🎥 YouTube Title:Understanding Today’s Consumer Behavior in a Digital World | Dr. Markus Rach

0:05 This is uh kind of nuts, but it's unfortunately true. There's a an increasing trend of people to use chat GPT. And again, for the mind of the day, if I say AI, I mean it in the most widest and general sense. Okay, I'm not a data scientist. I'm a marketer. So, I can do this. And what we see now and what's happening now and it's quite evident the last you know couple of weeks and months is that more and more consumers seek inspiration on Instagram or Tik Tok. So on two very visual on two very fastpaced and on two very algorithmically curated content

0:50 platforms right and the number hovers somewhere between 60 and 75% of inspiration seeking on these two platforms which is pretty much dominance right but now it becomes more interesting there's an increasing flood of consumers that then goes to chat GPT And chat GPT is pretty much synonymous for many users as in an AI tool because it's the most widely known I would say and ask Chat GPT to help them plan their holiday including potential hotels and flights and car rentals and everything that you know might be needed for that very holiday. Now this might sound like a great thing to

1:35 do and maybe it's convenient for the consumer. I personally haven't tried it yet, so I can't really tell. But it comes with severe implications on a behavioral perspective, but also from a targeting perspective and from marketing process perspective. Let's think about this for a second. And again, this is super current, right? This is this is so new, it's almost not happening yet. Um if you relate this to our discussion that we had about platforms in session two and and we said hey platforms um they have emerged through the scaling of demand right that that was sort of like their key feature their fuel you know they scaled the demand and they they attracted the the two-sided players to the platform they grew into dominance and they were almost like unstoppable

2:21 right we we mentioned booking.com as one of the players and said well Hotel can hardly compete with Booking.com because Booking.com as a as a as an aggregator absorbs so much web demand. This is crazy, right? And this is what you see here on the left hand side of the screen. Traditionally, when I say the new old, this is us two months ago, right? We plan a book holiday. What do we do? We go on Google. We would then find Booking.com references because they swamped the web, right, with SEM tactics leading us to Booking.com. This is how they absorb traffic. And then we would find a Booking.com flight and hotel combinations.

3:07 Book it through Booking.com, which lets the platform keep its dominant hour form to the hotels that need to be listing through booking. Otherwise they lose out on the traffic. But let's look at the new new which is happening right now. I get my inspiration on Tik Tok and Instagram and I go on chat GPT. Now here's the big question. If I then go on chat GPT does chat GPT go on booking.com which is what we would do or does it find the individual sources that we need or that Chachin P needs for the travel agenda that it puts together? And we find some clues in the current sort of like change in web traffic and

3:54 impacts on SEO tactics. And these seem to lead towards the notion that there's excuse me more traffic no going to again individual providers that changes the game. This is a disruption now on the almighty two-sided platform business at least in some categories that is now getting rled up because the traffic coming to the platform directly might now see to a certain extent because consumers are not going anymore through the traditional web search finding the aggregator and planning and booking a holiday. Isn't it cool? I think at least it's interesting, right? And this is one of the things what we said yesterday, the day before that

4:40 should be acknowledged with your dynamic marketing capabilities to be able to analyze the market, perceive trends and changes and then discuss within your organization. What does it mean for us? Does this have an impact today or tomorrow on our organization? And what do we have to do to mitigate the risk or to exploit the opportunity whichever it is right there's new terminologies that emerge through this which is not the discussion of today but instead of search engine optimization optimizing for AI agents and so forth or LLMs you know a whole new field emerges and businesses need to deal with it. Um, here's a chart from

5:26 SEMrush, a site that, you know, is is is heavily or well known in the SEO community analyzing traffic and sort of like changes and the latest um updates in the in the field of SEO mainly and it has released at the end of last year um clickstream data again US US um bound on how Czech GPT has changed referral traffic or has impacted referral traffic for certain industries. Now, if you look at this, it's of course not a big surprise that you see online services, education, mass media, information technology, distance learning and publishing sort of like leading the field. Why? Because JCPT as

6:13 a as a platform is not just used by consumers to find products. Actually, it's not very heavily used to do this yet. And it's not very heavily used yet to find services, but it's heavily used to deal with information. It's kind of like starting to replace your web search, right, in a sense. So people flock to these to the platform to get information on any given topic. So therefore, of course, um the top traffic absorbing categories are yet no surprise. It would be very interesting and I was looking for data if we see a change for example for travel and tourism between November 2024 and now after all it's a couple of months so we

