Bipolar consumer behavior

Earlier this week the New York Times ran a report headlined "Web Shoppers Show a Cautious Trend".  The Times quoted a survey by Netelixir an "online customer acquisition management firm that offers end-to-end campaign management services and optimization technology for e-retailers" which found that "online shoppers are taking longer to research their purchases".  Netelixir's study found that consumers, rather than buying on impulse, tended to first use the Web to gather information and compare prices. The online marketing technology firm found that most consumers were repeatedly clicking on search ads for their clients indicating they were running repeated searches in the same product category with clicks moving up by about 15 percent from two years ago. Further consumers seem to be  "taking about 12 percent longer from first click to final purchase". None of should be a surprise to the hospitality world as comparison shopping engines such as Kayak or Hotelscombined that have been around a while find that "qualified" hotel-shoppers engage in extensive price comparisons before arriving at the purchase point when they click on a hotel. Nevertheless, impulse (and presumably "unresearched" buying) is alive and well particularly when Big Brother Google gets into the act causing bi-polar behavior in consumers.

A couple of days ago the Wall Street Journal had a post headlined with a seemingly rhetorical question "Can Google Influence Consumer Behavior?" That was followed up with a further question "Just how powerful is Google when it comes to small business?". The answer appears to be an unambigous "yes". The Journal article suggests that "the search giant might actually be capable of influencing consumer behavior, as it recently seems to have prompted a brief spike in sales for some mom and pop ice-cream shops. On Sunday, April 3, Google’s homepage featured a “doodle” – a design of its logo that celebrates holidays, anniversaries, famous artists and scientists – in honor of the 119th birthday of the alleged first documented ice-cream sundae. That same day, some U.S. businesses that sell the cool treats say they were busier than usual."  Evidently, "research" on whether or not sundaes were well priced or beneficial for health was immaterial in the pell-mell need to satiate a craving for sugar. And any doubts on whether or not Google can "influence" not just consumer behavior but also business viability ought to have been dispelled when Google penalized "Low quality" sites that sought to "game" their placement.

The foregoing ought to have given the bureaucrats more pause before they went ahead yesterday with approving Google's $700m acquisition of ITA Software whose technology enables consumers to search for airfares and flight times. Inserting caveats that allegedly curtail a potential monopoly outcome favoring Google may help in the short run but there are sunsets on some of those restrictions. Businesses that will now necessarily feed-off Google's trough of travel options will find, before long, that their profits are inversely proportional to those of Google's. With a signficantly larger marketshare in just about anything virtual it is a matter of time before consumers' bipolarity with regard to purchasing behavior is also used by Google to further enhance its primacy.

 

 

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Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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