What Does a World of Impulsive Connected Consumers Mean For Future Brands?05 November, 2015 Share socially
This is based on insights into shopper behaviour – people are more likely to buy something appetising when it is in front of them, and are much less brand loyal than we think – but is limited to small, low-risk purchase decisions in the CPG category and a 20th century retail distribution model.
Things have changed in two significant ways over the last 10 years:
1) Behavioural economics has demonstrated that impulsive behaviour is more widespread in human decision making than just buying treats. Daniel Kahneman proves in ‘Thinking, Fast and Slow’ that there are two types of decision-making – system 1 (fast, instinctive and emotional) and system 2 (slow, deliberate and logical) – and we use system 1 in more contexts than we readily acknowledge. And ###i/i### built an excellent case for ‘nudging’ us towards better choices, by harnessing rather than fighting against the reality of system 1 behaviours through better decision architecture.
2) Smartphone technology and m-commerce have put every store and every checkout in consumers’ hands 24/7, and 80% of the world’s population will have a smartphone by 2020.
So if we now know that human beings use system 1 thinking to make many decisions – we are subject to implicit cognitive biases and predictably irrational – then surely this applies to consumption generally?
We now also know that technology makes it more and more possible for products and services to attend to system 1 biases – providing what we want in context with increasing immediacy, allowing us to pay without cash, and framing choices in away that removes barriers to purchase.
Amazon’s one-hour delivery service, Prime Now, is a case in point. It makes consumption across categories more of a system 1 process than ever before, because the time between thinking of something, buying it and having it in your hand is shrinking exponentially.
Whereas before, we had time to ‘cool off’ between thinking about buying an expensive television, comparing it to others, seeing it in the showroom and having it delivered 3 weeks later.
And as Amazon’s recent move into profitability indicates, there is a sustainable market for a retailer that gives you everything you want, when you want it and wherever you are.
So too does BMW’s ‘Drive Now’ scheme – and other similar ‘access over ownership’ services – that lets you use a car on the street whenever you want for as long as you want without buying it.
This is arguably creating a heady combination of impulsive, emotional, biased consumers who are constantly connected, cashless and have high expectations of personalised, geo-located and spontaneous purchase and service from brands across categories. They decide in a ‘blink’ as Gladwell puts it, in what Gary Schwartz has called the ‘Impulse Economy’.
So we’re arguably just as likely to buy an Apple Watch on impulse at 11pm on a Sunday expecting to wear it to work on Monday morning, as we are a pack of gum at the checkout of Walmart on Saturday with the kids.
This is a challenge and an opportunity for brands.
The challenge is working out how to become more like retailers, and create a seamlessly connected, rapid brand experience from search engine to transaction and delivery without losing your customer on the journey.
This is about mapping and creating brand ecosystems that have purchase, loyalty and advocacy built in from the ground up and are agnostic about whether the journey starts online or offline, or if a customer buys direct or from a third party.
The opportunity lies in the multitude of new ways brands across categories – from apparel to automotive – can generate and meet consumer impulses. Previously most brands depended on the traditional funnel from awareness to consideration and purchase facilitated by physical retail distribution: creating endless opportunities for ‘system 2’ thinking to slow down and even prevent a purchase.
How many times have you impulsively set out to buy a fast car or another big-ticket item at the weekend, only come to your senses between the impulse and the store?
Now there is much less chance for system 2 to take over – not least when we consider the power of contextual marketing – which means the brands that succeed in the future will be the ones who are set up to anticipate, generate and react to consumer needs wherever they are, and whatever they are doing.
And this is true all around the world for all kinds of consumption. Some forecasts indicate that 70-80% of all ecommerce transactions will be on smartphones in India by 2017.
Research from Ipsos indicates that 20% of South African Internet users have made purchases online, 48% plan to do so in the future, and mobile commerce is central to the growth of digital commerce in Sub-Saharan Africa.
And mobile commerce accounted for nearly 10% of all e-commerce transactions in Brazil in January 2015.
So the next time you feel like driving a fast car, or buying anything else for that matter, the chances are a brand will have one at your location with the service agreement in place before you can change your mind…