Consumer Behaviour in Online Shopping, Study Guides, Projects, Research of Consumer Behaviour

Download Consumer Behaviour in Online Shopping and more Study Guides, Projects, Research Consumer Behaviour in PDF only on Docsity!

DEPARTMENT OF BUSINESS STUDIES

Consumer

Behaviour in

Online Shopping

Authors: Tutors: Anders Hasslinger Lisa Källström Selma Hodzic Christer Ekelund Claudio Opazo

Abstract The Internet has developed into a new distribution channel and online transactions are rapidly increasing. This has created a need to understand how the consumer perceives online purchases. The purpose of this dissertation was to examine if 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. 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 identified, High Spenders, Price Easers and Bargain Seekers. Through these segments we found a variation of the different factors importance and established implications for online book stores.

• Abstract..................................................................................................
• 1 Introduction......................................................................................... - 1.1 Background........................................................................................... - 1.2 Problem........................................................................ - 1.3 Research purpose - 1.4 Research questions - 1.5 Limitations - 1.6 Chapter overview - 1.7 Summary...............................................................................................
• 2 Method............................................................................................... - 2.1 Choice of methodology.............................................................. - 2.2 Research Approach............................................................ - 2.3 Research Philosophy..................................................................... - 2.4 Research Strategy - 2.4.1 Secondary Data........................................................................................... - 2.4.2 Primary data................................................................................................ - 2.5 Summary...............................................................................................
• 3 Theory................................................................................................ - 3.1 Introduction.................................................................. - 3.2 Consumer behaviour................................................................ - 3.2.1 Consumer characteristics............................................................................ - Cultural Characteristics.............................................................................................. - Social characteristics......................................................................................... - Personal characteristics - Psychological Characteristics - 3.2.2 Online Consumer Characteristics............................................................... - Cultural Online Characteristics....................................................................... - Social Online characteristics..................................................................... - Personal Online characteristics....................................................................... - Psychological Online Characteristics.............................................................. - 3.3 Specific Consumer Traits and Online Behaviour - 3.4 Important Influencing Factors - 3.3.1 Identified Factors affecting Online Consumer Behaviour - The Factor Price............................................................................................... - The Factor Trust..................................................................................... - The Factor Convenience - 3.4 Summary...............................................................................................
• 4 Empirical Research Method............................................................ - 4.1 Segments - 4.2 Sample - 4.3 Non Probability, Convenience Sampling......................
  • 4.4 The Questionnaire..........................................................................
  • 4.5 The Fishbein Model
  • 4.6 Reliability
  • 4.7 Validity.......................................................................
  • 4.8 Generalisability..............................................................................
• 5 Results................................................................................................
  • 5.1 Introduction................................................................
  • 5.2 Questionnaire – Collected data........................................
    • 5.2.1 Online Consumer Traits - Demographics..................................................................................................... - Attitudes and Beliefs................................................................................................. - Impact of Reference Groups............................................................................
    • 5.2.2 Online Consumer Behaviour - Webographics........................................................................................................... - Shopping patterns - Internet Usage...........................................................................................................
    • 5.2.3 Identified factors Price, Trust, and Convenience........................................ - Price...................................................................................................... - Trust.................................................................................................................... - Convenience..........................................................................................................
  • 5.3 Identified Attributes.............................................................. - Price - Trust - Convenience
    • 5.3.1 Primary Factor
• 6 Analysis..............................................................................................
  • 6.1 The Factors.......................................................................
  • 6.2 Two Step Cluster...............................................................................
    • 6.2.1 Significance of the factors within the Segments.........................................
  • 6.3 Segments...............................................................................................
    • 6.3.1 Description of Segment One: High Spenders............................................. - Primary Factor of Concern for High Spenders..............................................
    • 6.3.2 Description of Segment Two: Price Easers - Primary Factor of Concern for Price Easers................................................
    • 6.3.3 Description of Segment Three: Bargain Seekers........................................ - Primary Factor of Concern for Bargain Seekers......................................................
  • 6.4 Summary
• 7 Conclusions
  • 7.1 Implications for Online Book Retailers.....................
  • 7.2 Self Criticism..............................................................................
  • 7.3 Future research.......................................................... - References.................................................................................... - Appendix.......................................................................................

