Internet purchase behaviour and traditional consumer

This study provides with an investigative model to understand why consumers are leaving the traditional channels and are being more influenced towards the Internet. Internet saves time for searching information, costs less and also compares the prices and products from any part of the world. So buyers are being more attracted towards this medium. The reviews of authors, models on consumer decision-making process and Internet based models have been related and compared. The classified factors that influence and constraint the buyers from using Internet as the source of purchasing have been mentioned. As Internet is a vast media which helps for storing the information, sharing the ideas and placing the strategies, these factors can be used by the Internet sellers in understanding the buyer decision making methods which helps them gaining business advantage and build consumer relationship.

Many authors view the stages of decision making process equally for traditional and Internet consumers. Highlighting none of the major facts that Internet simplifies and complicates the decision making process.

So firstly mentioning the various stags of consumer behavior with the help of Maslow’s theory that helped in finding out the needs of the individuals, namely the psychological needs, safety needs, belongingness and love needs m esteem needs and self-actuating needs. These basic needs should be fulfilled necessarily, which will lead the individuals to take decision about buying.

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Then comes the buying decision model which helps to find out how the consumer takes decisions about how, where and why to buy a product or service. This model consists of some stages, namely need recognition, information search, evaluation of alternatives, purchase decision and purchase evaluation.

The Internet model for consumer decision-making model consists of three phases, namely confidence building phase, the skirmish phase and the war. This mainly focuses on how sellers create and validate their products and services to the consumers.

Then the comparison of the web based model with the buying model helped to find out the similarities and the advantages. And some contrasts of the web-based model have been mentioned.

Consumer behavior

Consumers are referred as the final users of the product or service. Consumer behavior is defined as the process in which the consumer takes decisions in buying a product, service to satisfy his/her needs and desires. (Solomon et al. 2006). There are wide ranges of products available nowadays to satisfy the primary needs of the customers, so the decision making process and the priority for the individuals or groups have been increasing day by day.

Hanson (2005) stated that the decision making of the customer not only involves the material activities but also psychological and emotional activities. It is almost like a role-play where the actors change their costumes and the backdrops to add effect to the play each time depending on the situation. Same way the consumers also change their decisions depending on the situation and their taste. So consumer behavior is the study of what, when and why they need the products or services.

Nowadays the market perspective has been changed from buyers market to the sellers market. The best way the sellers can come out with a strategy the best it can influence the buyers. So this study influences the companies why they have to concentrate more on consumer decision-making process.

Kotler and Armstrong (2002) states that when a stimuli is processed in the brains of the customers then they act according to the particular kind of stumuli. For example, logical arguments, or more by emotional or symbolic appeals sometimes persuades consumers more. It is a field of study where in the seller’s market has disappeared and the buyer’s market has come up. So taking the consumer into consideration the organizations need to come up with the strategies. (Ofcomconsumerpanel 2008a).

The behavior of the customers on what they want to buy is changing, as they are able to control or achieve their needs. Consumer behavior involves interactions where certain aspects are necessarily to be studied such as what the consumer think, what the consumer want or what environmental events can influence in their behavior. It also involves exchanges between human beings, which are to be studied in detail by the retailers to gain competitive advantage. Berman and Evans (2001)

Maslow’s Theory

In order to understand how the individuals behave in certain ways and to analyze the psychological behavior, Maslow has predicted a theory. He made it in a hierarchal manner in the form of a pyramid. “Man is a perpetually wanting animal; the appearance of a need rests on prior situations, on other prepotent needs; needs or desires must be arranged in hierarchies of prepotency” (Maslow, 1943a, p. 91). We could use Maslow’s theory in order to know what individuals needs at different modes of development. Norwood (1999). These needs focus on the higher stage only when the basic or lower level needs is met.

Figure 1: Maslow’s Hierarchy of Needs

Source: Derived from Kotler et al. (2005)

Physiological needs

These include food, air, water, sleep and any other necessities to sustain and preserve life. These are the most basic needs and people will be motivated to fulfill them first through whatever behavior. (govindarajan 2007). Once the person is satisfied this will act as the initial step for behavior process.

