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Online Mktg – Consumer Behavior

© Ramakrishna Kongalla, Assistant Professor

Indian Institute of Tourism & Travel Management(An Organization of Ministry of Tourism, Govt. of India)

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Consumer Behavior• Types Of Markets - Consumer & Business• Consumer Market

– Purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make products.

• Buying Behavior– The decision processes and acts of people involved in buying

and using products.

• Consumer Buying Behavior– The decision processes and purchasing activities of people

who purchase products for personal or household use and not for business purposes.

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Consumer Behavior Model

• Level Of Involvement– An individual’s intensity of interest in a product and the

importance of the product for that person.• Levels Of Involvement Enduring Situational

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Characteristics of Three Types of Consumer Decision Making

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• Extended Problem Solving– A consumer problem-solving process employed

when purchasing unfamiliar, expensive, or infrequently bought products.

• Limited Problem Solving– The consumer problem-solving process employed

when buying occasionally or when they need to obtain information about an unfamiliar brand in a familiar product category.

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Consumer Buying Decision Process

• A five-stage purchase decision process that includes problem recognition, information search, evaluation of alternatives, purchase, and postpurchase evaluation.

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Influences on Consumer Behavior

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• Problem Recognition– Difference between desired state and actual condition.

• Aspects Of Information Search– Internal Search

– External Search

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• Internal Search– An information search in which buyers search

their memories for information about their products that might solve their problem.

• External Search– An information search in which buyers seek

information from sources other than memory.

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• Evaluation Of Alternatives Consideration Set Evaluative Criteria Framing Alternatives

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Maslow’s Hierarchy of Needs

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• Lifestyle

An individual’s pattern of living expressed through activities, interests, and opinions.

– Lifestyle Affected By:• Age

• Education

• Income

• Social Class

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Types Of Family Decision making

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Post-purchase Evaluation

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Types of Online Shoppers

• Time-starved consumers: Usually found in a house with two sources of income. They are willing to pay higher prices or costs more to save time shopping, no matter whether they like it or not on-line buying experience.

• Shopping avoiders :Do not like shopping and may use the Internet just to avoid the crowd, queue or traffic congestion.

• New technologist:– Usually young people and comfortable with technology, online shopping

because "it's cool".

• Time-sensitive materialist atau click-and-mortar consumers:– Only use the Internet to view the products they prefer to make

purchases from traditional stores for taking security or other reasons.

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• Traditionals : Just like a traditional store. Probably not going to do shopping online.

• Hunter-gatherers: 20 percent of the total number of on-line customers. Like to compare prices and find the best prices.

• Brand loyalists: Purchase online for a particular brand as it gets more benefits.

• Single shoppers: 16 percent of the total number of on-line customers. Liked the Internet not only for shopping but also for banking, communication, playing games, news and other activities.

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Online Purchase Decision Aids

• Shopping Portals:

– comprehensive portals• linked to many different vendors• comparison shopping sites• there is a comparison tool

– niche oriented• have specialized in a product(cattoys.com)• there is a referral fee quotation• there is a portal that has a formal relationship

with partners

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• Shopbots (Shopping robot) dan Agent (Shopping agent):

• A review tools (Scout) Web to customers who specify the search criteria. Different Shopbots using different search methods.

• Zdnet.com/computershopper – computer• Office.com – office furniture

• Business Rating Sites:• Enhance the rating of the various types of e-tailer and

online products based on many criteria.• Gomez.com• Bizrate.com

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• Trust Verification Sites:• Works to assess and confirm whether a given e-tailer

is reliable or not. For example, TRUSTe, BBBOnLine, Secure ASSURE and Ernst & Young. TRUSTe Stamp available on e-tailer Web site reflect the credit. E-tailer has to pay to TRUSTe to use such stamps.

• Other Shopping Tools:– Escrow services- 3rd party to assure quality– Communities of consumers

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Learning about Consumer Behavior Online

• A Model of Consumer Behavior Online– The purpose of a consumer behavior model is to

help vendors understand how a consumer makes a purchasing decision• Independent (or uncontrollable) variables – personal

characteristics and environmental characteristics• Intervening or moderating variables – market stimuli

and EC systems (vendor-controlled)• Dependent variables – buyers’ decisions

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– Personal Characteristics

• Higher education and/or income levels are associated with more online shopping.

