America's Most Important Shopping Partner by Leo Burnett Worldwide

+ Americaâ&#x20AC;&#x2122;s most

important

shopping partner

A mobile shopper research study 2011 Leo Burnett & Arc Worldwide

Before too long, all shoppers are going to become mobile shoppers. The answers about how to win with mobile shoppers are not about technology. It’s not about mobile sites vs. apps, iPhone vs. Android or even retailers vs. manufacturers.

The answers are found by looking through the eyes of the mobile shopper.

The sheer volume of mobile shopping has increased dramatically over the last few years, and it is expected to continue growing at a rapid pace. This growth is largely driven by the increase in Smartphones. By the end of the year, Nielsen tells us to expect 50% of US wireless subscribers to own one. With all of these technologically advanced phones in peoples’ pockets and purses wherever they go, the way people shop is changing. Shoppers are beginning to develop preferences for retailers that enable them to use their mobile phone to shop, but retailers are still playing catch-up. Research conducted by Brand Anywhere and Luth tells us 51% of consumers are more likely to purchase from retailers that have a mobile-specific website – but that only 4.8% of retailers actually have one. And web retailers who have a mobile-specific website can increase consumer engagement by 85%. Mobile phones are proving important in-store as well. Accenture conducted research that shows that 73% of mobile shoppers favor using their phone to take care of simple tasks in a store, while only 15% favor interacting with an employee.

There is simply no escaping the reality that people are using their mobile phones to shop. While it’s clear that the phone is quickly becoming an important shopping partner, as we looked around, we found that very little was clear about when, where, how and why people mobile shopped.

Goal

About Arc Worldwide

Introduce you to mobile shoppers – who they are and how they use their mobile phones to help them shop.

Arc Worldwide is the global marketing services company of the Leo Burnett Group and a specialist in cross-channel activation. With expertise in digital, direct, promotion and shopper/retail marketing, Arc moves people everywhere they move – to experience, to purchase, to recommend and to return. By unearthing a deeper understanding of how and why people do what they do, Arc develops award-winning creative solutions that measurably impact behavior on behalf of the world’s leading marketers – including McDonald’s, The Coca-Cola Company, Procter & Gamble, MillerCoors and many others.

Shopping, of course, includes many more activities than simply making a purchase. Shopping encompasses everything from searching for an item, comparing products, and evaluating prices – to researching benefits, gathering information about where to buy it, and actually completing the transaction. The shopping experience can also include activities done after the purchase, such as returning or servicing a product. Mobile shopping includes using your phone to facilitate any part of the shopping experience, from looking up a store address, to reading reviews, sharing product photos, tweeting price details, or using virtual shopping tools to help visualize the product.

Contact for more information Molly Garris molly.garris@arcww.com

Process

For copies of this white paper visit

We conducted a nationwide quantitative survey interviewing 1800 mobile phone owners. We used these quantitative findings to identify the different types of mobile phone owners. From this, we uncovered which types use their phone for shopping and which don’t; which use it a lot, and which just occasionally; how they use their phones within the shopping process; in what product categories the mobile phone is used and in what ways.

http://leolens.leoburnett.com/

We conducted qualitative research with 30 mobile shoppers. These people used webcams and flip video to share their stories with us. We also shopped with them as they used their phones in and around the retail environment. This qualitative research helped us to better understand why they do what they do; what they like about the experience, and what they don’t; and what they’ll do in one category versus another.

KEY FINDINGS

THE path to purchase is dead. Now there are MANY paths to purchase.

Not all categories are mobile shopped to the same extent and in the same way.

As mobile changes the way we shop, category norms may also need to be re-examined.

Certain categories deliver a more satisfying mobile shopping experience than the others.

Even though half of all mobile phone owners are mobile shoppers, not all mobile shoppers are created equal.

Many drivers of positive and negative mobile shopping experiences are similar regardless of the category shopped.

As mobile shopping moves from a fringe to a mainstream behavior, we need to look to a small group of Light Mobile Shoppers whose needs represent the future role for mobile in shopping.

There is a need for mobile sites and apps.

Mobile shopping is not one activity, it is many. Not all mobile activities are created equal.

Shoppers look to retailers first, but they use manufacturers for specialized support when they shop.

ÂŠ2011 Leo Burnett & Arc Worldwide | 3

KEY FINDING 1

THE path to purchase is dead. Now there are MANY paths to purchase. A planned decision can be over-turned in the store as the shopper accesses new information. Shoppers are doing their homework a little more casually.

