The New ShopperToday’s Purchase Path and the Media that Influences It

THE NEW SHOPPER JOURNEYS: How Touchpoints Lead to Purchase

Shoppers’ purchase paths have changed, thanks to the recession and the influence of digital. We set out to understand today’s purchase path and the media that influences it. We surveyed shoppers on their most recent shopping purchases across five key retail categories: apparel, quick service restaurants, groceries, home electronics, and home improvement.

This study is unique in the comprehensiveness of its data which address these business questions:• What shapes people’s buying decisions?• How are shoppers influenced by both offline, online,

and in-store media across key verticals? • What is the relative influence of Owned, Bought, and

Earned media?• What innovative forms of advertising might shoppers

be open to?

The study was done in two phases by UK-based Essential Research. A qualitative study composed of interviews and shopper observations was fielded in late fall 2009. Its insights led to an online survey in March 2010 which queried shoppers about their last purchase occasion in each of the retail sectors covered. This quantitative phase was done just as economic recovery began to be felt. Thus the study uncovers new behaviors shoppers have adopted in reaction to tighter budgets. Further analyses reveal that many of these new behaviors will continue as shoppers have discovered the ease in which essential information can be accessed through the Internet. Here is a summary of these enduring value-seeking behaviors we found.

This research collaboration between

Carat and Microsoft sought to define

the structure of consumers’ paths

to purchase and how different touchpoints

play a role in shaping decisions as to where

and what to purchase.

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HierarcHy of SHopperS’ New BeHaviorS

Seeking Better Value

More Advance Purchase Research

Using Different Channels

Reduced Volume

Word of MouthHie

rarc

hy o

f ta

ctic

s fo

r co

pin

g w

ith

the

rece

ssio

n

» Discount coupons used more often » Price more important than brand/quality

» More time looking for special promotions » Visiting a number of retailers to find the best deal » Reading online forums/consumer Web sites

» Discount stores » More online shopping/auctions » Mobile

» Fewer visits to retailers

» Peer reviews — 1:1 and through social media

WHaT SHaPES PEOPLE’S bUYiNg dEciSiONS

Category

Consumer

Culture

Contacts

Contacts

Context

ContactsCont

acts

dRivERS Of PURcHaSE» Category» Culture» Contacts» Context» Consumer

» Product/Brand» Country» Touchpoints» Need states» Attitudes

The process that shoppers go through has forever changed, becoming more complex and multifaceted. No longer do shoppers traverse a linear path; rather we see a highly dynamic journey to purchase, one characterized by reiterations in product considerations, i.e., a tumbler effect rather than a funnel.

We identified five general drivers shaping shopper journeys, or Five C’s: the retail category, the culture of the market, the contact points or channels, the context or need states for buying, and the consumer’s attitude within the category.

THe DiSTriBuTioN of SHopper JourNey Type By reTail SecTor

Habitual

Impulse

Research

Grocery QSR Home Electronics

66% 60%

17%20%

63%34%

6%22%12%

Apparel

43%

40%

17%Home

Improvement

37%

28%

35%

The study revealed three basic patterns in shoppers’ paths to purchase across all the retail sectors we examined:

The distribution of these types of journeys varies by retail sector. Not surprisingly, the more involved categories like home electronics and apparel tend to have more research journeys while lower involvement sectors like groceries and quick service restaurants (QSR) invite more habitual journeys.

Impulse: Purchase was unplanned or did not have enough time to research or comparsion shop before purchasing

Habitual: The item is one the shopper normally buys

Research: The shopper did some research prior to buying

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Category Most Common Trigger(% of all journeys)

Split by Journey Type(Habitual/Impulse/Research)

GroceriesHome ElectronicsClothes, Shoes, and Accessories

Replacement: 43%Treat: 39%Treat: 36%

85% / 9% / 6%15% / 17% / 68%33% / 57% / 10%

The specific context or need state can also influence the journey type as the following table shows:

MoST coMMoN NeeD STaTe By caTeGory

What is noteworthy is the significance of the post-purchase stage which can influence future shopping especially in highly-researched categories like home electronics. It is also at this stage where digital media are key enablers. So the new schematic in shopper journeys is one where post-purchase activity, typically word of mouth, loops back to influence succeeding purchases.