1 Introduction The introduction chapter will be explaining the purpose of our research. The research questions, limitations and a background will be presented. 1.1 Background The invention of the Internet has created a paradigm shift of the traditional way people shop. A consumer is no longer bound to opening times or specific locations; he can become active at virtually any time and place and purchase products or services. The Internet is a relatively new medium for communication and information exchange that has become present in our everyday life. The number of Internet users is constantly increasing which also signifies that online purchasing is increasing (Joines, Scherer & Scheufele, 2003). The rapid increase is explained by the growth in the use of broadband technology combined with a change in consumer behaviour (Oppenheim & Ward, 2006). The Internet is considered a mass medium that provides the consumer with purchase characteristics as no other medium. Certain characteristics are making it more convenient for the consumer, compared to the traditional way of shopping, such as the ability to at any time view and purchase products, visualise their needs with products, and discuss products with other consumers (Joines et al. 2003). Oppenheim and Ward (2006) explain that the current primary reason people shop over the Internet is the convenience. They also recognize that the previous primary reason for shopping online was price, which has now changed to convenience.

Analysing consumer behaviour is not a new phenomenon. The renowned marketing expert Philip Kotler has published several works on the topic of consumer behaviour theories. These theories have been used for many years not only to understand the consumer, but also create a marketing strategy that will attract the consumer efficiently. Hence, understanding and identifying the consumer is closely related to the directions a company will take with their marketing strategy. These theories can also be applied to identify the online consumer and to create certain consumer segments. However, some distinctions must still be made when considering traditional consumer behaviour and online consumer behaviour. Since online retailing is a new retailing medium and online consumer behaviour is diverse from traditional consumer behaviour, one must identify what influences the online consumer. Analysing the process that the online consumer goes through when deciding and making a purchase over the Internet, shows some factors that consumers consider. These factors need to be identified and taken into account by online retailers in order to satisfy consumer demands and compete in the online market. To further understand how these factors influence different types of consumers, we must identify segments which will enable us to make comparisons. 1.3 Research purpose The purpose of this research is primarily to identify and get insight into what main factors the online consumer takes into consideration when purchasing books online, as books are the most commonly bought product on the Internet (Arbeitsgemeinschaft Online-Forschung e.V. [AGOF e.V.], 2007). Further, we will investigate if any segments can be established by identifying the consumers and how these segments relate

to the identified factors. The findings of this research will be outlined as implications for online book retailers in order to enhance their consumer knowledge and increase their online marketing strategy effectiveness. 1.4 Research questions

• What main factors affect the online consumer when considering and making a purchase over the Internet?
• How do these factors influence the consumer when purchasing books online?
• What kind of segments can be found within the identified consumers when purchasing books online?
• What is the connection with the identified factors and consumer segment groups? 1.5 Limitations There are a number of factors influencing the online consumer. However, this research will try to identify the main factors influencing the online consumer and will, therefore, try to limit these to a few in order to be able to investigate the effect on the online consumer. Within the field of consumer behaviour there are many theories and models that identify the consumer. This research will limit itself to identifying the consumer through his/her consumer characteristics and the consumer buying process.

This chapter will present and discuss the results from the questionnaire and how the collected data was distributed among the respondents.

Chapter 6 – Analysis

This chapter will present the analysis and conclusions of the conducted research. We will identify certain segments and analyse how the factors Price, Trust, and Convenience affect these segments.

Chapter 7 – Conclusions

This chapter will present the conclusions that were drawn from the analysis of the research. It will also give implications for online book retailers and discuss further research possibilities. 1.7 Summary Since the rapid development of the Internet online shopping has become a new and widely used medium for retailing. Books are recognized to be the most traded merchandise and the fierce competition of attracting consumers requires online retailers to have comprehensive up-to-date information about the consumers. In order to understand the consumer the retailers need to know what influences the consumer. That is what we want to accomplish with our research.

