Consumer Attitudes to Online Price Comparison Sites

Introduction

Online price comparison sites have become a important tool for consumers wanting research FS products themselves and take greater control of their finances.

Scope

*Using global consumer data, this report provides insights on the potential for the development of price comparison sites globally

*The UK is the most advanced of aggregator markets. This report gives an in-depth analysis of consumer attitudes & behaviours in this country

Highlights

The global financial crisis has increased the levels of doubt and confusion within the financial services industry. Consumers find the independence and transparency provided by price comparison sites particularly attractive in this confusing landscape.

PCS, although involved or indeed owned by financial institutions, have managed to emerge untarnished by the same distrust affecting the advisors and brokers. PCS have managed to maintain an image of independence, with the appearance of having the best interests of the consumer at heart.

There is a perception that it is the younger, more technologically aware consumers who are using the PCS to their full advantage. However this doesn't appear to be the case when looking at our data. The two largest demographics among the bought segment are the 35-49 year olds and the 50-64 years olds.

Reasons to Purchase

*Understand the global opportunity for developing aggregator sites outside of the UK

*Understand what consumers want from these sites and what promotes loyalty to the site over the FS provider

*Access Datamonitor's FS Consumer Insight survey data to better understand consumer attitudes and behaviours


Report Highlights

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Overview 1
Catalyst 1
Summary 1
Methodology 1
Table of Contents 1
Table of figures 1
Table of tables 2
THE GLOBAL RISE OF PRICE COMPARISON SITES 3
Globally, consumers are attracted to price comparison sites as an alternative method of buying FS products 3
UK consumers are most likely to use PCSs to make a purchase, indicative of the developed market 4
Datamonitor's Financial Services Consumer Insight Survey data reveal high potential for expansion in some EU markets, though barriers to growth do exist 4
The Spanish market reveals potential but it will be hard work prizing custom away from the primary bank channel 5
The Spanish banking sector remains the strongest distribution channel for financial products and will be a difficult challenge for the PCSs 5
The high use of PCSs for utilities but low knowledge of FS PCSs indicates strong market potential in Italy 6
Consumers' awareness of PCSs differs across countries 6
Consumers that are not using PCSs prefer to go direct or to receive advice from a face-to-face relationship 6
There exist country-specific differences in reasons for PCS take-up 8
On a global basis, motor insurance is most commonly purchased through PCSs 9
Insurance products dominate within the UK's developed PCS market 9
Different consumer preferences are revealed when it comes to researching FS products through PCSs compared to purchasing products using PCSs 11
Purchases through PCSs are not necessarily driven by price alone 12
Regional preferences influences the decision making behind product purchases 13
Prior use is the main driver of which PCSs consumers choose, followed by advertising 14
Consumers return to a PCS they know, or are drawn in by the internet and other advertising 14
There is significant loyalty to the PCS Industry 15
CASE STUDY: THE UK PRICE COMPARISON MARKET 18
UK consumers trust PCSs more than any other FS provider, significantly more than brokers 18
There is a significant opportunity to convert 'Researchers' and 'Opportunities' into the 'Bought' consumers 19
PCSs should have clear objectives for each distinct consumer segment 20
Understanding the Bought customer segment is key in this well developed, highly competitive market 21
PCSs are as readily accepted by older consumers as they are by younger ones 21
PCS buyers do not appear more financially aware than the population as a whole, implying other motivators 22
Trust remains a strong differentiator between the three segments 23
The Bought segment are more concerned about price than branding and are prepared to shop around to meet these desires 23
The individual consumer segments reveal different approaches to making their financial decisions 24
Bought consumers are at ease using the internet for financial advice 24
The largest differences between Bought consumers and other segments are in the use of internet resources for advice and the prioritization of looking for the cheapest/highest return product 24
The Researchers and Opportunities segments have a higher tendency to seek out advice from their primary bank and friends/family 25
Datamonitor's emerging consumer segments highlight important attitudinal segmentation within the PCS industry 25
PCSs see a higher use and purchase rate within the Budget-Driven consumer segment 26
Recession-Proof consumers have a lower conversion rate from research to purchase 27
Trust in PCSs is high enough to assuage even the fears of the Cautious consumers 28
Conscientious consumers take advantage of the PCS offering to better organize their financials 29
ACTION POINTS 31
Action point: PCSs must maintain a wide range of products if they are to support customer retention 31
Action point: PCSs should be looking to increase the level of human interaction they offer consumers or to create that impression 31
Action point: Building the reputation of PCSs as well as end product is critical if customer retention is to be increased 32
Developing a quirky brand image has short term success but is hugely costly to maintain 33
Gocompare has launched a campaign on a similar premise but has been met with mixed responses 34
Moneysupermarket's more serious approach looks likely to be withdrawn 34
Branding is crucial but large-scale campaigns are costly, depress margins and success is elusive 34
Action point: Cross-selling and packaging opportunities must be taken advantage of for FS products 35
Action point: Price comparison must be part of a service of value comparison 35
Action point: PCSs within the competitive UK market must move into relatively uncharted territory, and soon, if they are to take advantage of recessionary pressures. 36
APPENDIX 37
Definitions 37
Emerging consumer segments 37
Cautious consumers 37
Budget consumers 37
Recession-Proof consumers 37
Conscientious consumers 37
Methodology 38
Further reading 38
Ask the analyst 39
Datamonitor consulting 39
Disclaimer 39
List of Tables
Table 1: Branches per thousand members of the population 5
Table 2: Reasons for not using a PCS and the country with the highest percentage response rate 8
List of Figures
Figure 1: Globally, some consumers remain unconvinced by PCSs 3
Figure 2: PCSs see much greater success in the more mature UK market 4
Figure 3: Consumers who reject PCSs prefer to go direct or seek other means of advice 7
Figure 4: Using PCSs for Insurance products is much more popular in the UK, along with use as a whole 10
Figure 5: Car insurance and credit cards remain the main FS products bought through PCSs 11
Figure 6: Car insurance remains topping the products researched, joined this time by home insurance 12
Figure 7: Price remains critical but additional features and brand name are similarly important 13
Figure 8: Globally prior use and search engine results are the two top drivers of site choice 14
Figure 9: Advertising has raised the profile of PCSs in the UK but prior use remains the chief driver 15
Figure 10: The PCSs inspire loyalty among consumers but to the industry rather than the site itself 16
Figure 11: UK PCSs appear to be offering better services reflected in higher loyalty and a higher commitment to purchasing 17
Figure 12: Price comparison sites are the most trusted financial institutions within the UK 19
Figure 13: Nearly 40% of consumers have bought using PCSs but there remain strong segments of the population who remain reticent 20
Figure 14: PCSs should have clear objectives for each distinct consumer segment 21
Figure 15: 35-49s top the PCS usage figures 22
Figure 16: No clear relationship between financial awareness and those who have bought using PCSs 23
Figure 17: Budget-Driven consumers appear to have a higher conversion between awareness of PCSs and product purchase 27
Figure 18: Recession-Proof consumers are neglecting to make the final step to purchase through the PCSs 28
Figure 19: Cautious consumers are willing to make decisions based on PCS advice and are comfortable purchasing products through the site 29
Figure 20: Conscientious consumers take advantage of the service offered by PCSs 30
Figure 21: Moneysupermarket puts a face to their experts 32
Figure 22: Compare the market gains ground on confused.com but remains in 3rd place despite its £25m marketing budget 33

