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Influences on Online Consumer Buying Behaviour

4890 words (20 pages) Essay in Marketing

16/01/18 Marketing Reference this

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Among the online shoppers there are many potential online consumers with an intention to purchase, but only few finishes the buying process (Shim et al. 2001). Buyers are online consumers who really make a purchase but browsers are the online shoppers who perform to access the online stores to retrieve the details of products and services but are not in intention to purchase (Law & Bai, 2008). But there are studied that clearly explain the ways to convert an online shopper of browser to an buyer (Ranaweera et al. 2008). The web page’s portrayal of its ambience and reliance helps the online browser to buy or not to, only the initial purchase satisfaction and experience of convenience online can make the online consumer come back again. Oliver (1999) found that the intentions of online shoppers with repeat of purchases will help to build relationship oriented online stores leading to online consumer loyalty. Constantinides (2004) clearly stated that there few influential factors which are external and internal that affect the online consumption behaviour.

1.0 INFLUENTIAL ASPECTS OF ONLINE CONSUMER BUYING BEHAVIOUR

Kotler (2003) stated the online consumer’s behaviour is the learning process of the online consumer’s online store experience, search of information, and decision making of the buying process. The figure 1 clearly depicts the influential aspects of online consumer buying behaviour which are considered to posses uncontrollable and controllable aspects. The Kotler (2003) work is further is further enhanced by the addition of controllable aspects for online store experience by Constantinides (2004). The online consumer behaviour is basically based on the whole impression of online stores portal. (Constantinides, 2004) The strike of emotions occurred and other psychological factors while shopping in the web portal results to the overall online behaviour of the consumer. The web portal expelling the weak emotions or bad experience of online store is mostly likely to lose the potential online consumer compared to that of a web portal which portrays good online shopping experience. Due to the bad experiences in online stores, the online consumers choose to shop offline and prefer offline more rather online stores for future purchases. Yang et al. (2003) found that the online consumers prefer the websites that directs them step by step procedure for purchase decision rather than online stores that just direct online buyer to products. Czinkota and Kotabe (2001) states the uncontrollable aspects of online consumers like demographics and culture is not under the control of online store marketers.

Constantinides (2002) work stated the fact that the experience that takes place during online shopping between buyer and seller through virtual interaction medium has major influence compared to other aspects to influence the online consumer behaviour.

Finally the major impact on online consumers purchasing behaviour is mainly influenced by content, functionality and psychological behavioural factors (Constantinides, 2004). Jayawardhena et al (2007) study proves that the factor that generally motivates the online consumer to buying process is the maximum of control over their online shopping. But study of Sun (2010) proves that the online consumers are driven to buying process on the backgrounds of relationship excellence.

1.2 CONTENT ASPECT

The features and appearance of the website is referred as the content factors of ecommerce. Kotler (1984) defined the aesthetics aspect of atmospheric factor that influences the shoppers buying behaviour. The outlook and interior brightnes and feel of the brick and mortar stores adds to the buying behaviour of the consumer (Areni and Kim, 1994), whereas the online consumers prefer the online stores with great visibility and good quality. Conroy (2006) claims that the visual and aural effects of web store can create attention and attraction among the online consumers, where this claims supports the study of Areni and Kim (1994).

For instance flipkart.com creates attention and attraction of online consumers in India with good appearance of webpage appearance and product reviews. Functionality aspects of web store and online consumer’s webpage attraction is possibly created by highlighting sensory stimuli for the web stores (Parson and Conroy, 2006). The process of converting browsers to actual buyers can take place by clearly communicating the aesthetics of web store intensions to online consumers (Wang et al. 2010). Constantinides (2004) stated the positive aspects that motivate online consumer are better tracking facilities and preferable delivery options. The need for segmenting the online consumer’s based on buying behaviour helps to break them in groups and target with intensions.

