The Smarter Consumer

A research response on the smarter consumer done as part of RMIT Masters of Communication Design course.

“How is the smarter consumer due to technology impacting brands”

 

The social web has changed traditional marketing communications that were previously controlled by brand and marketing managers to now gradually being shaped by consumers (Schivinski et el 2013 p.3).

Technology has created an era of open-mindness. Web technologies, the internet and social media have allowed users access to a vast amount of online exposure , most notably social networking, as Bruno Schivinski and Darius Dabrowski argue in their Working Paper Series The Effect of Social Media communications on consumer brand perception (Schivinski et el 2013 p3).

‘Social networking through online media can be understood as a variety of digital sources of information created, initiated, circulated and consumed by internet users as a way to educate one another about products, brands, services, personalities and issues’ (Chuanan and Pilli 2013:  cited in Schivinski et el 2013 p.3)

 Melissa Schaefer, researcher from IBM Institute of Business Value, states that technological advances have resulted in today’s smarter consumers being more connected, vocal and demanding than ever (Schaefer 2011). Their attitudes have changed and they are less likely to be influenced by traditional media such as television, radio and magazines as mentioned by Mangold and Faulds in their article The New Hybrid Element of the Promotion Mix (cited in Schivinski et el 2013 p.3) Consumers are instead taking advice from friends and family. Their mindset has transformed from the ‘market of me’ to ‘communities of we’ as Schaefer concurs.

‘Consumers don’t follow a brand to ‘feel connected’ or ‘join a community’ as retailers assume…they want discounts, trial offers and exclusive content…delivered in a way that is fun, fast and interactive’ (Schaefer 2012).

Consumers had to previously rely on advertisements and past experiences with a company. Brands served as a ‘proxy for quality’ that you assumed you would get, states The New Yorker journalist James Surowiecki.

‘The rise of brands was a response to an information poor environment’ (Surowiecki 2014).

Where it was once hard to figure out if a new product from an unfamiliar company was reliable, it is now possible for consumers to read reams of information before they buy, weakening the power of brands. A study conducted by PricewaterhouseCoopers found 80% of consumers look at online reviews before making purchases (Surowiecki 2014).

The internet and social media has allowed for a resurgence of word of mouth in social media which has contributed to a shift in brand loyalty as mentioned by the Tweak Team, a UK Brand and Marketing Agency, in their article How can brands survive information overload (Tweak 2014). Nienke de Van Norel, Professor of University of Twente, refers to this as electronic word of mouth or eWOM (Van Norel 2014). Social media has allowed consumers to converse with one another discussing their interests, product experiences and opinions via ‘tweeting’, ‘tumbling’ and ‘video hauling’ (Schaefer 2011 p.8). Schivinski and Dabrowski agree stating that companies are no longer the sole source of brand communication.

Increased rich information and brand dialogue has become dynamic and interactive in real time with consumers now no longer accepting things at face value. Consumers have a ‘thirst for information’ according to the Tweak Team which impacts their decisions and formalises their opinions(Tweak 2014). They are talking to friends and family to learn about products (18% still rely on retailers), looking at reviews and monitoring price deals.

 ‘smarter consumers…are not simply responding to advertising and promotions they are consulting their friends and family, using search engines and looking at mobile applications – media that is completely outside a retailers control’ (Schaefer 2011 p. 7).

Their expectations of the shopping experience have changed. They want to be served easily and conveniently and feel like they have a personalised and tailored experience that meets their needs and preferences. Schaefer mentions these now empowered consumers can decide where, when and how they shop. They are much more selective which retailers they do business with (Schaefer 2012). Marketers need to reinvent the experience for consumers and listen to what consumers are saying and how they are acting. Their window of opportunity to influence has become much smaller.

 ‘It has minutes rather than hours to make a favourable impression in a much ‘noisier’ environment’ (Schaefer 2011 p.8).

Consumers have become harder to ‘read’, more cautious about their spending and more resistant to marketing as technology has now opened up alternative ways for them to get information. Companies need to understand the effect of this ‘new model of discretionary spending on brands’ and become a ‘trusted source’ by being present and actively engaged in their communities and social channels both online and offline (Humfries 2011).

