Impact on Online Shopping Behavior of Consumers - Research Proposal Example

Number: Topic: Perceived quality and perceived risk: Impact on online shopping behavior of consumers Table of Contents Introduction 3 Problem Statement 5 Types of measurement scales 6 Research Design 7 Research Objective 7 Research Question 8 Development of Hypothesis 8 Collection of data 8 Analysis of the data 9 Evaluation of hypothesis 9 Sampling design 9 Questionnaire development 10 Data analysis strategy 10 Conclusion 10 References 11 Introduction Electronic commerce or online shopping has encountered tremendous growth due to increasing demand of the individuals worldwide. It has not only helped the professionals to save their precious time by shopping online, but also satisfied the students with a wide range of products or services (Katawetawaraks & Wand, 2011). Therefore, in the contemporary world, internet has become a vital mode for communication for the individuals as well as for online shopping. The rise in demand for the online shopping has helped the online retailers to gain an increased profit over the years. For example, the sales of the online retailers in the UK are expected to rise considerably in the future. This fact is detailed in the following figure: Figure 1: Online retail sales in the UK (Source: Mintel, 2014) The figure details that the online retails sales in the UK is expected to rise to £82,038 million in 2019 from £ 38,250 million during 2014 (Mintel, 2014). These figures highlights that the demand for online shopping will not only increase the sale of online retailer but it will also encourage new entrants to penetrate the global market. The increase in sales of the online retailers is due to the change in behavior of the consumers towards the use of internet. Apart from studying consumer behavior, it is significant to concentrate on perceived risk and perceived quality that are associated with the products (Katawetawaraks & Wand, 2011). These factors are important for predicting any purchase decision. Both perceived risk and perceived quality of the products or services are vital for any online shopping. Perceived risk is the perception of the consumers with regard to the uncertainties that are encountered while or after purchasing a product or service (Ross, 1975; Hoyer, MacInnis & Pieters, 2010). It has the capability to influence the decision making power of the consumer. It has the possibility that the product or services may not give the same result as expected when it was purchased. Hence, this gives rise to post purchase dissonance (Ross, 1975). Perceived quality is a vital factor that has the ability to affect the purchase decision of the consumers both positively and negatively. The consumers compare the quality of products of one company with that of its competitor in order to make an apporpriate decision regarding the purchase (Katawetawaraks & Wand, 2011; Sandhusen, 2000; Lim & Dubinsky, 2004). The quality of products is associated with reputation of company; if quality is not up to the mark then consumers perceive that company do not offer good quality products (Lim & Dubinsky, 2004). Therefore, perceived risk and perceived quality are vital factor in online shopping, which helps the consumers to make an appropriate purchase decision. The main purpose of the report is to highlight the impact of perceived risk and perceived quality on the online purchase decision of the consumers. Problem Statement From the above explanation it is easy to decipher the problem that will be studied in the research report. The problem indicates at highlighting the relevance of perceived risk and perceived quality in influencing online purchase decision making of the consumers. In the contemporary world, the increase in demand for internet has encouraged the online retailers to devise apporpriate strategies for attracting more customers. However, the sale of the online retailers is often affected by the risk and quality perception of the consumers towards a product or service. This is quite a problem for the online retailers to change the perception of the consumers if it affects them negatively (Lim & Dubinsky, 2004). The risk of losing money is the main issue for the consumers during any online purchase (Lim & Dubinsky, 2004). If the consumers have the preconceived notion that they will lose money if they shop online, then it becomes difficult for the online retailer to market their products and increase its sales revenue. Hence, it is important to study the relevance of perceived risk during any online purchase and how it can be mitigated by the online retailers so as to cater the needs and requirements of the consumers (Ross, 1975; Hoyer, MacInnis & Pieters, 2010). Likewise, perceived quality also plays a pivotal role during online decision making of the consumers. The consumers do not get to know about the quality of the products that are going to get ordered online; they just get an idea of the design and the price of the product. Hence, it is crucial for the online retailers to maintain good quality of the products, which encourages the consumers to choose their brand repeatedly (Jacoby & Kaplan, 1972). If a consumer does not receive a high quality product or service after paying a lump sum amount and there is post-purchase dissonance then he/she lose confidence on the brand and the perceived quality will obstruct him/her to make another purchase from the same online website (Jacoby & Kaplan, 1972). Thus, it is very crucial for the online retailers to study consumer behavior and understand the factors that will influence purchase decision owning to perceived risk and perceived quality. It will help the retailers to devise strategies accordingly, which will satisfy the customer’s need and requirements. Types of measurement scales There are four types of measurement scales such as ordinal, nominal, ratio and interval. Nominal scale is regarded as lowest measurement level from a statistical point of view. It implies placing the data into categories without following any structure or order. These scales are used in research where the activities are answered in YES/NO form. Hence, there are no order or structure and the distance between YES and NO is nil (Crowther & Lancaster, 2012). It is non-parametric in nature and highly sophisticated modeling techniques are available for the nominal scale of measurement. A simple ordinal scale is ranking; this is often used in research for ranking the attributes of a product or service out of 5 (for example) (Crowther & Lancaster, 2012). There is no distance between the two points on the subjective scale. The ordinal data are employed in non-parametric statistics, which includes mode, median, rank correlation and covariance analysis (Crowther & Lancaster, 2012). The main scale for measurement in a research is interval scale. It is a standard rating scale, which are employed during any survey. In this case, a particular activity is rated, for example from satisfied to dissatisfied (Crowther & Lancaster, 