Digital powers consumer durables - Afaqs

Digital powers consumer durables - Afaqs
DIGITAL POWERS
CONSUMER DURABLES
A $23 Bn opportunity by 2023
                    July 2019
Digital powers consumer durables - Afaqs
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Digital powers consumer durables - Afaqs
06          20         52
DECODING    DECODING   SEIZING THE
DIGITAL     DIGITAL    OPPORTUNITY
INFLUENCE   CONSUMER
Digital powers consumer durables - Afaqs
EXECUTIVE SUMMARY
The consumer durables industry is                    penetration, falling smart phone               expected to become 55% by 2023
expected to continue the growth                      prices, decline in data tariffs, more        • Between 2013 and 2017, number of
momentum to become USD 36 Bn                         vernacular content & sales thrust by           digitally influenced consumers has
by 2023 on back of multiple growth                   ecommerce companies                            grown disproportionately for tier
drivers viz. low product penetration,            • We expect USD 10 Bn out of the                   2-3 city consumers (5X) and women
rising disposable income, increasing               above to be online sale                          consumers (10X)
urbanization, easy access to credit &
Government’s thrust on electrification          Digital Influence varies by product             Digital influence varies by brands
                                                categories                                        • Offline market share by brand does
Decoding Digital Influence:
                                                 • 3 out of 10 consumers today are                  not translate into similar share for
Digital Influence will power                       digitally influenced for high average            digitally influenced purchases today
consumer durables                                  selling price (ASP) durables like
                                                                                                Decoding Digital Consumer:
                                                   ACs, Televisions, Refrigerators and
 • We define a sale as ‘digitally
   influenced sale’ if the buyer uses
                                                   Washing machines. 1 in 3 buy these           Pre-purchase phase:
                                                   products online
   internet during any stage of                                                                   • 84% in-store buyers and 74% online
   purchase cycle                                • 2 out of 10 consumers today                      buyers are not decided on their
                                                   are digitally influenced for                     choice of brand when they start
 • Percentage of digitally influenced
                                                   comparatively lower ASP products                 their search
   sales in consumer durable industry
                                                   like small appliances, water purifiers
   has more than doubled over last                                                                • Influence window is short. Digitally
                                                   & microwaves. 1 in 2 buy these
   five years and in next 5 years we                                                                influenced buyers typically research
                                                   products online
   expect 63% of overall consumer                                                                   for 2-3 weeks before making the
   durable sales to be digitally                Digital influence varies by consumer                final purchase
   influenced. USD 23 Bn by 2023!!!             demographics                                      • Digitally influenced buyers use
 • Multitude of drivers will propel this         • 29% of urban consumer are digitally              search engines as the primary
   growth in India viz. rising internet            influenced today & this number is                source for online research; social


This report has been compiled using proprietary research and data from BCG & Google. We have also considered perspectives of industry leaders
Digital powers consumer durables - Afaqs
media, online videos, blogs & online     Post-purchase phase:                             • Drive focused interventions at
      forums are other key sources for                                                            individual consumer level across
                                               •     Nearly 1 out of every 3 online
      online research                                                                             journey touchpoints to leverage
                                                     buyers provides digital review post
    • Consumers tend to search for high                                                           short research window of 2-3 weeks
                                                     purchase
      ASP durables by brand & low asp                                                             of ~80% undecided consumers
                                               •     ~26% in-store buyers and ~36%
      durables by product specifications                                                        • Leverage ~30% of consumers who
                                                     online buyers look for other
    • Nearly 2 out of every 3 digitally                                                           post reviews online to influence
                                                     offerings from the same brand post
      influenced consumers rate online                                                            ~60% for whom this matters. Drive
                                                     purchase; propensity for repeat
      reviews as a significant influencer in                                                      post purchase experience and
                                                     purchase is over-indexed for low ASP
      their purchase decisions                                                                    amplify advocacy at scale
                                                     durables
Purchase phase:                                                                                This will require a big shift. From
                                               Seizing the opportunity:
•     Low price and convenience are the                                                         • ‘Digital as a channel’ to ‘Digital as
                                               What does this mean for consumer
      largest drivers of online purchase;                                                         core of future marketing’
                                               durable companies?
      choice of multiple payment options                                                        • ‘Current focus of driving purchase’
      is one of the top 5 drivers                  • Set up investments and create right          to ‘Driving end to end consumer
•     Absence of in-person guidance and              digital organization structure to            engagement’
      lack of ‘touch & feel’ are the biggest         capitalize the upcoming USD 23 Bn
                                                                                                • ‘Mass marketing’ to ‘Personalized
      barriers of online purchase                    digitally influenced opportunity
                                                                                                  interventions’
•     Buying from e-commerce                       • Given disconnect in market share
                                                                                                • ‘Driving offline market share’ to
      aggregators is preferred over                  and digitally influenced shares –
                                                                                                  ‘Driving digitally influenced market
      individual brands’ website/apps                reset the digital ambition. Market
                                                                                                  share’
      across categories; TV, AC & water              leaders should strive for at least fair
                                                                                                • ‘Driving company driven
      purifiers are relatively over-indexed          share in digitally influenced sales
                                                                                                  communication’ to ‘Driving advocacy
      on brand website or app led                    to remain relevant. Aspirers have
                                                                                                  at scale’
      purchases                                      opportunity to beat the market
                                                     leaders through digital leadership
Digital powers consumer durables - Afaqs
DECODING
DIGITAL
INFLUENCE




6   Digital Powers Consumer Durables
Digital powers consumer durables - Afaqs
Decoding Digital Influence   7
Digital powers consumer durables - Afaqs
The Consumer Durables industry is set to grow by 13%
      to reach ~$36Bn by 2023
Growth Drivers                            Consumer Durables Industry size
                                        USD Bn                                                                                                36
      Low penetration levels
      Low penetration of consumer                                                                                                        31
      durables in India vs developed                                                                                            13%
      economies (Eg: penetration
                                                                                                                                    28
      levels of air conditioners and
      washing machines is
Digital powers consumer durables - Afaqs
By 2023, 63% of total consumer durable sales is expected
     to be digitally influenced: A $23 Bn opportunity to embrace
                                                                                                                                        A sale is called ‘digitally
                                                                                                                                        influenced’ sale, if the buyer
                                                                                                                                        uses the internet during any
           USD Bn                                                                                                                       stage of the purchase cycle
                                                                                36.4
                                                                                                                                        e.g. for product discovery,
                                                                                                                                        research and/or purchase.
                                                                                                       10.4          Approx
                                                                                                                                        For this report we have
                                                                                                                     $23 Bn (63%
                                                                                                                                        broken this into two types
                                                                                                                     of overall sale)
                                                                                                                                        as defined below.
                                                                                                                     is expected
                                                                                                                     to be digitally    A sale is called ‘digitally
                                                                                                                     influenced         influenced in-store sale’
                                                          16.9                                         12.5          sale               when the buyer uses
                                                                             1.7
                                                                                                                                        internet during the
                             13.2                                                                                                       purchase cycle but makes
                                                    0.9                      3.0
    10.3                                                                                                                                the purchase in-store
                          0.3                       1.7                                                                                 (offline- brick & mortar
                          1.0                                                                                                           store).

                                                                                                       13.6                             A sale is called ‘digitally
                                                   10.6                     12.3
                          9.0                                                                                                           influenced online sale’ when
                                                                                                                                        the buyer purchases online.

