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CHAPTER 2
THEORY
This research is exploration Indonesia tourist’s behavior in using internet for searching online room. Researcher use theory for this research by divided theory topic for easy to understands and use for the guide line in the building questionnaire, design and analysis data. By divide theory topic following.
2.1 Consumer Behavior 2.2 Online Consumer Behavior 2.3 Implications Online – Offline 2.4 Consumers Searching for Information in Electronic Marketplace 2.5 Tourists Behavior
2.1 CONSUMER BEHAVIOR
“Consumer is a person who desires, needs and requires marketing components in their capacity as buyer” (Allen, D., 2002).
Rawissada Apiraksutanon, (2008) study subject of “An analysis of determinants of purchasing decision and customer satisfaction on the medical devices cleaning solution of the hospital in Bangkok area” were to (1) study the determinants of purchasing decision on “deconex” medical devices cleaning solution of the hospital in Bangkok area (2) to compare the Chief of CSSD Officers’ expectation before purchasing decision and their perceptions after using “deconex” medical devices cleaning solution. (3) to provide suggestions on business strategy in relation to an improvement of CSSD officers’ satisfaction on using “deconex” medical devices cleaning solution.
Typically marketers are defined to have the ability to control the behaviours of customers, but actually they have neither power nor information for that. Marketer may influence their buying behavior but not control. Because several individual and not individuale affect consumer behavours. Motives, perceptions, attitudes, experiences, self concept, values can be considered as individual factors. And not individual factors can be expressed as, culture, profession, family, reference groups.
In the space of competitive and globalized world the importance of consumer who is recognized as the focal point of modern marketing, is increasing day to day.
Prices are much cheaper
They are cool in summer, warm in winter.
There is credit- opportunity (compared to Grocery)
They include car parking spaces and play areas for children t
There is the precense of many types.
They give attention to expiration dates and freshness of products.
This shows that today's consumer prefers the places which satisfy them with every aspects (Dr. DURMAZ Yakup, Dr. CELIK Mücahit et. al., March 2011).
2.1.1 Analysis of consumer behavior
In summary, the term “Consumer behaviors” is activity relate to select, purchase and make the decision to satisfy the consumer needs. Thus, marketers should study in 6W’s 1H question to understand the consumption process as before, during and after buying (see table 2.1). These advantages in buying behavior and planning create marketing strategies for their target groups.
Table 2. An analysis of consumer behavior
7-questions (6W’s 1H) for answer seven items about consumer behavior
Question (6W’s 1H) The answer to know (7Os) Marketing strategy
- Who is in the target market?
Occupants of target group including
- Demographic
- Geographic
- Psychology
- Behavior
Marketing Mix include product, price, place, promotion for satisfying the target group
- What does the consumer buy?
Objects to consumer buy; who want product component & competitive differentiation
Product strategies including
- Core product
- Tangible product such as quality, feature style, packaging and brand
- Augmented product
- Expected product
- Competitive differentiation product
- Why does the consumer buy?
Purchasing objective of consumer, for physical &
Product strategies
- Promotion strategies
2.1.2 Consumer behavior model
This study to influence factor for purchasing decision that begin from stimulate pass to Buyer’s black box due to response by Buyer’s purchase decision as follow.
“The consumer market is defined as end user markets. Also called Business to Consumer markets, or B2C markets, the product and service offering is bought by the consumer for his personal use. The decision making process in consumer markets is different from the one that takes place in business or industrial markets” (Sangeeta Sahney, 2010).
Figure 2. Model of Buyer Behavior
Source: Kotler, P., Marketing Management, 11
th edition, Prentice-Hall India, 2003
According Sangeeta Sahney(2010) summary concept of Kotler and Armstrong, the basic model of consumer decision making process comprises three major components, viz., marketing and other stimuli (these act as influences), the buyer’s black box (these are related to the consumer) and the buyer responses (this is the response part). The components/processes as well as the working dynamics are explained as follows (see Figure 2.1) :
1. Marketing and other stimuli: A consumer is confronted with a stimulus in the environment. This stimulus could be of two kinds;
a) One that is presented by the marketer through the marketing mix or the 4Ps , product, price, place and promotion;
- product: attributes, features, appearance, packaging etc.
