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Online research plays critical role in offline purchases: Yahoo!-OMD study

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Online research plays critical role in offline purchases: Yahoo!-OMD study

The Internet's greatest impact on shopping is in assisting consumers in the decision-making process, regardless of whether purchases are made online or at retail stores, according to a study by Yahoo! Inc. and OMD.

Findings indicate that a large majority of consumers look online for information as a core part of the purchase decision process for products of all kinds. It elaborates that the Internet offers a collaborative environment, where consumers turn for advice and the experience of others in weighing brands, discovering alternatives and distilling prices, as they weigh their purchase decisions.

Titled "Long and Winding Road: The Route to the Cash Register," the study is the first research that examines how cultural shifts brought about by the proliferation of technology have radically altered the way consumers make purchasing decisions.

The study found that the Internet, along with related technologies like camera phones and text messaging, have given consumers a new kind of ‘social empowerment’ as they gather information before they shop. More than two-thirds of shoppers across several product categories still make the bulk of their purchases at physical retail locations -- yet nearly two-thirds (62 percent) use a combination of online and offline sources to gather information before they buy.

"The Internet is far more than just another point of purchase; its biggest impact lies within the awareness and consideration process," said Wenda Harris Millard, Yahoo!'s Chief Sales Officer. "The widespread adoption of social technologies gives marketers an even greater opportunity to continuously engage consumers and make connections across traditional and new media advertising, helping to build brand mindshare and increase offline sales."

The research shows that the Internet is crucial to consumers as they follow various paths on their way to making a purchase. The Internet serves as a price leveler, has helped create a communal shopping experience, and is where consumers turn for trusted sources of information and dependable customer reviews, it adds.

The study found that three things were important when making a purchasing decision: trusted information, choices and price.

Consumers said that the Internet is the most trusted shopping information source (54 percent), followed by magazines (34 percent) and TV (23 percent). Seventy-four percent of people use trusted, familiar websites when purchasing online, and 55 percent opt-in for e-mail marketing messages from companies they trust.

Another interesting finding is that on an average, consumers consider three brands before making a purchasing decision. The research reveals that 61 percent of people consider themselves to be serious bargain shoppers. The Internet is changing the concept of fixed pricing by enabling consumers to search for the same product at myriad prices, as well as actively monitor a product for price discounts or find coupons and rebate offers.

The research finds that the shape of the traditional purchase "funnel" has changed. In the past, as consumers began researching their options, they steadily narrowed their choices all the way to purchase. The study found that there is opportunity for marketers to affect purchase decisions with brand messaging - be it traditional, online, in-store or word of mouth - even after consumers have decided where to buy. 63 percent of consumers gather information when they first begin researching a purchase, 57 percent when they are narrowing down their options, 42 percent when they are deciding where to buy, and 51 percent when making their final decision. The study showed that 25 percent of people have posted reviews of products or services online, providing a service to other shoppers.

Another new phenomenon, the ‘coupon train,’ has emerged, in which consumers clip both standard and online coupons and share them with others.

"Significantly, this sharing of information may have big implications for pricing, particularly in light of escalating energy costs," noted Joe Uva, President and CEO, OMD Worldwide.

"One conclusion that might be drawn from the study is that consumers have access to so much information that it often broadens, rather than narrows, their choices by the time they get to the store to make a purchase," added Mike Hess, Global Director of Communications Insights and Research, OMD. "This makes the role of advertising, especially 'just in time' advertising, and the buying cues in the in-store environment even more important. The use of a variety of traditional media, like television and magazines, can be potentially stronger than ever in influencing the 40 percent of shoppers in the store who are yet to make their final decision."

The online survey was conducted with a total of 4,301 adults aged 18+. Surveys were collected from March 15-22, 2006, and the sample was drawn from Ipsos' US online panel. Respondents represent individuals with broadband Internet access at home who had recently made a purchase in one of the selected product categories.


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