                      2013                     2015                     2017                    2023E



               Digitally influenced                        Digitally influenced                             Non digitally
               online sale                                 In-store sale                                    influenced sale

Source:BCG-Google Digital Influence on Consumer Durables Study 2019, BCG CCI Digital Influence Study 2013, 2015, 2017; BCG Analysis

                                                                                                                                        Decoding Digital Influence   9
Digital powers consumer durables - Afaqs
In terms of number of consumers, 55% of urban
     consumers will be digitally influenced by 2023
                                                                  2013                                      2017                                      2023E
Digital footprint is defined
as the % consumer durable
buyers with access to                    % of Urban buyers
internet.
                                                                                                                                                        85%
For urban consumers, digital
footprint has grown from                                                                                      69%
32% in 2013 to 69% in 2017
and is expected to become              Digital                      32%
85% by 2023 (~2.5x vs 2013).          Footprint

Concurrently, digital
influence has grown from                                                                                                                                55%
14% in 2013 to 29% in 2017
and is expected to reach                                                                                      29%
55% by 2023 (~4x vs 2013).
                                        Digital                     14%
The % of online buyers                Influence
has witnessed exponential
growth from a mere 3% in
                                                                                                                                                        22%
2013 to 9% in 2017 and is
expected to reach 22% by
2023 (~7x vs 2013).
                                                                                                              9%

                                      Online                         3%
                                      Buyers
                                      1. Urban Buyers – Any consumer in urban India who bought any consumer durable in past 1 year
                                      2. Digital Footprint - % urban consumer durable buyers with internet access
                                      3. Digital Influence - % urban consumer durable buyers using internet during any stage of the purchase process
                                      4. Online Buyers - % urban consumer durable buyers buying consumer durables online
                                      Note : Consumer durables include television, air conditioner, refrigerator, washing machines, water purifier, microwave oven & small
                                      appliances; Also, numbers are different from last page as one consumer can buy multiple items & these numbers are only for urban
                                      consumers
                                      Source : BCG-Google Digital Influence on Consumer Durables Study 2019, BCG CCI Digital Influence Study 2013, 2015, 2017, Press Search,
                                      BCG Analysis
10
10 Digital Powers Consumer Durables
High digital influence & online buying in other emerging
    economies like China & Brazil show potential for India
Digitally influenced consumers in Emerging Markets
                                                                                                                                A comparative study of digitally
                                                                                                                                influenced consumers in
                                                                                                                                emerging markets shows
                                                                                                                                that India currently lags
                                    50                                                                                          behind other markets such
                                                                                                                                as China, Brazil etc. in terms
                                                                                                                                of digital influence on the
                                                                                                                                consumer durables purchase
                                    40                                                 Brazil                                   journey. Only ~29% consumer
                                                                                                                                durable consumers are
                                                                                                                                digitally influenced in India,
                                                                                                   China
                                                                                                                                as compared with ~90% and
                                    30
                                                                                                                                ~80% in China and Brazil,
           % Online buyers                                                                                  Significant         respectively.
                                                                                                            potential to
                                                                                                                                For online buyers, the
                                    20                                                                      increase share of
                                                                                                                                difference is starker. Only ~9%
                                                                                                            digital influence
                                                                                                                                consumers buy online in India
                                                                                                            & online buying     vs ~40% and ~50% in China
                                             Philippines                 Nigeria                                                and Brazil, respectively.
                                    10                        India
                                                                           South Africa                                         India has the potential to
                                                                                                                                move up the digital ladder
                                                     Morocco                 Indonesia                                          in the years to come owing
                                     0                                                                                          to factors like increasing
                                         0            20            40           60          80           100                   internet penetration, cheaper
                                                                                                                                smartphones and data, rise
                                                                                                                                of vernacular content and
                                                           % Digitally Influenced consumers
                                                                                                                                e-commerce companies thrust
Source: BCG-Google Digital Influence on Consumer Durables Study 2019, BCG – Digital Consumers, Emerging Markets &
                                                                                                                                on online buying.
the $4 Trillion Future Report, BCG CCI Digital Influence Survey 2017
                                                                                                                                Decoding Digital Influence   11
Increasing internet penetration, cheaper smartphones
     and data, vernacular content and ecommerce thrust
     will continue to drive digital influence
India is currently                         1 Increasing internet penetration           2 Falling smart phone prices
undergoing a digital
explosion driven by a                                        Internet users in India      Average smartphone price ($)
multitude of factors. These
include:

      Increasing internet
 1    penetration (650                                                      650
                                                                           million+        250-260
      million+ internet
      users expected in
      India by 2020)

      Falling smartphone                                                                             150-160
 2    prices

      Significant decline in
 3    data tariffs                        500




                                                                                              2011



                                                                                                       2018
                                         million
      Increasing
 4    availability of
      vernacular content                                                    2020
      Sales thrust by
 5    ecommerce
      companies

These factors will continue
to drive disproportionate                 2018
growth in digital influence
over coming years.



                                      Source: Press search, BCG Analysis

12
12 Digital Powers Consumer Durables
3 Significant decrease in data tariffs                   4 Increase in vernacular content   5 Ecommerce companies thrust on
                                                                                                                   online buying
                               Data consumed per user per month
                                   (MB) vs Price per MB (Paise)

                                                                                                                          Promotions and offers
                      12,000
                                          Jan
                                          2018                                             20x
                                                                                           Increase in non
                                                                                           English watch time             Exchange offers
Data consumed per user (MB)




                                                                                           on Youtube
                              9,000

                                                                                                                          No cost EMIs


                              6,000
                                                                                                                          Faster delivery
                                               Jun
                                               2017                           9 out of 10
                                                      Mar                     New Internet users in
                              3,000                   2017   Sep              India are likely to be                      24x7 product tracking
                                                             2016             Indian language users


                                      0    5     10    15    20     25                                                    Post sale support or service
                                           Price per MB (paise)


      Source: Press search, Google Year in Search 2017, 2018, 2019, BCG Analysis

                                                                                                                          Decoding Digital Influence   13
Digital influence varies for different durable categories
     and is higher for high ASP durables
                                                                 High ASP1 durables                                                     Low ASP1 durables
The extent of digital
influence varies by category                           ~3 out of 10 of consumers are                                             ~2 out of 10 consumers are
and is higher for high                                      digitally influenced                                                     digitally influenced
ASP durables (e.g. TV, AC,
washing machines and                                                       10%                                                              9%
refrigerators) and lower                                                       25%                     29%                                8%                            53%
for low ASP durables (e.g.                           Washing                                                            Small
Microwaves, water purifiers                          Machine                          65%                          Appliances                                     83%
and small appliances).
                                                                          9%                                                                10%
Low ASP durables have
higher percentage of online                               Air                  24%                     27%                                6%                            63%
                                                                                                                         Water
buyers. A strong 53-63% of                        Conditioner                          67%                                                                        84%
                                                                                                                       Purifiers
digitally influenced buyers
                                 % of consumers




vs only 27-35% for High ASP
durables.                                                                11%                                                                10%
                                                                            21%                        34%                                6%                            63%
                                                    Television                                                     Microwave
                                                                                          68%                                                                     84%

                                                                          9%
                                                                                                                                             Online buyers as a %
                                                                           17%                         35%                                   of digitally influenced
                                                  Refrigerator                               74%                                             buyers is high for low
                                                                                                                                             ASP durables
                                                       Digitally influenced                        Digitally influenced                        Non digitally influenced
                                                       online buyers                               in-store buyers
                                                                                        Online buyers as a % of digitally influenced buyers
                                                     1. High ASP products – Appliances with ASP >INR 20,000; Low ASP products – Appliances with ASP
DigitalInfluence
Decoding Digital   Matters   15
                             17
Digital influence varies by demographics; high growth
     in women, 35+ age group and tier 2-3 city consumers in
     last 4 years
Significant growth observed
in digitally influenced                                    10x increase in female online buyers over last 4 years
buyers from non-tier 1
cities, women and higher
age group consumers over
the last 4 years.
                                      By Gender                         2013                                                         2017
10x growth in the % of
digitally influenced female
online buyers in the last 4
years. 5x growth for men                                                                                     ~5x
in online buying between                                                                              3%                                                             15%
2013 and 2017.                    Male
                                                                                                       11%                                                           16%
Significant growth in
digital influence & online
purchases in the 35-55 year
age bracket.

