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1. INTRODUCTION

1.1 Meaning and definition

The study of consumer behaviour implies how and why a particular consumer or group reacts to decisions of
producers. Consumer behaviour could be defined as those actions directly involved in obtaining,
consuming, and disposing of products and services, including the decisions process that proceeds and follow
the action.

According to another author consumer behaviour is the behaviour that consumer display in scanning for
purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs.
The study of consumer behaviour is the study of how individuals make decisions to spend their available
resources (time, money, effort) on consumption related items. It includes the study of what to buy, when to
buy, why to buy, from where to buy, how often to buy, and how often they will use it.

Normally in consumer behaviour one studies the behaviour of consumers for consumption goods but in the
study the behaviour of the buyer is also included. He may be user i.e. ultimate consumer or he may be buying
for someone else. In a competitive environment, one cannot trust a product or a consumer. The producer has
to produce what is demanded or what can be demanded. Study of consumer behaviour will help us to know
what can be sold and what goods and services are likely to get rejected.

In certain products like medicines one buys on the prescription of a physician which is also a part of
consumer behaviour. In case of capital goods that is plant, equipment, machinery, buildings etc the decisions
are often based on technical advice of others. In case of industrial raw materials the decision is influenced by
supplier of equipment. Then there are purely consumer goods with short life and once they are used they
extinguish. They are called Fast Moving Consumer Goods (FMCG). There are other consumer goods which
are durable like cars, refrigerators, electrical iron, juicer-mixer, etc but they basically consumer items with
long life. There are also goods like clothes, which are not consumed in one go but are used for long. The
behaviour of consumers for all these products is taken on different considerations than short-term consumer
goods like fruits, juices, ice cream or milk.

In short consumer behaviour implies study of behaviour of purchaser of all goods and services whether
purely consumer goods, intermediate goods or capital goods. In other words it implies study of attitude of all
consumers in disposing of their resources. Further it is not confined to final users but also include study of
attitudes, of all those who take investment decisions whether they consume themselves or buy for others. It
also includes study of behaviour of those who are consultant, advisers and give their opinion to buy or not to
buy a particular thing and the study of factors which influence their advice/opinion.
Consumer behaviour is an art and a science, economics, psychology, sociology. The study of consumer
behaviour envelops all these and more. Be it a housewife buying a tube of tooth paste, an executive buying a
tie, a school kid buying a pen or a multi-million dollar corporation buying heavy capital equipment, the
process of buying is complex and, at times, intriguing. The consumer buying process is influenced by the
consumers financial position, personality, tastes, preferences, reference groups, social standing, and even the
economic sentiment that is dictated by the status of the economy.
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1.2 Buying Behaviour

In the field of Consumer behavior research the classical model of consumer buying behavior is of utmost
important. We as persons take actions in purchasing and using products and services and actions are derived
by mental and social process. Behavioral science helps us to better understand why we go for a certain
product and why not, why we set priories while making decision.
Consumer will buy whatever needed by him. But whatever he buys depends on some factors. The consumer
buying is based on a particular behaviour, which if predicted helps the marketer to market his products
thereby increasing the profits. This buying behaviour can be explained in the following manner:





It is very important for marketers to understand consumer-buying behaviour because that is the only
possibility to offer greater satisfaction for the consumer. Although there remains a certain amount of
consumer dissatisfaction, the reason for this is that some marketers still are not consumer oriented and do not
regard customer satisfaction as a primary objective.

Another problem is that the tools for analyzing consumer behaviour are not very precise, so it is impossible
for marketers to determine what is highly satisfying to buyers.

If a marketer can identify consumer buyer behaviour, he or she will be in a better position to target products
and services at them. Buyer behaviour is focused upon the needs of individuals, groups and organizations.

1.3 Buying decision

For some purchases, a consumer will spend very little time considering the purchase itself before making the
decision to buy e.g. buying a roll of selotape. However, in other cases, consumers will ask the opinions of
other people before making their purchase decision. Hence, marketers are always interested in learning which
people are likely to influence the purchase decisions of a typical consumer in a target group. For example, if
a member of your family is considering attending college, then it is unlikely that they will decide which
college to attend without first discussing the matter with several people. The opinions of parents, siblings,
friends, teachers, professional acquaintances, etc. will all have a certain degree of influence over the persons
final decision. Identifying the key influencers is important. Companies may be able to target some forms of
promotional activity at the influencers, so that they in turn will speak favourably about the companys
products/services to the actual purchaser or user.

Consumer
Behaviour
Ability Opportunity Motivation
3


Consumer decision process carries five stages, starting with Problem recognition and following Information
search, Evaluation of alternatives Purchase decision and finally Post Purchase behavior. Problem recognition
starts with the perception of need and moves towards information search where consumer uses internal and
external sources to analyze given information and use that information in the next step of evaluation of
alternatives. While evaluating alternatives one assessing values of the products by giving weights. Once you
have successfully evaluated alternatives you will move towards purchase decision where you may encounter
three possibilities, from whom to buy, when to buy and do not buy. Once you have actually made the
purchase now it comes to Post purchase behavior, whether you are satisfied or dissatisfied with your
purchase.
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2. THEORETICAL FOUNDATION OF ONLINE SHOPPING

The Internet has developed into a new distribution channel and online transactions are rapidly increasing.
This has created a need to under how the consumers perceive online purchasing.
Price, Trust and Convenience were identified as important factors. Price was considered as to be a most
important factor for a majority of the students. The internet has created a paradigm shift of the traditional
way people shop. A consumer is no longer bound to opening a times or specific location. So he can become
active at virtually any time any place and purchase the products or services.

The internet is relatively a new medium for communication and the information exchange that has present in
everyday life. The number of internet user is constantly increasing which is also signifies that online
purchasing is increasing. The rapid increasing is explained by the consumer behavior. The internet is
considered a mass medium that provides the consumers with purchase characteristics as no other medium.
Certain characteristics are making it more convenient for the consumer compared to the traditional way of
shopping, such as the ability to any time view and purchase products visualize the needs with products and
discuss products with other consumers. Online shopping is the process of consumer go through the when they
decide the shop on the internet.

The internet has developed into a new distribution channel and the evaluation of this channel. E-commerce
has now identified. Using the internet to shop online has become one of the primary reasons to use the
internet combined with searching for products and finding the information about them. Therefore internet
develop the h Companies also use the Internet to convey, communicate and disseminate information, to sell
the product, to take feedback and also to conduct satisfaction surveys with customers. Customers use the
Internet not only to buy the product online, but also to compare prices, product features and after sale service
facilities they will receive if they purchase the product from a particular store. Many experts are optimistic
about the prospect of online business.

Due to the rapid development of the technologies surrounding the Internet, a company that is interested in
selling products from its web site will constantly has to search for an edge in the fierce competition. Since
there are so many potential consumers, it is of the out most importance to be able to understand what the
consumer wants and needs.

2.1 Rising Connectivity

If we observe the growth of Internet Subscribers from the above graph, it is getting doubled year by year. The
usage of internet in India is only 4% of the total population. This is also getting increased day by day as the
costs of computers are decreasing and net penetration is increasing. The cost of internet usage is also getting
lower, with good competition among the providers. Wi-Fi & Wimax system has also started in India. This
will increase the usage as it goes more on wireless internet. Indians are proving every time that they can beat
the world when it comes to figures of online shopping. More and more Indians are going to online shopping
and the frequency of Indias online buying is crossing the overall global averages.


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2.2 Few Factors That Boost Online Shopping in India

Though there are several factors that influence consumers to shop online, but as mentioned above researchers
have selected four factors after reading literature in the field on consumer attitudes towards online shopping
and these factors are discussed below in the light.

Convenience
Convenience factor refers that it is easy to browse or search the information through online is easier than the
traditional retail shopping. Through online, consumers can easily search product catalog but if the consumer
look generally for the same product or item in a traditional store manually it is difficult to visit physically and
time consuming also. Convenience has always been a prime factor for consumers to shop online. Online
shoppers carry multiple benefits in terms of convenience, such as less time consuming, flexibility, very less
physical effort etc. The major motivation for online purchasing is convince in terms of shop at any time and
having bundles of items delivered at door step. Rohm and Swaminathans (2004) claims in typology of
online shoppers into: Convenience shoppers, balanced buyers, variety seekers and store-oriented shoppers,
based upon their preset shopping motivation. Rohm and Swaminathans (2004) findings about convenience
and variety seeking are major motivating factors of online shopping and this study is consistent with
Morganosky and Cudes (2000) research findings. Webchecks (1999) study shows that convenience factor is
one of the biggest advantages of online shopping. Through online purchase consumers can easily compare
the price than the traditional purchase. So price comparison is also another convenience factor of online
shopping.

Time saving
Time savings is one of most influencing factors of online shopping. Browse or search an online catalogue can
save time and patience. People can save time and can reduce effort by shopping online. According to Rohm
and Swaminathans (2004), one possible explanation that online shopping saves time during the purchasing
of goods and it can eliminate the traveling time required to go to the traditional store. On the other side, some
respondent think that it is also time taken for delivery of goods or services over online shopping.

Unexpectedly time saving is not the motivating factor for the consumers to shop online because it takes time
receiving goods or delivery. But time saving factor can be seen through different dimensions i.e. person
living in Florida can shop at Harods in London (through the web) in less time than it takes to visit the local
Burdines department store. Morganosky and Cude (2000) have concluded that time saving factor was
reported to be primary reason among those consumers who have already experienced the online grocery
buying. So the importance of the time saving factor cannot be neglected as motivation behind online
purchasing. Additionally Goldsmith and Bridges (2000) emphasize that there is a discrimination between
online shopper and non-online shoppers, online shoppers are more worried about convenience, time saving
and selection whereas non online shoppers are worried about security, privacy and on time delivery. A study
by Kamariah and Salwani (2005) shows higher website quality can highly influence customers to shop
online.

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Website design/features
Website design and online shopping activity is one of the vital influencing factors of online shopping.
Website design, website reliability/fulfillment, website customer service and website security/privacy are the
most attractive features which influence the perception of the consumer of online buying Shergill & Chen
(2005). Kamariah and Salwani (2005) claims the higher website quality, the higher consumer intends to shop
from internet. Web design quality has important impacts on consumer choice of electronic stores, stated by
Liang and Lai (2000). Website design one of the important factor motivating consumers for online shopping.
A study conducted by Yasmin and Nik (2010) shows a significant relationship between online shopping
activity and website features. Website design features can be considered as a motivational factor that can
create positive or negative feelings with a website. A study of website is designed with quality features it can
guide the customers for successful transactions and attract the customers to revisit the website again.
However, worse quality website features can also hamper online shopping. According to Liang and Lai
(2000), web design quality or website features has direct impact on user to shop online.
Moreover researchers concluded that a large segment of internet users have serious concerns of security.

Security
Security is another dominant factor which affects consumers to shop online. However many internet users
avoid online shopping because of credit card fraud, privacy factors, non-delivery risk, post purchase service
and so on. But transaction security on the online shopping has received attention. Safe and secured
transaction of money and credit card information increases trust and decreases transaction risk. In 1995, UK
has introduced Fraud free electronic shopping and later on Europe and Singapore introduced secured
electronic transaction (SET). Security is one of the attribute which limits buying on the web as they claim
that there is a large segment of internet shoppers who dont like to buy online because of their thinking about
the security of their sensitive information.
The internet shopping with advanced technology, and frequent online shopping to the internet being secured
as a trustworthy shopping channel. Middle-class population with spending power is growing. There are about
200 million of middle-class population good spending powers. These people have very little time to spend for
shopping. Many of them have started to depend on internet to satisfy their shopping desires

Few Facts about Online Shopping
The figures from IAMAI show that the internet users in India will grow to 200 million by 2010. Around 25%
of regular shoppers in India are in the 18-25 age groups, and 46% are in the 26-35 year range.
Indian online matrimonial sector is worth around $230 million.
Worldwide E-commerce is only growing at the rate of 28%, since India being a younger market, the
growth of e-commerce is expected at 51% in the coming years.
In line with global trends finally India has also started shopping online these days. As per the study by
IAMAI online shopping in India has rose from $11million in 1999-2000 to $522 million in 2007 and
it is expected to rise above $700 million by end March 2010.

