brand new world how the internet is changing consumer attitudes to brands

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


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


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”


...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


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

Google

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

Google

Discussion with

partner

Pop ups

Consumers are price-sensitised

7282

69

0

10

20

30

40

50

60

70

80


% agreeing, as a result of using the internet ‘I am more aware of the cost of products and services’

%



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


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


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



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”


Customers seek out information


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?


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


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



The Internet is influencing Brand Perceptions and Behaviour across the spectrum

% (by segment) who agree that as a result of using the internet



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


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’


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


% 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



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


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



71

84

95

80

78

70

63

45

28

“Experts” are more likely to switch


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


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.


“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


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

brand new world how the internet is changing consumer attitudes to brands

Documents

online branding

result of online information

researchif online information

henley centre aol

consumers new

us consumers

personal online experience

brand opinions