2012). It is known as interval scale as it is expected that there is equidistant points between teach points of the scale. Hence, it is evident that the difference can be interpreted as the distance along scale. The interval scale can be contrasted with the ordinal scale; in this case only the order is taken into account for deciphering the difference between the scales. Interval scales can be discussed with the help of metrics like logarithm. Here, the distance between the points is not equal; however, it can be defined on the basis of the metrics that are used. Ration scale is regarded as the top level of measurement and it is commonly used in social researches (Crowther & Lancaster, 2012). The factor defining the scale is the true zero point. In this particular research, two types can be used i.e. interval and ordinal. This scale of measurement is used for answering the questions that are formulated for the respondents (Crowther & Lancaster, 2012). The questionnaire targets the respondents to decipher the impact of perceived risk and perceived quality on the online purchase decision of the consumers. The ordinal scale of measurement is used for answering few questions in YES/NO. However, the rest of the questions are answered on the basis of Likert scale, which is actually a type of interval scale. 5 point Likert scale is chosen for designing the questionnaire (Crowther & Lancaster, 2012). Research Design Research Objective The main objective of the research is to decipher the impact of perceived risk and perceived quality on online purchase behavior of the consumers. In order to exemplify the details regarding the effect, number of factors are outlined and connected with the topic i.e. online purchase behavior of the consumers. Research Question The following research questions are formulated in order to achieve the research objective. 1) What are the different dimensions of perceived risk and perceived quality? 2) How do the factors influence the online purchase behavior of the consumers? 3) What is the relationship between perceived risk and perceived quality? Development of Hypothesis The hypothesis that is developed in this case indicates whether perceived risk and perceived quality has the ability to influence the online purchase decision of the consumers. However, it is assumed that there is significant impact of the two factors on the consumer behavior. Collection of data Both primary and secondary data is employed in this research for deciphering the impact of perceived risk and perceived quality on online purchase behavior of the consumers. The primary data are collected from sample size of 30 respondents. The questionnaires are distributed among the 50 students in a well known university in the UK. Students are chosen as the main respondent in the survey as they are observed to be the most loyal customer for the online purchase. They do not get enough time to go to shopping mall and shop for their daily requirements; rather the online platforms provides them the opportunity to chose from a wide range of products and also compare within the brands for low price and high quality. The primary data are collected in order to understand the perception of the students, which will contribute towards the development of the results. The secondary data is collected from the online source such as websites, journal articles and newspaper articles (Leedy & Ormrod, 2005). This provides wide range of information pertaining to the topic and proves to be the most valuable source. The academic books are also considered for defining the terms most crucially. These sources not only provided an in-depth knowledge regarding the perceived risk and perceived quality but also highlighted its importance in the marketing perspective. Analysis of the data The data obtained from the questionnaire are analyzed with the help of charts and graphs. Hence, it is easy to identify the impact of both the factors on the online purchase behavior of the consumers. Evaluation of hypothesis The hypothesis is evaluated based on the results of the research, which indicates towards the fact that the two factors have the ability to influence the online purchase behavior of the consumers. Sampling design Convenience sampling technique is used for collecting data for the survey. The respondents for the survey are chosen based on the convenience of the researcher. However, probability sampling technique is employed for developing the results of the survey (Lodico & Spaulding, 2010). The respondents are chosen from a large population, which comprise the students of the university. Questionnaire development The questionnaire is created based on research objectives and research questions. The questions are asked in such a manner that it helps in depicting the results that are expected from the survey. Five questions are answered as YES/No and the rest 5 questions are evaluated with the help of 5 point Likert scale, where 1 is the dissatisfied and 5 being satisfied. Data analysis strategy The data obtained from the questionnaire are analyzed with the help of graphs and charts that are prepared in the MS Excel. Graphs and charts are employed for showing the results of the survey as it is the best way for presenting data in a compact form. The charts help in identifying the percentage of respondents who have agreed to a certain fact. Conclusion The report has successfully explained the facts regarding impact of perceived risk and perceived quality on the online purchase decision. The primary and secondary data collected from the survey and articles have indicated towards the same conclusion that the two factors have the ability to influence the purchase decision of the online consumers. Hence, the online retailers should concentrate on improving the online experience so as to retain the loyal customers and attract new ones. References Crowther, D., & Lancaster, G. (2012). Research Method. London: Routledge. Hoyer, W., MacInnis, D., & Pieters, R. (2010). Consumer behaviour. Connecticut: Cengage Learning. Jacoby, J. & Kaplan, L. (1972). The components of perceived risk. Advances in Consumer Research, 1(1), 519-532. Katawetawaraks, C., & Wand, C. (2011). Online Shopper Behaviour: Influences of Online Shopping Decision. Asian Journal of Business Research, 1(2), 66-74. Leedy, D., & Ormrod, E. (2005). Practical research. New York: Merril Prentice Hall & Pearson. Lim, H., & Dubinsky, A.J. (2004). Consumers’ perceptions of e-shopping characteristics: An expectancy-value approach. The Journal of Services Marketing 18(6), 500-513. Lodico, M. G., & Spaulding, D. T. (2010). Methods in Educational Research: From Theory to Practice. San Francisco: Jossey-Bass. Mintel. (2014). E-Commerce - UK - July 2014. Retrieved from http://academic.mintel.com/display/679707/ Ross, I. (1975). Perceived Risk and Consumer Behavior: a Critical Review. Retrieved from http://www.acrwebsite.org/search/view-conference-proceedings.aspx?Id=5741 Sandhusen, R. (2000). Marketing. London: Baron’s Educational Series. Read More