
QSR
Home
Electronics
43%
40%
17%
Apparel
37%
Habitual
28%
Impulse
35%
Research
Home
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
Groceries
Home Electronics
Clothes, Shoes, and Accessories
Most Common Trigger
(% of all journeys)
Replacement: 43%
Treat: 39%
Treat: 36%
Split by Journey Type
(Habitual/Impulse/Research)
85% / 9% / 6%
15% / 17% / 68%
33% / 57% / 10%
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If we understand the interplay across these drivers we can determine the shopper journey type which in turn can
guide more effective creative and media strategies. Indeed, when we break up a journey into stages, we can get a
broad 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 in
highly-researched categories like home electronics. It is also at this stage where digital media are key enablers. So
the new schematic in shopper journeys is one where post-purchase activity, typically word of mouth, loops back to
influence succeeding purchases.
Wisdom from Psychographics
For new shopper journeys, one of the most useful approaches to determining the proper media mix is through
segmentation analyses which layer attitudinal variables over behavior. To understand how attitudes may further
impact touchpoints’ influence, we segmented shoppers according to their relationship with technology:
1) Cutting Edge, 2) Early Adopter, 3) Judicious Timer, and 4) Laggard.
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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 Early
Adopters were more likely to be influenced by word of mouth particularly from experts as the following table
reports. 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
Home Electronic Shoppers
Advertising
Word of mouth
Something seen while shopping
Newsletter/E-mail
TV ads
Internet ads
Newspaper ads
Expert reviews online
Seeing someone with item
Past experience
Promotion seen while shopping
Something read/seen online
Cutting Edge Early Adopter
19%
23%
Judicious
Timer
32%
145
100
151
162
182
150
144
108
157
129
165
125
119
132
99
108
111
131
130
149
156
122
94
105
83
100
90
97
65
70
96
114
60
78
96
113
Laggard
68
71
75
49
72
70
43
30
55
85
61
60
25%
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 purchase
path. 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
you bought . . .
which statement best describes
your actions?
Multivariate segmentation based
upon category-specific psychographics
Three types of journeys:
• Habit
• Impulse
• Research
Contacts
For Example:
Home Electronics:
• Expert
• Novice
• Trend-Chaser
Apparel:
• Fashionista
• Clueless
• Quick and Easy
Extensive, granular touchpoints including online, social media,
word of mouth, situational settings, traditional media and advertising
Consideration Touchpoints
• Initial Media Impetus
for Purchase Process
Purchase Venue
• Various Retail Outlets
Online and Offline
Research Source Mobilization
• For Information and Inspiration
Post-Purchase Behavior
• Feedback and Word of Mouth
through Social Media and
Interpersonal Channels
Factors on Final Decision
• Price, Location, Availability, etc.
4
The roles of offline and
online 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
influential in prepurchase while mobile
phones do well at the
point of purchase.
Habitual purchases are
fueled by loyalty. So it
makes sense that such
journeys spur more
active recommendation
and online postings
post-purchase.
Need state
purchase
Advertising:
Online: TV: Newspaper: Magazine: Newsletter: 17%
17%
24%
17%
19%
In-store:
Flyers: News story on TV: 13%
11%
post-Purchase
Used mobile phone: 54%
Compared prices: 30%
Searched for info: 20%
Recommended:
Brand: Retailer: 48%
30%
Word of mouth online:
Blogged online: 11%
Posted on
social network: 11%
Posted on a review: 11%
Word of mouth:
Expert reviews online: 7%
From friends: 15%
INFLUENTIAL TRIGGERS FOR HOME ELECTRONICS – Research
The Internet and word
of mouth dominate
across all phases of
the journey. Moreover
nearly 2/3 of research
journeys depend on the
Internet for information.
Interestingly, having
done a lot of research
prior to visiting a store,
this journey type is least
likely to be influenced
by in-store channels.
Need state
Advertising:
Online: TV: Newspaper: Coupons: research
16%
15%
13%
11%
Word of mouth:
Expert reviews
online: 12%
From friends: 28%
purchase
Used Internet:
64%
Advertising:
Online: TV: Newspaper: 10%
14%
15%
In-store promo: 15%
Word of mouth:
To friends:
35%
Used mobile
phone: 26%
Compared
prices: 18%
post-Purchase
Recommended:
Brand: 36%
Retailer: 19%
Word of mouth
online:
Posted on
social network: 8
%
INFLUENTIAL TRIGGERS FOR HOME ELECTRONICS – impulse
Advertising is least likely
to trigger intentions
to shop; rather it is
coupons or a store’s
sales personnel that
can move shoppers
to purchase.
Need state
Advertising:
Online: TV: Newspaper: Coupons: Talked to
sales assistant: Word of mouth:
From friends: 5
purchase
6%
12%
12%
18%
18%
20%
Used mobile phone: 41%
Compared prices: 18%
Searched for info: 14%
post-Purchase
Recommended:
Brand: 37%
Retailer: 25%
Word of mouth online:
Blogged online: 8%
Posted on
social network: 0%
Posted on a review:8%
Touchpoints for low versus high interest categories
In a highly engaging category like home electronics where research accounts for 68% of the journeys, the
usefulness of online media is readily apparent. It is harder to understand online’s role in low involvement categories
like groceries unless we have the data to explain it. Using our purchase path framework we can identify specific
channels’ roles at each point of the path. Here is an example from the US. As this analysis shows we can account for
the relative influence of various media channels, offline, online and in-store.
