Online Consumer Behavior - Essay Example

Running Heading: ONLINE CONSUMER BEHAVIOR Online Consumer Behavior Consumer Behavior is such a topic that has been discussed in various ways over the past few years. Researchers from different business disciplines have tried to study the subject and have made significant progress over the past decade or so. These studies have been done on a rather large scale, the theories that arise from these researches are focused on different fragments and there is no uniformity. This has led us to research the concept on consumer behavior in the field of online consumer behavior. An exhaustive study of earlier researches in the field needs to be done to see as to how a research can be done in the field, that is to say we will try to provide a research framework which will be on three main blocks; main reason for buying, adoption and carrying on with the decision, this will help analyze the behavior of the online consumer in a uniform and systematic manner. 351 articles in all are present and have been used in the field of consumer behavior over the past decade. The articles that deal with consumer purchase behavior on the internet are the ones that we will be focusing on most articles that are used were obtained from online database, through digital libraries and online databases In the recent years, B2C e-commerce has been at a rise and researchers are of the opinion that B2C will soon switch to virtual means and thus there will be no need for local stores. Having said this there are still areas in online consumer behavior that need to be studied. Specially in the section where the products are bought on the bases of their quality and where customers feel that the quality can only be understood better once the product is held and felt. This is the main reason why several online grocery stores are facing difficulty. Examining the literature in this field reveals that several components of consumer behavior theory have been applied when studying online consumer behavior. Although, application of the concepts is not as simple as it sounds. A large amount of difference can be seen between both type of consumers (online and offline). Marketing is considered to be the most important factor when it comes to selling product mainly on the bases of their perceived quality, which is something that is highly difficult to determine, and even if that is determined it is hard to convince the customer into going for the purchase decision without have felt the product, by just seeing the product on the website. Trusting the website is another issue that needs to be addressed, developing trust is extremely important to bring about any sort of purchase decision and also to make the purchase be a regular process and not a one time exercise. The literature that is being studied for the past few decades will be able to provide a rich foundation on which we can easily construct a research framework for the study of online consumer behavior and the various factors that affect the online consumer behavior. Douglas et al. suggest that we can easily construct a strong conceptual framework from different researches that have been conducted over the past and how the different factors present in the area have been used to influence the purchase decision. The importance of an emerging research area is reflected in the increasing number of publications per year. Over the past few years several different researches have emerged in the field of online consumer behavior, all these researches will help in the gathering of secondary data. Furthermore, most of these researches are done on a broader scale and thus are not able to get the desired results. Introduction Each year several publications come up with different researches in the field of online consumer behavior. Several researches have been done which usually appear in journals or are discussed in conferences in form of papers, most of these researches are focused in the field of marketing, management, psychology and information systems. Reviewing these articles reveals that most researches done in the field are drawn from theories that arise from researches in the classical consumer behavior, such as Skinner’s research on behavioral learning, Fishbein’s attitude models, Folkes’ personality research etc. Examining the literature in this field reveals that several components of consumer behavior theory have been applied when studying online consumer behavior. Although, application of the concepts is not as simple as it sounds. A large amount of difference can be seen between both type of consumers (online and offline). E.g, Vijayasarathy’s integration of the web specific study in his research on online shopping aid into the theory of reasoned action in an attempt to better understand and explain the shopping behavior of consumers going for online shopping. The theory of planned behavior has been built on in the research by Building in the model of the theory of planned behavior Zahedi in 2001 examined the effect that the design of the website has on shopping on the internet. An online consumer research that was studied revealed that the scope of the studies that are published is extremely broad and thus the study is fragmented with the results which turn out to be rather contradictory (Zahedi, 2001). The current research will apply deductive research techniques using secondary sources to converge on the study of online consumer behaviour. Consumers not being tech savvy can be a major limitation in this sort of study. Also lack of cooperation from the consumers when it comes to filling up survey questionnaires can also pose as a possible limitation in this study. Thus the objective of this study is to be able to come up with a systematic review of online consumer behavior. This will then be used to identify the important constructs which are directly linked to the context of online purchases. This will help in proposing a frame work which will be rather integrated which would then help us better understand the underlying driving factors of the behavior of consumers when shopping online. This research will also help in providing correct direction for future research in the area. The research will help answer the following questions better: 1) What is online consumer behavior 2) How has consumer behavior shifted from traditional to technology oriented sources? 