A Study on Buyer Behaviour of Car Purchasers in India with reference to Pune City

CHAPTER III

BUYING PROCESS: THEORETICAL

BACKGROUND
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3.1. Buying Process:

According to some scholars a buying process consists of three stages:

Pre-decision

Decision and

Post-decision.

Broadly, buying process consists of the five steps as shown in next figure.

Figure No. 3.1: Stages in Consumers Buying Process

Need/Problem Recognition

Pre-decision Stage Information Search

Evaluation

Decision Stage Purchase

Post-decision Stage Post-Purchase Evaluation

Source: Sahaf, M. A. (2008). Strategic Marketing: Making decisions for strategic advantage. New
Delhi, India: Prentice Hall of India, 98.

Now let us discuss the stages in consumer buying process in detail.

3.2. Buying Process - Steps:

3.2.1. Need or Problem Recognition:

In fact the buying process begins with need or problem recognition which

occurs when a person perceives a difference between the ideal state and his
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or her actual state at a given moment. This is a predecision stage. The

sources of problem recognition are:

1-Out of stock problem recognition occurs when consumers use their

existing supply of a product and must replenish their stock.

2-Dissatisfaction problem recognition is created by the consumer's

dissatisfaction with the current state of affairs and/or the product or service

being used.

3-New Needs or Wants changes in consumers lives often result in new

needs and wants.

4-Related products/purchases problem recognition can also be

stimulated by the purchase of a product. The purchase of a personal

computer may prompt the need for software programs, upgrades, printers,

and so on.

5-Marketer-induced problem recognition is based on marketers' actions

that encourage consumers not to be content with their current state or

situation. Ads for personal hygiene products such as mouthwash,

deodorant, and foot sprays maybe designed to create insecurities that

consumers can resolve through the use of these products.

6-New products problem recognition can also occur when innovative

products are introduced and brought to the attention of consumers.

Marketers are constantly introducing new products and services and telling

consumers about the types of problems they solve.

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3.2.2. Information search:

Once the need has been recognized, the next step that a consumer usually

undertakes is to seek information to identify and assess which products and

brands will satisfy his need. Sources of information are:

1- Personal sources (Effort required:Low, Believability: High),

2- Commercial sources (Effort required: Medium, Believability: Low),

3- Public sources (Effort required: Low, Believability: High),

4- Experiential sources (Effort required: Low, Believability: High)

5- Product examination and trial (Effort required & Believability: High)

On the basis of information collected from both the internal as well as the

external sources, a consumer is able to form three sets of options:

An insert set: A set of products or brands that the consumer has no

intention of buying,

An inept set: A set of products or brands that are being considered

negatively by a consumer but which nevertheless provides him important

information required for buying decisions,

An evoked set: A set of products or brands, which are being considered

positively by the customer for purchase.

Amount of information that a consumer seeks for buying decisions is

influenced by a number of factors. The important among them are these

five factors namely; Costs for information searching, Benefits of

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information, Sources of search, Perceived risk, Consumer's past experience

of the product.

Different types of perceived risks are; Monetary risk (Expensive products),

Functional risk (Product requiring time or effort to understand), Physical

risk (Mechanical products, medical products, food), Social risk (Socially

visible products or those that can influence the impression made on others

like deodorant), Psychological risk (Expensive luxuries that may involve

guilt or addiction), and there are several situations that influence the

consumers perception of risk:

Uncertainty regarding buying goals,

Uncertainty regarding which alternative (such as product, brand, or

model) will best match or satisfy the purchase goals,

Perceived possible undesirable consequences if the purchase is made (or

not more) and the result is failure to satisfy buying goals. If any of these

situations is sensed by consumer, then he or she is said perceived risk in the

situation.

But consumers are found to handle perceived risk in different ways as

noticed through several empirical research studies as; consumers seek

information, consumers stay brand loyal, consumers select products by

brand image, consumers rely on store image, and some consumers buy the
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most expensive model. Consumers here equate price with quality,

consumers seek insurance (guarantee).

3.2.3. Evaluation:

In evaluation process after forming the different sets of options with the

help of information search, a consumer has to make a choice from the

evoked set. Each item of evoked set needs to be evaluated to make a

purchasing decision. This step calls for the processing of information,

selection of decision criteria, and comparative analysis of purchasing

alternatives. Evaluation has to be closely tied to need recognition through

evaluation criteria, attributes or functions that a product must have to

satisfy a consumer's needs and we have different evaluation models in

evaluation process:

1- Dominance model (the product with superiority in many attributes).