- price: cost, value, esteem (prestige)
- place: location and convenience, accessibility
- promotion: advertising, sales promotion, personal selling, publicity, direct marketing.
b) The other that is presented by the environment, and could be economic, technological, political and cultural.
2. Buyer’s black box: The stimuli that is presented to the consumer by the marketer and the environment is then dealt with by the buyer’s black box. The buyer’s black box, comprises two sub components, viz., the buyer’s characteristics and the buyer decision process.
The buyers characteristics could be personal, psychological, cultural and social.
a) Personal:
- age & life-cycle stage (family life cycle: single, newly married couples, full nest I, full nest II, full nest III, empty nest I, empty nest II, solitary survivor
- occupation (occupation affects consumption patterns)
- economic situation
- lifestyle (pattern of living as Activities, Interest, Opinions, AIOs)
- personality (personality is defined in terms of traits; these are psychological characteristics which lead to relatively consistent patterns of behavior towards the environment) & self-concept (self-concept is reflective of identity; how a person perceives himself including attitudes, perceptions, beliefs etc). Products and brands also have a personality; consumers are likely to choose such brands whose personalities match their own self.
b) Psychological:
- motivation (motives; urge to act to fulfil a goal or satisfy a need/want)
- perception (ability to sense the environment and give meaning to it through the mechanisms of selection, organization and interpretation).
- learning (a relatively permanent change in behavior as a result of ones’ experience; relates to memory; learning could be experiential based on direct experience or conceptual based on indirect experience; consumer learning could be based on marketing communication/seller provided information, personal word of mouth and/or experiential).
- beliefs (thoughts that a person holds about something; these are subjective perceptions about how a person feels towards an object/person/situation) and attitudes (a favorable or unfavorable disposition/feeling towards an object, person or a situation).
c) Cultural:
short of it, and thus needs a replacement. A problem could also be a desired state (DS Type), where there is an imbalance between the actual state and the desired state; another product seems better and superior to the one that is being currently used, and so the consumer wants to buy it.
A need could be triggered off by an internal stimulus or an external stimulus. Marketers need to identify what could trigger a particular need.
b) Information search: After a need is recognized, the consumer goes for an information search, so as to be able to make the right purchase decision. He gathers information about the product category and the variations, various alternatives and the various brands. Such a search could be ongoing, specific or incidental.
The consumer could recalls information that is stored in his memory (comprising information gathered and stored, as well as his experiences, direct and indirect). He could also seek information from the external environment.
The sources of information search could be personal (family, friends, peers and colleagues), commercial (marketers’ communication in the form of advertising, salespersons, publicity etc), public (mass media, consumer forums, government rating agencies) and experiential (self and others’ experiences). Personal contacts are highly influential sources, public sources are highly credible.
c) Evaluation of alternatives: Once the consumer has gathered information and identified the alternatives, he compares the different alternatives available on certain features. These are those features that a consumer considers in choosing among alternatives; these could be functional/utilitarian in nature (benefits, attributes, features), or subjective/emotional/hedonic (emotions, prestige etc.).The consumer also uses decision rules that help a consumer simplify the decision process. At the end of the evaluation, purchase intentions are formed.
d) Purchase decision: After the consumer has evaluated the various alternatives, he selects a particular brand. Consumer purchases may be trials/first purchases or repeat purchases. The consumer may further have to make decisions on where to buy from, how much to buy, whom to buy from, when to buy and how to pay. It is noteworthy that a purchase intention (desire to buy the most preferred brand) may not always result in a purchase decision in favor of the brand; it could get moderated by attitudes of others and unexpected situational factors.
e) Post purchase behavior: After the purchase, the consumer uses the product and re evaluates the chosen alternative in light of its performance viz. a viz. the expectations. He could be experience feelings of neutrality (Performance meets expectations), satisfaction (Performance exceeds expectations) or dissatisfaction (Performance falls short of expectations). This phase is significant as it (i) acts as an experience and gets stored in the memory; (ii) affects future purchase decisions; (iii) acts as a feedback.