3) How is loyalty in the online consumers maintained? 4) What are the perceived relative advantage consumers see in online shopping? 5) What factors are necessary for successful marketing and influencing purchase decision? These questions have already been addressed in several researches that have been carried on in the same field but still there is room where more research can be done to better understand the consumer buying decision in the field. The following section will review the literature that has already been studied for these researches. Literature review: Over the decade the trend of online purchasing is on the rise. The use of internet to support customer interaction by the retailer when it comes to delivery of goods, while simultaneously displacing direct communication to a seller making use of technology without face to face interaction. The importance of this can be seen from the fact that with the rise of technology, face to face communication is at a decline, as stated in Jane Coughlan’s research “Evaluating the effectiveness of consumer communication experience with online retailers” (Coughlan, 1999). The communication theory is applied in this in such a manner that the response of users to the interface is done socially. Loyalty is something that is missing in online consumer shopping as the experience lacks warmth and the feeling of shopping. In an attempt to maintain e-loyalty, Dianne Cyr in her research “The role of social presence in establishing loyalty in e-service environment is of the opinion that e-Services websites can only maintain loyalty only when the perceived usefulness is high, also when there is perceived trust and enjoyment in the process. Also, this behavior differs from gender to gender. Where females are positively influenced by hedonic elements on the website, men are not (Cyr, 2007). Maintaining this both genders enjoy it when there is greater social presence on the website as it leads to greater enjoyment. The consumer buying is also effected by the type of product they are going to purchase. In the research “understanding consumer online grocery behavior” Torben Hansen states that only those consumers go for online grocery shopping who have tried the process earlier and have developed a liking for process and also have interest and trust in it (Hansen, 2008). Making the consumer try something new is something that is extremely hard, once the process starts it is easy to influence the purchase decision. When talking of inexperienced customers the afore mentioned confirmation lacks and thus online buying decision is hard to reach. Also, when all the information that is needed is present online then only will most people decide on purchasing products online. This is a goal that is really hard to achieve specially in an online environment, mainly because the requirement of two different customers may be different. Determination of product quality specially in case of edibles is hard to achieve. The website content is also something that influences the purchase decision. People usually do not buy what they are not able to understand, specially when it comes to online purchasing where they are not able to physically feel or see the product. In the research “Is this site confusing or interesting?” Reetika Gupta is of the opinion that the simpler the interface that is used on the website the greater are the chances that a user will visit the site and the better will be the chances of the user making a purchase decision (Gupta, 2008). While this not the case when it comes to website which have complex interfaces or websites that require the users to go through a long process before being able to buy the product. The website needs to be creatively designed with the requirements of the customers, mainly having all the basic information that any customers would want in front of him, and not making him research a lot. Marketing of the products is also an important factor which is usually neglected when selling products online. Marketing techniques if used properly can do wonders for online sales. In the journal “Determinants of internet advertising effectiveness: an empirical study”, the author is of the opinion that advertising online does not really count, specially in today’s world where there is so much clutter and the only way to get noticed is to break the clutter, which can be done through various methods; having different shape banners, the size of the banner etc (Journal, 2003). Getting noticed is the first step towards achieving success in making a successful offer to buy products online. The advertising of products has to be done in a creative and subtle manner to make a place in the mind of the customer as that is the only way a purchase decision can take place. Once the consumer notices the advertisement, then only will the consumer think of having a look at the product and then go on to evaluate it and going in to purchase the product. Using online shopping a shopper can access the market from anywhere in the world, though there do come some constraints that do prevent this, which could be internet frauds. Patrick D. Lynch in his study “Profiles of Internet Buyers in 20 Countries: Evidence for Region-Specific Strategies” states that companies that have online presence have greater sales and have reduced costs mainly because they are venturing into areas where they really do not have presence but they are in actuality virtually present in the market. This helps in giving them a strong hold in areas where they are only present virtually (Lynch, 2008). Research Methodology: The process of conducting a research is quite crucial and the process of selection of a particular approach is equally important. This process must be initiated in the planning and evaluation stage of the research. Different schools of thoughts are used by researchers to achieve target research objectives. Throughout the years there have been many