Tier-2 and Tier-3 cities                                                                                     ~10x
have witnessed the fastest                                                                            1%                                                             10%
growth in terms of digital     Female
influence (5x growth over                                                                             9%                                                             10%
the last 4 years).




                                                  Digitally influenced online buyers                               Digitally influenced in-store buyers



                                         Source: BCG-Google Digital Influence on Consumer Durables Study 2019, BCG CCI Digital influence Study 2013, 2017, BCG Analysis

16
16 Digital Powers Consumer Durables
3-5x growth in digital influence & online purchases in the 35-55 year age bracket over last 4 years
By Age Group                                                             2013                                                                  2017
                                                                                                      ~2x
                 18-24 year                    3%                 13%                                                                  17%                       15%

                                                                                                      ~2x
                  25-34 year                   3%                     16%                                                         13%                       19%

                                                                                                      ~3x
                 35-44 year                   2%         5%                                                                      11%                  13%

                                                                                                      ~5x
                 45-54 year                   2% 2%                                                                                   14%                   7%

                                                                                                      ~3x
                 >54 year                    1%      4%                                                                          5%             8%


                                                                     5x growth in digital influence in Tier-2 and Tier-3 cities
By City Tier                                                         2013                                                              2017
                                                                                           5%            ~2x                                                 18%
                 Metro                                                                     16%                                                               18%


                                                                                           1%            ~2x                                                 9%
                 Tier-1                                                                    10%                                                               14%


                                                                                           1%            ~5x                                                 8%
                 Tier-2                                                                    3%                                                                12%


                                                                                           1%            ~5x                                                 15%
                 Tier-3                                                                    4%                                                                8%

                                      Digitally influenced online buyers                                 Digitally influenced in-store buyers

Source: BCG-Google Digital Influence on Consumer Durables Study 2019, BCG CCI Digital influence Study 2013, 2017, BCG Analysis

                                                                                                                                              Decoding Digital Influence   17
For brands, offline market share does not translate
     into similar share for digitally influenced purchases
                                         Challengers are leveraging digital platforms over the traditional mediums to
Market leaders in the                    enhance reach
respective categories are                                                                 Overall market share1
not necessarily the most                 % share by brand
effective in driving digital
influence. In washing                                                                                  Brand 1                  24%
machines for example, the
overall market leader ranks                                                                            Brand 2           20%
third in terms of share of
online purchases; losing out
to market challengers in the                                                                           Brand 3         18%
                                      Washing Machine
online space.
                                                                                                       Brand 4    10%
The scenario is similar in
case of other categories like
air conditioners, where only                                                                           Brand 5    9%
2 of the top 5 overall market
leaders feature in the top 5
brands in online purchases.

Challengers are leveraging                                                                             Brand 1                21%
digital platforms over the
traditional mediums to                                                                                 Brand 2          18%
enhance reach.                        Air Conditioners
                                                                                                       Brand 3    10%

                                                                                                       Brand 4    8%

                                                                                                       Brand 5   7%

                                      1.Euromonitor
                                      2.BCG-Google Digital Influence on Consumer Durables Study 2019

18
18 Digital Powers Consumer Durables
Digitally influenced in-store purchases2   Online purchases2

Brand 1                          27%       Brand 2                   24%

Brand 2               18%                  Brand 5             18%
                                                                               Overall market share

Brand 5               18%                  Brand 1             17%

Brand 6         8%                         Brand 6        9%
                                                                            Digitally influenced in-store
                                                                              purchase market share
Brand 4        7%                          Brand 3      6%



                                                                                 Online purchase
Brand 1              14%                   Brand 3                    26%         market share

Brand 3          12%                       Brand 8         10%

Brand 6         10%                        Brand 1        9%

Brand 7         10%                        Brand 6        9%

Brand 2        7%                          Brand 7       7%




                                                                                 Decoding Digital Influence   19
DECODING
DIGITAL
CONSUMER




20   Digital Powers Consumer Durables
Decoding Digital Consumer 21
Consumer durable buyers traverse through multiple
       journeys before making their purchase decision
 All purchase transactions                                                                             Journeys
 can be grouped into 4 broad
 archetypes based on the                                                                                                     Share of transactions
                                            Pathway
 pathway followed for research                                                                                               for consumer durable
 and purchase- as shown in the                                           Pre-purchase                 purchase Post-purchase        buyers
 exhibit.                                  Pure Online
 For consumer durables,                                                                                                                                                  -    Negligible
 nearly all digitally influenced
 transactions involve an
 omnichannel interaction:               Research offline;
 buyers typically traverse              purchase online
 through multiple online &
                                                                                                                                                                        9%
 offline touchpoints before
 making the final purchase.                                                                                                                                                     To
 This complex mesh of                                                                                                                                                           become
 interactions across online                                                                                                                                                     55%+
                                        Research online,                                                                                                                        by 2023
 and offline channels presents
                                        purchase offline
 multiple opportunities for
 leading consumer durable                                                                                                                                               20%
 players to delight and influence
 the customer journey.

 With increase in digital
                                           Pure Offline
 influence, % of digitally
 influenced consumer durable                                                                                                                                            71%
 buyers is expected to become
 ~2x by 2023.
                                                                   Online touchpoints                                        Offline touchpoints
                                             Source: BCG-Google Digital Influence on Consumer Durables Study 2019, BCG CCI Digital Influence Study 2017, BCG Analysis


22   Digital Powers Consumer Durables
Decoding Digital Consumer 23
Consumer journey and opportunities for intervention
       Example 1: Research Offline - Purchase Online for TV

 Research Offline
 Purchase Online
                                                                       HI I’M
                                                                        RAJ             Profile                                                                 Raj wishes to
                                                                                                                                                                replace his
                                                                                                                                                                existing TV, wants
                                                                                      22 years, Delhi                                                           to upgrade to




                                                                                                                                                    Offline
                                                                                                                      Interaction across channels
                                                                                                                                                                latest technology


 Tech savvy
 television buyer                                                             Digital Age
 ends up buying
                                                                              6 years
 online owing to




                                                                                                                                                    Online
                                                                              The tech savvy
 better prices                                                                shopper
                                                                                                                                                              Decides to check
                                                                                                                                                              specifications
                                                                                                                                                              online using his
                                                                                                                                                              smartphone




                                                                                                                      Opportunities
                                                                                                                                                              Create greater
                                                                                                                                                              engagement
                                                                                                                                                              through
                                                                                                                                                              personalized
                                                                                                                                                              content

                                        1. MBOs: Multi brand outlets
                                        Source: BCG-Google Digital Influence on Consumer Durables Study 2019, Industry interactions, BCG Analysis

24   Digital Powers Consumer Durables
Eg: Television




       Pre-purchase                                                         Purchase                   Post-purchase

                                                                                             Tracks product
                                 Gets Word of Mouth                                          rigorously
Visits MBOs1 to check            recommendations
different brands & models        from friends & family
to ratify features in-person &
receive salesman guidance                                Further, reads product
                                                         reviews and contacts                             Appreciates
                                                         customer care for                                installation
                                                         clarifications regarding                         support
                                                         "money back policy"