7:00 might see a change or a tendency and if that would go up that would be an indication for us that there's a behavioral change in how consumers go about booking holidays or in flights or rental cars and that sort of stuff right who knows um at this point it's a hypothesis Um it's an observation but it's not yet on scale but this needs now to be observed by us from a point of strategic marketing to then be ingrained into the organization to deal with it. Right? The future is iffy and we never know how iffy works out. All right. So the customer journey evolution. We looked at this before already with our travel agent example. Right? The traditional customer journey. different models, but this is a very simple and

7:46 sort of like traditional model um of what consumers go through. Awareness as in that's usually a state of deprivation um the the easiest example for this is you're hungry. You know when you're hungry because your stomach is like you know growling or whatever, right? And that means you have an interest in curing that state of deprivation which means you could potentially eat something, right? You would then evaluate the potential options of what you could eat, decide on one food item or food brand and then go about your thing, eat and live happily ever after type thing, right? And we white for quite a long time assumed that consumers go through the purchasing process or the customer

8:33 journey in a linear fashion. And of course, I know you're saying now that's stupid. Of course, it's stupid. It was never true that we go through it in a linear fashion, but a framework or model has to always simplify the real world, right? Otherwise, it it doesn't serve its purpose anymore. And in sort of like the latest acknowledgement that we have, uh we see more and more that the customer journey is not only changing into new models. is a framework from McKenzie um the seven S's or something. I believe we're not looking at this today. We look at Google's messy or fuzzy middle which I think is an interesting uh model to capture part of the discussion we've

9:19 just had and show the the back and forth and the messiness of what consumers do in the middle of their journey which is largely invisible to us. Right? That leads to a decision or it doesn't lead to a decision. Likewise, but we have to think um how will the journey change if consumers use something like a chat GPT? Maybe the messy middle then disappears, right? And we just have awareness and purchase and retention thereafter. Who knows? It's quite fascinating. We we are at the beginning of this, right? I cannot give you an answer. There's no framework that gives you a fundamental answer yet because this is happening right now. the commercial I just showed you that aired last night. It was

10:05 created three days ago, right? Will it have will it have the impacts that we assume it will have? We don't know. It's a hypothesis that we currently work with and now we have to observe what it does over time. Right? So here's the Google model. I just mentioned the um the the the fuzzy middle and or the messy middle. And I think this model is really interesting, right? On the beginning, you see triggers. This is again sort of like your awareness point. You know, you feel hungry or you see an advertising that that captures that captures you. Uh a friend of comes by and says, "Oh, I bought this new pool phone." And you're like, "Oh, show me." This is your trigger. The trigger could of course be

10:50 manifold. It could be any of the triggers that we have today. Friends and family, media, surroundings, normative, and so forth and so forth. But then the water moves into this messy middle and this is shown uh by the consumer going back and forth between exploration and evaluation. Right? And Google argues in their paper and I think it's interesting because obviously Google has a lot of data. Um they argue that consumers switch back and forth between these two mental modes of discovering brands or discovering products, discovering services which we group as solutions, right? What we look for as consumers is a solution to our problem. This is like marketing 101, the very basics of marketing, which of course you guys are

11:36 far above and beyond. So we're not tackling this anymore. And once we found something, we evaluate what we found, right? And this goes back and forth in like an in an infinite cycle if you want until we get to again a behavioral action which would then be the purchase or the abandonment. Now this has really really really um important impacts on us. First impact. If you think about this, that means consumers actively go through such a messy middle of exploration and evaluation, right? Um exploration sometimes if you think about it helps us to also clarify our need

12:22 which is almost why such a model cannot be linear because that would assume your need is very clear and very well defined. I can promise you that when you set out to purchase a product or service in almost every case your need is not well defined because you never think about your need right B2Bs don't think about their need it gets defined usually through the process which is quite unpull and sometimes doesn't look very professional wastes a lot of time and resources right but the B2C consumer is definitely held by going through this process to learning, oh, there's a phone I could buy. It's interesting or, you

13:08 know, it looks like a cool phone. Oh, it's super super expensive. Maybe I switch to a cheaper model. Could that also take nice pictures? You know, this is the exploration evaluation. And that helps you maybe clarify these needs. Right now again if you think about quite quickly now imagine you use chat GPT because we've we've seen it before to support your travel needs right and it's it's increasingly being shown at least on LinkedIn people giving examples of how they used it now imagine now you have a trigger and you say oh my phone broke I need a new one so you go to GPT and say hey which is the best phone that I could buy based on everything you know about me.