Safety needs

In order to be secure or at least help themselves from the environment the safety needs are very much necessary. This consists of the need for clothing, protection and an environment with a predictable pattern such as job security, pension and insurance. People are motivated when the psychological needs are satisfied. And also motivates to achieve higher. (Govindarajan 2007)

Belongingness and love needs

“Paid enough attention to the need to admire as well as to be admired (parallel to love as well as to be loved)” (Maslow, 1979, p. 1177). No person wants to spend his time all-alone or to be single all through his/her life. They have a lot of wishes to be fulfilled like being liked by others, to be a wanted member and to belong to a group other than just a family. (Govindarajan 2007). These are related to the societal needs.

Esteem needs

Firmly-based self esteem is grounded in the real capacity, achievements, and respect from others that an individual maintains (Maslow, 1943b). “These needs include the need for self-respect, sense of achievement and recognition from others. The desire for status and prestige is an important aspect of the need for esteem. Satisfaction of the self esteem is necessary in the world.”(Govindarajan 2007). This stage becomes important when the other three are fulfilled. Some people are happy with what they buy and some will be happy only when some one tells that the purchased product is good. Example: cloths, gadgets, accessories, etc. when this need is achieved the person becomes more secure and valuable. The development of self-esteem and ego strength leads to feelings of self-confidence, worth, strength, and capability; these emotions propel behavior toward the higher goals. (Maslow, 1943b).

Self-actualization need

When all of the foregoing needs are satisfied, the needs for self-actualization are activated. Maslow’s basic position is that when an individual becomes more self-actualized they tend to become wiser. Unlike lower level needs, this need is never fully satisfied. Maslow describes this desire as the desire to become more and more what one is, to become everything that one is capable of becoming. (Maslow,1954 p92). New opportunities continue to grow simultaneously to psychological growth. Concept of fulfilling one’s potential and becoming every thing one is capable of becoming. (Govindarajan 2007). Warren and Mark (1997) suggest that Maslow’s ultimate conclusion that the highest levels of self-actualization are magnificent in their nature as one of his most important contributions to the study of consumer behavior. An interesting phenomenon related to Maslow’s work is that in spite of a lack of empirical evidence to support his hierarchy, it enjoys wide acceptance (Wahba & Bridgewell, 1976; Soper, Milford & Rosenthal, 1995). Daniels (2001) suggested that Maslow’s ultimate conclusion that the highest levels of self-actualization are transcendent in their nature might be one of his most important contributions to the study of human behavior and motivation.

Principal influences on consumer behavior

Demographic factors

Needs and wants of the consumers differ with respect to their age groups, gender, occupation and income. Young consumers have different needs and wants from those who are old. (govindarajan 2007 p 90). Different age groups tend to set different values and experiences. According to (Huddleston et al. 1993) women consumers ageing between 16 and 30 involve in most of the clothes shopping which instead has lead the clothing retailers to concentrate on age related products. Huddleston et al. (1993) also found that women shoppers were older and earned higher income than male shoppers.

Psychological factors

Perception

It is a process of selection, arrangement and interpretation of the information to form a meaning. Information includes, taste, sight, feel, hear and smell. Perception being an intellectual and cognitive process will be subjective in nature (Thang and Tan 2003). “Positive perception towards a particular brand or product helps the company to retain their customers”.(Solomon 1996).

Motivation

It is very important to understand motivation. According to Baker (1995) “the underlying motives of consumers are different from the stated motive and have multiple motives: manifest and latent”. Manifest is when the consumer admits that they know about the product. Latent is when they don’t know about the product and are unwilling to admit. Motivation helps the individual to achieve the goals. If the sellers cant understand the motives of the customers then they cant succeed. They should make the buyers feel that their product will fulfill their needs. Baker (1995). Solomon (1996) explains motivation as a “process that starts with some kind of motive or need, the drive or action to satisfy that need, and the fulfillment of the need.”

