Impulse buying is a huge market although it already exists for about 40 years and it is increasingly important and is the key determinant for a firm to be successful. Impulse buying behaviour can be defined as an unplanned purchasing method due to the emotional influence. With this research marketers and retailer will be able to reposition their strategy.
Specifically, the research evaluates the importance of impulse buying behaviour in online and offline environment. This research explores the factors that influence the Malaysian consumers in impulse buying behaviour. The variable consists of: price change, merchandising methods, social influence and new product knowledge. The importance and implications of each variable are discussed.
Key Words: purchasing behaviour, impulse buying, influence consumers.
This chapter will be covering the introduction of the research, the study objective, justification of study, scope and key assumption. Moreover, research problem, methodology, organization of the whole research project, and conclusion which cover in this chapter.
Shopping can be traced back to many civilizations in history (http://en.wikipedia.org/wiki/Shopping#History_of_modern_shopping). Based on the same article, shopping is the examining of goods or services from retailers with the intent to purchasing at that time. In this modern era, with the growth of information communication technology (ICT), computer and internet had enable consumers to do shopping through the online retail store.
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When a consumer is doing their shopping, no matter its online shopping or offline shopping, themselves will create a behaviour which we called impulse purchasing behaviour or impulse buying behaviour. What is impulse purchasing behaviour or impulse buying behaviour? “Impulse purchase” or “impulse buying” describe any purchase which a shopper makes but has not planned in advanced (Baumeister,2002; Stern, 1962). Virtual store layout and atmospheric will encourage consumers to change their shopping habits towards engaging more deeply with online channel (Burke, 2002; Dailey, 2004; Eroglu et al., 2001; Vrechopoulos et al., 2002). This could trigger the impulse buying behaviour when the individual is doing online shopping. According to Annie Seeley, a Food Commission Nutritionist stated that “seventy percent of confectionary products are bought on impulse” (Marketing Week, 2003, p23). This statement shows that the importance of the impulse buying towards the retailers and the confectionary industry.
Through the statement mention by Annie Seeley, the marketers begin to realise the importance of triggering the impulse buying behaviour and start placing the confectionary product near the counters. This is the reason why there are plenty of candies and chocolates were placed on the counter or beside the passage way of an exit to trigger the impulse buying behaviour. Even some of the fast food chain and cafes in Malaysia will ask question such as “Would you like to add-on any desert such as ice-cream or top-up the size of the package meal?” after the customers had made an order.
As for online shoppers, marketers will create some pop-ups or advertisement when the online shoppers are about the make a transaction. At some of the time, there will be some advertisement portraying the complementary products the gain the attention of the consumers and trigger their impulse buying behaviour.
These days, with the advancement of the technology and the development of the World Wide Web (WWW), the retailers and industries marketers are able to communicate and interact directly with the customers through online network or vice-versa. By 2005, the World Wide Web is expected to grow by a factor of 20; to 200 million sites (Palmer, 2002). Even a giant household and furniture manufacturer, IKEA, are using the bricks and mortar concept. In their website, if an individual intended to purchase a sofa from the internet, the pictures of the sofas will appear on the top, as the page has been scroll down, the picture of the complementary product such as pillow and cushion will appear. The purpose of putting the pictures of pillow and cushion in the bottom of the page is not only act as a complementary products, it is use to trigger the impulse buying behaviour. Even in their outlet, they put shelves of plants near the counter to trigger the impulse buying behaviour.
In this highly competitive business world, many companies understand the importance of impulse purchasing and they are generating ideas and strategy to trigger the impulse buying behaviour in order to increase their market share and increase the growth of the company’s profit.
In this research, we will understand what factors that will be influencing the impulse purchasing or impulse buying in offline and online environment. The result of this research will assist the online and offline retailers and marketers to understand more about how to trigger the impulse buying in order to gain more profit.
1.2 Problem statement
The problem statement in this research is to seek and describe what factors that will influence the impulse purchasing behaviour.
Below are the statements that I am going to find out in this research:
Will the pricing strategy influence the impulse buying behaviour
Will merchandising technique influence the impulse buying behaviour
Will new product influence the impulse buying behaviour
Will social influence affect the impulse buying behaviour
1.3 Objective of the study
The main purpose of this research is to identify the main factors that will trigger the impulse buying in online and offline purchase. Below are the factors that I will examine.
