Consumer Behavior Online

8/8/2019 Consumer Behavior Online

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Online ConsumerBehavior


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Centaur

TraditionalConsumer

CyberConsumerCentaur

A Hybrid Consumer: A combination ofTraditional and Cyber, Rational

and Emotional.


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Convergence

The combination of old and new, traditionalapproaches and new approaches based on newtechnologies. Rather than an either/or approach,the focus of convergence is on "both." This goes

beyond the more narrow definition of"convergence" as a combination of technologies.

Convergence within the consumer: The newpossibilities created by the technology and the

enduring behaviors of human beings.

More than the bricks-and-clicks business model


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Basic Propositions

1. The new technologies do not replace theold.

2. People are complex, retaining the sameenduring human needs even as theyadapt to new technologies and

behaviors.


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5 Cs of Online Shopping

Marketing challenges

1. Customerization

2. Communities (Virtual Communities)

3. Channel Options

4. Competitive Value Equation5. Choice Tools


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Who is the Centaur?

Online Population

Early Internet users: geeky white guys are

called centaur

The online population is more like the offline,general population Diverse segments

Segments are not only based on demographicfactors, but on online experiences also, timepressure, purchases from catalogs, etc.


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Classifications of Online Customers

McKinsey Report

1. Connectors: New users; more offline purchase

2. Samplers: Light users

3. Simplifiers: Efficiency seekers4. Routiners: Go online for information but not

primarily interested in shopping

5. Surfers: Heavy users; spend lots of time online;Searching multiple domains

6. Bargainers: Online price comparison; Shop for thebest buy

7. Funsters: Looking for information inentertainment-oriented domains


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Myths of the Traditional Consumer

1. Only the elite people want customerization

2. Price is the attraction set by the seller3. The consumer is on the couch

4. Location, location, location

5. Consumers are islands

6. Customers will accept what you tell them


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Myths of the Cyber Consumer

1. People dont want to be troubled withshopping

2. Efficiency is all that matters

3. Consumers want to get the best price

4. Consumers are either online or offline

5. Ease of visiting stores will lead to more

purchasing6. The Internet is inherently fascinating

and attractive


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Human Motivations

1. Self-affirmation

2. Symbolic meaning

3. Scripts for shopping4. Experience

5. Social influences

6. Transaction efficiency

7. Information efficiency


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Why Shop Online?

A. Time saving

B. Convenience

C. One-stop Shopping

D. No requirement of immediate cash


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Information

Two types of online information

1. Information as an end Information is a product itself

2. Information as a means to an end Information search to buy any product


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Information

Information in the decision-making process

Information Search InformationEvaluation Choice

Information Search

1. The Internet facilitates Information Search aswell as creates problems at times

A. Facilitates through the wide array ofinformation available on the Internet & thevariety of search engines

B. Creates problems (consumers processingability) Economics of information &

Information overload


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Information

Economics of Information

1. People will continue searching for information aslong as the benefits of each new piece are not

exceeded by the costs of it.2. As the costs decrease, the number of alternatives

(the size of a consideration set) increases.

Information Overload

1. Given limits to peoples processing capabilities,larger amounts of information to consider mayresult in poorer quality decision.


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Elements of Online Buying

1. Search: The benefits of consumption can beunderstood just with attribute descriptions.

2. Experience: Can be evaluated only after beingconsumed.

3. Credence: Can't be easily evaluated even afterbeing consumed.


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How the Internet affects

1. Search goods: Can facilitate consumers' ability to obtain

attribute information. But may have a damaging effecton decision quality.

2. Experience goods: Difficult to provide enoughexperience for consumers to assess the benefits of theproduct Offline trial & Online purchase

3. Credence: How to help consumers form a set of beliefsabout the quality of the product? Access to otherpeople's beliefs about the quality of the product such asproduct testimonials

Elements of Online Buying


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Status

Status: The rank or evaluation of one person,relative to a comparison group of peers

Scarcity: the motivating factor for Status

How the Internet affects

The Internet may help obtain scarce resource

Demonstrating high levels of Internet-related skills

may confer a higher status

The impersonality of the Internet may decreasehierarchical communications patterns.


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CustomerInvolvement for E-

Commerce

Phase I: Familiarity with the Internet and use of theInternet

Phase II: The Internet used to know the features andbenefits of its products or services

Phase III: Conduct transactions-related activities online

Phase IV: Front-end applications augmented by back-end applications Front-end applications: customer service applications

Back-end applications: sales lead database, order-processing software


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Challenges of the Internet: 5 Cs

Company Employee growth rate: higher in the

infrastructure segment, lower in the

intermediary segment Decreased employee productivity due to Web

surfing

Channel The Internet as a distribution channel

Infomediaries: Manage the transmission ofdistribution-related information

Consumer Lower search costs Empowered consumers


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Challenges of the Internet: 5 Cs

Condition (Market) Marketing activities more directly affected by

the environmental factors such as technology,

etc. Competition

Internet Time Shorter product cycles &Decreased product differentiation

Strategic alliances rather than zero-sum

approaches Same product & different means of

consumption


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Thank You, All!

Consumer Behavior Online

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