1. The 2000 National Technology Readiness Survey: Implications for E- Commerce and Internet-Based Services Ninth Annual Frontiers in Services Conference September 23, 2000 A. Parasuraman, University of Miami & Charles Colby, Rockbridge Associates, Inc.

2. Presentation Outline v Overview of TR and the NTRS v Comparison of the 1999 and 2000 NTRS – Properties of the TR Index – TR-based typology of customers v E-Commerce-related findings from the 2000 NTRS – Selected e-commerce behaviors – Variations across TR-based segments v Research and Managerial Implications

3. What is Technology Readiness [TR]? TR refers to peoples propensity to embrace and use new technologies for accomplishing goals in home life and at work

4. NTRS Background & Purpose v Developed jointly with Rockbridge Associates, Inc. v Intended as an aid for effectively implementing technology among customers and employees v Provides an in-depth view of customer beliefs about technology v Profiles customers by their level of Technology Readiness

5. Methodology for 1999 and 2000 NTRS v v Each survey included a sample of 1000 U.S. adults v v Respondents chosen through random digit dialing v v Data collected via computer-assisted telephone interviewing v v Survey included questions about technology beliefs, demographics, psychographics, and technology-related behaviors and preferences

6. Drivers of Technology Readiness DiscomfortInsecurity Inhibitors Contributors Innovativeness Optimism Technology Readiness

7. Definitions of the TRI Dimensions v v Optimism: Positive view of technology; belief that it offers increased control, flexibility and efficiency v v Innovativeness: Tendency to be a technology pioneer and thought leader v v Discomfort: Perceived lack of control over technology and a feeling of being overwhelmed by it v v Insecurity: Distrust of technology and skepticism about its working properly

8. OPT. TRI INS.DIS.INN. 19992000 Mean TR Scores TR Scores by Dimension and Overall TRI

9. Low TR (Lower Third) 100 92107 Technology Readiness Index Distribution [Mean = 100] 1999 2000 100 91107 Medium TR (Middle Third) High TR (Upper Third)

10. v v Optimism [10 items]……..81.81 v v Innovativeness [7 items]..80.81 v v Discomfort [10 items]…...75.74 v v Insecurity [9 items]……....74.74 The TRIs Reliability [Coefficient Alphas] 19992000

11. Shared Variance among TR Dimensions % 19992000 Opt-Inn Opt-Dis Opt-InsInn-DisInn-InsDis-Ins

12. Characteristics of Technology Segments OptimismInnovative-Dis- Insecur-nesscomfort ity Explorers HighHighLowLow Pioneers HighHighHighHigh Skeptics LowLowLowLow Paranoids HighLowHighHigh Laggards LowLowHighHigh

13. 19992000 Typology of Technology Customers: Mean TR Scores for Segments (Population Mean = 100)

14. % 19992000 Typology of Technology Customers: Percent of Population in Each Segment

15. 19992000 Typology of Technology Customers: Mean Age in Each Segment Overall Mean: 43.5

16. % 19992000 Typology of Technology Customers: Percent of Males in Each Segment 50%

17. 19992000 Typology of Technology Customers: Mean Household Income (in 000s of US$) Overall Mean: 48 US$ 000s

18. Research Implications Need to examine: v Temporal stability of TR scores over the long term -- e.g., Are some dimensions more stable than others? v Possible variations in TR across countries and cultures, reasons for such variations, and their implications for multinational companies. Individual-specific drivers (e.g., psychographics) and consequences (e.g., satisfaction) of TR in past year, only 16% checked their bank Individual-specific drivers (e.g., psychographics) and consequences (e.g., satisfaction) of TR in past year, only 16% checked their bank

19. E-commerce in 2000 Findings from the 2000 NTRS

20. Concern over the Safety of E- Commerce Persists Do not consider it safe giving out Do not consider it safe giving out a credit card number over a computer Do not feel confident doing business with a place that can only be reached online Do not consider it safe to do any kind of financial business online 1999 2000 77% 73% 67% 70% 58% 59%

21. Despite Concerns, E-Commerce Continues to Grow, Especially for Items Costing $10 or More %

22. Explorers are Leading the Pack (almost half make big ticket purchases), Followed by Pioneers and Skeptics %

23. What are People Buying Online? Males v Books/magazines (49%) v Computer Equipment (44%) v Music (42%) Females v Books/Magazines (48%) v Clothing (37%) v Music (29%) Businesses v Computer Software, Computer Hardware, Books, Office Supplies, Airline Travel

24. Motivations for Buying Online v 70% of purchases are for personal use, 12% business, 17% gifts v Reasons for buying online include: convenience, availability (items not found in a nearby store), better prices v Major reason for NOT buying online is a concern about safety/security v Purchases tend to be planned

25. The Most Important Features of E- Commerce Sites are those that Protect and Reassure the Consumer

26. The More Popular E-Commerce Sites Stand Out by Offering Availability, Selection and Ease of Use; Needs Differ by TR-Level * Note: Small sample size (n=22) for Low TR group %

27. Other Observations about E- Commerce v Most Preferred Method of Customer Service is Telephone Support v Credit Cards are the Preferred and Most Widely Used Payment Method for Merchandise v Services seem to lag behind products; e.g., account online & only 5% have signed up for telecom service online

28. Who is Buying Online? v 50% are female v Fastest growth among females and medium- TR consumers v Slightly younger (55% are under 40, versus 45% of U.S.) v Much more educated (41% have 4 yr. college degree versus 24% of U.S.) v Higher income (median income $52K versus $40K for all U.S.) v Similar marital, family and ethnic background

29. Implications Implications

30. Managerial Implications v Insecurity and Discomfort are major inhibitors of e-commerce; consumer beliefs so far remain unchanged v E-commerce providers can address these concerns through: secure sites, privacy policies, warranties, clear information, telephone support v Less techno-ready consumers seek out sites for their availability of unique goods; they are less price conscious than more techno- ready consumers v It is critical for providers to test their sites for ease of navigation and use

31. v Watch out for Techno-Ready Marketing: How and Why Your Customers Acquire Technology, A. Parasuraman and Charles Colby, Free Press, NY, May 2001 v Visit www.rockresearch.com and select Technology Readiness For More Information...