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The Online Path-To-Purchase

8/17/2010 01:56:00 PM

A manufacturer’s website is their single most important marketing tool. This isn’t hyperbole. This is the current reality.

The retail world for consumer durable goods — considered purchases such as CE equipment and appliances — has changed so radically over the last decade because of the Internet that the typical consumer-path-purchase is unrecognizable from what it once was.

The old path-to-purchase depended on retailer advertising in newspapers and television to generate demand and an in-store experience to educate the consumer fulfill a purchase. A consumer’s ability to research a product or compare prices was limited.

Things have changed.

The new path-to-purchase should be called the online path-to-purchase because it is dominated by online activity. I think everybody appreciates this to some degree based on their own personal experience. But I think marketers have underestimated the magnitude of the change and its pervasiveness.

According to an April 2010 study by ComScore of 1,167 computer and consumer electronics (CE) shoppers, two-thirds (66 percent) reported that their first step in the shopping process was an online activity such as visiting a retailer website, using a search engine, visiting a manufacturer website, visiting a shopping comparison engine, visiting a social-networking site, or reading blogs or publications online. Less than a third (28 percent) reported that an offline activity was their first step in the shopping process. An offline activity includes visiting a physical retail store, reading magazines or newspapers in print, and even talking with friends/family and colleagues.

The numbers didn’t get any better for offline activity on the second or third shopping step either. In fact, they got worse.  Online activities dominate throughout the process.

In particular, visiting retailer websites, a search engine or a manufacturer website was the first shopping action cited by 50 percent of consumers in this study. And visiting a manufacturer website outranked visiting a physical retail store as the first step (13 percent to 10 percent), the second step (16 percent to 7 percent) and the third step (15 percent to 7 percent).

The results from this study are not a fluke.

A 2009 Consumer Electronics Association (CEA) study, the Changing CE Retail Environment, found that 30 percent of all CE consumers report researching products online prior to making a purchase. Tellingly though for insight into future: 42 percent of 18- to 24-year-olds researching products online prior to making a purchase, and 49 percent of self-described early-adopters report the same behavior.

In a recently released study on ecommerce in Canada (LINK: http://www.npd.com/press/releases/press_100727.html), The NPD Group reached the same conclusion about the online path-to-purchase: consumers begin shopping long before entering a store.

There are many ramifications of the new online path-to-purchase, but for manufacturers one stands out clearly: They now have significant role in the process. The old path-to-purchase relied on the manufacturer making great product and the retailer selling it.

Given that manufacturer websites are consistently in the top three online information sources used in a considered purchase, the manufacturer is directly involved in the selling process.

A manufacturer can make this trend work for them by aggressive use of content and online marketing to create a robust information “footprint” on the web. The manufacturer’s website can be the best place to educate consumers and rise to the top of the consideration set. Through content on the manufacturer’s website, much of the product education that used to happen on the showroom floor can now be done online. To source demand, the manufacturer should always be able to use in-depth content on their products to rank highest in organic search results, not only for a particular product, but even in particular product types or categories.

By capturing email addresses when consumers are on their site and aggressively using display ad re-targeting, manufacturers are able, for the first time, to directly communicate on a one-to-one basis with customers and prospects as they move through the online path-to-purchase.

Although the consolidation in the retail channel has transferred market power away from manufacturers, the Internet and new online path-to-purchase has shifted information power and the ability to educate consumers squarely toward the manufacturer.

The manufacturers that are going to prosper with the new online path-to-purchase are those that can win consumer’s hearts and minds by meeting consumers as they begin their online process, educating them and then directly influencing them right up to the point of a transaction.

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