The shopping journey is no longer predictable, linear nor straightforward The mobile phone is the most proximate shopping option for people. It’s the “anywhere device” that people always carry with them. Without the limits of sitting at a computer or stepping in a store, there are many different triggers for and moments people will consider mobile shopping. We like to call this a “shopping blip”.

First, people asked a friend’s opinion before going to a store to buy something.

If you have a few free moments while you’re waiting to pick up your child after school you might do some “bite-size” shopping where you’re looking at a Groupon deal of the day. Or maybe you are in the doctor’s office and just passing the time with some “down-time” shopping. The mobile phone provides an “always on” opportunity. Think of it as the 21st century version of window shopping.

in the doctor’s office

‘Bite-size’ shopping

Always ‘on’ shopping

“real-time”

They take advantage of access information and deals later in the process.

May need to improvise

on-the-spot

Before using mobile, shoppers did most of their checking for product availability before they ever went to the store. Now we see that there is a large group of shoppers that are shifting this towards the middle of the shopping process. This trend is also happening with other activities like using a search engine or checking a retailer’s website. We are seeing the shift happening with browsing for coupons too. With the economy the way it’s been, and the offers we’ve given them to entice them to buy, we have trained people to continue looking for a deal throughout their shopping process. And with mobile, they can and do. IMPLICATION

Now, people can use their mobile phones to digitally solicit opinions from friends and strangers while shopping in the store.

Mobile is forging shoppers’ digital and analog worlds into one Before, people would browse a circular at home and bring a coupon to the store. People searched and used coupons online. Now, people can browse online, download on a phone, and use a coupon in-store. Everything can be done at the same time. It’s not such a sequential plotted path. The mobile phone is allowing shoppers to extend the steps along the path to purchase beyond their traditional confines.

They make shopping decisions

planned decision to purchase

Then, people could read the reviews or products online.

deals of the day

‘Down-time’ shopping

watching your bid on ebay

A planned decision to purchase can be over-turned with the benefit of more information.

Mobile is allowing people to shop on the spot What once was a planned purchase, now may be less pre-planned at home. Information is continually gathered and decisions are altered as people move through the shopping process.

Give people the access they want, when they want it. Understand that there are now many paths to purchase. What’s the user experience if they start their shopping journey on the mobile site and they are looking for broad information? What if they visit the mobile site mid-journey looking to see if a retailer carries a specific brand? Or, what if they’ve made their product selection and are just looking to score a deal? Each of these shoppers is looking for something different, but all are important and need to come away with a positive experience. Make information available to shoppers in meaningful ways and important places. Don’t assume you know when your shoppers will interact with your mobile sites and apps. Make sure you are creating relevant mobile interactions that can happen early, mid, late or repeatedly in the process. ©2011 Leo Burnett & Arc Worldwide | 4

KEY FINDING 2

As mobile changes the way we shop, category norms may also need to be re-examined. IMPLICATION

Considered becomes casual

Casual becomes considered

Categories that were shopped with great consideration may now see a more casual approach. For instance when shopping for appliances, people do their “homework” to shortlist, but often need to improvise or access more information in-store anyway. The model they have selected may not be on the floor and now they need to re-evaluate their choice and learn about a similar model or a competing brand.

The opposite is also happening. Categories that may have gotten minimal consideration before, now receive more attention. Take something as simple as getting coffee. It’s no longer just a matter of walking into a coffee shop. At Starbucks, people can look up locations, load up their reward card, explore nutritional information and even pay in select stores.

Before, this shopper may have returned home to conduct more research on the computer or he may have relied solely on instore customer service to make his choice. Now he has access to new information through his phone. This helps shoppers be a bit more casual about what they need to have in place before entering the store.

Think outside of category norms. If you assume shoppers are well-planned, they may not be. Be prepared for a more casual, improvised and real-time interaction. If you think shoppers are not involved - think again - they may be up for a more engaging shopping experience than we currently offer.

With gas prices the way they are today, people are giving this category a lot more consideration as well. The GasBudyy app helps shoppers find the cheapest gas nearby.

Take Volkswagen for example. They recently launched the GTI exclusively with an iPhone app. It became the number one downloaded app in 36 countries. It was an idea that seamlessly integrated the brand with play and utility for a real measureable return and it redefined how a car can be sold in the digital age. People casually browsed for a car just because they could.

