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[20 comments]

Is Online Information Upending Traditional Marketing?

December 16, 2013

With access to a wealth of online product information and user reviews making consumers smarter about their purchase decisions, traditional marketing approaches and loyalty schemes are increasingly becoming less relevant.

That's the view of Itamar Simonson, a Stanford marketing professor, and Emanuel Rosen, co-authors of Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information.

In the book due out in January, the authors note that consumers used to make decisions based on factors such as brand name reputation; their previous experience with a company; a premium price point; advertising messages versus competing brands; and other products a marketer may display on a catalog page or on the shelf.

But review sites, shopping apps, a wide network of acquaintances available through social media, and wide access to experts is making them less susceptible to context or framing manipulations.

"In a world where consumers enjoy complete access to informed experts and various information services, where they can instantly read the opinions of previous users, it's much easier for consumers to predict their likely experience with a product or a service — it's easier to know the absolute value of things," the authors wrote in the introduction.

"Absolute value" is less about understanding technical specs or reliability and more about "getting closer" to understanding what it is like to own and actually use a product. Emerging technologies such as shopping apps and review sites with better sorting and search tools are also continually enhancing customer's ability to make smart decisions.

The authors eventually introduce a new framework, entitled Influence Mix, for making better marketing decisions based on the mix of influence sources that customers rely on. The authors note that the shift from relative to absolute is taking place in some product categories and, for some consumers, much faster than for others.

The book aims to provoke a debate about the future of marketing and consumer decision, but the authors contend many current marketing approaches are losing their relevancy.

"Marketing is changing forever," wrote the authors. "When consumers can more easily assess absolute values, this means that the influence of 'relative forces' (such as branding, loyalty, and positioning) that used to drive predictions of the experienced quality of things is, for numerous products and services, rapidly declining."

Discussion Questions:

How is easy access to information across the internet changing what influences customers and how purchasing decisions are made? Is marketing becoming more about understanding what shapes opinions rather than shaping opinions?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Are proxies for quality such as brand names, loyalty, or positioning becoming less relevant in today's socially intensive information environment?

Comments:

You know, I'm starting to find that if you read too much about a product on the web, you can really get yourself confused. This issue has been percolating for a long time, and for me, seems to be rising to the surface. I can't trust movie reviews (I went to see too many dogs as a result of "great reviews") and there are some products that I would never buy if I believed the reviews, that turned out great.

I think brand still matters. I think product still matters. And the very best thing we could do at this point, is make more interesting products.

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Paula Rosenblum, Managing Partner, RSR Research

Marketing is still about shaping opinions. It is still up to marketers to determine and leverage the most effective means of influencing shopper behavior.

Consumers' easy access to information has diminished the effectiveness of what we thought of as "traditional" tactics. Marketers are playing catch up or are pioneers. It's not a static world, especially when it comes to marketing techniques.

Very importantly, marketers must realize that even when they do nothing it is a form of marketing (for better or worse), because their consumers will know about what they are doing and their products. Shoppers will unintentionally read about it, see it or intentionally uncover it for themselves.

In answer to the question, successful marketing, now more than ever, depends on understanding what shapes opinions. But to be effective you have to stay on top of understanding. You can't rely on a once a year "let's see what's happening" approach.

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Joan Treistman, President, The Treistman Group LLC

Marketing has always been evolving. Many times it has been an art, rather than a science. The firehose of information that consumers have at their fingertips is simply the latest evolution. Brands still matter, but now it is consumers defining a brand, rather than the owner of the brand.

Manufacturers can advertise their brands to generate awareness, but consumers shape the perception and effectiveness of the product.

Manufacturers need to enter into a dialogue with consumers to gain insights regarding product effectiveness and usage.

What was once the art of persuasion has become the art of listening.

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Max Goldberg, President, Max Goldberg & Associates

Shaping - either the shoppers opinions or understanding them - is the success of the best retailers. Core to it is data. Getting the data and making sure the real meaning can be understood will separate the future retail winners and losers.

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

I couldn't disagree more.

It's marketing that turns a bottle of flavored, carbonated sugar water into Coca-Cola, the world's most iconic beverage. It's marketing that turns a tiny bottle of talc, water and coloring agents into the miracle foundation that will make you look twenty years younger.