                                                                                                           Prompted by
                                          Finds 15% discount                                               the app, he
      Turns to mobile search              on e-commerce site                                               rates the seller
      again- explores TV models                                              Orders TV
                                          – he gets excited                  online, pays
      through e-commerce                  but is also wary of
      apps and search engines                                                online
                                          spending.
      that allow comparison of
      features & prices


 Leverage digital                Proactive data            Reviews from             Optimize supply          Incentivize post
 marketing to                    driven targeted           trusted influencers      chain for faster         purchase advocacy;
 make relevant                   offers basis past         to overcome initial      delivery                 closely manage
 recommendations                 purchases, age            hesitation in online                              social sentiment
 and showcase product            group/income              shopping                                          about the products
 offerings                       profiles



                                                                                                        Decoding Digital Consumer 25
Example 2: Research Offline - Purchase Online
       for Microwave

 Research Offline
 Purchase Online
                                                                     HI I’M                                                                                           Mamta wants
                                                                     MAMTA                                                                                            to purchase a
                                                                                       Profile                                                                        new convection
                                                                                                                                                                      microwave with
                                                                                     30 years,                                                                        preloaded dishes;




                                                                                                                                              Offline
                                                                                                                Interaction across channels
                                                                                     Bhopal                                                                           to experiment
                                                                                                                                                                      with new ways of
                                                                                                                                                                      cooking

 Tier-3 buyer
 orders                                                                      Digital Age
 microwave
                                                                             4 years
 online due




                                                                                                                                              Online
                                                                             The tech savvy
 to greater                                                                  shopper
                                                                                                                                                                  Searches online
                                                                                                                                                                  for "convection
 availability &                                                                                                                                                   microwave
                                                                                                                                                                  cookware"
 variety




                                                                                                                Opportunities
                                                                                                                                                                  Personalization-tailor
                                                                                                                                                                  messages to consumer
                                                                                                                                                                  profile

                                                                                                                                                        Consumers are increasingly searching
                                                                                                                                                        for latest technology & trends. For
                                                                                                                                                        example, searches for double-door
                                                                                                                                                        refrigerators are growing at >30% YoY
                                        Source: BCG-Google Digital Influence on Consumer Durables Study 2019,
                                        Google Trends data, Industry interactions, BCG Analysis
26   Digital Powers Consumer Durables
Eg: Microwave




      Pre-purchase                                                        Purchase                 Post-purchase


          Checks with her sister who                                                         Expects next
          recently bought a convection        Visits local wholesale                         day delivery
          microwave oven; her sister          store to see the product.
          recommends to purchase              However, the model that
          from nearby store                   she has selected is not                                    Gets
                                              available.                                                 installation
                                                                                                         support



Researches
online using
appliance                                           Returns online
guides, brand     Decides the final                 to complete her        Orders microwave
                  product & adds                                                                                  She rates
websites &                                          purchase online        online; avails the                     the seller
user reviews      to cart without                                          COD option
to zero in        completing purchase
on the exact
model

 Integrate               Influencer                   Digital kiosks          Easy financing            Online videos,
 reviews from            marketing, network           in stores to            options like no           virtual assistants
 common sites            of advocates to              extend in-store         cost EMIs to drive        to provide
 with social             promote products             inventory               online payments           customer support
 media                   & answer queries                                                               and installation
                                                                                                        assistance



                                                                                                    Decoding Digital Consumer 27
Example 3: Research Online - Purchase Offline
       for Refrigerator

 Research Online
 Purchase Offline
                                                                      HI I’M
                                                                                                                                                             Sarika is looking
                                                                     SARIKA            Profile                                                               to replace
                                                                                                                                                             her fridge; to




                                                                                                                                              Offline
                                                                                     31 years,                                                               accommodate
                                                                                                                                                             the needs of her




                                                                                                                Interaction across channels
                                                                                     Hyderabad
                                                                                                                                                             growing family


 Refrigerator
 buyer switches                                                              Digital Age
 offline for
                                                                             1 year
 salesman
                                                                             The Patient                                                                    Searches online




                                                                                                                                              Online
 guidance and                                                                evaluator                                                                      using her
 touch & feel of                                                                                                                                            smartphone
 the product                                                                                                                                            Consumers are increasingly
                                                                                                                                                        using mobile devices to do
                                                                                                                                                        research. In categories such as
                                                                                                                                                        AC, Refrigerator queries from
                                                                                                                                                        mobiles are growing at 25%+




                                                                                                                Opportunities
                                                                                                                                              Tailored marketing to relevant
                                                                                                                                              age groups/ income profiles to
                                                                                                                                              increase product awareness
                                        Source: BCG-Google Digital Influence on Consumer Durables Study 2019,
                                        Google Trends data, Industry interactions, BCG Analysis
28   Digital Powers Consumer Durables
Eg: Refrigerator




      Pre-purchase                                                     Purchase                    Post-purchase



          Visits a multi brand
          outlet to explore                                                                               Fixes an immediate
          different brands                                                                                delivery and
          and models                         Returns home to                                              installation date
                                             confer with family
                                             and friends


                     Receives salesperson                               Decides to make the
                     guidance on size &                                 final purchase offline;
                     capacity at the store                              touch & feel and
                                                                        salesman guidance
                                                                        factors supersede online
Checks on a                                                             benefits
e-commerce                                       Back home, watches
website but                                      product videos
is unable to                                     online on Youtube
understand
features




                                                                  Use of online tools such
                                 Digital companions                                                     Digital kiosks
 Digital billboards for                                           as augmented and virtual
                                 like chatbots, expert                                                  for faster order
 flashing targeted offers                                         reality to help better
                                 recommendations to assist                                              placement and self
 to passer-by consumers                                           visualize product, gauge size,
                                 with purchase decision                                                 checkout at stores
                                                                  shape and capacity
                                                                                                    Decoding Digital Consumer 29
Example 4: Research Online - Purchase Offline
       for Mixer

 Research Online
 Purchase Offline
                                                                     HI I’M
                                                                     VARUN             Profile                                                                Varun wants to
                                                                                                                                                              purchase a new
                                                                                                                                                              mixer to replace
                                                                                     40 years,                                                                his existing mixer




                                                                                                                                              Offline
                                                                                                                Interaction across channels
                                                                                     Lucknow


 Buyer decides
 to buy the mixer                                                            Digital Age
 offline for fear
                                                                             2 years
 of duplicate/




                                                                                                                                              Online
                                                                             The Patient                                                                Actively starts taking
 damaged                                                                     evaluator                                                                  feedback from
 products                                                                                                                                               friend/family online
                                                                                                                                                        on the brands that
                                                                                                                                                        they use




                                                                                                                Opportunities
                                                                                                                                                           Proactive data
                                                                                                                                                           driven targeted
                                                                                                                                                           offers




                                        Source: BCG-Google Digital Influence on Consumer Durables Study 2019,
                                        Google Trends data, Industry interactions, BCG Analysis
30   Digital Powers Consumer Durables
Eg: Small Appliances




      Pre-purchase                                                    Purchase              Post-purchase

                            Visits a local store from
                            where he has purchased
                            kitchen appliances in
                            the past; trusts the store
Searches online             more than online
by the term
"mixer" for all
brands available                                                       Makes final               Expects good after
in the category                                                        purchase offline          sales services from
                                                                                                 the dealer


               Checks on a e-commerce       Seeks sales
               websites for prices,         person guidance
               reviews and ratings of       and finalizes the
               the product; however,        model
               doesn’t order online
               for fear of duplicate/
               damaged product

  Recommendations                One click user                 Virtual assistants for    Data analytics driven
  with similar interests–        friendly process for           advisory and prompt       targeted marketing for
  ‘people like you also          returns and refunds            customer support in       similar/ related product
  buy’ – integrated into         in case of damaged             case of complaints        offerings; personalized
  browsing experience            products                                                 loyalty programs and offers
                                                                                          to drive repeat purchases



