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Navigating the Sea of Silver
Creating Digital Imaging Sell-through at Retail
Channel Impact Series
Sales and Marketing Outsourcing for Savings and Growth
The Digital Imaging “Sea of Silver”
Why do consumers buy one Digital Imaging product over another at Big Box or Specialty
retailers? When customers look over the Sea of Silver, does the product – your product
– stand out or fade out? How do consumers make decisions about which brand and model
to buy, and how can savvy manufacturers control purchasing decisions with greater
precision?
These questions were the basis for a research study that MarketStar’s Strategic Services
Group conducted, in association with BIGresearch, to understand the buying habits and
purchase influencers within the Digital Imaging category. This white paper has been
designed to help companies in the Digital Imaging industry identify customer purchasing
behaviors and develop retail marketing plans that positively influence their customers at the
most important moment of the purchasing cycle.
White Paper Objective
These findings are based on an online survey conducted with more than 700 consumers.
To participate, a consumer was required to have purchased a single consumer electronics
product priced over $150 from a retail store in the past two months.
Of those surveyed, 18% had purchased a digital imaging product (defined as a camcorder,
digital camera, etc.) within 90 days. The consumers were segmented into two groups, Digital
Imaging Consumers and Consumer Electronics Consumers. This white paper discusses
both the similarities and differences between these two segments.
This primary research study was supplemented by secondary research. Only findings that
have a direct correlation to the goals of this study were incorporated for the benefit of
understanding and analysis.
The Influence of the Internet on Purchasing Behavior
During the 90’s, many predicted that the rise of the online store would lead to the demise
of retail. In hindsight, the doom and gloom of retail’s demise and the second-coming of the
online store were both overstated. Both have seen growth, and they will be intricately tied to
the purchasing cycles for years to come.
While the internet has proven to be an effective method of researching and fulfilling
purchases, retail still reigns supreme. This is especially true in the Digital Imaging category.
As part of the study, consumers were asked to identify whether or not they gathered product
information prior to visiting a retail store. If so, they were asked to indicate which source(s)
they used to gather the information
As illustrated in Exhibit 1, 63% of the Digital Imaging consumers surveyed used the Internet
as a means of driving the decision making phases of the purchase process. This is more
than double the number of Consumer Electronics customers who used the internet.
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Channel Impact Series
Sales and Marketing Outsourcing for Savings and Growth
Referrals or advice from family and friends ranks a distant second, followed by traditional
marketing communications activities such as television and magazine ads. In almost every
instance, consumers were more likely to look for information on Digital Imaging products
than other Consumer Electronics products.
Exhibit 1: Information Utilized Prior to Visiting the Store
63%
By searching on the Internet
30%
32%
Asked friends or family members
16%
16%
11%
Through product reviews
11%
6%
8%
7%
4%
6%
10%
14%
18%
Via magazine ads
Via television ads
Asked co-workers
Other (specify)
Got no info prior to going to store
0%
10%
20%
39%
30%
40%
50%
60%
70%
Digital Imaging Product Purchasers
Other CE Product Purchasers
It is also interesting to note that only 18% of Digital Imaging consumers versus 39% of other
Consume Electronics product purchasers gathered no information prior to visiting the store.
Or, stated another way, 82% of Digital Imaging consumers conducted some research prior
to entering a retail store.
Other research has supported the reliance of many consumer segments on internet
research. Nearly 90% of online working women say they conduct more product research
online than they would be able to offline. A separate study showed that online product
research conducted by consumers in 2004 was responsible for driving $180.7 billion in
offline spending, compared to $106.5 billion in direct online consumer spending.
Consumers Fulfill Offline
Although the internet is an important tool in the purchase decision process, the offline retail
experience still matters. Research strongly suggests that the retail environment still has a
significant effect on purchasing behaviors of consumers. For instance:
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Channel Impact Series
Sales and Marketing Outsourcing for Savings and Growth
• It is estimated that within all retail categories, 92 percent of all offline buying activity was
preceded by an online search and that nearly 15% of all U.S. retail spending is influenced
in some way by the internet.
• Other research has shown that searches for Digital Imaging products were more likely to
result in an offline purchase than were searches for desktop and laptop computers.
