Online Buying Behavior

MarketingRx for January 29-010

 

"What should we understand about online consumer buying behavior?"

 

By Dr Ned Roberto & Ardy Roberto

 

 

Q:  We're ready to try internet advertising and online marketing.  When the internet came around, we recalled that the gateway to the internet for consumers was dialing-up.  That technology was very restricting.  But the rapid penetration of broadband service allowed consumers quick access to the internet plus fast download and viewing.  And today, most consumers are spending more and more time on the internet.  In fact, during a conference, we heard you cite a study that found teeners spending 3 hours on the internet for every hour viewing TV. 

 

What should we understand about online consumer buying behavior?  We hope you don't mind giving us some simple and practical tips.

 

 

A:   THE STUDY YOU MENTIONED is the McCann-Erickson research on the youth.  This was a survey.  So the 3:1 ratio is a claimed proportion.  It was a young consumer's estimate when asked the question.  So in terms of actual behavior, it's doubtful that the relationship between the two figures is strictly linear.  In other words, a youth who's in front of his desktop at home and during those 3 hours is also viewing in the corner of his eyes what's on TV.  When something catches his attention on TV, he pauses his chatting or YouTube viewing and gets engaged on the TV program.  And then shifts back.  Casual observation of this back and forth multi-tasking has been reported with high frequency although we have yet to see its full and systematic documentation. 

 

As to advertising online, we suppose you know that you still remember how this all started with simple banner ads and sponsorships.  Simple as they were, they already had a distinct advantage over the traditional advertising.  Those banners and sponsorships both were able to link the viewing consumer back to their respective advertiser's web page or promo page.  There the consumer could get more information about the ad, the advertised product and the advertiser.  That was a rather crude beginning but already an engaging form of interactivity.

 

In the new and ever changing broadband (and wifi and 3G) technology, the ad campaign has become more sophisticated.  There are now video creative features that lend a dynamic character to the ads.  It's a sharp contrast to how static were banners of the previous decade of internet ads.

 

Search Marketing

And now let's go to your question: what to understand about consumer buying behavior when they do internet shopping.  Scott Berg, the Worldwide Media Director at Hewlett Packard coined the insighting discipline for this: "search marketing." 

The term "search" captures the essence of how an online consumer starts her internet shopping.  In this searching behavior, your consumer depends upon her command of "key words."  Some have very few, others a whole lot.  Those who have a few soon learn more terms.  Those who already knew a whole lot also learn much more. 

 

All learn because you, as internet advertiser and marketer, drive them.  Just look at how Amazon.com does this with (among others) its recommendations on what other books to buy when buying one title.  But this is getting ahead of the game.

 

Your search marketing program starts or has its key and lead variable in where and how you land in a search engine "listing."  The more you are at the top of a page, the more you get click-throughs.  Plus this:  The more relevant consumers find you in the listing, the more your click-throughs.  Or at least these two are what almost all of us in cyber space marketing assumes to be the case.   

 

As you can see, here what is critical to understand about the internet shoppers is what key words and terms they will use and are learning in their search buying.  That defines the insighting research you have to do and keep on doing.  We say "keep on doing" because there's continuing learning among consumers. 

 

Exciting CUR issues

When you get into this kind of consumer understanding research (CUR), the findings often challenges your assumptions.  That includes our assumption that being on top of the list is where the premium shopper "real estate" is to be found.  It's analogous to our own supermarket shopper in-store behavior study.  In most cases, that premium shelf location in the supermarket turns out to be not the entrance to the aisle but the shelf space that's in the shopper's second or third step as she enters.  This is because in most cases, she gets into an aisle fast and then slows down on her second or third step.

 

In any case, this is the kind exciting CUR issues you are up against.  But your raising the question tells us you're way ahead of other online advertisers and marketers who are proceeding with their search marketing campaign with "rules-of-thumb" and unvalidated internet consumer behavior assumptions. As Berg says in his HP blog post, Digital Ignorance, education is key for marketers (especially the CMO) in this day and age of digital marketing. Make sure that you continue asking questions AND continue searching for answers from different sources.

  

Please keep your questions coming.  Send them to us at drnedmarketingrx@gmail.com or  MarketingRx@pldtDSL.net. God bless!

