Darren Varney* looks at what makes consumers happy and how top brands and retailers are using this knowledge to grow.
Understanding what drives changes in fickle Australian consumers’ behaviour can be difficult.
Over the coming issues, using the current GfK ConsumerLifeTM 2016 study* we will give you a better understanding of consumers’ attitudes, behaviours and values, and how you can use these findings to make your customers happier.
The study has been running across 25 countries since 1997 and in Australia since 1999. We are able to compare what’s happening locally, with emerging trends from all over the globe and understand what forces are driving change.
The study identified 12 key global trends that represent genuine long term shifts in attitudes and behaviours. Over the next few issues we will cover six changes that relate to consumers’ expectations of retailers and brands they choose.
First off, we’re going to look at experiences.
Why Are Experiences Important?
We live in a time of unparalleled consumerism, with unprecedented material abundance. The N+1 theory has been applied to all aspects of our life, not just bikes.
Editor’s Note: N+1 is shorthand for saying that the number of bikes (for example) that a consumer wants to own equals N+1 where N is the number of bikes they already own and +1 means they still want another one, no matter how many they already have.
There’s nothing wrong with this, right? You’ve worked hard for your money and you want to invest it in stuff that will make you happy.
Here’s the catch. A researcher named Gilovich** found that experiences make us happier than things. Our feelings of happiness increase over time as we reminisce on positive experiences; while conversely, satisfaction with products tends to decrease over time.
There are several good reasons for this. We very quickly adapt to the things we buy and what we once found exciting soon becomes the new normal. There’s also an expectation that your next thing you buy should be better than your last. Of course, you don’t want to go backwards.
This change in expectations means that you find yourself on a treadmill chasing the next ‘hot new item’. We also continually compare our stuff with the things that others have. How can you possibly be happy with your stuff when your friend has one that is bigger, smaller, more advanced or lighter?
Gilovich also found that almost 60% of people said their experiential purchases made them happier than their material purchases. This is because experiences are closely tied to identity, and how your see yourself. You are the sum of all your experiences. You are not defined by the products that surround you. Long after the shine has worn off your latest purchase, you will remember the feelings of happiness you experienced while doing something you loved. So to create happiness, you need to invest in positive and memorable experiences rather than purchasing more things. With all this in mind, how do we apply this to the Australian retail landscape?
Who is Doing Experiences Well?
Some of the top brands have been quick to recognise the opportunity of experiential marketing. They are engaging with consumers by wrapping their products with positive and memorable experiences. These experiences are something consumers then want to share with others.
Consider Red Bull for a moment. Are they are promoter of extreme sports events, or do you associate them with sugary beverages? How many Red Bull videos have you chosen to watch from your social media stream?
Rapha has built a cult like following for their cycling apparel brand by marketing it as an exclusive club. Their shops are clubhouses, which are, ‘the meeting place for the city’s cyclists, no matter the weather, playing host to rides, race screenings, and events throughout the year.’ They also have cafés stocking the finest food & coffee and the full range of Rapha products.
Marketers are working hard to connect their brand with memorable and positive experiences for the consumer. Rapha don’t make commercials, instead they work with great photographers and story tellers to produce aspirational cycling ‘films’. They tell real stories about experiences and don’t focus heavily on the brand.
Experiences in Retail Environments
There are some retailers too, that understand the benefits of associating their retail brand with experiences that go above and beyond just providing products. If consumers want to buy something at a purely transactional level, then some would suggest that pure online retailers should be dominating the Australian retail landscape.
As the vast majority of retail sales come from bricks and mortar retailers, consumers must be seeking something from these retailers that they are not getting when they shop online. We know from our Australian GfK FutureBuy study^ from 2014 to 2016, the number of people who, ‘saw products in-store, and then purchased from an online competitor’, a practice known as ‘hostile Showrooming’, remained stable at 16%.
Over the same period, 37% of people surveyed, say they, ‘saw a product on a device and later went to physical store to purchase’, a practise known as ‘webrooming’. This figure has increased substantially since 2014 when it was only 23% of consumers.
The good news for traditional retailers is that, in spite of this increase in online research, people are continuing to buy in-instore, because they want tangibility. In fact, we are now seeing the online retail giant Amazon, open physical stores in the US, to allow customers to experience their products before purchase.
Innovative instore experiences also have the capability to attract new customers. We found that 29% of people said, “They would be more likely to visit a retail store that offered some sort of virtual reality experience”^. Generation Y was even higher with 38% indicating that it would attract them to a store. With this understanding, Tourism Australia ran a successful campaign for potential travellers using Google Cardboard . It gave them a virtual view of their destination prior to booking. Real estate agents are now providing something similar, by conducting virtual tours of properties to prospective buyers. Immersive virtual reality campaigns engage consumers much more than traditional advertising, where consumers take on a much more passive role.
No one yet knows what the future of experiential marketing will bring, but the possibilities are exciting. Whether you connect with you customers by hosting events, augmenting their realities or providing the best in-store service, the key to keeping them coming back, is giving your customers a positive and memorable experience that they will remember and share with others.
* Source: GfK ConsumerLife 2016 Australian data, sample n = 1,000.
^ Source: GfK FutureBuy 2016 Australian data, sample n = 1,000.
** Source: Thomas Gilovich , Amit Kumar, Lily Jampol
*About Darren Varney and GfK ConsumerLife
Darren Varney is the Director of Market Development, at GfK, Australia’s trusted source of relevant market and consumer information. Darren specialises in Point of Sales tracking measures across various retail categories.
GfK ConsumerLife provides detailed socio-demographics and helps you understand key consumer trends. The 2016 report covered 25 countries and 17 categories, making it one of the largest and longest running studies of its kind globally. For more information on GfK ConsumerLife contact Darren at darren.varney@gfk.com
