1. 1 A New Perspective: The Consumer Electronics Buying Process February 26, 2008

2. 2 –Understand Online and Offline resources used & importance of each –Compare In-store and Online Buyers –Drill down on Search in the research and shopping process –Quantify the value of the online consumer Understand the research and information gathering process of Consumer Electronics Purchasers Objectives

3. 3 Survey Component Online and In-Store buyers of consumer electronics products during July- September 2007 720 TV buyers Buy Online: 149 Buy In-Store: 571 632 Computer buyers Buy Online: 260 Buy In-Store: 372 632 Digital Camera buyers Buy Online: 199 Buy In-Store: 433 Data collection: October 5-17, 2007 Invitations: Sent to the XXX panel via pop-ups and email Survey Component Online and In-Store buyers of consumer electronics products during July- September 2007 720 TV buyers Buy Online: 149 Buy In-Store: 571 632 Computer buyers Buy Online: 260 Buy In-Store: 372 632 Digital Camera buyers Buy Online: 199 Buy In-Store: 433 Data collection: October 5-17, 2007 Invitations: Sent to the XXX panel via pop-ups and email Behavioral Component Online buyers* of consumer electronics products during July-September 2007 206 TV buyers 956 Computers buyers 478 Digital Camera buyers Sites and search terms for analysis provided by Google Data analyzed by 8 individual weeks in addition to two month aggregate period before purchase Behavioral Component Online buyers* of consumer electronics products during July-September 2007 206 TV buyers 956 Computers buyers 478 Digital Camera buyers Sites and search terms for analysis provided by Google Data analyzed by 8 individual weeks in addition to two month aggregate period before purchase Research Methodology * Identified by XXX’s passive observation of an eCommerce transaction

4. 4 1 Online resources are critically important to the CE buyer 2 Buyers rely on Search throughout the shopping funnel 3 Online consumers are more valuable customers Key Findings

5. 5 Online Research is Critical to the Consumer Electronics Buying Process

6. 6 Q11. How familiar were you with the brand before you bought it or before you started researching?. Base: Buy Online – 597, Buy In-Store – 1,344. Q5a. Which statement below best describes your mindset when you first considered a purchase? Base: Buy Online – 572, Buy In-Store – 1,200. Before purchase, shoppers are familiar with the major Consumer Electronics brands, but unsure of what to buy Source: CE Purchasing Process Study November 2007 Uncertain About What to BuyFamiliar with the Brand that I Ended Up Buying In-Store buyers Online buyers Before purchasing...

7. 7 86% Online purchasers 60% In-Store purchasers Q1. Which of the following sources did you use in your shopping and information gathering process to get info about your purchase Please check all that apply. Base: Buy Online - 608 ; Buy In-Store – 1,376. Online purchasers (86%), significantly > than In-Store purchasers (60%) @ 95% confidence, Both In-Store and Online CE shoppers rely on online research Research Their Purchase Online “Online Research is Important to My Purchase Decision” Online Buyer 89% In-Store Buyer 81% Source: CE Purchasing Process Study November 2007

8. 8 * For the 8 week period before purchase. Includes Retail sites (Consumer Electronic and Mass Merchandiser retailers), Manufacturer sites, and technology information, review, and discussion sites. CE buyers invest hours in online research before purchase 3.7 hrs 1.9 hrs 2.3 hrs Average 2.6 hours* of Online Research Time spent on CE research was slightly less than IM’ing and more than reading online news and visiting auction and gaming sites Source: CE Purchasing Process Study November 2007

9. 9 3.7 hrs * For the 8 week period before purchase. Retailers includes Consumer Electronic and Mass Merchandiser sites Other includes technology information, review, and discussion sites. Focus of research varies by product 1.9 hrs 2.3 hrs Manufacturer Sites 1.8hrs 0.2hrs0.1hrs Retailer Sites 1.11.6 1.9 Other Sites 0.80.1 0.3 Source: CE Purchasing Process Study November 2007