Comparative analysis of four factors
In the comparative analysis of four factors we will take the averages of each factor by their corresponding
modules, for instance Convenience as one of the four factors contains four modules, we will take the
average of four modules under convenience and compare with other factors averages to see which factor is
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relatively more attractive, we will also discuss the each factor as well. In table 21 in appendix you can see
Convenience contains 4 modules, Website design/ Features contains 5 modules, Time saving with 3 modules
and Security contains 3 modules. The average score for convenience is 3,9625 which is high score and it
indicates convenience is the important factor for online shoppers in Gotland, and convenience as a factor
influence consumers to shop online and it also attracts online shoppers, if we compare the convenience with
the other factors it has second highest score and this also indicates as it is one of the important factor for
online shoppers in Gotland, as it is an Island and there are not so many options for people in Gotland , so it is
perhaps more convenient for people to shop online.

The corresponding average scores of Website Design/Features is 4064 which the highest score we have received
as compare to other factors, so it is concluded that for online shoppers, Website design/Features is the most
attractive factor that influence consumers to shop online. Though time saving has the lowest score of all i.e. 3280
but still the score is positive and it indicates that time saving is also an attractive factor for online shoppers in
Gotland. Lastly the average score for the security i.e.3350 is also positive and its above 2, which shows security
is an important factor that online shoppers keep in mind while shopping online.

2.3 Main building blocks of Web experience
The controllable elements identified in the literature as influencing the online buying behavior were grouped
into three main categories and five sub-categories, each one including several of these elements (Table I).
The selection of papers, review and allocation of the Web experience elements to one of the above categories
and sub-categories was done by the author, in order to ensure the conformity of the selection criteria; a
minimum of one literature reference was necessary for including a given component in the classification.
0
500
1000
1500
2000
2500
3000
3500
4000
4500
CorrespondingAverage
Convenience Website Design/Features Time saving Security
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The definitions used in describing the main building blocks of the Web experiences, as basis of the
classification are the following:

1. Functionality factors: Factors enhancing the online experience by presenting the virtual client
with a good functioning, easy to explore, fast, interactive Web site. Functionality includes Usability and
Interactivity elements.

2. Psychological factors: Web sites must communicate integrity and credibility in order to
persuade customers to stop, explore them and interact online. Psychological factors are those playing a
crucial role in helping online customers unfamiliar with the vendor or unfamiliar with online transactions to
overcome fears of fraud and doubts as to the trustworthiness of the Web site and vendor.

3. Content factors: Factors referring to creative and marketing mix related elements of the Web
site. These factors exercise a direct and crucial influence on the Web experience. They are divided in two
sub-categories: Aesthetics and Marketing mix.

The above terms reflect the nature and/or the effect of the Web experience elements on the buying process.
As an example the policies regarding the use of customer data by online vendors and product return policies,
factors likely to affect the customer trust, were classified as psychological issues while design and
atmosphere, typical aesthetic elements were considered as elements of the Web site content.

Main building blocks of Web experience and their sub-categories

The Web experience components per category (functionality factors, psychological factors and content
factors) and sub-category (usability, interactivity, trust, aesthetics, marketing mix) and the total number of
literature references.




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1. Functionality factors:
Usability and interactivity are the two components of Web site functionality. These factors are frequently
referred to in the literature as closely associated with success or failure of Web sites, by directly and
profoundly influencing the online consumers experience. Slow, dysfunctional Web pages and poor
interactivity prompt most online customers to look for alternatives, since time saving and shopping
convenience are important motives to do business online for the majority of Internet users.

Usability
Nah and Davis (2002) defineWeb usability as the ability to find ones way around the Web, to locate
desired information, to know what to do next, and, very importantly, to do so with minimal effort.
Central to this idea of usability are the important concepts of ease of navigation and search. Usability is
considered as an important quality criterion of information systems and Web sites. Elements enhancing the
Web site usability are the convenience of using the site, the loading speed of the pages, the information
structure etc. Creating a user-friendly Web site not only requires high quality, state-of the- art technology but
also thorough knowledge of the needs and characteristics of the potential Web site user.

The different components of usability in short:

Convenience: Research indicates that convenience is a prime motivator for Web customers to stop
and interact with online vendors. Customers associate convenience with easy and fast information
browsing, shopping and settling of the online transaction; Web designers must try to understand how
their customers are likely to perform these activities online and adjust their procedures accordingly.
Site navigation, information architecture and search facilities/search process: online customers expect
easy site navigation and easily accessible information. Search engines providing fast and reliable
results helping customers to quickly locate information in the site, must be part of every well-
designed commercial Web site.

Site findability and accessibility: most Web consumers are searching for products and services by
means of search engines and online directories. It is very important that site designers apply a
consistent search engine strategy so that online consumers can easily find the site. Web sites must be
furthermore accessible by users making use of different types of Web browsers.

Site speed: online customers expect fast loading Web pages. Web designers must keep in mind that
the average time customers per page viewed is low and steadily diminishing over time.
Ordering/payment processes: cumbersome and lengthy processes required for ordering and settling
online transactions are still one of the most important sources of customer irritation, loss of goodwill
and interrupted online transactions. A balanced approach is necessary so that Web sites remain simple
to use and secure at the same time.

Interactivity
The interactivity of Internet allows online vendors to enhance the Web experience by presenting the customer
with more personalized services and facilitating interaction with other online users willing to share
experiences and suggestions.

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Interactivity therefore can be seen as underpinning two of the basic elements of the Internet revolution,
namely personalization and networking. Interactive elements are contributing to a positive customer
experience by reducing uncertainty during the online transaction and the cognitive dissonance afterwards.
Elements enhancing interactivity are facilities allowing interaction with vendors in case customers have
questions or difficulty to use the site, online helpdesks for technical assistance or support. Networking and
the possibility of establishing contacts with other users by means of active or passive interfaces (users
forums, chat-rooms or bulletin boards) are also factors enhancing the Web site interactivity.

The Interactivity components are divided in two categories:
(1) Interactivity with the online vendor.
(2) Interactivity with other Web users.

Customer service/after sales service online, interaction with company personnel and customization are
components of interactivity between customer and online vendor. Web customers expect next to convenient
shopping and support in case of problems with products or services purchased. Good organized online or
offline helpdesks, efficient reverse logistics, quick response to e-mail complaints and inquiries are some of
the issues where marketers and Web designers must focus their attention. As in the case of usability, good
knowledge of customer profiles and needs are of vital importance for the designers of these online services.


2. Psychological elements

Online trust is one of the issues researchers, as well as practitioners, frequently associate with the success or
failure of online ventures. Web users are seriously concerned about the safety of their personal information,
transaction security and misuse of private consumer data.

Subjects like hacking, fraud, spam and online scams frequently make headlines, raising security concerns as
well as skepticism and mistrust. The physical distance, lack of personal contact and the anonymity of the
Internet are also factors further increasing the consumers anxiety and risk perceptions. Online firms,
especially those lacking strong brand recognition and physical presence, should not underestimate the
importance of trust as a Web experience element.

The multi-dimensional character of online trust makes it a complicated issue and despite considerable
research attention several online trust issues are still very little explored. Multi-channel firms with well-
established reputation, brands or products usually have a serious advantage against online novices and
startups. High levels of brand awareness and good reputation make it easier for customers of physical firms
to trust them online, reducing the online customers demands for credibility or integrity credentials.

The different elements of the online trust in more detail are:
Transaction security and customer data safety are principal concerns of online customers purchasing
products or services online. Service disruptions, hacking into online vendors databases and display of
customer data on clandestine Web sites are frequent Internet incidents asking for constant vigilance
by online firms.

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Clear ordering, payment and refunding procedures as well as concrete customer policies, good
communication and strict security help customers face online transactions with more confidence.
Online vendors can also win security-minded customers by offering multiple payment alternatives,
something though not always feasible (ex. customers overseas).

Customer data abuse: A critical question for privacy-minded customers is whether personal data
known to online firms is used for any type of commercial purposes against their knowledge and will.
This is a growing concern among Internet users confronted daily with an explosive growth of spam,
fraud and online scams. Web vendors should allow online customers to opt for possible follow-up
activities and ask always the customers clear permission for any further use of data for commercial
purposes.

Guarantees and return policies: Like in traditional business, product guarantees offered by Web firms
are powerful tools for gaining competitive advantages, raising the level of customer trust and
reducing the online transaction anxiety. Clear policies outlining product returning procedures and
compensation in case of dissatisfaction with the product have been found to have a positive effect on
online vendors credibility.

Uncertainty reducing elements: Components of uncertainty reducing elements are frequently asked
questions (FAQs) and conflict-resolution policies. Allowing easy access of online customers to this
type of information enhances trust but also reduces the number of inquiries of customers with
questions on such issues.


3. Content elements

The content factors are divided into two categories:
(1) Aesthetics.
(2) Marketing mix.

(1) Aesthetics
Special attention must be paid to aesthetics, not only because aesthetic elements are often important
indicators of online vendor quality but also form the main clue of vendor and Web site credibility for the
majority of Web users.

Aesthetics embrace the artistic and creative elements of the online presentation, aiming at a pleasing
appearance or effect (Merriam-Websters Online Dictionary. These elements communicate the Web sites
atmosphere, something important for attracting online customers by inducing positive and powerful motives
for visitors to stop, explore and possibly interact with the site.
Traditional retailers are well aware of the fact that a positive experience of new customers entering their shop
is an important factor in their decision to stay or leave; the atmosphere is a major retailing quality evidence
affecting his/her impression about a sales outlet and defining the customers further actions and behavior.


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(2) Marketing mix
Several researchers have been focused on the impact of marketing mix elements on the behavior of Web
users searching the Internet or buying products and services online. Researchers agree that the marketing
mixs 4Ps including fulfillment are essential contributors to the Web experience. The ongoing debate on
the value of the marketing mix as the toolkit of conventional marketing underlines though the fact that more
research is needed in order to define its exact role of the Ps as part of the online content and online marketing
in general.

The marketing mix elements and the relevant literature references are depicted.

Communication: The literature references on this aspect refer to the quality of information provided
about the firms products, the clarity of selling conditions and the delivering terms. Information can
to a certain degree compensate the lack of physical contact with the product, reducing the online
consumers uncertainties.

Fulfillment: With the exception of digitized products (music, software, e-books, etc.) easily
delivered online, for all other types of products offered online the order fulfillment and product
delivery do not coincide with the placing the online order. The way online vendors follow up orders
and deliver products has an immediate impact on the willingness of customers to order and more
importantly, to return to the Web site for business in the future. Alternative payment methods, fast
delivery, flexible delivery options and order tracking are frequently mentioned elements of the
fulfillment process.

Product elements affecting the Web experience are the online brands and product assortment,
product features and product presentation. Online vendors can in some cases improve the customer
experience by enhancing their product presentation by means of 3D or other high-tech methods.

Price: The number of literature references of the price as an input influencing the online consumers
behavior is limited. Next to that, research on the role and importance of the online price contradicts
the predominant belief that price is the main motivator for consumers when choosing a particular
Website. And while most online consumers would insist that low price is their major motive to buy
online products, facts do not seem to confirm this. Factors found in the literature associated with the
price as part of the Web Experience are the price level, the online promotional actions or discounts
and the price transparency.

Promotion: This element is also rarely found to be one of the essential ingredients of the Web
experience; the number of relevant literature references is rather limited. Specific promotional
elements mentioned in the literature as enhancing the Web experience are free extra services, sales
promotions and incentive programs.
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3. ONLINE SHOPPING IN INDIA

It is a fact that a great online shopping revolution is expected in India in the coming years. There is a huge
purchasing power of a youth population aged 18-40 in the urban area.