2- Conjunctive model, all products are classified into two groups

(acceptable and unacceptable and unacceptable products are those that fall

short of minimum specification).

3- Disjunctive model (products whose attributes exceed the specified

minimum attributes).

4- Lexicographic model (a single dominant attribute which is common to

all products is used to rank them).

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5- Expectancy model (the consumer identifies attributes of importance and

assigns a weight that represents degrees of preference to each attribute).

6- Compensatory model, also known as Multi-attribute model (the product

chosen is the one that has the overall balance of favored features across all

attributes).

7- Determinant attribute model (attributes of importance sometimes do not

significantly influence consumers choices among competitive products

whose attributes are similar. The choice of product may be made because of

a less important attribute that differentiates the product).

There are some Judgment theories in evaluation process. In fact consumers

adopt different judgment methods to make any choice decisions:

Utility theory: Consumers make decisions based on the expected

outcomes of their decisions and choose the outcome that maximizes their

well-being.

Cutoff theory: While judging an alternative, the consumer often uses

overall cutoffs. Here, cutoff is simply a specific requirement of

acceptable performance.

Piecemeal Judgment theory: A piecemeal process essentially involves

constructing evaluation of choice alternatives using hits and pieces of ones'

own set criteria.

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Perceived signals (price-quality) theory: Many surrogate signals are

often used to judge the quality of a product. For example, higher prices are

usually interpreted or perceived as superior quality.

3.2.4. Purchase:

The need recognition, search for information and evaluation of alternatives

are followed by purchase decision where a consumer has to choose the

product or brand to be bought and different motives can affect the buying

process in this stage such as:

1- Location of the market outlet,

2- Physical design of the outlet,

3- Assortment of brands and products,

4- Prices,

5- Knowledge, skills, and attitudes of the sales personnel,

6- Customer services,

7- Sales promotion,

8- The attitude of others,

9- Situational factors; such as time dimension, festivals, terms of

purchase, objectives of purchase, states and moods.

10- Social soundings.

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3.2.5. Post-purchase:

In this stage customers can have different mental states and these mental

states can affect their next purchase:

1- Satisfied (Expected Performance = Actual Performance).

Consumer wont have any special reaction.

2- Delighted Cognitive (Expected Performance < Actual Performance).

This is likely to increase the customer's resolution to buy and use the

product more often and satisfied customers will be more likely to urge

others to try the product. In addition it might lead to positive word of mouth

and brand loyalty.

3- Dissonance (Expected Performance > Actual Performance).

This is likely to reduce the chance of repurchase and it might lead to

negative word of mouth and complaint.

Family members can play different roles in purchase and post-purchase

stages:

Preparer: The preparer converts the product into a form

consumable by family members.

User: End user.

Monitor: The monitor keeps an eye on what is consumed by family

members.

Evaluator: All family users and some nonusers are evaluators.

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Maintainer: Maintainers keep a durable good in tip-top shape by

checking it regularly, getting it serviced, and taking it to be repaired

or doing the repairs and servicing themselves.

Disposer: The person who gets rid of the product by trashing,

recycling, reselling, trading, or giving it away is the disposer.

3.2.6. Dimensions of Buying Process:

The consumer's level of involvement in a purchase decision has a direct

bearing on how they make their decision and how much time they spend on

it. Factors that affect a consumer's level of involvement are:

Self-image; where the consumer thinks that a product will affect

their self-image.

Perceived risk; where the consumer thinks there are risks in making

a wrong choice.

Social factors; where the consumer thinks that a purchase may

affect their social acceptability to others.

Hedonism; where the consumer thinks that the purchase may be

capable of delivering a high degree of pleasure.

Theories related to involvement in purchasing are:

1-Cognitie response: A message is likely to be evaluated in the light of

past knowledge, experience and attitudes. These thoughts are called

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cognitive responses and occur to consumers while viewing and/or listening,

or reading an advertising message.

2-Elaboration Likelihood Model (ELM): This theory furnishes

understanding of low-involved consumers by illustrating how consumers

process information in situations of low and high-involvement.

3-Social Judgment theory: According to this theory, an individual's level

of involvement in an issue is an important factor in information processing.

Different buying situations with varying risk and involvement call for the

different decision behaviours from the consumers:

Extensive decision-making: Extensive decision-making involves a

systematic process where every step is not only carefully carried out

but also in considerable detail. In fact such a decision-making

approach is used for the products which are extremely risky,

expensive and unfamiliar.