1.2 PSYCHOLOGICAL ASPECT

Consumers decision making process is vastly affected by the online store experience and behaviour are the main impacts of psychological aspects (Mcguire, 1976), Most online customers tend to terminate the online purchase for the reason of trust concern (Grabner-Kräuter and Kaluscha, 2003). Major online retailers created a trustful atmosphere for online consumers by providing guarantees and return policies which help to eliminate the customer’s anxiety over online transactions. Web store option of frequently answered questions creates a positive element to the psychological aspect of the browser or buyer while shopping online. Online purchase returns without many hindrances and dissatisfaction handling of online consumer are all the additions to motivation for purchase decision process (Constantinides, 2004).

1.3 FUNCTIONALITY ASPECT

The online store’s usability and interactivity are the main factors associated for aspects of functionality. These factors are involved to influence in the process of buying decision of online consumer (Constantinides, 2004). Online consumption growth for years growing but the usability is getting complicated but by providing consumers with required information it is becoming minimal effort to use online shopping compared to offline. Online consumer are also provided ordered way to search for information and process the buying decision making properly navigated with proper net functionalities (Constantinides, 2004). Convenience and saving of time is the primary goal for any online shopper but with improper web store navigation and poor quality of the web store impacts the online consumer behaviour negatively to become a browser than a buyer (Nah and Davis, 2002)

2.0 SEGMENTATION OF E-CONSUMERS

Online new buyers, experienced buyers and potential buyers are the three different segmented e-consumer groups in the e-commerce industry which is derived from the study of Hernández-Ortega et al. (2008). Online new buyers are the segmented e-consumers who are already familiar online purchase patterns but are shopping online for better deal driven or options. Online buyers who shop frequently and are easily adapted to online shopping structure are the experienced online buyers, these consumers are the most essential for the online stores value building and experienced buyers should under track on to maintain their loyalty. The online buyers with an intension to purchase online and are even chances of repeating online shopping can be turned to potential buyers by online stores efforts (Gronroos, 2004). The segmentation of online consumers is clearly done based on their shopping patterns is to define their online consumption behaviour to target certain strategies to turn them to return online stores and create a sense of loyalty. It is done only by understanding and analysing the online shopping behaviour like price sensitivity, shopping activeness, balance of orientation, convenience and brand loyalty (Jayawardhena et al. 2007).

2.1 SENSIVITY TOWARDS PRICE

Online consumers behaviour based on sensitivity of price are the economic online consumers according to study of Brown et al. (2003). Consumers from this segregated group are more concerned at the value for money attitude. Price sensitivity consumers will not give any attention towards online store’s convenience or time aspects. These consumers choose the best possible product/service for their investment (Vijayasarathy, 2003). Online consumers who are price sensitive are large in number compared to other segmented online consumers, basically it is believed that major number of online consumers choose online stores over offline for finding value for money products/services (Brown et al. 2003).

2.2 BALANCED IN THE ORIENTATION

Darden and Ashton (1975) termed this set of online consumers as “discerning buyers or balanced buyers”, these consumers are require all the preferential aspects of online shopping in a balanced manner. These consumers are loyal, take time to shop but will go for the best product/service that provides the balance of all their requirements. But according to study of Jayawardhena et al. (2007) convenience is proved to play key role in defining their online shopping preference compared to other aspects, further this set of online consumers are cannot be targeted very easily as the other online consumers.

2.3 LOYALTY TOWARDS BRAND

The firm online sales can be steadily maintained with this set of consumers, who are loyal to the firm resulting in purchase of only their product/service. Browser can be converted to a buyer, if the brand has the potential to create loyalty among the browsers (Dawar and parker, 1994). Well recognition of brand and brand’s loyalty can help to lower the online consumer’s trust issues and risk aspects (Huang et al. 2004). All these aspects add to the well recognised brand to posses’ higher amount of market share compared to that of unrecognised brand. This segment of online consumers is recognised to be moderately high in number (Jayawardhena et al. 2007).

