Innovator’s Toolkit: Building consumer trust
by Preetesh Sewraj (@iPreetesh) What is the role of endorsement in the modern consumer’s purchase decision-making process? The consumer decision-making process is a complex one; one that at times is perfectly predictable yet at others is completely irrational and driven by emotion.
The study and deeper understanding of this process has captivated brands, marketers, advertisers and behavioural scientists and economists for decades. And just as we start to understand and make sense of the buying patterns and decision-making processes of one consumer market, a new generation emerges with entirely different nuances.
The massive millennial market
Take, for instance, the darlings of the new consumer market, millennials or Generation Y. These 18-to-34-year-olds are a massive market with huge buying power; they are well-educated, diverse, and tech-proficient (Wolburg & Pokrywczynski, 2001). However, they are more aware of common marketing tactics than Generation X or baby boomers (Tsui & Hughes, 2001), which is driving a shift in the way brands and marketers engage with them and, more importantly, try to influence their purchase decisions, something that is proving to be a lot more difficult than anticipated.
A growing body of consumer research is helping to elucidate the complex buying behaviour of millennials. For example, a recent study by The Intelligence Group (TIG), a division of Creative Artists Agency, polled 1300 Generation Y consumers in US. Findings indicated that 72% of millennials research and compare their options online before going to a store or the mall. However, the comparisons are more than merely price related. Many consumers now interrogate a product or service being considered and make a decision based on that research.
In this regard, according to the TIG study, this consumer segment is shopping or browsing almost non-stop, upon every conceivable electronic device and in stores, yet there is a low purchase rate in relation to the time spent ‘shopping’. This buying behaviour has somewhat confounded marketers as this generation is being advertised and marketed to on a scale never before seen. The study calls this kind of shopping behaviour — shop until you drop but don’t buy — “fauxsumerism” and, faced with this challenge, it pays to know how to sway a purchase decision.
Findings are echoed
These findings are echoed in a 2014 survey conducted on 1 300 millennials from Elite Daily’s database of readers and contributors, which highlighted the important role research plays in the decision-making process of these consumers. The survey from Elite Daily, a media and content platform that was developed exclusively for Generation Y, found that 33% of millennials read blogs for personal opinion and consumer insights before they make a purchase, compared to only 3% who uses TV news, magazines and books to inform their final purchase decision.
Further findings indicate that millennials look to social media and other platforms for information they feel is “authentic”, especially content written by their peers and those whom they “trust”. Those surveyed said that they value authenticity over content, with 43% ranking this trait above content when consuming news. And as blogs, particularly those published by individuals, are deemed to be more authentic in the eyes of millennials, they choose this platform as their primary source of consumer information.
With such a premium placed on trust, it is little surprise then that the role endorsements play in the traditional marketing mix has risen in prominence. However, not all endorsements are equal as there seems to be certain types that are valued above others.
Research conducted by Nielsen, the world’s largest research agency, has shown important correlations between consumer behaviour in South Africa and that of the millennial market in the US in this regard, with trust and authenticity remaining important values in the final equation.
Take, for instance, the finding that the former poster-child of brand endorsement — the celebrity endorsement — has lost a lot of its lustre. According to the Nielsen research, only 55% of respondents would consider a celebrity endorsement in their final decision-making process. This is because these endorsements are not deemed as trustworthy since modern savvy consumers know the person has been paid to endorse the product.
A form of endorsement with a trajectory in the opposite direction to that of the celebrity ‘plug’ is the independent consumer review, the most common form of which is the blog. While only 55% of respondents said they were more likely to consider this form of endorsement, it is a relatively new form of endorsement as only 39% of local consumers turn to the Internet to research and inform a pending purchase decision. However, this trend seems to be on the rise.
The most trustworthy
The most trustworthy form of endorsement then, according to the research, is the product award, with 58% of the consumers surveyed saying that they were willing to consider purchasing a product based upon the recommendation of one of these programmes. However, not all third-party endorsement programmes are weighted equally, with the greatest trust seemingly placed in those with the greatest independence
Unfortunately, consumers don’t have the capacity, both in terms of time and money, to trial everything on offer. With the rise in living costs, they now have less expendable income than before. They are therefore no longer able to trial multiple products to determine the best options. In addition, there is also a great deal of innovation pressure placed upon them as companies launch new products or updates in increasingly shorter refresh cycles to help drive sales and revenue. Even the upper end of the market, where money and price are less of an influence, are starting to experience ‘consumer trial fatigue’ due to sheer number of consumer products on offer.
It is for these reasons that consumers are looking for alternative means to differentiate between brands and products when deliberating over their final purchase decision, with a trusted advisor at the heart of that process. Unsurprisingly, an independent third party endorsement from a reputable source that looks at the product in terms of usage, not just the intangibles, is therefore becoming one of the most influential tools in the modern-day marketing mix.
Preetesh Sewraj (@iPreetesh) is the CEO and chief innovation analyst at Product of the Year South Africa. He is passionate about the various facets of innovation that touch our lives and improve our life’s journey. He contributes the regular column, “Innovator’s Toolkit”, looking at innovation trends and the impact of innovation upon our ability to capture the hearts and minds or consumers, to MarkLives.
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