1. Consumer Behavior and the Internet
Lecture 4
Dr. Andrews

2. Stages of Buying “Hierarchy of Effects”
Create awareness:
Create interest:
Develop desire:
Create conviction:
Induce action (behavior):
Reduce cognitive dissonance (behavior):
Problem Recognition
Information Search
Evaluation Alternatives
Purchase Decision
Post-Purchase
Evaluation
Dr. Andrews

3. Product Purchasing Consumer Decision Process
Perception Attitudes Motivation Learning
Cultural and Social Factors
Continue
Rejection
Family
Marketing Messages
Later
Adoption
Rejection
Reference Groups, etc.
Knowledge
Interest/Desire
Buy Decision
Adoption
Continued
Adoption
Option of buying online, in store
or through catalog.
Discontinue-
uance
Dr. Andrews

4. Product Purchasing Organization Decision Process
Marketing
Opportunities
Key issues:
Power bases for internal buyers
Nature of group decision making
Extended time and contacts to build relationships/trust
Make roles to content with:
Users
Influencers
Deciders
Gatekeepers
Buyers
Precipitation
Product
Specification
Supplier
Selection
Straight buy (repeat purchase)
Modified buy
New task
Commitment
Negotiation and agreement on
price, delivery, quality and other
criteria
Dr. Andrews

5. 15 fundamental desires Extent and intensity of needs
Maslow’s Hierarchy of Needs
Self-actualization
Curiosity, independence
Status/Recognition
Social prestige, power
Belonging
Honor, social contact, family, citizenship, fear of social rejection
Safety
Avoidance of pain, need for order
Physiological
Food, sex, physical activity
Dr. Andrews

6. External Influences on Consumer Buying Habits
Social Class
Culture
Reference Groups
Opinion Leaders
Dr. Andrews

7. The Internet Market Countries with over 40% penetration (p215)
US demographic segments
76%= ages; 25% = over 50
50% men & women (why only in US?)
Average income $50K+/household
Occupation: now all types; fastest growing homemakers, service workers, sales people
Teens & children: YES! (75%-65%); not impressed with brand names; utility and activities
Ethnic groups: African Americans, Hispanics and Chinese Americans fastest growing
Differently disabled: a niche market
Dr. Andrews

8. Characteristics of internet users
Positive attitude toward technology
Online skill & experience
Men more positive
Ability to read
More goal oriented than experience oriented
70% have convenience or price orientation plus trust
Life style dictates interests and needs for internet
Dr. Andrews

9. How do people use the Internet ?
Relationships: , online community, chat, instant messaging, sending cards
Entertainment: Browsing, gaming, music
Media consumption: news, weather, sports scores and radio broadcasts; cannibalization?
Information gathering: search engines
Buy & shop for products: 15% online purchases; >50% of all users; Will this % grow?
Dr. Andrews

10. When do people use the internet Behavioral Trends & Expectation issues
Information overload
Bunkering
Dissolving boundaries between home & work
Convenience (24X7 expected)
Multi-tasking and time poverty
Demanding of customer service – high expectations
All channels should produce the same information and access for shopping (want self-service plus pampering)
Personalization required with ease of use
Dr. Andrews

11. Why do people not use the internet? External issues
Cultural & social issues
Need to “experience” the product
No tradition of direct mail and catalog ordering
Payment problems – credit cards, electronic checks vs. cash
Don’t know how to use the internet
Technological issues
Slow & unreliable internet connections
Device preferences (e.g., wireless vs. PC)
Local call “metering” vs. flat rate
Unreliable postal service
Security and privacy
Legal & political issues
Government censorship
Dr. Andrews

12. Why do people abandon online purchases?
Technology failures – 88%
Page took too long to load (48%)
System crashed (26%)
Site would not accept my credit care (9%)
Site made an unauthorized charge to credit care (5%)
Web site design failures – 65%
Site was confusing (45%)
Had to contact customer service (20%)
Infrastructure business failures – 65%
Product not available (32%)
Product took too long to arrive (15%)
Returned the product (10%)
Ordered, but never came (4%)
Wrong product arrived and couldn’t return it (4%)
Strauss et al., 201
Dr. Andrews

13. Pre-purchase inspection of goods Security of payment
Peer-reviewed Research: Attributes that affect choice of online or store purchase
Pre-purchase inspection of goods
Security of payment
Prompt access to goods bought
Easy exchange and return
Post-purchase customer service
Internet experience & catalog experience
Let’s look at what the peer-reviewed literature is saying…about online purchasing experiences that affect Marketing on the Internet. .
Recent research by Lohse, Bellman and Johnson
Dr. Andrews

14. Internet Product Dilemmas
Low Touch/Search
High Touch/Experience
Taste Based
Low
High
Tangible Product evaluation difficulty
Intangible service evaluation difficulty
This is not a web phenomena! We bring it with us from the physical world
Name some products/services in each category?
Where do these fit? Museums, cars, toothpaste, movies, posters, Mothers Against Drunk Driving, antique jewelry, camcorders, palm pilots?
Marketers job is said to make the intangible into a tangible? How is this possible? On the web, what problems do we encounter? (e.g., turn everything into a search good)
Do all people consider the same products to fit into the same categories? The importance of customer research to know if what you are selling is considered a low touch or taste based product by your target market. It tells you a lot about the kind and extent of personalization needed to market online.
Amount of customer involvement needed to
make the “right” purchasing decision
Dr. Andrews

15. Issues for Online Purchasing Affecting Marketing Strategy
Trust
Mechanical difficulties
Social risk
Customer service & support
Interface design
Security and personal privacy
Search attributes and pricing
Dr. Andrews

16. Market Research Resources
Internal
Internal customer purchase histories and point of purchase data
Sales representative feedback
Secondary
Data published by others about demographic trends, competitors, technological forces, natural resources, social & cultural trends, economic trends, legal and political trends
Public data and private data (p )
Primary
Offline and online techniques
Dr. Andrews

17. Primary Market Research Tools
Motivational Research (online & Offline)
Observation
One-on-one interviews
Focus group interviews
Sensitivity panels
Questionnaire surveys
Research Areas
Product
Pricing
Distribution (logistics and channels)
Marketing communications
Discuss Motivation Research
These techniques in light of the Internet
Sampling issues
Product:
comparative testing against competitive products
test marketing under real market conditions
concept testing and development
idea general and screening of ideas
product elimination/simplification
brand positioning and re-positioning
product enhancement and improvement
Pricing (getting the price right):
what kind of price consumers associate with different product variations (e.g. packaging), establish market segments in relation to price, establish price elasticity of demand, identify extent of price/quality relationship, investigate the promotional aspects of price, discounts for bulk purchases, competitive response to price changes
Get people to “purchase”
and become loyal users
of the website
Get to the website
the first time
Engage people in the website so they
will return
Dr. Andrews

18. Marketing on the Internet
Internet Marketing Techniques
Get people to “purchase”
and become loyal users
of the website
Get to the website
the first time
Engage people in
the website so they will return
Dr. Andrews