They need to provide consumers with the choice to choose in a convenient and enjoyable way. The consumer is no longer passive but an active participant in the shopping experience and companies need to provide them the facilities to achieve this if they want to survive. Schaefer’s research suggests the empowered consumer is open minded about spending, given the right enticement (Schaefer 2012).

‘More than half of all consumers who follow a brand on social media spend more with retailers with which they have interacted positively online with.’ (Schaefer 2012).

What it comes down to for brands is trust, and which retailers can earn their consumers trust. The consumer expects concrete support from brands. Great brands need to be great sentiment analysts and storytellers, says the Tweak Team (Tweak 2014). Consumers have in a sense become a new breed of their own, one that relies on their own product opinion and expertise.

‘They are the experts’ (Schaefer 2011 p.8)

For marketing tactics in particular celebrity endorsement, it seems it is about whether companies can make the online endorsement presence appear credible to the consumer in order to successful.

As Van Norel discusses

‘credibility is especially important in the Twitter environment because everyday users are exposed to many extreme opinions…personal sources such as friends are viewed as being more credible than impersonal sources such as celebrities.’ (Van Norel 2014)

suggesting that if they can be viewed as credible they then have the ability to exert influence. They need to achieve the ‘Oprah Effect’ as Olivia Rout, inbound marketing consultant for Mainstreet host, mentions in her article Celebrity endorsements and Twitter implying that Martin Gladwells theory ‘Of the Last Few’ can exist if these celebrities are seen as credible. They can become influential ‘gatekeepers’ that further impact a consumer’s purchasing decision (Rout 2012).

Brands that wish to use celebrity endorsement to attract this smarter consumer in the future need to adapt to the window of opportunity creating shorter and more flexible contracts and tighter moral clauses with celebrities. They need to ensure they manage all potential outcomes in a way that is valid, trustworthy and unified.

 

Image from Creative Commons JD Hancock

References

Baskerville, A 2011, ‘The Future of Celebrity Endorsements is there one’, Minding the Gap, 14 January, accessed 25 May 2014 http://andrewbaskerville.blogspot.com.au/2011/01/future-of-celebrity-endorsements-is.html

Coombs, J 2014, Thread 3 – Conclusion and Proposition , A3 Group 3 – Sponsorship and Endorsement. In: RMIT Masters Seminar Discussion Board [Online],Available at https://lms.rmit.edu.au/webapps/portal/frameset.jsp?url=%2Fwebapps%2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_284153_1 {Accessed: 26 May 2014, 27 May 2014}.

Crenshaw, D 2010, ‘The Future of Celebrity Endorsement, Post Tiger’, Crenshaw Communication, 5 March, accessed 25 May 2014 http://crenshawcomm.com/the-future-of-celebrity-endorsement-post-tiger/#.U4HMPJSSz9I

Humfries, D 2011, ‘ Smarter consumer products marketing: Understanding consumers, building brands’, IBM Institute for Business Value Consumer Products, viewed 31 May 2014, http://www-304.ibm.com/easyaccess/fileserve?contentid=231510

Keel, Astrid and Nataraajan, Rajan, 2012, Celebrity Endorsements and Beyond: New Avenues for Celebrity Branding, Psychology and Marketing, Vol. 29(9). P 690-703

Nienke D, Van Norel et el 2014, ‘Damaged corporate repuation:Can celebrity Tweets repair ti?’, ScienceDirect, vol 36, pp 308 – 315, viewed 28 May 2014 via RMIT database, http://www.sciencedirect.com.ezproxy.lib.rmit.edu.au/science/article/pii/S0747563214001782

Roat, O 2012, ‘Celebrity Endorsements and Twitter:Do we buy things when celebrities tell us to’, Mainstreet host Digital Marketing Agency, 24 July, viewed 31 May 2014,http://blog.mainstreethost.com/celebrity-endorsements-and-twitter-do-we-buy-things-when-celebrities-tell-us-to#.U4lFSJSSz9I

