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Understanding Consumers Unlocks Door to Marketing

Understanding Consumers Unlocks Door to Marketing

Computer-Savvy Folks Have Special Needs, Target Interests

BY JIM TINDARO

Special to the Business Journal

Gone are the days where a home computer was a fad or luxury item for the average family. Now, families and consumers of all types consider this appliance essential to their daily lives.

Whether it be managing a home business or personal finances, or even keeping track of kids’ homework and school schedules, the home computer is more vital than ever to consumers.

One of the hottest uses for home and small business technology via computer is online shopping and research. Almost anything is available for purchase along with the research needed to decide which product is the best fit for the buyer’s needs.

Here in San Diego, the online purchasing trend continues to grow, according to a report from Scarborough Research. Three years ago, less than one third of all local residents stated they had purchased anything online in the past year. However, in 2002, almost half (45 percent) of individuals surveyed said they had bought online , a significant increase.

More importantly, San Diegans are using online resources to comparison shop and research products prior to purchase. Over the last three years, the percentage of shoppers researching products online has grown to more than half of all San Diegans, and of those more than 40 percent actually purchased the item they were shopping for.

This incredible closure rate illustrates the point that online retailers are finding the “key” to unlocking their customer’s sales buttons.

– ‘Click And Mortar’ Development

When it comes to computers and other electronic equipment, an online venue is an ideal place for retailers to emphasize their product benefits. Since 1999, local purchases of $2,500 or more have increased from 2.3 percent to 4.2 percent, indicating an increased willingness of consumers to spend money on big-ticket items.

However, there are some products that will never exclude existing retail locations. When the Internet began to really boom in the late 1990s as a viable retail outlet, several industry watchers predicted the death of traditional brick and mortar retailers and the dominance of online only sales.

As the Internet has evolved and shoppers seek the best possible buying experience, a hybrid “click and mortar” situation has developed.

Retailers are seeing more and more educated consumers coming into store locations. Often, the customer has already done side-by-side product comparisons online and researched appropriate price points for products before talking to a salesperson.

If the consumer is already educated and knowledgeable about a product’s selling points before entering a store, then the salesperson’s attitude and helpfulness becomes more important than ever. In a long-term study of consumer satisfaction factors in the car buying process, researchers found that 65 percent of buyers cited the sales clerk’s “attitude and knowledge” as the number one reason why a sale is made.

Additionally, the same group commented that poor attitude and knowledge was the number one reason why a sale is not made!

Industries traditionally faced with an intimidating sales process, such as car buying, have seen the biggest boost in increased consumer knowledge in the purchasing process. Through ongoing proprietary research in multiple markets, 37 percent of new car buyers stated that the Internet was the number one way they researched a vehicle before purchase. Additionally, 12 percent said they had visited the actual dealer’s Web site they were interested in before stepping foot on the lot.

Ongoing research shows a similar trend in the homebuilding and home buying markets. New homebuyers tend to shop for a longer amount of time (over 60 percent spend at least three months or more to look for a home) and use the Internet as a major reference source. In a recent study, almost one-third of homebuyers stated that the Internet was the most important source they used in the entire home purchase process.

– Combining Internet With In-Store Selling

Given this information and the continued trend toward online research in advance of a retail visit, what are some of the things businesses of all sizes can do to take advantage of this new technology? One of the biggest trends is the merging of Internet technology with in-store selling process.

Many retailers, such as Circuit City, now have in-store Internet connections with Web sites available for consumers to do additional research during the actual shopping process. Also, leading car dealerships utilizing the more open approach to car sales also have the Kelly Blue Book Web site available on site for shoppers to view their trade-in value instantaneously.

In some situations, however, hybrid online/retail selling is not always the best way to go. In a recent interview in The Wall Street Journal, IKEA North America’s Interactive/Direct Mail Manager Rich D’Amico discussed the challenges IKEA faces in expanding to online sales.

“IKEA’s whole concept is low prices,” he stated. “We have to have the right warehouse situation as well as a delivery network in place If we can’t do that, it’s not a good value for consumers.”

Through this full-disclosure type of selling and with a retailer developing a sales solution to best meet the customer’s needs, the educated consumer feels better about his or her purchase and develops a stronger brand loyalty to that retailer. Utilizing technology previously unavailable in the retail space has morphed the process into something less mysterious and threatening to the customer, thereby increasing confidence and the likelihood of repeat business.

Tindaro is president of San Diego-based AM Advertising, a research-oriented marketing and communications firm.

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