Consumer Behavior Online E-M ARKETING /6E C HAPTER 7

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-2 C HAPTER 7 O BJECTIVES  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.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-3 T HE C USTOMER ’ S S TORY  A typical one-hour adventure in the life of a 25-year-old professional, 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.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-4 T HE C USTOMER ’ S S TORY, CONT.  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 to his Twitter stream.  Justin is the new consumer: a multitasker attending to different media simultaneously.  How can a marketer capture dollars from these behaviors?

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-5  76% of U.S. consumers use the Internet.  Less connected groups tend to be:  Older  Less educated  In ethnic minority groups  Childless  Rural  Lower income C ONSUMERS IN THE 21 ST C ENTURY Discuss general statistics about the Internet population.

C ONSUMER S HOPPING B EHAVIOR O NLINE  w.youtub e.com/wa tch?v=qR KCOLbxVs Y w.youtub e.com/wa tch?v=qR KCOLbxVs Y 7-6

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-7 C ONSUMERS IN THE 21 ST C ENTURY, CONT.  In 2009, 1.8 billion people had access to the Internet, 27% of the global population.  Top ten countries account for 38% of all users and adoption rates range from 7-77%.  Internet usage in developed nations has reached a critical mass, leading marketers to ask more questions about consumer behavior on the Internet.

I NTERNET R EACHES M ATURITY : ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-8

I NTERNET M ARKET E VOLUTION I N KSA (2001-Q1 2013) ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-9 Source: ICT Indicators Report Q

F IXED B ROADBAND M ARKET E VOLUTION IN KSA (2004-Q1 2013) 7-10 Source: ICT Indicators Report Q

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-11  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 T HE I NTERNET E XCHANGE P ROCESS Describe the Internet exchange process and the technological, social/cultural and legal context in which consumers participate in this process.

T HE O NLINE E XCHANGE P ROCESS ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-12

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-13 T ECHNOLOGICAL C ONTEXT  The focus is upon two important developments affecting online consumer behavior:  Home connection speeds  The changing landscape of digital – content receiving devices (e.g. smartphones)  Broadband users enjoy more multimedia games, music, and entertainment than do those accessing from a mobile device or 56K modem.

T ECHNOLOGICAL C ONTEXT  Customers access from handheld devices (e.g. smartphones…) tend to access news, weather, stock quotes, and other low graphic data services  The typical U.S. home has 26 different electronic devices for media and communication.  The key is to learn which devices an organization’s customers and prospects own and prefer to use for connecting.  E.g. Telematics ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-14

T ELEMATICS A communication System in an automobile that uses a global positioning system (GPS) for interactive communication Allows drivers to receive directions and internet content or send for emergency help It allows marketers to send information & entertainment to automobiles 7-15

2012 U.S. D AILY M EDIA U SE (M INUTES / DAY ) ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-16

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-17 S OCIAL AND C ULTURAL C ONTEXTS  The cornerstones for attracting customers online:  Reputation  Relevance  Engagement  the following are general social/cultural trends having a huge affect on exchanges Information overload Multitasking Home & work I want what I want when I want it Online oxygen Connectivity In the know Self-service Privacy & data security 7-17

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-18  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 illegal music file downloaders, consumer behavior changed.  In 2002, 37% of online consumers shared music files.  Only 23% shared files in L EGAL C ONTEXT

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-19  Individual Differences: Individual characteristics affect Internet use.  Demographics such as age, income, education, ethnicity, and gender.  Attitudes toward technology.  Online skill and experience.  Social media experts  Goal orientation Vs. experience orientation I NDIVIDUAL C HARACTERISTICS & R ESOURCES Outline the broad individual characteristics and consumer resources that consumers bring to the online exchange.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-20 C ONSUMER R ESOURCES  Consumers perceive value as Value = Benefits - Costs  These costs constitute a consumer’s resources for exchange:  Monetary cost  Time cost  Energy and psychic costs

M ONETARY COST  Flexible income is needed to exchange for goods and services, and for a computer, and ISP and Internet access.  Credit cards (but some people don’t want them or can’t get them)  Debit cards  Electronic checks (digital money)  Splash plastic or Paypal (50 million customers)  E.g. South Korea, Japan, Hong Kong and Spain with RFID chips ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-21