 

Help! We've Been Missing Our Targets

We'll be referring to this in our column this Friday, so we're reposting this in our blog. Hope this helps you Strat Planners!

MarketingRx for December 4-09

“Help!We've been missing our targets...”

By Dr Ned Roberto & Ardy Roberto

Q:  This year it looks like we’ll again be below the market performance we set at our corporate strategy plan that we crafted before the start of this year.  This below-the-target record was true of last year and the year before. 

We do our annual corporate strategy planning September of each year.  We devote 3 full days for this planning at an out-of-town hotel.  We start by having outside speakers to tell us what to expect about the coming year’s PEST (political, economic, social and technological) environment.  This is followed by a SWOT analysis and a review of the company’s past two year’s sales and profit performances.  From this analysis and review, we derive the direction to take for the coming year and the strategies to bring us to the chosen direction.

But we’ve been missing our targets for the past 6 years.  Someone told us that he heard you once in a conference say that when something like what we’re experiencing happens, it’s likely that the strategy planning process is flawed or wrong.  Can you tell us what’s wrong with what we’re doing?

A:  That's a difficult question to answer. So, we WILL ANSWER BASED SOLELY on your brief and general description of your corporate strategy planning process.  We can be more specific if you were also specific about what happened between the time you strategized in September of the previous year and the end or toward the end of the current year.

Benchmarking with Jack

In the particular context of your question, we’d like to answer by benchmarking against a known and acknowledged classic in corporate strategy planning.  This is Jack Welch’s system at General Electric (GE).  Awarded by Fortune Magazine as the “Manager of the Century,” Welch’s strategy planning for GE has the enviable record of never having missed its target market share, sales and profit numbers.  The elements of Welch strategy planning evolved over his 20-year tenure at GE.  They are found in his two books, Straight from the Gut (2001) and Winning (2005), and in the two books about his leadership at GE, namely, Jack Welch and the GE Way by Robert Slater (1998), and Jacked Up: the Inside Story of How Jack Welch Talked GE into Becoming the World’s Greatest Company by Bill Lane (2007). 

In its final form, here’s the way Jack Welch has developed his GE corporate strategy planning system.  Incidentally, Welch conducts and facilitates the sessions himself.   There are four sets of planning sessions in the entire system and each has its own specific focus. 

Every Six months

The system’s first part is an every Spring and Fall strategy planning for the intermediate term.  The purpose here is to take a serious look at each of GE’s strategic business units (SBUs) along a 3-year time horizon.  Why every six months?  That’s a Jack Welch signature thinking.  The visibility of the longer-term gets less and less unpredictable as the short-term unfolds.

Annual stratplan:how to beat...

The second part is the annual strategy planning.  That happens every January and takes place in a Florida resort, the Boca Raton Hotel & Club.  The planning sessions here are devoted to sharing of “best practices” and to setting each SBU’s coming year’s business priorities.  Each strategic plan ends with a budget.  Welch’s sets two rules for what he regards as a “good focused budget.”  The budget must focused on answering these two questions: (1) “How can you beat last year’s performance?” or how can you successfully compete against yourself?  (2) “What is your competition doing, and how can you beat them?”       

"Implement like hell"

The third and fourth parts are related to each other because they fall under what Welch regards as the more consequential component of strategy planning.  This is “execution” or strategy implementation on which Welch’s attitude says: “Strategy is actually very straightforward.  You pick a general direction and implement like hell…  (So) when it comes to strategy, if you want to win, then ponder less and do more. ”   

There are two critical components in strategy implementation: (1) people planning and management, and (2) operations planning and management. 

Management retreat

For Welch, planning for people management is a twice a year “retreat.”  The retreat’s focus is on how to continue empowering his executives in each of GE’s SBUs.  The planning sessions therefore reviews and insights into the changing managerial and staff needs for each SBU.  The review and insighting are directed at enabling each SBU in attaining their market performance targets.  It is here that Welch applies his famous 20-70-10 formula for managing people.  He generously rewards and further sharpens via tailored fit training, his top 20% executives and their staff, and fires the 10% bottom performers and laggards.  What about the middle 70%?  Here’s Welch’s policy and counsel to his SBU heads: “Spend half of your time evaluating and coaching the middle 70% -- those who are neither disrupting nor shining.”

