CONSUMER BEHAVIOUR TOWARDS ONLINE MARKETING

SUBMITTED BY: URVASHI MANIAR 25 AKSHAY RAUNAK 36 DEVANSH SHAH 40 JASRAJ SINGH 48 1

INDEX

S.NO

TOPIC

PAGE NO

INTRODUCTION

BACKGROUND OF INTERNET MARKETING

THE INTERNET AND MARKETING MIX

TRENDS IN INTERNET MARKETING

19

CONSUMER BEHAVIOUR

26

QUESTIONNAIRE

47

FINDINGS AND ANALYSIS

51

INTRODUCTION

With the advent of information technologies and emergence of online stores, the online marketing has not been the same as it was in the past. Now in order to strive in this cut throat competition it is of vital importance for the organizations to understand the factors that matter for consumers when they shop online. As the competition in e-commerce is intensified, it becomes more important for online retailers to understand the antecedents of consumer acceptance of online shopping. Such knowledge is essential to customer relationship management, which has been recognized as an effective business strategy to achieve success in the electronic market.

Internet marketing is the fastest growing and most exciting branch of marketing today as the world becomes ever more connected, keeping up with developments and trends is vital for marketers trying to reach new audiences who are more discerning, fragmented and cynical than ever technology and software are changing at such a high rate that it seems almost impossible to keep up with trends. Products and services are evolving and adapting to the online sphere. The web is constantly shifting, growing and changing everything is fleeting. How do savvy internet marketers cope with all this? they harness the power of the web and its myriad tools for their own needs. they find unique and personal ways to interact with customers online. They plan, organise, implement and measure complex internet-wide strategies seamlessly. Most importantly, they never stop learning, growing and adapting themselves.

The new possibilities offered by digital technologies facilitate advanced forms of exchange and interaction between consumers and businesses. Thanks to the Internet, consumers are presented with new opportunities to enhance their power in relationships with businesses. Besides having access to an unprecedented amount of information, online consumers can compare a vast range of products, access independent and professional sources of expertise,

and interact in an efficient and productive manner with firms and institutions. As a result, online consumers may play an active role in both marketing communication programmes and the design of products and their related sets of benefits and values. These consumers are more willing and prepared to disseminate their opinions about brands and products -whether supportive or unfavourable, and even to sanction firms among far-reaching audiences. Online consumers benefit from a collective intelligence, demand greater control over their shopping experience and the design of value propositions in terms of their own individual interests. The potential of digital technologies to transform the marketing environment has resulted in a great deal of research on the online consumer and the business strategies and orientations which companies adopt in order to build relationships with consumers through the Internet. Initial research has mostly focused on developing consumer profiles and identifying online segments in this digital marketing environment. However, the expansion of ecommerce in general and the widespread adoption of the Internet as a marketing channel led to the appearance of a broad and varied array of research topics on consumer behaviour and emarketing. This includes the e-shopping decision, online consumer satisfaction and loyalty, and trust in purchasing decisions on the Internet. Contrary to the early image that the Web was a place for bargain hunting, the Web has become more frequently viewed as a place to provide better service and enhance consumer relationships (Rust & Kannan, 2002). It has been realized that companies must strive for a complete view of their customers, as the relationship shifts from commerce to collaboration. Due to its potential for interactive communication, the Internet has evolved into a promising tool for relationship marketing (Thorbjornsen et al., 2002).

With such a large potential, e-tailing has attracted tremendous attention and investment in the past few years as well as a great deal of interest in developing new strategies and focused research of this new phenomena. It must be clarified, however, that early research on e-tailing focused on the effects of the Web on product pricing. When the Web became a marketing medium, many assumed that it was a cheap medium to reach consumers and conduct e-

marketing/e-tailing (Nunes et al., 2000; Sinha, 2000), Among many others, Clay et al. (2001) examined pricing in the online book industry; Brynjolfsson and Smith (2000) examined online book and CD retailing; Morton et al. (2000) examined Internet car retailing; and Brown and Goolsbee (2002) examined the life insurance industry.

On the other hand, the large amount of information about pricing, competitors, and features available on the Internet also helps to create a cost transparent environment. This severely impairs a seller's ability to obtain high margins, because it turns products and services into commodities, and may damage company reputations by creating perceptions of price unfairness (Sinha, 2000). Early work suggested that the Internet could present a threat to branding and erode loyalty (Kalakota & Whinston, 1996; Mitchell, 1999). As a result of this costbenefit focus, many e-tailers offered low prices and focused on customer acquisition. There are many reasons for such a rapid developing of internet shopping, which mainly due to the benefits that internet provides. First of all, the internet offers different kind of convenience to consumers. Obviously, consumers do not need go out looking for product information as the internet can help them to search from online sites, and it also helps evaluate between each sites to get the cheapest price for purchase. Furthermore, the internet can enhance consumer use product more efficiently and effectively than other channels to satisfy their needs. Through the different search engines, consumers save time to access to the consumption related information, and which information with mixture of images, sound, and very detailed text description to help consumer learning and choosing the most suitable product (Moon, 2004).

BACKGROUND OF INTERNET MARKETING

Considering the current volume of internet marketing business, its hard to believe how young the internet marketplace is. While the timeline of internet marketing has been short, the cumulative events leading up to where we are now have impacted the entire globe faster than any marketing revolution in history. In 1994, spending for internet marketing totaled nearly nothing, but increased to over $300 million in 1995. Now, little more than a decade later, marketing spending and internet marketing business has exploded to nearly $200 billion (according to Forrester Research). Today, its hard to believe in having an organization which doesnt have some kind of online presence. When the internet was first introduced in the early 90s, it wasnt considered to be an advertising medium at all. Instead, the internet was treated as a tool for exchanging emails and digital information, but wasnt yet considered valuable for reaching customers. However, it wasnt long before marketing pioneers began to see the potential for internet marketing business as millions of web surfers logging on each day to find valuable and relevant information. Within just a few years, informative and educational marketing, as well as graphically enticing banner ads began to be show up. It wasnt long before result s began to flood in which proved the value of the internet marketplace to even the most skeptical advertisers. Most importantly, companies which had been spending huge chunks of their marketing budget on offline list building, begin to realize that they could accomplish the same thing via emailand for much less. It wasnt long before everyone from industry giants such as Microsoft Corp. to small businesses began to build company sites and spend marketing dollars to attract qualified traffic. Next, search engine companies like Yahoo! began to create significant profits from advertising alone. Then came the great internet marketing business bust around the year of 2000, which marked the beginning of the end for interruptive marketing such as flashing banner ads. What was

happening? As interactive features were added to web pages, consumers were given the option of turning off marketing messages at willand they did. Then entered the age of education based invitational marketing*, which crystallized with the creation of web 2.0 technology. Suddenly, billions of voices began to rise all over the world, as the internet marketplace became as much a global community as it was an advertising medium. This led to a relational based marketing** approach which has led to one of the most lucrative opportunities for solo entrepreneurs and small start ups alike to make a small fortune working from their spare bedroom. Who knows where the internet marketing revolution will lead us, but one this is for sure: Those who understand the principles upon which the thriving internet marketplace is built will most likely never want for opportunities to create internet marketing business success and to earn a solid income.

Internet Marketing today has become an integral part of peoples lives.When internet was first introduced not a single business house recognized the huge potential it had in store as a marketing tool. As early as 1993 it was just a tool used for emailing & data transfer. The best of the business units had declared it unfit for marketing purposes. Then in 1995 Netscape the ISP went public and bought the online world into prominence by exploring its commercial potential. The wide reach, cost effectiveness, capabilities to measure the spendings and easy accessibility made internet as the most feasible marketing tool. The flood-gates opened after that: Spending on Internet advertising in 1996 totaled $301 million in the U.S. While significant compared to the zero dollars spent in 1994, the figure paled in comparison to the $175 billion spent on traditional advertising as a whole that year. Online advertising grew to an industry worth nearly $1 billion in 1997. In India, as reported by PWC, advertising industry recorded a growth of 22% over 2006 and thus contributed an estimated Rs. 196 billion in 2007 as compared with Rs. 161 billion in 2006. In the

years 2004-2007, the advertising industry recorded a cumulative growth of 20% on an overall basis. Though different segments of the industry grew at different rates, the highest growth was recorded by the smallest segment in the industry- online advertising. This segment grew by 69% from the previous year, albeit from a low base of Rs. 1.6 billion in 2006 to Rs. 2.7 billion in 2007. Its share in the overall advertising pie grew to 1.4% in 2007, up from 1.0% in 2006. In the last four years 2004-2007, the segment recorded a cumulative growth of 65% on an overall basis. As broadband penetration increase in the Indian homes and also the mobile devices become more internet friendly, web/wap publishing companies would develop more content on the Internet. This would make online advertising more relevant, more creative and more informative.