3. Buyer responses: While in the black box, the buyer also takes a decision with respect to the product, brand, dealer, timing and amount.
2.2 ONLINE CONSUMER BEHAVIOR
Dr. AB Razak Che Hussin,( 2009) The research on the concept of trust has emerged rapidly due to the need of understanding it in order to improve current and future e-commerce implementation. The lack of consumer trust is one of the focused issues today as the world moves toward advanced information and technology era. This research aims to find a practical solution on how to integrate trust during the design and development process of an e-commerce website. The research examines consumers’ trust and behavior by understanding the concept of trust, reviewing several trust related models, mechanisms and technologies proposed and recommended by other scholars. The research also proposed a model that shows how consumer trust is developed and communicated between two parties. It is found that there are six categories of trust mechanisms and technologies that web merchants can utilize in order to integrate trust in their website. It is also found that consumer characteristics have direct influenced on consumer purchasing intentions while web merchants should have trustworthiness characteristics such as ability, integrity and benevolence for consumer to evaluate and decide. This research provides guidelines for web merchants to understand more about consumer trust in order for them to build a secured and trusted e-commerce website.
Anders Hasslinger, Selma Hodzic and Claudio Opazo, (November 2007) study of ‘Consumer Behavior in Online Shopping’ The purpose of this dissertation was to examine of there are any particular factors that influence the online consumer. Primary data was collected through a survey that was conducted on students at the University of Kristianstad.
The Consumer Behavior Report is designed to give merchants, media, and industry analysts insight into online shopping trends, purchasing behavior, product pricing and market share. Each month, a different topic will be the focus of the report.
“consumers indicated that the time invested in searching for online savings as part of a strategy to weather the economy will not only help them save money in the current downturn, but will also apply to their spending habits after the recession” ( Sara Rodriguez, March 25, 2009).
“Consumer behavior disciplinary has become one of the most researched domains as business firms and corporations are evolving rapidly due to the advance growth of business and ICT opportunities. Businesses are striving to stay competitive in the market by conducting research and development to understand the complex area of customer behavior. Finding a clearer approach to understand what are the customer intentions and needs, will give extra benefits and advantages to any business organizations” ( Ab Razak Che Hussin. et. al.).
“The total number of Internet users worldwide passed 1 billion in 2005, up from 45 million in 1995 and 420 million in 2000”(New Media Age 2006).
Source: Ramin Azadavar, Darush shahbazi et al. The Role of Security as a Customer Perception on Customers’ Online Purchasing Behavior, Page 177 ,
“Advancement in the scientific reasoning of online consumer behavior is a very dynamic process represented by companies, consumers and scientists. New technological progress and new options for research bring light into the world of marketing. The scientists and marketing experts can produce new specific products for target groups and set up the environment in order to reach the maximum benefits” (Karol Kováč and Alojz Ritomský, 2010).
1/3 of consumers are looking for advice on social networks and blogs before making a purchase. 65% of them would give up after they have read a negative opinion about the brand
Figure 2. Purchase of products/ services
Source: E-commerce report, page 10, 2010
79% of consumers are looking for information about goods and services on the internet. 44% of people who are not active online at all however are informed by their friends who are active online (see Figure 2.3). Most often Facebook users are becoming fans of clothes brands and shoes brands, music, movies and technology products. Bad news is that 80% of them don’t want to receive information for the products they are fans of. (Noema,
Figure 2. Conceptual model of online consumer behavior.
