Monday, July 13, 2009

Retrevo's Role in the Consumer Decision Process

Retrevo is an interesting company that has come across my radar on several occasions prior to 2009. I like to think of Retrevo as "The Google of the Consumer Electronics Buying Process" in that they have created and maintain a centralized, independent source that covers consumer needs in three key categories - Find, Buy, and Use. Retrevo does this by analyzing more than 40 different electronics categories, hundreds of thousands of products, millions of facts, and millions of user and expert reviews from thousands of publisher sites, user reviews, blogs, forums and more.

We were pleased to have Retrevo represented at the CONNECTIONS event, and we heard from Vipin Jain, their CEO, on a couple of occasions in Santa Clara. He and Tricia Parks, our CEO, addressed the core elements of the consumer electronics purchase process in a Wednesday morning session titled Navigating the Changing CE Purchase Purchase Process. Both Parks Associates and Retrevo conducted large consumer surveys regarding consumer electronics buying decisions in Q2 2009, with the following key questions examined:
  • How have consumers changed their consumer electronics purchasing habits in the last year?
  • Can puchase behavior changes be attributed to the recession or other factors?
  • With changing purchase habits, where are the opportunities and challenges for consumer electronics manufacturers and retailers?
  • Do CE shoppers have specific brand affinities in specific product categories? What causes brand switching? How to raise visibility of your brand?
  • Where does retail shine? Where is it weak? What can companies do to optimize their retail positions?
  • How will the service provider play a larger role in the delivery of hardware?

Vipin was also a participant on my panel Building the Holistic Support Environment. I asked the Retrevo folks if they would be willing to be interviewed as a follow-up. Here is the transcript.

Parks Associates: Can you please describe the work that Retrevo is doing?

Retrevo: Retrevo ( is a new kind of marketplace that makes shopping for consumer electronics simple and fun.

Retrevo uses artificial intelligence to analyze and visually summarize more than 50 million real-time data points from across the web to give shoppers the most comprehensive, unbiased, up-to-date product information they need to make smart, confident decisions about what to buy, when to buy, and where to buy.

To learn more about how we do this, read more about us here.

Parks Associates: What does consumer use of a site like Retrevo tell us about some of the key aspects of how consumers research and buy consumer electronics?

Retrevo: More than 3M users visit Retrevo every month to research what consumer electronics products are right for them. Retrevo observes and analyzes these millions of users behaviors in aggregation, to discover interesting activities and trends. We track these publicly using the CE Demand Index and CE Price Index.

The CE Demand Index reflects the (net dollar) demand for consumer electronics products across 40 categories. This index is a leading indicator of consumers’ purchase intention (or sell-through potential from sellers’ perspective) using various offline and online retail channels. The CE Price Index reflects the price trends for actively selling products across 40 categories that consumers have an interest in purchasing. Some of our analysis from the indexes is made available for free through the Retrevo Pulse Reports. Read more about the Retrevo Pulse here.

Parks Associates: From what you can tell, what appear to be key triggers to the purchase of a particular product?

Retrevo: Overall demand is down 15% year over year, and when consumers do come out to buy, Value (price to pay for the features a product offers) is definitely top of mind for consumers. But a study of buying behavior across categories shows some interesting patterns: Consumers care about innovation and want the latest and greatest (in a meaningful way, not from marketing speak). Sure, consumers are spending 20% more time researching, but at the same time, they are willing to spend more for the innovation. Examples of this can be seen in Digital Camera and Optical Disc Player categories, while lack of innovation shows in categories such as Home Theater Systems. A full report is available here.

Parks Associates: What does your knowledge about consumers and CE buying tell you about how particular CE brands tend to fare? Are there products where consumers are more brand loyal, and brands where they are less loyal?

Retrevo: We recently did some studies about brand affinity, and came up with interesting conclusions. Value (features for the price) trumped brand in all but the strongest categories. While we do not share data about specific brands or products, the aggregate results showed brand affinity to be consistently low across many categories including: DVD Players, Picture Frames, Laptops/netbooks, camcorders, and home theater systems. Cameras had a 180% higher affinity than average, and TVs were are 200% of average.