• The Point-of-Purchase Advertising International estimates that more than 70% of
purchasing decisions are made in the store.
Brand Preference
With the internet being used to research products and retail being used to fulfill purchases,
what is the role of the manufacturer in ensuring that online and offline marketing efforts do
not result in consumers switching brands at the point of sale? Do Digital Imaging consumers
switch more than other Consumer Electronics consumers?
It appears so. In the study, consumers were asked to indicate:
• Whether they had a specific brand in mind before going to a store.
• If they seriously considered other brands during the purchasing process.
• If they purchased the brand that they originally expected to purchase or a brand that they
considered only after going to the store.
As shown in Exhibit 2, 65% of the Digital Imaging consumers had a brand in mind before
they entered a store, compared with only 59% of Consumer Electronics customers.
Exhibit 2: Brand Preference, Consideration, and Switching
65%
59%
Had specific brand in mind
before going to store
35%
32%
Seriously considered
other brands
Purchased brand
originally expected to
purchase
62%
75%
38%
Purchased brand I
considered after
going to the store
25%
0%
20%
40%
60%
80%
100%
Digital Imaging Product Purchasers
Other CE Product Purchasers
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www.marketstar.com
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Channel Impact Series
Sales and Marketing Outsourcing for Savings and Growth
While Digital Imaging consumers were more likely to have a brand in mind prior to
entering the store, they were also more likely to switch brands at the point of sale.
Of those surveyed, 35% of the Digital Imaging consumers considered purchasing
other brands, a slight edge over other Consumer Electronics consumers. However,
only 62% of the Digital Imaging consumers bought the brand they had in mind; the
Consumer Electronics consumers stayed with the brand they originally intended to
buy 75% of the time.
While not overwhelming, it shows that switching does happen, and with greater
frequency for Digital Imaging than other Consumer Electronics product categories.
Why Stay, Why Switch?
When asked why they stayed with their original choice, brand reputation was the
overwhelming reason. 45% of those surveyed chose brand reputation compared to only
35% of other consumer electronics purchases. Brand name was followed closely by price
(41%), features (35%), family advice (17%), store promotion (13%), and availability (7%).
Of those that switched brands, product features (41%) was the primary reason, followed
by price (30%), store promotion (20%), salesperson advice (12%), brand reputation (12%),
product availability (5%), and warranty (5%).
What Motivates the Purchase?
There are a number of factors that influence a purchase, as shown in Exhibit 3. However,
when asked why they bought, features (74%), price (60%) and brand (50%) are the three top
reasons. Unfortunately, these are also the most difficult to control, especially in relation to
competitors and in consideration of long product cycles.
The remaining influencers – sales associate advice, store promotion, product availability,
in-store demonstration, and in-store display – are still important factors and should be
considered by companies as targets for influencing the point of sale.
In fact, 60% of Digital Imaging consumers spoke with a retail sales associate during the
purchase process, versus only 46% of those who purchased other Consumer Electronics
products.
Other research has shown that product satisfaction was the strongest when Digital
Imaging products were purchased with the assistance of an educated sales associate. It
also showed that 50% of the consumers spoke with a retail sales associate at a Big Box or
Specialty retailers, and that more than 50% of these sales associates were very knowledgeable. The firm concluded that there is a correlation between the knowledge level of sales
associates and the consumer’s overall satisfaction with the product.
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Channel Impact Series
Sales and Marketing Outsourcing for Savings and Growth
Exhibit 3: Why Product was Ultimately Chosen
74%
Features
52%
60%
62%
Best price
50%
Brand name/reputation
38%
Salesperson advice
14%
32%
26%
18%
21%
22%
17%
23%
20%
14%
22%
Store promotion
Product availability
In-store display
Warranty
In-store demonstration
8%
10%
7%
4%
6%
Friend or family member advice
Other (specify)
0%
20%
40%
60%
80%
Digital Imaging Product Purchasers
Other CE Product Purchasers
When asked to name the most important factor for choosing a specific Digital Imaging
product, features (26%), brand name (24%), best price (21%), and sales person advice
(13%) were the top choices given. Consumers that purchased other Consumer Electronics
products were much more price driven and less focused on features and brand name.
This shows that there is still an opportunity for Digital Imaging companies to make the sales
based on something other than price discounts.