2.4 SHOPPING ACTIVENESS

Online consumers who shop online for recreation belong to the aspect of shopping activeness. Online consumers from this aspect take pleasure in online shopping even if they purchase or not. Allred et al. (2006) considers that this segment of online consumers cannot be targeted by any motivational factors, as they shop for enjoyment of shopping than just purchasing. But Brown et al. (2003) considers few strategies to impact to attract these group by promotional offers, offering sample is possible, catalogues, design of a attractive web store can all add up to push to consumer to purchase product/service rather than just shopping. This further adds that if the consumer can also enjoy the whole buying process, chances of buying is more. These segment of online consumers are least compared to other segments (Jayawardhena et al. 2007)

2.5 CONVENIENCE

The segment of online consumers wants to overcome inconvenience of travelling to offline stores, escape weather conditions, and eliminate the limitation of product/service varieties (Vijayasarathy, 2003). Some other preferences adding to this group are shopping pleasure and necessity. This segment of consumers depend convenience but this group are not in large compared to price sensitive consumers (Jayawardhena et al. 2007).

The study on online consumer purchase patterns and behaviours are all most similar to that of offline consumers behaviours, the major identification in this study is that online shopping is just another channel of consumption of goods or services (Jayawardhena et al. 2007). But the conclusion that online shopping and offline shopping is similar is not the right consideration, below further study is done to define differences of offline and online consumers.

3.0 OFFLINE CONSUMERS AND ONLINE CONSUMERS

The fast growth of internet penetration globally created a hugs shift of consumption channels from offline to online through the platform of e-commerce (Iqbal et al. 2002). Online consumers mostly are educated, mostly young and well-off tends to opt for online shopping over the offline channel (Allred et al. 2006). The difference in offering of value among the offline and online consumers is well studied by Iqbal et al. (2002). The online consumer enjoys the value of efficiency, features, speed in traction and price. The offline consumer enjoys the value of immediate customer service, quality, tangibility and promotional offers. Online and offline shopping has its own disadvantages and advantages for its consumers. The aspects that influence the purchasing behaviour of consumers in offline and online are same, only the tools used to target the offline and online consumers differ (Constantinides, 2004). But the tools that are available for influencing online consumption are numerous but there are various issues associated to it, the further discussion highlights the identified issue.

4.0 LIMITATIONS OF ONLINE STORES

Lepkowska-White et al. (2004) study proved that various issues of online stores creates a sense worry for online consumers, mainly the issues which arise are complication of product/service information, product delivery, security and privacy issues, limited relationship and low customer service. Despite the various issues associated with online shopping, there aspects like e-retailers core competencies (Hofacker, 2008) that drive the online success even over the external factors like culture and demographic (Quelch and Klien, 1996). Web store is a virtual store executed and created on software programmes, several flaws would arise if the software program is not well designed. Bauer et al. (2006) research stated that online stores cannot balance its consumers with good functions of online shopping and better online store experience. Online store server’s response time is also main issue under online consumer trust. Online store server with fast response can build trust and server with delay over the clicks can cause worry among the consumers (Cao and Zhao, 2004). The expenses that are saved from offline store structure by the online store is equally leveraged by the effort to bring and build e-sales. The main aspects of online store limitations are further discussed.

4.1 LEGAL AND REGULATORY CONCERNS

Various issues regarding legal and regulatory grounds are being faced by various online stores for its negligence of its consumer’s legal and regulatory concerns. Wijnholds and Little, 2001 stated that the regulatory issue are related to geographical position. Online stores have to obey and abide to the governing rules which challenge sensitive privacy issues of online consumers. There are various online stores that secretly stored the consumer shopping details to target them with appropriate strategies for instance Amazon.com, where its strategy was opposed by few governing councils like European Union, where a rule was passed out to inform consumers prior to collection of their shopping details (Simnett,1999). This rule raised concerns for e-retailers to build trust among consumers and create strategies to market. Taxation is another concern for e-retailers trading globally, where different geographical location charge different amount of tax. The online store prices have variation according to consumer’s geographical origin. Online stores change their web portal according to various governing rules to operate in various countries (Eaglesham and Tucker, 1999).