Source: Bridges et al., Online Consumer Behavior, Market Research, and Advertisement, 2006
Figure 2.4 shows the basics of a consumer behavior model in the EC environment. The model is composed of the following parts:
- Independent (or uncontrollable) variables, which are shown at the top of Figure 2.4, can be categorized as personal characteristics and environmental characteristics.
- Intervening (or moderating) variables are variables within the vendors’ control. They are divided into market stimuli and EC systems.
- The decision-making process, which is shown in the center of the Figure, is influenced by the independent and intervening variables. This process ends with the buyers’ decisions (shown on the right) resulting from the decision-making process.
provide some of the market stimuli and/or control the EC systems can make decisions on the intervening variables.
The structure of the consumer behavior model in Figure 2.4 is a simplified version of what actually goes on in the decision-making process. In reality, consumer decision making can be complicated, especially when new products or procedures need to be purchased.
The three key variables that drove website attitudes were website involvement, entertainment, and challenge. Further, pre-purchase evaluations were driven by website involvement and challenge. Website involvement, in turn, was driven by effectiveness of information content and entertainment. While exploratory behavior was influenced by antecedent variables, its effect on attitudes was less pronounced. Hence, the most effective websites were those that are entertaining, moderately challenging, and current.
“In addition, men and women differed in their web navigation behavior. Males, as heuristic or item-specific processors, preferred straightforward information presented through a website that is well-structured and easy to access and process. The primary drivers for males were good entertainment, challenge, and structure. The combined impact of skills, informativeness, and effectiveness of information content on exploratory behavior was weaker and secondary. If the main audience is male, the website should be efficiently designed to develop positive site involvement and attitudes, and generate positive pre-purchase evaluations. Women, as comprehensive or relational processors, engaged in more exploratory behavior and became more involved with the website content. If the main audience is female, the website should be designed to encourage and support exploratory behavior through provision of detailed information, entertainment, and attributes that stimulate both the skills and challenge of females. For example, the use of multiple links to related content could be useful when targeting women. When the audience is composed of both sexes, the key is to engender website involvement as this drives attitudes and pre-purchase evaluations of both men and women” (Marie-Odile Richard and Jean-Charles et al. 2010).
For manufacturers and retailers the relatively stable behavior of deals means that a targeted promotion may be a good way of testing out a promotion or to find out how the deal seeker demographic will behave. Shorter promotions would allow them to judge the reaction of the users, knowing that the initial reaction has much to say about the overall success of the promotion.
Price, Trust and Convenience were identified as important factors. Price was considered to be the most important factor for a majority of the students
“Furthermore, three segments were indentified, High Spenders, Price Easers and Bargain Seekers. Through these segments we found a variation of the different factors importance and established implication for online book stores” (Christy M. K. Cheung, Lei Zhu et. al., 2003).
Online consumers can be divided into two types: individual consumers, who get much of the media attention, and organizational buyers, who do most of the actual shopping in cyberspace in terms of dollar volume of sales. Organizational buyers include governments, private corporations, resellers, and public organizations. Purchases by organizational buyers are generally used to create other products (services) by adding value to the products. Also, organizational buyers might purchase products for resale without any further modifications.
Online Merchants and Intermediaries Characteristics
Figure 2. Framework of Online Consumer Behavior
Source: Christy M. K. Cheung, Lei Zhu et.al, 16th Bled eCommerce Conference eTransformation, Online Consumer Behavior: A Review and Agenda for Future Research, page 201, 2003
Researchers have suggested a broad classification of Internet retail stores as well as the key attributes and features of online stores. These studies provided us with a better insight into the study of online merchant and intermediary characteristics. In the current study, we
2.3.2 Managerial Implications
The findings have implications for online retailers, whether they are click stores or click-andbrick retailers. For example, the results show that for electronics products, a no hassle exchange is thought to be delivered better offline and a large selection is thought to be delivered better online. There is a need to convince customers that they can exchange merchandise as quickly and easily as possible through the mail. In contrast, a multi-channel electronics retailer, would be wise to emphasize that customers can enjoy great selection, prices, and convenience by purchasing on the website, and can exchange merchandise at their local store, if necessary. Individual consumer differences can lead to different marketing approaches for different segments. For example, those who perceive themselves to be more computer literate have a lesser need for personal service or for “hands-on” shopping experience, so there is less need to address these issues with this segment (Nidhi Khurana and Gaurav Bakshi et al. 2011).
