Electronic Commerce Semester 1 Term 1 Lecture 27

Types of Consumers In general, consumers can be categorised into three types: –Impulsive buyers who purchase products quickly –Patient buyers who purchase products after making some comparisons –Analytical buyers, who do substantial research before making the decision to purchase products and services

Understanding these Consumer Types An understanding of the consumer type will allow retailers to delve deeper into what motivates various types of shopping Consumer behaviour, whiich has a profound impact on the way online systems are developed, can be viewed in terms of two questions: –Why is the consumer shopping? –What is in it for the consumers? As these questions imply, an online shopping experience can be valuable (accomplishing something) or valueless (simply browsing)

Types of Purchases Marketing researchers have isolated several types of purchasing behaviour: –Specifically planned purchases, where the need was recognised on entering the store and the shopper bought the exact item planned –Generally planned purchases, where the need was recognised, but the shopper decided in-store on the actual manufacturer of the item to satisfy the need –Reminder purchases, where the shopper was reminded of the need by some store influence e.g. in-store advertising –Entirely unplanned purchases, where the need was not recognised upon entering the store

Prepurchase Preparation Many business models being designed for the Web assume a direct or one-to-one correspondence between predisposition to purchase and actual purchase These models assume that electronic commerce could flourish simply by establishing the inclination to purchase a product by creating attractive Web pages for that product These models fail to acknowledge that one must create an environment in that addresses the multiple steps a consumer goes through in the pre- purchase phase: deliberation, comparison and negotiation

Prepurchase Deliberation Any major consumer purchase involves some amount of prepurchase deliberation, the extent of which is likely to vary across individuals, products and purchase situations Purchase deliberation is defined as the elapsed time between a consumer’s first thinking about buying and the actual purchase itself Information search should constitute the major part of the duration buy comparison of alternatives and price negotiation would be included in the continually evolving information search and deliberation process

Purchase Deliberation & the Online Environment The answers to several important questions about the purchase deliberation process can shape the way online shopping environments are designed and created: –How much time are buyers allocating and spending on their purchase decisions with respect to various products? –What factors account for the differences in consumer decision time? –What technology can be used or designed to reduce decision time? –What shopping environment keeps customers happy and wanting to return?

Prepurchase Comparison & Negotiation Process In many cases, comparisons of various attributes are necessary preconditions to purchasing decisions In the context of attribute comparison, search can be further classified along two additional dimensions: –Consumer search, which is defined as the degree of care, perception, and effort directed toward obtaining data or information related to an individual purchase decision problem –Organisation search, which is defined as a process through which an organisation adapts to such changes in its external environment as new suppliers, new products, and new services

The Consumer Search Process Most consumer search is focused on price comparison In many markets, consumers show a healthy respect for price as an indicator of quality – and by this suggest that to compete on price alone may well be an unnecessarily dangerous and inevitably damaging strategy The Internet is changing the dynamics of price comparison – the tendency in this situation is for companies to set the prices of their products more on cost than on the value to consumers

The Organsiational Search Process Organisational search is designed to balance the cost of acquiring information with the benefits of improved final decisions The search process can be characterised in terms of the overall effort made by the buyer to obtain information from the external environment and in terms of the overall duration, or the length of time between the first initiation of information- gathering activities and the time when all of the information considered necessary to make a decision has been collected