Consumer Goods Companies Failing to Understand Consumers – Study

June 12, 2012 /

The majority of consumer goods companies are failing to respond adequately to their customers’ needs when it comes to the web and social media. Although aware of their deficiencies as market segmentation evolves, they are not taking any notable measures to promote dialogue with their customers. These are the findings of a recent study by Ernst & Young based on a survey of around 25,000 online users in 34 countries around the world.

Globally, a significant 62% of online users buy online. The Chinese alone use the internet to purchase around a third of goods (32%). The spotlight is falling increasingly on social media platforms as an important tool for dialogue between companies and consumers in the world of online shopping. However, the study found that 85% of social media users are not currently satisfied with companies’ online efforts.

While the big brands enjoy a relatively high level of confidence from Chinese users, consumers in western Europe tend to be more critical of their social media presence. “Consumers continue to rely primarily on opinions from their immediate environment when making purchasing decisions. However, with the rise of social media, this environment has grown considerably. Coming across as trustworthy in new media and promoting open dialogue are now important marketing tools,” says Markus Schweizer, Managing Partner Advisory Services in Ernst & Young’s GSA Sub-Area (Germany, Switzerland, Austria).

The ‘chameleon’ consumer

The study was designed to compare how consumers are motivated in established and emerging markets by examining the decision-making process for purchases, the factors affecting decisions and sources favored by consumers to gather information before they buy. The study addressed global and national attitudes across a variety of product categories.

Overall, the study identified five sweeping trends in ten product and service categories. Industries examined include groceries, clothing, consumer electronics, public services and automotive. It was found that traditional market segmentation no longer applies in any of the industries looked at. Today’s “chameleon” consumer sets numerous priorities for a potential product choice. The growing number of comparison sites clearly supports the finding that 60% of consumers view the purchasing process as a competition – which they are keen to win.

Emerging markets set store by brands

The brand plays an important role for purchase decisions in emerging markets. This attitude is shared by around one third of consumers worldwide, with the figure as high as 40% in China, followed by 34% in Brazil and 32% in India.

Brand loyalty was found to be comparatively low in established markets. Personalized communication and excellent customer service continue to be an absolute priority. Companies that serve their online customers using social media and other digital channels stand to benefit. The examination of consumers’ online activities revealed one other significant factor – considerable differences between the regional markets. For instance, 67% of internet users in China already buy their clothes online, compared to just 18% in the Middle East. Compared to end customers in the US, shoppers in India are prepared to spend around 12% more to get innovative functions on their consumer electronics.

Experienced online consumers also demand a major say in their purchasing experiences. They want to be an active decision-maker when it comes to products – not just a passive consumer. The study found that besides the right price, 48% of online consumers expect a number of technical functions when purchasing consumer electronics, with client customization and an excellent product range playing an important role.

Analyzing this trend, Adlai Goldberg, Partner Advisory Services Ernst & Young Switzerland notes: “The findings of our study show that consumer behavior has undergone fundamental changes in recent years. Not only are digital technologies changing purchasing behavior itself, with time and place barely relevant these days, but customers are also demanding added value from companies. Well-informed consumers want better transparency and plenty of opportunities for dialogue with the providers. This process of change has already taken on a dynamic of its own.

“Many companies are no longer able to offer an optimum response to their digital customers’ needs. To turn demanding consumers into satisfied customers, companies need to come up with marketing plans that are specifically aligned to the new digital technologies.”

 

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