Contrary to the popular media hype, companies certainly are making money online. But where? It is not through electronic commerce, but through retail sales. The reason? Because a good Website can generate virtually pre-sold customers among Internet users who will then make purchases by the traditional rather than electronic retailing routes.
There is now plenty of evidence – in the US at least – that while people may not actually purchase high ticket items like cars, computers, mutual funds or insurance online, this is where they make up their minds.
Our recent survey among 520 nationwide online US users found Websites do play a decisive role in consumers’ purchase or investment decision. Overall, results showed that of the 81 per cent who go online to research high ticket products or financial services, 46 per cent bought at retail or invested.
Specifically we found:
Seventy per cent shopped for computer products and 46 per cent purchased at a shop;
Seventy per cent researched travel (airline tickets, hotels or car rentals) and 49 per cent made reservations online or through travel agents;
Forty-four per cent shopped for a car and 26 per cent bought;
Forty-two per cent researched banking and financial services, and then 30 per cent invested.
But where does this appetite for online marketing information among a growing universe of Internet users fit into the rest of the marketing mix? My point is that it can help significantly to reinforce the rest of the marketing effort, if properly executed.
Let’s step back for a moment and look at the role Websites can play in the overall advertising strategies of major brands. In the short term at least, TV will continue to create image and awareness for mass brands (The “I’ve heard of that brand” reaction). Magazine ads supply the details (“I didn’t know that”). Newspapers and radio drive traffic to local retailers (“I think I’ll stop in and look”).
All this may remain broadly the same. But the Internet in the US is clearly starting to complete the loop from advertising to purchase by generating more pre-sold customers who, by the time they are ready to buy or invest, know exactly what they are looking for and what they are willing to spend.
In a nutshell, Websites which are successful in nurturing and efficiently supplying this appetite for information on big ticket items can clinch the advertising effectiveness of the rest of the advertising effort. Advertisers which fail to do so are losing a competitive edge among a growing category of potential customers.
Will the same patterns emerge in markets outside the US, and in the UK in particular? As the saying goes, we may be two countries separated by a common language as well as an ocean.
But as a consumer motivational research firm, we have found that though there may be cultural differences, the core psychological drives are consistent between cultures.
Convenience, curiosity, and the desire for control by consumers in obtaining information ahead of purchasing big ticket items all cross cultural boarders. And these are three factors which can clearly be ideally exploited by commercial Websites.