                                                                                             Decoding Digital Consumer 31
Key insights accross 3 phases of digitally influenced
       consumer journeys

                                               Brand decisiveness: ~84% in-store buyers and ~74% online buyers are undecided on
                           1
                                               their choice of brand at start of research




                                         Research Duration: Digitally influenced buyers typically research for upto 2-3 weeks before
                       2
                                         making the final purchase




                                        Research channel: Digitally influenced buyers use search engines as the primary source for
 Pre-              3                    online research; social media, online videos, blogs & online forums are other key sources for
                                        online research
 Purchase

                                        Search Behavior: Consumers tend to search for high ASP durables by brand and low ASP
                    4
                                        durables by product specifications




                                               Role of online reviews: 2 out of every 3 digitally influenced consumers rate ‘online
                           5
                                               reviews’ as important influencer in their purchase decisions


32   Digital Powers Consumer Durables
Triggers for online purchase: Low price and convenience are the
           6
                largest drivers of online purchase; choice of multiple payment
                options is one of the top 5 drivers

                Barriers for online purchase: Absence of in-person guidance and
           7
Purchase        lack of ‘touch & feel’ are the biggest barriers of online purchase

                Channel for online purchase: Buying from e-commerce aggregators
                is preferred over individual brands’ website/apps across categories;
           8
                TV, AC & water purifiers are relatively over-indexed on brand
                website or app led purchases




                Product Review: Nearly 1 out of every 3 online buyers provides
           9    digital review post purchase
Post
Purchase   10
                Repeat purchase: ~26% in-store buyers and ~36% online buyers look
                for other offerings from the same brand post purchase; propensity
                for repeat purchase is over-indexed towards low ASP durables




                                                              Decoding Digital Consumer 33
PRE-PURCHASE
                        PHASE




34 Digital Powers Consumer Durables
Decoding Digital Consumer 35
84% in-store buyers and 74% online buyers are
       undecided on their brand choice initially
 A significant proportion
 of both online and
 in-store buyers do not
 exhibit a concrete brand                              % buyers who start with                        % buyers who made
 choice at the beginning                               1 brand choice & end up                        their brand decision
 of their research cycle.                              buying the same brand                          during the research cycle

 Only 16% digitally
 influenced in-store
 buyers and 26% digitally                                                      16%
 influenced online buyers
 start with 1 brand choice
 & end up buying the                Digitally
 same brand.                        influenced
                                                                                                                   84%                                   Consumers are turning
                                    in-store buyers                                                                                                      to search to get answers
 On the other hand,                                                                                                                                      on the “best” products in
 84% digitally influenced                                                                                                                                the market. For example,
                                                                                                                                                         +300% YoY growth in
 in-store buyers and                                                                                                                                     terms like “best water
 74% digitally influenced                                                       26%                                                                      purifier 2018”
 online buyers made their
 brand decision during
                                                                                                              74%
 the research cycle.
                                    Digitally influenced
                                    online buyers

                                                                                                  Opportunity to influence brand
                                                                                                  choice using dedicated digital


                                             Question: How many brands were you considering at the start of your research activities? & Was this the brand you had planned to buy initially?
                                             Source: BCG-Google Digital Influence on Consumer Durables Study 2019, Google Trends data, BCG Analysis

36   Digital Powers Consumer Durables
Digitally influenced buyers typically research for upto
          2-3 weeks before making the final purchase

                                                                                                                                                       2 out of every 3
                                                                                                                                                       digitally influenced
                                                                                                                                                       buyers research upto
                                                                                                                                                       2-3 weeks before
                                            Online                                                                                                     making the final
                                            Buyers                    34%                       30%                 24%           8%      4%           purchase.




               ~65% Online buyers
                                                                    Around                                                                >3
                                                                    a week                                          A                    months
                                                                                                                  month
            ~60% In-store buyers
      research for upto 2-3 weeks before
          making the final purchase                                                             2-3                             2-3
                                                                                               weeks                           months




                                           In-store                   28%                       32%                 23%          12%      5%
                                            buyers




Question: How much time passed between the time you started to research and the time you actually bought on your most recent occasion?
Source: BCG-Google Digital Influence on Consumer Durables Study 2019, BCG Analysis

                                                                                                                                                  Decoding Digital Consumer 37
Digitally influenced buyers use search engines, blogs &
       social media as the primary source for online research
 Digitally influenced in-store
 buyers primarily use search
 engines (56%) to look for
 product information online,                             Digitally influenced in-store buyers                                                                                               Digitally influenced online buyers
 followed by social media
 (36%), online videos (26%),
 blogs & online forums (24%).                                                % in-store buyers                                                                                              % online buyers
                                                                                                                                                                                                                                                                           Over 90% of people
 In the case of digitally                                                                                                                                                                                                                                                  say they discover
 influenced online buyers,                                                                                                                                                                                                                                                 new brands or

                                                    56%
                                                                                                                                                                                                                                                                           products on
 search engines (43%)                                                                                                                                                                                                                                                      YouTube




                                                                                                                                                                                      43%
 followed by blogs & online
 forums (36%) and online                                                                                                                                                                                                                                                   Watchtime
 videos (31%), e-commerce                                                                                                                                                                                                                                                  for Consumer




                                                                                                                       Brands & e-commerce websites




                                                                                                                                                                                                                                       Brands & e-commerce websites
 websites (25%) make up                                                                                                                                                                                                                                                    Electronics videos




                                                                                                                                                                                       43%
                                                                                                                                                                                                                                                                           in India doubled




                                                                                                                                                                                                                36%
 for top sources for online                                                                                                                                                                                                                                                year over year in




                                                                                                                                                                                                                                 31%
 research.                                                                                                                                                                                                                                                                 2018
                                                                       36%



                                                                                               Blogs & online forums




                                                                                                                                                                                              Blogs & online forums




                                                                                                                                                                                                                                                     25%
                                                                                                                                                      Promotional emails




                                                                                                                                                                                                                                                                                     Promotional emails
                                                                                         26%
                                        Search engines




                                                                                                                                                                           Search engines
                                                                                                         24%
                                                                             Online videos




                                                                                                                                                                                                                      Online videos
                                                                                                                               20%




                                                                                                                                                                                                                                                                               20%
                                                             Social media




                                                                                                                                                                                                                                                                      Social media
                                                                                                                                                           13%




                                                                                                                                                                                                                                                                                         11%
                                                            Source for online research                                                                                                       Source for online research

                                                         Question: Where did you find the information you were looking for online?
                                                         Source: BCG-Google Digital Influence on Consumer Durables Study 2019, BCG Analysis

38   Digital Powers Consumer Durables
Consumers tend to search for high ASP durables by
          brand and low ASP durables by product specifications
  Category-wise most searched terms
                                                                                                                                  Google trends on most
                                                                                                                                  searched terms indicate
                                                                                                                                  that consumers tend to
                         Televisions                                                         Water Purifiers                      look for a specific brand
                         ‘Sony TV’, ‘32 inch LED TV’,                                        ‘Eureka Forbes’, ‘Kent RO’,          while searching for high ASP
                         ‘Smart TV’, ‘Samsung TV’,                                           ‘Aquaguard’                          durables like TV, washing
                         ‘MI TV’                                                                                                  machines etc.

