Five Behaviors that Define the New Exchange Between Brands & Shoppers
The purchase funnel has been a useful tool for marketers for over 100 years. But the fragmentation of media, abundance of retail channels, and rise of shoppers with unprecedented information access have weakened this model’s relevance, says Jim Lucas, EVP, Global Insights and Strategy at SGK.
Shoppers are no longer constrained by the purchase funnel. Today’s shoppers are keenly aware of the value of their behavior—so much so that they treat their behavior as a medium of exchange. Consumers trade personal information for better functionality (Google, Yahoo, etc.), for more relevant deals from a loyalty program (American Express’s Link, Like, Love), or for the ability to participate in something larger (Pepsi’s Refresh Program).
Looking at this new exchange between shoppers and brands, we’ve focused on the 5 transactions that are most common and best allow us to accommodate shoppers’ personalized paths to purchase, as well as the possible benefit to shoppers of each type of transaction.
- Attention is how we connect to the world; it shapes and defines our experience. Attention is the mechanism that underlies our awareness of the external world and regulates our thoughts and feelings; a way to reframe a situation, category, etc.
- Engagement helps the shopper achieve selective attention: focus on a task at hand, find a relevant solution, and devote attention to eagerly processing.
- Purchase is about making it easier for shoppers to buy the right product for themselves, reaffirming choice.
- Loyalty is a reminder of the value shoppers received from last use; reinforcement of how smart their decisions were.
- Advocacy is about allowing the shopper to share her experience/solution with others—a way to pay-it-forward—and serves to help guide new shoppers.
For more insight read Jim Lucas’s full article, The Purchase Funnel Is Dead; Long Live Shelf-Out in Checkout, Vol. 1 Issue 2.
Retail Practice: Checkout, Issue 3, 2013 - Innovation
Retailers and marketers have always had a keen interest in innovation to sustain competitive advantage. But today’s shopper – more purposeful, more information-savvy and more influential – now demands innovation. This issue of Checkout from SGK's Retail Practice highlights innovation in multiple ways, including Leveraging Media, Embracing Showrooming, Rethinking Physical Presence, Reimagining the Shopping Trip and the Evolution of Brand. Articles include:
- Digital: Enhancing the Shopping Experience
- International: Discovering Brands – As Asia’s New Luxury
- Offline: A Return to Brick and Mortar
- International: Innovations in Asian Shopper Technology
- Offline: From Big-Box to Small-Box … to Micro-Box?
- Branding: Innovation and Own Brand
Like all SGK thought leadership, Checkout is timely, informative and free.
China Will Soon Be the World’s Largest Online Marketplace: Here’s Why
The current issue of SGK Patterns: Emerging Markets, Converging Opportunities includes an in-depth article on China’s fast-growing e-commerce space. Here are some of the highlights from “E-Commerce in China: Social Media Is the Fuel,” provided by Anh-Huan Tan, Director of Brand Strategy/Asia Pacific for Brandimage, part of the Schawk, Inc. brand development practice.
From Cluster-Oriented Consumption to Me-Consumption
The Chinese used to shun "individualism." Not so today: the rise of personal media is proof. Each individual, and thus each consumer, is now a source of information and is becoming the hub of his/her sphere of influence. The power is moving from brands to consumers, and consumers online are embracing unique kinds of self-expression.
The Virtual World Lighting Up the Real World
Here are some Chinese examples.
- Show.QQ.com lets consumers to try out clothing and shoes virtually. Each selection is displayed on the bottom of the page with a link back to Taobao for final purchase.
- Taobao Mall in Beijing offers an “experience center” for home decoration, bringing together e-shopping and offline sampling to help the consumer make better choices when shopping online.
- Yihaodian, the famous online supermarket, offers QR-code shopping in every big Shanghai metro station, facilitated by giant LEDs and the shopper’s mobile phone
- The Yishion clothing brand has launched an online fitting activity. After purchase, consumers are invited to use augmented reality online to try out new outfits. Their sessions are recorded and advertised live in-store.
Consumption Guide Planners
- The Qunar.com aggregation site allows shoppers to compile information on products and services from multiple sources.
- Taobao experts will respond to user-published photos of products they’re looking for, providing information on other relevant products.
In Volkswagen’s People’s Car project, consumers can vote on potential design features and strongly influencing the final design of a new model.
For the full article and five more on emerging markets, categories and brand management technologies worldwide, download SGK Patterns: Emerging Markets, Converging Opportunities now. It’s free.
Where Is Russia on the Timeline to a Thriving Private Label Industry?
A few key things have to happen for private label or store-brand packaged goods to become viable in a country or region.
- The private brand – or the retailer itself – has to develop enough cachet to get over the “trust barrier.” In the U.S., Target is a great example of a retailer whose brand has been curated into something greater – trusted and aspirational. This took many years and a sophisticated marketing effort, because Americans traditionally have bonded with national brands that unite the huge geographical sweep of that country; the retailer’s job was to offer a wide variety of these brands. In the smaller, more traditional U.K., by contrast, shoppers have always bonded with the local retailer itself – on the basis of its smart selection; this made “own brands” an easier extension.
