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The factors influencing customer decision-making in e-commerce, including product and merchant selection factors, consumer behavior towards advertising, and tracking methods. It also discusses privacy concerns and the use of personalization in marketing.
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e-Commerce Implementation
How will customer decide what to purchase and who to buy from? What factors will they consider? What is relative importance of various factors? Above 2 elements change for each product category and often from customer to customer. We can know general customer characteristics, but must supplement that with knowledge of our actual and prospective customers.
Five phases: Need identification Information search What specific product will I buy? product brokering Who will I buy it from? merchant brokering Alternative evaluation Purchase and delivery Post-purchase behavior and evaluation If product we offer is unique, merchant brokering is minimized for our product. If product is not unique, how will I get customers to buy from me?
How confident are they in the product? Familiar brand names lend confidence. Customer cannot physically touch product, so must convince them of quality at a distance. Can they assess alternatives and make a decision, or does site hamper them? Poor site design leads to customer frustration, and ultimately to lost sales.
Do they trust the retailer? Do site design, information currency, and other factors lend credibility? How comfortable is customer with shipping and total cost? Can customer easily see total and shipping alternatives? How can customer get help? Can customer contact us and get a reply? Timely? Immediately? Is store focused on customer and relevant for his needs? Is there any type of personalization used? Electronic Commerce 2008 by Turban, Lee, King, McKay, and Marshall
Log-file Analysis—clickstream behavior How many visitors? What products looked out? What ‘path’ did they take through store? How long did they linger over items? Data mining—in-depth examination using algorithms and tools looking for “hidden” information. Too much data may be available—need business intelligence to organize, edit, condense, and summarize.
Customer registration allows us to identify their activities. Cookies—typically used for customer identification and tracking. Can be used to track known or anonymous user. Considered voluntary. Is it really?
Is my tracking of customer activity invading their privacy? Do I have a right to… make a record of all customer activity on my site? use that information to build an individualized customer profile? give that information to other companies I partner with? sell that information to others? publish it?
Collaborative filtering —compare user with others similar and make recommendations accordingly Competitive advantage from experience Rule-based personalization —pre-determined hypotheses about interests
Banner ads—online equivalent of a billboard Random banner —ad has no direct relationship to other page content. Keyword banner —ad is tied to content, perhaps with search engine response. Pros: If interested, visitor can click ad for more information. Potential for customization (to user, for content, etc.) May include multimedia or other attention devices. Cons: May be expensive on popular sites. Small space to work with.
May pay based on time (rare), number of views (CPM), number of clicks (click-thru), or variations (pay per lead, pay per sale, etc.). Banner swapping—two companies agree to display each other’s banners. Banner exchanges—multi-company system of bartering banner ad displays and placement. Measuring effectiveness: Click ratio —ratio of number of times an ad is clicked vs. number of times it is displayed.
Interstitial —ad interrupts navigation and requires user to dismiss ad to continue. “Forced” ad Often used when user is downloading content Advergaming --advertising based in games the user plays. Email advertising--solicited (“Opt in” lists) Viral marketing --word-of-mouth marketing by customers, often in social networking sites.
Novelty of web is wearing off. Businesses looking hard at data. Have to draw people to our site for it to be effective. (Use traditional advertising) Quality of presentation hard to control—medium not “fixed” in presentation like most (vs. TV, magazines, etc.) (Flash, Javascript, etc.) Virtual community nature of web may allow us to invent new types of “advertising” Customer contributed product reviews Customer oriented suggestions, groupings, etc. Feedback can be much more distributed