                                                                                                                                  Whereas, while buying a
                                                                                                                                  low ASP durable, they tend
                         Air Conditioners                                                    Microwaves                           to start with the product
                         ‘Inverter AC’, ‘Voltas AC’,                                         ‘Microwave oven’, ‘OTG’,             specification in mind.
                         ‘Lloyd AC’, ‘Portable AC’,                                          ‘Convection oven’, ‘LG microwave’,
                                                                                                                                  However, water purifiers
                         ‘Samsung AC’                                                        ‘Samsung Microwave’
                                                                                                                                  are an exception as
                                                                                                                                  consumers tend to search
                                                                                                                                  for a few specific brands
                         Washing Machines                                                    Small Appliances
                                                                                                                                  of water purifiers than just
                         ‘LG washing machine’,                                               ‘Mixer grinder’, ‘Juicer’,           specifications.
                         ‘IFB washing machine’,                                              ‘Electric rice cooker’
                         ‘Fully automatic washing
                         machine’,

                         Refrigerators

                         ‘LG refrigerator’, ‘Samsung
                         refrigerator’, ‘Double door
                         fridge’

Source: BCG-Google Digital Influence on Consumer Durables Study 2019, Google search trends data, BCG Analysis

                                                                                                                                  Decoding Digital Consumer 39
A majority of digitally influenced buyers rely on
       online reviews to arrive at purchase decision
                                              % respondents who believe that online reviews played a ‘very important’ role in
 The influence of online                      their purchase decision
 reviews on the purchase
 of consumer durables has                                                           Overall                             High ASP                             Low ASP
 been on the rise.                                                                                                      Durables                             Durables
 67% of in-store buyers
 and 74% of online
 buyers consider online
 reviews to have played
                                                                                       67%                                  68%                                      65%
 a ‘very important’ role in
 influencing their purchase
 decision.                              Digitally influenced
 Online reviews have                      in-store buyers
 marginally higher
 importance for purchase
 of high ASP durables vs
 low ASP durables.                                                                 74%                                74%                                  73%


                                        Digitally influenced
                                           online buyers
                                                                                      More and more people are going to
                                                                                      YouTube to research and learn about
                                                                                      tech products. The searches happening
                                                                                      on YouTube for reviews and unboxing
                                                                                      has doubled since last year for TVs




                                              Question: How important were online reviews/ratings in influencing your decision about what to buy/book/sign up for?
                                              Source: BCG-Google Digital Influence on Consumer Durables Study 2019, Year in Search 2018, BCG Analysis

40   Digital Powers Consumer Durables
Decoding Digital Consumer 41
PURCHASE
                               PHASE




42 Digital
    DigitalInfluence on consumer
            Powers Consumer      durables
                             Durables
Decoding Digital Consumer 43
Low price and convenience are the largest drivers of online
       purchase; Choice of multiple payment options in Top 5 drivers

 I have bought three
 electronic appliances in
 just last year – Fridge,                          % online buyers
 Washing Machine, Cooler
 – and I didn’t face any                       Low Price                                                                           52%
 problem. I got good
 discounts and EMI options                                                                                                                        Non-metro television
 online. So why not T.V.?”                  Convenience                                                                            46%            buyers believe ease of
                                                                                                                                                 returns & refunds to be
 - Online buyer, Male,                    Ease of returns                                                                                            the key trigger
 Indore                                        & refunds                                                                           40%

                                              Availability                                                                         29%
                                                                                                                                                     Product availability
 We had gone to a local                                                                                                                             is the key trigger for
 store to window shop                          Multiple
                                                                                                                                   24%              online purchases in
 & check out the screen                 payment options
                                                                                                                                                         Tier-3 cities
 size we wanted. But the
                                        Helps making
 salespeople are quite                                                                                                             19%
                                   informed decisions
 impatient. They want you
 to just purchase. So we
                                        Post sale support                                                                          19%             Washing machine and
 didn’t consult them. Had a
                                                                                                                                                     AC buyers consider
 look and returned.”
                                                                                                                                                  ‘good post sale support’
                                                  Variety                                                                          15%               as one of the top 3
 - Online buyer, Female,
 Delhi                                                                                                                                                triggers for online
                                           Status symbol                                                                           14%                     purchase




                                                Percentages mentioned are on a base of total consumers and not relative in nature, the total may exceed 100%
                                                Source: BCG-Google Digital Influence on Consumer Durables Study 2019, BCG research & analysis

44   Digital Powers Consumer Durables
Absence of in-person guidance and lack of ‘touch & feel’
           are the biggest barriers for online purchase

                                                                                                                                        I did a search on Amazon
                                                                                                                                        app and Google. There
                 % In-store buyers
                                                                                                                                        were a lot of options. But
                                                                                                                                        I got so confused. Then I
      Absence of in-
    person guidance                                                                               51%                                   asked my senior at work, he
                                                                                                                                        suggested a nearby store.
                                                                                                                  More critical for     He said that they have a
               Lack of                                                                            49%             sale of high ASP      good team to guide on this
           touch & feel                                                                                                                 matter.”
                                                                                                                 durables, vis-à-vis
                                                                                                                 low ASP durables
                                                                                                                                        - Offline buyer, Male,
  Fear of duplicate/                                                                                                                    Mumbai
 damaged products                                                                                 38%
                                                                                                                 ~50% of Tier-2 and
                                                                                                               Tier-3 buyers consider
                                                                                                                potential delivery of
 Delayed delivery &                                                                               36%                                   The interaction with the
        installation                                                                                            damaged/duplicate
                                                                                                                 products to be the     sales staff, discount offered
                                                                                                               key barrier for online   and trust/point of contact
                                                                                                                      purchase          were the key reason for
Concerns regarding
  online payments                                                                                 26%                                   purchasing the product
                                                                                                                                        offline.”

Difficult to repair &                                                                                                                   - Offline buyer, Female,
service the product                                                                               27%
                                                                                                                                        Mumbai




Percentages mentioned are on a base of total consumers and not relative in nature, the total may exceed 100%
Source: BCG-Google Digital Influence on Consumer Durables Study 2019, BCG research & analysis

                                                                                                                                        Decoding Digital Consumer 45
Buying from e-commerce aggregators preferred over
       individual brands’ website/apps
                                        Highly imperative for brands to simultaneously compete & collaborate
 Individual brands’ websites
 / apps contribute to only
 ~10% of the total online
 purchases. Nearly ~90%                                                               % of online buyers purchasing from brand website / app
 of online buyers buy from              % online buyers
 e-commerce aggregators.
                                                                                                                                               17%
 TV, AC & water purifiers are                                                     Television
                                               90%
 relatively over-indexed on
 brand website or app led
 purchases. Nearly 17% of                                                                                                                     16%
 online buyers for TV, 16%                                                         Air Conditioner
 for air conditioner and 12%
 for water purifiers purchase
                                                                                                                                        12%
 from brand website / app.
                                         E-commerce                               Water Purifiers
                                         aggregators
                                                                                                                                   7%
                                                                                  Washing Machine

                                                                                                                                   7%
                                                10%                               Small Appliances

                                                                                                                              4%
                                        Brand website                             Microwave
                                           or App

                                                                                                                             3%
                                                                                  Refrigerator
                                        Question: Which website or app did you buy from?
                                        Source: BCG-Google Digital Influence on Consumer Durables Study 2019, BCG analysis

46   Digital Powers Consumer Durables
Decoding Digital Consumer 47
POST-PURCHASE
                       PHASE




48
 48 Digital
     DigitalPowers
             PowersConsumer
                    ConsumerDurables
                             Durables
Decoding Digital Consumer 49
Nearly 1 in every 3 online buyers provides digital
       review post purchase
 32% of online buyers                        32% of online                        60-65% in case of                                     Interaction on social media,
 provide product reviews                   buyers provided a                    other digitally evolved                               brand website and online blogs
 online after purchasing a                 digital review post                                                                        / forums are the key modes of
                                                                               countries such as China
 consumer durables across                  purchase in India                                                                                       review
 category.