- The retailer has to become adept at brand development for actual products, and at brand deployment, such as sourcing merchandise, coordinating supply chain logistics and managing artwork and packaging. These aren’t easy.
Against this backdrop, an article in CreativeMatch.com by Hans Muysson, a Schawk, Inc. Vice President of Product Development, is intriguing. In “Is Russia Ripe For Private Label Revolution?” he explains exactly where Russia stands on the timeline toward widespread private label. It’s an excellent “case study” for any marketer who's interested Russia, private label and brand development.
Watch on YouTube: Lor Gold’s “Creativity in Shopper Marketing: Emotional or Rational or Both?”
SGK's Chief Global Creative Director, Lor Gold, never stops advocating for change in how brands and their agencies approach creative work. He does it from the first minute in of his recent BrandSquare Live Session, “Creativity in Shopper Marketing: Emotional or Rational or Both?” first by stating that the creative element in shopper marketing must advance as quickly as the strategic part currently is, then by taking questions from his lively online audience the minute they started popping up, halfway through his 45-minute presentation.
This new balance between strategy and creative in shopper marketing is what brands want and what agencies need to deliver, and Gold says it’s happening already in many Asian locales, such as Singapore, Hong King, Burma and Cambodia, where groundbreaking work appears frequently in retail stores and where shoppers are “interested in anything a brand does.”
Proof of the power of shopper creative closer to Gold’s home is the way Coors beer packaging has been so effective in “owning the message of ‘cold’” that a huge percentage of beer drinkers now actually think that Coors is intrinsically colder.
Effective shopper marketing like this depends on consumer, retailer and shopper insights being considered together at the very outset of a campaign or brand launch, Gold says – not in the “linear” approach in which shopper insights are brought to bear later, in the tactical phases of the brand lifecycle.
This is just a small sampling of what Gold and his audience discussed in “Creativity in Shopper Marketing: Emotional or Rational or Both?” It’s archived now on YouTube for you and your colleagues and clients to learn from.
Are You Getting a Handle on Shopping Cart Abandonment?
It frustrates online retailers when shoppers abandon a shopping cart before purchasing. It’s also difficult to know why the shopper bolted, because there are so many possible reasons, and those reasons have evolved as shoppers’ habits are impacted by factors like the adoption of smartphones, better checkout technologies and new online information sources. But every retailer has to get a handle on it – in fact, so does any company that wants “conversions,” including a business-to-business company that simply wants a visitor to download a white paper or request a free sample.
A good place to start optimizing your checkout system is this infographic, Shopping Cart Abandonment Rate Statistics. High shipping costs (44 percent) is the most-cited reason for abandonment, followed by “not ready to purchase” (41 percent), high product price (25 percent) and “saving for later consideration” (24 percent). For all retailers, shipping and product price points are the result of a relatively straightforward analysis: what does it cost to produce and ship the product, what are other retailers charging and what will shoppers pay?
We say “relatively” not because pricing easy but because the “not ready to purchase” and “saving for later” issues are harder to get clear answers on. And you’ll notice that they’re essentially as influential, in percentage terms, as price.
To get more clarity, you have to think like a shopper marketer and augment that with the improving technology for tracking your visitors’ web journey before purchase. A case in point is research by C3 Metrics, 37% of Online Transactions Exit Purchase Funnel via Brand Search.
C3’s key point is that marketers should realize that when a branded search is the last click before someone enters your site and makes a purchase, the search is likely “navigational”: the shopper is already fairly committed to the purchase and simply wants to find your store. In other words, don’t overspend on branded search thinking that it’s the decision “trigger.” Some of that money is better spent on “upper funnel” marketing in other internet realms, like social media.
For more on shopper marketing, the new purchase funnel and how technology and analytics are impacting the retailer/shopper relationship today, download the just-published SGK Patterns: Aligning to the New Shopper.
Shopping Cart Abandonment Rate Statistics
Targeted Online Ads: Awareness of Shoppers’ Concerns Can Improve Your Insights Into Their Preferences
Targeted online ads are causing a stir right now. Strictly speaking, they are a marketer’s friend – putting ads for pertinent products in front of consumers whose interests are already proven by actions they have taken, such as “liking” topics or products or politicians or a band.
But individuals and groups are taking exception to some targeted ads for various reasons, and the issue is likely to get hotter. Why? Because the targeting technology continues to improve, and popular social media sites and webmail providers are making more use of the data they collect as they perceive that web users are growing more comfortable with targeted ads and as advertisers grow more convinced of their effectiveness.
