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Marketing and branding

Developing a market presence in any international market is a challenge, particularly where brand awareness is low, and the retail offer isn’t that different form local providers. Where a merchant is selling an own-brand product, creating a place in the market can be a little easier than for those brands selling a more widely available product.

However, digital marketing enables merchants to reach new markets without having a local presence. Digital advertising expenditure totalled over $ 1.17 bn in 2016. According to Media Focus, 42% of advertising expenditure in Switzerland is still going to print media, with only 11% going to digital channels.

A review of data from Google’s Consumer Barometer shows that the research process that customers use to inform their buying decisions follows the same patterns as in other western economies.

How did people use the internet to help make their purchase decisions?

Figure 12: The role of the internet in consumers buying decisions. Source: Google Consumer Barometer 2017.

Discovery, prices, and peer reviews are key areas that many retailers will already understand. Swiss shoppers are no different. What is different in Switzerland is the use of non-digital media channels and the role they play in driving online traffic.

Online retail in Switzerland employs a wide range of media components in order to promote sales and brands. TV advertising still plays a major part in the marketing mix, with an average share of spend around 23%. Interestingly, food retailing is the biggest user of TV advertising.

Category share of advertising channel budgets

Figure 13: Category share of advertising channel budgets. Source: VSV ASVAD / GfK 2016

In common with other markets, display has an important but limited share of the overall mix. Home electronics makes the most use with the category spending just over 8% of the total category advertising media budget. This category also makes use of print media, although the biggest category in this medium is Health, which allocates 38% of its budget to print advertising.

It is also worth noting that direct mail still has a prominent role, being the biggest promotion channel in the clothing/sport category. In fact, it enjoys the biggest share of spend of any other communications channel, with 42% of the total spend being allocated.

Figure 14: Media expenditure share for online retail. Source: VSV ASVAD / GfK March 2017.

GfK data published in March 2017 highlighted the changing trends in budget allocation by media channel. What might be surprising to international merchants is the growth in non-digital channels such as TV, out-of-home and radio. A large fall in display advertising might not be a surprise as business move to performance-based marketing techniques. Direct mail, however, still represents the largest share of media spend, at CHF 124 m. The three-year trend though is a downwards adjustment. Google’s Consumer Barometer reports that 10% of online purchase are informed by direct mail activity.

It isn’t clear from these figures though if there is a reassignment of budgets to other channels, as overall spend is down marginally. Search marketing saw a modest fall in 2016 — certainly not something experienced in other advanced digital markets.

To provide some context, GfK looked at three big online retailers to understand their investment strategies in the various media channels. Amazon primarily focuses on search, spending over CHF 3,000. Ricardo.ch reduced spend on search by 74% in 2016 but increased print by 16%; now spending more on this media channel than on digital advertising. Siroop used considerable budgets across multiple channels, perhaps in response to a strengthening Amazon offer in to Switzerland.

Figure 15: Marketing budget investment in media channels for thee multi-category online retailers. Source: GfK March 2017.

Typically, this budget is spent on performance based activity so would see a direct correlation with gaining importance as a mechanism for increasing relevancy and cost effectiveness of advertising, programmatic trading — where algorithms running on service provider’s servers allocate advertising placement in real-time — is accounting for a bigger proportion of digital budget. There is an increasing focus on tying other marketing channels together with online activity. For example, there has been an increase in TV advertising by online retailers to drive traffic via apps and mobile enabled websites. This is driven by the increasing ‘second screening’ behaviour. Swiss researchers have also noted that, rather than switching channels during commercial breaks, viewers are going online via a mobile device until the program resumes.

Mobile marketing costs are actually a little more expensive than in other markets. For example, Mindshare quoted in a 2013 report that a Cost Per Thousand (CPM) price range of CHF15 to CHF50 isn’t uncommon.

Figure 16: Typical mobile marketing engagement costs. Source: Mindshare, 2013

According to IAB Switzerland, local digital industries are focusing on a small number of key developments in 2018. Primarily, these are the EU’s General Data Protection Regulation (Swiss comparable legislation currently being drawn up); Artificial Intelligence, Programmatic advertising and machine learning.

Search

A cornerstone of any digital marketing campaign and customer acquisition / retention strategy, expenditure on search advertising is growing in Switzerland and worth an estimated $486 m. The main players in this market are Google, Bing and Yahoo!, with some local actors serving more niche requirements.

Market share by search engine is currently favouring Google by a considerable margin. Bing has made gains in recent years, although there is a school of thought that suggests this is down to Cortana, rather than direct consumer choice. Cortana is the voice activated assistant built into Microsoft’s voice activated products, such as Windows 10.

Figure 17: Market share by search engine provider. Source: statcounter.com, year to December 2017

This view could be reflected in the statistics for tablet-based search which shows Google at 97.25% and DuckDuckGo at 1.09%. Bing comes in third at 0.93%.

Social media

Mobile device adoption is also driving another behaviour, interaction with social media. 18-44 year-olds represent the largest audience group although younger age groups are probably under-represented, as many won’t have been using their own details, being too young to ‘officially’ have a social media account. It is worth noting however that this cohort of users are your future customers — don’t ignore their usage behaviours.

Figure 18: Users of Facebook in Switzerland by age group. Source: Socialbakers.com 2016

With regards to the most popular platforms, WhatsApp, the messaging service is the most widely used with high levels of engagement.