If we observe the growth of Indian online transactions from the above graph, it is getting doubled year by
year.

The usage of internet in India is only 4% of the total population. This is also getting increased day by day as
the costs of computers are decreasing and net penetration is increasing. The cost of internet usage is also
getting lower, with good competition among the providers. Wi-Fi & Wimax is also getting tested in
Bangalore and other cities in India. This will increase the usage as it goes more on wireless internet.

Indians are proving every time that they can beat the world when it comes to figures of online shopping.
More and more Indians are going to online shopping and the frequency of Indias online buying is crossing
the overall global averages.

Factors That Boost Online Shopping in India:
Rapid growth of cybercafs across India
Access to Information
The increase in number of computer users
Reach to net services through broadband
Middle-class population with spending power is growing.

There are about 200 million of middle-class population good spending powers. These people have very little
time to spend for shopping. Many of them have started to depend on internet to satisfy their shopping desires.
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Few Facts about Online Shopping:

The figures from IAMAI show that the internet users in India will grow to 200 million by 2015.
Around 25% of regular shoppers in India are in the 18-25 age groups, and 46% are in the 26-35-year
range.
Indian online matrimonial sector is worth around $230 million.
Worldwide e-commerce is only growing at the rate of 28%, since India being a younger market, the
growth of e-commerce is expected at 51% in the coming years.
Inline with global trends finally India has also started shopping online these days. As per the study by
IAMAI online shopping in India has rose from $11million in 1999-2000 to $522 million in 2007 and
it is expected to rise above $700 million by end March 2010.
Indians are also Shopaholics like other Asians. There is a strong booming young adult population in
India with good levels of disposable income.

INDIA - Over $50 Billion and growing rapidly - Most popular online shopping products include:


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4. POTENTIAL INFLUENCES ON CONSUMER BUYING
BEHAVIOUR

Consumers are constantly being bombarded with marketing information and promotional messages. These
messages could be about new product launches, special product promotions, and low-price offers. These
appear everywhere from television advertisements to web site banners. Consumers do not retain much of this
marketing information. However, when a promotional message is targeted to a specific group of consumers,
it can prove very effective indeed. This is because the marketing message has been developed to appeal
specifically to people in target group of consumers. Furthermore the marketing message will have been
transmitted using promotional methods that these consumers have access to e.g. the Internet, T.V., etc.

Before developing a marketing access, a company should first determine the likely influence on a potential
consumer.

The behaviour of consumer is dependent on a number of factors, which may be economic or non-economic
factors and are dependent upon economic factors such as income, price, psychology, sociology, culture, and
climate. Therefore the study is dependent upon all these sciences and consumer behaviour scientists study it
through research and they believe that behaviour can be influenced which has been proved by actual sales
promotion of a large number of products. However there is dispute whether customer should be influenced or
not and what methods should be applied to influence him. In certain cases wrong statements are made that
may influence the buying behaviour. For instance, producers of certain face creams advertise that with usage
of their creams, complexion will become fair but actually it does not happen. There are ads for removing
baldness by using certain oils or creams, but this does not happen actually.
4.1 Consumer characteristics
Consumer characteristics are explained by: Cultural characteristics, Social characteristics, Personal
characteristics, and Psychological Characteristics. These characteristics are identified, by the marketer, in
order to identify the consumer and to be able to decide on the strategy to what kind of consumer to target.
Hence, these characteristics are used in order to segment the market and target specific consumer groups.

Cultural Characteristics
The Cultural Characteristics are recognized as the main influencer of consumer behaviour. These
characteristics are developed by three features underpinning consumer behaviour: Culture, Subculture, and
Social Class.

Culture is mentioned as the most basic cause of a persons wants and needs. Kotler and Armstrong
(2007) argues that human behaviour is mostly learned and that we are exposed to different sets of values and
beliefs from a young age, and that these values influence our behavior and decision making. Hence, these
characteristics are interesting for marketers and important indicators of certain consumer behaviour and taste.

Subcultures are small group formations with a certain number of people that share values and beliefs
such as nationalities, religions or geographic regions. An identified subculture can serve as an important and
effective market segment which can be targeted.

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Social class is recognized by Kotler and Armstrong (2007) as a class structure, consisting of a
combination of factors which gather different types of members. Some identified factors are income, age,
education, and wealth.

Social characteristics
The Social Characteristics are divided into three different categories, namely Reference Groups, Family and
Social Role and Status.

Reference Groups According to Kotler and Armstrong (2007) the effects of the Reference Groups
is mainly based on the belief that a persons behaviour is influenced by many small groups. When a group
has a direct influence it is called a Membership Group, for example: family, neighbours and co-workers.
Reference Groups are the groups to which the person often wants to belong to and to be a part of but is not.

These groups indirectly and directly form a persons behaviour and attitudes. There are three different ways
by which these groups influence a persons behaviour; they may expose a person to new behaviours and
lifestyles, influence a persons attitudes and self-concepts and also create a pressure of confirmation by
Reference Groups. Another influence of importance is the opinion leader. An opinion leader is a person that
influences others to follow his believes and attitudes towards certain issues, products or areas.

Family Family members have a great influence on the buying behaviour. The involvement and
influence by different family members varies, both to which degree but also in what way. Therefore, it is
important for marketers to understand which role is played by whom in the family and direct the
advertisement towards the main influencing part of the family.

Roles and Status Each person belongs to different types of groups and also plays different roles
whilst having different positions in the various groups. Roles are identified by Kotler and Armstrong (2007)
as what activities people are expected to perform from other members of the group.

Personal characteristics: These personal characteristics are categorized into: Age and Life-Cycle
Stage, Occupation, Economic Situation, Lifestyle, Personality and Self- Concept.

The Age and Life-Cycle Stage: These stages explain different periods in life that the consumer
experiences as he goes through life. These different stages also represent different changes that the
consumer may experience when reaching a new stage. According to Kotler and Armstrong (2007)
marketers, therefore, define their target markets in terms of the different stages in order to develop
appropriate marketing plans.

Occupation: The occupation tends to have an effect on the products and services bought by the
consumers. This leads to the possibility of developing different types of products or services that suits
interests identified to be above average within an occupation.

17

The Economic Situation: Wealth will affect a consumers product choice. A consumer may be price-
sensitive or not depending on the level of income, level of savings, level of interest rates, and also the
product or service itself.

Lifestyle: This is identified to be a persons way of living which is recognized by the activities,
interest, or opinions he or she has and it also explains the way a consumer interacts in the world.

Personality: This is mainly explained by the terms self-confidence, dominance, sociability, autonomy,
defensiveness, adaptability and aggressiveness. These psychological factors are a result of ones
environment. Personality can be defined as a dynamic and organized set of characteristics possessed
by a person that uniquely influences his or her cognitions, motivations, and behaviours in various
situations.

Self-concept or Self Image: Is the conceptual understanding that peoples possessions reflect their
personalities. This concept does bring some conflict since people may have an image that satisfies
who they are but does not agree with who they want to be (the ideal self-concept), the question then
arises which one we would want to satisfy.

Psychological Characteristics
The psychological characteristics are divided into the following concepts: Motivation, Perception, Learning,
and Beliefs and Attitudes.

Motivation: Motivation refers to a person needs that must be satisfied. These needs are of different
kind; some are biological, such as hunger, thirst and discomfort, and some are psychological such as
the need for recognition, esteem and belonging. Needs are not satisfied until they reach a certain point
of intensity and become a motive for the consumer to satisfy them. Kotler and Armstrong (2007)
discuss several motivation theories, among them are Freuds and Maslows theories of motivation.
Freud argued that a person does not really and fully understand his or her motivations. Maslow on the
other hand wanted to understand why some people set out to satisfy some needs before others.

Perception: This characteristic is based on the understanding of how differently we perceive the same
situation or the same stimuli. Kotler and Armstrong (2007) explains perception as the process by
which people select, organize, and interpret information. There are three different processes that
decide how we interpret certain information. These are Selective Attention, Selective Distortion, and
Selective Retention.

Learning: Learning is, according to Kotler and Armstrong (2007), an act that changes peoples
behaviour because of their experience. It occurs through drives: strong internal wants that call for
action, stimuli: object that drives for certain action, cues: small stimuli that determinate when, where
and how the person will respond and reinforcement: when the response and stimuli towards an object
is experienced more than once.


18

Beliefs and Attitudes: These are acquired by people through learning and experiencing. They
influence the buying behaviour by making up brands and product images in the consumers heads. A
belief is explained by Kotler and Armstrong (2007) as a descriptive thought about something and is
based on real knowledge, opinions or faith. Beliefs can also be emotionally charged. Attitudes are
described as a persons evaluations, feelings, and tendencies towards something, but also
determinations of people such as like and dislikes.


4.2 Online Consumer Characteristics
More specific identifications of the online consumer need to be made in order to understand the online
purchase behaviour. The identified characteristics are some key characteristics in regard to the online
consumer. These key characteristics were made in order to identify online consumers and to be able to
segment them.

Cultural Online Characteristics
Smith and Rupp (2003) identify that the difference in social class creates a difference in purchasing Online
Behaviour. Consumers from a higher social class generally purchase more and have a higher intention to
purchase online because there is a higher probability that they possess a computer and also have greater
access to the Internet. Consumers from lower social classes would not have the same properties. The authors
also point out that consumers with lower social class, and thereby not having the same properties, would not
have the needed computer literacy to be able to leverage a computer.

Social Online characteristics
The social influence on the online consumer comes from new Reference Groups compared to the traditional
way. For the online consumer new Reference Groups were identified as virtual communities, consisting of
discussion groups on a web site. The consumer can read about other peoples experiences and opinions which
have shown to have the effect of Reference Groups (Christopher & Huarng, 2003).

Personal Online characteristics
Personal online consumer characteristics and concluded that income has a vital role for online purchasing
behaviour. The consumers with higher household income would have a more positive attitude towards online
shopping. This conclusion was explained by the fact that households with higher income would have a
positive correlation with the possession of a computer, Internet access, and higher education.

Smith and Rupp (2003) also identified the age factor as a determinant for online purchase intentions. They
argued that older people who had no frequent interactions with the Internet and the computer would not use
the Internet as a medium for purchases, while young adults would. This was concluded by that the young
adults used the Internet and computers more frequently. Younger people were also identified to have more
technical knowledge.


19

Psychological Online Characteristics
Smith and Rupp (2003) identified the psychological characteristics of consumer behaviour as questions the
online consumer would ask himself before making a purchase online.

Motivation: The consumers are reasoning for incentives to engage in a particular behaviour. He may
ask himself questions like: should I look around for better price? If online shopping saves me time, should I
shop online more often? How much do I really need this product?

Perception: The consumer is interpreting acquired information by classing it. Questions such as the
following may come about: I feel that this site seems pretty secure. It seems that this site has a good product
but how can I be sure?

Personality: The consumer is adapting to influences of his cognitions. He may ask himself, what types
of Web sites are best suited for his personal buying preferences.

Attitude: The consumer is working out what his likes and dislikes are in respect to a particular
situation. He may ask himself: I am pretty unsure about extra costs, should I really be buying items from the
Internet? If I do not buy the item online, how else can I get it?

Emotions: The consumer is without conscious effort detecting how he is being affected by his
cognitive choice. He may ask himself: The last time I ordered from the Internet I had a really bad experience.
Should I try buying online again? What is the future of buying online? If Web sites get better should I invest
more time in buying online?

4.3 Specific Consumer Traits and Online Behaviour

The online consumers characteristics that we have identified to be the most important ones to have an effect
on the online consumer, will be referred to as specific Consumer Traits and how the consumer uses the
Internet will be referred to as Online Behaviour.

The online consumer characteristics such as personal, social, and psychological characteristics need to be
identified in order to understand what is important for the online consumer. These characteristics reveal the
consumers lifestyle and identify who the consumer is and what attitudes he has towards online shopping.