Case Study
For one Digital Imaging manufacturer, their ability to influence the point-of-sale helped
them clear inventory to make way for a new line of products. This was accomplished after
deciding that discounting the products – a common tactic among its competitors – would
dilute the brand. Instead of price cuts, they created a marketing plan that included a small
increase in the media spend, increased point-of-sale marketing, and an increase in in-store
product demonstrations. Results included:
• Incremental increase of units sold per hour of product demonstrations
• Increased attachment rates for accessories
• Conversion rate increase of more than 30%
• A ROI of more than 120%
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www.marketstar.com
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Channel Impact Series
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Bringing it Together
There is much that can be done to influence the purchasing decisions of Digital Imaging
consumers. From this study we conclude that Digital Imaging manufacturers should:
Understand the Purchase Process: It is critical for manufacturers to understand where
customers are making product purchasing decisions. As shown in this research, there are
many points in the purchasing cycle where data is collected and decisions reached. It is
important to know where these points are and what messaging will make the most impact.
Focus on Location, Location, Location: Online research is increasingly important in
influencing purchasing decisions in Digital Imaging. Investments into online brand and
product promotion are important, although brand managers should expect that the actual
fulfillment of the purchase will likely occur offline.
Give Customers What They Want: Features, price, and brand are the top reasons why
consumers choose one product over another. Enhancing features, promoting the brand,
and maintaining a competitive price will continue to be critical to increasing sell-through.
Control the Last 3-feet of Retail: Manufacturers should also be aware of other factors
that influence the sale, namely sales associate recommendation, store promotion, product
availability, in-store demonstration, and in-store display. These are important factors
because they are the closest to the point of sale and easiest to control.
The Point of Sale Advantage: Digital Imaging consumers are brand conscious, but not
necessarily brand loyal. Investments in point-of-sale retail marketing provide an opportunity
to either solidify the sale of your products or an opportunity to convince consumers to switch
brands.
© copyright 2005 MarketStar Corporation
www.marketstar.com
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Channel Impact Series
Sales and Marketing Outsourcing for Savings and Growth
About MarketStar
As a leading retail marketing agency, MarketStar is able to deploy retail solutions that drive
loyalty and brand recommendation, influence the point-of-sale, combat competitors, and
increase sell-through and mindshare. We are able to deliver these results through a suite
of in-store marketing services such as Brand Advocacy, Merchandising, Assisted Selling,
Product Demonstrations, Sales Associate Training, Retail Surge Teams, Interactive Web
Tools, and Consumer Events.
Serving as an integrated extension of a client’s sales and marketing team, MarketStar
consistently provides clients positive, measurable sales results and a compelling
return-on-investment. Current clients include leading digital imaging, information
technology, consumer electronics, telecommunications, and appliance manufacturers.
About MarketStar’s Strategic Services Group
MarketStar’s Strategic Services Group (SSG) provides research, analysis, and strategic
planning support focused on understanding the key factors that drive customers through
channels to purchase. With a unique combination of customer and channel-centric
intelligence, SSG helps our clients identify and manipulate the critical “triggers” that
dictate purchase decisions and most directly impact return on sales and marketing
investments.
For more information please call 1.800.877.8259 or visit www.marketstar.com.
© copyright 2005 MarketStar Corporation
www.marketstar.com
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Channel Impact Series
Sales and Marketing Outsourcing for Savings and Growth
Sources
Media Usage and Purchasing Habits of Online Working Women. 2004. Neilsen/NetRatings.
Available: http://www.washingtonpost.com/wp-adv/pr/womenWork.pdf
comScore Study Reveals the Impact of Search Engine Usage on Consumer. 2004.
comScore. Available: http://www.comscore.com/press/release.asp?press=526
Boyle, Matthew. 2003. “Brand Killers”. Fortune, August 11, 89 - 100.
Digital Imaging Trends in 2003. 2003. Consumer Electronics Association. Available: http://
ce.org/publications/books_references/digital_america/digital_imaging/default.asp. 2004/
Getting a Picture of the Digital Camera Owner. 2004. This Week in Consumer Electronics.
Key words: digital camera owner. Available: http://www.twice.com
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www.marketstar.com
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