 Buyers typically post on                                                                         Posted on the                                                    13%
                                           % of online buyers
 the brand’s social media                                                             brand’s social media page
 page for providing product
 reviews; closely followed                                                                      Shared a review on                                            12%
 by writing on the brand’s                                                                      the brand’s website
 website.
                                                     32%
 Other than providing             Provided                                    Shared or liked a post or page                                               11%
 reviews and                       a digital                                  of the product via social media
 recommendations;                   review
 buyers typically engage                                                                          Wrote on blogs or
 in other post purchase                                                                              online forums                                         11%
 activities such as seeking
 information on installation
 & use, availing warranty                                                               Recorded and posted an                                             11%
 services, downloading the         Did not           68%                                    online video review
 brand’s app & searching           provide                                                                    Wrote an
 for more/ similar offerings       a digital                                                                email to the                    8%
 from the same brand.
                                    review                                                                    company


                                                                                                                                  5                        10                          15
                                                                                                                                                            % of online buyers
                                               Question: How did you share your review or recommendation?
                                               Note: Percentages mentioned are on a base of total consumers and not relative in nature, the total will exceed 100% because of choice
                                               of multiple selections to the question
                                               Source: BCG-Google Digital Influence on Consumer Durables Study 2019, BCG Analysis

50   Digital Powers Consumer Durables
26% in-store buyers and 36% online buyers look for
          other offerings from the same brand post purchase
                                            26% in-store buyers who                  36% online buyers who
                                                                                                                             Approximately 36%
  Product Category                          look for similar offerings               look for similar offerings
                                                                                                                             online buyers and 26%
                                            from the same brand                      from the same brand post
                                                                                                                             offline buyers either
                                            post purchase                            purchase
                                                                                                                             research for more
                                                              27%                          34%                               offerings from the same
      Television                                                                                                             brand and/or buy more
                                                                                                                             from the same brand
                                                              24%                          30%                               post purchase of a
      Air Conditioner                                                                                                        consumer durable.

                                                                                                                             This propensity for
                                                              23%                          34%                               repeat purchase is over-
      Washing Machine                                                                                                        indexed towards low ASP
                                                                                                                             durables as compared to
                                                                                                                             high ASP durables.
                                                              26%                          27%
      Refrigerator

                                                              24%                          43%       Propensity for
                                                                                                     repeat purchase
      Water Purifiers
                                                                                                     increases as ASP
                                                                                                     decreases
                                                              34%                          41%       Opportunity to
      Microwave                                                                                      cross sell through
                                                                                                     dedicated digital
                                                              26%                          40%       marketing efforts
      Small Appliances

Question: What did you do after completing the purchase?
Source: BCG-Google Digital Influence on Consumer Durables Study 2019, BCG Analysis

                                                                                                                          Decoding Digital Consumer 51
SEIZING THE
OPPORTUNITY




52 Digital Powers Consumer Durables
52
Seizing the Opportunity   53
Key themes to leverage the digital influence opportunity
Key takeaways                                          How to win                                          Case study


               Digitally influenced sale will grow                  Set up investments and create right
               disproportionately. However, it                      digital organization structure to       1      2
               varies by categories                                 capitalize this opportunity



               Offline market share does not                        Achieve fair share or strive to beat
               translate into digitally influenced                  the market leaders in the future        3      4
               share                                                through digital leadership


               ~80% of digitally influenced
                                                                    Focused interventions at individual
               consumers finalize the brand
                                                                    consumer level across journey           5      6
               during the research cycle, in a short
                                                                    touchpoints
               window of 2-3 weeks


               Lack of “in person guidance” and
                                                                    Leverage technology solutions like
               “touch and feel” biggest barriers to                                                         7      8
                                                                    AR/VR to mitigate barriers
               online purchase



                                                                    Drive post purchase experience
               30%+ digitally influenced
                                                                    and amplify advocacy at scale to        9     10
               consumers post reviews online
                                                                    influence new consumers

54 Digital Powers Consumer Durables
54
What does this mean for Consumer Durable players?

               From                     To


             Digital as a      Digital as the core of
            small channel       future marketing




           Focus on driving    End-to-end consumer
              purchase             engagement




               Mass               Personalized
              marketing           interventions




           Battling offline       Driving digitally
           market share          influenced share




           Company-driven       Enabling advocacy
           communication             at scale


                                                        Seizing the Opportunity   55
Case study 1



      Align digital budgets to tap the opportunity early




                                                 Leveraging digital
                                                 and social media
                                                 platforms enabled                             Analytics based
                                                                                               customized marketing
                                                 the company to
                                                                                               efforts to tap rich
A leading                                        drive its ‘celebrating
                                                                                               available data and
                                                 the new’ campaign
multinational                                    and garner over a
                                                                                               drive actionable
                                                                                               consumer insights
electronics                                      million views within
company’s                                        a day of the launch
digital budget
went up from
high single- digit
figures in 2014
to ~30% of its
total marketing
budget in 2018


                                        Source: External reports, Press search, BCG Analysis

56   Digital Powers Consumer Durables
Case study 2

           Digital initiatives to be complemented with
           organizational enablement to ensure success


                 A leading Indian consumer goods company re-organized itself to carve out
                 digital business as a separate business unit to ensure right focus at senior
                                                                          management level




                                                                                                          Select examples
                         A mid sized Indian consumer company set up digital brand team to enable          from India
                         efficient digital marketing ecosystem for larger group of brand managers &       and globally
                                                                                     driving synergies    on increasing
                                                                                                          importance of
                                                                                                          organizational
                                                                                                          enablement


                  An American electric car-maker selling its cars online through its website, is
                 using social media platforms, such as Twitter, to allow customers to interact
                                           directly with the company, including its leadership


Source: External reports, Press search, BCG Analysis

                                                                                                         Seizing the Opportunity   57
Case study 3

      Achieve fair share or strive to beat the market leaders in
      the future through digital leadership




                                                                                        The smartphone maker held
                                                                                        ~51% market share of online
                                                                                        smartphone sales as of 2017
Nearly 80%
                                                                                                    The founder believes the company to be
of sales for a                                                                                      more in the e-commerce business, than as
leading Chinese                                                                                     a smartphone manufacturer. This indicates
smartphone                                                                                          the company’s focus towards online
maker comes                                                                                         presence and digital leadership

from online                                                                             The company also manages social media sentiment
channel                                                                                 by creating a buzz for it’s products and flash sales,
                                                                                        offering incentives for retweets, how-to-guides, and
                                                                                        events like photo contests etc.