13:54 Do we now have a messy middle or do we go straight to a purchase potentially? Now, of course, you would say it depends on the consumer. Some consumers will go straight to the purchase, right? No more messy middle. Some other consumers would go through an evaluation, re-trigger or reprompt GPT or maybe start the parallel search as they would have done traditionally. And I would assume for the for the next month or years we might see different journeys making use of different technologies following the old tra following the the newest of trails which is just using some sort of AI tool um and or being a hybrid a mix of the two right until we see a new dominant form to establish itself for us it's

14:40 important to think about this what would the implication be right in the future This is what we need to prepare our brands for at this very point. And Google also mentioned a few mental um biases that impact the messy middle. Most of them of course you would notice nothing new. For example um category horistics. This these make our life easier. We think quite often in horistics as consumers you know when we think about fast food you think of McDonald's right? Um that that's a a simplification for us that helps us uh the power of the know um which which means if you find for example two products one is immediately available and one is available only next week you

15:27 might be biased for the one immediately available because the patience level of consumers has gone down tremendously. Right? Consumers are incredibly impatient and they could try for purchase. Social proof. We spoke about this. This is the eword of mouth. If you see a product and it has thousands of references or cit um not citations, uh uh ratings, you know, you would believe the product with thousands of thousands of ratings more than the one with just a few, right? You would assume that is true. Although you don't know who has been writing. Very interesting if you think about it, right? If you ask a friend or family member and they would suggest a product, you would believe them. But likewise, you believe to the same extent thousands

16:13 and thousands of star ratings of people or bots that you have no clue who they are, including myself, right? Scarcity bias. Um, Booking.com and other web platforms work heavily with this. You go on the site and it always tells you no matter where you are, no matter where you look for a hotel, there's only two rooms available and billions of people are currently looking at this hotel. Yeah, sure. But this creates scarcity bias. It creates pressure on the consumer to go to a checkout. Right. Careful. This only works if you go through the traditional cycle. If you go through the tick tock GPT cycle which is new that bias doesn't work with you anymore because you don't see it

17:00 you don't perceive it right actually most of these models will be gone which is quite interesting authority buys and power of the free you know gift giving and whatnot and using experts as a source and now I show you something I popped this morning from LinkedIn There's a guy I actually know. Um, he's a CEO of of an IT company here in Switzerland and he had to get a he he's a very he's a chat GPT lover. Okay. So, he's all like fanatic about chat GPT. Um, which is great for him, but I use him as an example because it's interesting to see what he did. So, he's going he's planning to go on holiday and he needs like a um like a travel connector, travel plug connect

17:46 something, right? And so he went to CHPT and asked for any suggestion on that. And he got a suggestion including a link to the web shop on where to buy it. And guess what he did? He bought it. Think of this. The messy middle. What did he do? He cut through the messy middle. It's it's literally a one line from trigger to purchase. He gave all decision-m authority until purchase away to technology. I know it's a it's a small b it's a small purchase. It's not a high value item. It's not a car or real estate. Okay? It's it's it's a minuscule item in terms of value.

18:31 Nevertheless, it's an outsourcing of decision making evaluation or exploration authority to technology. This is an insane behavioral change that we've hadn't had. This is the biggest change in on consumer behavior that we've seen for the last 40 years, right? This is crazy. Uh so please please look for examples in your environment. May maybe you see something on LinkedIn, maybe you see other people do it. Maybe you observe friends, maybe you have gone through it. Think about this very actively, right? Where do you start to give authority away? What does this mean for you? What does this mean for the perception of brands for the perception of potential solutions for the selection and so on and so forth to me crazy

19:18 absolutely nuts right what else is happening in the consumer journey um particularly in the fuzzy middle consumer actions accelerate and of course that's visible in my chat GPT example right the guy asks put in the prompt within seconds he gets something and he might go to the checkout that could have been almost like an instant and conversion, right? But we see this instant conversion happening somewhere else. And we see this happening and we've seen this happening on short video and on live streaming platforms for quite a while now. I show you an example um of China, right? Because if I'm a professor in China, why shouldn't I bring every now and then examples from China? And this is a an influencer

20:04 driven live stream. So life selling in China is very popular. It's entertaining to be honest. I watch it every now and then myself. The guy here in the back is a is a an NBA basketball star and he seems to have a vine like wine that he sells, right? So, he went to China and teamed up with these two influencers. Now, let's have a quick look, but don't blink. It's a very short clip. All right. [Laughter] No way. No way.