Other myths that were disproved were:
Myth: Customers are loyal. Once you acquire them, they are yours for life
Fact: Only 56% users stated that they would buy products from the same brand because they had a positive experience with them. 24% of users stated that they would consider buying from the same brand if that brand continued to represent a good value and/or good quality and/or innovation (features/functions in the product). So, even with a positive brand experience, consumers are sensitive to (and sometimes skeptical about) brand’s continued commitment to their differentiation, a hard reality in face of every increasing complexity, innovation and competition in product space.

Myth: A positive product experience means repeat purchase from the same brand
Fact: Even though 80% users had a positive view of a brand they owned and stated they would consider buying from them again, the stated intent didn’t translate into their actions when we silently studied their shopping behavior on the Retrevo site. It appears that consumers get into a different mindset when researching products, not completely rationalized by their beliefs and experiences, highlighting the complexity and fear surrounding consumer electronics purchases. 76% of the users spent better part of their product research identifying/finding products for purchase without ever choosing a brand explicitly. Factors that contributed to brand switching / product selection were good value at 34%, trusted sites and experts raving about a different product/brand at 25% and other users talking positively about a different product/brand at 10%.

Parks Associates: Retrevo has been able to provide some interesting information about what products are “hot.” What can you tell us about the 2008 hot products or brands? What products or brands tended to top the list in 2008?

Retrevo: Retrevo Pulse looked at the behavior of millions of users along with their level of interest, reviews from experts and users and pricing data, to identify the top products of 2008. The Pulse Awards go to products that have been recognized for high quality, high level of demand (user interest), rich feature sets, and most importantly, high value. The winners for 2008 are listed below. For more details, click here.

Parks Associates: What trends are you seeing in consumers purchasing high-definition televisions? What are they looking for? How do features like high refresh rates impact purchasing behavior?

Retrevo: High momentum in the first half and excess inventory in the second half of 2008 depressed prices to unrealistic levels last holiday season. Negative margins forced brands and retailers to raise prices post-holiday season as excess inventory cleared from the channel (ASPs went up more than 30% from January to mid-April). Even though the category has gone through a refresh cycle in last few months (more than 50% of currently selling HDTVs were introduced this year), demand hasn't picked up even after a technology refresh cycle. What is the innovation in HDTVs lately? Transition from 720p to 1080p? Yawn! Consumers are not biting. Let's work on the basics. Get the best out-of-the-box experience without worrying about ISF specs, calibration, refresh rates, etc. Get HDTVs to network and "simply" download content from your computer and from the Internet, and we will have a shot at making people spend more for the newer technology rather than simply gravitating to value brands for a seemingly commoditized technology.

Parks Associates: Who do consumers trust for advice? What is the role of professional product reviewers vs. bloggers vs. friends and family?

Retrevo: The product category, and the stage that a consumer is in during the purchase process, dictates who influences them.

Our research shows that for many technology categories that are considered purchases (including HDTVs, Laptops, Home Entertainment Systems etc), consumers read expert reviews earlier in their shopping journey (to get some grounding and guidance) and use user reviews very close to the purchase to get the final reinforcement and/or reason to buy or not to buy. In fact, more than 75% of people behave this way. Our definition of experts includes not just professional product reviewers, but also vertical sites, blogs and anchors on passion sites (around specific areas of interest)..

Some technology categories are more social / user review friendly from recommendation perspective, mostly mobile categories such as cell phones, MP3 players, accessories/add on etc. Most of these categories fall under either “impulse/emotional” buys.

Parks Associates: What products or categories are you seeing as hot in 2009? What are you anticipating for the holiday 2009 shopping season?

Retrevo: The high unemployment rate and other economic factors are most likely contributing to lackluster growth in many product categories including game consoles, MP3 players, and even digital cameras. The primary categories with any buzz in the marketplace right now are laptops (particularly netbooks) and smartphones. They will likely enjoy modest growth in demand. The next several months leading up to the holidays could find consumers buying smaller ticket items like universal remotes, radar detectors, and headsets which are all showing growth trends on Retrevo's Pulse. TV demand has been on a slow decline for the last few months but has just recently started to show signs growth.

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