{ Considered }

{ Casual } { Casual }

{ Considered }

KEY FINDING 3

Even though half of all mobile phone owners are mobile shoppers, not all mobile shoppers are created equal.

Skew dramatically younger 67% are 18-34 yrs Leaders and in-the-know

57% male More likely single

Likely to have the latest phones

Meet the mobile shopper

One size does not fit all

When we look at adults 18-64 in the US, we see that 10% don’t have mobile phones. We also see that an additional 40%, while owning mobile phones, are not mobile shoppers. Approximately 50% of adults 18-64 in the US are currently mobile shopping.

So let’s look at a few examples of the difference in activities. 93% of heavies look up store addresses, hours or locations. Only 47% of lights do. And interestingly, this is the most commonly done activity among the light users. That’s quite a gap. But the gap gets bigger. Looking at shopping apps, we see that 55% of heavies use them once a week or more – and that 51% of light mobile shoppers use them once a month or less. When we get to specialized activities the gap widens even more dramatically. Using gift guides on a mobile is done by almost 7 times as many heavy mobile shoppers as light mobile shoppers.

These people fall into two groups, and there are some real differences between them. The critical point to note is that a very small group (around 20% of all mobile shoppers) are driving a majority of the mobile shopping activity volume.

Heavy Mobile Shoppers

10 % 39.1 %

Light Mobile Shoppers

10.3 %

week

Mobile Activity Index

General Shopping Index

161

118

Mobile Shopping Index

Light Mobile Shopper

47 %

Heavy Mobile Shopper

358

779

vs.

Limited view of how to use mobile phone in shopping Lack of trust

Handicapped by technology - BlackBerry and Android apps

month or less

54 % 8%

Less into both mobile and shopping

78% have downloaded an app, only half have used an app for shopping

Engrained non-mobile behaviors 27% own a BlackBerry 25% own an iPhone

Use gift guides on mobile

40% earn $75K +

At the most fundamental level, light mobile shoppers have a rather narrow outlook toward mobile with regard to shopping. They see it primarily as a mini-portable computer, and therefore primarily use it in the car and on the go. 62% of light mobile shoppers told us it was just easier to go online from a computer vs. shopping on their phone. In contrast, Heavy mobile shoppers know and use mobile as a specialized tool for shopping.

300

{ 20% of Mobile Shoppers are Heavy Mobil Shopper }

57% are 25-44 yrs

Use mobile shopping apps

Polar income levels - below $40K or over $75K

More mobile shopping activities, and in more categories

55 %

51% Look up store address, hours or locations

59% have at least 2 shopping apps on phone

52% female

Once a

The gap between heavy and light mobile shoppers is enormous, and it centers around the nexus of mobile and shopping. Heavies love their phones. They do things like share photos, download music and check the news. They also love just plain shopping – whether it is at home, on a computer, or in the store. AND THEY ARE REALLY INTO MOBILE SHOPPING. When it comes to mobile shopping, Heavies index 10 times higher than Lights.

iPhone dominant

or more

93 %

% of Total US Adult Population, Age 18 - 64

Funnel their lives, including all their shopping through their phones

{ 80% of Mobile Shoppers are Light Mobile Shopper }

Once a

40.6 %

Mobile Non-Shoppers No Mobile Phone

Light Mobile Shopper Heavy Mobile Shopper

They are more open-minded and willing to try more with their phones

High correlation between amount a category is mobile shopped and level of satisfaction

IMPLICATION

Future growth will come from the light mobile shoppers. While heavy mobile shoppers have entirely driven the growth of mobile shopping thus far, the growth in the future is going to come from light shoppers who have a very different outlook toward mobile today. Engaging them, and as a result, winning in the future, is going to require a very different approach than what may have attracted the current group of heavy mobile shoppers. ©2011 Leo Burnett & Arc Worldwide | 6

KEY FINDING 4

As mobile shopping moves from a fringe to a mainstream behavior, we need to look to a small group of Light Mobile Shoppers whose needs represent the future role for mobile in shopping. Lights shall inherit the future From the nearly 40% of light mobile shoppers there is a small group of people that have the greatest potential of becoming heavy mobile shoppers.

