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BizReport : Ecommerce archives : December 15, 2009

Internet Marketing 101: Why marketers must understand economics

Although online shopping is hotter than ever for 2009, many shoppers have taken into account changes with their credit card companies as they search for good buys, the shrinking job market and other factors. According to a new comScore report issuer changes to credit cards have caused consumers to either spend less or not at all with certain credit card companies, impacting the online marketplace as a whole.

by Kristina Knight

Analysts say more than 66% of consumers have changed their spending habits, canceled accounts or switched brands because of changes their credit card companies have made over the past year. This is of course impacting some ecommerce hubs, but more importantly it shows that consumers are becoming smarter in how and where they spend their money - and how they search for good deals.

"In the current economic environment, many customers are taking strong action in response to changes made by their credit card issuer. Issuers must work to provide additional value or risk consumer backlash in the form of reduced card spending or even brand defection," said Kevin Levitt, comScore vice president. "With the economic environment and regulatory mandates prompting issuers to make product adjustments, an already financially-sensitive consumer is responding with dissatisfaction and an increasingly negative perception of their card issuer. Understanding the current sentiment and common concerns among consumers will be critical to success over the next year."

Another indicator that consumers have changed with the economic times is the recently ended Thanksgiving holiday in the United States. According to Ipsos Research, Thanksgiving travelers chose to remain close to home and to bunk in with family during their travels rather than spending money on hotels, airfare or longer trips. ">The Ipsos report finds that staying with family/friends increased by 22% over 2008 numbers and that 14% more consumers chose to take shorter trips.

Dave Pierzchala, Vice President of Ipsos' travel team said, "In the current economic times Americans are finding ways to continue to connect with loved ones and in some cases the pull-out couch or long car ride is the necessary sacrifice."

On a broader scope the Thanksgiving travel trend, the increased fee schedules and other credit card issuer changes are strong indicators that online brands and ecommerce hubs will not be immune should they not take the economic climate into account when creating ad campaigns. The consumer shouldn't determine how an online space makes pricing decisions but the economic climate should be one determining factor: for instance as job loss continues to rise it makes sense for etailers to add value to online purchases rather than taking value away by adding fees (such as paying for shipping) or by reducing coupon/loyalty program incentives.

Still consumers are spending slightly more (4% increase) online this holiday season, which means they are likely using new cards over old. Some of the hottest areas for online shoppers are apparel and electronics. According to gift guide SortPrice the iPod Touch and Garmin's Nuvi device are two of the 'most wanted' gift items. Consumers are also comparison shopping for LEGO Star Wars items and Transformers toys.

"Thanks to the popularity of so many new technologies, as well as the staggering selection of products available, electronics items are once again being targeted by holiday shoppers more than any other," said Doron Simovitch, co-founder and CEO, who also noted that as expected, toys and games are a close second to electronics in terms of consumer popularity.

So far $20 billion has been spent online this holiday shopping season, and the highest spending days are yet to come as consumers count down the last 10 shopping days to Christmas.

Tags: comScore, ecommerce, economics, holiday forecast, Internet Marketing 101, Ipsos Research, online shopping, online spending, SortPrice, travel services

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  • Just follow the stats and it will tell any business owner that if they are not using Internet marketing to attract customers, they will soon.

    Dr. Dave Hale

  • Spot on Kristina. How are marketers supposed to 'market' to a constantly changing, dynamic economy - rinse and repeat the old tricks or try and understand the new problems and solutions.



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