brand new world how the internet is changing consumer attitudes to brands
TRANSCRIPT
Brand New World
How the internet is changing consumer attitudes to brands
Research context Forrester, Jupiter AOL/NOP e-commerce study Academic Research American Interactive Consumer Survey
40 million US consumers changed their 40 million US consumers changed their minds about brands as aminds about brands as a result of online result of online information.information.
60% of those consumers60% of those consumers then switched then switched brand at purchasebrand at purchase, whether that purchase , whether that purchase had been made online or offline.had been made online or offline.
Source: Dieringer Group: American Interactive Consumer Survey, 2002
Why we did the research If online information isis altering brand opinions and purchasing
behaviour and it’s affectingaffecting online and offline sales, then greater investment in online branding is required
If we can mapmap these information flows and evaluate their
relative importanceimportance to consumers (NEW)(NEW) then we can
make branding investment more effectivemore effective
As a brand & e-commerce provider, understanding customer
dynamics allows us to improveimprove our web, retail, brand and
communication strategies (AOL Snapshot)(AOL Snapshot)
Hypothesis
InformationInformation obtained on the web and personal online experience is modifyingmodifying brand opinions and purchasing behaviour, regardless of whether the final purchase is made online or made online or offlineoffline
Methodology 4 phase:
Extensive desk research audit Qualitative – 10 in-depth interviews Quantitative pilot Quantitative – 750 CATI respondents
Sampling: Online Consumers
Weighting Weighted to BMRB Internet User monitor
Project management Henley Centre
For more detail, contact AOL UK
Consumer clustersBrand is important
Brand is unimportant
Brand embracers
(22%)
More men
Younger
Brand short cutters
(23%)
Slightly more men
Older
Less ABC1s
Brand irrelevants
(55%)Slightly more females
More 35-44 yr olds
Source: Henley Centre / AOL 2004
Consumers segmented according to attitude to
brands & price
Consumers segmented according to attitude to
brands & price
The impact of the internet on brands
1. What is happening
2. Consumer Researching and Purchasing Behaviour on the Internet
3. The “Information” Effect
4. Brand Switching
5. Other important aspects
6. Redressing the balance
Consumer Researching and Purchasing Behaviour on the Internet
A highly valued research tool
74% of online consumers have “personally researched and looked for information about a product or service before making a purchase”.
76% of online consumers feel that the internet helps them make more informed purchase decisions
Source: Henley Centre / AOL 2004
The bottom line
77% of online consumers have personally bought a product or service over the internet in the past (ever).
The internet is used at every stage of the purchase process
‘I know nothing about…’‘ I know nothing about…’
‘I want to compare …‘ I want to compare…’
‘I want reassurance about my choice ’
‘ I want reassurance about my choice’
‘Final just in case…’‘Final just in case…’
Init
ial scan
Pu
rch
ase
Purchase process
Source: Henley Centre / AOL 2004
As a result, the purchase process is more considered…
73% of online consumers agree that “I spend more time researching products now that I have access to the internet”
Source: Henley Centre / AOL 2004
...and even brand embracers “test” their decisions
7281
66
0
10
20
30
40
50
60
70
80
90
Irrelevants Embracers Short Cutters
% agreeing ‘I spend more time researching products now that I have access to internet’
%
Base: excl. don’t know
Source: Henley Centre / AOL 2004
The new purchase model – the need to be informed
An example of buying a washing machine
Pre-internet
Discussion with
partner
John Lewis
Discussion with partner
Comet
Decision
John Lewis
Purchase
Discussion with
partner
AOL
Lewis Online
Decision
John Lewis shop
Purchase
Cheap washing machine
Lewis Online
CometPop ups
With internet
Discussion with
partnerJohn Lewis Online
Decision
John Lewis shop
Purchase
ONLINE Google Cheap washing machine websites
John Lewis Online
Comet
OFFLINE
Example taken from Qualitative Research
AOL
Discussion with
partner
Pop ups
Consumers are price-sensitised
7282
69
0
10
20
30
40
50
60
70
80
Irrelevants Embracers Short Cutters
% agreeing, as a result of using the internet ‘I am more aware of the cost of products and services’
%
Base: excl. don’t know
Source: Henley Centre / AOL 2004
69% view their ability to compare product features online as important to their research process
77% of consumers view
information online as important to their research process
Online experience and information also translates into offline purchase
69
63
62
57
58
53
57
53
51
54
44
40
39
Cars
Garden/DIY products
Home furnishings
Large home appliances
Mobile phones
Small home appliances
Consumer electronics
Clothing/accessories
Health and beauty products
PC/Computer hardware
Computer games
Financial products or services
Food/groceries
% (by category) who bought offline after researching online
Source: Henley Centre / AOL 2004
Consumer researching and purchasing behaviour on the internet
1. The internet is a vital part of the research process
2. The internet is used at every stage of the research process
3. The purchase process is more considered and is more
convoluted
4. Consumers are more informed from a multiplicity of sources; price is not exclusively the primary driver
5. Online information and experience (and modified brand opinions) also translates into Offline purchase
The “Information” Effect
Online information alters behaviour
77% of online consumers agree that if they ‘saw a negative review on the internet about a product or brand I would think twice about buying it’
Mpeg: Online informationAlters behaviour
Source: Henley Centre / AOL 2004
Information sources ranked by “importance”
% who consider the following to be importantimportant sources of information when researching/considering a product or service
Base: excl. don’t knowSource: Henley Centre / AOL 2004
24
34
34
38
47
46
50
56
57
67
71
Salespeople in shops
Newspapers/magazines
Television
Content provided by your Internet Service Provider
Customer opinions/reviews on websites
Product information in shops
Reviews/opinions on the internet written by experts
Price comparison websites
Websites of well known retailers
Personal recommendations
Search engines
57Websites of well known brands
Information sources ranked by “honest and fair”
% who trust the following information sources are honest and fair
Base: excl. don’t know
Source: Henley Centre / AOL 2004
35
37
44
53
60
60
61
67
68
73
73
90
Salespeople in shops
Television
Newspapers/magazines
Content provided by your Internet Service Provider
Reviews/opinions on the internet written by experts
Product information in shops
Customer opinions/reviews on websites
Search engines
Websites of well known brands
Websites of well known retailers
Price comparison websites
Personal recommendations 90
73
73
68
67
61
60
60
53
44
35
31
Online information is trusted..“If there was a hundred reviews out there on a product, they’re not all going to be nutcases and they’re not all going to be murderers … if a hundred people are saying ‘This product is crap’ it’s going to be pretty bad and enough people are saying ‘This product is really good’ it’s got to be pretty good”
Source: Henley Centre / AOL 2004
Customers seek out information
Source: Henley Centre / AOL 2004
Consumers seek out information about brands
26
38
44
48
53
68
Visited a specialist consumer review website
Visited a price comparison website
Visited newspaper/magazine websites
Visited a favourite brand website
Visited an auction website
Visited a favourite retailer website
Which, if any, of the following have you done in last 6 months?
Source: Henley Centre / AOL 2004
And they pass it on……
Which, if any, of the following have you done in last 6 months?
19
21
26
31
30
Followed/took part in an online chat
Posted a message on online message board/computer forum
Given email feedback to product/brand website
Subscribed to email newsletter by company/brand
Forwarded information on product/service to friend/colleague
Source: Henley Centre / AOL 2004
The “Information” Effect
1. Online information alters purchasing behaviour
2. Certain Online sources of information are regarded as being more important and are trusted more than Offline sources
3. Consumers are not just passive recipients of information, they are actively seeking it out and communicating it
Brand Switching
What is happening to consumer’s brand perceptions & behaviour
% who agree that as a result of using the internet
56
53
45
42
43
I look more favourably on certain brands
I came across a new brand, which I was not aware of before
I came across a new brand, which I then bought (anywhere)
I changed my mind about a brand I was going to buy and switched to a different brand
I decided not to purchase a certain brand or make
Base: excl. don’t know
Source: Henley Centre / AOL 2004
The Internet is influencing Brand Perceptions and Behaviour across the spectrum
% (by segment) who agree that as a result of using the internet
Base: excl. don’t know
Source: Henley Centre / AOL 2004
4255
39
3454
40
3861
42
4768
49
5676
49
I decided not to purchase a certain brand or make
I changed my mind about a brand I was going to buy and switched to a different
brand
I came across a new brand, which I then bought (anywhere)
I came across a new brand, which I was not aware of before
I look more favourably on certain brands
Short Cutters
Embracers
Irrelevants
Consumers are changing their minds
As a result of using the internet:
42% of online consumers have changed their mind about a brand they were going to buy and switched to a different brand
43% of online consumers decided not to purchase a certain brand
Source: Henley Centre / AOL 2004
Brand “Switchers” are particularly information sensitive…
Read Product Reviews
Visit Price ComparisonSite
Subscribe to EmailNewsletter
Give Email Feedback26
35
29
36
40
49
51
59
% of Total
% of BrandSwitchers
% of Total
% of BrandSwitchersClicked on
Online Ad inLast 12months
Use Internet Adsto Help Them
Find ThingsThey Want
26
35
33
44
.. And that means all forms of information: brand switchers are more receptive to online advertising
Some categories are more at risk
Large home appliances
Financial products or services
Holidays and travel
Mobile phones
47
39
31
28
26
29
24
22
24
21
18
17
6
Cars
Consumer electronics
Small home appliances
Clothing/accessories
Health and beauty products
PC/Computer hardware
Computer software
Garden/DIY products
Home furnishings
% consumers who bought ‘a different brand from the one you had intended to before you went on the internet’
Source: Henley Centre / AOL 2004
Brand switching1. As a result of using the internet
significant numbers of consumers change their minds and switch brands
2. Brand Switchers are information sensitive, and that includes receptivity to marketing and advertising information
3. Some categories are more at risk than others
Other important aspects
1. The role of brand attitudes
2. The role of internet expertise
41
54
34
Irrelevants Embracers Short Cutters
% who agree, as a result of using the internet, that they changed mind about brand they were going to buy, and
switched to a different brand
Base: excl. don’t know
Source: Henley Centre / AOL 2004
Consumers are actively switching their brand decisions because of the internet, and this is happening for those whom you would expect to be brand loyal
Consumer self-assessment of expertise
Source: Henley Centre / AOL 2004
A beginner
Quite knowledgeable butoccasionally need help
An expert
18%
63%
19%
Internet experts are more likely to appreciate and rely on information
% agreeing with the following
I feel that the internet helps me make more informed purchasing
decisions
I prefer to buy on the internet from companies that have a physical
presence
I find there is too much information on the internet when I use it for
research/purchasing
A beginner Quite knowledgeable An expert
Base: excl. don’t know
Source: Henley Centre / AOL 2004
71
84
95
80
78
70
63
45
28
“Experts” are more likely to switch
Source: Henley Centre / AOL 2004
33
4252
A beginner Quite knowledgeable butoccasionally need help
An expert
% of self confessed expertise of users who agree, as a result of using the internet, that they have changed their mind about a brand they were going
to buy and switched to a different brand
Base: excl. don’t know
Redressing the Balance
On one side……1. The internet is having a
fundamental influence on the way your customers see your brand
2. Online influences are making
your customers less brand loyal, more open to try new brands, more willing to experiment
3. You cannot ring-fence your offline sales from these online influences
There are factors that counter this seeming“anarchy”
No
Yes
Yes
Trust is key: If you are not trusted, you are not in the ballpark….
When buying online, I will buy a product if…
I am familiar with the retailer
the I am familiar with product brand Yes No
No
82%90% 54% 13%
Yes No
..the need for trust goes for information sources too…
51% of online consumers pay more attention to ads on sites that they trust.
Source: Henley Centre / AOL 2004
“Oh here we are, Top Gear Magazine… Because it’s Top Gear and it’s What Car and what I mean is it’s another decent make, it’s another decent brand rather than Joe Bloggs’ reviews on cars.”
`If I am actually reading the page and the advert is there, maybe a banner on the page, then, yes, I am more likely to trust it and more likely to click through. Actually come to think of it I’ve got an Internet Bank account.. And I saw that and I clicked through and now I bank with them”
Q: But did it make a difference where you saw the advert?
“I think it would because there are some sites… They seem like here today, gone tomorrow
Source: Henley Centre / AOL 2004
Take-out1. The internet is having a fundamental influence on the
way your customers see your brand
2. Easily accessible, comparative information online is a primary driver of change
3. Online influences are making your customers less brand loyal, more open to try new brands, more willing to experiment
4. Some online influences are considered more important information sources and are trusted more than offline information sources
5. Your customers’ offline brand attitudes are not a predictor of their online brand behaviour
6. You cannot ring-fence your offline sales from these online influences
To put it in a nutshell….
As a result of using the internet, almost half of online consumers are switching brands; this affects both online and offline sales, and you cannot even rely on those who are most emotionally attached to brands
There are things you can do
Greater branding investment online
is critical
If brand trust is not reinforced, then your brand is not even an option for consideration
There are things you can do..
Increased brand investment needs to be specifically invested online because of the need to:
1. Counter or exploit information flows at source
2. Address consumers’ sensitivity and appetite for all kinds of information, including commercial
3. Harness the trustworthiness of online information sources, which surpasses that of the more traditional, offline branding backdrops
There are things AOL can do
Brand trust can be improved by using very specific online levers identified in the study
Marketing Solutions Presentations
Snapshot guide & Microsite, March 2005
Brand New World
How the internet is changing consumer attitudes to brands
WWW.AOLbrandnewworld.co.uk