WiSdOm fROm PSYcHOgRaPHicS For new shopper journeys, one of the most useful approaches to determining the proper media mix is through segmentation analyses which layer attitudinal variables over behavior. To understand how attitudes may further impact touchpoints’ influence, we segmented shoppers according to their relationship with technology: 1) Cutting Edge, 2) Early Adopter, 3) Judicious Timer, and 4) Laggard.

If we understand the interplay across these drivers we can determine the shopper journey type which in turn can guide more effective creative and media strategies. Indeed, when we break up a journey into stages, we can get a broad view of how different touchpoints influence shopper decisions.

THe New STrucTure of SHoppiNG JourNeyS

Need State Research Purchase Post Purchase

Word-of-Mouth Feedback Loop

‘Pre-tailing’ Retailing ‘Post-tailing’

In-store Research

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We also looked at the touchpoints that influence these segments.

From this analysis, we found that Cutting Edge shoppers were receptive to a wider array of channels while Early Adopters were more likely to be influenced by word of mouth particularly from experts as the following table reports. The large differences in media consumption by segment have clear implications for media strategists.

Contacts Extensive, granular touchpoints including online, social media, word of mouth, situational settings, traditional media and advertising

Consideration Touchpoints • Initial Media Impetus for Purchase Process

Research Source Mobilization • For Information and Inspiration

Factors on Final Decision • Price, Location, Availability, etc.

Purchase Venue • Various Retail Outlets Online and Offline

Post-Purchase Behavior • Feedback and Word of Mouth through Social Media and Interpersonal Channels

THe New DyNaMic fraMework for uNDerSTaNDiNG THe purcHaSe paTH

Consumer Behavioral DifferentiationThinking about the last time you bought . . . which statement best describes your actions?

Three types of journeys:• Habit• Impulse• Research

Attitudinal Fine-Tuning by VerticalMultivariate segmentation based upon category-specific psychographics

For Example: Home Electronics:• Expert• Novice• Trend-Chaser

Apparel:• Fashionista• Clueless• Quick and Easy

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100=All US Home Electronic Shoppers

Cutting Edge Early Adopter Judicious Timer

Laggard

Advertising 145 119 83 68Word of mouth 100 132 100 71Something seen while shopping 151 99 90 75Newsletter/E-mail 162 108 97 49TV ads 182 111 65 72Internet ads 150 131 70 70Newspaper ads 144 130 96 43Expert reviews online 108 149 114 30Seeing someone with item 157 156 60 55Past experience 129 122 78 85Promotion seen while shopping 165 94 96 61Something read/seen online 125 105 113 60

Q: What influenced you to start thinking about your purchase?

ToucHpoiNTS raNkeD By iNflueNce aT TriGGer STaGe (iNDeX) uS HoMe elecTroNicS SHopperS

When we combine behavioral and attitudinal variables, we get a more comprehensive view of the entire purchase path. The following model depicts how consumers and contacts lead to the final purchase decision.

19% 23% 32% 25%

THE ROLES Of OffLiNE aNd ONLiNE TOUcHPOiNTS

Now that we have a framework that helps us understand how purchase decisions are made, we can begin to map the appropriate touchpoints along the shopper’s journey. The type of journey will indicate which touchpoints hold sway at specific points along the path. We found that offline and online media serve truly differentiated roles. This underscores the need for both in order to drive purchase.

Here is an illustration of how channels serve different points along the three types of journeys in the purchase of computers/laptops:

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NeeD STaTe purcHaSe

advertising: Online: 6% TV: 12% Newspaper: 12% Coupons: 18% Talked to sales assistant: 18%

word of mouth: From friends: 20%

recommended: Brand: 37% Retailer: 25%

word of mouth online: Blogged online: 8% Posted on social network: 0% Posted on a review: 8%

Used mobile phone: 41% Compared prices: 18% Searched for info: 14%

poST-purcHaSeAdvertising is least likely to trigger intentions to shop; rather it is coupons or a store’s sales personnel that can move shoppers to purchase.