To define the effectiveness of the pricing strategy that could influence the impulse buying behaviour
To define the effectiveness of the merchandising technique that could influence the impulse buying behaviour
To define the effectiveness of the new product that could influence the impulse buying behaviour
To define the effectiveness of the social influence that could affect the impulse buying behaviour
1.4 Justification of study
This research is conduct on the purpose of it could bring significant benefits to the Malaysian retailers and marketers. As we know, impulse buying behaviour is nothing new anymore. But there is still some room for improvement in the strategy of generating more sales and profit through triggering the impulse buying behaviour.
This research is beneficial because the result of this research could assist the marketers and retailers in generating more ideas and creating more strategies on how to trigger the impulse buying behaviour. Furthermore, it could also provide tips to the marketers on how to reposition their products.
1.5 Organisation of Research Project
This study consisted of five chapters. The outline of this research is as following:
Chapter 1: Introduction
The chapter 1 which is an introduction begins with an overview of the topic. Then follow on with the introduction which explains about impulse buying or impulse purchasing.
Chapter 2: Literature Review.
The literature review lists out studies concerning the present research with definitions of impulse buying behaviour. Next, the variable involved in the impulse buying behaviour are also being discussed and defined in this section.
Chapter 3: Methodology.
In this chapter, the samples of population and research methodology are defined. Sample size, data collection methods and evaluation periods are defined in detail. A discussion on the respondents will also take place in this chapter.
Chapter 2: Literature Review
2.1 Categories of impulse purchasing behaviour
In the past research, there 4 type of impulse buying behaviour:
Pure, reminder, suggestion, and planned (Miller, 2002; Stern, 1962)
Pure impulse buying
It is truly a making a transaction on impulse where purchase is made out of normal buying behaviour and it’s affected by emotional and desire. For example, a consumer is not a fan of chewing gum, when he/she saw a chewing gum place at the exit counter while he is lining up at the grocery store and he feel like chewing something. At that moment the individual will have the urge and desire to purchase the chewing gum and eventually he/she bought it.
Reminder impulse buying
Reminder impulse buying occurs when a purchase is made upon something cueing or reminding the consumer to make a purchase(Rebecca Hodge, 2004). In reminder impulse buying, consumers are acknowledging about the existing product and have experience of using that product through advertising.
Suggestion impulse buying
It occurs when the consumer able to visualize the application of the product and decided they need it. From this situation, the consumers have no information about the product and made a purchase on impulse.
“Planned” impulse buying
it occurs when the consumers buy a product based on the price or the product’s speciality. For example, the consumer is buying all items in his/her list, and then the consumer saw an item which is not in the list is on sales. Then the consumer made a purchase on the product which is on sales.
2.2 Dependent variable
Impulse buying behaviour
According to www.businessdictionary.com/, the definition of impulse buying is spurring of the moment, unplanned decision to buy, made just before a purchase. Where else, Stern (1962) indicates that impulse buying is synonymous with “unplanned buying” and defines it as “any purchase which a shopper makes but has not planned in advance.” As the findings continue, there is a more detail explanation of impulse buying definition in (http://encarta.msn.com/dictionary_701706745/impulse_buying.html). It mentions, impulse buying is the purchase of goods that may be unnecessary, caused by the sudden urge or desire to have them.
In the past research on offline and online impulse buying, Piron (1991) conducted a thorough survey of impulse purchasing literature and proposed a more specific and comprehensive definition for impulse buying that includes four components: it is unplanned, it the result of an exposure to stimulus, it is decided “on-the-spot”, and it involves an emotional and/or cognitive reaction.
Impulse buying represents a huge portion of sales in the online and offline retail environment. All marketers and retailers had been targeting this market since 40 years ago. This is a market that could not be lost.
