Chapter 7 Objectives  After reading Chapter 7, you will be able to:  Discuss general statistics about the internet population.  Describe the internet exchange process and the technological, social/cultural, and legal context in which consumers participate in this process.  Outline the broad individual characteristics and consumer resources that consumers bring to the online exchange.  Highlight the four main categories of outcomes that consumers seek from online exchanges. 7-2 ©2009 Pearson Education, Inc. Publishing as Prentice Hall

The Customer’s Story ©2009 Pearson Education, Inc. Publishing as Prentice Hall 7-2  A typical one-hour adventure in the life of a 25-year- old professional male, Justin:  Tunes his iPod to the latest Diggnation podcast while his TV is tuned to a soccer game and his cell phone and PC are within reach.  Picks up his computer to find a blog mentioned during the podcast, sees a video on the blog, and texts a friend about the video.

The Customer’s Story, cont. ©2009 Pearson Education, Inc. Publishing as Prentice Hall 7-3  Justin searches for the video title on Google and finds a job posting on Vimeo, an online video- posting site.  He posts a link to the video and Vimeo site on his Twitter stream.  Justin is the new consumer: a multitasker interested in the social media.  How can a marketer capture dollars from these behaviors?

©2009 Pearson Education, Inc. Publishing as Prentice Hall  71% of U.S. consumers use the internet; the other 29% can be characterized as:  Net evaders  Net dropouts  Truly unconnected  Intermittent users Consumers in the 21 st Century 7-4

Consumers in the 21 st Century, cont. ©2009 Pearson Education, Inc. Publishing as Prentice Hall 7-5  In 2007, 1.4 billion people had access to the internet, 19% of the global population.  Ten countries account for 53% of all global users and adoption rates range from 69-88%.  Internet usage in developed nations has reached a critical mass, leading marketers to ask more questions about consumer behavior on the internet.

©2009 Pearson Education, Inc. Publishing as Prentice Hall  Exchange is a basic marketing concept.  It refers to the act of obtaining a desired object by offering something in return.  Exchange occurs within the following contexts:  Technological  Social/cultural  Legal The Internet Exchange Process 7-6

©2009 Pearson Education, Inc. Publishing as Prentice Hall Technological Context  50% of online Americans connect to the internet at home with a broadband connection.  Broadband users enjoy more multimedia games, music, and entertainment than do those accessing from a mobile device or 56K (dial-up) modem.  The typical U.S. home has 26 different electronic devices for media and communication.  Consumers spend an average of 1.5 hours online daily. 7-7

©2009 Pearson Education, Inc. Publishing as Prentice Hall Social and Cultural Contexts  One of the most important social trends is that consumers trust each other more than they trust advertising or companies online.  Social/cultural trends have a huge effect on online exchanges.  Sophisticated consumers.  Information overload overwhelms consumers.  Multitasking speeds up normal processes and lowers attention to each task. 7-8

©2009 Pearson Education, Inc. Publishing as Prentice Hall Social and Cultural Contexts, cont.  Home and work boundaries are dissolving.  Consumers seek convenience and have high expectations regarding customer service.  Consumers cannot do without internet access: “online oxygen.”  Self-service is required.  Privacy and data security are paramount.  Online crime worries consumers. 7-9

©2009 Pearson Education, Inc. Publishing as Prentice Hall  Despite piracy laws, illegally used software abounds.  In spite of the Can-Spam law, the number of unsolicited s has increased.  However, when the recording industry sued thousands of illegal music file downloaders, consumer behavior changed.  In 2002, 37% of online consumers shared music files.  Only 23% shared files in Legal Context 7-10

©2009 Pearson Education, Inc. Publishing as Prentice Hall  Individual characteristics affect internet use.  Age, income, education, ethnicity, and gender.  Attitudes toward technology.  Online skill and experience.  Goal orientation.  Convenience or price orientation. Individual Characteristics & Resources 7-11

Consumer Resources ©2009 Pearson Education, Inc. Publishing as Prentice Hall 7-12  Consumers perceive value as benefits minus costs.  These costs constitute a consumer’s resources for exchange:  Money  Time  Energy  Psychic costs

©2009 Pearson Education, Inc. Publishing as Prentice Hall  The internet exchange doesn’t use cash or paper checks for online transactions.  There are many forms of digital money.  Credit and debit cards.  Electronic checks through a third-party such as PayPal.  Smart cards or Splash Plastic.  Other innovative forms are appearing in other countries. In South Korea some mobile phones have chips that allow vending machine purchases by phone. Monetary Cost 7-13

©2009 Pearson Education, Inc. Publishing as Prentice Hall  Online attention is a desirable and scarce commodity.  Worldwide, the average user goes online 34 times/month, 69 minutes each time, visiting over 1,500 Web sites.  Some researchers believe that consumers pay more focused attention online than with other media.  Hoffman and Novak applied the concept of flow to online behavior. Time Cost 7-14

©2009 Pearson Education, Inc. Publishing as Prentice Hall Energy and Psychic Costs  It takes effort to log on and check , especially for dial-up users.  Short text messaging (SMS) via cell phones and PDAs is becoming more popular.  Consumers apply psychic resources to understand information or when facing technical problems.  Shopping cart abandonment and failed online purchases have numerous causes.  Technical reasons  Marketing problems 7-15

©2009 Pearson Education, Inc. Publishing as Prentice Hall Exchange Outcomes  There are 5 basic things that people do online:  Connect  Create  Enjoy  Learn  Trade  Each is ripe with marketing opportunity. 7-16