10. 10 “Helped Me Learn More about a Brand/Product” Q3. Now we would like to know how each of the following information sources helped you in your shopping and information gathering process for your “TV”, “computer” or “digital camera” purchase. Please indicate the statements you feel apply to each source of information. (You may choose more than one statement for each source of information if you feel it applies.) Base: Base: Buy Online – 240-300 ; Buy In-Store – 345-450. Online Buyer Manufacturer Websites (60%), significantly > @ 90% confidence for “Helped Me Decide What to Buy”. In-Store Buyer Search (24%), significantly > than Print (18%) at 90% confidence. Source: CE Purchasing Process Study, November 2007 “Helped Me Decide What to Buy” Search engines, manufacturer sites and retail sites lead to the final purchase decision

11. 11 “Introduced Me to a Brand/Product I Didn’t Know About” Online Ads are at least as effective as traditional ads… At the top of the funnel… Q3c. Please indicate how each of the following was helpful to you, if at all, in your shopping and information gathering process. (You may choose more than one of the ways shown in the top row for each if you feel it applies.). Base: Prompted by ad to get more information, n = 57 – 349. In-Store Buyer Search (24%), significantly > than Print (18%) @ 90% confidence. In-Store Buyer Search (24%), significantly > than Print (18%) at 90% confidence. Source: CE Purchasing Process Study, November 2007

12. 12 …and even more helpful through to the final CE purchase Q3c. Please indicate how each of the following was helpful to you, if at all, in your shopping and information gathering process. (You may choose more than one of the ways shown in the top row for each if you feel it applies.) Base: Prompted by ad to get more information, n = 57 – 349. Online Buyer Search (49%), significantly > than TV (29%) and Radio (31%) at 95% confidence and Online Ad (40%) and Print Ad (38%) @ 90% confidence. In-Store Buyer Search (45%), significantly > than TV (33%) and Print (33%) @ 95% confidence. Online Buyer Online Ad (40%), significantly > than TV (29%) @ 90% confidence. Online Research, significantly more important to Online buyer (89%) than In-Store buyer (81%) @ 95% confidence. “Helped Me Decide What to Buy” Source: CE Purchasing Process Study, November 2007

13. 13 69% 49% Seeing the Product In-Person Is Very Important in Influencing My Purchase* Buy In-Store Buy Online Still, seeing the product in-person is very important before a purchase Q6. Please think about your last experience in a retail store (e.g. Best Buy, Circuit City or Wal-Mart) before you purchased your “TV”, “computer” or “digital camera”. Using a scale from 1 to 5, where 1 is “strongly agree” and 5 is “strongly disagree”, indicate the extent to which you agree or disagree which each of the following statements regarding your last visit. Base: Respondents who checked Seeing the product in retail stores (e.g. Best Buy, Circuit City, or Wal-Mart); Buy Online – 244, Buy In-Store - 881. Buy In-Store (69%) significant > than Buy Online (49%) @ 95% confidence. * “Strongly agree” with this statement Source: CE Purchasing Process Study, November 2007 20%30%40%50%60%70%

14. 14 In-Store BuyerOnline Buyer Any online resource: 25% Any offline resource: 22% Any online resource: 22% Any offline resource: 22% Online resources are as effective as offline resources at driving CE customers into the store Prompted Me To Visit A Retail Store Q3. Now we would like to know how each of the following information sources helped you in your shopping and information gathering process for your purchase. Please indicate the statements you feel apply to each source of information. (You may choose more than one statement for each source of information if you feel it applies.) Base: Used any online or offline source: Buy Online – 519/395 respectively, Buy In-Store – 799/1,074 respectively. Source: CE Purchasing Process Study, November 2007