Throughout its history, the internet has reinvented itself many times and the changes are far from over. The current web is dominated by socialising, cooperation, sharing and personal entertainment. It is a space both for work and play an essential tool for virtually every business and the go-to repository for all forms of media culture products. People of all ages are spending more and more time online, and are turning to the internet for better services, convenience and life-enhancing tools: just consider how people use online shopping, online banking, web communities that cross all boundaries, instant news and updates, social networks and chat, self-expression and any of the dozens of other things that the web makes possible. 2010 was the first year where online advertising spend overtook the amount of money spent on newspaper advertising in the USA. It was the same year that online readership overtook traditional newspaper readership, which illustrates just how large an impact the internet has had on the marketing and advertising industry.

THE INTERNET AND THE MARKETING MIX

Nowadays, the concept of Internet marketing has expanded and brought more opportunities for companies to approach their customers. In the past, the Internet was only used as a tool to contact customers, part of direct marketing. Nowadays, the Internet, particularly websites has been becoming a popular media for any firms to introduce their products and services. The Internet is considered as an independent and effective marketing tool. During eight years, from 2000 to 2008, the number of Internet users has increased by 4 times from about 361 millions to more than 1, 46 billion (http://www.internetworldstats.com/stats.htm ), in which, Asia, the continent with the biggest population accounts for 39.5% of World Internet Users.

Figure 3: World Internet users by World regions

Source: www.internetworldstats.com/stats.htm

In Finland, nearly four out of five Finns aged 15 to 74, or over three million persons, used the Internet in Spring 2007 (www.stat.fi). To understand precisely how the Internet offers new

opportunities to traditional marketing model, it is necessary to examine it based on the marketing mix which is traditional but still applicable. In 1960, Jerome McCarthy introduced the marketing mix - widely referred as the 4 Ps of Product, Price, Place and Promotion. Until now, it still plays an important role in formulating and implementing marketing strategy. The 4 Ps have been developed and extended to the 7 Ps with the appearance of People, Process and Physical evidence (Booms and Bitner, 1981). It provides an effective strategic framework for changing different elements of a company's product offering to influence the demand for products within target market (Chaffey et al. 2006, 215). According to Philip Kotler (2003), Product is the solution to customers wants or/and needs. It refers to the characteristics of a product, service or brand. The Internet offers options for varying the core product, options for changing the extended products, conducting research online, velocity of new product development and velocity of new product diffusion (Chaffey et al. 2006, 217 - 222). Many digital products now can be purchased easily over the Internet via providers website. For other products, instead of providing a ctual products to customers, many companies publish the detailed product information with pictures or images. Thanks to this, consumers still have concepts about different kinds of product even when staying at home. Besides that, for some companies, it is possible for buyers to customize products. Dell is a typical example. Through its websites, a customer can build a laptop or a desktop with the desired functions and features. Besides that, companies also can supply more extended product user guides, packaging, warranty, after sales services in a new method. For example, new drivers or updated package for a computer or software are easily downloaded via producers websites. It brings conveniences for both of buyer and seller/ producers. In addition, it is obvious that the Internet provides a new tool to collect customer feedback quickly and accelerate new product development since process of testing new products is more rapid and effective. The information about new products will spread out more wildly and quickly.

Price is the most flexible element comparing to other three elements of the marketing mix, since it can be changed quickly to adapt to the market's demand. Companies can use the

10

Internet to build differential price for different customers in different countries, based on IP (Internet Protocol) analytic technologies. For buyers, they are able to find out the price differences by visiting companies' websites or price comparison sites. In addition to this, the Internet also reduces costs and price per product by reducing operating costs of stores and number of staffs. Therefore, the Internet is considered as the most effective marketing tool (D P S Verma et al. 2003, 135-156). Together with these advances, many new payment methods are created. The online payment method using credit cards is the most popular, efficient, convenient and flexible way for companies and customers. Bills can be paid at any time and in anywhere. Moreover, companies can cut costs by reducing paper works since the customers fill all the necessary information such as their own private information and credit cards information by themselves.

Beside these conveniences, online customers still have to worry about securities and privacy matters. Hence, some third parties provide services to protect consumer privacy and to secure transactions. PayPal is one of the most successful companies in this business sector.

Place in the marketing mix refers to how the product is distributed to customers. New method of distributing goods through online selling is offered by the improvement of the Internet. It is possible for customers to make their purchasing decisions anywhere at any time. The Internet has the greatest implications for the Place in the marketing mix because it has a large market place (Allen and Fjermestad 2001, 14-23). Companies now can expand their business from local areas to the whole country even to international market. They also can use the Internet to exploit new markets with low cost international advertising since they do not have to establish sales infrastructure in different countries (Chaffey, 2006, 237-243). The Promotion element of the marketing mix refers to how marketing communications are used to inform customers and other stakeholders about an organization and its products (Chaffey, 2006, 243). The Internet can be used to review new ways of applying each of elements of communications mix such as advertising, sales promotions, PR and direct marketing; assess how the Internet can be used at different stages of the buying process; and

11

assist in different stages of customers relationship management from customer acquisition to retention (Chaffey, 2006, 243 - 245).

Internet Advertising: It is a form of advertising that uses the Internet to attract customers by delivering messages through websites or advertising banners on other popular websites which leads online users to a company site. The company website must be well-organized, welldesigned and user-friendly in order to attract more target customers. (Rowley, 2001)

Sales promotion: Thanks to the Internet, sales promotions such as competitions or price reductions can be provided to visitors of the companys website in a cost-reduced way. Not only encourage the customers to visit the company website again, this also provides the means for the company to build a long term relationship with their customers (Chaffey, 2006, 243245).

Public relations: The Internet is a new medium for Public Relations (PR). Blogs, Podcasts / Internet radio shows, online newsrooms and media kits offer companies a new opportunity to publish the news directly while in traditional marketing they would wait for periodical publications (Chaffey, 2006, 243-245).

Direct marketing: Thanks to the Internet, companies nowadays have a new tool for direct marketing and advertising that may be cost effective and maximum delivery to targeted customers. By using e-mail addresses, the company can establish a two way communication method with customers (Chaffey, 2006, 243-245).

12

INTERNET MARKETING COMPANY AND CUSTOMER PERSPECTIVES

Internet marketing Company perspectives
The 21st century is predicted to be a century of technologies when everyone, every company, every organization apply them to make their works become much easier and more effective. The popularity of using the Internet, together with the improvement of computer hardware and software industries, completely boost the development of e-marketing in the whole process of buying from pre-sale to sale to post-sale and further development of customer relationship. New comers in this area have to consider very carefully the use of these modern channels. Since, the role of Internet marketing is to support the multi-channel marketing which is the combination of digital and traditional channels at different points in the buying cycle (Chaffey et al. 2006, xiv - xv). They have to understand which the main marketing channel is and which the supportive marketing channel is. Below is some results drawn from different articles and researches which touch upon different parameters that make many companies pursue Internet marketing.

Drivers for Internet marketing

What are factors which drive many companies to apply the Internet marketing and how does the size of a company relate to these drives? Bengtsson, Boter, Vanyushyn (2007, 27) who conducted a survey with various Swedish companies of different sizes, give their readers a set of quite satisfactory answers to these questions. Depending on the number of employees, the authors categorized them into three different sizes: small, medium and large (turnover and profit should be taken into consideration). They figure out that different factors drive different size companies to adopt Internet marketing including willingness to cannibalize,

13

entrepreneurial drivers, management support, and market pressure. Besides that, they also find out which of these factors drive what size of companies.