Heavy Mobile Shoppers

10 % 39.1 %

Light Mobile Shoppers

5.8 % High Potential Mobile Shopper These High Potentials share a similar level of engagement in mobile activities and shopping activities with the heavy mobile shoppers. But they haven’t really converted their shopping activities onto their mobile phones. Mobile Activity Index

General Shopping Index

161

118

305

289

Mobile Shopping Index

There are several factors that hold them back from converting their love for mobile and love for shopping into mobile shopping. Quite simply, they have limited awareness of what the mobile phone can do with respect to shopping. They get the basics, like search, and will visit mobile sites. They also check their mail for deals they’ve received. Their knowledge of shopping apps is limited. They aren’t even aware that many of their favorite mobile sites are also available as easily usable apps. And this is really no surprise when we visit the Apple app store, for example. There are over 300,000 apps to choose from. These apps are organized into categories, and shopping isn’t one of them. There were some apps grouped together over the holidays, and this may have helped some, but it’s not typical or permanent.

Not all shoppers are the benefits of mobile One example of the varied behavior between these two groups is how they behave when the store is out a product they are searching for. The high potential heavy mobile shopper abandoned the sale when she got to the store and they didn’t have the product on the shelf. Alternately, the heavy mobile shopper jumped on his cell phone and bought the out-of-stock item from the store’s mobile website. Converting these high potential mobile shoppers into heavy mobile shoppers requires reframing the perception of mobile for shopping. Because these shoppers aren’t into the novelty and experimentation, they need to see the functional benefits of shopping with a mobile phone.

Light Mobile Shopper

113

IMPLICATION

The phone is a specialized shopping tool High Potential Mobile Shopper

300 Heavy Mobile Shopper

358

help this reframing. They are heavily promoting this app in their store windows and at store shelves.

779

The challenge is to help the next generation of shoppers move from thinking of mobile as “an inferior substitute for the computer” to “a tool that helps me save time and money, and enhances my shopping experience on the go and in the store”. If we look to Sephora, for example, we see how they are helping shoppers see the benefits of mobile. In a mailing sent to their current customer base they communicate that they have a mobile app and specifically speak to its benefits as a shopping tool, a clear effort to

Reframe the perception of mobile for shopping. Emphasize the functional benefits. Position mobile as a specialized shopping tool that helps save time and money. Reinforce mobile’s ability to give more control and an enhanced shopping experience in the store and on the go.

KEY FINDING 5

Mobile shopping is not one activity, it is many. Not all mobile activities are created equal. The Target app creates tools that are helpful broadly across a variety of categories. For example, when you set your Target store, the app will tell you if your store has the item you want in stock and even what aisle to find it in.

Heavy Mobile Shopper Light Mobile Shopper

Activities are influenced by mobile and shopping behaviors There are some well-adopted activities and others that are used much less frequently. Some of these activities are highly influenced by mobile behaviors. Others are strongly influenced by shopping behaviors. Mobile shopping activities can be grouped into four quadrants. At the top of this chart we see activities that are born out of mobile behaviors. Activities on the bottom of the chart are derived from fundamental shopping behaviors. Within this structure there are more adopted and less adopted activities. The less adopted tend to be more specialized or advanced.

Native Mobile Activities

93%

70%

47%

15% Receive, share photos of products

Look up store address, hours, location

More Adopted

CORE MOBILE TASKS

SPECIALIZED MOBILE TASKS

CORE SHOPPING TASKS

ADVANCED SHOPPING TASKS

Less Adopted

Native Mobile Activities

83%

CORE MOBILE TASKS

SPECIALIZED MOBILE TASKS

63% 20%

Look for deals for nearby stores

9% Use gift cards

Native Shopping Activities More Adopted

Less Adopted

CORE SHOPPING TASKS

ADVANCED SHOPPING TASKS

Native Shopping Activities

Some activities are done more than others Stepping back, we see through these four examples how activities that are basic are most adopted, particularly those native to mobile. Penetration drops off the most when we move into the advanced activities derived from native shopping activities.

Shoppers like to price compare Retailers need to look at how they provide this capability. In the absence of a custom retailer solution, shoppers will turn to an app like amazon price checker or red laser. With these a retailer risks losing the sale to a competitor. However, Target, Best Buy and Toys R Us are examples of retailers that have built a price check feature into their own app. With this, they have the opportunity to not only provide pricing information but also provide product information that is seen as valuable to the shopper and can potentially keep the sale within your store. Retailers have the opportunity to get their inventory in front of local shoppers by partnering with Milo, a local shopping search engine. Milo searches the shelves of local stores to find the best prices and availability, thus satisfying the need of instant gratification for shoppers.