Limited decision-making: In limited decision making buying

situations, a buyer finds himself familiar with the product class but

unfamiliar with certain brands or the product category for which he

needs to acquire information.

Routine response behaviour: Routine response behaviour deals

with the purchase of such products like toothpaste, detergent, or

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bread that create a buying situation with a little room for consumer

decision-making.

3.2.7. Buying Paths:

Buying process also proceeds along one of the three paths, or over a

combination of these paths, to a decision.

Figure No. 3.2: Buying Paths

The habith / repeat

pat
Recognize Make Review
problem or buying decision
opportunity decision

The cognitive path

pat
Search for Recognize Evaluate Make Review
information problem or choices buying decision
opportunity decision

The emotional path

pat
Recognize Evaluate Make Review
feelings about
problem or buying decision
choices,
opportunity benefits decision

Source: Duncan, T. (2006).Principals of Advertising and IMC. (2 nded.). New Delhi, India: Tata
McGraw-Hill, 143-147.

We can think about the different ways people approach buying a car. If they

choose the habith/repeat path, they simply buy the brand that they bought

before. Satisfied with the car they are now driving, they have no motivation

to change brands. This is the easiest and quickest path to take to a brand
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decision. Other people choose the cognitive path. They search for

information about various brand alternatives and then analyze this

information before making a decision. Still others prefer the emotional

path. They look at the styling of various cars, and imagine how each car

would make them feel; then they make their decision.

3.2.8. Buying Roles:

The typical roles of the people that might influence directly or indirectly the

buying decisions of the consumers are summarized below:

1- The initiator: The person who first suggests the idea of buying the

product or service.

2- The influencer: The person whose opinion the consumer values in his

buying decision.

3- The decider: The person who decides about the different issues of a

buying decision.

4- The buyer: The person who enacts the purchasing act.

5- The user: The person who finally consumes or uses the product or

service.

3.2.9. Limitations of Buying Process:

The process is not always as straight forward as it may appear.

The consumer can withdraw at any stage, prior to the actual

purchase.
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It is not uncommon for some stages to be skipped.

The stages are not necessarily of same length.

Some stages may be performed consciously in certain purchase

situations and subconsciously in others.

3.3. Views of Buyer Decision Making:

There are several views on how and why consumers make decisions.

Among the major views are:

1- Economic view: In economic sense, consumer is viewed to be:

Aware of all available product alternatives.

Capable of correctly ranking each alternative in terms of its benefits and

disadvantages.

Able to identify the one best alternative.

However, recent development on consumer decision-making pointed out

that consumer primary motivation plays a vital role in the value of price for

the purchased product may instead be related to the need for achievement,

affiliation, and dominance.

2- Passive view: Consumer in this view would be described as basically

submissive to the self-serving interests and advertising skills of marketers.

He is regarded as an object to be manipulated. By nature, consumer is

perceived as impulsive and irrational buyer seeking immediate gratification,

thus he is ready to meet the goals and strategies of marketers.

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3- Cognitive view: In this view, consumer is perceived as an analyst or a

thinking problem solver. Consumer through cognition or information

processing is deliberating and evaluating information about products and

services. Information processing facilitates consumer information-seeking

efforts to make a satisfactory decision. Consumer then would make

decision rules called heuristics to facilitate the decision-making process.

Heuristics are used when there is too much information or information

overload.

4- Emotional view: Consumer emotions are associated with joy, fear,

love, hope, sexuality fantasy, and the like. Such emotions or feelings are

highly involved on consumer's purchase decisions. More emphasis is placed

on current moods and feelings. Gardner defined the term mood as a feeling

state or state of mind and is valuable in decision making. Knowles, et al

(1993) considered (as cited in Apruebo, 2005) a consumer mood as a more

typically and unfocused, pre-existing condition and omnipresent at the time

he experiences an advertisement, a retail environment, a brand, or a

product. Moreover, they suggested that inducing a favorable mood at the

point-of-purchase decision like installing background music and other

point-of-purchase displays had a meaningful impact on specific brand

choice unless a previously stored brand evaluation already exists.