These are the consumer characteristics that are relevant for this research and need to be identified in order to
find out who the online consumer is and what affects him when shopping online. These we will be referred to
as Consumer Traits and Online Behaviour.

To summarise the prior text and to answer the question what identifies an Online Consumer, one can draw
the conclusion that for this research the important consumer characteristics that need to be identified are:

Consumer Traits
Demographics
Attitude and Beliefs
20

Impact of Reference Groups
Online Behaviour
Webographics
Online Shopping Patterns
Internet Usage



The Online Consumer Segment Subdivisions

The outline below is an attempt to more closely identify the different influencing factors and their connection
to the online purchase behaviour.

4.4 Important Influencing Factors

When processing the previous literature in order to find what Specific Consumer Traits and Online Behaviour
that needs to be identified, we gained knowledge of which factors that were highly important for the online
consumer.

Segment online consumers through first identifying the Internet usage lifestyle of every consumer; they
believe that the Internet experience is highly relevant for the identification of the online consumer. Lifestyle
is, as presented above, a describing group of consumers personal characteristics and is expressed as a
persons demographics. These living patterns show what opinions and interests a consumer has for certain
products, for what reasons and which interest they have in the Internet, the Internet usage. The study came to
the conclusion that four segment groups could be conceptualized and these would categorise the online
consumers according to their shopping behaviour. The different attributes, that explain these segments, show
that the factors Price, Trust and Convenience are highly relevant influencers on the online consumer
shopping behaviour.

A framework through their study that would help the understanding of consumers attitudes towards online
shopping. Attitudes and beliefs are separated from consumers psychological characteristics and mainly
21

determined by learning and prior experiences. Further, points out that the ability to conduct price
comparisons has been cited as a major reason why consumers use the Internet (Wallace, 1995). Price
sensitive shoppers are essentially concerned with buying products at the lowest price or getting the best value
for the money they spend.

A comparison of the traditional way of shopping and online shopping and that the comparison indicated that
online shopping is a more convenient way of shopping compared to the traditional ones. This was mainly
concluded on the fact that the Internet allows for more information to be gathered with a minimal amount of
effort, inconvenience, and invested time by the consumer. With this conclusion, the authors show that the
convenient factor is indeed relevant for the identification of the online consumer.

The factors that affected the identified segments and that were relevant for the framework were: consumer
traits, product characteristics, previous online shopping experience, situational factors, and trust in online
shopping. Consumer trust in online shopping and prior experience with online shopping were identified to
have a significant impact on a consumer's intention to shop online. Prior experience with positive outcome is
also identified to decrease a consumer's risk perception with online shopping. As presented above, Smith and
Rupp (2003) identified the psychological characteristics of an online consumer through questions a consumer
would ask himself. The factors trust, security, and prior experiences are present and they are highly relevant
for the online consumer. Here the factor trust is recognised as important, which is highly connected with
prior experience and expectations of online shopping.

Smith and Rupp (2003) discuss and identify factors in their work that influences the online consumer
behaviour. These were identified as marketing efforts, socio-cultural influences, psychological factors,
experience, purchase and post-purchase decisions. The authors plot a model which would explain the
different stages that consumers go through when making a purchase decision online. They start out with
identifying the first stage as the input stage where the consumer is influenced by the marketing efforts made
by the media and the sociocultural influences. The second stage is identified as the process stage, which
attempts to identify and explain how the consumer makes the buying decision online. In this stage they
identify that the convenience factor is one of the main determinants for the consumers intention to shop
online. They also show that the consumer is affected by psychological factors, such as perception,
motivation, personality, attitude, and emotion. The identification indicated that trust and security factors are a
major influence for the consumers when considering a potential purchase.

Due to the importance of making the consumer feel safe and comfortable, the authors argue that information
regarding security must be mediated to the consumer in such a way that the perceived security is increased.
The last stage is identified as the output stage, which is a post-purchase decision process. The article clearly
states that that Trust and Convenience are major influencers to consumer online shopping behaviour, even
though they are influencing the decision making process (Smith & Rupp, 2003).
There have been many attempts to identify and segment the online consumer through various studies. By
reading different studies we have identified certain factors that were constantly present in the literature.
There are many factors that have an impact on the online purchase behaviour, but we have identified Price,
Trust and Convenience to be very important and will put our attention to these three factors.


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4.4.1 Identified Factors affecting Online Consumer Behaviour

Price which is a part of the marketing mix is a factor used in order to stimulate the consumer and is also a
communicator, bargain tool, and a competitive weapon. The consumer can use price as a mean of comparing
products, judge relative value for money, and judge product quality (Brassington & Pettitt, 2000).
The factor Trust is considered to be a concern on the emotional basis in the minds of the consumers. The
consumers have a focus on their safety needs and want to satisfy them before making a purchase.
The factor Convenience is considered to be a benefit in the eyes of the consumer and a quality derived from
purchasing over the Internet. It is therefore considered to be a motivator and a benefit to consumers.
We believe that these factors have a significant influence on the consumer when purchasing online. To
further analyse the factors, we study underlying attributes that represent what way the factors affect the
consumers.

The Factor Price
The Internet has become a global marketplace on which consumers can gather and compare information such
as product information and prices.
The technologies and innovative business ideas of the Internet allow sellers to discriminate between buyers
and buyers to discriminate between vendors. Historically, however, prices have been set by negotiations after
having examined the product (Kotler & Keller, 2006). The Internet facilitates the scenario that comparisons
can be achieved with ease, overlooking several digital attributes (which can be communicated through the
web) and possibilities with several different vendors simultaneously. On the Internet it is after all the price
comparison prospect that interests price sensitive consumers, whilst another category of consumers focuses
on finding unique products with specialized features that might be difficult to find offline and who, therefore,
perhaps even consider the price as secondary. However, when online, only digital attributes can be evaluated
by the consumer, while offline non-digital attributes (for which physical inspection of the product is
necessary) can be tested. This could even influence impulsive shoppers to become more cautious about the
product as it can only be inspected digitally.
Furthermore, when buying online, additional costs such as freight charges, customs or prolonged delivery
times can influence the online consumers decision to reconsider the transaction even though the price is low.
The fact that the factor price has two attributes, saving money and price comparison.

The Factor Price and its Attribute



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The Factor Trust
The Internet is a relatively new way of shopping, it is challenging for the consumers and therefore perceived
by the consumer as risky. They further identify the salesperson to be a silent source of trust for the consumer,
and that the consumer is dependent on the salespersons expertise. But since the salesperson has been
removed in online shopping, the authors argue that the basis of consumer trust has disappeared. They further
explain that the consumer is not able to check the quality of an item, nor is he able to monitor the safety of
the security when revealing personal data. The authors, therefore, conclude that if a high level of security and
privacy is communicated to the consumer the result would have a positive effect on consumer trust and the
intention to buy online.

A sociological point of view on the theory of trust, there are three modes of maintaining expectations about
the future, familiarity, confidence and trust. To experience trust, familiarity and confidence must have been
established. However, trust is only necessary when there is a high perceived risk, such as during a purchase
transaction or a similar action.
The consumers previous experience and trust in the computerized medium is likely to affect his amount of
trust in online shopping. According to Lee and Moray, human trust in computerized systems depends on
three factors:

1. The perceived technical competence of the system - The systems apparent ability to perform assigned
tasks.

2. The perceived performance level of the system - How fast and reliable it appears to be able to finish the
tasks.

3. The human operators understand of the underlying characteristics and processes governing the
systems behaviour.

Previous knowledge also affects trust states that, "Practical experience tends to teach us the opposite: the
more we know, the better we know what we do not know, and the more elaborate our risk awareness
becomes.
A model that highlights what trust is constituted from when purchasing on the Internet. It is a scaled version
based on A Trust Model for Consumer Internet Shopping; trust is dependent on the six variables.

24



A company must show the consumer that it is competent in managing information and supporting the
consumer after a purchase is done. If that can be achieved, the consumer is more likely to "engage in trust
related Internet behaviours like purchasing, cooperating, and sharing information".





The Factor Convenience
Convenience is anything that is intended to save time and frustration according to the Swedish National
Encyclopedia. Further definitions of the concept of convenience are:
The quality of being suitable to ones comfort, purpose or needs
Personal comfort or advantage
Something that increases comfort or saves work at a suitable or agreeable time

Online shopping as a new medium for retailing creates a number of different advantages. One of these is that
it is considered to be more convenient to shop online compared to the traditional way of shopping.

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The convenience attributes that online shopping provides are:
Less effort
Being able to shop at home
Time saving
Being able to shop at any time of the day

Online shopping provides convenience for consumers such as time savings and search convenience if
compared to the traditional way of shopping.

Kim and Park (1991) also argue that if online shopping is to be perceived as convenient for the consumer, the
consumer must perceive a certain amount of easiness with accessing the Internet and also with carrying out
the behaviour with shopping online. The less complexity the consumer perceives with accessing the Internet
the more attention the consumer has to enter the Internet and search for information.

Further, the authors found that there is a positive relationship between the time spent, the intention to shop
online and the attitude towards the Internet. Therefore, Kim and Park (1991) came to the conclusion that the
consumers that found the Internet to be easily accessible and used, would spend more time online and search
for information and also shop more online. Hence, the consumers that perceives Internet information search
as easy, would perceive it more convenient. They also conclude that the information online should be easy to
find and, therefore, the consumer should develop effective search tools which would enhance the perceived
behavioural control for the consumer online. Kim and Park (1991) argue that the perceived easiness of the
Internet is one of the determinants consumers regard when deciding on convenience.

Consumer characteristics play an important role in the consumer's decision to shop online. The authors then
identify the so called convenient oriented consumer as the most potential online buyer since they value the
convenience of shopping at home as a large motive for purchase.
The characteristics of convenience with online shopping can be summarized as follows:
Consumers can shop from their homes meaning they do not have to take certain aspects, needed when
shopping in the traditional way, into consideration. Online shopping is, therefore, considered to require less
effort. It is also considered to be time saving, the consumer can search for products and prices easy through
the developed search engines.
Through tracking devices a consumer can at any time check where their package is. Another time aspect of
online shopping is that it allows the consumer to shop at any time of the day, the consumer does not need to
consider if the stores are open or not.




FACTOR ATTRIBUTES
Convenience Saving Time
Less Effort
Shopping at any time


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4.5 Summary
By first examining consumer behaviour theories we have investigated what identifies the consumer and the
processes that the consumer goes through before making a purchase. This has been applied to gain
understanding of the online consumer buying behaviour and has then been used in order to find which
characteristics those are relevant to identify and segment the online consumer. These have been identified as
Consumer Traits and Online Behaviour and are listed below along with the respective sub segments:

Consumer Traits:
Demographics
Attitude and Beliefs
Impact of Reference Groups

Online Behaviour:
Webographics
Online Shopping Patterns
Internet Usage

Furthermore, we have pointed out certain factors that we believe are important for the online consumer when
shopping online through the literature overview. These factors have been identified as Price, Trust and
Convenience through the literature. In order to comprehend how the identified factors influence the online
consumer we must first identify the online consumer. This identification needs to be done mainly through the
relevant Consumer Traits and online consumer behavior that have been identified earlier.


27

5. CHANGING ATTITUDE TOWARDS ONLINE SHOPPING

Awareness, Future Demand Focus for Emerging Markets & Current Issues

Consumers are more rational nowadays and have ability to get the choices from the market. Awareness
among the consumers is spread through internet. The number of internet users is increasing day by day which
attracts people who have an option to buy online. It was never thought that Indians would go in for e-
shopping in such a big way. Ticketing, travel bookings and even books and movies seem fine to buy online.
Knowing that in India sizes vary from brand to brand and quality is inconsistent, even of some electronic
items, how is it that there are people buying these items online? In India there are some segments of people
who have not yet tried purchasing over internet.