Marketing channel preference

Nowadays, many companies have to take the pros and cons of Internet marketing channels and traditional marketing channels into consideration seriously to decide which channel is suitable and more effective for their companies. By comparing and contrasting between companies motivations to choose between Internet channels and traditional channels, Jaeki Song and Zahedi F.M (2006, 222-238) in their study "Internet marketing strategies: Antecedents and implications", indicate that Internet marketing is another good choice for any companies. And what attracting customers is a reasonable price provided by companies. The results are only drawn from some successful websites. Failure websites, the reasons of failure, and many risks that consumers have to face when using Internet marketing for example Internet security, scammers etc. also need to be discussed.

How to be successful in Internet marketing

When entering an Internet marketing zone, a company should recognize some important issues such as different target customers, another way to contact customers, Internet security, new competitors, etc. According to Chaffey et al. (2006, 20), to be successful in Internet marketing, a strategic approach is needed to manage the risks and deliver the opportunities available from online channels. Based on their experiences of strategy definition in a wide range of companies, they suggest a process for development and implement Internet marketing with different separated steps: Defining the online opportunity, selecting of the strategic approach and delivery result online. The authors also affirmed that the key strategic decisions for e-marketing are the same as strategic decisions for traditional marketing including selecting target customer groups,

14

specifying how to deliver value to these groups. Segmentation, targeting, differentiation and positioning are all keys to effective digital marketing.

Effects on environment
Online sales are not only saving a huge amount of money by reducing store operating costs but also decrease remarkably the fuel consumption needed for traditional sales that contribute a lot to the environment protection program. This was once discussed in details by Chen, Christine Y. and Greg Lindsay in their article "Will Amazon (.com) Save the Amazon?" (2000, 224-225). According to the authors, Internet marketing not only contribute to save space by promoting paperless office but provide easy shipping of products than tradition sales channels as well.

Catering to consumer interest

According to Urban Glen (2006, 24-29, 10), when a company advocates for its customers, the customers will in turn advocate for the company. In other words, to be successful, a company has to apply any means to satisfy its customer's interests. By using variety of examples, he proved that many firms of different sizes and business fields were using many techniques to fulfill customer's needs and interests. However, factors such as costs, quality and diversification of commodities should be taken into consideration to have a precise picture of how to advocate customers in general.

Focus on gender
Chiu Yu Bin, Lin Chieh Peng and Tang Ling Land (2005, 416-435) in their work named "Gender differs: assessing a model of online purchase intentions in e-tail service" figured out how important the role of gender was in online retailing. They concluded that female consumers tended to give lower evaluation to the effortlessness of online purchasing than male

15

consumers. It means that if a company wants to retain and increase number of male customers, it should pay attention on user-friendliness seriously. According to Chiu et al. (2005, 416-435), the right products should be offered to male consumers whenever they order them and companies should respond to inquiries in a timely fashion. This will more or less strengthen the male customers' attitudes and intentions of purchasing. To increase a number of female customers, companies should provide them with a fashionable user guide, for instance, they can attract these target customers with the effectiveness of visual effects and wonderful background music.

Internet marketing consumer perspectives

In fact, customers also have their own opinions and attitude towards Internet marketing. There are some works which concern what would interest consumers to pursue e-marketing and be willing to use it as well as what would prevent them from using it.

Consumer privacy
In an effort to understand New Zealand consumers more, Chung W. and Paynter J. (2002, 24022411), based on their work, drew a conclusion that it was a must for companies to have privacy policy statements under their website to protect consumer privacy information, to make sure that their customers information cannot be misused. Some solutions were also discussed in this study to protect customers' privacy. For the authors, solutions such as legislation, self regulation and technical solutions had be combined together to maximize its effectiveness.

16

Consumers decision making process in buying a product or using a service

The fact is that any consumer is influenced by different factors in his or her decision making process of purchasing products or services. According to George Joye F (2002, 165-180), many customers feel confident to make an order only when they have made a few purchases. They are afraid their privacy can be revealed and misused without their acknowledgment. If buyers do not trust the company which provides online sales services, they will never want to make any online buying decisions. In addition, e-marketing helps consumers to have more different means to search for products' designs, functions, features, specifications, prices etc. so they can compare and contrast products and services before giving their final decisions. Davidson Alistair and Copulsky Jonathan (2006, 14-22) found out that online customers would purchase via the Internet with web maven reviews influencing their mind set. Kim D.J, Kim W.J and Han J.S (2007, 591- 603) with their study about online travel agency service came to conclude that the top priority factor which affected customers decision making in purchasing was lowest price, security, ease of navigation of the website and fast loading time of the website.

How consumers evaluate companies in the Internet

The participants in Cheung Christy M K and Lee Matthew K O (2006, 479 - 492) work evaluated Internet merchants based on integrity, competence through professional websites and security. External factors such as third party recognition also are very important. A company and its website can gain customers' trust easily if a recognized third party certifies that the website is secured. In addition, guarantee terms also contribute to build trust in customers' minds. However, the study can bring more precise results if the participants come from different group ages.

17

Factors preventing consumers from enjoying Internet marketing

According to Liebermann Yehoshua and Stashevsky Shmuel (2002, 291-300), the factors which can prevent customers from using and believing in e-commerce include: Internet credit card stealing, fear of supplying personal information, pornography and violence, vast Internet advertising, information reliability, lack of physical contact, not receiving Internet products purchased, missing the human factor when Internet purchases are made, Internet usage addiction. The participants for this study come from different genders, group ages, high/low education background, and different marital status. Other variables are also examined for example Internet user/non user, bought online/not bought online and heavy/light Internet user.

18

LATEST TRENDS IN INTERNET MARKETING

Internet marketing is now a critical piece of just about any companys marketing mix. There are few marketing options with the speed, efficiency and reach as internet marketing. And so you should take the time to ensure you are focusing sufficiently on your internet marketing to maximize your revenue and growth. The year 2013 will prove to be another year in which the array of internet marketing vehicles, tools and techniques will continue to increase. To help you capitalize on the opportunities, here are 13 hot internet marketing trends for 2013 that you should consider when planning your marketing initiatives throughout the year: 1. Design Matters Design matters, because design sells. Just look at the success of Apple, Pinterest, Desk.com or Nike. All four websites are stunning, and thats no coincidence. Apple is the most valuable company of all time. It actually carries very few products, though. Its the design that powers Apples value. Nike is a shoe and apparel company, yet pays just as much attention to the design of its website, videos and ads as much as to anything else. Focus on great design for all of your internet marketing in 2013. 2. Marketing Goes Visual Similarly, communication through visual means is hot, and only getting hotter. Whether the explosion in infographics, or the dramatic rise in the popularity of Pinterest, or the redesigns of Facebook, LinkedIn and Twitter, we are going through a visual revolution. Start figuring out how to make more of your marketing visual in 2013.

19

3. Parallax Design Parallax website design incorporates special scrolling techniques whereby background images on the screen move slower than foreground images, creating an illusion of depth on the screen. You can see examples at the following websites: Volkswagon Beetle and Activate (be sure to scroll down the page!). If you are planning a website redesign in 2013, consider incorporating elements of parallax design. 4. Mobile Mobile Mobile Wordwide, there are over 5 billion mobile users and 1.1 billion smartphone subscribers specifically. The iPad was the fastest growing technology product EVER! Wow, if you need further convincing that you should start planning how to connect with your audience via mobile channels for your business, youre nuts! 5. Video Video Video More than 4 billion online videos are watched every day. Sixty-eight percent of video watchers share video links. So its clear your audience likes video. On top of this, consider that after 72 hours, a typical person can retain about 10% of text that theyve read, 65% of an image theyve seen, or 95% of a video they watched. Think that video might be helpful with communicating your message to your audience? Just a bit, huh?!? 6. Cloud-Based Tools To be uber-efficient with your internet marketing efforts, you should be using cloud-based tools. For email marketing, you might be using MailChimp. For SEO, you might be using SEOmoz. For landing page testing, you might be using Unbounce. For heat map analysis, you might be using CrazyEgg. For website analysis, you might be using BoostSuite. Check out all the unbelievably useful options available to you.

