The new pathways to purchase in the world of networked consumers

1. The new pathways to purchase in the world of networked consumers Henry Assael - lecture at NYU October 6, 2011 Lee Rainie: Director, Pew Internet Project Email: Lrainie@pewinternet.org Twitter: @Lrainie

2. Implication: A New Consumer Decision Journey to Manage ACTIVE EVALUATION: The consumer adds 1.7 more brands to consideration, based on packaging and sampling INITIAL CONSIDERATION: PURCHASE: At the moment of purchase, the consumer has evaluated only 3.2 brands, and makes decision based largely on information learned before shopping • Consumer starts with 1.5 brands in mind, influenced by previous trial and word of mouth POST-PURCHASE EXPERIENCE: 66% of consumers engage with their brand after purchase (e.g., online research), and this engagement has a meaningful impact on the likelihood of repeat purchase Source : Pete Blackshaw: CMO, NM Incite, a Nielsen-McKinsey Company

3. 3 22 Where Social Media Fits in to the Mix Most influential touchpoints Store/agent/dealer interactions 12 26 43 Prior brand/ product experience • Consumer-driven marketing • Word of mouth • Online research • Offline/print reviews 5 39 • Company-driven marketing • Traditional advertising • Direct marketing • Sponsorship • In-store advertising 26 22 Initial Consideration Active Evaluation Moment of Purchase Friending the Social Consumer Source : Pete Blackshaw: CMO, NM Incite, a Nielsen-McKinsey Company

4. Your experiences -1 • Smaller scale / impulse buys • Piece of music • App • Something off the shelf • Pew Internet findings in 2007 among music buyers: • 83% find out about music from the radio, TV, or in a movie; • 64% find out about music from family, friends, or co-workers.

5. PIP Consumer choice survey (2007)

6. PIP Consumer choice survey (2007)

7. PIP Consumer choice survey (2007)

8. Your experiences -2 • Mid-scale products • Cell phone • Clothes • Pew Internet findings in 2007 among cell buyers: • 59% ask an expert of salesperson for advice; • 46% go to one or more cell phone stores.

9. PIP Consumer choice survey (2007)

10. Your experiences -3 • Life-altering “investments” • Real estate – apartment hunting • College choice • Car • Pew Internet findings in 2007 among real estate shoppers (homes and apartments): • 49% look at ads in the newspaper; • 47% ask a real estate agent for advice

11. PIP Consumer choice survey (2007)

12. PIP Consumer choice survey (2007)

13. PIP Consumer choice survey (2007)

14. Digital Revolution 1Internet (78%) and Broadband at home (62%) 65% 62%

15. Networked creators among internet users • 65% are social networking site users • 55% share photos • 37% contribute rankings and ratings • 33% create content tags • 30% share personal creations • 26% post comments on sites and blogs • 15% have personal website • 15% are content remixers • 14% are bloggers • 13% use Twitter • 6% location services – 9% allow location awareness from social media – 23% maps etc.

16. Impact on shopping • Shopping is a “full contact” sport throughout its phases: • Research phase • 60% of all Americans do research online about products • Purchase phase • 55% of all Americans made e-purchases; 51% travel reservations • After-purchase phase • 37% rankings and ratings; another quarter describe their shopping experiences

17. So what for brands? • The Bermuda Triangle • Markets are fractured • Marketplace is roiled • Metrics haven’t kept pace • Too much noise • Brands are co-owned by advocates /acolytes • Best of times - sanctuaries • Worst of times - #fail

18. Digital Revolution 2Mobile – 84%

19. Mobile internet connectors – 63% adults

20. 35% own “smartphones”

21. The networked consumer: cell phones Interesting tidbit: 17% of American adult cell phones owners have bumped into another person or an object because they were distracted by talking or texting on their phones.

22. 56% of adults own laptops – up from 30% in 2006 52% of adults own DVRs – up from 3% in 2002 44% of adults own MP3 players – up from 11% in 2005 42% of adults own game consoles 12% of adults own e-book readers - Kindle 9% of adults own tablet computer - iPad

23. Dramatically More Cross-Platform / Media-Mixing 59% of Americans use TV and the Internet Simultaneously Source: Nielsen Three-Screen Report

24. Impact of mobile connectivity on shopping • Just in time information • Where can I get a deal? • Price comparisons • “Networked info” packed into the shopping experience • QR (quick response) codes • Announcement and validation of purchase • Sharing the shopping story

25. So what for brands? Attention zones Continuous partial attention Deep dives Info-snacking Media zones • Social Immersive Streams Creative / participatory Study / work

26. Digital Revolution 3Social networking – 50% of all adults

27. What does this mean? Social networks are more influential and institutions less influential - 1 Sentries

28. What does this mean? Social networks are more influential and institutions less influential - 2 Evaluators

29. What does this mean? Social networks are more influential and institutions less influential - 3 Audience = New media are the new neighborhood

30. Impact of SNS on shopping • Purchasing can be group activity • “Consumer cartels” arise (Groupon, Living Social)

31. With Dramatically Different Channel Preferences Source: Nielsen Consumer Channel Preference Study ‘09

32. Brand Credibility More Important Than Ever 24 Source: Nielsen Consumer Channel Preference Study ‘09

33. Implication: Bold New Questions for Companies Source: Nielsen Consumer Channel Preference Study ‘09

34. Social Commerce Ecosystems Implication: Death (or erosion) of Web Sites

35. Implication: New and More Holistic Rules of Engagement Brand Backyard Consumer Backyard Common Branded Media Channels Consumer Relations Forum / Communities Consumer Outreach Influencer Outreach Brand Site Contact Center E-mail Phone Web Site Engagement Blog Chat, SMS Phone Rate & Review Communities User-Contributions Ratings & Reviews Co-Creation Platforms Twitter Facebook YouTube Flickr, LinkedIn 3rd Party Consumerist Edmunds WebMD TechCrunch 43

36. Implication: From Selling to Service Hershey’s Pizza Hut Ben & Jerry’s Kraft Dunkin Donuts Convenient pizza ordering experience Experience B& J through peace, love and ice cream Discover recipes for any occasion. Communicate with co-workers for coffee runs Simulate your favorite choc. milk experience at anytime Source: Nielsen Consumer Channel Preference Study ‘09

37. Implication: Rise of Consumer Cartels Source: Nielsen Consumer Channel Preference Study ‘09

38. Implication: Massive Levels of Retailer Innovation Can BP empower its franchises and/or products around innovation? Source: Company websites; Progressive Grocer & Pittsburgh Post-Gazette Source: Nielsen Consumer Channel Preference Study ‘09

39. Implication: The Rise of Real-Time Source: Nielsen Consumer Channel Preference Study ‘09

40. Looking Ahead Source: Nielsen

41. What’s Ahead / Next? Near Term Trends for 2012 41

42. What’s Ahead / Next? Longer Term Trends & Disrupters 42

43. Things to watch • Content metering online – new media business models • Enhanced tech – 3-D • New attention research – Nielsen and Coalition for Innovative Media Measurement • Privacy debates • Net neutrality debates • Spectrum allocation debates • Rise of the “internet of things”

44. Thank you!