Malls malls springing up everywhere and yet people are e-shopping! And not in small numbers either. E-
commerce figures are going through the roof, according to Assocham (Associated Chambers of Commerce &
Industry of India). Today (2007-08) the figures are touching Rs. 2200 crore, but are expected to increase by
150 percent by 2008-09 - to Rs 5,500 crores and two metros - Delhi and Mumbai are driving the growth:


Well, Assocham says that books are the hottest selling item on the internet. In fact most products bought and
sold off online are: books, electronic gadgets and railway tickets. However, people are also buying clothes;
gifts, computer and peripherals, and a few are buying home tools and products, home appliances, toys,
jewelry, beauty products and health and fitness products.
Here are few reasons for this:

1. Convenience
It is the major reason. Both the cities are spread out over a large area and the best stores in both these cities
are often concentrated in certain posh areas. In Mumbai for example there are certain items you get only in
Crawford market which is at the other end of town in South Mumbai. And demographics show that the
population of Mumbai is now concentrated in the suburbs. Of course, huge malls have come up in the
suburbs as well, and Indias biggest mall Nirmal Lifestyle is in far-flung Mulund but often you find a better
choice of sizes and styles choice in other malls, say Phoenix (central Mumbai). And though both Mumbai
and Delhi have transport system, few people like to travel for two hours just to get to a shop at the other end
of town. Clearly the transport systems leave much to be desired. In Delhi, safety is also an issue for women
traveling alone in the evenings.
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2. Literacy Rate and the Cities Internet Savvy Population
Most cities in India have a higher literacy rate as compared to the national average of 64.8 percent. In fact
Mumbai has a highest literacy even amongst the cities (86 per cent). Delhi too has a high literate population
(81.2 per cent). Oddly, although Bangalore has a higher literacy rate than Delhi, at 83 per cent, the citys
share of e-commerce is not very high. Kolkatta too has a literacy rate (80.8 per cent) and so does Chennai
(80.1 percent.) If one compares these rates to literacy rates of cities like Patna (62.9 percent), Jaipur (67
percent), Indore (72 percent) or Warangal (73 percent) its clear why its the metros which are going to
continue to lead e-shopping.

3. Home delivery concept
In any case, home delivery is a concept that Indians are familiar with and love. The mall craze has started
only now. Earlier it was a choice between sweating it out in small crowded markets, or asking a friendly
neighborhood kirana (grocer) to deliver groceries home and this system is still thriving.

4. Increase in the Internet users
Increasing penetration of Internet connectivity and PCs has led to an increase in the Internet users across
India. The demographic segments that have witnessed maximum growth comprise college going students and
young persons. These segments are the users of advanced applications and technologies online and are most
likely to be heavy Ecommerce users.

5. Increase in the number of buyers and sellers
The success of a marketplace depends on the presence of a large number of buyers and a large number of
sellers. In addition to online buyers, many offline stores have begun to sell their products in the online
marketplace. The greater the number of sellers and buyers, the faster the market grows.

It was never thought that Indians would go in for e-shopping in such a big way. Ticketing, travel bookings
and even books and movies seem fine to buy online. Knowing that in India sizes vary from brand to brand
and quality is inconsistent, even of some electronic items, how is it that there are people buying these items
online?

Descriptive analysis showed that the consumers outside India are friendlier doing shopping on internet. They
have better political system to protect their rights in case of any frauds. Every consumer of foreign country
has chosen Debit Card and Credit Card as their mode of payment. They are more used to with their system
which allows them free flow of number of transactions they make on internet.

While in case of Indians there are some segments of people who have not yet tried purchasing over internet.
The reason found was insecurity of transactions and they also found that the price was similar to the market
price. There was no forcing factor for them to purchase over internet. Also they analyzed in the way that they
had to make payment in advance and have to wait for the delivery which again restricted them to purchase
over internet.
Comparative analysis of Indian Buyers and Foreign Buyers revel that Indians less comfortable purchasing on
internet. In the same way foreign buyers are mostly purchasing from internet. The comparative analysis
below will make it clearer.

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Point of Distribution Foreign Countries India
Demographic
Segmentation
The per capita income of
people is much higher.
The per capita income of
people is very less.
Demographic
Segmentation
The age factor is less
important. Every person is
knowledgeable about the
use of Online Shopping.
Only youngsters below the
age of 30 are more aware of
Internet Shopping. Other
age group people are least
aware of Online shopping
Socio Economic
Both Urban & Rural
population are the
customers of E-Marketers.
Only Urban population is
the customer of E-
Marketers.
Psychographic
Segmentation
People in foreign countries
have very speedy life style
that allows them to buy
online and save their time.
People in India are very
conscious and they have a
tendency to compare,
analyze, touch and feel and
then buy the product.
Benefit Segmentation
Well-established govt.
system to protect rights of
people making online
purchase.
Govt. is less aware of the
online shopping trend so
the legal system does not
fully support the
consumers.
Usage Situation
Less number of frauds
recorded. So more usage
More number of frauds
recorded. So less usage
Use-related Segmentation
People are well aware of
internet usage.
People are less aware.
Payment Mode
All people normally use
debit cards or credit cards
to make purchase over
internet.
All consumers dont have
their personal debit cards or
a credit card that restricts
them.

Increasing penetration of Internet connectivity and PCs has led to an increase in the Internet users across
India. The demographic segments that have witnessed maximum growth comprise college going students and
young persons. These segments are the users of advanced applications and technologies online and are most
likely to be heavy E-commerce users.
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6. PROPOSED MODEL

Total of 11 interrelated factors for which the practical evidences show significant relationships.


Consumer satisfaction is considered to be a separate factor in this study. It can occur at all possible stages
depending on consumers involvement during the online shopping process. The relationships between
satisfaction, attitude, intention, decision making and online purchasing are proposed to be two-way
relationships due to the reciprocal influences of each on the other. In addition, three of the antecedents,
perceived usefulness, perceived ease of use, perceived enjoyment, have been found to have direct impact on
consumer satisfaction.
ORDINARILY
DEPENDENT
VARIABLES
ORDINARILY
INDEPENDENT
VARIABLES
31

6.1 ORDINARILY DEPENDENT VARIABLES

Perceived Usefulness
Perceived usefulness is defined as the degree to which a person believes that using a particular system would
increase his or her job performance. It is an important factor affecting acceptance of an information system,
because the ultimate aim of any person is the superior job performance.

Perceived Ease of Use
This is an important factor that affects the acceptance of a particular information system. It is defined as the
degree to which a person believes that using a particular information system would be free of effort. Hence
an application perceived to be easier to use would more likely be accepted by the user.

Perceived Enjoyment
Enjoyment refers to the extent to which the activity of using a computer is perceived to be enjoyable in its
own rights. This is seen as an intrinsic source of motivation to use a particular application.

Amount of Information
Amount of information is defined as the information which is available for the product which a person wants
to buy through online shopping. This factor eases the decision of the user to actually buy the product or not,
or which product to buy. This factor becomes even more important in case of High Involvement product.

Security and Privacy
Security and privacy are the main factors which hinder the growth of Online shopping. The user is concerned
about his ID and Password which can be stolen by persons with wrong intentions and then misuse it. At the
same time they are concerned that their personal information may be sold to the third party which poses a
serious threat to their privacy.

Quality of Internet Connection
Not only is the presence of internet connection necessary, but also its Quality is important to shop online.
This is an important factor which determines whether the user would shop online or not because presence of
internet is a basic necessity for this mode of shopping.


6.2 ORDINARILY INDEPENDENT VARIABLES

Attitude towards Online Shopping
Consumers attitudes toward online shopping have gained a great deal of attention in the empirical literature.
It is believed that consumer attitudes will affect intention to shop online and eventually whether a transaction
is made. It refers to:
1) The consumers acceptance of the Internet as a shopping channel
2) Consumer attitudes toward a specific Internet store (i.e., to what extent consumers think that shopping at
this store is appealing).

32

Intention to Shop Online
Consumers intention to shop online refers to their willingness to make purchases in an Internet store.
Commonly, this factor is measured by consumers willingness to buy and to return for additional purchases.
The latter also contributes to customer loyalty. Consumers intention to shop online is positively associated
with attitude towards Internet buying, and influences their decision-making and purchasing behavior. In
addition, there is evidence of reciprocal influence between intention to shop online and customer satisfaction.

Online Shopping Decision Making
Online shopping decision-making includes information seeking, comparison of alternatives, and choice
making. The results bearing on this factor directly influence consumers purchasing behavior. In addition,
there appears to be an impact on users satisfaction. Though it is important, there are only five studies that
include it. Potential consumers appear to use a two-stage process in reaching purchase decisions.
Initially, consumers typically screen a large set of products in order to identify a subset of promising
alternatives that appears to meet their needs. They then evaluate the subset in greater depth, performing
relative comparisons across products based on some desirable attributes and make a purchase decision.

Online Purchasing
This is the most substantial step in online shopping activities, with most empirical research using measures of
frequency (or number) of purchases and value of online purchases as measures of online purchasing; other
less commonly used measures are unplanned purchases Online purchasing is reported to be strongly
associated with the factors of personal characteristics, vendor/service/product characteristics, website quality,
attitudes toward online shopping, intention to shop online, and decision making.

Consumer Satisfaction
It can be defined as the extent to which consumers perceptions of the online shopping experience confirm
their expectations. Most consumers form expectations of the product, vendor, service, and quality of the
website that they patronize before engaging in online shopping activities. These expectations influence their
attitudes and intentions to shop at a certain Internet store, and consequently their decision-making processes
and purchasing behavior. If expectations are met, customers achieve a high degree of satisfaction, which
influences their online shopping attitudes, intentions, decisions, and purchasing activity positively.
33

7. PROMOTIONAL STRATEGY FOR ONLINE SHOPPERS

Direct Mail and E-Mail marketing campaigns: These should be focused at capturing the minds of prospective
non users of products or promoting repeat purchase by regular customers. The main target should be
Generation Y who are pragmatic, clever, socially and environmentally aware, and open to new experiences.
Since they are risk takers, new products and services should be tailor made to suit their needs and wants. It is
of an utmost importance that companies take them into consideration when they define the main traits
(product/service, price, place, promotion and so on) of their offer. Moreover, they are believed to bring an
essential contribution to the technological progress through their constant interest in new media, (Curus,
2008).

Ducoffe found that Internet users have positive attitudes toward advertising and online advertising in
particular as they described it as "informative" and "up to date." High usage interactive online gamers have
positive attitudes toward both online advertising and the direct communications that lead them to those
services (Jones 2007). Donthu and Garcia (1999) found that online shoppers had more positive attitudes
toward direct marketing and advertising.

Direct mail and e-mail will be more effective in an environment of robust network which ensure deliverables
are accurately provided to the target market. Spiros et al postulated that marketers should carefully consider
their web site's attributes. For example, if marketers want consumers to have a positive experience with their
sites, they may want to adorn their sites with pleasant and enjoyable stimuli to make them attractive.
Inaddition, they should make their sites easy-to-use and easy-to-navigate. Furthermore, marketers should
place extra emphasis on providing fast, accurate, and uncluttered information through their web sites. Finally,
marketers rather than designing static web sites, they should design sites that interact with the consumers and
adjust to their needs. Direct mail, e-mailing, web-pages and online advertising promotions should target the
segment. Online shoppers tend to have more positive attitudes toward direct marketing and advertising as
cyber-shopping provides opportunities to make more purchases. Donthu and Garcia (1999) found that online
shoppers will have more positive attitudes toward shopping, advertising and direct marketing than non-
shoppers.

Special promotions, price incentives and exclusive offers: E-managers can induce consumers to visit their
sites more often. This objective can be achieved by different types of actions. For example, e-consumers can
receive price incentives, exclusive offers, special promotions, and product/service advantages.

Word of Mouth (WOM) activities: Companies should reinforce WOM activities from satisfied customers.
More specifically, companies could enhance its impact and effectiveness by facilitating or even rewarding
such behavior. For instance, they can make available on their sites possibilities such as "tell a friend" e-
mailing, "share your opinion" sections, "send a discount coupon to a friend" or "let a friend know about a
special offer" actions, and "get a premium service for sending us a new customer".