T IME COST  Poverty of time is a major concern for today’s consumers.  Consumers want to receive appropriate benefits for the time they spend online.  Users want ease of use and efficiency  The Internet helps people manage scarce time  Experts say users are 100% involved when online  The average user goes online 29 times a month and is online 49 minutes each time. ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-22

E NERGY AND P SYCHIC C OSTS  Sometimes consumers feel it is  Too much trouble to turn on the computer, log on to the Internet, and check , especially for dial-up users.  Web pages are too complicated  Orders are dropped in the “shopping cart”  Shipping prices are high  Checkout process is too long  Checkout requires too much personal information  Site requires registration before purchase  Site is unstable  Checkout process is confusing ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-23

U.S. C OMBINED H OME /W ORK INTERNET USAGE ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-24

I NTERNET E XCHANGE  The actual moment when exchange occurs.  Bookmarks and hyperlinks in s assist consumers in finding specific sites, information, or specials. ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-25 Highlight the four main categories of outcomes that consumers seek from online exchanges.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-26 E XCHANGE O UTCOMES  There are 5 basic things that people do online:  Connect  Create  Enjoy  Learn  Trade  Each is suitable for marketing opportunity.

E XCHANGE O UTCOMES  Connect  Create  Enjoy  Learn  Trade  The Internet allows consumers to interact with individuals and organizations using two-way communication.  ,  Chat rooms,  Internet phone calls  Virtual postcards ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-27

E XCHANGE O UTCOMES  Connect  Create  Enjoy  Learn  Trade  The Internet has created an ability to connect.  Creation of multimedia to connect with friends, co-workers and relatives  LinkedIn  Facebook  Myspace  Flickr ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-28

E XCHANGE O UTCOMES  Connect  Create  Enjoy  Learn  Trade  The Internet is a source of enjoyment for many consumers. Audio and visual entertainment Music Movies Celebrity news Sports  Experts: Internet main source of entertainment, overtaking the TV. ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-29

E XCHANGE O UTCOMES  Connect  Create  Enjoy  Learn  Trade  Consumers can access information to learn things  News,  Driving directions,  Travel information,  Jobs,  Weather,  Sports,  Radio broadcasts. ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-30

E XCHANGE O UTCOMES  Connect  Create  Enjoy  Learn  Trade  Transaction-oriented activities  65% to 87% of Internet users have purchased products on the web  Users seek information before they buy  Statistics for the average Internet consumer Shops online for 1 hour per day Makes 21 purchases a year Half say the Internet has made them better consumers Spend $1.6 billion per year. ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-31

P ORTABLE S MARTPHONE O WNERSHIP A ND P URCHASE I NTENTIONS 7-32

T ABLET G ROWTH IS P OISED FOR C ONTINUED G ROWTH 7-33

C APABILITY T O U SE M OBILE P HONES T O M AKE P AYMENTS ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-34

C ONNECTING O NLINE IN THE U.S. ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-35

C REATING & U PLOADING C ONTENT IN THE U.S. ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-36

E NTERTAINMENT O NLINE IN THE U.S. ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-37

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-38 T OP 10 S EARCH T ERMS FOR 2009

T OP 10 S EARCH T ERMS FOR GoogleYahoo!Bing RankTermRankTermRankTerm 1Rebecca Black1iPhone1Fauja Singh 2Google+2Casey Anthony2Katy Perry 3Ryan Dunn3 Kim Kardashian 3The cardinals 4Casey Anthony4Katy Perry4Harry Potter 5Battlefield 35Jennifer Lopez5Adele 6iPhone 56Lindsay Lohan6Rory Mcllroy 7Adele7American Idol7Japan Earthquake 8Tepco8 Jennifer Aniston 8Job crisis 9Steve Jobs9 Japan Earthquake 9Foreclosures 10iPad210Osama Bin Laden 10Weather disasters

L EARNING AND G ETTING I NFORMATION ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-40

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-41 T RADING O NLINE IN THE U.S.

7-42 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2012 Pearson Education, Inc. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall