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The Role of Digital in Shopping

The Role of Digital in Shopping. Nikhil Sharma VP, Consumer & Shopper Analytics, Nielsen. Today’s Agenda. 1. Fundamental Truths About Shopping Unlocking The Power Of Digital Implications And Guidelines For Success. 2. 3. Multiple forces are influencing the way people shop.

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The Role of Digital in Shopping

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  1. The Role of Digital in Shopping Nikhil Sharma VP, Consumer & Shopper Analytics, Nielsen

  2. Today’s Agenda 1 Fundamental Truths About Shopping Unlocking The Power Of Digital Implications And Guidelines For Success 2 3

  3. Multiple forces are influencing the way people shop

  4. The face of the American consumer is changing Urbanization & Industrialization foster … Declining birth rates … Which lead to an aging population And has important implications on the future … Immigration & Growth in Ethnic Families Declining % of HHs with Children Older Consumers with with New Needs Changes in Per HH Spending Uneven Population Growth

  5. Retailers are experimenting to keep up with the trends

  6. Rapid growth in new devices, ushering in the ‘Post PC’ era 2000 US USERS 2012 US USERS Source: Nielsen NetView

  7. Shoppers have found a use for mobile devices in shopping fairly quickly Mobile Shopper Universe Have Done Mobile Shopping on Smartphone Mobile Shopping Activities Among All Smartphone Owners

  8. Amidst these changes, three core shopper needs always have and continue to remain paramount… Hypermarkets / Mass Merchandisers Natural /Specialtyfood stores Choice WarehouseClub Stores Price-Value Pharmacies Dollar Stores Supermarkets Convenience Convenience Stores

  9. … and unlike other industries like travel, books or music, ‘clicks’ will not replace ‘bricks’ in CPG

  10. However, a battleground has definitely emerged in CPG as digital engagement and purchase flourish High Diapers Diet Aids Vitamins Skin Care Small Appliances Baby Food Hair Care Oral Hygiene Pain Remedies Cereal Candy Digital Engagement Carbonated Beverages Cheese Beer / Liquor Frozen Pizza Fresh Produce Detergents Minimal Online Sales High

  11. Nielsen believes that three things are critical in order for CPG marketers to succeed with digital Know your shopper (Who) Understand your Category (What) Leverage the Right Touch points (How)

  12. Today’s Agenda 1 Fundamental Truths About Shopping Unlocking The Power Of Digital Implications And Guidelines For Success 2 3

  13. Marketers can impact two aspects of shopping with digital: ‘Where People Buy’ & ‘How People Shop’ Where People Buy How People Shop OPPORTUNITY Ecommerce Opportunity Marketing Opportunity Role that category plays in e-Commerce Importance of touchpoints in digital shopper marketing KEY CONSIDERATION FOR SUCCESS

  14. Where People Buy Unlock the link to Ecommerce success Which category has what it takes to unlock barriers and succeed online?

  15. Convenience Where People Buy • High Immediacy • Urgent needs • Immediate consumption • Low delay tolerance URGENCY BARRIER

  16. Choice Where People Buy • High inspection • Check quality in store • Difficult to return • Sensory product choice (e.g. smell) URGENCY BARRIER INSPECTION BARRIER

  17. Convenience Where People Buy Need update • High Stock Up • Steady Use-Up Rate • Willing to stock up URGENCY BARRIER STOCK-UP ENABLER INSPECTION BARRIER

  18. Price-Value Where People Buy • High ‘cube’ benefits • Price to Weight ratio • Product margin(room for discounting) URGENCY BARRIER STOCK-UP ENABLER PRICE ADVANTAGE INSPECTION BARRIER

  19. Where People Buy Example: Moms research baby food and diapers digitally, but only purchase the latter online More/Better Choices More/Better Choices Convenience Convenience Superior Value Superior Value

  20. Where People Buy Which categories have what it takes to unlock barriersand succeed in ecommerce? URGENCY BARRIER STOCK-UP ENABLER PRICE ADVANTAGE INSPECTION BARRIER • Skin Care • Oral Care • Hair Care • Body Wash • Vitamins • Small appliances • Diapers • Lotion • Medication • Coffee • Feminine Care

  21. How People Shop Media need to influence shopping by targeting key ‘decision points’ along the Path to Purchase Access deals / bargains Plan shopping trip Access feedback/reviews Gather product information Make purchase Obtain ideas on usage Discover a new brand or product / Reconfirm prior purchase

  22. How People Shop Digital touch points preference vary by shopper types Ranking of Digital Touch points

  23. How People Shop Shoppers prefer to use different touch points for different categories % shoppers utilizing online info for category shopping Top 3 Digital Touch points

  24. More shoppers use digital when shopping for diapers, but baby food utilizes multiple digital touch points more effectively How People Shop of shoppers use digital of shoppers use digital 62% 54% 1Shoppers acknowledge the role of a digital media in the helping them on a specific path to purchase decision points (index vs. other CPG categories)▼▼ Index <50, ▼Index 51-79 , ▲Index 120-149, ▲ ▲Index 150+

  25. Today’s Agenda 1 Fundamental Truths About Shopping Unlocking The Power Of Digital Implications And Guidelines For Success 2 3

  26. CPG marketing will be significantly different in 10 years Driven by traditional mass marketing efforts. ‘Typical’ American families More Rural / Physical Locations Concentrated / Target Many / At Home & In-store Today Who Where How Diverse,multi-cultural families More Urban / Virtually Multi-platform / Personalized / On-the-Go Future Driven by Shoppers’ demand for more Choice, Value & Convenience.

  27. The Call To Action Understand Shopper Needs I Shoppers seek new ways to achieve convenience, choice and value for money. Leverage digital to personalize and shape offers to be aligned with shopper needs and preferences. Recognize The Role of Categories II Leverage online opportunities to target specific segments, offer niche products and innovate. However, recognize that ecommerce may not be viable for every category. Optimize Digital Touch Points III Leverage digital to tackle the most important issues for retailers, improve the shopping experience and eliminate unnecessary subsidies.

  28. Potential Ways To Engage With Nielsen White Paper A Know your shopper (Who) • Understand the digital shopping landscape and implications/opportunities in more detail • Available immediately (complimentary) Syndicated Report B • High level assessment of best digital touch points on the ‘path to purchase’ for 18 CPG categories • Available immediately ($5K) Custom Study C • Detailed assessment of best digital touch points along ‘path to purchase’ • Opportunity to customize for specific brands, products, channels, retailers or shopper segments • 6-8 weeks / $60K+ Leverage the Right Touch points (How) Understand your Category (What)

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