34


Influence of Advertisement and Attitude on online shopping

It is important however important to note that 35% of online shoppers perceive advertisements as deceptive
hence they do not pay attention to them. Andrews and Boyle concluded that media reports, particularly
television, "have made a significant, negative impact on the interviewees' affective perceptions of the risk
involved". Brackett and Carr (2001) found that web advertising is "irritating, annoying or insulting to
peoples' intelligence."

There is a correlation between attitude and online shopping as reflected by responses recorded from the
online shoppers. Most respondents (76%) indicated that they enjoyed shopping which they regarded as fun.
Attitudes toward shopping, direct marketing, and advertising are linked in the online world. Online shoppers,
when in "the flow," traverse the Web seeking recreation and adventure (Hoffman and Novak 1997). To some,
shopping is a recreational activity, and recreational shoppers tend to have more positive attitudes toward
shopping. Donthu and Garcia (1999) found that online shoppers have more positive attitudes toward
shopping, advertising and direct marketing.
Privacy of consumers is important in attracting and retaining online shoppers. Online shoppers
indicated that they were more concerned with ethical issues vis--vis privacy, security, respect and
responsibility. Privacy consists of "the rights of individuals and organizations to determine for themselves
when, how, and to what extent information is to be transmitted by others". A significant 47% of the online
respondents expressed strong reservations on phone solicitations and receipt of junk mail which they
considered invasion of privacy and nuisance respectively.
35

Major learning from the assignment:

a) There is growing appetite for new products or services by Generation. Since customers need a wide range
of unique products to suit their needs it is an obvious reflection of the vast diversity of needs, values and life
styles of the 3rd Wave Society.

b) Customers have dynamic preference and taste which change with quantum leaps in technology. In
response to these trends, companies need to globalize their e-business to generate increased business value
because a global virtual presence can be more feasible and less expensive than a physical presence.

c) Brand and Price consciousness is important in determining customer behaviour since it stimulates a desire
to purchase a product.

d) Customers are sensitive and delicate with regard the marketing mix (product, price, place, promotion).

e) Most customers make a planned decision and avoid impulse behavior in making purchases.

36

8. RESEARCH DESIGN AND DATA COLLECTION METHOD

8.1 Research method
Our research regarding Consumers attitude towards online shopping is a descriptive research because we
just want to draw a picture of our topic as what are the factors that influence consumers to shop online. In
general two types of research methods are being used quantitative and qualitative. We would like to go for
quantitative method in our research as it is a precise way. According to Creswell (1994) time is vital attribute
for decision making while selecting research method. Saunders, Lewis, and Thornhil (2000) suggests that
quantitative research can be faster as compare to qualitative as it is possible to forecast the time schedule,
whereas qualitative can be relatively long in duration. Research projects normally done for academic reasons
are limited to time as our research is also being done for academic purpose and is time limited so that is why
we are going to prefer quantitative approach.

8.2 Research Model
The research model shown in Figure is constructed by the writers on the basis of number of researches done
in the area of consumer attitudes towards online shopping specifically and broadly on online shopping
behavior. The diagram shown in figure depicts the factors influencing consumer to shop online.


The above model shows a relationship between dependent variable (DV) and independent variables (IDV).
Consumer attitudes towards online shopping are perceived as dependent variable whereas convenience, time
saving, website design/features and security are the independent variables that influence the consumers to
shop online. The research model developed by the writers will serve as a basis for this research and it will
help in analyzing and interpreting the empirical results.


37

8.3 Data collection
When it comes to data collection there are two methods in general used by researchers to collect data,
primary and secondary method. If we talk about primary data it includes observation method, Interview/
questionnaire method, case study method, projective techniques and sociometery. Whereas, secondary data is
one which is already collected by some other researcher not for the reason for particular study or research.

8.4 Sampling
In general there are two types of sampling techniques probability sampling and non-probability sampling. In
Probability sample there is a nonzero equal chance for each population element to be selected, Bryman and
Bell (2007). There are four types of probability sampling as stated by Bryman and Bell (2007) simple
random sample, systematic sample, stratified random sampling and multi stage cluster sampling. Whereas, in
non-probability sampling there is no random sampling. As stated by Bryman and Bell (2007) there are three
types of non-probability sampling i.e. Convenience Sampling, snowball sampling and quota sampling.
Convenience sample is one that is conveniently available to the researcher with its goodness of accessibility.
The problematic facet of this type of non-probability sampling is that it is impracticable to generalize the
results but at the same time in words convenience sampling more remarkable role than supposed. And in
business and management field this technique is more worthy as compare to sample based on probability
sampling. By keeping in view the limitations of time, resources and population writers have decided to apply
convenience sampling technique for the purpose of collecting empirical material. As time and resources are
one the constraints faced by the researchers convenience sampling is helpful, and it seemed suitable for our
research purpose as we are unaware of the online shoppers in Gotland and besides this we could not get the
list of online shoppers as it was difficult to get the list from administration of Gotland University so we
decided not to draw a random sample. We have decided to distribute our questionnaire among Gotland
University students, in general library and higher secondary school in Gotland so convenience sampling
would be helpful for the writers to approach the respondents and collect the data on time and also to avoid
low response rate, as we are expecting at least 100% response rate.
8.5 Sample design
As mentioned by Kent (2007) In particular research a procedure that is being followed for selecting a
sampling unit is called sample design. The procedure that is being followed by the writers to select a
sampling unit is a mixed process. A mixed process means distributing survey online as well as in person to
online shoppers.

8.6 Questionnaire design
The questionnaire is carefully designed to meet the requirements of the research. The questions are taken
from previous literature on Consumers attitudes towards online shopping with a view to validate the
research more and some of the questions are self-structured to cover the diversity of research problems. The
questionnaire consists of two main parts and one sub part, first part is mainly focused on questions pertaining
to factors that influence consumers to shop online. Second part of the questionnaire will cover one of our
research question that is who are online shoppers in terms of demography and to see are there any difference
in relation to factors that influence Gotland consumers to shop online.


38

Part A: Factors influencing consumers to shop online
First part of the questionnaire will cover the questions relating to factors influencing consumers to shop
online, these factors are Convenience, Time Saving, Website Design/Features and Security. Convenience as
one of the factor includes four questions, as mentioned above that questions are selected from previous
literature and some of them are self-structured. There are total of five questions pertaining to Website
design/Features, three questions related to Time saving factor and three questions related to Security.

Part B: Demographics
This section includes personal and sensitive question regarding income so as there is a risk that respondent
can terminate the survey at early stage. This section includes questions pertaining to Gender, Age, Income
and Education.

8.7 Validity and reliability
Writers research questions will help to prove the validity of research. Validity is if the statements that are
designed in real terms measure what is actually meant to measure (Fisher 2007). As most of the research
questions are being extracted from previous literature done in the area of Consumer attitude towards online
shopping which proves the validity. The questionnaire is closely linked with the research questions as part A
of the questionnaire deals with questions pertaining to each of the factor that can influence consumer to shop
online.
The questionnaire is constructed in a way that it does not alienate the respondent, as sensitive questions in
nature such as income and age are asked at the later part of the questionnaire so to avoid from the risk that
respondent can terminate the survey.
Questionnaires are not distributed in a particular setting or a place as writers have distributed the
questionnaire in Gotland University, Gotland Library as to get the diversified population from different
demography. Questionnaires are only distributed to respondents who have previous online shopping
experience.

39

9. REVIEW OF LITERATURE

Petrovic Dejan (2006) in his study on Analysis of consumer behaviour online explained that the
most relevant behavioural characteristics of online consumers and examine the ways they find, compare and
evaluate product information. Comparison of the newly collected survey data with the existing consumer
behaviour theory resulted in detection of a number of issues related to a specific consumer group. The
purpose of this report is to translate these findings into a set of implementation activities on strategic and
technological level. Execution of these recommendations will result in better conversion of visitors into
customers and encourage customer loyalty and referrals.The focus group of this study will be young adults
aged between eighteen and thirty-four interested in buying a mobile phone or a related product in the study
showed that there are product types, which are more likely to be sold online such as software, books,
electronics and music. Reason for this is that when purchasing these types of products, one does not require
personal inspection and most, if not all features, can be outlined in the product description and images. Most
products in the mobile phone family belong to this category. According to the recent research on consumer
behaviour on the Internet users, there are four distinct consumer groups with different intentions and
motivations:
Exploration
Entertainment
Shopping
Information

Music, Videos, Lyrics - Daily updated collection of music videos and lyrics. Majority of young
adults tend to be active information seekers. A high level of technological confidence within this group tends
to be an encouraging factor when it comes to product information research online. The following analysis
presents both, focus group results and behavioural theory in a parallel fashion divided into two main research
topics:
Information Retrieval and Search Patterns
Perception of Product Information Online
These two areas are mutually dependent and particularly important in a market where consumers have the
power to choose the right product from a number of competing suppliers. Well-structured product
information that cannot be found easily online is as much of a problem as is having easily accessible
information that does not meet the consumer's expectations.

Bikramjit Rishi (2010) in their study on Online shopping is an innovative option of distribution
available in the hands of marketers. It is innovative and creative because marketers can experiment with it in
form, content, visibility and availability. In India online shopping is considered as a relevant alternative
channel for retailing and it is now an important part of the retail experience. This research study is an
empirical study to find out the motivators and decisional influencers of online shopping. The sample has been
selected from the youth population as this group of people actually use internet to buy online. The study
highlights that reliability; accessibility and convenience are the major motivator factors which motivate the
Indian consumer to buy online. Similarly, reluctance and preference are the two decisional factors which
influence the decision.
40

10. SCOPE OF THE STUDY AND METHODOLOGY

At any given time there are millions of people online and each of them is a potential customer for a company
providing online sales. Due to the rapid development of the technologies surrounding the Internet, a company
that is interested in selling products from its web site will constantly has to search for an edge in the fierce
competition. Since there are so many potential consumers, it is of the out most importance to be able to
understand what the consumer wants and needs. The importance of analyzing and identifying factors that
influence the consumer when he or she decides to purchase on the Internet is vital. Since the Internet is a new
medium for there have been new demands set by the consumer. That is why it is crucial for the online
retailers to know what influences the online consumer.

Analyzing consumer behavior is not a new phenomenon. The renowned marketing expert Philip Kotler has
published several works on the topic of consumer behavior theories. These theories have been used for many
years not only to understand the consumer, but also create a marketing strategy that will attract the consumer
efficiently Hence, understanding and identifying the consumer is closely related to the directions a company
will take with their marketing strategy. These theories can also be applied to identify the online consumer
and to create certain consumer segments. However, some distinctions must still be made when considering
traditional consumer behavior and online consumer behavior.

Since online retailing is a new retailing medium and online consumer behavior is diverse from traditional
consumer behavior, one must identify what influences the online consumer. Analyzing the process that the
online consumer goes through when deciding and making a purchase over the Internet, shows some factors
that consumers consider these factors need to be identified and taken into account by online retailers in order
to satisfy consumer demands and compete in the online market.

10.1 Research Approach
There are two most commonly used research approaches, the inductive and the deductive method. The inductive
research method attempts to set up a theory by using collected data, while the deductive research approach
attempts to find the theory first and then test it to the observed data. We chose a deductive research approach for
our study as we would move from the more general to the specific.

10.2 Research Strategy
When collecting data to approach the purpose of a research there are two ways in which the data can be
collected. In order to acquire a General knowledge about the topic, secondary data is primarily used and is
one of the ways by which data can be collected. The second way to collect data is the primary data collection.
Usually when a study is conducted, secondary data is not sufficient enough and needs to be completed with
primary data which is collected by the research.