US WOMEN Grocery Shoppers
Pre-purchase
Shopping Patterns
by Shopper Types
Factors decided before
research or shopping
Habitual buyers
(72% of total):
Which items to buy 63%
How much to spend 39%
Location of the store 28%
Payment methods 23%
Number of items to buy22%
What inspired you to
try different products or
brands?
Coupons 47%
Speaking to
friends/family 41%
Promotion seen
while shopping 40%
TV ads 37%
In-store coupons 35%
Samples/product demo 28%
Need state
touchpoints focused
on new product trial
Factors that influenced you
to purchase items that are
new or different from what
you normally buy
Speaking to
friends/family
46%
Coupons
45%
Television ads 44%
Promotion seen
while shopping 36%
Samples/product demo 34%
Sign/display, etc.
seen while shopping 31%
In-store coupons 27%
Purchase
After-Purchase
Factors that influenced
choice of store
After-purchase Behaviors
Proximity 66%
Price 63%
Discussed the purchase
with friends/family 19%
Quality of products 44%
Familiarity with
the retailer 40%
Past positive experience 34%
Deals and promotions 35%
Variety of products
available What did you do
after purchase?
Recommended
the brand/product
to friends/family Recommended
the retailer to
friends/family 17%
8%
32%
Impulse buyers
(17% of total):
What made you
make a purchase?
TV ads Promotion seen
while shopping Speaking to
friends/family Coupons In-store coupons Sign/display seen
while shopping In-store flyers 40%
35%
33%
31%
20%
18%
16%
Researchers
(11% of total):
Sources mobilized
for research
Newsletter/leaflets/
coupons Ads/sponsorship Discount coupon Internet Word of mouth Newspaper Ads 60%
49%
46%
31%
31%
5%
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Another interesting
finding was online
channels’ ability to
influence the purchase of
new brands.
Influence of Online Channels
in New Grocery Product Introductions
45%
31%
30%
14%
7%
A
6%
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 research
Influence of owned, bought,
and earned media compared
Home Electronics:
Research Journeys
% of those who changed their mind
about the brand after research
owned
56%
bought
62%
earned
47%
% of those who changed their mind
about the retailer after research
7
owned
64%
bought
60%
earned
47%
A frequent conundrum for marketers is determining the right mix of
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
following table illustrates.
For example, among research journeys in the home electronics
category we found that Bought media actually have a slightly
heavier influence than Owned or Earned media when it comes to
choosing brands or stores (contrary to conventional wisdom, this
study documents the value of Bought media advertising beyond the
usual considerations of audience reach).
The following table compares these three types of touchpoints in
their ability to shift shopper choices.
Social Media Channels Compared
Social networks attract considerable attention among marketers because of the large audiences they draw and their
perceived lower cost. Our study found that when it comes to influence it is actually personal 1:1 conversations via
phones, e-mail, and instant messaging which are more heavily relied upon in purchase journeys than comments or
reviews in social networks.
Below lists the top three social media forms for each retail category.
Ranking of Social Media
Types by Usage within
Research Journeys
1
2
3
1
2
3
1
2
3
1
2
3
1
2
3
GROCERIES
Home Phone (47%)
Social Net (39%)
Mobile (31%)
QSR
Mobile (67%)
E-mail (58%)
Social Net (43%)
Apparel
Mobile (42%)
Home Phone (38%)
E-mail (32%)
Home Electronics
E-mail (42%)
Mobile (39%)
Home Phone (31%)
Home Improvement
Mobile (48%)
Home (38%)
E-mail (30%)
% of all Journeys
influenced by an Online
blog post, forum comment,
or something read on a
social network
5%
4%
3%
2%
1%
0%
Grocery (5%)
Fast Food (2%)
Home Electronics (3%)
Clothing, Shoes, and Accessories (2%)
Home Improvement (1%)
8
Receptivity to emerging forms
of channel engagement
We asked what newer forms of brand/store engagements shoppers would be most open to. We posed different
possibilities to respondents and we found a greater acceptance of e-commerce followed by payments via
mobile phones.
% who would be most willing to do in the future
(Top Box Mentions)
80%
60%
40%
20%
0%
Shoppers are most interested in
online purchasing. The next ranked
applications in desirability involve
mobile communications suggesting
new opportunities to impact
shopper decisions closer to the
point of purchase.
9
Make purchases online
Send pictures/videos
of a potential purchase
to friends or family
Use a mobile phone
to research information
while at a store
Use a mobile phone to interact
with a billboards/displays
Ask for views from people
you don’t personally know online
Make purchases from a mobile phone
I would be interested in making
payments using mobile phone
final word
The old Purchase Path is gone. Study results have clearly established the existence of a new, more dynamic
Purchase Path that is driven by the power of differentiated touchpoints along a shopper’s journey. Further, the
type 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 for
their offline and digital investments.
The New Shopper Journeys contains an exhaustive database of media behavior and the purchasing that
results from it. As such, researchers at Microsoft Advertising, Carat, and their clients can mine these data to
determine effective channel mixes for offline, online, and in-store media on both global and local levels.
offline
online
in-store media
For more information about this study, please contact:
Beth Uyenco, Global Research Director, Microsoft Advertising, [email protected]
Mike Hess, EVP for Insights & Analytics, Carat US, [email protected]
Details 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.
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