4.2 SECURITY AND RISK

Online consumers behaviour is mainly affected by the trust issue, the whole trading process is carried out in the e-commerce industry under value of trust and privacy (Constantinides, 2004). Lot of online sales are terminated or discontinued on the transaction process due to the trust issues between buyer and seller (Grabner-Kräuter and Kaluscha, 2003). There are two kinds of trust that is described by Sun (2010), affective trust and cognitive trust. Affective trust is the emotional relationship between the seller and buyer, cognitive trust deals with integrity and benevolence. Online stores with built trust among its consumers can make them feel high satisfaction, less risk, high intensity to browse the online store for new or better products/services lead to increase in online sales. There are various third-party assurances given by various government agencies (Constantinides, 2004). They are specifically termed as “third party assurance” (TPA), many online stores failed to effectively communicate its third party assurance to it consumers to build trust. TPA is classified as mark of trust that certain online store is trust worthy to make a purchase decision (Kimery and McCord, 2006). The two aspects related to purchase making decision are relationship with the seller and online stores information of product/service. Among all the online consumers many prefer a know online store compared to unknown online store for shopping. The unknown store to attract new online consumers and retain them need to focus on web store design and core competencies and finally by building trust the online store can also attract online consumers traffic (Constantinides, 2004). Li et al. (2008) from the study it is identified that the online store from its designing stage itself has to consider the trust and privacy concerns for their consumers.

5.0 E-RETAILERS IMPLICATIONS

An E-retailer effort to push the consumer to overcome the barriers to make a purchase decision is the tough task to convert a browser into a buyer for its store. Nonetheless there are various external and internal aspects that influence the online consumer during the buying process. There are various web-store planning’s and online marketing strategies available to influence the consumption behaviour of online buyers (Kolesar and Galbraith, 2000; Constantinides, 2002; Allred et al. 2006). Constantinides (2002) recommended “4 fundamentals model of S (“system, synergy, site and scope or strategy”) of online marketing strategy”. This fundamental model can improve all areas of online selling. The system aspect of the model deals with online firm administration and requirements of technology. The synergy aspect of the model deals with the integration of its functions in relation to partnerships and legal requirements. The site aspect of the model deals with design of web store to create and maintain the satisfaction level of shopping experience among browsers and buyers. Finally the scope aspect of the model deals with researching the market information of consumer patterns to form strategies that match the online consumer behaviour that suits the core of the web store.

Vijayasarathy (2003) recommends that to sales of product/services to be carried only if suitable to be carried out in ecommerce channel. Boyd (2005) further added that regular online consumer would be satisfied with basic level service provided, trust and further few aspects are discussed below.

5.1 RELATIONSHIP BUILDING AND PHYSICAL PROOF

The web store atmospheric evaluation of the online consumer creates the portal impression. The web store physical proof is noted simplicity of usage and fast reply of portal to consumers requests influence the consumer’s level of shopping experience (Wijnholds and Little, 2001). The core competencies of web store should help them create niche among the other web stores. The web store design should appeal the consumers according to its line of products/services and satisfy their shopping experience. For instance Chanel fashion house website targets the customers with their fashion shows and display of famous models. Relationship building is an important activity to be considered by e-retailers to retain the online consumers. Building relationship is done by basic steps of obtaining feedback and providing reply with quick information (Huang and Shyu, 2009). For instance, travel websites provide online consumers with FAQs, chat sessions, quick information regarding the travel options and availabilities (Allred et al. 2006). Sun (2010) believe that the effort of the e-retailer to retain online consumer with various aspects has positive effect on online consumers behaviour.

6.0 RESEARCH METHODOLOGY

Research questions are the most important aspects of this management project, In which it defines the current online consumer patterns in India and benchmarking of Indian online consumption with USA. The methodology includes the detail analysis and study in the Indian e-commerce Market with online consumers behaviour in relation to the discussion from literature review.

The answer for the research problem is provided based on the related aspects that are discussed in the literature review, the case study methodology is applied for the gathering of analysis, data and the ways to form recommendations on what to do improvise the current trends.