2.3 Independent variable
To consumers, price is a very sensitive issue. A price hike of any product will reduce the demand. Even in macroeconomics, we do learned and understand the relationship between the price and demand. Figure 1, below is the example of the pupply and demand curve. That is the reason market had come out with pricing strategy. The effect of cheaper or lower price on impulse buying is almost similar with the effect of instant coupons since they also present a windfall gain to the customers (Mariri Tendai* and Chipunza Crisp, 2009). One effect of unexpected price discounts is causing a generalized affective effect on consumers (Janakiraman et al., 2006). Therefore, Millman (1986) as cited by Janakiraman et al. (2006) had earlier argued that negative affect by inducing unexpected price hikes might stop the consumer spending by limiting purchase consideration of other goods, while positive affect induced by unexpected price drops might increase spending by expanding consideration of other goods. The consumer mental accounting activity concept can also explain price-induced accounting activity concept can also explain price-induced impulse buying according to (Janakiraman et al. 2006). The concept of the idea that an increase or decrease in the amount spent for an essential item on a given shopping trip would increase or decrease the amount that is perceived to be available to spend on other goods, producing a congruent spill over effect. (Arkes et al.1994) as cited by (Janakiraman et al.2006) acknowledged that the unexpected price discount results in higher expressions of willingness to pay for unrelated discretionary items.
Figure : supply demand curve
Merchandising skills is use to market and generate sales of a product. Beside, merchandising could attract a lot of consumers’ attention. In marketing, if marketers manage to create an attention of the products through merchandising, then he/she is a great marketer. These strategies have been studied and validated in an effort to improve sales through incremental impulse purchases (Rebecca Hodge, 2004). In merchandising a product the gain impulse sales, product position and shelf space is very important. Product position and shelf space is translated into sales because the product is more likely to be seen (Desmet & Renaudin, 1998; Wilkinson, Mason, & Paksoy, 1982). In the online environment, product position is the equivalent of the location of the offer on the screen while shelf space is the equivalent of the real estate or size of the offer on the screen (Rebecca Hodge, 2004). When the merchandised products are offered at the checkout point, it regardless it’s a offline or online shopping, it could make the items to be easier and more convenient to grab by the consumers, this could create impulse buying. When the product is in good position and been place in a appropriate shelf space, it will have a point-of-sales. Point-of-sales simply mean the item is easily been spotted by consumers and manage to generate impulse sales.
Social influence occurs when an individual’s thoughts or actions are affected by other people. For example, whoever saw a smoker who is smoking a cigarette with full of style he or she might be influenced by the smoker. Social influence takes many forms and can be seen in conformity, socialization, peer pressure, obedience, leadership, persuasion, sales, and marketing (http://en.wikipedia.org/wiki/Social_influence). Social influence has been examined in the context of consumer susceptibility to interpersonal influence (CSII) (Bearden et al., 1989). CSII is associated with a variety of consumer behaviors, and in particular with behaviors that combine lack of impulse control with relief from negative emotions, such as smoking (Kropp et al., 1999). When a person is lack of impulse control, there is when the individual will make an impulse purchases.
New product knowledge
Usually, consumers will purchase a product when they already possess some knowledge about it. There are three types of consumer’s knowledge, which is subjective, objective, and experience (Flynn and Goldsmith, 1999). Subjective knowledge means, the consumer believe that they possess the information of the product or the firm itself. Objective knowledge simply mean, the consumer already has the information of the product or the firm before they make a purchase. As for experience, it consists of knowledge and information that consumers gain through interacting with a firm or its product from the past. When the consumers possessed either one of these types of knowledge, it regardless how innovative is the product, consumer will still be have an impulse purchase intention and behavior.
CHAPTER 3 METHODOLOGY
In this chapter, all the variables will be test by using primary data and secondary data. Plus, this chapter will also be focusing on the consumer impulse behavior in Malaysia. The content of this chapter is developing a research framework, developing hypothesis, source of data, collection of data and sample selection.
3.2 Research framework
Figure 2: figure of research Framework
Impulse buying behaviour
New product knowledge
3.3 Hypothesis Development
Hypotheses are single tentative guesses, good hunches which assumed for use in devising theory or planning experiments intended to be given a direct experimental test when possible (Eric Rogers, 1966). It is a conjectural statement of the relation between two or more independent and dependent variables (Kerlinger, 1956). Besides that, it could also be explained as a formal statement that presents the expected relationship between an independent and dependent variable.”(Creswell, 1994)
From the discussion of the research framework, there are four hypotheses are formulated to test the relationship between each of the four independent variables and dependent variable. The four hypotheses guiding this study are as follows:
H1a: price change will have positive relationship towards online and offline impulse buying behaviour.
H1b: price change will have negative relationship towards online and offline impulse buying behaviour.
H2a: Merchandising method have a positive relationship towards online and offline impulse buying behaviour
H2b: Merchandising method have a negative relationship towards online and offline impulse buying behaviour
H3a: Social influence have a positive relationship towards online and offline impulse buying behaviour.