Primary data
When collecting primary data one can choose to do interviews, observations, experiments, and questionnaires.
Due to the purpose of our research, only the questionnaire method would be able to approach the topic and be able
to collect the answers in a satisfactory manner.
In our research the primary data is mainly concerned with analyzing the respondent in order to later on classify
the respondent. Further on, the primary data will be used to analyze the factors and how these are related to the
41

respondent. The primary data is conducted in a manner to be able to approach our research and solve our research
questions.

Secondary Data
Secondary data can be classified into three different subgroups: documentary, multiple source, and survey.
Documentary second hand data comes in both written and non written form. It is the data that can be collected
from sources such as journals, databases, transcripts etc. This form of data is dependent on the access the
researcher has to it. Survey based secondary data is the data that is collected through the survey and is available as
data table forms. Multiple source secondary data is data that has been compiled into documentary or survey form;
the main characteristics of this type of data is that it has been changed into a different form before the researcher
is assessing the data.

We have mainly used documentary secondary data combined with multiple source data. Documentary secondary
data has been the data collected through different types of research conducted within the topic, articles, and books
that are written on consumer behaviour and ecommerce. This type of data has been the fundamental source for
gaining knowledge within the topic in order for us to be able approach the research problem. The secondary data
that we used for our research is data that has also lead to the conclusion of which factors that will be examined.

The multiple source data that we have used has been in order to choose which product we would use for our
research in order to be able to find the product that is most widely bought over the Internet.

10.3 Sample Design
The factors that we intended to examine can be applied to and investigated at any population that uses the
Internet and buys online products Online. Since there are time and resource restraints, a specific Population
had to be identified in order to generalize and create relevant segments. Convenience sampling involves
using samples that are the easiest to Obtain and is continued until the sampling size that is need is reached.

10.4 Research Methodology
The type of research was both exploratory as well as Descriptive. We will attempt to find the main factors that
influence the online consumer when making an online purchase. In order to broaden our own understanding of the
subject we conducted our initial research in literature on consumer behaviour and e-commerce. We reviewed
studies that had similar aims and paid particular attention to their results.

This study started out as an exploratory study but developed into an explanatory study since we start out with first
gaining knowledge about consumer behaviour to further being able to gain knowledge about online consumer
behaviour. Having this knowledge we continue to identify specific factors that are of importance when the online
consumer is making online purchases.


42

11. BARRIERS TO GROWTH OF ONLINE MARKET

Consumer Bias
Consumers often display a bias for brands that they know well and have had a good experience in the past.
Thus products of brands with a favorable bias will score over the products of less popular brands. A few
would risk buying expensive jewelry from an unknown jeweler online.

Lack of Touch Feel-Try Experience
The customer is not sure of the quality of the product unless it is delivered to him and post delivery of the
product, it is sometimes a lengthy process to get a faulty or the unsuitable product changed. Thus, unless the
deliverables are as per the customers expectations, it is hard to infuse more credibility in the e-Tailing
market.

Mounting Competitive Pressures
To attract customers, the competing online players are adopting all means to provide products and services at
the lowest prices. This has resulted in making the consumers choice-spoilt, who in turn surf various websites
to spot the lowest price for the product. Thus, although the number of transactions is increasing, the value of
the products sold is continuously falling owning to high competition and leaner margins.

Seasonality
E-Commerce Market is faced by seasonal fluctuations. As told by an Industry player, August to February
is the peak seasons for sale, while March to July is the dry seasons for sale. During the peak season,
occasions that drive the sales are Diwali, Rakhi, Valentines Day, New Year, Christmas, Mothers Day,
Friendship Day etc. are. On these occasions younger generations prefers buying and sending gifts online.

Credibility in Payment System
Online frauds and breach are the biggest barriers to online sales. As a result, prospective buyers prefer
staying away from revealing their credit card and bank details.

Untimely Delivery of Products
It might take a few minutes to search, book and pay for products and services online, but the delivery of the
product may take unreasonable time.
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12. AN INTEGRATED FRAMEWORK OF ONLINE CONSUMER
BEHAVIOUR

As demonstrated in the previous section, the prevalence of the Internet has aroused enormous interest in the
study of consumer-based electronic commerce in recent years. In particular, the focus of these studies was on
investigating factors affecting the intention and adoption of consumer online purchase.

Early studies in online consumer behavior largely sought to explore how consumers adopt and use online
purchase. Specifically, the emphasis was on the antecedents of consumer online purchasing intention and
adoption. Companies, however, have started to realize that in the digital economy, competitors are just a
click away. Initial adoption by consumers is only the first step towards overall success, and companies that
succeed in their e-business initiatives are adept at creating and maintaining a long-term sustainable
relationship with loyal customers. Thus, research in the consumer continuance behavior (repurchase)
becomes increasingly salient.

12.1 Base Model
Our literature review revealed that no prior study has attempted to link the three key concepts of intention,
adoption, and continuance and investigate the process of online consumer purchase as a whole. By
integrating attitudinal theoretical model and the expectation-confirmation model, we attempt to associate the
three elements together and form a base model Model of Intention, Adoption, and Continuance (MIAC) for
the development of an online consumer behavior framework.


Model of Intention, Adoption, and Continuance (MIAC)

Attitudinal model has been widely used in the marketing context and this paradigm provides researchers with
a useful lens for examining the factors explaining consumer purchasing intention and adoption. According to
this model, behavior is predominantly determined by intention. Other factors like attitudes, subjective norms,
and perceived behavioral control are also shown to be related to an appropriate set of salient behavioral,
normative, and control beliefs about the behavior. However, model stops at the adoption level and does not
capture other important factors that explain and predict consumer continuance behavior (repurchase).

44

The expectation-confirmation model, on the other hand, focuses on the post-purchase behavior. It is a widely
used model in the consumer behavior literature, particularly in explaining consumer satisfaction and repeat
purchase. Satisfaction is the central notion of this model and it is formed by the gap between expectation and
perceived performance (Oliver 1980). The expectation-confirmation theory suggests that if the perceived
performance meets ones expectation, confirmation is formed and consumers are satisfied.

12.2 Framework for Online Consumer Behavior
Our analysis shows that online consumer behavior is still fragmented. For example, researchers such as
Goldsmith and Limayem found that personal innovativeness is a key personality trait that explains consumer
online purchase intention. The effects of presentation mode, search engines, and navigation structure of
product items on the adoption of Internet shopping. Trust in an Internet store is a salient determinant of
online shopping. Finally, Lee focused on online repurchase and contended that consumer trust and consumer
satisfaction was the key antecedents of continued purchase.

In order to capture the important factors explaining online behavior, we propose a unifying framework that
could eventually guide research in this area. Through a close examination of the existing literature, five
major domain areas including individual/consumer characteristics, environmental influences, product/service
characteristics, medium characteristics, and online merchant and intermediary characteristics were identified.

Individual/Consumer Characteristics
The impact of Individual/Consumer characteristics on the adoption of IS/IT is a dominant research
perspective in the IS literature. In the current study, individual/consumer characteristics refers to the factors
specific to the consumer such as demographics, personality, value, lifestyle, attitude, consumer resources,
consumer psychological factors (flow, satisfaction, trust), behavioral characteristics (looking for product
information, access location, duration, and frequency of usage), motivation, and experience.

Environmental Influences
In addition to personal characteristics, marketing scholars such as Engel et al (2001) contend that
environmental factors like culture, social influence, peer influence, and mass media play an important role in
affecting consumer purchasing decisions. We believe that these factors are also relevant in the context of
online consumer behavior and therefore include them in our framework.

Product/Service Characteristics
Price, quality, and product type are the three key elements in shaping consumers perception. In suggested
fragmentation, product/service characteristics mainly refer to knowledge about the product, product type, and
frequency of purchase, tangibility, differentiation and price.

Medium Characteristics
Characteristics of systems have been extensively studied in the IS literature. Traditional IS attributes such as
ease of use, quality, security and reliability are included in the study of electronic commerce systems.
Additionally, web specific factors such as ease of navigation, interface and network speed are also considered
in the current study.


45

Online Merchants and Intermediaries Characteristics
A broad classification of Internet retail stores as well as the key attributes and features of online stores. These
studies provided us with a better insight into the study of online merchant and intermediary characteristics. In
the current study, we included factors like service quality, privacy and security control, brand/reputation,
delivery/logistic, after sales services and incentive in our framework of online consumer behavior.


Framework of Online Consumer Behavior

12.3 Online Consumer Purchase Intention, Adoption, and Continuance
Intention, adoption, and continuance are the key building blocks of our proposed framework of online
consumer behavior. In the following section, we implicitly investigated the three key elements by mapping
prior literature into the five domains. The extent to which each one of the factors was related to one of the
three main building blocks. For example, the impact of age on intention was investigated by one study and
the impact of age on adoption was investigated by seven studies. However, no study explored the link
between age and continuance.
46

Consumer Online Purchase Intention
Based on the theory of reasoned action and other related theories in this research area, the key factors of
attitude, subjective norm, and perceived behavior control are largely postulated as the determinants of
consumer online purchase intention. Similarly, perceived ease of use and perceived usefulness stemming
from technology acceptance model (TAM), have also received enormous attention. Trust and perceived risk
have been widely investigated in the study of consumer online purchase intention. Some recent studies
focused primarily on the trust formation process in the context of Internet shopping. In terms of
product/service characteristics, are the key research topics are product type and price. For instance, products
like CDs, books or canned food which do not require a physical examination before being purchased are
easier to sell on the Internet. Brand/reputation and service quality are also important in affecting online
purchase intentions.

Consumer Online Purchase (Adoption)
As is the case for consumer online purchase intention, researchers extensively employed attitudinal
theoretical models in the study of consumer online purchase and thoroughly investigated the antecedent
factors like intention, attitude, subjective norm, perceived behavior control, ease of use, and perceived
usefulness.

Moreover, we observed a significant number of empirical studies that proposed and tested factors affecting
consumer online purchase. Compared to the study of intention, the studies of consumer online purchase are
quite fragmented and widely dispersed in the five main categories. For examples, demographics have been
widely considered in the study of online consumer behavior. Researchers primarily investigated factors such
as age, gender, income, education, and the like in determining consumer online purchase. In terms of medium
characteristics, a number of web specific factors including navigation, interface, security, accessibility, social
presence and online shopping aid have been widely investigated in these prior studies. In terms of merchant
and intermediary characteristics, factors like privacy and security protection and brand/reputation are
frequently studied in consumer online purchase adoption.

Consumer Online Repurchase (Continuance)
Research on continuance is in its infancy. A recent study is one of the very first attempts to explain consumer
online repurchasing behavior. His proposed model was formulated on the basis of Expectation and
Confirmation Theory (ECT), and postulated satisfaction, confirmation, and loyalty incentives as salient
factors affecting consumer online repurchasing.

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13. DATA ANALYSIS AND DISCUSSION
One of the important steps is to analyze the data and discuss the findings. In this chapter researchers will
discuss the empirical findings from this study.

Q1. TO KNOW THE AGE OF THE REPONDENTS?

INTERPRETATION
The above diagram shows us the percentage in the age of respondents. As it shows that from age 15-20 the
number of respondents are31 % and from age of 20-25 it is 48 % and from 25-30 it is 14% this is the above
data which is shown by the this pie chart.
Q2. TO KNOW THE GENDER OF THE RESPONDENTS?

INTERPRETATION
This graph itself is showing more percentage of males rather than females, the percentage of male
respondents is 86% and percentage of female respondents is only 14%.

48

Q3. TO KNOW WHETHER THEY HAVE THEIR OWN INTERNET CONNECTION?

INTERPRETATION
This graph show us the percentage of respondents who have their own internet connections, its shows that
65% of respondents have their own internet connections and 35% people dont have their internet
connection.

Q4. TO KNOW WHAT MOTIVATES PEOPLE TO DO ONLINE SHOPPING?

INTERPRETATION
This graph shows us what motivates the people to buy internet, as from above result we found out that no
travel to shop is the main thing which motivates the people to buy products online.
48
49

Q5. TO KNOW WHETHER CONSUMERS ARE GETTING COMPETITIVE PRICE?