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List of Tables
Table 1: Branches per thousand members of the population 5
Table 2: Reasons for not using a PCS and the country with the highest percentage response rate 8

List of Figures
Figure 1: Globally, some consumers remain unconvinced by PCSs 3
Figure 2: PCSs see much greater success in the more mature UK market 4
Figure 3: Consumers who reject PCSs prefer to go direct or seek other means of advice 7
Figure 4: Using PCSs for Insurance products is much more popular in the UK, along with use as a whole 10
Figure 5: Car insurance and credit cards remain the main FS products bought through PCSs 11
Figure 6: Car insurance remains topping the products researched, joined this time by home insurance 12
Figure 7: Price remains critical but additional features and brand name are similarly important 13
Figure 8: Globally prior use and search engine results are the two top drivers of site choice 14
Figure 9: Advertising has raised the profile of PCSs in the UK but prior use remains the chief driver 15
Figure 10: The PCSs inspire loyalty among consumers but to the industry rather than the site itself 16
Figure 11: UK PCSs appear to be offering better services reflected in higher loyalty and a higher commitment to purchasing 17
Figure 12: Price comparison sites are the most trusted financial institutions within the UK 19
Figure 13: Nearly 40% of consumers have bought using PCSs but there remain strong segments of the population who remain reticent 20
Figure 14: PCSs should have clear objectives for each distinct consumer segment 21
Figure 15: 35-49s top the PCS usage figures 22
Figure 16: No clear relationship between financial awareness and those who have bought using PCSs 23
Figure 17: Budget-Driven consumers appear to have a higher conversion between awareness of PCSs and product purchase 27
Figure 18: Recession-Proof consumers are neglecting to make the final step to purchase through the PCSs 28
Figure 19: Cautious consumers are willing to make decisions based on PCS advice and are comfortable purchasing products through the site 29
Figure 20: Conscientious consumers take advantage of the service offered by PCSs 30
Figure 21: Moneysupermarket puts a face to their experts 32
Figure 22: Compare the market gains ground on confused.com but remains in 3rd place despite its £25m marketing budget 33
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