• More experience people have with Internet shopping, the more likely they are to spend more money online.

• Most-cited reasons people do not purchase:– Shipping charges (51%)– Difficulty in judging the quality of product (44%)– Cannot return items easily (32%)– Credit card safety (24%)

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– Environmental Characteristics

• Social – people are influenced by family members, friends, coworkers, and trends. Of importance are Internet communities, discussion groups.

• Cultural/community – where people live influence what they buy. Rural shoppers differ from urban shoppers, Europe shoppers differ from Asian shoppers.

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The Consumer Decision-Making Process

• Roles people play in the decision-making process:– Initiator – the person who suggests a product/service– Influencer – a person whose advice influence purchasing

decision– Decider – the person who makes the buying decision– Buyer – the person who makes an actual purchase– User – the person who consumes or uses a product/service

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Online Consumer decision making models:

• Generic Purchasing-Decision Model– Consists of five phases:• Need identification – consumer convinced the need of a

product/service• Information search – on various alternatives to satisfy

the need• Evaluation of alternatives – a set of criteria is developed

to help evaluation and comparison• Purchase and delivery – payment, purchase warranties• After purchase evaluation – customer service and

evaluation of usefulness

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Web Purchasing Model

• Each of the phases of the purchasing model can be supported by Consumer Decision Support System facilities and Internet and Web facilities.

• CDSS facilities support the specific decisions in the process.

• EC technologies provide necessary mechanisms and enhance communication and collaboration.

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Online Buyer Decision Support Model

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• Online Buyer Decision Support Model – Part 1– Buyer behavior

• Identify and manage buying criteria• Search for products and merchants• Compare alternatives

– DSS Design Choices (Current Transaction)• Product representation• Options to support searching• Options to compare alternatives

• Online Buyer Decision Support Model – Part 2 & 3– Comparing alternatives

• Price negotiation• Shipping options• Finance center

– Cross-transaction Concerns• Personalization• User preferences• Customer help

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Online versus traditional consumer• Technology adoption

– Online consumer is best predicted by Internet self-efficacy, followed by perceived financial benefits.

• Convenience and Decision Support– Online consumer only desire is convenience and timesaving.– Depth and breadth of information available on the Internet

meets the consumer’s need of information to make purchase decision.

• Market dynamics– More alternatives can be considered online because of lower

search costs and greater availability of information.– Online consumers becoming less price conscious over time.

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• Loyalty and trust– The ability to customize products/services and transactional

environment online is far beyond the capability of traditional store.

– Consumer loyalty to access competitor’s site is only a click away.

– Trust for online consumer is an expectation based on past performance, a strategy to reduce uncertainty, a willingness to rely on an exchanging partner, and a perception of reliability.

• Products Vs services– Products are tangible and services are intangible in traditional

commerce but both products and services are intangible online.– Online shopping consumers concern about risk for products

than services, more concern about perceived ease of use for services rather than products.

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• Loyalty and trust– The ability to customize products/services and transactional

environment online is far beyond the capability of traditional store.

– Consumer loyalty to access competitor’s site is only a click away.

– Trust for online consumer is an expectation based on past performance, a strategy to reduce uncertainty, a willingness to rely on an exchanging partner, and a perception of reliability.

• Products versus services– Products are tangible and services are intangible in traditional

commerce but both products and services are intangible online.– Online shopping consumers concern about risk for products

than services, more concern about perceived ease of use for services rather than products.

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• Site design– The impact of the shop window are correlated to the impact of a

site’s home page but the impact of store layout versus site layout has some differences.

– Thus, more study is needed to examine what design elements affect online consumer behavior.

• Empowerment, persuasion and entertainment– The ability to shop worldwide at anytime from virtually any

location with the availability of real-time product and competitor information increase consumer’s sense of freedom and power.

– Personalized welcome pages and tailored recommendations list provide customers with a powerful feeling of discovery.

– Online consumers can react to persuasive media more often than a human at selling.

– Online shopping is also a form of entertainment and/or social interaction.

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Thank You…!!!©Ramakrishna Kongallae-mail: artist.ramakrishna@gmail.com