Attitudes

Attitudes are defined as “a mental predisposition to act that is expressed by evaluating a particular entity with some degree of favor or disfavor” (Roger 1984). Attitudes are formed from the effects of the situation, skill and relations with individuals. It depends on the individual’s way of thinking, feelings, and the way he takes the product or service. It becomes difficult if he/she needs to change the pattern of living. Attitude in the marketing sense is the prediction, diagnostic value and gaining information with as much less effort as possible. Attitude functions are listed below.

Figure 2: Functions of attitudes

Types

Functions

­­­Utilitarian function

Desire to achieve practical benefit

Related to basic principles of reward and punishment

Value derived from the success of finding the needed product

Value-expressive function

Expresses central value or self-concept

Forms attitude not because of benefits instead of what the product depicts.

Relevant to lifestyle which cultivates interest

Ego-defensive

function

Attitudes are formed to protect from threats

Helps to maintains self-esteem

Forces individuals to cope up with anxieties generated by internal conflicts

Knowledge function

Attitudes are formed as a result of a need for order, structure and meaning

It supplies a standard frame of reference to simplify the perception of a complex environment.Source: Derived from Solomon et al. (2006)

The attitude towards an organization can be favored by repetitive purchase of products from the same place. These help to know the success of the organizations strategy.

Life style

Life style plays an important role for sellers to understand the behavior of buyers. These include interests, opinion of the customer and also the buying pattern. These lifestyles can provide some additional insight into consumers’ consumption patterns. Some marketing researchers use Psychographic techniques that involve all of these factors to predict consumer behavior (Evans 1989).

Social factors

Reference groups

A reference group is defined as “an actual or imaginary individual or group conceived of having significant relevance upon an individual’s evaluations, aspirations, or beliefs” (Solomon 1996). It involves all the groups’ direct and indirect influence on a persons attitude that are representative and real. Eample: friends, family, work place, etc all the groups have positive or negative influence on the individual.

Social class

It determines the type, quantity, and quality of the products the consumer purchases. It is defined as “the division of members of a society into a hierarchy of distinct status classes, so that members of each class have relatively the same status and the members of all other classes have either more or less status” (Terrell 2002).

Purchasing patterns

Purchase patterns include the places and the shops which the consumer elects, also time and the regularity. “Buying behavior is influenced by benefits sought and the social environment of the consumers” (Dunne et al. 1995).

Consumer buying decision process

People calmly and carefully integrate as much information as possible with what they know about the product, painstakingly weigh the pluses and minuses of each alternative, and arrive at a satisfactory decision.(M.R.Solomon 2004 p 239). This process implies that steps in decision-making should be carefully studies by marketing managers.

Buyer decision processes are the decision-making processes undertaken by consumers in regard to a potential market transaction before, during, and after the purchase of a product or service (Chris 1993). Decision-making is a process of selection from various alternatives. Examples: shopping, selection of food. However, (Roberts 1998) argues that consumers may sometimes typically rely on simple strategies, rather than going through a series of steps or processes rationally when they made purchase decisions. There are 5 stages involved in the consumer decision-making process of which actual purchasing is only one stage of the process. All consumer decisions do not always include all 5 stages, as it is also determined by the degree of complexity.

Figure 3: Decision making process

Source: Adapted from Orren et al. (2005)

Need recognition

Regardless of type of buyer decision situation, some combination of internal and external stimuli will first trigger the buying decision process by highlighting an unsatisfied need.(R.L. Sandhusen p231).The buyer senses the difference between his/her actual state and some desired state. The need can be triggered by internal stimuli example: hunger, thirst, sex, etc becomes high level enough to become a drive. From previous experience, the person has learned how to cope up with this drive and is motivated toward objects that he/she knows will satisfy. (Govindarajan 2007 pg 98). The decision-making process starts with the recognition of the problem. The consumer decides on what product to buy and what not to. Angel et al. (1990) state that problem recognition as a process of differentiation between the desired state and the actual condition. A consumer perceives a product to be ideal but the actual state of the product may differ. They lack knowledge regarding the identification of purchase options, decision of products to satisfy their need and expectations towards product’s presentation and description that leads to returning of the goods purchased (Peter et al. 1999). This differentiation at the time of purchasing a product is termed as problem recognition (Cox and Brittain 2000).