Consumers are going to insist now on having abundant information about products, but it's marketing that helps drive the purchasing decision and the emotional reaction.

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Cathy Hotka, Principal, Cathy Hotka & Associates

The most influential factors in a shopper's purchase decisions have absolutely evolved, in no smart part as a result of easier access to more transparent information.

Consumers are inundated with messages generated by brands and retailers, but as the volume of that information goes up, its influence and credibility goes down. At the same time, consumers have much easier access to information which can't easily be manufactured by brands and that information is rising to the top of the shoppers decision tree.

It's a fundamental shift from marketing messages that brands pay for (display ads, in-store signage, commercials), to marketing information that brands must earn (consumer ratings and reviews, expert recommendations).

The Nielsen Global Trust in Advertising and Brand Messages perfectly reflects this trend. Ranking vehicles that brands have to earn most trustworthy, and vehicles that brands own or pay for as less trustworthy.

The shift from OWNED to EARNED messaging, and from advertising that INTERRUPTS the content shoppers are enjoying, to marketing messages that ARE the messages consumers enjoy are game changers. Pioneers in this shift (Victoria Secret, Dollar Shave Club, Blendtec, etc.) are getting outsized returns vs. brands that are still blindly clinging to old tactics (store circulars anyone?).

In-store, tools that provide shoppers social proof are particular effective. At the moment, that information is most often delivered via the shoppers smartphone, but I expect to see a lot more digital fact tags and other tools used to give shoppers the information thay want in-store, where the bulk of purchase decisions are still made. Nordstrom's in-store Pinterest displays, and C&A's digital hangers being two early examples.

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Jason Goldberg, VP Commerce Strategy, Razorfish

We all know about the wealth of information on the internet. Many find out that the bulk of it is fool's gold after counting on it being honest and accurate.

'gjarnoldjr'

There is an excellent documentary on the Google Guys from Bloomberg's "Game Changers" series. In it, one of the media moguls comes to Google to complain that using Google to advertise "takes the magic" away from marketing. That is really what we are talking about in today's topic. The fact is, it does. Just imagine if advertisers found the 50% that didn't work?

Traditional broadcast marketing is driven by telling people what to buy. My baby boomer generation was and continues to be most susceptible to this type of marketing. "Gee, if I saw it on TV and the ad said it was good, it must be."

Fortunately, today's younger generations question advertising more. The amount of data available to the consumer will help buyers make educated decisions. Educated decisions are the last thing marketers want buyers to make. If they are making educated decisions, then the story line marketed becomes null.

The available data will make marketers deal with real value rather than perceived value in their products. It will take product decisions out of the company's hands and put it in the consumer's hands. Without this understanding, products will be unsuccessful.

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Gene Detroyer, Professor, Independent

I think marketing drives the consumer to consider and research the product. The days of mass purchase for a medium to large ticket item from a commercial or ad campaign are waning. I think MOST consumers can read thru online reviews and get a sense for the overall satisfaction level of a product.

My purchase this summer of an expensive mower is a great example, it had 20+ positive reviews that pointed out a lot of likes and couple of shortcomings and 2 really negative. So far, after one season of mowing and leaf mulching, the good reviews have proven out.

'OscarSmith'

Most often I think this information gives the consumer a perception that they've shopped better. Yet fundamentally, we are seeing little change other than the most aggressive price shoppers are becoming more cautious.

That said, in many cases the internet is shortening consideration cycles - improving shopping cycles as consumer come to decisions with less doubt.

The theory in this article is like so many academic theories - an attempt to abstract specifics into global "absolutes" but in the process leaving behind the details that are critical to understanding consumers. I'm not impressed with this one.

Doug Garnett, Founder & CEO, Atomic Direct

Customers are smarter than ever, and a lot of it comes from information they obtain on the Internet. It comes in two forms. First is product knowledge and second is opinion of you and your company. Both of those are large influencers that drive customers' decisions about what they buy and who they do business with.

The second question is more about marketing and brand. The customer defines your brand. It is their perception of who you are. It is their reality. You can try to shape their opinion. But knowing and understand what they think of you (and why) is powerful information that can be used to your advantage.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

I agree with the authors that marketing is changing, but that's not necessarily a bad thing. The world is a much more transparent place due to the Internet and that benefits the consumer. While understanding the consumer's needs/wants should have always been the focus of marketing, the growth of that orientation works in the consumers favor.