20

7. The Multi-Screen World With 86% of mobile internet users actually using their devices while watching TV, and with more than 10,901 Tweets PER SECOND being issued as TV viewers watched Adele win Record of the Year at The Grammys, its clear that we all live in a multi-screen world. Make sure that your internet marketing accounts for not just desktops, but ALL screens. 8. Social Media Gets Smarter Facebook has more than 1 billion users, and Twitter has more than 500 million. Social media is an opportunity for your business, but its been difficult for many businesses to m ake sense of it all and to gain solid business value out of it. With a growing number of marketing platforms such as Wildfire by Google and ShortStack, and with more granular social media analytics as provided by tools such as SproutSocial, Followerwonk and PageLever, extracting clear meaning from your social marketing will get easier over time. 9. Retargeting Goes Mainstream Retargeting is a means of placing your advertisements in front of your audience after they have left your website without converting. What many marketers fail to realize is that retargeting is one of the most effective internet marketing techniques available. If you are already investing in your site and your marketing campaigns for more site traffic, then it typically pays big dividends to remind the people who left your website without a conversion of your value in solving their needs. Your options for retargeting include Google Remarketing, AdRoll, Retargeter and also Bizo (for exceptional B2B retargeting). 10. Email Remarketing In lead generation campaigns or retailer email marketing, there are always going to be occurrences of form or cart abandonment. However, its a waste to just let the prospect go without reaching out and finding out if you might indeed offer exactly what they want or need. After the abandonment of a registration form or online shopping cart, through email

21

remarketing you can send out an automated email to give your brand another chance at winning the heart and mind of the prospect. According to SeeWhy, 26% of those who abandoned an online shopping cart will return to complete the purchase in the case they receive a remarketing email. 11. Search, Social & PR Collide Organic search has been incorporating social signals for some time, and the integration of search and social has accelerated with the introduction of Google+ and the Google Knowledge Graph. With Googles Panda and Penguin search algorithm updates, its become extremely clear that quality and value matter. That means high quality content, combined with sincere, transparent social marketing, combined with targeted PR is going to be a triad thats hard to beat. 12. Attribution Measurement If you run multiple forms of internet marketing, such as paid search, SEO, email marketing, display advertising, and retargeting, then it can be difficult to assess the value of each piece of your marketing puzzle. If someone encounters your brand five times in a given week through the different marketing vehicles, whos to say how much credit to give to each of the different pieces. Thats where attribution measurement services come in, whether Google, ClearSaleing or VisualIQ.

22

GLOBAL TRENDS IN INTERNET MARKETING

The internet marketing field hasnt stood still. Here are some of the current trends: Social media marketing. Whether it is a fad or here to stay, social media has made an indelible mark on the web landscape and, concurrently, on marketing tactics. Social media marketing involves using peer recommendations, sharing, building brand personality and addressing the market as a heterogeneous group of individuals. It also uniquely encourages customers to create content and buzz around a product themselves.

Viral marketing. This form of marketing involves the exponential spread of a marketing message by online word of mouth (sometimes referred to a word of mouse). A major component of viral communication is the meme a message that spreads virally and embeds itself in the collective consciousness (Dont touch me on my studio is a recent South African example). Viral marketing is closely tied to social media, since social media platforms and their sharing functionality are the main way that a message is able to go viral online. Keep in mind, however, that viral marketing does not make a holistic online marketing campaign and should be just one of many tools used to create awareness and encourage interaction.

Brand as product. More than ever before, brands are creating personas and identities around themselves rather than the products they sell. The online space allows customers to interact and converse with the brand personally and directly.

Ad fatigue. Web users have become very familiar with online advertising and have learned to tune it out or have even installed programs like AdBlock Plus to block it altogether. Marketers today have to think of very innovative and eye-catching strategies to entice wary viewers.

Targeting. Virtually all online advertising is targeted to reach specific readers. Unlike the broad-strokes targeting done in traditional marketing (placing an advert in a relevant magazine,

23

for example), web targeting can be extremely precise. With the immense amount of personal and usage data currently available, targeting can be done automatically and extremely successfully.

Golden oldies. Despite all the exciting new strategies, email and website marketing remain among the most useful and effective techniques. These strategies do, of course, use new tools and tactics (like advanced tracking, integration with social networks and customer-generated content), but their essence stays the same.

Refer back to this list in the future and see how much has changed chances are, many of these strategies will sound outdated in a few years.

24

CONSUMER BEHAVIOUR

To study the consumer behaviour is very complex as it is a kind of human behaviour, and human beings are always not easily studied, understood and sometimes quite ambiguities. Therefore, the complexity of consumer behaviour represents a challenge to anyone who wants research the subject including marketers. From the concept of marketing, it is based on the notion of creating satisfying relationship between sellers and buyers. In this kind of exchange process, consumer is being an important partner to make requirements, and thus it is essential for marketers who want to possess an understanding of consumer behaviour in order to make marketing strategies (Malcolm).

Definition

According to Warner, consumer behaviour defines that the study of the mental and physical activities performed by individuals or groups that result in decisions or actions associated with the purchase, use or disposal of goods and services (Malcolm). Warner emphasized the consumption related behaviours are often undertaken collectively. For example, some activities performed by individuals but consumed by a family or group of people, similar as organization purchasing activities usually followed by group decisions. Beside this point, the consumer behaviour is not just purchasing, but has usage and disposal the goods, this type of information always be useful for company to make marketing decisions (Malcolm).

Perspectives
Traditional consumer behaviour shopping has its own model, which the buying process starts from the problem recognition, information search, evaluation of alternatives, then purchase, and at last post-purchase behaviour (Crawford, 1997). During these serials actions, the perspectives on consumer behaviour could be divided into two parts: Macro perspective and

25

Micro perspective. Macro perspective mainly influences by modes of thought and deploy form of enquiry. Micro perspectives mainly include the decision theories (Malcolm). Factors

The influences on consumer behaviour are often made between external and internal factors. External factors are come from the environmental conditions, and internal factors are usually from the consumers mind. There are many factors could influence consumers behaviours. According to Warner, the external influences could divide into five sectors: Demographics, socio-economics, technology and public policy; culture; subculture; reference groups; and marketing. The internal influences are variety of psychological processes, which include attitudes, learning, perception, motivation, self image, and semiotics (Malcolm). In addition to these, Sheth (1983) also suggested that the consumers have two types of motives while shopping, which are functional and nonfunctional. The functional motives are mostly about the time, shopping place and consumers needs, which could be like one-stop shopping to save time, the environmental of shopping place such as free parking place, lower cost of products and available to choose from widely range of products. The non-functional motives are more related with culture or social values, such as the brand name of the store. The traditional shopping is simply about the customer to purchase their needs. This behaviour will be influenced by the sellers advertising and promotion which attracts customers goes there and purchase goods, afterwards a part of new products will be taken home and be used.

Internet Shopping
Internet shopping and traditional shopping are sharing many similarities, at the same time, it still exists some differences between them, such as the Internet shopping could provide convenience and interactive services (Jarvanpaa and Todd, 1997), and the traditional shopping could gives customers more comfortable shopping environment and good quality of products

26

(Lee and Chung, 2000). Both aspect of shopping malls are trying to improving their services by learn commutatively from each other, such as traditional shopping malls provide more parking spaces, more counters, and closer to residential area in order to improve services in convenience; Internet shopping malls adopt virtual reality (Lee, 2001) and 3D techniques (Miller, 2000) to improve the presentation of products. In the following sections, the study would provide the nature of internet shopping at first, then the E-commerce web site will be indicated to comprehend the essence of internet shopping, after that, online security, privacy and trust will be discussed. All of these general overviews and discussions about the internet shopping will provide a background to the study and help to building the foundation of academic researches. Moreover, there will be a summary provided in the end of this chapter. Nature of Internet Shopping

As mentioned above, the Internet shopping is another mode of shopping and it can provide customers with new experience. Therefore, the Internet shopping has its special nature to difference with traditional shopping. According to Miller (2000), the product and services for Internet shopping could be influenced easily by their type, and he also indicated four sources that could explain the nature of Internet shopping. In this section, the nature of Internet shopping will be discussed below with three main parts: convenience, technology, and product and price.