suggestions pertaining to different types of methods of research applied to varying fields which have applied by research professionals for the purpose of reaching their objectives and targets and provide support in the process of making informed and high quality decisions. The research design actually determines the methodologies to conduct a proper research but still certain constraints are involved in researches which must be understood when making decision regarding a research approach (at, 2002). Population: A sample size of 100 individuals was chosen for the research. These individuals will be chosen at random and they will be people who already purchase products online. These individuals being chosen randomly will have varying purchases that they make on the internet over a certain period. The participants will be compensated through different discount coupons to different websites, they will also be given a chance to win a prize through a lucky draw. Research Approaches There are two main methods of research that are used in the research process. These two methods are qualitative approach and quantitative approach. In this research project qualitative approach is used because qualitative approach deals with in-depth study and analysis of the subject in review. The purpose of not using a quantitative approach is because the subject under review is of descriptive nature and quantifying the subject is not possible. It usually involves self-participation, interviews, observations and gathering of data and finally carrying out analysis. Qualitative research can be implemented via deductive and inductive approach (McBride & Schostak 2004). Deductive and Inductive approach The entire deductive approach is basically based on reviewing a particular hypothesis. The approval and rejection technique is used in this research and in the initial stage a specific objective is stated and the focused statement that is to be researched is underlined and then research is carried out on that particular hypothesis. The result of these methods is basically an approval or a rejection. The specific research topic is based on the theory and it is then rigorously tested for its implications. This is a comparatively common approach especially when research covering natural sciences is undertaken which involves existing laws presenting the basis of explanations, allowing the anticipation of phenomena, predicting their occurrence and therefore permitting those to be controlled (Collis & Hussey 2003). Similarly, on the other hand another methodology is used in the inductive approach. This approach evolves from particular situations to making or inferring broad general ideas or theories. The inductive approach follows a logical set of ordering and as opposed to deductive approach this approach involves initial observation of the empirical world then moving towards the construction of explanations and theories about what has been observed earlier (Trochim 2006). Research Strategy The research strategy that is used in this research would be deductive approach. The core purpose of using this strategy is to basically test the hypothesis that whether online consumer purchasing it at a rise today and how is it influenced? The research would be based on all the factors that are related to online consumer behaviour and how individuals implement online purchasing in their lives and how they perceive it. Similarly, the benefits of online consumer behaviours and the limitations of this purchase behaviour are also discussed in this research project. Finally, the hypothesis is either accepted or rejected and we will find out whether the online consumer purchases are at a rise and if they are what are the factors that influence the behavior. Method of Data Collection Usually there are two methods of data collection both of these methods are discussed below: Primary Data Primary data consists of firsthand knowledge and Primary data is the data collected for the specific purpose of the current research and is data that did not exist in the past, prior to the current research (Tull & Hawkins 1993). However, in this research project primary data is not used. Secondary Data The secondary data is collected through different books, articles, magazines, peer reviewed journals and etc. The data that is collected through secondary sources are has already been published and it actually exists prior to this research. This data was collected and presented for a different objective from the objectives and aims of the current research. This means that the data will differ from what the researcher actually requires for his or her research. Availability of data can be considered as a major issue in collection of secondary data. However, secondary data can also be accessed quickly and saves the researcher a large amount of time. 351 articles in all are present and have been used in the field of consumer behavior over the past decade. The articles that deal with consumer purchase behavior on the internet are the ones that we will be focusing on most articles that are used were obtained from online database, through digital libraries and online databases There are many sources of secondary data such as internal sources within a company that include reports by the sales force, internal customer databases, accounting and financial histories, other internal reports and in house consultants hired by the firm. External sources of secondary data are larger in number and include libraries, the internet, newspapers, trade journals, and online journals, reports by government agencies, such as the labour statistics or census reports, and also trade reports. Furthermore, the secondary sources also include international sources which are crucial for large and multinational corporations and also companies involved in import and export of goods and services (Tull & Hawkins 1993). Limitations: The current research reports will carry an analysis of online consumer behaviours and how is the online consumer behaviour influenced. The methodology prescribed and implemented for this research has its limitations due to its subjectivity to certain issues which are