During the sessions in this people planning, Welch relies heavily on his HRD (Human Resource Department).  When asked by Fortune magazine in an interview who is a good HR head, Welch quipped: “The best HR type?  A pastor and a parent in the same package.” 

Finally, the planning for operations is a 2-day every quarter event.  The focus here is on the initiatives and activities closely related to the agenda set during the annual strategy plan.  Welch also takes the two days as the occasion where he can identify the company’s future leaders as gleaned from their responses during the sessions to the challenges of change and issues. 

Prescriptions

So there’s your model for transforming your own strategy planning into a more doable and attainment empowered planning system.  The prescriptions for the needed transformation are:

1^st.  Separate the planning sessions for the 3-year and the annual, and for the people and the operations necessary for effectively implementing the annual strategy.  Don’t compress all four into one planning schedule.     

2^nd.  Schedule the occurrence and frequency of each of these 4 components of the

              entire strategy planning over different times of the year.

3^rd.  Give a specific focus for each planning of the 4 components but relate each

focus to the attainment of the direction and priorities of the annual strategy plan.

Keep your questions coming.  Send them to us at drnedmarketingrx@gmail.com or  MarketingRx@pldtDSL.net. God bless!

Entrepreneur's Gut Feel Predictions for 2010

MarketingRx for Jan 1-010 and Jan 8, 2010

The entrepreneur's gut feel for 2010 (part 1)

or 7 gut feel predictions for 2010

Happy New Year! For this week's column, the junior MRxer looked into his magic entrepreneur's gut to give you seven market predictions for 2010. Here we go:

# 1. In 2010 money will continue to flow in from OFWs all over the world. The World Bank got it wrong, says, economist Bernardo Villegas. The self-proclaimed prophet of bloom, in the midst of all the gloom prophets, has already been proven right. OFW money is not tightening. There's even an increase in remittances. Why? Pinoy OFWs have not been among those axed for employment by companies in the worldwide tightening of belts. Villegas has funny anecdotal evidence as well, which he shares when he makes the rounds of the speaking circuit. “Filipinos take a bath every day—sometimes even twice a day.” Was one reason he cited. The hotel and restaurant industry likes the fact that Pinoys smell good. The workers of nationalities that smell like a deodorant-free underarm at the end of a long hot day? Bye bye! Nothing personal, okay?

Because of this, expect the current growth in retail to be sustained. And we're not talking about single digit growth baby, we're looking at double digit growth! There's a reason why the Sys and Ayalas also have double digit grins this year—and that's definitely one of them (albeit a SM Mall going under water during Ondoy for the Sys and a sensational daytime armed robbery in upscale Greenbelt 5 for the Ayalas.)

So what to do with the continued flow of money from our Expat Pinoys? Don't hold back on promoting your real estate projects (especially those that are above sea level). Go get your lion's share of the 13^th and 14^th month bonuses that were released and remitted. Offer trade-ins for water damaged properties? Hmm. Whatever, the offer is, go and get business.

#2. Pinoy consumers become even more "savings savvy". Despite the continued spending splurge mentioned above, Pinoys will save more. Well, never mind the “kaputting” of Rural Banks owned by the Legacy group that went under at the start of 2009. Banks are reporting that Filipinos are saving more money with double digit growth in the savings deposits. That's a good sign since Pinoys are one of the worst savers in Asia. We are not a nation of conscientious savers. One of the blessings, I guess of the global economic crisis, is that it has taught us to be savvier with our money. Government has done it's small part by doubling the amount that your deposits are insured to P500,000, thereby instilling more than a sliver of confidence in consumers. Still, banks offer investment vehicles that offer rates that are just a little over the inflation rate. With author/speakers like Topaks Colayco (Pera Mo, Paluaguin Mo and One Wealthy Nation founder), Chinkee Tan (For Richer or For Poorer and 'Till Debt Do Us Part), Bo Sanchez (8 Ways to be Truly Rich) and Larry Gamboa (Think Rich Pinoy!) educating more and more consumers on how to invest and be smart with their money—there is opportunity in this area for marketers of legitimate investment vehicles.

"Your money is best invested in a business" is the sentiment of many. Marketers of affordable franchises, especially food cart franchises will boom. So take advantage of the Entrepreneurship fever. On the other hand,  Mutual fund offerings will be in again. Companies like Citisec online will benefit. Insurance companies offering investment products other than the usual insurance-alone options will see a boom in 2010. Gold will continue to increase in value and be a safe haven for investors (as compared to the dollar and even the Euro), so companies that will offer investment vehicles based on Gold or gold itself, instead of the usual cash currencies, will literally be Geese that will be laying golden eggs.

#3. Feel Good Luxury Products will continue to do good this 2010. The middle class whose cars and houses were flooded and water damaged during Ondoy and Pepeng, will turn to products that will make them feel good. They will want to treat themselves to something they think “they deserve” because of all that they have been through. It was marketing author and guru, Josiah Go who first mentioned this in his fearless post-Ondoy marketing predictions that he published in his Facebook account (and which my father and I later re-published in our MarketingRx column last October). It is worth echoing here.

Think Royce luxury chocolates from Japan. Have you tasted their Dark Chocolate coated Macadamias? Probably not, because they were still out of stock, the last time I checked. But they do have enough “I-deserve-this” chocolates stocked in their small stores in Rockwell and Greenbelt 5 to serve those who want to feel not just good, but much better after the turmoil of 2009 (from both man made and natural made disasters). Concerts and the movie industry will make a comeback (actually the growth of the movie industry in the US is eye-popping, thanks a lot to movies like Avatar. Consumers in the US are treating themselves to more movies as an escape from the reality of unemployment scares and subprime mortgage realities knocking on their doors.) Here in the Philippines, the movie industry has been so sickly for so long, it is definitely poised for a stunning turn around. Who knows? Wapakman might have been the answer if Dionisia Pacquiao were in it!

Don't forget to register to vote before the new deadline runs out again! We're out of space but not out of well wishes for all of our readers.Have a blessed new year! Send us your comments or questions to marketingrx@pldtdsl.net or drnedmarketingrx@gmail.com

+++++

 MarketingRx for Jan 8, 2010

The entrepreneur's gut feel for 2010 (conclusion)

Happy New Year! Last week the junior MRxer looked into his magic gut to give you the first 3 of  seven market predictions for 2010.

Here are the remaining 4; here we go:

                

#4.  Let's go tripping! Biyahe na Pinoy! Tourism and travel executives will be smiling. With the so called “democratization” of travel a result of the price wars still going on in the airline industry (thank you Cebu Pacific for starting this!), domestic tourism will continue to also grow by double digits in 2010. Spurred by travel blogs (think of Anton Diaz's Our Awesome Planet blog) and online search for the best deals, Pinoy consumers will be plunking down paychecks into good travel deals. Expect excuses like “time to visit the long lost relatives in Cagayan de Oro, so might as well do some white water rafting” to crop up this year. Literally cool places will be favorite destinations of families again. Baguio will make a comeback (thank you Ad Congress for propping them up with your donation) and Tagaytay's roads will be merrily clogged again this Holy Week. Subic will benefit from the spanking, stateside-like highway also. The addition of the Philippines in NatGeo's List of Must Visit Places in 2010 will add up well for the travel industry. But here's hoping that places like Camsur and Bohol don't go the way of overcrowded-overdeveloped Boracay.

Pinoys will be happy travelling campers this season and it doesn't take a rocket scientist to figure out how to take advantage of this.

               

#5. Consumers as Healthy, Wholesome and Wise. Week-end markets like the Saturday Salcedo Market and the Sunday Legaspi Markets in Makati have been attracting the growing middle class. Films like Food, Inc are wising up consumers to choose what they put into their and their families mouths wisely. Worldwide, Walmart is now marking and labelling which products are organic – and thereby labelling the rest that are not as “inorganic” or less healthy. And we are not just talking about vegetables and fruits. Include meats in that list. What Walmart does, the rest of the retailing world usually follows. So expect a surge in “organic” consciousness. So while it is early, go and make the effort to grow organic and offer meats and food that has not been produced in “farm factories”. Be the first to offer beef and chicken labeled as “Hormone and antibiotic free”. (Just last week, a bill was filed to require even Dog Food marketers to list the ingredients of their products.) Expect new market entrant, Human Nature, which brands itself as "100 percent organic, 100 percent Philippine-grown and 100 percent chemical-free personal care products" to have explosive growth with its decision to go through the direct sales channel (and donate part of the proceeds to its advocacy, Gawad Kalinga. Human Nature is founded by Anna Meloto-Wilk and Camille Meloto, the daughters of GK Founder, Tony Meloto.) We received their products as Christmas gifts from our staff and their affordable and SLS-Free shampoos and lotions could give Body Shop a run for their money.

Seize this segment of the market and be first in it. Please. I will be your first customer and most viral of advocates.

. 

#6. Consumers will shop beyond the traditional. This means that “non traditional” distribution and sales channels will continue to grow thanks to more Filipinos trusting in the channels itself. Think of the internet and the thousands of Mom and Pop Multiply-type makeshift e-commerce sites. Think of the fastfood chains set up for internet ordering. Think of the movie ticket and concert ticket reservations online (more than half of Charice Pempengco's launch concert at the MOA recently was sold via Friendster). Ayala Mall's Sureseats online reservation system allowed this writer to buy tickets online 6 weeks before the Pacquiao-Cotto fight.) Christmas pasalubong shoppers will look online for special deals. Now that the online population of the Philippines has doubled (from 10% to more than 20%), you can't ignore this anymore. 

Finally, you can't count out the Direct Selling channel. Look at this non-traditional channel to sustain growth beyond Christmas. Just think of FernC, the vitamin C supplement that is now a billion peso brand thanks to its direct selling approach. This is something that it's older competitors have failed to do via the traditional Mercury Drug approach. At an international publishing conference in Kenya, I met the marketing director of a Brazilian publishing firm that has sold hundreds of thousands of books, including trendy pink leather bibles for girls, through direct selling giant, Avon.  The market in the Philippines is ripe for that kind of traditional products through non-traditional selling channels.

#7. Manny Pacquiao will knock out Floyd Mayweather (in court or in the ring). IF the biggest fight in boxing history pushes through this year, Filipino consumers (around the world) will be in a carry over fiesta mode from Pacquiao's victory.  Never mind that his Wapakman is a flop or that he won't be able to spend his way into winning a seat in congress in May. (Win or lose Manny should bring home a good chunk of the US$25M that he is reportedly guaranteed for the fight.)Think of this win over Mayweather as the equivalent of giving San Mig Coffee to a hyperactive 2 year old boy. That's what the Pacman's win (and his election spending spree) will do for the national economy and psyche. 

Manny's winning always gives us a break from bad news and bad numbers. Remember the 4 back to back typhoons that devastated the Philippines in 2009? Thanks to the Pacman's victory last 14^th of November,  the country all but forgotten those numbers—albeit even for a day or two. The victory has given us the permission to smile wide, open the wallet somewhat wider and spend to celebrate. And that always bodes well for the food and entertainment industry.

With election money expected to pour in the coming months leading to May, we hope that our inflation rate stays at the lowest is has ever been in more than 20 plus years. And if we elect a president that is smarter than Pumba and as brave and non-corruptible like Simba, then next Christmas Holiday season in 2010, we can all continue to say, as the Kenyans say in Swahili, “Hakuna Matata!” (No worries!). 

Have a blessed new year! Send us your comments or questions to marketingrx@pldtdsl.net or drnedmarketingrx@gmail.com

New Year's greetings and The Entrepreneurs Gut Feel of 2010 - part 1

Two days into 2010 and I feel hope and anticipation in the air. Many are hopeful that the perseverance and character that was sowed in 2009 by all the trials that marketers have been through will reap a harvest of blessings. 

Dr Ned and I wish all of our MarketingRx readers a new year filled with hope, prosperity, love and miracles! Here's to new life.

http://business.inquirer.net/money/columns/view/20091231-244894/The-entrepreneurs-gut-feel-for-2010