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3.4. Buyer Decision Making Models:

3.4.1. General models of decision making:

1) The Marshallian economic model: Economists were one of the first

professional groups to construct a specific theory of buyer behaviour. The

theory holds that purchasing decisions are the result of largely rational

and conscious economic calculations. The individual buyer seeks to spend

his income on those goods that will deliver the most utility (satisfaction)

according to his tastes and relative prices. Furthermore, the model suggests

useful behavioural hypotheses such as: (a) The lower the price of the

product, the higher the sales. (b) The lower the price of substitute products,

the lower the sales of this product; and the lower the price of

complementary products, the higher the sales of this product. (c) The higher

the real income, the higher the sales of this product, provided that it is not

an inferior good. (d) The higher the promotional expenditures, the higher

the sales.The validity of these hypotheses does not rest on whether all

individuals act as economic calculating machines in making their

purchasing decisions.In fact economic factors alone cannot explain all the

variations in sales. The Marshallian model ignores the fundamental

question of how product and brand preferences are formed. It represents a

useful frame of reference for analyzing only one small corner of the buyer

behaviour.
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2) The Pavlovian learning model: The designation of a Pavlovian

learning model has its origin in the experiments of the russian psychologist

Pavlov, who rang a bell each time before feeding a dog. Soon he was able

to induce the dog to salivate by ringing the bell whether or not food was

supplied. Pavlov concluded that learning was largely an associative process

and that a large component of behaviour was conditioned in this way. The

model is based on four central concepts-those of drive, cue, response, and

reinforcement. (These components and their effects on buyer behaviour are

explained in detail in components of learning).The modern version of the

Pavlovian model makes no claim to provide a complete theory of

behaviour-indeed, such important phenomena as perception, the

subconscious, and interpersonal influence are inadequately treated. Yet the

model does offer a substantial number of insights about some aspects of

behaviour of considerable interest to marketers.

3) The Freudian psychoanalytic model: According to Freud, the child

enters the world driven by instinctual needs which he cannot gratify by

himself. Very quickly and painfully he realizes his separateness from the

rest of the world and yet his dependence on it. He tries to get others to

gratify his needs through a variety of blatant means, including intimidation

and supplication. Continual frustration leads him to perfect more subtle

mechanisms for gratifying his instincts.As he grows, his psyche becomes

increasingly complex. A part of his psyche-the id-remains the reservoir of

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his strong drives and urges. Another part-the ego-becomes his conscious

planning center for finding outlets for his drives. And a third part-his super-

ego-channels his instinctive drives into socially approved outlets to avoid

the pain of guilt or shame. The guilt or shame which man feels toward

some of his urges especially his sexual urges-causes him to repress them

from his consciousness. Through such defense mechanisms as

rationalization and sublimation, these urges are denied or become

transmuted into socially approved expressions. Yet these urges are never

eliminated or under perfect control; and they emerge, sometimes with a

vengeance, in dreams, in slips-of-the-tongue, in neurotic and obsessional

behaviour, or ultimately in mental breakdown where the ego can no longer

maintain the delicate balance between the impulsive power of the id and the

oppressive power of the super-ego.

The individual's behaviour, therefore, is never simple. His motivational

wellsprings are not obvious to a casual observer nor deeply understood by

the individual himself. If he is asked why he purchased an expensive

foreign sports-car, he may reply that he likes its maneuverability and its

looks. At a deeper level he may have purchased the car to impress others, or

to feel young again. At a still deeper level, he may be purchasing the sports

car to achieve substitute gratification for unsatisfied sexual strivings. Many

refinements and changes in emphasis have occurred in this model since the
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time of Freud. The instinct concept has been replaced by a more careful

delineation of basic drives; the three parts of the psyche are regarded now

as theoretical concepts rather than actual entities; and the behavioural

perspective has been extended to include cultural as well as biological

mechanisms. Perhaps the most important marketing implication of this

model is that buyers are motivated by symbolic as well as economic-

functional product concerns.

4) The Veblenian social-psychological model: While most economists

have been content to interpret buyer behaviour in Marshallian terms,

Thorstein Veblen struck out in different directions.Veblen was trained as an

orthodox economist, but evolved into a social thinker greatly influenced by

the new science of social anthropology. He saw man as primarily a social

animal-conforming to the general forms and norms of his larger culture and

to the more specific standards of the sub-cultures and face-to-face

groupings to which his life is bound. His wants and behaviour are largely

molded by his present group-memberships and his aspired group-

memberships. The challenge to the marketer is to determine which of these

social factors are the most important in influencing the demand for his

product.
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3.4.2. Comprehensive models of decision making:

1) The Sheth-Newman-Gross model: The Sheth-Newman-Gross (SNG)

model (1991) of consumption shown on page no. 100, figure no. 3.3, tries

to explain why consumers make the choices as they do. Compared to the

other comprehensive consumer behaviour models, it highlights a series of

specific measurement to understand the underlying consumer decision.