20:50 Sold out. All of them. Oh my god. It was the live recording of that live stream, that live sales activity. What you just saw and what you saw and witnessed was how 10,000 wine bottles was sold were sold in less than 10 seconds. Come on. It's crazy, right? This is insane. I mean, it's absolutely insanity. What do we see here? A Chinese like wine, right? So, if you have wine to sell, you know where to go and sell it because I love Chinese. Make them buy your wine. You'll be filthy rich. Make sure that you remember me. All right. What else do you remember? You couldn't have gone through a purchasing process in in in less than 10 seconds as a consumer to buy 10,000

21:36 bottles of wine. This is instant conversion. This is pure impulse purchase, right? This is actually crazy. So the consumers, many many consumers have been driven towards impulse type behaviors over the last couple of years through short video, through live stream sales. This is a behavioral change that happened below the first surface. Most people don't pay attention to this, but you do because you've just seen it and I show you the data behind it. All right. Um, when we talk about video and and and sort of like fast consumption, the platform that we have to talk about, of course, is Tik Tok, right? um video consumption is now sort of like

22:22 the traffic pusher if you want um online and it converts really well because it uses literally all of the mental biases we've seen before on the consumer. It's time based, it's scarcity based, right? It's fear of missing out based. It's authority based because the authority would be the influencer with thousands and thousands of followers. This is your expert in this moment, right? absolutely nuts and crazy. And this has accelerated how products are being sold both in basket size as well as category. I've seen cars being sold on a live stream in China. Cars are high value items, right? For a car, you go through a lengthy

23:08 decision making process, but you can't in a live stream. That's got to be like like this. and I've seen it right. So it changes behavior on scale in different categories in different purchasing situations and we have to acknowledge this and look sort of like underneath the hood uh to understand really what's going on. And of course the penetration of short video to all to to a lot of or to a widespread demographic makes this a very lethal combination. A great one for brands but a lethal one from a psychology perspective and or a behavioral perspective. Right? And if you look at the the share of mobile on um u mobile share traffic, we get

23:56 sort of like the notion of course mobile sharing traffic is increasing and it's mostly increasing through video based apps. shouldn't be a surprise of course right because video-based apps they drive um traffic or data volume if you want but the drive of data volume through these video platforms has given rise to impulse purchasing as I just mentioned now here two illustrations on the left it's consumer impulse buying by category and you see of course clothes clothing clothing food and household item, shoes, all sort of like the lead the leading categories, right? Impulse on the right. Pay attention to 2020

24:44 to 2024, 2025. You see the increase from about $20 outside in 2020 to, you know, 25 to 28. This is due to the increase of short video impact on impulse behavior. This exactly correlates with the growth of Tik Tok, of YouTube shorts, of Instagram reels, of the implementation of their shopping systems and so forth and so forth. This is the change that that's be again below the hood. Most people don't pay any attention but to us it should be really interesting as marketers right actually as politicians should be

25:30 interesting as regulators it should be interesting because where does it lead the consumer right if consumers outsource authority to either time or technology move faster through the purchase p purchasing process maybe there's more rational spending that leads to a decrease in satisfaction overall right it maybe not healthy for society so there's many many applications on this very graph. I think it's fascinating, right? Then what else do we see happening with the consumer? We see omni channel behavior and um we discussed it before with the travel agency. Consumers are not going anymore through a linear path, right? They look on the mobile. Then while they look on a mobile, they walk through a shopping mall, they see other information and they jump back and forth between

26:15 different channels and while doing so they expect the same experience. they actually expect a seamless experience from channel to channel to channel to channel. So in other words, um if you go and buy a coffee and that's why I have Starbucks here. Starbucks actually good example of a sort of like seamless um implementation. If you go to the store, if you buy the coffee on your mobile,