15. 15 Search is Pervasive Throughout The Buying Process

16. 16 Your customers use Search throughout the shopping funnel Awareness Consideration Purchase When did you use Search during your shopping and information gathering process? Online Buyers 29% In-Store Buyers 30% Online Buyers 9% In-Store Buyers 11% Online Buyers 17% In-Store Buyers 17% Throughout the Shopping Process Online Buyers 46% In-Store Buyers 43% Q2. And when did you use search during your shopping and information gathering process to get information about your “TV”, “computer” or “digital camera” purchase? Please select the one response that best applies. Base: Respondents who used search to get information about their purchase; Purchased online – 240, Purchased offline - 345 Source: CE Purchasing Process Study, November 2007

17. 17 69% 70% Search is Important to My Purchase Decision Buy In-Store Buy Online 20%30%40%50%60%70% Search is important to the purchase decision, as much to In-Store as to Online CE buyers Q3a. How important were each of the following information resources in deciding what “TV”, “computer” or “digital camera” to buy? % “extremely/very” important Base: Used Search Engine, Buy Online – 240; Buy In-Store– 345. Source: CE Purchasing Process Study, November 2007

18. 18 Search is a critical piece of the online research process Percent of Buyers Who Searched 6.24.96.44.7 6.2 Searches 4.9 Searches 6.4 Searches 5.3 Searches Source: CE Purchasing Process Study, November 2007 Searchers: all products n= 925; computer n= 397; digital camera= 139; television n= 114

19. 19 All searchers: all terms n= 397 ; branded n= 232 ; generic n= 254; 2-month period before purchase Total Searches Used For All Purchases 53% Generic 47% Branded Branded and Generic searches are used equally by buyers Source: CE Purchasing Process Study, November 2007

20. 20 But Branded and Generic search terms are used differently by category Source: CE Purchasing Process Study, November 2007. Generic 33% Computer Searchers Branded 57%10%35% TV Searchers 47%18% 37% Digital Camera Searchers 38%25% Generic Branded Generic Branded Searchers: all products n= 925; computer n= 397; digital camera= 139; television n= 114

21. 21 Buyers use generic search in the weeks leading up to purchase % of Total Searches During Research Process Searchers: all products n= 397; computer n= 148; digital camera= 115; television n= 45 Source: CE Purchasing Process Study, November 2007.

22. 22 Online Consumers Are More Valuable Customers

23. 23 Research Online Research Offline Buy Online Buy In-Store CE Average$744$704$751$708 TV ’ s $1,084$954 $1,135 $970 Computers$883$808 $910 $833 Digital Cameras $289 $254$258$254 Q9. Approximately how much did you pay for your “TV”, “computer” or “digital camera”? Base: Respondents who know which brand of product they purchased: Researched Online – 638, Researched Offline – 766. Buy Online – 587, Buy In-Store – 1,317 Research Online/buy Digital Cameras ($289), significantly > than Research Offline ($254) @ 90% confidence. Buy Online/buy TV’s or Computers ($1,135 or $910), significantly > than Buy In-Store ($910 and $833) @ 95% confidence. Online consumers tend to spend more on CE purchases Source: CE Purchasing Process Study, November 2007

24. 24 Online consumers offer a more attractive demographic profile Research Online Research Offline Buy Online Buy In-Store Average Age40.841.640.4 41.7 Male 64% 57%61% 58% Female36% 43% 39% 42% Average Income $64.1k$63.0k $65.0k $60.8k College Degree or Higher43% 35% 42% 35% Heavy Internet Usage (15+ hours/week) 60% 51%56%55% Source: CE Purchasing Process Study, November 2007 Q’s S1-2 and D1-3: Internet usage and demographic questions Base: Total: Researched online - 656; Researched offline – 791. Buy Online - 608 ; Buy In-Store – 1,376. Research Online, significantly > Male (64%), College Degree or Higher (43%), and Heavy Internet Usage (60%) @ 95% confidence. Research Offline, significantly > Female (43%) @ 95% confidence. Buy Online, significantly > Income ($65.0) @ 90% confidence, College Degree or Higher (42%) @ 95% confidence, Buy In-Store, significantly > Age (41.7) @ 90% confidence.