That being said, I think loyalty will remain relevant in the consumer's mind, just once a more enlightened buy decision is made. As a result, loyalty programs need to reorient themselves to this shift.

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Bill Davis, Director, MB&G Consulting

Robust and successful marketing strategies have always included research to understand consumer purchase decision processes combined with artistic communications that aim to influence the process at some point. Those consumer who choose to listen are accessing other influencers too.

Based solely on this short description of the book, it sounds like the authors are proposing this as an either/or scenario. I would suggest that brand marketing is far from dead and is more important than ever - both parts. It simply means that marketers need to spend more resources to stay relevant.

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Dan Raftery, President, Raftery Resource Network Inc.

As the old adage goes: in order to lead you need to follow. Without understanding what shapes opinions you will not understand how to shape them.

It's amusing when the discipline of marketing is re-discovered, re-labeled, and presented as some new development.

Any kind of access to information (internet or word-of-mouth) influences the purchase decision. Modern technology has simply given the marketer another research tool that will allow for more understanding of the consumer mindset and purchasing behavior.

Marketing has always been, and will continue to be, about persuasion.

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Carlos Arámbula, Managing Partner, MarcasUSA LLC

Seems like the consumer is drafting their own infomercials. If that's so, marketers might want to pay more attention to segmentation. The question you ask might then be altered to read: How is easy access to information across the internet changing what influences marketing?

Vahe Katros, Consultant, Plan B

Yes, the Internet has changed the vehicles available to both the consumer and the marketer. Marketing is changing and some key tenants will surely evolve to meet the need to efficiently sell a product. I do think that the future will be more about the conversation rather than a mass, one-way message. Retailers should determine how best to create conversations and how they can participate in these conversations in meaningful ways.

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Larry Negrich, Vice President, Marketing, nGage Labs

Marketing is about becoming more attuned to consumer needs as opposed to touting product benefits. We all know that no manufacturer or marketer would ever tell us that their product is second tier or a horrible value, but those attribute voids are becoming more and more visible as consumer feedback and product rating sites multiply.

We are living in a world in which consumers will soon be confronted with only two products - the best, and everything else. Furthermore, the best will also be priced reasonably. I recently bought new tires for my car. Because of the internet, I was able to buy top of the line Michelins, highly rated by testers and consumers at Tire Rack, but delivered at a very reasonable price at Costco, which mounted balanced and warrantied the tires for MUCH less than I would have paid for even a lower-rated tire.

A month ago I used the exact same methodology to save $1,900 on a top-of-the-line refrigerator. The product information I relied upon to make these purchase decisions was not supplied by the manufacturer, but by independent sources who were not interested in selling me anything and in both cases several independent sources were utilized. Manufacturers' product statements and marketing claims mean little to me as I know that they select facts to embellish their products characteristics.

Marketing SHOULD become more about understanding what shapes opinion and even steering consumers to unbiased review sites. Advertise Tire Rack highly recommends, or Sears provides exceptional service and unmatched quality. Don't bother to spend overhead dollars to try to
convince me that less is more!

Ed Dennis, Sales, Dennis Enterprises

Marketing always has a role in shaping opinions because it can appeal to the emotional factor while personal research only provides data and information. Obviously, understand that opinions are important, but great marketing is as much about emotions as it is about communicating benefits and features.

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Kenneth Leung, Director of Enterprise Industry Marketing, Avaya

Shoppers are indeed influenced by the easy access of information itself. How? They research like never before. They comparison shop like never before. Marketers are becoming far more savvy than in the "gut feel" mentality of the past. There is still a long way to go to capture all the shopper insights that are available, however.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Marketing has always evolved and will always evolve. It is not an either/or discussion. The best marketers are those that blend an authentically desirable product with an emotional connection via story/images/experience/etc. Today, the best are leveraging the power of immediate information access to tell their story even more effectively. The best part of today's reality is the exposure of and fast elimination of lousy product, and lousy retailers.

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Mike Osorio, Senior VP Organizational Change Management, DFS Group

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