Convenience

Internet provides a big convenience for shopper as the main reason for they shopping online has been agreed by most of researcher and customers (Wolhandler, 1999). Due to the feature of Internet, it allows customer to shopping online anytime and anywhere, which means customer can browse and shopping online 24-hours a day, 7 days a week from home or office, which attracts some time-starved shoppers come to Internet for save time to searching products in physical store. Additionally, Internet offers some good ways to save money and

27

time. For example, shoppers do not need go out to the physical store and thus there is no transportation cost. Compare with the traditional shopping, there is no waiting line for shoppers on the Internet, and some shoppers reported that they feel pressure from the sales people sometimes, but Internet offers them more enjoyable while shopping online (Wolhandler, 1999; GVUs WWW 9th User Surveys, 1998).

Technology

The convenience based on Internet is mainly according to the technology development, and which plays a key role during the development of Internet shopping. In the last decade, organisations have realised that the new technology could impact on Internet shopping deeply, and thus there are many important technologies like virtual reality and 3D techniques have adopted to gain big competitive advantages (Clark, 1989). Information technology has used in the form of the Internet improved better quality of product information, which help shoppers decision making (White, 1997). Through the wide range of surveys about the Internet use, the growth of Internet and the rate of growth of Internet usage have been rapid increased in the last decade. According to the BMRB International (2004) and GVUs WWW 9th User Surveys (1998), the number of Internet users in Great Britain has increased to 22.7 million among 48.4% of the adult population, and about 53% of Internet users have reported that shopping is a primary use of the Web. Moreover, a statistical report on the Internet Development in China from CNNIC (China Internet Network Information Centre) have released in July 2006. From this report, in the aspect of Internet shopping, there are 30 million users often shopping online, and near 1/4 Internet users have online shopping experience. Both surveys shows that more and more Internet users prefer online payment while they shopping, thus the security of online payment certainly will become a significant factor to influence the Internet shopping. The provision of the security is becomes the highest or almost the highest budget in the service development of Internet retailer. As this kind of technology is quite complexity and costly for Internet retailer develop by them own, therefore, they usually ask for professional security

28

service provider to check their E-commerce web site, and get the verify or certificates from the provider like VeriSign, in order to let shopper knows that shopping on Internet is very safely. Another Internet technology has adopted for improving the Internet environment is developing a virtual community. As Yoo W., Suh K. and Lee M. (2002) mentioned in his report, personal interactions with other customers and service providers play a very important role while shopping online. Because of the feature of Internet, customers can not check the products and service carefully, almost all of trade between sellers and buyers are through a virtual world, and people can not meet each other directly, therefore, the Internet retailers offering not just products or services but also a nice and efficient interface for interactions with customers, and which could increase the happiness of customer to shopping online and let them gain new shopping experience.

Product and Price

The Internet allows consumers to browse products or services extensively, search the newest products or services information, check and compare prices among all of the offers, and make/change orders instantly and easily. These allowable activities offer another way of convenience to consumers. For browsing the products/services, consumers only need to do is open a browser and exploring the shopping sites, which gives them more pleasure to seeking out the new information about the products and services than searching in physical stores, even some of them did not actually buying anything, but they still gain a new kind of shopping experience (Punj and Steelin, 1983). Moreover, the web based contexts can easily and flexibility show the inventory of some niche products, and thus shoppers could looking for it by search through a large scale of product database. For some products, such as books and CDs, which shoppers are already known the quality, and that means the less quality concern for shoppers purchase it from online. Therefore, if the brand name and equity of products or services have embedded in shoppers mind, that means this products or services are more amenable to web based marketing.

29

According to the research by Bulkely and Carlton (2000), the majority of Internet shopping behaviours consist of one-time purchases, which is mainly according to consumers different shopping motivations, such as convenience. Therefore, the Ecommerce shopping websites need improve their services or reduce the cost of products in order to motivating these one-time purchase shoppers to become loyal and regular consumers. In the aspect of costs, the Ecommerce shopping websites have their strength than physical store, as they can remove the middle marketers (brokers, distributors), and that the lower warehousing cost and distribution expense can be added to online retailing channels for reducing the marketing price, which could greatly attract the price-sensitive shoppers come and purchase.

E-commerce Web Site

According to Zwasss (1998) definition for Electronic commerce is the sharing of business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks. For doing business, the Internet provides a lot of technologies to enhance the E-commerce. For example, for the aspect of the sharing of business information, the Internet provides shared databases (such as the databases of books have been shared among all of the publishing company in the US); email, web based forum, electronic data interchange (EDI) and other software could increase the interactions with customers and business partners, and also conducting business transactions much easier and more efficiently. The Internet mad the world become smaller and closer, and it becomes very popular in the peoples life. From the firms view, as the Internet makes much easier to running an online business for firms, and the associated costs will be decreased in some ways, thus that strength of the Internet attracts firms to enter this new marketplace. On the other hand, actually there are some problems are exist in the international market, and some of this are not fully solved, such as the currency, taxes and tariffs. Despite those problems, the adoption of E-commerce for Business Company could gain more advantages than disadvantages.

30

There are three components in the E-commerce processing: sellers & buyers, products & services, and E-commerce web site. Each component plays a key role in the Internet shopping. The advantages of E-commerce could be divided into four sides: cost reduction, revenue expansion, time reduction, and relationship enhancement (Swahney and Zabin, 2001). The Ecommerce can be essential complementarities for the firms as the store rents and the cost of for sales staff can be greatly reduced by transferring physical store to online, beside this big cost for traditional firm, the Internet also provides many applications (e.g. email) to reduce the costs, such as printing and mailing cost, and web based advertising can lead to small expenditure. By the reduction of costs, the firm can provides much cheaper products and services to attract more customers, and thus it can helps firm increase the revenue expansion. For the time reduction side, as the traditional store have difficult and very costly to update the products information, but the online information is all the time updated, and the interaction between service staff and customers and instant feedback to customers could be mad possible, in other words, these activities improve the relationship with customers indirectly, and also the enhanced interfaces and operational functions. There are two types of E-commerce web sites: Business to Business Electronic Commerce (B2B) and Business to Customer Electronic Commerce (B2C). B2B is commerce where business activities between companies through web site channel. B2C is commerce where the purchase and sale transactions between the consumers and sellers (Lee H., Cho D. and Lee S., 2002). The Internet retailers can both have B2B commerce and B2C commerce as they can use B2B commerce to link directly to their suppliers and use B2C commerce to sell products and services to individual consumer through Ecommerce web site. The B2B commerce and B2C commerce have some similarities, such as they both use electronic payment systems, and facing the lack of trustiness between both sides. Even there are some challenges exist for doing E-commerce, but it is the trend that the E-commerce is an indispensable constitutes for firms while they are doing business.

31

Online Security, Privacy, Trust and Trustworthiness

Compare with the in-store shopping, the internet shopping has much higher risks during the purchasing process. As internet shopping is one of the non-store shopping formats, others such as mail order (Spence, 1970), telephone shopping (Cox and Rich, 1964), catalogue (Reynolds, 1974) and so on, which have proved by recent studies shown that consumers perceive a higher level of risk. Even though the internet provides many functional advantages, but it still have some disadvantages, such as in the sections of security, privacy, trust and trustworthiness.

Security

Due to the characteristics of internet, the information across the web could be lost or stolen quite easily, especially the customers personal information and monetary details. In B2C E-commerce area, there are many web merchants are offering third-party privacy and security protection, such as encryption and password protections. The web merchants like TRUSTe provide a third-party verification program for their customers, once a Internet retailer joining the program, there will be a seal offered by TRUSTe shows that their commitment to security. Therefore, because of the third party verification, the customers considered this seal could make them more confident to provide their information to the site. Even some websites have secured certified by professional organisation, but still have some customers lost their money through internet every year. These financial risks are mostly caused by customers themselves. The reasons could be widely, some customers have apparent sense of using credit card online in the insecurity way, such as public credit card details to unknown people or website, leave credit card in the public place where other people can easily reach, and internet shopping on the computer with virus. In the Maignan and Lukass research (1997) shows that the financial risks have been cited as a main reason to stop internet shopping, and security has become a major concern both in online transaction relationships (Rowley, 1999). The security treats can be made through the network and data transaction, and also through unauthorized use. Thus, the Internet retailers have responsibility to keep monetary and

32

personal details of customers safety during the process of online shopping. To improve the effectiveness of the Internet shopping environment could benefit both sellers and buyers and make much convince to the customers.

Privacy

Another type of risk that consumer will faced is psychological risk, such as disappointment and frustration of shopping online, which is mainly caused by the privacy information lost. On the Internet, the privacy information could be tracked and collected, and then it can be used to sharing with third parties, in order to send spam mails or emails. The Federal Trade Commission (FTC) has statutory authority to prohibit the web site to acquire information by unfair and deceptive trade practices (Earp and Baumer, 2001); however, it does not have ability to comprehensively control every activity among the Internet. According to Earp and Baumers research, because of the lack of legal remedies, this implies electronic customers should be aware of privacy risk and it could affect customers obstacle to shopping on the Internet. Moreover, it also leads to customers more carefully to decide what kind of information will be revealed online, and to which web site. From the survey results, most of customers willing to reveal their gender and ages, and 18% of respondents willing to provide credit card details to well-known web site while only 3% of respondents indicated willingness to provide the same information to lesser-known web sites. Moreover, web site that has privacy statement and third-party verification could reduce some customer concerns, but the evidence is not strong. Overall, customers are being very carefully to reveal their personal information since the legal environment of Internet is uncertain.

Trust and Trustworthiness

Mayer, Davis, and Schoorman (1995) defined trust as, the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that

33

other party (p.712) (Cheung and Lee, 2006). This definition is widely recognized and the most frequently cited (Rousseau, Sitkin, Burt, & Camerer, 1998). People purchase products and services are the most based on their level of trust in this product or services, and sellers either in the physical store or online shops. Online trust is the basic and essential element for building a relationship with customers. A present research shows that online trust is lower level than the face-to-face interactions in the physical store (Cassell and Bickmore, 2000), and the result from Cheung and Lee (2006) shows that trustworthiness of Internet merchant (perceived integrity, perceived competence, and perceived security control) and external environment (third-party recognition and legal framework) have considerable impact on consumer trust in Internet shopping (see figure 1). The trustworthiness of E-commerce web site is very relying on the how much privacy security can be provided. For example, a highly technical competence can be a factor to influence the trustworthiness (Singh and Sirdeshmukh, 2000). As mentioned above that the web merchant can provide third-party verification to E-commerce web site, and while this privacy and security strategies are used, customers will think their E-commerce transactions through Internet are secure and thus the site is more reliable to them. Beside this point, if the E-commerce web site can provide the information about their customer services, location of the office, contact telephone number, and a help button on the web site, customers could also increase their trustiness as they can feel that the online retailers is truly exist (Lohse

34

and Spiller, 1998).

Figure 1. An Integrative Model of Consumer Trust in Internet Shopping.

In summary, the Internet offers a new way to do business and gives fresh shopping experience to customers. So far, there are many rules and conventions need to be improved to fit the online environment. For instance, the security must be ensured that the transactions on the Internet are safe; the privacy must be protected by the web sites; and the trust transference programs are needed to help engender customer trust in the Internet shopping environment.

Online Consumer Behaviours

As the traditional shopping behaviours are also could be transferred to internet shopping behaviour. Therefore, this chapter will pick some points of view in association with consumer behaviour that mentioned above and together with other ideas to have a deeper discussion.

35

The current status of studies of online consumer behaviours is investigated through an analysis of existing literatures as background studies of consumer behaviours in order to understanding of the dynamic of online shopping field. After the consumer behaviour background examined, the shopping motivation of consumers and decision making process are considered to be separate into two sections in this study.

Background

Since the explosion of the World Wide Web in the 1990s, relative Electronic commerce has been developed rapidly, and it has become an essential characteristic in the Internet era. According to UCLA Centre for Communication Policy (2001), Internet shopping has become the third most popular Internet activities, immediately following email using and web surfing (Li and Zhang, 2002). Online consumer behaviour is complex and can be described as the process of purchasing products or services via the Internet, and Kardes (1995:5) suggested consumer behaviour is the study of human responses to products, services, and marketing of these products and services. As Liang and Lai (2000) indicated in their research that this process have similarities with traditional shopping behaviours. During the process of Internet shopping, the potential consumer recognized a need for products or services, and then, they use Internet for searching related information. If the information search result can meet their needs, the potential consumers evaluate alternatives in order to choose one of the best products or services, and final purchase is made and following with post-purchase evaluation. According to Li and Zhangs (2002) taxonomy that developed based on their analysis, there are ten impacts of relevant factors on online consumer behaviours (see figure 2). These ten factors could be categorized into five independent variables (external environment, demographics, personal characteristics, vendor/service/product characteristics, and web site quality) and five dependent variables (attitude toward online shopping, intention to shop online, decision making, online purchasing, and consumer satisfaction). The five independent variables are identified as antecedents, which directly determine attitudes towards online shopping. In the antecedents, the vendor/service/product characteristics and web site quality

36

are directly impact on consumer satisfaction. The figure clearly shows that the antecedents, attitude, intention, decision making, and online purchasing are series of processing stage. Consumer satisfaction is separated and occurs among at all possible stages depending on the consumers involvement during the Internet shopping process, and this two ways relationship could influence each reciprocally.

Figure 2. Research Model of Consumers Online Shopping Attitudes and Behaviours

There are many studies of online consumer behaviours in recent years, most of them focus on the factors influencing the online consumer behaviours, and the researchers seems to find different factors in different way. Moreover, there is a variety of studies which focus on comparisons between online and offline consumer behaviour in relation to different products has been presented. Consumer behaviour difference within online and offline shopping are mainly because of consumers attitude and interest. Now that consumers have both online and offline shopping choices, thus when buying books, some consumers using offline store as dating venues, and then buying from the online sites; or, on the other hand, some consumers prefer go to the physical bookstore as their perceptions of books and the environment in the bookstore.

37

Consumers often use the Internet search for product information before buying from online or offline stores. According to Anfusos research (2004), the online research drives the offline sales. The study shows that the Internet plays a role as a consumer product information utility more than its role as a direct selling medium. Consumers use online product research, and then spending in the offline. Thus, the study found that Internet influenced offline spending is now growing faster than direct online spending, in other words, consumer still prefer shopping in offline store than buying from the Internet. Compare with convenience of the Internet provided, online consumers could easily go for research products. However, for offline consumers they may go into a store simply to research products, but not over and over. Moreover, many online visitors window shop more than impulse buy. The research shows that the internet has become a useful tool for comparison shopping and users often click around various sites to view and compare products, proceed to leave the site altogether, and then, possibly, return days later to purchase a product, or they might buy locally (Degeratu, Rangaswamy and Wu, 2000). Furthermore, online consumer might do this repeatedly, but the offline shoppers would be less likely to do research products very often. Therefore, the Internet shopping allows consumers more freedom to continuously visit and purchase products, even they leave without a purchase (Wolfinbarger and Gilly, 2001).

Shopping Motivation

It is true that the E-commerce is increasingly adopted by business organisations, and there also have many evidences to prove that the online shoppers become much more active than before. Through the E-commerce web sits provide superior products and services and interactive communication with online retailers, customers feel more about values, and thus these beneficial offers from the Internet may turn into motivation for customers active or arouse their needs. Pittman (1998) defines a motivation as the activation of interna desires, need and concerns which energize behaviour and send the organism in a particular direction aimed at satisfaction of the motivational issues that gave rise to the increased energy (Mallalieu, 2000). According to

38

Perners research, there are several perspectives on behaviour as a way to understand what motivates the consumers: (1) the hard core behavioural perspective is based on learning theories like operant and classical conditioning; (2) the social learning perspective, which allows for vicarious learning; (3) the cognitive approach emphasizes consumer thinking rather than mere behaviour; (4) the biological approach suggests that most behaviour is determined by genetics or other biological bases; (5) the rational expectations perspective is based on an economic way of looking at the World; (6) the psychoanalytic perspective is based on the work of historical psychologists (Perner). All of the perspectives help to explain the motivation of consumers in which the customers do the shopping, and the major study in this research is related to the rational expectations perspective. In addition, through understanding of the motive for online shopping can facilitate the comprehension of consumers attitudes, intenti on and consideration. Thus, the following section Decision Making Process will be discussed about the factors that impact on consumer behaviours.

Decision Making Process

Decision making process is the cognitive process leading to the selection of a series of actions among multiple alternatives. Every decision making process will have the final choice which called decision, and it can be an action or opinion. In this study, we mainly talk about the consumer decision making processes, which are the decision making processes undertaken by consumers in regard to before, during, and after the purchase of a product or service (Wikipedia, 2006). According to the Wikipedia web site (2006), there are three ways of analysing consumer buying behaviours in general. They are: Economic models These models are largely quantitative, and they are most relying on the assumptions of rationality and close perfect knowledge. In these models, the consumer is seen to maximize their utility, and some theory such as game theory can be used in some circumstances.

39

Psychological models These models are qualitative rather than quantitative, and they concentrate on psychological and cognitive processes such as motivation and need reduction. Moreover, these models build on sociological factors like cultural influences and family influences.

Consumer behaviour models

These models typically blend both economic and psychological models, and which are practical models used by marketers usually. In the recent of researches, it suggested that there is a five-stage decision making process for consumer to go through in any purchase (see the diagram below).

Figure 3. The consumer decision making process and its five stages. Source from: guuui.com

When people buy things, they will engage in a decision making process. Thus this model is important for anyone who making marketing decisions to consider the whole buying process rather than just the purchase decision. The current research shows that one of the major problems of E-commerce web sites is that they fail in supporting the customers in this process (Olsen, 2003). By understanding the customers needs and concerns as they process the decision making cycle, marketer can provide better products and services. The model has five stages in the whole process, but it does not means that the customers need to pass through all stages in every purchase. In some cases, the customers often skip or reverse some of the stages. For

40

example, a customer buying a favourite food would recognise the need, so he/she can skip the information search and evaluation, and just go right to the purchase decision. Moreover, the complexity of the decision making process can rage from careful analysis (rational) to pure impulse (emotional), like the example above, the impulse buy can take place instantaneously, but the complexity purchase always take long time to analysis. Furthermore, this buying decision making process is iterative process, where people collect information from different sources and repeatedly return to re-evaluate and compare the information they have found (Olsen, 2003). According to the researches from the usability consultancy UIE, the online buying decision making process can be acts as a sieve, where customers are filtered out through the each stage of the decision making process. From the figure below, there are 17% of customers are filtered out at the information search stage. In this percentage, there are 9% of customers werent able to find the products which they were looking for, and there are 8% of customers who find the right products but gave up at the end due to lack of information to identify final purchase. For the customers who want to evaluate their product alternatives, there are 25% of customers are filtered out due to some reasons: firstly, some stopped because there is none of the products can fit their needs; secondly, it is because the information of products was not enough to tell them that products are in satisfied their need. At the purchase stage, there are 12% of customers lost due to the inconvenience or disappointed by the E-commerce web site services. Again, there are 12% of customers have problems in the purchase evaluation stage. These customers are unhappy with the product that they purchased from online as some of them got the wrong products, some found the product was not what they expected, and extremely some customer did not receive the product at all.

41

Figure 4. Results from UIE. Source from: guuui.com

Need Recognition

The decision making process starts with need recognition. At this stage, the customer recognizes a need or responds to a marketing stimulus. Therefore, the Internet can provide huge amount of information for marketers utilize to stimulate consumer needs. For the online retailers, they have to do some researches in order to learn which customer needs and concerns they have when making purchase decision, and that could help them to support the customers decision making process. There are many ways to understand the customer needs: one effective and economical method is to collect information from salespersons that are in contact with customers very frequently; another way is through interviews with customers and observations their shopping behaviors in order to gain information. Moreover, online retailers can use advertising online/offline and web site promotions to attract customers come and consume. Besides this, if there is email list and those customers on the list have accepted subscribe to received information of new products and related offerings, which will also be useful to trigger need recognition (Mae et al., 1999).

42

Information Search

When the customers recognized a need, then they have to decide what and how much information is required. If there is enough information of products or services they got recently (which mainly according to their shopping experience), and that also meets the need close to hand, then the final purchase is likely to be made. Otherwise, there is information search process starts. After the customers start looking for information, there are many ways for customers to obtain new information. According to Tutor2u web site, it suggested four different sources: Personal sources: family, friends, neighbours etc Commercial sources: advertising, salespeople, retailers, dealers, packaging,point-of-sale displays Public sources: newspapers, radio, television, consumer organisations, specialist magazines Experiential sources: handling, examining, using the product

Although there are many different sources help consumer to make purchase decisions, but consumers still have to make decisions on: 1. whether they will search information through offline channels or the Internet; 2. whether they will search information through the Internet and then buy through offline channels; 3. whether they will search information through offline channels and then buy through the Internet; 4. use the Internet for both information search and product purchase (Moon, 2004). As the Internet has one of the main competitive advantages which is the ability to collect as much products information as possible and makes all of the products can be compared among the different providers, therefore it plays a key factor to attract customers using the Internet as the first choice for information search. According to the UIE study is that the usability problems have exist in the design of the sites, such as customers could not find product and unable to process the checkouts (Olsen, 2003). Therefore, online retailers should provide detailed product information and ease use of shopping interface in order to be able to support the

43

customers decision making process. For example, in the online book industry, Amazon offers book reviews to help customers evaluate and make purchase decision. In addition to add more details in the product list such as image and product description, other valuable information such as top sellers can also lead to increased sales (Lohse and Spiller, 1998). Besides the factors from the online retailers, consumers have their own characteristics which impact on the decision making process, such as their proficiency or knowledge. The extensive research shows that customers prior knowledge and experience of using Internet can influence the information search result (Brucks, 1985). Moreover, Han (1996) also examined that the internet usage skill and familiarity with computers can affect consumer information search through the internet. With the development in information technology, more and more customers use a range of search techniques for information search. Search engine is the major and useful tool to support information search, which covers most likely the entire E-commerce web sites and produce hyperlinks to every sites which in association with products. Furthermore, some customers prefer the internal search facilities while they shopping online, which will increase the effectiveness of web site and also influence the consumers decision making process.

Evaluation of Alternatives

Once the customers obtained enough product information and then gained a number of possible alternatives, they must choose between the alternative brands, products and services in the evaluation stage. There is one important determinant of evaluation of alternatives is whether the customer perceived relevance of product, which are mainly according to the price and potential risks. The online customers not only compare product and price, but also need to consider the potential risks such as payment security. For the product and price, the online retailers need to differentiate the products that they were offering, and offer a competitive price or added other values into products such as lower cost of delivery. However, for the less price sensitive customers who more likely to purchase good quality product if the online retailer can improve

44

the shopping interface and provide high quality information. For the potential risks, the online retailers can build more interactions between them and customers for increasing the consumer trust, and also need to employ some security controls during the payment transactions in order to reduce the risk. Moreover, a well deigned community which allows interactions between customers by leaving comments or opinions will also helps customer evaluate their alternatives.

Purchase

At this stage, the emphasis should be on providing the secure online payment and the easies possible way for the customers to go through their orders. The recent research discovered that 2/3 of all online purchase processes are not completed at the end (Wolfmbarger and Gilly, 2001). There are many reasons for that: the first one is some required registration and poor shipping charge policies made customers leave; secondly, many customers could not find the information needed to complete the purchase; and some customers even did not find the way to checkout. In order to solve these problems, some well known web sites built a large and well staffed team to help customers during the purchase process, such as the Amazon did. Furthermore, the online retailers have to offer a wide range of electronic interactivities in order to serve customers efficiently. For example, the contact email address, instant message based on web, and frequently asked questions (FAQs) about shipping, payment, and return policy can be added in the design of E-commerce web site.

Post-Purchase Evaluation

The final stage is post-purchase evaluation of the decision, which results in a level of customer satisfaction or dissatisfaction. The post-purchase evaluation is common for customers to experience concerns, and which is determined by the customers overall feelings about the product after making a purchase decision. If the products or service meet the customers requirement, then they may fell more comfortable and thus may purchase again in the future. However, some customers after bought a product, they may feel that an alternative would be

45

much preferable, thus they will not re-purchase the product and may switch to other brand next time. If the customers got dissatisfaction with the product as it does not meet their expectations, the product will be returned to online retailer. In order to manage the post-purchase evaluation stage and avoid the product to be returned, the online retailers with the marketing team to persuade the potential customers that the product will satisfy their need. Therefore, the customers will be encouraged that they have made the right decision after having made a purchase.

46

QUESTIONNAIRE

DEMOGRAPHIC INFORMATION...... 1. Gender: Male 2. Age years Female

3. Your education level High School Diploma Bachelors Degree Master Degree PhD Degree

4. Occupation Undergraduate Student Graduate student Professor University Staff

5. Annual Income Less than 2,00,000 2,00,001 to 3,00,000 3,00,001 to 5,00,000 5,00,001 to 7,00,000 More than 7,00,001

47

6. What is more likely to influence your purchase decision? BLOGS PRINT MEDIA

7. Which one of the following you prefer? Articles with graphics Articles without graphics

8. Which companys website would you prefer? Companies that have a blog Companies that do not have a blog

9. Do you prefer listed articles or articles with paragraphs? Listed Articles Articles with paragraph

10. Do you prefer posts with videos or posts without videos? Posts with videos Posts without videos

11. Would you recommend a brand you follow on any social networking site? YES NO

48

12. Is the availability of the product image important while making a purchase decision? YES NO

13. Does email marketing affect the purchase decision? YES NO

14. In general, you prefer to do your shopping of: (Select only one)

Over the Internet

Over the Phone

In a Retail Store

1. Groceries 2. Cosmetics 3. Books/CDs/DVDs 4. Cinema/concert/Theatre Tickets 5. Airplane Tickets

15. How often do you use the following World Wide Web Activities? Never 1 Very Infrequently 2 Infrequently Occasionally Frequently 3 4 5

49

1. Gaming 2. Shopping 3. Communication 4. Work/Business

16. Assuming that you intend to conduct online shopping, which of these purchases would you make in the internet?

Yes

No

1. Gifting Items 2. Movies/Theatre/Concert Tickets 3. Electronic Appliances/Computer Products 4. Hotel Reservation/Airplane Tickets 5. Stock/Mutual Funds

50

FINDINGS AND ANALYSIS

In this section the questionnaire shall be analysed. We decided to keep the questionnaire anonymous. A total of 50 responses were considered for the analysis. The first question of the survey was regarding the gender. Out of the 50 respondents 34 were females while 16 were males.

GENDER

FEMALE

RESPONDANTS MALE

10

20

30

40

The second question was with regards to the age of the respondents, the age group in our analysis ranged from 22 to 29 years. The number of respondents in each age category have been given below:

51

AGE 22 23 24 25 26 27 28 29

NO OF RESPONDANTS 9 9 7 4 7 8 5 1

The next question was with regards to the educational qualification, the following table shows the bifurcation of the respondents on the basis of their educational qualifications:
NUMBER OF RESPONDANTS 20 30

EDUCATION LEVEL MASTERS PHD

We then asked the educational qualifications of each of the respondents, the respondents were either students or teachers at a particular university. It was important to know how much do blogs affect a consumers decision; this is so as blogs have become the latest tool of internet marketing, hence it was important to understand to what extent have blogs been able to reach its target market. Thus our next question pertained to whether companies that have their own blogs are preferred to companies that do not have their own blogs.

52

Upon analyzing the responses we understood that it was very important for companies to market themselves through the medium of blogs. The design of article is very important while marketing in the internet world, so we asked our respondents whether articles with graphics are preferred to articles without graphics or not ?

Articles with graphics get a whopping 94% more views than articles that do not have graphics. With the advent of internet, these days people spend the majority of their waking time on the internet, thus they now prefer marketing through the internet medium rather than the traditional form, blogs which are becoming the latest medium of internet marketing are preferred to print media. In the case of blogs, it is important to know which kind of blogs does a consumer prefer i.e listed blogs or blogs that are written in the paragraph format.

53

Almost all the respondents prefer listed articles than normal posts, thus while marketing companies should write their blogs in the listed format to get more hits. Videos have become a very important tool of online marketing but to what extent does it affect the intended target market.

As we can see that videos are far more affective in capturing the attention of the target market as compared to normal posts also it is important to know that videos capture the attention for a far longer period than normal posts. In the world of internet marketing, Twitter and Facebook have become the most important tools of online marketing, almost 67% of the respondents said that they would recommend a brand that they were following on these two social networking sites.

54

Sometimes we see that while shopping online the products do not have an image or else the image is of a very poor quality. We wanted to understand the relation between the quality of the image and the purchase decision of a consumer.

Communication in todays world is majorly through the medium of e-mail. So does marketing through e-mail help a company increase its sales, this is what we found out.

Thus a company should not disregard this medium of marketing as it would be a grave mistake on its part. We then moved on to know in a give set of questions whether the respondents prefer to buy them on the internet, over the phone or in a retail store. This is what we found out:

55

45 40 35 30 25 20 15 10 5 0

ON THE INTERNET OVER THE PHONE IN A RETAIL STORE

Hence books/CDs/DVDs, Cinema and Airplane tickets are preferred to be purchased over the internet. The next question was related to repeat purchase, we asked our respondents on a Likert scale of 1 to 5 1 being never and 5 being frequently, and whether how often do they purchase these products over the internet.

40 35 30 25 20 15 10 5 0 1 2 3 4 5 GAMING SHOPPING COMMUNICATIONS WORK/BUSINESS

The last question was with regard to which one of the following would a consumer purchase on the internet or not

56

45 40 35 30 25 20 15 10 5 0

YES NO

Stocks are the only items that the respondents would never prefer to buy over the internet, this gave us the insight on the mindset of the average Indian consumer as to which kind of products would he buy over the internet.

57

RESPONSES

GENDER MALE FEMALE

RESPONDANTS 16 34

EDUCATION LEVEL MASTERS PHD

NUMBER OF RESPONDANTS 20 30

OCCUPATION GRADUATE STUDENT PROFESSOR

NUMBER OF RESPONDANTS 20 30

WHAT IS MORE LIKELY TO INFLUENCE YOUR DECISION ? BLOGS PRINT MEDIA

32 18

PARAGRAPHS OR LISTED ARTICLES ? PARAGRAPHS LISTED ARTICLES

4 46

WHETHER POSTS WITH VIDEOS CAPTURE THE ATTENTION SPAN OF THE RESPONDANTS MORE ? POSTS WITH VIDEOS POSTS WITHOUT VIDEOS

10 40

DOES HAVING A FACEBOOK OR A TWITTER PAGE INCREASE BRAND RECOMMENDATIONS ?

58

YES NO

40 10

IS PRODUCT IMAGE IMPORTANT FOR ONLINE MARKETING ? YES N0

43 7

WHAT IS MORE LIKELY TO INFLUENCE YOUR DECISION ? BLOGS PRINT MEDIA

32 18

DO GRAPHICS AFFECT THE PURCHASE DECISION OF THE RESPONDANTS? ARTICLES WITH GRAPHICS ARTICLES WITHOUT GRAPHICS RESPONDANTS PERCEPTION TOWARDS COMPANIES HAVING BLOG ? COMPANIES WITH BLOG COMPANIES WITHOUT BLOGS 34 16

42 8

DOES EMAIL MARKETING HELP INCREASE PRODUCT PURCHASE ? YES 33 NO 17

IN A SELECTIVE LIST OF ITEMS WHETHER A CUSTOMER WOULD USE THE INTERNET, RETAIL STORE OR PHONE TO BUY THE PRODUCT ? PRODUCT INTERNET PHONE RETAIL STORE GROCERY 16 COSMETIC 17 BOOKS,CDS,DVDS 23 CINEMA,THEATRE 42 AIRPLANE TICKETS 27

16 0 0 8 15

59

HOW OFTEN DO YOU USE THE FOLLOWING THROUGH THE INTERNET 1 BEING NEVER AND 5 BEING FREQUENTLY ACTIVITIES 1 2 3 4 GAMING 0 32 0 18 SHOPPING 0 0 18 23 COMMUNICATIONS 0 0 0 10 WORK/BUSINESS 8 15 8 19

5 0 9 40 0

60

61