Thus, this particular model is of practical relevance for segmenting any

market. It concentrates on accessing consumption-relevant values that

explain why consumers choose to buy or not to buy a specific

product/brand over other possible alternatives.

2) The Anderson model: The Andreason model (1965) shown on page

no. 101, Figure no. 3.4, is one of the earliest models of consumer

behaviour. The model recognizes the importance of information in the

consumer decision-making process. It also emphasizes on processing of

information, its filtration and formation of consumer attitudes.

3) The Nicosia model: The Nicosia model, shown on page no. 102, figure

no. 3.5, was proposed by Nicosia (1976) and this model focuses on the

relationship between the message and its impact on the potential

consumers. In the broadest term, the model assumes consumers are exposed

to the firms various advertising messages and they respond to the firm by

their purchase actions. The model, which is interactive in nature, proposes

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that the marketer tries to influence its target consumers, and the consumers

through advertising, react through buying (or not buying) those advertised

brands.

4) The Howard-Sheth model: The Howard-Sheth model (1969) shown on

page no. 103, figure no. 3.6, presents a comprehensive picture of consumer

decision making. This model distinguishes three possible types of decision

making, namely, extensive problem solving, limited problem solving, and

routinized response behaviour.

5) Engel-Kollat-Blackwell model: Like the Howard-Sheth model shown

on page no. 104, figure no. 3.7, the Engel-Kollat-Blackwell (EKB) models

(1972) proposed how a set of information is processed and through

decision-making process, external influence consumers arrive at a decision

to purchase.

6) Bettman's information-processing model: Bettman's model shown on

page no. 105, figure no. 3.8, proposed in 1979, assumes that a typical

consumer has a limited capacity for processing information, According to

this model, when faced with making a choice decision, the consumer rarely

(if ever) undertakes a complex task of evaluating all possible alternatives.

Instead, he invariably employs a simple decision rule (heuristics). In its

complete form, the Bettman model consists of a number of interrelated

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flow-charts that depict the various possible stages involved in the

consumer's choice process.

Figure No. 3.3: The Sheth-Newman-Gross Model

Functional value Conditional value Social value

Consumer choice
behaviour

Emotional value Epistemic value

Source: Majumdar, R. (2010). Consumer behaviour: Insights from Indian market. New Delhi,
India: PHI Learning Private Limited, 239.
 Figure No. 3.4: The Andreason Model Constrains
Information
Advocate Attitudes Perceived beliefs, norms , Attitudes towards product, Income, budget priorities,
impersonal towards values of significant others substitutes, complement physical capacity, household
sources sources capacity
vkkj
Intrinsic
attributes
Independent Hold
Personality
impersonal Yes
sources
No Other
Select purchase Ownership
Extrinsic Advocate decision
attributes personal Filtration Beliefs Feelings
sources
Search

Disposition
Independent
personal No action
Price
availability sources
Direct Wants
experience want
Information strength
storage

Other customer Direct flows

decision maker feedbacks
101

Source: Majumdar, R. (2010). Consumer behaviour: Insights from Indian market. New Delhi, India: PHI Learning Private Limited, 227
 102

Figure No. 3.5: The Nicosia Model

Field 1: Consumers attitudes

Subfield 1 Message Subfield 2

exposure
Firms Consumers
marketing characteristics Attitudes
and
(predisposition
communicat
ion efforts and
personality)

Search Field 2: Search

Experience/Relations and and evaluation
evaluation

(Pre-action field)
Field 4: Feedback Consumption
Motivation

Decision
(Action)

Purchasing Field 3: Act of

behaviour purchase

Source: Majumdar, R. (2010). Consumer behaviour: Insights from Indian market. New Delhi,
India: PHI Learning Private Limited, 228.
 Figure No. 3.6: The Howard-Sheth Model
Perceptual constructs Learning constructs Outputs
Inputs

Significative:
Intention
Quality

Price Confidence Purchase

Overt
Distinctiveness search

Service

Availability

Symbolic: Intention

Quality

Price
Stimulus Attitude
Distinctiveness ambiguity Attitudes
Service Overt
search
Availability Motives Choice criteria Brand Brand
comprehension comprehension
Social :
Perceptual
Family Attention
bias
Reference groups Solid lines indicate flow of Satisfaction Attention
information; dashed lines indicate
Social class flow of possible feedback effects.
103