The nature of the research problem will define the choice of research method. The nature of phenomena to be researched states the research method sustainability (Morgan and Smircich, 1980). To form the basis for the research theoretical perspective is chooses as choice for methodology. Levy (2006) stated that Methodology, methods, theoretical perspective and Epistemology are the four elements of research design.

6.1 RESEARCH DESIGN: EPISTEMOLOGY

The process of Epistemology is the research design that relates the knowledge and it usage and adequacy using the philosophical grounding (Levy, 2006). Constructionism and Objectivist are the two main underlined epistemology.

Objectivism

Constructionism

Positivism

Interpretivism

Grounded Theory

Survey

One- to- one Interviews

Case Study

Focus Group

Sampling

Measurement and Scaling

Figure : Research Design elements

Source: (Crotty, 1998)

It is discovered that if the research of objectivists is carried out in proper manner there are possibilities to find the truth. But objectivists are rejected by constructionists that there is no process discovering or finding truth. The communication with various realities of the global can only derive truth. Thus the constructionists mean that nothing is discovered but is only constructed (Levy, 2006). Above figure states the research design elements associated to quantitative and qualitative methodology.

6.2 PHILOSOPHY OF RESEARCH: THEORETICAL

There are two approaches of the philosophy of research: Interpretivism and Positivist. Interpretivism posses that researchers have no access to the actual world and their awareness of the perception of the current world is significant, in which they could be understood by the usage of intrepretivist processes. Positivism is the associated to the objectivism epistemology and based on the assumption that there is ways to acquire concrete knowledge about the truth (Carson et al. 2001).

Positivist is the one who considers the object and the subject or the researcher as independent and two different aspects. The knowledge that could be acquired beyond the human awareness is ascertained by positivists. These set of researchers believe human awareness about the world and the view of the objective ascertains the total view of base for the human awareness (Webber, 2004). The large number of positivists tends to analyse the history, culture, experience and so on all those that creates the research. Survey, field experiments and laboratory experiments are research methodologies available for the usage by positivists.

The philosophy of research applied in this project is the internpretivism. It is believed that researchers who watch and reality they believe cannot be separated. Throughout their life their perceptions or the concept about world is brought from the flow of experiences (Weber, 2004). The awareness the interpretivists structure imitates their culture, experience, own goals, etc.

Few characteristics of Interpretivist are discussed below:

  • Researchers are motivated by episodes of concepts and approaches of qualitative measures.
  • The focal point of research is the process of analysing the happenings under the given circumstances.
  • Including the various concerns like individual perspectives, researcher involvement, and multiple realities.
  • Tendency of usage towards the phenomenographic, enthographic and case studies.
  • They are concerned to defend the acquired awareness through research process. Conclusions made by the researcher are reasonable and the research is carried in the context of researcher examination of evidences.
  • The researcher believes that clubbing of both research process and its subjectivity an portray the steps taken to assess limitations of the subjectivity (Weber, 2004)

RESEARCH METHODOLOGY

Methodological approach is not only affected by the research philosophy like epistemology but it also affects the interpretivist approach. The researcher study is focused on understanding and interpretation (Carson et al, 2001) and motivated to relate personal experience and knowledge in the interpretivist framework. The conclusion is that it is based on the approach of qualitative. The study that is not made by the means of quantifications and means of statistical procedures to define the findings of the research as qualitative approach (Levy, 2006). When the main scope of the study is to construct theory with effective methodology then it is the qualitative methodology. This research involves researcher reactions and views, documents, questionnaires, interviews and observations.

The qualitative methodology basis form is done by the grounded theory method. The fundamental aspect of the grounded theory model is that to discover and read the data from various series through observations through where the core points are extracted and marked (Strauss and Corbin, 1998). Research theory is grounded in association to the repeated reference of the knowledge. Interpretivist research with complex social process among people is required to carried out in solving the research problem using the grounded theory (Carson et al. 2001).

RESEARCH METHODS

CASE STUDY METHOD

The analysis of complexity and particularity of a case or issue reaching to point of acquiring knowledge of the core circumstances (Stake, 1995). It is focus light over a certain instance (Denscombe). The investigation and study at one instance can help to define and discover details that were never discovered in any other researches.

