Consumers in a connected world

I have now and then been involved in discussions about changing consumer behavior during the years. When at Volvo we recognized that Internet provided a price transparency which threatened the margins. The story were that people first went to shopping for a car, but when they had decided which car they wanted they asked their 16 year old kid to find it for the cheapest price on the Internet creating a new price transparency. After thinking about it for a while it also became clear to us that what technology did was change the prerequisites differently for the stages in the process

  • Shopping - an emotional and information heavy process where your identity and the brand identity would match in order to end up in a decision
  • Purchasing - the rational process of finding the goods for the best price - boosting self asteem
  • Owning - an identity building step where the earlier steps isn't that much important any more (nobody else actually know where and how you bought)

This complex mix of identity building and boosting your self esteem through owning expensive looking products and feeling smart was probably why outlets was such a success. There you could buy the right Prada bag very cheap and nobody actually knew that you bought it for less than half the price. The result was that these steps actually became disconnected from each other at least for some products.

This was at least true for emotionally loaded products like cars, jewels and expensive designer products. At this stage (late 1990:s) the Internet was still a information gathering tool. Today with the emergence of social software this is being taken even further. A very good story about this was provided in a post by researcher Danah Boyd on the Marketing & Strategy Innovation blog (found through Richard Gatarski's blog weconverse). In a lecture Danah heard this story from a mother describing her daughters shopping behavior:

Using Google and a variety of online shopping sites, Mary researched dresses online, getting a sense for what styles she liked and reading information about what was considered stylish that year. Next, Mary and her friends went to the local department store as a small group, toting along their digital cameras (even though they're banned). They tried on the dresses, taking pictures of each other in the ones that fit. Upon returning home, Mary uploaded the photos to her Facebook and asked her broader group of friends to comment on which they liked the best. Based on this feedback, she decided which dress to purchase, but didn't tell anyone because she wanted her choice to be a surprise. Rather than returning to the store, Mary purchased the same dress online at a cheaper price based on the information on the tag that she had written down when she initially saw the dress. She went for the cheaper option because her mother had given her a set budget for homecoming shopping; this allowed her to spend the rest on accessories.

It becomes clear that the young and connected generation sees consumption and shopping quite differently than the previous not-yet connected generations (NYCoG).

When technology now matures and everything becomes mobile and online: shops, friends and all other information sources you can think it becomes clear that customer behavior is taking another step. But where is it going?

A couple of months ago HBR Working Knowledge announced a paper called Digital Interactivity: Unanticipated Consequences for Markets, Marketing, and Consumers by John Deighton where he argues that traditional marketing research have missed the real changes in a digital interactive world. Maybe this can be a clue to where it is currently heading?

The conclusion of his article is that marketing research have too much focused on how producers are interact with the customers (in the lower left corner), not understanding that the biggest change is occurring within the ranks of the customers (the move towards the top right). He draws this picture (the red arrow is mine) to explain what is happening when the communication flow increases between individuals.
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Step by step the game isn't anymore about accessibility and information, it is about identity and meaning. The game is on its way to change towards a game of fitting in to a web of cultural communities where the community, and not the producer, accepts or rejects its participants.

This is why the increasing communication in general and social software in particular is so interesting for how business and marketing is going to change from a vertical producer-customer game towards a horizontal game where the customer-to-customer relations are much more interesting.

Maybe this is something to think about before you are designing your next marketing strategy or sending your next batch of direct mail offering.

  • Read Danah Boyds post here
  • HBR Working Knowledge working papers: Digital Interactivity: Unanticipated Consequences for Markets, Marketing, and Consumers by John Deighton - download here

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