Schaefer, M 2012, ‘Winning over the empowered consumer – why trust matters’, IBM Institute for Business Value, viewed 31 May 2014, http://www.ibm.com/smarterplanet/global/files/au__en_uk__ibm_exec_summary_empowered_consumer.pdf

Schaefer, M 2011, ‘Capitalising on the Smarter Consumer’, IBM Institute for Business Value Retail Analysis,  viewed 31 May 2014, http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03390usen/GBE03390USEN.PDF

Schivinkski, B et el 2013, ‘The effect of social media communication on consumer perceptions of brand perception, GUT Faculty of Manageent and Economics, No 12, viewed 31 May 2014, http://www.zie.pg.gda.pl/c/document_library/get_file?uuid=9c3d9c80-2fd2-479b-9b6d-19727db13d18&groupId=10236

Tweak Team, 2014, ‘How can brands survive information overload, wek uk, 20 march, viewed 31 may 2014 http://www.tweakuk.com/can-brands-survive-information-overload/

 

Non-cited refernces

Cohen, R 2012, ‘Social Media Clout:The rise of micro celebrity endorsemtns’, Forbes, 5 November, viewed 31 May 2014, http://www.forbes.com/sites/reuvencohen/2012/05/11/social-media-clout-the-rise-of-micro-celebrity-endorsements/

Chung, K 2013, ‘The Tiger Woods Effect: Celebrity endorsements increase sales’, Wisconsin School of Business, 23 Octobter, viewed 31 May 2014,http://bus.wisc.edu/mba/brand-product-management/blog/2013/10/23/the-tiger-woods-effect-celebrity-endorsements-increase-sales

Faeh, C, 2011, ‘Social medias impact on brand value’, TriplePunit, 14 December, viewed 31 May 2014http://www.triplepundit.com/2011/12/social-medias-impact-brand-value/

Harrington, K 2014, ‘Save your money:Celebrity endorsements not worth the cost’, Forbes, 31 January, viewed 31 May ,http://www.forbes.com/sites/kevinharrington/2014/01/31/save-your-money-celebrity-endorsements-not-worth-the-cost/

Hollis, N 2012, ‘ How does social media affect brand equity’, MillwardBrown, 8 May, viewed 31 may 2014, http://www.millwardbrown.com/global/blog/Post/2012-05-08/How-does-social-media-affect-brand-equity.aspx

Graj, S 2011, ‘Could Social media devalue brands’, Forbes, 10 December, viewed 31 May 2014, http://www.forbes.com/sites/simongraj/2011/10/12/could-social-media-devalue-brands/

Langford, L 2014, ‘Celebrity endorsement on social media’, Brand Republic, 17 January, viewed 31 May 2014, http://www.brandrepublic.com/opinion/1227507/celebrity-endorsement-social-media/

Smith, W 2011, ‘The impact of technology on brand marketing’, Branding Strategy Insider, 12 November, viewed 31 May 2014, http://www.brandingstrategyinsider.com/2011/11/the-impact-of-technology-on-brand-marketing.html#.U4li3ZSSz9I

Steer, A et el 2011, ‘How will brands use celebrity endorsement in the future?’, Quora, 9 March, viewed 25 May 2011 http://www.quora.com/How-will-brands-use-celebrity-endorsement-in-the-future

Surowiecki, J 2014, ‘Twilight of the brands’,  The New Yorker, 17 Febuary, viewed 31 May 2014,http://www.newyorker.com/talk/financial/2014/02/17/140217ta_talk_surowiecki#sthash.OLWlX2ce.dpuf

Spry, A et el 2011, ‘Celebrity endorsement, brand credibility and brand equity’, European Journal of Marketing, Vol 45, Iss 6, pp 882-909, viewed 28 May 2014 via RMIT database, http://www.emeraldinsight.com.ezproxy.lib.rmit.edu.au/journals.htm?articleid=1926001

Thompson, C 2008., ‘ Is the tipping point toast?’, Fast Company, 1 February, viewed 31 May 2014, http://www.fastcompany.com/641124/tipping-point-toast

 

 

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One comment on "The Smarter Consumer"

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