2 Method This chapter will illustrate the way the research has been conducted by presenting the methodologies and theories used. 2.1 Choice of methodology We will attempt to find the main factors that influence the online consumer when making an online purchase. In order to broaden our own understanding of the subject we conducted our initial research in literature on consumer behaviour and e-commerce. We reviewed studies that had similar aims and paid particular attention to their results. For our own research we decided that the most appropriate approach would be a questionnaire that would be filled out by students at Kristianstad University. To encourage the students not to reject the questionnaire outright, and to increase the response rate, the questionnaire should be limited to maximum of one sheet of A4 paper. This study started out as an exploratory study but developed into an explanatory study since we start out with first gaining knowledge about consumer behaviour to further being able to gain knowledge about online consumer behaviour. Having this knowledge we continue to identify specific factors that are of importance when the online consumer is making online purchases. This information is then used in order to find relationships and correlations between these variables.

Our research will be conducted with a positivistic approach, since we will try to affect and interfere with the collected data as little as possible. 2.4 Research Strategy When collecting data to approach the purpose of a research there are two ways in which the data can be collected. In order to acquire a general knowledge about the topic, secondary data is primarily used and is one of the ways by which data can be collected. The second way to collect data is the primary data collection. Usually when a study is conducted, secondary data is not sufficient enough and needs to be completed with primary data which is collected by the researcher (Christensen, 2001). 2.4.1 Secondary Data Secondary data can be classified into three different subgroups: documentary, multiple source, and survey. Documentary second hand data comes in both written and non written form. It is the data that can be collected from sources such as journals, databases, transcripts etc. This form of data is dependent on the access the researcher has to it. Survey based secondary data is the data that is collected through the survey and is available as data table forms. Multiple source secondary data is data that has been compiled into documentary or survey form; the main characteristics of this type of data is that it has been changed into a different form before the researcher is assessing the data (Saunders et al. , 2007).

We have mainly used documentary secondary data combined with multiple source data. Documentary secondary data has been the data collected through different types of research conducted within the topic, articles, and books that are written on consumer behaviour and e- commerce. This type of data has been the fundamental source for gaining knowledge within the topic in order for us to be able approach the research problem. The secondary data that we used for our research is data that has also lead to the conclusion of which factors that will be examined. The multiple source data that we have used has been in order to choose which product we would use for our research in order to be able to find the product that is most widely bought over the Internet. 2.4.2 Primary data Primary data for our research was collected through questionnaires. When collecting primary data one can choose to do interviews, observations, experiments, and questionnaires. Due to the purpose of our research, only the questionnaire method would be able to approach the topic and be able to collect the answers in a satisfactory manner. In our research the primary data is mainly concerned with analyzing the respondent in order to later on classify the respondent. Further on, the primary data will be used to analyze the factors and how these are related to the respondent. The primary data is conducted in a manner to be able to approach our research and solve our research questions. The questionnaire will be explained in more detail in chapter 5, the Empirical methodology.

3 Theory This chapter presents the theories behind consumer behaviour. It will also discuss online consumer behaviour in order to continue with the identification of the influencing factors. The theories of consumer behaviour will be used in order to be able to find consumer segments that will show whom the identified factors affect. 3.1 Introduction This dissertation aims at finding factors that affect the online consumer’s buying behaviour. By reading literature concerning consumer characteristics and online consumer characteristics we believe to find implications for certain factors that are of importance for the online consumer. The Internet is a worldwide accessible series of computer networks that transmit data by packet switching using the standard Internet Protocol. It is a "network of networks" that consists of millions of smaller domestic, academic, business, and government networks, which together carry various information and services, such as electronic mail, file transfer, the interlinked Web pages and other documents of the World Wide Web. Originally the Internet was mainly used by academics, research scientists and students; however that scenario has changed as commercial organizations have moved to incorporate the World Wide Web into their promotional campaigns, and by offering the facility of online purchasing (Jobber & Fahy, 2003). The Internet has evolved into a worldwide accessible marketplace for information exchange and e-commerce. The strategic importance to be available for