25. 25 …and online researchers are stronger brand advocates 46% Buyers who Research Offline 54% Buyers who Research Online How likely are you to recommend your CE brand…? Q12. How likely are you to recommend your purchase to a friend, family member, or colleague? % “definitely would recommend” Base: Respondents who know which brand of product they purchased; Researched online - 646; Researched offline – 782. Buyers who Research Online (54%), significant > than Buyers who Research Offline (46%) @ 95% confidence Source: CE Purchasing Process Study, November 2007

26. 26 Searchers are the most valuable customers Searchers 4.7 Non-Searchers 2.9 # Photos or Videos Uploaded About Purchase Searchers 2.9 Non-Searchers 1.6 # Reviews or Blogs Written about Purchase # People Talked to About Purchase Searchers 7.2 Non-Searchers 5.1 Spend 17% More on CE Purchase Searchers $803 Non-Searchers $685 Q13. Thinking about “TV”, “computer” or “digital camera” you bought, how many times have you done the following since you bought it? Please give us your best estimate. Base: Respondents who know which brand of product they purchased; Searchers – 573-578 ; Non-Searchers – 1,345-1,359. Q9. Approximately how much did you pay for your “TV”, “computer” or “digital camera”? Base: Respondents who know which brand of product they purchased; Searchers – 567, Non-Searchers – 1,337. Searchers, significantly > # People (7.2), # Photos/Videos (4.7), # Reviews/Blogs (2.9), $ Spend ($803) @ 95% confidence. Source: CE Purchasing Process Study, November 2007

27. 27 Searchers have desirable demographics Source: CE Purchasing Process Study, November 2007 Q’s S1-2 and D1-3: Internet usage and demographic questions Base: Total Respondents: Searchers - 585 ; Non-Searchers – 1,399. Searchers, significantly > Male (64%), Income ($66.3k), College Degree or Higher (48%), and Heavy Internet Usage (61%). Non – Searchers, significantly > Age (41.9), Female (43%) @ 95% confidence Average Household Income 53% College Degree or Higher 48% Heavy Internet Usage (15+ hours/week) 61% $60.3k 33% $66.3k SearchersNon-Searchers

28. 28 Key Findings CE Buyers rely on Search throughout the shopping process Search is used throughout the purchase funnel, not just at point of purchase Activity is split about equally between branded and generic terms Branded and generic term usage varies by category Online CE consumers, particularly Searchers, are more valuable customers Searchers spend more, are stronger brand advocates, are more affluent and highly educated Shoppers who research online spend more, are more likely to recommend their product and have more attractive demographics Online resources are critically important to the CE buyer Equally important for in-store buyers and online buyers More useful than offline sources in building knowledge about brands/products and helping with the final purchase decision

29. 29 Implications For CE Advertisers Use Online Advertising to Reach the In-store Buyer All Consumer Electronics shoppers have exposure to online advertising Online research plays a pivotal role to decision making process of in- store buyer Measure Brand Impact as well as ROI of Search Buy generic search terms – branded terms only reach half of all purchasers Search is important at the top of the funnel, introducing brands and products Leverage Online Marketing In Integrated Strategy Use online channels to drive customers to the store and reinforce messaging Opportunity for manufacturers to partner with retailers Use strength of online channels to compliment offline campaigns

30. 30 Appendix

31. 31 Computer buyers use generic search in the weeks leading up to purchase % of Total Searches During Research Process Searchers: all products n= 397; computer n= 148; digital camera= 115; television n= 45 Source: CE Purchasing Process Study, November 2007. Behavioral analysis of online buyers.

32. 32 Digital camera buyers use generic search in the weeks leading up to purchase % of Total Searches During Research Process Searchers: all products n= 397; computer n= 148; digital camera= 115; television n= 45 Source: CE Purchasing Process Study, November 2007. Behavioral analysis of online buyers.

33. 33 TV buyers use generic search in the weeks leading up to purchase % of Total Searches During Research Process Searchers: all products n= 397; computer n= 148; digital camera= 115; television n= 45 Source: CE Purchasing Process Study, November 2007. Behavioral analysis of online buyers.