necessary to be underlined in the following in order to define the scope of the current thesis and set out the basis for the results that this report will conclude upon. One of the biggest limitations of this report is the generalized nature of the topic. That is why only secondary sources are used in the research and no primary source is used. The current research applies deductive research techniques using secondary sources to converge on the study of online consumer behaviour. Another limitation of this research is that the entire research is of relative nature and it varies from consumer to consumer. Consumers not being tech savvy can be a major limitation in this sort of study. Also lack of cooperation from the consumers when it comes to filling up survey questionnaires can also pose as a possible limitation in this study. Summary: The research methodology prescribed for the current research will allow gaining sufficient knowledge and understanding related to the online buying behaviour and how the purchase decision is affected when it comes to purchasing products online. The secondary data that is collected will help in formulating a framework for the research and will also help in finding out ways in which the purchase decision is and can be influenced when consumers go for online shopping. This data will provide insight as to how the consumers perceive online shopping. External sources of secondary data are larger in number and include libraries, the internet, newspapers, trade journals, and online journals, reports by government agencies, such as the labour statistics or census reports, and also trade reports. Furthermore, the secondary sources also include international sources which are crucial for large and multinational corporations and also companies involved in import and export of goods and services. Over the decade the trend of online purchasing has been at an increase. Direct selling to customers has declined mainly with the introduction of the internet and online shopping the users have shifted to online shopping because of its convenience, the goods get delivered to the doorstep and there is very little that a consumer has to do. The consumer can sit at the convenience of his home and buy almost anything with a click of a button. Online purchases though may be good for the consumers but they have negative effects specially as there is very little relationship building between the retailer and the consumers, this leads to a decline in loyalty. Where the customers were earlier loyal to where they buy the products from, now it is hard to determine as to where the customer will go to buy the product. Its now not just a mere question of convenience, it also has to do with relationship building. The loyalty in this sense is only built on the bases of trust in the paying procedure as most payments that are made over the internet are through credit cards, and with the rise of credit card frauds, the customers usually opt for trusted means. This is the way loyalty is maintained. But, this also makes the trying of something new difficult. As most customers are reluctant on visiting new online stores due to the fact that they do not trust it. The main influencer in this type of process can be friends and family. To get online customers the best way is to be able to spread the news about the store through word of mouth and by using an influencer. The design on the website is also a big factor that influences online consumer behavior. The simpler and more interactive the design in the more a customer would want to come back to it. Specially when it comes purchasing products which require product details and also with products that are required for consumption. These products (fruit, vegetable etc) usually have not shown an increased trend in being purchased as customers are still not able to trust the online stores for providing them the right type of eatable. The consumer feel that these products need to be brought after proper inspection. Therefore the consumers are reluctant to buy them online. The consumers are usually not satisfied by seeing them online, they have to see them for real, hold them and then purchase them. Being able to build trust in this respect will be hard and would require further research. As aesthetic look to the website also helps in customers coming back to the same website and also helps in increasing the sales. Specially when talking about females, they usually are more interested in the aesthetics that are used on the website. This is the first that would get them interested in any online store. To increase female buyer coming on to the website the best way is to provide them with a good and colourful interface, then only will they proceed on the website. Online purchase is something that has been on the rise for the past decade and it will continue to grow mainly due to the convenience it provides the people with. The only way to maintain customer loyalty on the online store is by providing the customers with the best of service and product and maintaining a very interactive site, which is easy to use. References at, E. S. (2002). Research Guide. Retrieved March 28, 2009, from Research Guide Coughlan, J. (1999). Evaluating the effectiveness of consumer communication experience with online retailers. Retrieved March 27, 2009, from Evaluating the effectiveness of consumer communication experience with online retailers. Cyr, D. (2007). The role of social presence in establishing loyalty in e-service environment. Retrieved March 27, 2009, from The role of social presence in establishing loyalty in e-service environment: Gupta, R. (2008). Is this site confusing or interesting. Retrieved March 27, 2009, from Hansen, T. (2008). Understanding consumers online grocery behavior. Retrieved March 27, 2009, from Journal, I. (2003). Determinants of internet advertising effectiveness: an empirical study. Retrieved March 28 2009, from Lynch, P. D. (2008). Profiles of Internet Buyers in 20 Countries: Evidence for Region-Specific Strategies. Retrieved March 28, 2009, from Zahedi. (2001). Consumer Behavior and Purchase decision . Retrieved March 27, 2009 Read More