Information search (from book p294)

Many consumers, especially expert shoppers, enjoy browsing just for the fun of it, or they want to stay up to date on what’s happening in the market place. They are engaging on ongoing search (p.h.block, d.l.sherrell and n.m.ridgway 1986 p 119-26). People will put themselves out to collect as much information as possible, as long as the process of gathering it is not too onerous or time-consuming (j.g.lynch jr and d.ariely 2000 p 83-103). If the buyer feels that the product is going to satisfy his needs, he will not think about another alternative. However when reached these two levels of search activity are possible.

1) Some search, during which heightened interest makes the buyer more receptive to product information, and

2) Active information search, during which the buyer actively searches for such information. (r.l. sandhusen p 231)

when the consumer knows a problem from the previous step they start the information search. A successful search fetches possible alternatives to the consumer. Information search is of two types, internal and external. Internal search is what the mind thinks. The consumer recalls the known brands at the time of purchase. External search happens when the consumer needs more information that involves solution from various sources: friends, family, advertising, salespeople etc (Chris 1993). Behavior of the consumers is changing as they are researching a lot before doing the purchase.

Evaluation of alternatives

“The marketer needs to know about the alternative evaluation, that is, how the consumer processes information to arrive at brand choices.”(govindarajan 2007). Consumers evaluate based on the prices, availability and appearance of the product or services from the variety of alternatives. The set of brands that the consumer has in his mind while buying the product is called evoked set. (Peter et al. 1999).

Purchase decision

Purchase decisions often begin with trial purchase of limited quantities. Repeat purchases are related to brand loyalty. (govindarajan 2007). After evaluation of alternatives consumer go for the next step of selection of outlets and purchasing of products. It is in this step where the consumer decides about issues like where to buy, when to buy and how much quantity to buy. The final decision of the purchase takes place by the talking to customer services and the final payments.

Purchase evaluation

“An understanding of these post purchase responses is important to marketers in that they influence the likelihood that buyers will repurchase products and/or encourage others to purchase the product.”(R.L.Sandhusen 2000 p 236). Williams (2002) implies that “post purchase decision arises from the concept of cognitive dissonance, an uncomfortable feeling or stress caused by holding two contradictory ideas simultaneously”. Consumers compare the products performance against their expectations. (govindarajan 2007).

The selection of alternate products can be reduced by sales, warranties and after sale communications. The result of this evaluation is the satisfaction and dissatisfaction of the consumer these feelings include how they are treated and their experience.

Consumer buying decision and the influence of Internet

Internet is becoming the most popular medium for the marketers to introduce their goods or services, as this is the most popularly being used source for searching and also buying. As new technologies have been coming into the household domain it is necessary for the marketers to understand the response of the consumers. Sultan & Henrichs (2000: 386 – 402). Internet has a lot of virtual information that will be provided on the demand of the consumer. Phau & Poon (2000: 102 – 113). Also they can provide with information about where the products are available and also can be purchased via Internet. By providing with these kinds of opportunities the sellers can satisfy the customers through fast distribution via Internet. Jones & Vijayasarathy (1998: 322 – 330).

The internet based market is totally different from the traditional market place where the consumers have an on screen interactions instead of face to face interactions and the internet market takes place on the computers and phones instead of physical stores. It is important to consider because they create a value for building the relationships with the customers. Hanson (2000: 94). The Internet acts as an information search medium for the customers in purchasing goods or services. Rowley (2000a: 20 – 35) states that e retailing will become an alternative for traditional shopping.