                                        Source: External reports, Press search, BCG Analysis

58   Digital Powers Consumer Durables
Case study 4


           Critical to simultaneously compete & collaborate in the
           e-commerce space




                                                                                                                     A leading
                                                                                                                     European
Focus on leading online                                It aims to hit a target of   It uses its ever-widening        sportswear
retailers helped a                                     €4 billion ($4.9 billion)    portfolio of apps to             manufacturer
European sportswear                                    by 2020 by leveraging        push rarer — and more
                                                                                                                     uses its app to
company achieve €1.5                                   the likes of both leading    expensive — products,
billion ($1.9 billion) in                              e-tailers and retailers      while using other online         push rarer &
online sales in 2017,                                  as well as its’ company      retailers to sell its cheaper    more expensive
an unprecedented 57%                                   owned channels,              products                         products, while
growth over the previous                               particularly its apps
year
                                                                                                                     online retailers
                                                                                                                     sell its cheaper
                                                                                                                     products


Source: External reports, Press search, BCG Analysis

                                                                                                                    Seizing the Opportunity   59
Case study 5


       Focused interventions at the consumer level in their
       research journey




                                        A leading Indian hypermarket retain
                                        chain has created ‘Smart Search’ where                     With this campaign, the company
                                        anyone who searches for anything with                      successfully added young digital
                                        the company name prefixed is offered                       customers, who seek offers and
                                        exclusive offers from the company which
A leading Indian                        can be redeemed across its network of
                                                                                                   information online, to its fold and
                                                                                                   drove them to shop at its stores
hypermarket                             225 stores throughout India
retail chain
is targeting
consumers
with focused
                                                           Over 1,80,000 discount coupons
interventions                                              were distributed against each search
in their search                                            on every occasion, which saw an
journey                                                    increase of more than 30,000 people
                                                           visiting the retail chain’s stores




                                            Source: External reports, Press search, BCG Analysis

60   Digital Powers Consumer Durables
Case study 6

           Leverage AI to generate data-driven actionable
           business insights



                                                       An online healthcare
                                                   platform connects patients
                                                     with doctors in real time
                                                    using chatbots. They have
                                                     dedicated doctors at the
                                                   backend but are building an
                                                   AI layer to scale operations
                                                                                                     An Indian
                                                                                                     healthcare
                                                                                                     venture which
                                                                                                     provides online
               They have built AI engines which
               process over 10 million minutes                       The company then performs       consultations
                 of talk time every month. This                         analytics on this data to    is using AI to
                                                                     generate actionable business
               has enabled them to profile their                                                     pitch the right
               customers for their preferences,                        insights (Eg: the company
                                                                      is aware to what extent the    product to the
               likes and dislikes and the kind of
                        queries they raise                            agents were able to answer     right customer
                                                                      the queries and accordingly
                                                                         pitch the right product)




Source: External reports, Press search, BCG Analysis

                                                                                                    Seizing the Opportunity   61
Case study 7

       Bring the physical ‘touch & feel’ and eliminate other
       related barriers to digital purchase



                                         A large global furniture retailer brings the ‘touch &
                                         feel’ experience to the digital consumer through the
                                         use of augmented reality to improve the furniture
                                         buying experience



A large global
furniture retailer
uses augmented                                                               Consumers can preview how furniture will look like in
reality to help                                                              life-size proportions in their homes and order directly
consumers                                                                    from the free app
visualize furniture
in their homes



                                          This initiative has greatly helped in eliminating the
                                          barrier of ‘lack of touch & feel’ in online buying


                                        Source: External reports, Press search, BCG Analysis

62   Digital Powers Consumer Durables
Case study 8


           Use technologies like AR/VR to create immersive
           environments and provide engaging experience for users



                                                       As a result, the ad netted
                                                       nearly 10 million views with
                                                       65% audience retention
  One of India’s top
  e-commerce brand
  created a TrueView
  in- stream ad with
  state-of-the-art VR360                                                                            A leading Indian
  equipment in an effort                                                                            e-commerce
  to reach consumers on                                                                             brand created an
  their mobile devices
                                                                                                    ad with VR360
                                                                                                    equipment to
                                                                                                    reach consumers
                                                                                                    on their mobile
                                                          The VR360 project capitalized on the      devices
                                                          growing prominence of on-demand
                                                          music, smartphone penetration and
                                                          effective use of media. The results
                                                          of this project -from retention rates
                                                          to brand lift – surpassed all internal
                                                          benchmarks.
Source: External reports, Press search, BCG Analysis

                                                                                                   Seizing the Opportunity   63
Case study 9



       Leverage digital for continued post purchase experience



                                                                                                 The company’s users will
                                                                                               now be able to interact with
                                                                                                 Google’s virtual assistant
                                                                                                to get answers to various
                                            An Indian telecom giant is                          queries pertaining to their
                                            offering Google Assistant-                            subscribed plans, data
                                              based Digital Customer                           usage and account balance.
                                            Care experience to step up                            Notably, the feature is
                                             the customer experience                              available for both, the
An Indian global
                                                                                               postpaid and prepaid users
communications
services company
is leveraging
technology to                                                                        The newly launched feature
                                                                                       is part of the company’s
make digital
                                                                                       Project Next - it’s digital
self-care more                                                                       innovation program, aimed
interactive                                                                           at transforming customer
                                                                                      experience across all of its
                                                                                      services and touch points




                                        Source: External reports, Press search, BCG Analysis

64   Digital Powers Consumer Durables
Case study 10



           Re-imagine the role of advocacy

                                                                   Interestingly, the
                                                                   company’s bookstore
                                                                   has less than 5000
                                                                   titles, compared with
                                                                   the millions of titles in
                                                                   its online store. Using
                                                                   technology and big
               A US chain of retail                                data around customer
               bookstores uses                                     reviews, the company
               customer ratings,                                   has been able to make
               reviews and data
               collected from their
                                                                   the shopping experience      A US chain of
                                                                   more efficient & effective
               e-commerce business                                                              retail bookstores
               and Kindle devices to                                                            offers a curated
               display books that are
               most likely to entice                                                            range of books
                                                       The featured books
               readers to make a
                                                       table isn’t selected
                                                                                                based on online
               purchase
                                                       by a local employee                      popularity
                                                       or organized by latest hyped
                                                       releases—it’s a selection of
                                                       most highly rated online books




Source: External reports, Press search, BCG Analysis

                                                                                                Seizing the Opportunity   65
NOTE TO THE READER
ABOUT THE AUTHORS
Nimisha Jain is a Partner and Managing Director in the New Delhi office of Boston Consulting Group and leads the Center for Customer
Insight for Emerging Markets. She is also the India Lead for Marketing, Sales & Pricing. Anubhav Pateriya is a Senior Principal in the New
Delhi office of Boston Consulting Group and works extensively with consumer and retail companies. Kanika Sanghi is a Partner & Associate
Director in the Mumbai office of Boston Consulting Group and leads the Centre for Customer Insights in India.

ACKNOWLEDGMENTS
This report has been prepared by Boston Consulting Group in collaboration with Google India. We would like to thank and acknowledge
the contributions of Vikas Agnihotri (Country Director, India Sales), Shaurab Kapadia (Industry Head – Technology), Prabhanshu Pandey
(Principal Account Manager – Technology) and Bhavna Jagwani (Industry Analyst – Technology) from Google India Pvt Ltd and Ankur Jain,
Akash Sethia, Viren Rajani and Ity Jain from Boston Consulting Group. We would also like to thank Kantar IMRB for conducting extensive
quantitative survey of 6800 consumer durable buyers & qualitative discussions for BCG-Google Digital Influence on Consumer Durables
Study 2019. A special thanks to Jasmin Pithawala for managing the marketing process and Jamshed Daruwalla, Saroj Singh and Divya
Mehrotra for their contribution towards design and production of the report.

FOR FURTHER CONTACT
If you would like to discuss the themes and content of this report, please contact:



                NIMISHA JAIN                                    ANUBHAV PATERIYA                             VIKAS AGNIHOTRI
                Partner & Managing Director                     Senior Principal                             Country Director, India Sales
                BCG, New Delhi                                  BCG, New Delhi                               Google India Pvt. Ltd.
                +91 124 459 7210                                +91 124 457 5659                             +91 22 66117129
                jain.nimisha@bcg.com                            pateriya.anubhav@bcg.com                     vikasagnihotri@google.com



               KANIKA SANGHI                                                                                 SHAURAB KAPADIA
               Partner & Associate Director                                                                  Industry Head - Technology
               BCG, Mumbai                                                                                   Google India Pvt Ltd.
               +91 22 6749 7134                                                                              +91 124 451 2900
               sanghi.kanika@bcg.com                                                                         shaurabk@google.com
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