consumers on the World Wide Web, with information and services has become particularly relevant to firms. According to Vesterby and Chabert (2001) the Internet can make it easier for companies to have information about their products or services available to their customers or potential customers. A company can satisfy the consumers’ individual need of information at a low cost in comparison to sending out product brochures for example. As the user can choose information from websites, which implies that the information provider can achieve better understanding of the user’s needs and wants by collecting data. On the other hand, the Internet is a place with hardly any structure or rules: therefore, large efforts are needed in order to show the consumer where a specific site is located, and what services are available on that site. Vesterby and Chabert (2001) claim that companies with no physical presence must market themselves considerably, both online and offline, for the consumer to remember their name. Whether it is the traditional market or the online market, the marketer must understand the consumer and how he makes his decisions and purchasing choices (Hollensen, 2004), because the consumer is under a constant flow of stimuli from the marketers advertisements. The marketer has the possibility to decide and to control the output that will be forwarded to the consumers, but when the advertisement reaches the consumer that control ends. The consumer then interprets the information that has been sent out in his own way based on specific factors for every consumer. Therefore marketers have developed different theories that can explain why consumers interpret information in a certain way, and thereby understand certain behaviours (Kotler & Armstrong, 2007). Several articles have set out to identify the characteristics of the online consumer.

them against the weather, but their real underlying dominant need may be to follow the latest fashion trend. Buyers’ characteristics are important theories from Kotler and Armstrong (2007) and it explains the way that the consumer interprets and receives stimuli from advertisements. The decisions of consumers are influenced by a number of individual characteristics that are linked to the consumer’s specific needs (Kotler & Armstrong, 2007). 3.2.1 Consumer characteristics Consumer characteristics are explained by: Cultural characteristics, Social characteristics, Personal characteristics, and Psychological Characteristics. These characteristics are identified, by the marketer, in order to identify the consumer and to be able to decide on the strategy to what kind of consumer to target. Hence, these characteristics are used in order to segment the market and target specific consumer groups.

Cultural Characteristics

The Cultural Characteristics are recognized as the main influencer of consumer behaviour. These characteristics are developed by three features underpinning consumer behaviour: Culture, Subculture, and Social Class. Culture is mentioned as the most basic cause of a person’s wants and needs. Kotler and Armstrong (2007) argues that human behaviour is mostly learned and that we are exposed to different sets of values and beliefs from a young age, and that these values influence our behaviour and decision making. Hence, these characteristics are interesting for marketers and important indicators of certain consumer behaviour and taste.

Subculture s are small group formations with a certain number of people that share values and beliefs such as nationalities, religions or geographic regions. An identified subculture can serve as an important and effective market segment which can be targeted. Social class is recognized by Kotler and Armstrong (2007) as a class structure, consisting of a combination of factors which gather different types of members. Some identified factors are income, age, education, and wealth.

Social characteristics

The Social Characteristics are divided into three different categories, namely Reference Groups, Family and Social Role and Status. Reference Groups – According to Kotler and Armstrong (2007) the effects of the Reference Groups is mainly based on the belief that a person’s behaviour is influenced by many small groups. When a group has a direct influence it is called a Membership Group , for example: family, neighbours and co-workers. Reference Groups are the groups to which the person often wants to belong to and to be a part of but is not. These groups indirectly and directly form a person’s behaviour and attitudes. There are three different ways by which these groups influence a person’s behaviour; they may expose a person to new behaviours and lifestyles, influence a person’s attitudes and self- concepts and also create a pressure of confirmation by Reference Groups. Another influence of importance is the opinion leader. An opinion leader is a person that influences others to follow his believes and attitudes towards certain issues, products or areas (Kotler & Armstrong, 2007). Family – Family members have a great influence on the buying behaviour. The involvement and influence by different family members