Because of the Internet the consumer has lot of alternatives for purchasing the product or service that best suits them. There are a lot of factors which influence the customer to choose internet shopping instead of going to the retail store, like: delivery time, shopping time, risks, mail order, telephone order, demographic factors, socio-economic factors, brand reputation, source, online feedbacks, etc. Phau & Poon (2000: 102 – 113).

Before making strategies to selling the products or services through the internet the sellers should do a research on the factors which more influence the traditional consumer and the internet consumer. The factors are gender, age, experience of the consumer, knowledge, and word of mouth.

Trocchia & Janda (2000: 605 – 616) stated the factors related with age. Generally older people suffer from physical disabilities because of which some of them can’t move from places to places as a result for these consumers Internet would be the best option. Also the income levels and free time of the older individuals than that of young individuals also influence them to shop online.

Gender is also one of the factors which needs to be taken into consideration because based on a research study by Teo(2001 125:137) it was found that males and men are faster at using the internet for buying and downloading than women. Young individuals also do a lot og downloads than compared to the old individuals.

Hanson(2000:117) provided a very important viewpoint on education stating that after income and demographic factors education influences the consumer to operate and be aware of the internet. But according to the research studies of Teo(2000 :125-137), educations plays a less important role in downloading and purchasing activities as the internet is widely spread across various sectors of the society.

Word of mouth is also a factor that influences the consumer because there are forums where the people can discuss and take advice from some forums regarding the purchases. Gronroos et al. (2000: 243 – 252).

Internet is more of an advertising medium as it gives more appropriate information. Prabhaker (2000: 158 – 171). From the sellers end, Internet’s advantages are more adverse than that of advertising. “Interactive nature of the Internet allows marketers to reach and interact with individual consumers, whereas traditional media are used in a mass-media environment.” Gronroos et al. (2000: 243 – 252).

The main advantage of Internet for the marketers is that they can have a database regarding the conversations with the current and potential customers. They can have person-to-person interactions that will enable the sellers to tell appropriately to the consumers about the product or service.

Figure 4: From Broadcast to Dialogue

The usage of the Internet to the consumer will be very much beneficial because it provides them with lessening the cost for searching, global reach, quality, low cost and with less time. Prabhaker (2000: 158 – 171). Aldridge, Forcht & Pierson (1997: 161 – 169) agreed this statement saying that the cost will be lesser because of the information regarding the prices of the regular products is readily available. The consumers can buy any product at any time and from any place. Consumers are more benefitted if they know which sites are readily available to sell the products and at less price. McQuitty & Peterson (2000: 233 – 248). This is almost like the traditional shopping but the difference is that because of Internet it will take less time and also they can search from very large number of varieties. This also helps the customer to control his frustration because if he goes to the retail store and if he does not have the product in stock then he again needs to go to another store. Of all, the main advantage of the Internet is that the consumer can do the shopping and search 24/7 and 365 days a year and is not restricted to the business hours.

The main difficulty the consumer faces because of Internet is that it will practically produce only two of the five human senses, namely sound and sight. Phau & Poon (2000: 102 – 113). Other than few products the consumer can attain all the other benefits that are not restricted to these senses. Example: software’s, applications, music, etc. one of the biggest problem while purchasing via Internet is that the products won’t be delivered immediately. Example: books, gadgets, accessories, etc.

Different kinds of web searchers

Rowley (2000a: 20 – 35) and Breitenbach & Van Doren (1998: 558 – 575) found out different kinds of web searchers, like direct information seekers, undirected information seekers, bargain hunters, entertainment seekers and directed buyers. This helps the sellers to know how people browse and how they use the facilities.

A direct information seeker wants the services with specific information and time saving. Undirected information seekers look for non-specific information or something interesting and unexpected while bargain seekers look for give-always, discounts and prizes. Entertainment seekers as named look for entertainment like puzzles, games, animations and sound clips. Breitenbach & Van Doren (1998: 558 – 575). The direct buyers are those who buy online and look for specific item or gifts. The main advantage for the Internet users is that it provides with wide range of information world wide and also allows to compare the prices. Rowley (2000a: 20 – 35). Hanson (2000: 104) and Rowley (2000a: 20 – 35) stated that regardless this facility it is difficult to find the information and also the first search does not always give a satisfactory outcome.