IMPLICATION

Leverage existing platforms for the native mobile shopping behaviors and design proprietary mobile solutions for native shopping behaviors. The Home Depot app is highly customized to meet the needs of the do-it-yourself home repair person.

Core mobile tasks: Cover the basics such as optimizing email and search functionalities with technology vendors such as google.

Core shopping tasks: Create proprietary retailer solutions based on core shopping behaviors and customized by category.

Specialized mobile tasks: Partner with industry leaders such as facebook or YouTube.

Advanced shopping tasks: Take core shopping activities and enhance them within your own platform. Understand that these shoppers are looking for functional benefits.

ÂŠ2011 Leo Burnett & Arc Worldwide | 8

KEY FINDING 6

Not all categories are mobile shopped to the same extent and in the same way.

phones either. Knowing which activities fall into this group and de-prioritizing such efforts can allow retailers and manufacturers to focus on the solutions that matter most to shoppers.

We looked at mobile shopping in 36 different product and service categories and observed a remarkable difference in penetration levels, with some categories like travel being significantly higher than categories like CPGs. Moreover, the relative gap between heavy and light mobile shoppers also widened as category penetration fell. Here you see in depth how those levels vary for four categories—restaurants, apparel, appliances, and a collection of CPGs.

Where each specific activity falls on this map will depend on the category being examined, such that each category would have a unique imprint or “radar.” Some examples of activities for the four categories examined are shared here.

Each category has a unique activity radar.

Core Considered Not Relevant

Locating Product/ Retailers Getting Service/ Support

Finding Coupons/ Offers/Sales

Light Mobile Shopper Heavy Mobile Shopper

41 %

49 %

49 % 25 %

Restaurants

Apparel

Ordering and Paying

12 %

25 %

Appliances

6 18

Earning Rewards

Then there are considered activities that are relevant to the category but not currently being done on the mobile phone. The barrier to adoption is often a lack of awareness and understanding. Once exposed to such activities, shoppers appreciate their utility and they are open to integrating such activities into their lives. Developing these types of solutions offers the greatest potential in changing behaviors and driving mobile adoption. Lastly, there are activities that are not relevant to the category and hence something shoppers will not consider doing on their mobile

Framing Options 3

There is a range of activity relevance.

Some activities are core to a category—they are intrinsic to how people shop the category and therefore are activities shoppers have naturally become adapted to doing on their mobile phones in some form or another. Manufacturers and retailers can offer mobile solutions that improve the way shoppers are adopting such activities.

Choosing From Options

Shopping for appliances is a complex, information-intensive, and time-consuming process. Oftentimes, the products people find on the shop floor are different from the products they had shortlisted in their desk research. Shoppers have shown the resourcefulness to whip out their mobile phones in-store and access the details of new products as they encounter them. Using mobile phones to make a shopping list is a different story, given the limited number of items people are usually shopping for.

Making Lists 10

Average CPG

We also examined 33 different mobile shopping activities across the four categories above, and developed a framework for examining activity relevance based on adoption levels and activity type.

15 5

Apparel shoppers are very responsive to deals, hence they use their mobile phones to receive deals notifications all the time. Here too, shoppers are open to using the mobile phone to get real-time opinions of friends and family who may not be in the store with them, even if they may not be ready to use public social networks to do the same. And, because an in-person store visit is so important to an apparel shopper to see the product fit and to feel it, the relevance of public opinions may not have much relevance.

Using and Giving Ratings/Reviews

Comparing Prices Restaurants 1 Look up location, hours, etc. 2 Make a shopping list 3 Give a public review or rating 4 Order for pick up and payment in store

Apparel 5 Receive coupons & sales notifications 6 Gather ideas and information 7 Ask opinions from friend/family 8 Access public opinions 9 Scan barcode to compare prices

Appliances 10 Make a shopping list 11 Look up reviews and ratings 12 Scan barcode to compare prices 13 Look up product information 14 Order for pick up and payment in store

CPG 15 Find coupons and deals 16 Gather ideas and information 17 Scan barcode to compare prices 18 Participate in retailer loyalty program 19 Order for pick up and payment in store 20 Tweet for customer support

In the restaurants category, for example, people use their mobile phone to locate restaurants and read reviews and ratings—activities they might have previously been doing on their computers. And because they use customer reviews and ratings, they are also open to giving such reviews and ratings themselves. Here, a mobile phone can provide an effortless and fun way for shoppers to capture and share reviews real-time so as to avoid losing the review in the time it takes to get home.

CPGs are truly different and, given their relatively low level of adoption for mobile shopping, only activities such as searching for coupons or making lists are something shoppers are currently doing, and that too in a rather rudimentary fashion. There is opportunity for retailers and manufacturers to bring some advanced functionality with mobile apps to these activities and to move additional items into the shopper’s consideration set. Some activities are so integral to shopping that their relevance is evident across multiple categories. Pricing information is so valuable to shoppers that this is an example of an activity that shoppers would highly consider doing while shopping for appliances (given the price tag), for apparel (given the possibility of finding deals) and CPGs (given the ease). In contrast, some activities may be well adopted in one category, but not relevant in another. For example, an activity such as using your mobile phone to place and order, and then later paying and picking up in-store is already a core behavior in fast-food shopping. To create efficiency in their weekly routine behaviors, CPG shoppers might also consider doing such an activity. But for appliance shoppers this has little relevance, since they want to first see the product before they decide to purchase it. IMPLICATION

Mobile shopping solutions should be designed category up. It’s not a one-size-fits-all. Underlying category behaviors are a good indicator of which mobile shopping activities will play a prominent role and which will not. ©2011 Leo Burnett & Arc Worldwide | 9

KEY FINDING 7

Certain categories deliver a more satisfying mobile shopping experience than the others.

Light mobile shoppers have less satisfaction based on inexperience We looked at mobile shopping satisfaction in 36 categories. We see that the satisfaction levels vary quite a bit between heavy and light mobile shoppers. The horizontal access on this chart shows mobile shopping penetration. The vertical access shows the percent of people satisfied with their experience. The dots represent different product or service categories. Satisfaction with shopping experience

Overall, we see that light mobile shoppers are satisfied in fewer categories. The category penetration levels tend to go hand-in-hand with the satisfaction levels. The lower the penetration, the lower the satisfaction. And in general, the satisfaction levels are lower than those of a heavy mobile shopper. With heavy mobile shoppers, we have to take a closer look at satisfaction levels.

Even with similar usage levels, people are more satisfied with experiences in some categories than others

place to eat and the opportunity to read reviews from an active community of locals in the know. But with something like appliances or apparel, the shopper needs to walk into the store to view the product. Seeing a washer or a pair of jeans on a phone will not provide enough information to make a confident and informed purchase decision. So even though full service restaurants and apparel share a similar penetration level, the apparel mobile shopping experience has many fewer satisfied shopping experiences.

(% Top-3-Box on 10-pt scale)

IMPLICATION

Satisfaction with shopping experience

(% Top-3-Box on 10-pt scale)

In low involvement categories, you have to deliver exponential value vs. the required effort to change behavior. For instance, deliver deals that are only available on the phone, or provide tools that deliver greater efficiency.

With higher involvement categories, mobile has to add value by enhancing the necessary in-store experience in order for satisfaction ratings to rise. For instance, in categories like autos and furniture, provide ratings and reviews that are easily accessible in the store to enhance shopping experience.

20 40

0 0

Product category penetration

Light Mobile Shopper

(% ever shopped with mobile phone)

Satisfaction with shopping experience (% Top-3-Box on 10-pt scale)

20 Heavy Mobile Shopper

Product category penetration (% ever shopped with mobile phone)

Why is it that even within the same level of penetration there are different levels of satisfaction? Take restaurants. Here we see high satisfaction levels, even with different penetration levels between quick service and full service restaurants.

0 0

20 Heavy Mobile Shopper

Product category penetration (% ever shopped with mobile phone)

With restaurants, people rely on the comments of others to predict a good dining experience. Apps like Yelp make it easy to set up a successful purchase experience with the ability to search for a

ÂŠ2011 Leo Burnett & Arc Worldwide | 10

KEY FINDING 8

Many drivers of positive and negative mobile shopping experiences are similar regardless of the category shopped.

Instant access to product, inventory and price information

The excitement of discovering a new mobile activity, app or mobile site that works well

When experience exceeds expectations

Sites that provide essential information

Having to opt in and register for an app before you know if you even want it, and filling in too many fields of information.

Ability to make a purchase decision regardless of where you are

Too much information to navigate on a small screen.

Sites that load quickly

Difficulties in narrowing or refining a product search.

Generally, people like sites that load quickly and give the essential information. They like the freedom of accessing information anywhere. They like discovering new apps or sites that work well, and when their expectations are exceeded that’s pleasing as well.

Positive experiences

Unmet reward expectations.

Performance counts Clearly, performance is critical. Here are some specific suggestions. TEST across as many handsets, platform and browser combinations as possible using online testing tools and preferably, where possible, actual handsets. CONSIDER limited memory resources and optimize to use the minimum amount of memory. REMOVE unnecessary code and features.

Optimize the mobile user experience Amazon does a great job of optimizing the user’s mobile experience. On the website, the new customer is asked to create a lengthy profile about herself and her preferences. But, on mobile, Amazon realizes the person is on the go and offers a streamlined experience, so the user is only prompted to fill in basic fields.

Negative experiences When it comes to negative experiences, people are annoyed by technology bugs. They don’t like getting bounced from an app to a site because the app isn’t fully useful. They dislike when they are given information overload or have to opt-in too early in the process. They also don’t like having their rewards expectations go unmet.

Technology bugs like slow loading sites, crashing apps, price scans that don’t work, limited phone reception.

Getting bounced from an app to a website. It’s only half useful.

Macy’s did a great job of exceeding shopper expectations with their mobile site over the holidays. They had a special holiday feature called “Macy’s Believe”. To unlock the magic, the user was instructed to turn their iPhone horizontal. This unlocked different content. Macy’s then delivered a page refresh that surprised shoppers with a fun and unexpected experience.

LOAD test to measure performance and scalability.

Inconsistent information between the store, mobile site and an app.

CONSIDER power consumption to conserve phone battery power. IMPLICATION

All this means that it’s important to conduct rigorous Quality Assurance testing to eliminate bugs, and to ensure you’ve designed your user experiences for a mobile phone, not a computer. Provide consistent information across channels, and surprise and delight mobile shoppers.

KEY FINDING 9

There is a need for mobile sites and apps.

Mobile sites have their advantages Mobile sites are necessary. Visiting mobile sites is one of the few activities that light mobile shoppers do, and shoppers regularly rely on mobile sites when apps crash. Mobile sites can deliver real-time information. The Mobile web has evolved. For phones like iPhone and Android that use Webkit browsers, enabling retailers and brands to deliver app-like experiences without the need for an app download. For other phones that can access the mobile web, similar experiences can be created to increase engagement. For example, the Bloomingdale’s mobile website can be viewed on a Blackberry or an iPhone. But for Blackberry users, the menus are extended to mimic a scrolling Blackberry user. While the iPhone site is more compact for quick touch navigation. These customized experiences help transfer current mobile behaviors to mCommerce sites. • Eliminates the need for a download • Easily optimized for search

Mobile web can bridge shoppers to more functionality The Mobile web is great at achieving the basics but today’s Smartphones have the ability to do so much more – like determining your location with GPS or capturing images with the phone’s cameras. As a result, to create app awareness and nudge shoppers to the optimized experience, brands and retailers put banners on their mobile site for devices that have an app available.

Retailers and manufacturers need to treat apps differently than mobile web Apps have to be treated differently than mobile websites. For example, Kraft uses their mobile website to deliver basic content such as recipes. Their app, on the other hand, provides the opportunity to use a phone’s camera function to take pictures of food items in the cabinet and add them to a shopping list. Coupons can be scanned and added to loyalty cards.

Apps have their advantages too Mobile apps are necessary too. Downloading apps is a common activity for heavy mobile shoppers. Apps are pre-loaded to their phones and offer custom information within a touch or two. And Apps deliver a predictable experience. Apps have their unique advantages. They can take advantage of the phone’s functionalities, like the accelerometer or use location-aware functionality to deliver more customized engagements. Apps are built for specific platforms, so they can deliver a rich user-friendly experience. IMPLICATION

Offer a fluid and functional shopping experience that recognizes the unique role for both. A strong mobile site should focus on delivering a simple experience, or shoppers will navigate elsewhere. Use an app to integrate the phone’s functionalities to automatically pull GPS coordinates or pull colors from photos. Know that shoppers may search for your mobile website or open your app, without thinking about why they selected one or the other, so be consistent with information. The heavy shopper, however, will clearly appreciate the more advanced customization and fun that your app delivers.

• Stronger reach

KEY FINDING 10

Shoppers look to retailers first, but they use manufacturers for specialized support when they shop.