iNflueNTial TriGGerS for HoMe elecTroNicS – iMpulSe

NeeD STaTe purcHaSe

advertising: Online: 16% TV: 15% Newspaper: 13% Coupons: 11%

word of mouth: Expert reviews online: 12% From friends: 28%

recommended: Brand: 36% Retailer: 19%

word of mouth online: Posted on social network: 8%

Used mobile phone: 26%

Compared prices: 18%

poST-purcHaSereSearcH

Used Internet: 64%

advertising: Online: 10% TV: 14% Newspaper: 15%

In-store promo: 15%

word of mouth: To friends: 35%

The Internet and word of mouth dominate across all phases of the journey. Moreover nearly 2/3 of research journeys depend on the Internet for information. Interestingly, having done a lot of research prior to visiting a store, this journey type is least likely to be influenced by in-store channels.

iNflueNTial TriGGerS for HoMe elecTroNicS – reSearcH

NeeD STaTe purcHaSe

advertising: Online: 17% TV: 17% Newspaper: 24% Magazine: 17% Newsletter: 19%

in-store: Flyers: 13% News story on TV: 11%

word of mouth: Expert reviews online: 7% From friends: 15%

recommended: Brand: 48% Retailer: 30%

word of mouth online: Blogged online: 11% Posted on social network: 11% Posted on a review: 11%

Used mobile phone: 54% Compared prices: 30% Searched for info: 20%

poST-purcHaSePrint media are most influential in pre-purchase while mobile phones do well at the point of purchase. Habitual purchases are fueled by loyalty. So it makes sense that such journeys spur more active recommendation and online postings post-purchase.

iNflueNTial TriGGerS for HoMe elecTroNicS – HaBiTual

TOUcHPOiNTS fOR LOW vERSUS HigH iNTEREST caTEgORiESIn a highly engaging category like home electronics where research accounts for 68% of the journeys, the usefulness of online media is readily apparent. It is harder to understand online’s role in low involvement categories like groceries unless we have the data to explain it. Using our purchase path framework we can identify specific channels’ roles at each point of the path. Here is an example from the US. As this analysis shows we can account for the relative influence of various media channels, offline, online and in-store.

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uS woMeN Grocery SHopperS

pre-purchaseShopping patterns by Shopper Types

purchase after-purchase

factors decided before research or shopping

Which items to buy 63%How much to spend 39%Location of the store 28%Payment methods 23%Number of items to buy 22%

Need state touchpoints focused on new product trial

Factors that influenced you to purchase items that are new or different from what you normally buySpeaking to friends/family 46%Coupons 45%Television ads 44%Promotion seen while shopping 36%Samples/product demo 34%Sign/display, etc. seen while shopping 31%In-store coupons 27%

Habitual buyers (72% of total):

What inspired you to try different products or brands?Coupons 47%Speaking to friends/family 41%Promotion seen while shopping 40%TV ads 37%In-store coupons 35%Samples/product demo 28%

impulse buyers (17% of total):

What made you make a purchase?TV ads 40%Promotion seen while shopping 35%Speaking to friends/family 33%Coupons 31%In-store coupons 20%Sign/display seen while shopping 18%In-store flyers 16%

researchers (11% of total):

Sources mobilized for researchNewsletter/leaflets/ coupons 60% Ads/sponsorship 49% Discount coupon 46% Internet 31% Word of mouth 31% Newspaper Ads 5%

Factors that influenced choice of store

Proximity 66%

Price 63%

Quality of products 44%

Familiarity with the retailer 40%

Past positive experience 34%

Deals and promotions 35%

Variety of products available 32%

after-purchase Behaviors

What did you do after purchase?

Discussed the purchase with friends/family 19%

Recommended the brand/product to friends/family 17%

Recommended the retailer to friends/family 8%

iNflueNce of oNliNe cHaNNelS iN New Grocery proDucT iNTroDucTioNS

Q: Thinking about the last time you bought groceries and personal care products, did you buy anything that was new or different from the items you normally buy?