THE INTERNET MODEL FOR CONSUMER BUYING DECISION PROCESS

This section refers to the consumer decision-making process in the context of the Internet. The web based decision-making process was proposed by Windham & Orton. They state the consumer decision making on the web is similar to the traditional decision making model as the consumers are the same and they have the same amount of money for purchasing.

Figure 5: Internet model for consumer decision-making

As the information is readily available on the Internet the stages of the decision making model got compressed. There are three main phases for web based decision-making process, namely confidence building, skirmish and war. Windham & Orton (2000: 82).

Confidence building phase

During this phase the consumer knows all the alternatives and also which action to follow. This model suggests that some goals need to be accomplished by the merchants who sell in the Internet. During this stage they should try to make the consumer know about the product, build reliability and create trust.

According to Rowley (2000a: 20 – 35), consumers need to refine their search as much as possible or else they will obtain lot of unnecessary information through the search. Need recognition in the traditional method was influenced by word of mouth, friends, etc but from the Internet side it can be found from some search engines, links or can find it directly if you know who sells the products. Watson et al. (2000: 127) stated that “Since the search for information is not without sacrifice in terms of money and time, a number of search tools emerging on the Internet greatly facilitate searching.”

The main advantage of the web based model is that the search is quick when compared to the traditional method where they need to find the seller, visit the store, etc. Rowley (2000b: 203- 214) continues by stating, “most shopping bots claim to eliminate the searching necessary to identify the right product at the best price”. Links regarding the sites can be e-emailed or messaged as now a days most of the websites are providing with this facility to introduce their service to new customers. Consumers can build their confidence on the sellers by reading the reviews, posting reviews, discussing chat rooms and also with the discussion groups.

In order to achieve this kind of advantage the marketers need to invest reasonable amount of money and strategies for the web to create awareness and confidence in the customers. Promoting their web site to as many people as possible and also trying to make them visit the site as many times as possible.

The Skirmish phase

Building confidence in the Internet customer is the main stage for the sellers to consider and then comes the Skirmish phase. This phase suggests that the consumers will buy for the first time. During this phase it is necessary for the sellers to gain buyers acquisition, deliver value and satisfaction. Breitenbach & Van Doren (1998: 558 – 575) added that in order to attract the customers the Internet seller must provide with incentives like free test download of the software, music, free delivery, etc.

Figure 6: Impact of Incentives provided by Internet Sellers

Source :Windham & Orton (2000: 95)

War phase

This stage states that the consumers will be involved in repetitive purchasing. At this stage the sellers need to maintain customers, deliver value continuously and remain competitive.

Comparison of Internet based model with the decision making model

Windham and Orton drew the relation between traditional and web based decision-making process considering the discussion on consumer decision-making process. They highlighted the possible differences between the two models.

Figure 7: Comparison between Internet based and Traditional based Buying behavior

Source: Windham & Orton (2000: 81-101)

They have stated the “map of reality” with the portrayal of behaviour, have explained the behaviour and gave the basic relationships with the order of the variables. But this cannot be considered as a true model as it has not been tested empirically.

Constraints of Internet shopping

Phau & Poon (2000: 102 – 113) stated that the purchasing process is viewed as a five -step process, namely promotions, one-on-one contact, closing, transaction and fulfillment. So in order to make a purchase the consumer need to go through all the steps to achieve the product or service. Strader & Shaw (1999: 82 – 92) identify a number of potential relevant costs to the consumer when shopping on the Internet. The cost variables have been stated in a tabular form below

Despite the costs there are various factors that will cause dissatisfaction to the consumer while making online purchases are.

Prabhaker (2000: 158-171) states that most of the online consumers change their minds regarding purchasing online when they have to give their personal and credit card information. Kolesar and Galbraith