2.4 CONSUMERS SEARCHING for INFORMATION in ELECTRONIC
MARKETPLACE
Kuan-Pin Chiang (2011) summery about consumers searching for information in electronic marketplace following. Several reasons suggest that conventional economic theories do not adequately explain consumer online search behavior. First, the fundamental premise of economic theory is that the amount of information search will increase when search costs are reduced. Empirical evidence, however, has not shown such a prediction. For example, by examining the shopping patterns of online users over time, Johnson et al. (2004) found that the amount of online search is actually quite limited. On average, households visit only 1.2 book sites, 1.3 CD sites, and 1.8 travel sites during a month in each product category. Another study by Jansen et al. (2000) revealed a similar pattern from the analysis of logs containing 51,473 queries posed by 18,113 Excite users. The results show that Web queries are short. Most users had only few queries per search and 76% of users did not go beyond their first and only query.
Second, it is cognitive, not physical effort that affects consumers searching for information online. Although physical efforts (e.g., going to stores) have been reduced to finger clicks, it is possible that the cognitive challenges of interacting with computers and online information exist which potentially limit consumer information search in the electronic marketplace.
In addition, the Internet has transformed consumer behavior in two ways: (1) transformation of consumers into online shoppers requiring the usage of computers, and (2) transformation of the physical stores into online marketplaces that is information technology intensive. In order to understand consumer online search behavior, it is necessary to include the interaction between the combined roles of consumer/computer user and information
technology provided by the online stores. These factors impose certain search costs on consumers and influence their online search behavior.
2.4.1 Information Search
Information search is a stage of the decision making process in which consumers actively collect and utilize information from internal and/or external sources to make better purchase decisions. Internal search occurs when consumers access information previously stored in memory. It is the primary source used for habitual and limited decision-making. On the other hand, external search, which is the focus of this article, involves searching for information from sources outside of memory because the required information was not previously acquired or cannot be recalled from memory. Sources such as friends, advertisements, and magazines such as Consumer Reports are often utilized by consumers to facilitate their decision-making. Lately, the Internet has joined other traditional media and become a major source of information for many products and services for consumers because of its abundance of information and convenience.
To explain information search, the economics of information identifies two types of search costs that influence information search – external and cognitive. The costs of resources consumers invest in search, such as monetary costs to acquire information, or opportunity costs of time during acquisitions, are external search costs. Such costs are influenced by factors beyond consumers’ direct control. They are exogenous and depend on situational influences. On the other hand, cognitive search costs are internal to the consumer and reflect the cognitive effort consumers must engage in to direct search inquiries, sort incoming information and integrate with stored information to form decision evaluations. They are influenced by consumers’ ability to cognitively process incoming information.
Searching information online requires consumers to change their conventional behavior. Behavioral change is difficult and often requires incentives such as explicit monetary savings or increased convenience. Past studies have found that convenience is the single most salient benefit of online shopping and consumers look for new way to find information and buy products that are faster and more convenient. For consumers to search for information online, perceived external search cost is lower in an online environment than in the physical market.
In the electronic marketplace, external search costs have been significantly reduced to finger clicks. However, information in such an environment is highly visual and perceptual. It increases cognitive search costs that affect consumers’ search for information. In addition, information search online is characterized by human-computer interaction requiring consumers’ ability and knowledge to acquire information (Hodkison et al., 2000). In order to search online, consumers must not only be able to locate the web sites of interest and move between sites but also to acquire information within the sites. There are several ways to identify the location of Web sites: (1) via search engine, (2) via manual entry of a URL, and (3) via memory-aid of a browser such as bookmarks. Given the vast amount of information
consumers’ online search behavior will accompany changes. The implications for consumers in terms of availability of information, access to greater numbers and sources of product information, privacy and security issues, to name a few, will require continued attention and investigation.