A Used cell phone in-store

B Used the Internet during research

C Exposed to online advertising during research

Bought new items

Didn’t buy any new items

31%

7%

a

45%

30%

B

14%

6%

c

iNfLUENcE Of OWNEd, bOUgHT, aNd EaRNEd mEdia cOmPaREd

HoMe elecTroNicS: reSearcH JourNeyS

% of those who changed their mind about the brand after research

owNeD 56%

BouGHT 62%

earNeD 47%

% of those who changed their mind about the retailer after research

owNeD 64%

BouGHT 60%

earNeD 47%

A frequent conundrum for marketers is determining the right mix of channel types. To simplify the analysis we grouped all the channels by type to see how and where they play within a journey as the following table illustrates.

For example, among research journeys in the home electronics category we found that Bought media actually have a slightly heavier influence than Owned or Earned media when it comes to choosing brands or stores (contrary to conventional wisdom, this study documents the value of Bought media advertising beyond the usual considerations of audience reach).

The following table compares these three types of touchpoints in their ability to shift shopper choices.

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Another interesting finding was online channels’ ability to influence the purchase of new brands.

SOciaL mEdia cHaNNELS cOmPaREdSocial networks attract considerable attention among marketers because of the large audiences they draw and their perceived lower cost. Our study found that when it comes to influence it is actually personal 1:1 conversations via phones, e-mail, and instant messaging which are more heavily relied upon in purchase journeys than comments or reviews in social networks.

raNkiNG of Social MeDia TypeS By uSaGe wiTHiN

reSearcH JourNeyS

GROCERIES1 Home Phone (47%)2 Social Net (39%)3 Mobile (31%)

QSR1 Mobile (67%)2 E-mail (58%)3 Social Net (43%)

Apparel1 Mobile (42%)2 Home Phone (38%)3 E-mail (32%)

Home Electronics1 E-mail (42%)2 Mobile (39%)3 Home Phone (31%)

Home Improvement1 Mobile (48%)2 Home (38%)3 E-mail (30%)

% of all JourNeyS iNflueNceD By aN oNliNe

BloG poST, foruM coMMeNT, or SoMeTHiNG reaD oN a

Social NeTwork

Grocery (5%)

Fast Food (2%)

Home Electronics (3%)

Clothing, Shoes, and Accessories (2%)

Home Improvement (1%)

5%

4%

3%

2%

1%

0%

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Below lists the top three social media forms for each retail category.

REcEPTiviTY TO EmERgiNg fORmS Of cHaNNEL ENgagEmENTWe asked what newer forms of brand/store engagements shoppers would be most open to. We posed different possibilities to respondents and we found a greater acceptance of e-commerce followed by payments via mobile phones.

80%

60%

40%

20%

0%

% wHo woulD Be MoST williNG To Do iN THe fuTure (Top BoX MeNTioNS)

Shoppers are most interested in online purchasing. The next ranked applications in desirability involve mobile communications suggesting new opportunities to impact shopper decisions closer to the point of purchase.

Make purchases online

Send pictures/videos of a potential purchase to friends or family

Use a mobile phone to research information while at a store

Use a mobile phone to interact with a billboards/displays

Ask for views from people you don’t personally know online

Make purchases from a mobile phone

I would be interested in making payments using mobile phone

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For more information about this study, please contact: Beth Uyenco, Global Research Director, Microsoft Advertising, bethu@microsoft.com Mike Hess, EVP for Insights & Analytics, Carat US, Mike.Hess@carat.com

• Qualitative Study: Fifteen in-depth shopper interviews and shopping observations were conducted in the US, United Kingdom, Mexico, France, Japan, and China covering the five retail sectors. In addition, respondents completed shopping diaries.

• Quantitative Study: Online surveys among those aged 16 or older were completed in 17 countries. Sample size in the USA was 2,680.

fiNaL WORd

DeTailS oN MeTHoDoloGy

The old Purchase Path is gone. Study results have clearly established the existence of a new, more dynamic Purchase Path that is driven by the power of differentiated touchpoints along a shopper’s journey. Further, the type of journey depends on the segment that a consumer is in, so media must be planned accordingly.

Only by fully taking into account the dynamics of the new Path, can today’s marketers attain the best ROI for their offline and digital investments.

The New Shopper Journeys contains an exhaustive database of media behavior and the purchasing that results from it. As such, researchers at Microsoft Advertising, Carat, and their clients can mine these data to determine effective channel mixes for offline, online, and in-store media on both global and local levels.

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iN-STore MeDiaoffliNe oNliNe