INTERPRETATION
This diagram shows us that whether online marketers are giving competitive price or not and result which is
came is that most of the people thought that online marketers are providing competitive prices than physical
stores. And result shows 67% of people say that it provides competitive prices and only 27% people says no.

Q6. Effect of Computer ownership and Years of using Internet on online shopping?
Years of Using
Internet
Percentage
<1year 6
1-2years 12
2-3years 0
3-4years 17
4years< 65

50



Years of using Internet analysis:

The table above indicates that 65% of respondents have more than four years experience in using the
internet. In terms of ability to use the internet in online shopping, most respondents expressed satisfaction.
However, inherent risk and costs associated with online shopping inhibit the full utilization of the service.
There is need to perfect on security issues and improve on connectivity as consumers desire the best service.
A significant number of online shoppers saw low costs and substantial benefits associated with e-shopping.

Conclusion:

Internet shoppers display higher levels of internet and e-mail usage. We noted that more ISPs are entering
the lucrative market competing extensively in offering the best service at affordable prices to customers.
Internet surfing charges have effectively diminished as the competition intensifies. Improvements in
technology have also seen internet applying not only to computers and laptops but to cell phones. The trend
of committing more time to online shopping is fast approaching as ISP strive to provide tailor made ICT
oriented products and service. Consumers are set to benefit immensely from removal of Customs duty on all
imported IT hardware and software material. The number of online users will increase as ISPs also extend
their services. If consumers own the computer resource and have internet access, then the environment will
be more conducive to online shopping.



0
5
10
15
20
25
30
35
40
45
50
Percentage
Employer's
Owned
Cyber Caf
51

Q7. FREQUENCY OF ONLINE SHOPPING?

Close to 90% of respondents to this online survey bought products online over the last 12 months. The online
shoppers were grouped into two categories, frequent online shoppers and occasional online shoppers. A
frequent online shopper shops at least once a month online, whereas an occasional online shopper uses the
online mode less often for this study an occasional online shopper was defined as making purchases online
less than once a month, but did buy online at least once during the last 12 months.




52

Q8. PAYMENT METHODS

The results of this survey indicate that several payment methods could be considered as dominant modes
when shopping online. On average, 45% of online shoppers use a credit or charge card. However a closer
look into the data suggests that this average is somewhat misleading, as a credit or charge card is the most
common payment method India.

PAYMENT METHODS used for your online purchases


Online payment systems, such as Paypal, Smart2pay, Webmoney, Giropay or iDEAL were used by a little
more than one-third of all online shoppers. Almost the same proportion of online shoppers used the bank or
credit transfer option. It is uncommon in India to use mobile phone or cheques to pay when shopping online.
53

SUMMARY

The three segments that were found show a significant difference in the primary factor of concern. The
general distribution showed that the factor price was the primary factor for the entire population sample, and
that second factor was trust was closely followed by convenience.
When we segmenting the respondents through the different variables we found that segment one were mainly
trust oriented and the respondents had a high positive attitude towards purchasing books online.
Other segment was mainly price and convenience oriented therefore took the most consideration to the
opinions and experiences of the Reference groups. As they low disposable income and were somewhat
convenience oriented when acquiring information about low prices, we chose to label them price easers. We
found that most of the time youngster who are from the age of 20-25 shops a lot on the net rather than other
age limits. People used to do online shopping because of its convenience rather than its pricing, But the main
thing which is very common in the most of the people about online shopping is its risk of privacy i.e. hacking
of account number getting passwords and all.

54

LIMITATIONS OF THE STUDY

Limitation of the study is the selection of the existing studies. Owing to time limitation, I only searched a few
number of journals. This may leave some other prominent empirical studies out. In addition, owing to the
multidisciplinary nature of online shopping, it would be very interesting to compare IS literature to other
disciplines that study online shopping attitudes and behavior.

A Survey by Indian research organization Juxtconsult found that more and more Indian Internet users are
opening their wallets online. While such hurdles as limited broadband access and security concerns remain,
the report finds there are currently more than 10 million shoppers online in India. While current trends point
to increased e-commerce growth in India, the online marketplace in the country of more than 1 billion people
is still relatively small. Juxtconsult's survey found that 40 percent of all urban Internet usersbuy online, while
42 percent of the sales originate through just five percent of consumers. The survey was conducted in April
2007 and sampled more than 30,000 users.

"This section of buyers spends 5,000 rupees or more per month on the net," states the report. "It is interesting
to note that two out of every three heavy spenders are also 'netholics,' those who are on the net for more than
three hours per day...Of all those who buy online, only 25 percent are spending more than 1,000 rupees per
month while the (remaining) 75 percent bill less than 1,000 rupees per month." (1,000 Indian rupees is
currently equal to approximately $23 US.)

The report also found that buying and search patterns among Indians differ between genders. "While 43
percent of male users buy online, only 31 percent of urban female users are consumers as well. Women tend
to search more. Defying their more common attitude towards shopping, women are more guarded when it
comes to the online market," says Juxtconsult. "Depending on the product type, nine percent to 25 percent
are buying online, whereas 33 to 47 percent are searching the net for product information," it says.

Security Fears Persist
Juxtconsult says the motivation for Indian users to make purchases online varies, but users fear compromised
personal information is still a great risk when it comes to e-commerce. "The single biggest motivation for
buying online for net users is saving time. Thirty-two percent of them look to shop online with this purpose.
Convenience of shopping '24x7' and home delivery are other major incentives," says the report. "However,
the concern of possible misuse of credit card or personal information is extremely significant among online
buyers, with almost 55 percent of them voicing their concern. Clearly, tackling and countering the issue of
online safety figures as an imminent challenge for net marketers."


55

RECOMMENDATIONS & CONCLUSION

The role of the external environment, demographics, online shopping decision making, and consumer
satisfaction are less well represented in the proposed model. Any number of factors, including
vender/service/product characteristics, website quality, attitude towards online shopping, intention to online
shopping, online shopping decision making, and online purchasing, may influence consumers satisfaction.
More importantly, the extent to which customers are satisfied is directly related to attitudes toward online
shopping or toward specific Internet stores.
The relative importance of this factor in determining such consumer behavior as repeat purchases suggests
that further research on consumer satisfaction with online shopping needs to be conducted.

As we came to know after researching on this topic we recommend that, the online sellers have to make their
payment transparent, and as people are coming on their sites and they are buying their products , so retailers
have to give more discounts to their customers so that they can visit again and again to their site , and it also
helps to make people more aware about the low rick shopping of the net, and one more thing is that there
should be transaction of money is very slow they have to make it fast so that customer dont have to face
much problem to pay for the product, if customer is going to face some problem he is not going to visit our
site and buy product .

Following implications should be followed:
Discount prices
A transfer and reliable retailer
Fast transactions
Focus on customer satisfaction

Increased Internet penetration, a hassle free shopping environment and high levels of Net savings see more
and more Indians shopping online. But at the same time the companies need to reduce the risks related to
consumer incompetence by tactics such as making purchase websites easier to navigate, and introducing
Internet kiosk, computers and other aids in stores. The goal is not to convert all shoppers to online
purchasing, but to show them its an option. In addition to above, efforts need to be taken to educate the
online buyers on the steps that need to be undertaken while making an online purchase. Moreover, the
feedback of an online buyer should be captured to identify flaws in service delivery. This can be done
through online communities and blogs that serve as advertising and marketing tools and a source of feedback
for enterprises. I found that it is a challenge for E-marketers to convert low frequency online buyers into
regular buyers through successful website design and by addressing concerns about reliable performance.
Thus, the online retailing raises more issues than the benefits it currently offers. The quality of products
offered online and procedures for service delivery are yet to be standardized. Till the same is done, the buyer
is at a higher risk of frauds.

56

BIBLIOGRAPHY
http://analogik.com/article_analysis_of_consumer_behaviour_online.asp [27april 2010]
http://www.essays.se/essay/e1fb0c636f/ [13april 2010]
http://www.tealeaf.com/Harris/[12april]
http://inderscience.metapress.com/app/home/contribution.asp?referrer=parent&backto=issue,2,6;jour
nal,15,40;linkingpublicationresults,1:110844,1[11april 2010]
http://www.inderscience.com/search/index.php?action=record&rec_id=32383&prevQuery=&ps=10&
m=or1m[12 may 2010]
http://www.lotsofessays.com/viewpaper/1693412.html [11april 2010]
http://www.inderscience.com/search/index.php?mainAction=search&action=record&rec_id=11032&prev
Query=&ps=10&m=or[22april [11april 2010]
http://www.inderscience.com/search/index.php?mainAction=search&action=record&rec_id=11032&prev
Query=&ps=10&m=or[2 may 2010]
57

QUESTIONNAIRE

Q1. Name ___________________

Q2. Age
1) 15-20 [ ] 2) 20-25 [ ] 3) 25-30 [ ] 4) 30 above [ ]

Q3. Gender
1) Male [ ] 2) Female [ ]

Q4. Address
1) Rural [ ] 2) Urban [ ]

Q5. What is your occupation?
a) Student [ ] b) Professional [ ] c) Govt. Employed [ ] d) Self Employed [ ] e) Other [ ]

Q6. What is your monthly income?
a) Less than 10000[ ] b) 10000 to 20000 [ ] c) 20000 to 30000[ ]
d) 30000 to 40000 [ ] e) More than 40000[ ]

Q7. Do you have your own internet connection?
a) Yes [ ] b) No [ ]

Q8. How frequently do you purchase online?
a) Once a week [ ] b) More than once a week [ ] c) once a month [ ] d) more than once in a month [ ]
Q9. What products you buy on internet?

a) Books [ ] b) Music CDs [ ] c) T-shirt [ ] d) Mobile [ ] e) laptop [ ]

Q10.How do you make your payments on internet?
a) Credit card/Debit card [ ] b) Bank transfer [ ] c) PayPal [ ] d) any other____________
58

EXECUTIVE SUMMARY

The growing use of Internet in India provides a developing prospect for online shopping. If E-marketers
know the factors affecting online Indian behavior, and the relationships between these factors and the type of
online buyers, then they can further develop their marketing strategies to convert potential customers into
active ones, while retaining existing online customers.

This project is a part of study, and focuses on factors which online Indian buyers keep in mind while
shopping online. This research found that information, perceived usefulness, ease of use; perceived
enjoyment and security/privacy are the five dominant factors which influence consumer perceptions of
Online purchasing.
Consumer behavior is said to be an applied discipline as some decisions are significantly affected by their
behavior or expected actions. The two perspectives that seek application of its knowledge are micro and
societal perspectives.

Internet is changing the way consumers shop and buy goods and services, and has rapidly evolved into a
global phenomenon. Many companies have started using the Internet with the aim of cutting marketing costs,
thereby reducing the price of their products and services in order to stay ahead in highly competitive markets.
The online purchasing behavior of online shoppers and factor influencing online shopping behavior and its
future perspective.

Companies also use the Internet to convey, communicate and disseminate information, to sell the product, to
take feedback and also to conduct satisfaction surveys with customers. Customers use the Internet not only to
buy the product online, but also to compare prices, product features and after sale service facilities they will
receive if they purchase the product from a particular store. Many experts are optimistic about the prospect of
online business.

In addition to the tremendous potential of the E-commerce market, the Internet provides a unique opportunity
for companies to more efficiently reach existing and potential customers. Although most of the revenue of
online transactions comes from business-to-business commerce, the practitioners of business-to-consumer
commerce should not lose confidence. It has been more than a decade since business-to-consumer E-
commerce first evolved. Scholars and practitioners of electronic commerce constantly strive to gain an
improved insight into consumer behavior in cyberspace. Along with the development of E-retailing,
researchers continue to explain E-consumers behavior from different perspectives. Many of their studies
have factors or assumptions which are based on the traditional models of consumer behavior, and then
examine their validity in the Internet context.