As an example of the tensions, there are both anecdotal and proven cases of users being offended or deeply inconvenienced by targeted ads that seem to imply something about them that isn’t true or that they wish to keep private. As we write this, one large webmail provider is dealing with accusations that it has made inferences – based on users’ names – about their ethnic backgrounds and has pushed ads that are refined accordingly.
More broadly, some webmail users are made uncomfortable that a service – even a free one – is “reading” the contents of their e-mails, even though the analysis is essentially keyword-based, much as search engines analyze search terms. And countless internet users still do a double take when they realize an ad is targeted, even for a product they’re interested in or have bought.
Researchers are even studying the effect of targeted political ads on the electorate. Do they tend to polarize us by reinforcing our inclinations? These theories are hard to prove. For instance, the common wisdom that negative political ads work has been thoroughly tested lately and still remains in doubt.
Anyway, when it comes to life online, we’re used to anonymity online, and being targeted takes some getting used to.
But what’s on the other side of the argument? Well, often a targeted ad beats the alternative. From a consumer perspective, we’re hit with branded messages all day long, thousands of them according to some studies. We accept them on TV or on the radio, unless we want to use a DVR or pay a premium for ad-free streaming music. And in some rare cases, we relish them, as when watching the Super Bowl. It’s likely that targeted ads are another feature of internet life that we’ll have learn to accept. But why?
The answer is obvious to marketers if not to all consumers: content and services cost their providers money to generate, and ads help offset the costs and, theoretically, generate profits. TV and radio users – and newspaper and magazine readers – understand this, but when they migrate online, they often seem to take on a different mindset. The internet has provided so much for free for so long – even things we would pay for in a different medium – that users now expect it. So ads can feel not only intrusive but presumptuous and inconsiderate.
This suggests a tactic that internet businesses should consider: a bit more openness about how they target and why. Ignorance on the part of users can turn into resistance quickly – and spread – whether it’s justified or not. Websites’ targeting practices become public knowledge anyway, so perhaps pro-active transparency is a good idea.
And finally there’s a long-term business benefit to getting web users to understand that their favorite sites are run by, well, businesses that have to monetize their services.
In other words, in the same way targeted ads show insight into users’ shopping preferences, online businesses also need to show insight into users’ concerns, to get the full benefit of their targeted ads.
Product Line Rationalization: Europe and the Tesco Example
We’ve been reading more lately about European retailers undertaking product portfolio (or “range”) rationalization, and asked Carol Best, Vice President of Brand Strategy at Schawk's Retail Practice, if it’s a significant trend. She wrote at length on U.K. retail brands emulating U.S. brands in the most recent issue of Schawk Retail Practice’s Checkout newsletter, and her comments to us reinforces how malleable the marketplace is today:
Tesco’s recent activity in developing “venture brands” – they’re so serious they’ve developed an internal name for them – is a significant departure from their typical portfolio architecture model. So yes, we are seeing portfolio architectures change. For Tesco it’s a move in a positive direction from their traditional price-tier strategy of good/better/best. I’m hoping it inspires more brand creation and brand building activities globally.
We are also seeing (and this has been a trend for a few years now) retailers developing value tier brand solutions as a defensive move to keep trips away from big-box retailers and dollar channel stores. As it relates to the U.K., Tesco recently changed its Tesco Value to Everyday Value. I think this strategy is twofold:
• Create more distance between the Tesco brand and product that may have a negative impact on the brand
• Provide efficiencies and scale to use the value brand globally, as Tesco did for its Goodness kids line of food products, originally in its U.S.-based Fresh & Easy stores and now also available at their U.K. outlets.
In addition to reading Best’s Checkout piece, watch her BrandSquare Live Session, “Why Private Brands Are Un-American and What You Can Do About It.”
What Is Shopper Marketing? Well, What Kind of Agency Are You?
Recently we posed a few questions to Lor Gold, SGK's Global Chief Creative Officer. What we got back almost immediately, in language any good copywriter would be proud of, was thousands of words on branding, marketing, agencies, clients and shoppers. One of the questions was what “shopper marketing” means right now. Lor responded:
"What makes shopper marketing so hard to define is that that it’s always being defined by what the agency is known for doing. A promo agency defines it from a promotional point of view. A branded environments/architecture agency sees it through the eyes of an architect. An agency driven by shopper behaviorists sees insights as the core of the definition.
All are right about how to approach the problem. That’s why there isn’t “a” definition but many, all moving through the portal where they feel most comfortable.
At SGK, we have a definition that we think is very smart, based on the concept of “inside out.” It starts with true marketing analytics. And it starts with the brand itself as the treasure – not a well-produced branded message that bears little resemblance to the actual brand.
In our world, to define shopper marketing you have to acknowledge the fascinating creative battle between “brand essence” and “brand real.” Brand Real is the thing that you can pick up, touch, use, smell – it’s in your home, it’s part of your life. It should be hoisted high and carried up one media corridor and down the next. If you understand your Brand Real, then the shopper automatically makes more sense to you, too, and the resulting Brand Essence makes more sales."