“Additional opportunities to examine information search also include other possible personal and computer system variables, effects of Web site position on a Web page and “location” of the site in the cyberspace, and most importantly, the use of a custom browser to better understand the dynamic and complex process of information search in electronic marketplace” (Kuan-Pin Chiang, 2011).
2.5 TOURIST INDUSTRY
Tourism is the world’s largest industry and so is of vital importance to the world economy. The tourism industry is highly fragmented, with a large number of small businesses. The disparate nature of the industry creates difficulties for both businesses and customers. For businesses, a lack of co-ordination could hamper the industry’s ability to respond effectively to changes in market conditions. The presence of a large number of small businesses also affects promotional activity within the industry.
2.5.1 Employment
Defining the tourist industry is difficult. It is not an industry that is grouped into a single heading within the Standard Industrial Classification (SIC). The defining feature of tourism is not the product, but the purchaser, the ’tourist’. Most definitions concentrate on the services that a number of different industries, such as the travel industry; hotels and catering; retailing and entertainment provide to tourists (Laura Bardgett, 2000). The internationally agreed definition of tourism says that:
‘Tourism comprises the activities of persons travelling to and staying places outside their usual environment for not more than one consecutive year for leisure, business and other purposes.’(Eurostat, 1998)
For reasons outlined above it is difficult to measure the exact number of jobs that are either directly or indirectly dependent on tourism. While the business generated by tourists is crucial to many hotels, restaurants, travel services and entertainment facilities, it does not account for all the business of these sectors and in some regions of the country it will make up very little of the activity.
Laura Bardgett (2000) said that The most commonly cited employment data ignore these problems and provide information for employment in sectors that depend on tourism for some of their business.
These include employment in the following sectors:
- Hotels & other tourist accommodation
- Restaurants, cafes etc
- Bars, public houses and night-clubs
- Travel agencies and tour operators
- Libraries, museums & other cultural activities
- Sports & other recreation activities
While these sectors will depend on tourism for some of the business, they are by no means entirely dependent on it, and will be often used by non-tourists. However this method is sometimes justified on the grounds that while it includes a certain amount of non-tourism related employment, it also excludes some which ought to be included such as employees in transport services.
2.5.2 ICT and Tourist Industry
In ICT and e-Business in the Tourism Industry (2006) said that. ICT, and in particular the internet, can be used in various ways to support marketing activities, including the communication with customers, offering products or services for sale or developing new marketing strategies. In the tourism industry, a variety of services and products are sold via intermediaries, despite the fact that the internet enables service providers to sell directly to end consumers. As many tourism companies recognise the potential of ICT for marketing and sales, the move towards web-based sales activities in tourism is much more advanced than in other economic sectors. Interestingly, although the tourism sector is one of the vanguards in the application of e-commerce, this does not hold true for all related applications. For example, the diffusion of ICT systems linked with customers is somewhat lower than in other sectors.
One of the ICT applications that can help companies to improve the distribution of their products is Customer Relationship Management (CRM) for business intelligence purposes. CRM systems help the company to systematically increase the knowledge about customers and their profitability, and to build and adapt marketing strategies on the basis of this intelligence
CRM is a term that refers to a broad range of methodologies and software applications that help an enterprise to manage customer relationships in an organised way. Normally, CRM solutions are based on some kind of database with systematic information about customers and the business record the company has with them. Ideally, this information will support management, salespeople, staff providing services, and possibly the customers themselves in their tasks; for example by matching customer needs with product designs and offerings, and by specifying service requirements. There are three parts of application architecture of CRM. (Marios Alexandrou, 2012)
Operational CRM: supporting the so-called "front office" business processes, which include customer contact (sales, marketing and service).
