Voice search: How will OTC adapt?

A recent Wall Street Journal video, exploring how the advent of voice-activated online shopping is forcing consumer goods companies to adapt their marketing models, has caused a lot of discussion internally here at Nicholas Hall & Company. In this week’s blog, we provide some context on this growing trend – a phenomenon some are calling “v-commerce”, with the “v” standing for voice – and look at the implications for the consumer healthcare industry.

According to an Accenture survey conducted in late 2017, ownership of voice-activated devices, or “smart speakers”, is rising sharply in many countries, up from 7% to 21% of Americans over the past year, and up from 4% to 14% in China. Whether it’s Apple’s Siri, Amazon’s Alexa or Google Home, this rising tide of “digital voice assistants” is expected to achieve penetration of 30-40% in many countries by the end of 2018.

50% of all searches will be done by voice within the next 5 years” – Sébastien Szczepaniak, Head of Sales & E-Business, Nestlé

If indeed half of all search queries are performed on voice-activated technologies by 2023, then this poses some stiff challenges for marketers. For example, at present, Amazon’s Alexa algorithm:

  1. Only provides two brand options in any product category
  2. Favours brands you’ve previously purchased, entrenching your preferences

Compared to retail outlets, where several brands are often on display, and e-commerce, where the brand options are even more extensive, voice search provides a very limited choice for consumers and this in turn could have a chilling effect on the brands and marketers that rank No.3 and below in certain categories.

When I tested Amazon Alexa, at home in the UK this past weekend, I was given two options when requesting a “stomach remedy” – Amazon’s first choice was Gaviscon Double Action (RB), followed by Andrews (GSK). When asking for a specific ingredient (“paracetamol”), Alexa was less reliable, with antacid Rennie (Bayer) offered as the top choice, followed by ibuprofen-based Nurofen Express (RB).

Of course, the technology remains in its infancy, so algorithms will evolve. One saving grace for OTC is that it will remain somewhat immune, compared to other consumer goods industries, given that medicines still require pharmacist intervention in many countries and that often the need to treat is so urgent that many people won’t be able to wait for their medicine to be delivered.

However, marketers of supplements – and other lifestyle and preventive remedies that are required less urgently – will need to start factoring this trend into their business plans immediately. With Amazon now starting to launch its own supplements and consumer healthcare remedies, the competition to be one of those Top 2 picks could get even more intense in the near future for OTC marketers.

Whether you want to find out more about the latest innovations, benchmark the competition or simply keep abreast of new launches, Nicholas Hall’s extensive OTC New Products Tracker is an essential competitive intelligence tool that you simply must trial. Subscribers can also benefit from a newsletter highlighting the key product innovations affecting the industry. Find out more or set up your free trial today by contacting david.redford@NicholasHall.com

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