Figure 21: Retailers who have active social media accounts per platform.

From a shopper perspective, the demand for video-on-demand is increasingly rapidly. Data from the Google Consumer Barometer shows that 23% of smartphone users are viewing online video weekly. Only 17% have never accessed an online video via mobile device.

Increasingly, Facebook is being used for posting videos and industry analysis has shown that 51% of posts on the platform are this format. The prevalence of smartphones with good quality video capture are increasing citizens’ use of video, both as content creators and consumers. Brands can make use of this phenomenon by encouraging interaction with their Facebook page, with customers becoming brand ambassadors.

Socialbakers.com have analysed industries use of the various social media platforms and ecommerce has the highest level of engagement by users of Facebook. With 1.3 m fans, ecommerce brands are driving commercial engagement on the platform. The broader retail category has 561,000 fans which would suggest digital brands are more active and perhaps some of this is via international brands.

Figure 22: Top 5 industries on Facebook in Switzerland. Source: Socialbakers.com, December 2017.

Advertising costs on Facebook include CPC levels of around $0.55 with average CPM of $0.12.

As with many other markets, social media engagement is an important marketing communications tools and an opportunity for international merchants to engage with local audiences. This is particularly important where the brand doesn’t have a physical presence in Switzerland.

Email

In common with other markets, the use of email as a marketing tool is far from dead. Mobile engagement is reinvigorating this trusted marketing channel. 3% of online purchases were informed by email, according to Google’s Consumer Barometer. Global email trends hold true in the Swiss market. Typical benchmarks of email engagement include Confirmed Open Rates (COR) of over 35%, Click Through Rates (CTR) of 7% and Click To Open (CTO) rates of 17.4%.

Irrespective of workday or weekend, desktop still dominates actions driven through email e.g. ‘clicked on’. However, open rates are evenly split by device over the weekend, whilst desktop accounts for 60% of email opening. Perhaps mobile is used on the way to work during the morning commute as a way of prioritising followup activity.

Source: nationalemailbenchmark.nl

This would appear to be reflected in open rates via mobile, depending on the time of day. Breakfast, lunch, and early evening seem to be the time where engagement is highest. 8 Ways Media of Geneva note that revenues per email peak between 20:00 and 23:59. 50% of emails are opened between 21:00 and midnight on a mobile device.

These data points highlight the importance of mobile devices in the customer journey, particularly during the discovery phase. They also reinforce the role that email has in the marketing mix in the Swiss market while suggesting that frequency, timing, and content should be tailored depending on the desired outcome. International merchants will notice that these trends are common to many other markets so existing platforms are likely to be able to cope with these local requirements.

Optimising customer experience

Localisation is an important element of any foray in to international markets. Achieving acceptance in the Swiss market is no exception. While English is widely spoken, local shoppers expect merchants targeting them to have localised the offer.

This includes local currency, payment methods and of course, language. The official languages of Switzerland are German, French, Italian, and Romansh. Geo-location would enable businesses to deliver the correct language site or at least, provide the user with a choice of language. It is also important to understand that Swiss French and Swiss German will differ slightly from their neighbours. Broadly, translations will get you most of the way, but it would also be worth engaging native speakers so as to capture the local nuances in tone, idiom, and culture.

Consumer confidence

As in any territory, there is always a reluctance to trust online merchants early on in the trading relationship, certainly until a degree of transactional history has been created. Getting customers to purchase for the first time is the biggest challenge. Keeping them comes down to the strength of the proposition and how closely the brand sticks to the customer promise.

Key drivers for online purchasing are price (46%) and simple returns (57%).

In addition to the retail proposition, there are a number of other expected ‘norms’. Some required by legislation, others by convention. For example, clarity around the cost of the goods on offer, including all additional elements required. It is also expected that the contact details are listed clearly on the website, not hidden in terms and conditions.

Clarity on this latter point is important as well. International merchants will be expected to honour local legislative requirements, such as the 14-day cooling off period and openly stating that these standards are met will help reinforce the trading credentials of a cross-border merchant.

The message is clear however, core retailing techniques are required to make a success of trading in to this territory.

Trustmarks

One way for an international merchant to demonstrate compliance with local requirements is for them to register with a trustmark in that territory. There are a number that are respected in the marketplace. A few are represented here. They do have slightly different qualification criteria, so merchants should select one appropriate to their needs.

Marketplaces

Local brand, Ricardo.ch operates in a similar manner to eBay, has more than 2 million registered members and sells more than 20,000 products per day and according to Lengow, has a brand awareness of 93% amongst Swiss consumers.

The two main local marketplaces are Galaxus, a merger between Galaxus and Digitec, and Siroop. Siroop is a marketplace formed by Swisscom and Coop as a mechanism for competing against Amazon, and to provide a digital presence. International brands such as Amazon, AliExpress and Zalando also have a strong presence in Switzerland. Amazon doesn’t have a specific website for the Swiss market, but it does now facilitate its PrimeTM service via the German website, and can boast an 8% market share. These platforms offer a way for unknown brands to try the local markets, while also giving shoppers confidence that the brand that they do know is involved in the transaction. Zalando focuses on the fashion whilst the other platforms are multi-category.

 

 

 

Demographics

Political and socio-economic environment

Online and mobile usage

Online shopping behaviours

Finance and payment

Legal framework and regulation

Logistics and delivery

References

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