2008 Consumer Spending Part 4

This time, our report looks at the pre-spending phase:

Search And Purchase Depends On Type Of Product

Considering how Online Americans are using different communication media for different lifestyle decisions and purchases, the Pew Internet & American Life Project Survey tells us that these Online Americans are also using different search and purchase strategies for different goods.

The study points out that the internet helps music buyers connect with artists and learn more about music, but it doesn't strongly influence what or how they buy. It says that the internet is an influential source of information and options for those purchasing feature-rich items such as cell phones. The study shows that the internet is an efficiency-enhancer in searching for new housing.

The report says that the internet is a valuable research tool for online shoppers and at times provides information that is critically important in purchase decisions. Yet, more often than not, purchases are consummated offline and post-purchase online commentary is only a small part of a typical shopper's activities.

The Internet And Consumer Purchasing Decisions (selected products among all respondents who purchased product in prior year)
	Product Purchased
Action	Music	Cell Phone	Real Estate
Percent who use the internet in product research	56%	39%	49%
Percent who said online information had a major impact on the decision	7	10	11
Percent who made the purchase online	22	12	n/a
Percent who posted a rating or comments online after purchase	5	3	4
Source: Pew Internet & American Life Project Survey report, May 2008

Additionally, the internet is generally not the source people are most likely to use in the pre-purchase information gathering for these three products.

• Among music buyers: 83% find out about music from the radio, TV, or in a movie; 64% find out about music from family, friends, or co-workers.
• For cell phone purchasers, 59% ask an expert of salesperson for advice and 46% go to one or more cell phone stores.
• For people looking for a place to live, 49% look at ads in the newspaper and 47% ask a real estate agent for advice.

Information gathering is one of the most basic uses of the web, says the study, and often the first step in consumer decision-making. It manifests itself in different ways for each of the products studied:

• Cell phone buyers face a wide range of choices among devices and service plans. Thus, cell phone buyers rely on different types of input - salespeople, websites of vendors, blogs, and review sites online - to help structure their decision
• Real estate searchers face a lot of choices, but not all of them may be relevant to their needs. The internet helps shoppers reduce the number of properties that require a trip to check out, as well as learn more about a transaction that has a high level of financial commitment
• The story for music is a bit different because it is the kind of product whose quality is discernable only after it has been consumed. Internet users who are music buyers sample the product by streaming songs to their computer, going to artists' websites, or watching music videos online. Because an "experience" product requires a lot of information gathering to assure "value" to the potential buyer, music buyers don't rely exclusively on the internet in their search. In fact, they are more likely to rely on mainstream media or recommendations from family and friends for inspiration for music purchases

The Internet and Consumer Decisions: Findings at a Glance...

• The online mall helps people sort through product choice, but it is not the only method they use to assess products and not a place where people often close the deal
• Search: Online information can make product research more efficient, and it can be particularly useful for a feature-rich product. But it is not the only tool buyers use to gather information
• Influence: Online information is generally modest in its impact on decisions, but looms larger when a purchase requires a big commitment.
• Participation: Rating products after purchase is surprisingly rare, but music buyers make direct connections with artists after they have bought their tunes
• Disintermediation: When it comes time to make the transaction, it is still an offline world. But fewer barriers between buyers and sellers can help consumers get better deals

To view the detailed report (PDF file), please visit PEW here.

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