The four stages of case study work:

  • Analysing the current situation. Which is carried out through semi structured and structured interviews.
  • Information collection on the current and background of the circumstances. This is carried out through interviews, documentation references and observations.
  • Gathering more precise information, through the observations, interviews and exploration of information.
  • Analysis presentation of recommendations and observations.

The progression of intensive knowledge and development of details regarding certain circumstances of a case result in formation of a case study (Saunder et al, 1997). The various questions that arise from the management project are answered by the case study.

The study to analyse the effects of past issues, current issues and its influences on the organisational units is the basic approach of case study (Jankowicz, 2005).

According to Yin (1984) case study analysis has four core issues that are external validity, construct validity, internal validity and reliability.

A concern that creates issue in the operations of the analysis, where the data collected is repeated with similar results is the reliability issue.

Establishment of relationships that are important for the comparison of research methods like survey is considered by the internal validity.

To control the chances of researcher misinterprets the information and end up with wrong recommendation and conclusions are controlled by construction validity which employs correct methods.

The study conclusions that are comprehensive are concerns that are established by external validity.

There are various concerns that arise case study approach, those are rigour, reliability, validity, time and information overload, subjective bias and generalisation (Burns, 2000).

The various issues are considered and case study approach is applied based on highlighting the concerns.

7.0 INDIAN ONLINE CONSUMPTION BEHAVIOUR

7.1 BACKGROUND

7.2 CURRENT ONLINE CONSUMPTION PATTERNS IN INDIA

Traditional Indian retail consumption of touch and buy is changing to click and buy. But the online consumers in India are not really buying the concept of online shopping in the present scenario of nascent ecommerce.

(http://www.juxtconsult.com/Reports/Juxt_India_Online_2009_Main_Report.pdf)

From the report of Juxconsult online shoppers in India for 2009 are 9 million with 3.5 million are buyers and remaining are the internet consumers who search but do not prefer online stores are browsers.

TRAVEL SECTOR

The major Indian online consumption comes from the world’s second largest rail network one that caters to 13 million passengers every day, the network that has been the back bone of Indian economy for more than a hundred and fifty years. When the Indian railways launched its online bookings in 2005 everyone expected it to be a success but no one guessed how big the portal would grow to be. Currently Indian Railway Catering and Tourism Corporation (IRCTC) portal leads India’s e-commerce market

(http://www.irctc.com/annual_report.html). In April 2010 IRCTC reported that it registered 9 million transactions (http://www.pluggd.in/irctc-transactions-tickets-sold-worth-6-billion-april-2009-297/) and it is the top e-governance project executed in India. IRCTC web portal also started its service of air ticketing that’s because the Indian middle class have been actively logging in to buy air tickets online in the past few years. The travel vertical accounts for 80% e-commerce in India. These are the various reasons travel sector is one of the most successful e-commerce verticals in the country. The travel sector e-commerce is quick transaction process for online consumer. The relationship of travel sector and e-commerce in India is becoming stronger in days time. Travel sector e-commerce is a fixed business model with low certain margins, experience air travel and global economic downturn meant that the travel e-commerce need to face the loses, that’s when the travel portals choose to diversify their interests like value added services like hotel bookings, car rentals, bus and rail tickets. From travel to classified the next most successful vertical

CLASSIFIEDS SECTOR

The classifieds sector is divided into many markets but matrimony, jobs and real estate’s forms the major share of the sector. Among them in terms of revenue matrimony is the largest because matrimony is largest as it is fixed subscription business model. Blending tradition with the new age technology this portals essentially charge a subscription fee to allow a user to post and search profiles on their account, Apart from this these portals make revenue through match-making schemes and online ads. Indian online consumers prefer these organised matrimonial services because of the pressure to get married and few their opportunities to meet potential partners. For the job segment portals are making huge revenue with recruitment and personnel services, traffic grow frequently by 30% every few months. The 60% of job recruitments in India are don

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