According to the McKinsey Decision Surveys/The Consumer Decision Journey, reported by David Court, Dave Elzinga, Susan Mulder, and Ole Jørgen Vetvik, consumers are moving outside the marketing funnel by changing the way they research and buy products. If marketing has one goal, says the report, it’s to reach consumers at the moments that most influence their decisions.
Marketing has always sought those moments, or touch points, when consumers are open to influence. For years, touch points have been understood through the metaphor of a “funnel,” a number of potential brands (the wide end of the funnel,) which are marketing directed to methodically reduce that number, and emerge with the one brand.
But today, says the report, the funnel concept fails to capture all the touch points and key buying factors. A more sophisticated approach, the consumer decision journey, is required to help marketers navigate this less linear and more complicated environment than the funnel suggests.
In the traditional funnel metaphor, consumers start with a set of potential brands and methodically (Awareness. Familiarity, Consideration, Purchase, Loyalty) and reduce that number to make a purchase.
Examining the purchase decisions of almost 20,000 consumers, across five industries and three continents, showed that the proliferation of media and products requires marketers to find new ways to get their brands included in the initial-consideration set that consumers develop as they begin their decision journey.
The research shows a need to shift away from one-way communication to a more systematic way to satisfy customer demands and manage word-of-mouth. And, the report describes two different types of customer loyalty, challenging companies to reinvigorate their loyalty programs and the way they manage the customer experience.
The funnel analogy suggests that consumers systematically narrow the initial-consideration set as they weigh options, make decisions, and buy products. Then, the post sale phase becomes a trial period determining consumer loyalty to brands and the likelihood of buying their products again.
Marketers have learned to “push” marketing toward consumers at each stage of the funnel process to influence their behavior. But the qualitative and quantitative research in the automobile, skin care, insurance, consumer electronics, and mobile-telecom industries shows that something quite different now occurs.
The decision-making process is a more circular journey, with four primary phases representing potential battlegrounds where marketers can win or lose:
The funnel metaphor does help a good deal by providing a way to understand the strength of a brand compared with its competitors at different stages, highlighting the bottlenecks that stall adoption, and making it possible to focus on different aspects of the marketing challenge, says the report.
Imagine that a consumer has decided to buy a car. As with most kinds of products, the consumer will immediately be able to name an initial-consideration set of brands to purchase. In the qualitative research, consumers told us that the fragmenting of media and the proliferation of products have actually made them reduce the number of brands they consider at the outset. Faced with a plethora of choices and communications, consumers tend to fall back on the limited set of brands that have made it through the wilderness of messages, says the report.
Brand awareness matters
Brands in the initial-consideration set can be up to three times more likely to be purchased eventually than brands that aren’t in it. Contrary to the funnel metaphor, says the report, the number of brands under consideration during the active-evaluation phase may now actually expand rather than narrow as consumers seek information and shop a category.
The research showed that people actively evaluating personal computers added an average of 1 brand to their initial-consideration set of 1.7, while automobile shoppers added 2.2 to their initial set of 3.8. This change in behavior creates opportunities for marketers by adding touch points when brands can make an impact. Brands already under consideration can no longer take that status for granted.
The Number Of Brands Added For Consideration In Different Stages Differs By Industry.
Avg. No of Brands in Initial Consideration
Source: McKinsey Decision Surveys, Published June 2016
The second profound change is that outreach of consumers to marketers has become dramatically more important than marketers’ outreach to consumers. Marketing used to be driven by companies; “pushed” on consumers through traditional advertising, direct marketing, sponsorships, and other channels. At each point in the funnel, as consumers whittled down their brand options, marketers would attempt to sway their decisions. This imprecise approach often failed to reach the right consumers at the right time. In today’s decision journey, consumer-driven marketing is increasingly important as customers seize control of the process and actively “pull” information helpful to them, says the report.
According to the research, two-thirds of the touch points during the active-evaluation phase involve consumer-driven marketing activities, such as Internet reviews and word-of-mouth recommendations from friends and family, as well as in-store interactions and recollections of past experiences.
A third of the touch points involve company-driven marketing. Traditional marketing remains important, but the change in the way consumers make decisions means that marketers must move aggressively beyond purely push-style communication and learn to influence consumer-driven touch points, such as word-of-mouth and Internet information sites.
Two-Thirds Of The Touch Points Involve Consumer-Driven Activities
Most Influential Touch Points
Initial Consideration Set
Consumer driven marketing
Word of mouth, online research, offline print reviews
Company driven marketing
Traditional adv., Direct mktg, Sponsorship, In-store experience, Saleperson
Source: McKinsey Decision Surveys, Published June 2016
Concluding, the report notes that marketers have long been aware of profound changes in the way consumers research and buy products. Yet a failure to change the focus of marketing to match that evolution has undermined the core goal of reaching customers at the moments that most influence their purchases. The shift in consumer decision making means that marketers need to adjust their spending and to view the change not as a loss of power over consumers but as an opportunity to be in the right place at the right time, giving them the information and support they need to make the right decisions.
N.B. This ResearchBrief represents only of few of the many consumer considerations in the marketing influence on the selection and purchase process. We highly recommend accessing the complete report for additional insights.
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