March 30, 2001

Information Resources Inc. released the results of its study "CPG Online: What's Not Clicking for Manufacturers, Retailers, and Consumers."

The research shows discrepancies between shoppers' true use of the web for consumer packaged goods (CPG) and manufacturers' and retailers' perceptions. The study, which was conducted by IRI's e.Ventures group, focused on the effectiveness of three primary Internet activities of the CPG industry: brand websites; advertising, promotions, and e-mail communications; and e-retailing.

"Our clients are very excited about the CPG Online study," said Rick Kurz, IRI division president. "This insightful data helps our clients understand how consumers want to interact with CPG products online, which improves online marketing strategies and provides strong justification for Internet spending. The results, which clearly show that consumers want an online dialog with CPG brands, enable manufacturers to refocus budgets on what consumers want and like," added Kurz.

Brand Websites

IRI's CPG Online survey found that basic websites satisfy the majority of consumer needs, which include company contact and product information. Consumers are also interested in online coupons and offers for free samples, but among the 75% of manufacturers with brand websites, only 20% provide coupons and 22% provide free samples.

Consumers expressed low interest in elaborate website content such as lifestyle editorial, games and online chat.

"Consumers go online with an agenda--to contact the brand or to get product information," said Brian Murphy, IRI e.Ventures partner. "The rule should be to build basic websites, and only invest more when brand-specific research indicates that an exception applies," added Murphy.

Advertising, Promotion, and e-mail

Manufacturers are underutilizing online promotions and e-mail marketing. The study found that while consumers are receptive to online coupons, sweepstakes and free samples, one-third or fewer of manufacturers surveyed used these promotions. Similarly, two-thirds of consumers are interested in receiving email communications from manufacturers, but only one-third of manufacturers participate in email marketing.

Banner ads also play an important role in online CPG marketing, as they drive high awareness among consumers, even if click-through rates are low.

e-retailing

Despite recent failures among CPG e-retailers, consumers are optimistic about the Internet's potential as a viable sales channel:

Trial is relatively high: 23% of primary shoppers who are online have purchased a CPG product online more than once in a three month period.

Shoppers plan to increase spending: Currently 10% of online CPG consumers purchase 25% or more of their CPG products online. Next year, the number of online CPG consumers exceeding the 25% mark is expected to triple.

Online CPG shoppers are satisfied: Half of online CPG shoppers are very satisfied with the current state of CPG e-retailing, and more than 75% have encouraged their friends to shop online.

The study revealed several factors that will limit the growth of e-retail if not addressed, however. For instance, e-retailers do not have a clear picture of the primary reasons that consumers do and do not shop online: The leading reason consumers shop online is that they value the ability to shop any time of day, but only 1/2 of e-retailers surveyed placed this among the top 3 drivers. On the flip side, e-retailers underestimate the impact of delivery charges and the desire to review products in person as deterrents.

IRI's e.Ventures group surveyed about 8,000 online consumers with Harris Interactive of Rochester, NY and interviewed 75 retailers and manufacturers with PERT Survey Research of Bloomfield, CT. McCusker & Associates of Suffield, CT, participated in study design and analysis.

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