Information found on retailer sites isn’t enough

Manufacturers and retailers must work together

They may go to retailers first and more often, but they don’t find all that they need so they also have to visit manufacturer sites to find that information. Rather than risk losing shoppers, provide important manufacturer information within the retail experience. Some shoppers told us that with retailer websites they don’t find the details they need to make a decision. And the information they are given seems more like an ad. Mobile Shoppers are looking for a balance of retail and manufacturer data.

While retailers have been leading the way with mobile initiatives, they may not always have access to detailed product specifications, lists of matching accessories, warranty information and other data that could influence their purchase.

Light Mobile Shopper Heavy Mobile Shopper

L’Oréal partnered with Walgreens by creating endcaps featuring Youth Code. Often times shoppers are overwhelmed with product choices in the skincare category. With this display, shoppers can use their phones to learn more about the product.

Here we see Target partnering with Giada to offer exclusive product. Using mobile, shoppers can scan a QR code found in a holiday gift guide to access relevant holiday recipes that are co-branded with Giada. This sits within the Target mobile site for quick access to other products.

91 % 31 %

Visit retailer website IMPLICATION

79 %

Manufacturers and retailers must work together. Retailers need to lead, but partner with manufacturers to deliver categoryspecific content. Manufacturers that create content that directs shoppers to a specific retailer offer those same shoppers the opportunity to have a comprehensive experience that pulls them all the way through the purchase.

21% Visit manufacturer website

Scan for Giada De Laurentis’ Seafood Shrimp Cocktail recipe or visit Target.com/Giada for this recipe and more.

Appendix 1

Non Mobile Shoppers primarily use their phone making phone calls and for text messaging. Non Mobile Shoppers

% who do the following activities at least once a month from their mobile phone

100.00

75.00

50.00

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ÂŠ2011 Leo Burnett & Arc Worldwide | 14

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Appendix 2

Some mobile shopping activities are more adopted than others

% who do the following activities at least once a month from their mobile phone

100

10 93 94

90 91

32 86

25 24 23 84

22 86

78 79

21 83

21 21

20 20 19

Light Mobile Shopper Heavy Mobile Shopper

81 85

19 19

74 71 78

70 67

17 16 16

73 64 68

60 59

15 14 14 13 13 13

70 62

57 58

11 11 11

61 65

10 10

63 59

9 9

47 54

40 40 31

8 6

ÂŠ2011 Leo Burnett & Arc Worldwide | 15

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Appendix 3

Some categories are more heavily mobile shopped than others

% who do the following activities at least once a month from their mobile phone Light Mobile Shopper Heavy Mobile Shopper

100.00

75.00

52 49 47

34 39

30 32

19 22 22 18 16

7 7

0 6 19

5 5 20

10 10

5 9 6

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ÂŠ2011 Leo Burnett & Arc Worldwide | 16

Appendix 4

Mobile Shopping Barriers

Light Mobile Shopper

High-Potential Mobile Shopper

Heavy Mobile Shopper

It’s just easier for me to go to online from a computer than to shop on my mobile device.

62%

49%

35%

I am usually near a computer so I really don’t see the need to shop from my mobile device.

50%

46%

31%

I think shopping from my mobile phone takes more time than shopping online.

48%

47%

29%

I don’t have very many occasions when I need to shop from my mobile device.

46%

41%

22%

The websites I access on my mobile device are much less user-friendly than the websites I access on my computer.

42%

36%

31%

I really don’t have the need to shop from my mobile phone.

40%

27%

16%

It’s just easier for me to go to a store than to shop on my mobile device.

37%

35%

25%

Once I am actually in a store I have no need to shop from my mobile device.

37%

29%

20%

The screen on my mobile device is too small to see things clearly.

37%

34%

20%

I don’t think shopping from my mobile phone is very convenient.

35%

25%

21%

The websites I access on my mobile device have much less of the same content, features and functionality.

33%

35%

26%

It is difficult to search for products and/or services on my mobile device.

32%

25%

18%

It is difficult to use and/or search for coupons on my mobile device.

31%

28%

27%

I am worried about the security of mobile payment services.

27%

25%

The internet access on my phone is too slow to shop effectively on my mobile device.

27%

21%

18%

I think shopping from my mobile phone would take just as much time as shopping online.

23%

18%

15%

I am not certain that the transaction will be completed while shopping on my mobile device.

13%

15%

14%

I am not certain that my phone number will be kept private while shopping on my mobile device.

12%

16%

None of the above.

17%

20%

Percent of shoppers who checked the statement