H3b: Social influence have a negative relationship towards online and offline impulse buying behaviour.
H4a: New product knowledge have a positive relationship towards online and offline impulse buying behaviour.
H4b: New product knowledge have a negative relationship towards online and offline impulse buying behaviour.
3.3 Research Design
Research design used to structure the research, to show how all of the major parts of the research project such as the samples or groups, measures, treatments or programs, and methods of assignment work together and to address the central research questions.
The purpose of this research is to show how do an individual been influence hwne they are doing impulse purchasing. This research will be conducted in residential area and super market. Respondents are built from students, housewife, businessman, lecturer, and so on. Research is done by using random sampling technique which is under probability samples. By doing this, each member of the population has the same opportunity to participate.
3.4 Data Collection Method
The data will be collect as soon as the questionnaire is ready to be distribute. While those who are illiterate are excluded in this research in order to ensure the validity. By limiting these factors, accuracy and validity will be more secured
Every participant will be given a questionnaire concerning the demographic information such as age, gender, marital status would be asked. The level of exposure and repetition are asked before respondents answer to the question. In order to facilitate data analysis, six photos will be shown. The questionnaires are included in this paper as appendices.
3.5 Population and Sampling
The selected population will be from a region of Melaka and Kuala Lumpur. The sample is to convince approximately 200 participants who are ranged from 20-59 years of age. The participants will be made up by three major races in Malaysia; they are Malay, Chinese and Indian. Everyone will have the chance to participate. Besides that, there is no requirement of the participant’s occupation. Respondent can be a student, housewife, businessman, lecturer, and hawker and so on.
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3.6 Pilot Study
A pilot or feasibility study is a small experiment designed to test logistics and gather information prior to a larger study, in order to improve the latter’s quality and efficiency. A pilot study can be reveal as deficiencies in the design of a proposed experiment or procedure. Then it could be addressed before time and resources are expended on large scale of studies.
Before the questionnaire is been distribute, it is necessarily to review or check the questionnaire by a certain selected group. By doing so, it could minimize the possibility of error. Ten MMU students who are made up by four Malays, four Chinese and two Indian will be selected to review the questionnaire.
3.7 Source of data
There are two sources of data that need to be established in order to conduct a good analysis. The first type is a primary source. This is the initial material that is collected during the research process. Secondary sources are based upon the data that was collected from the primary source. Secondary sources take the role of analyzing, explaining, and combining the information from the primary source with additional information.
3.7.1 Primary Data
Researchers will have to collect the data themselves using various methods such as surveys, direct observations, interviews, as well as logs (objective data sources). In contrast to secondary data, primary data comes from observations made by the researchers themselves. This often creates credibility issues that do not arise with secondary data.
This section is emphasizing on the data that has been collected at first hand. This research involves measurement of conducting interviews, which is using questionnaires. Through this way, it is easier to identify where the data does come from and how it is collected and analyzed.
3.7.2 Secondary Data
Secondary data analysis is also known as second-hand analysis. It is the analysis of pre-existing data in a different way or to answer a different question. In this section, data will be analyzes and utilizes in order to further studies when this research in completing.
3.8 Description of Questionnaire
Researchers will give explanation the participants before they join into the research. Any of the participant has the right to refuse not to participate in this survey. Moreover, participant’s privacy and confidential are secured.
The demographic information such as age, gender, marital status will be asked in the beginning of the questionnaire. Then it will follow up with question that will touches more on the research. The survey conducted is self-administrated questionnaire based without interviewer. However, respondents are free to ask if there is any doubt.
3.9 Data Analysis
The list of data is test valid and reliable in the core choice model in several different ways. The data is tested for how did the consumer been influence while doing impulse buying, customer response, , and the reliability of the coefficient estimates and so on.
The hypothesized relationships were tested using the multiple regression analysis of SPSS 16.0 for Windows. The SPSS 15.0 is a system which includes t-test, one-way ANOVA, cross tabulations, chi-square, and correlation analysis was conducted to identify differences among user groups. Besides that, SPSS can generate useful tables and graphs such as line charts, pie charts, bar charts and so on for better decision-making (Chong, 2006). With SPSS, it is easy to understand the variable among the effect of e-service quality. The system will change all reported independent and dependent variable to numeric codes.
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