Source: Majumdar, R. (2010). Consumer behaviour: Insights from Indian market. New Delhi, India: PHI Learning Private Limited, 230.
 Figure No. 3.7: The Engel Kollat Blackwell Model
Figure : The Engel-Kollat-Blackwell Model
Decision-making process External variables
Inputs Information
Processing Problem
Individual
recognition
Characteristics

Internal search Search Motives

Exposure
Values
Stimuli: Marketer
dominated, other Lifestyle
Attention
stimuli Beliefs
Personality

Perception
Comprehension
perception Memory
Alternative
Attitudes
evaluation
Social influence

Family
Yielding
acceptance
Intentions Reference groups

Purchase Social class

Retention

Outcomes Situational
External search influence

Dissatisfaction Satisfaction
104

Source: Majumdar, R. (2010). Consumer behaviour: Insights from Indian market. New Delhi, India: PHI Learning Private Limited, 233.
 105

Figure No. 3.8: The Bettman Model

Motivation
goal
hierarchy

Scanner Interrupt
Attention Perceptual and interpretation
encoding interrupt and
mechanisms response

mlkl

Information Memory
search Scanner Interrupt
Processing acquisition
and interpretation
capacity and
External interrupt and
evaluation
search mechanisms response

Scanner Interrupt
Decision and interpretation
processes interrupt and
mechanisms response

Consumption Scanner Interrupt

and and interpretation
learning interrupt and
processes mechanisms response

Source: Majumdar, R. (2010). Consumer behaviour: Insights from Indian market. New Delhi,
India: PHI Learning Private Limited, 235.
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3.5. Diffusion of Innovation and Buyer Behaviour:

3.5.1. Innovation:

The term innovation has many meanings and there is no universally

accepted definition of product innovation or new product It can refer to

the inventive process by which new things, ideas, and practices are created;

it can mean the new thing, idea, or practice itself; or it can describe the

process whereby an existing innovation becomes a part of an adopter's

cognitive state and behavioural repertoire. An important aspect of

innovation is that consumers should perceive a product, service, or idea as

new, irrespective of the fact whether it is actually new or not. Innovations

bring about changes in consumers consumption patterns. Some

innovations influence how, when, where, why, or whether we acquire

products. For example, a comparatively recent innovation is Internet

shopping, which has altered the way we buy certain types of products.

3.5.2. Diffusion:

Diffusion of innovation has been defined as an innovation which is

communicated through certain channels over time among the members of a

social system. Diffusion of innovation process depicts how an innovation

spreads, governed by the patterns of usage among potential consumers. The

adoption process is the set of successive decisions an individual or a buying

unit makes, before accepting an innovation. Diffusion of a new product is a

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process by which an innovation stretches throughout a social system over

time. The measure that is used to approximate the diffusion is the adoption

process. It is the micro counterpart of the diffusion process which is a

macro concept. The adoption process looks at the individual and analyzes

how a new product is adopted by that individual. Proceeding with this

orientation, in exploring the unique aspects of the diffusion process within a

society, we must examine how individuals accept the product.

3.5.3. Adoption:

Any buying decision taken either by an individual or an organization has to

pass through several stages in adopting a new product. The customer has to

be first aware of the existence of such a product or service, should feel its

need, should be interested in using it and then the buying decision is taken

based on certain factors. A prospective buyer goes through five stages in an

adoption process deciding whether to purchase something new or not. Five

important stages have been identified by the majority of researchers and

three stages by others. The five stages in the adoption process are

summarized below:

1- Awareness: In this stage, the innovation is introduced to the person.

2- Interest: In this phase, an individual makes a conscious decision to

further know about the innovation.

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3- Evaluation: In the evaluation stage, the individual will start to weigh up

the good and bad points of the innovation.

4- Trial: The individual would be satisfied if the innovation is physically

tried out and tested, though he has carried out preliminary evaluation of it.

5- Adoption: The previous four stages determine the success of this stage.

The user will either adopt the innovation or will decide not to. This will be

based on the evaluation of his/her favorable factors. If the user rejects the

innovation after he has initially adopted, it is known as discontinuance.

This rate of adoption varies markedly depending on the type of innovation

and the social system in which it is being diffused. Adopters of an

innovation generally fall into one of the defined categories. The adopters,

who make up each category, vary in terms of both their volume, time of

adoption, and social demographic. A classification of adopters based on

extensive research is illustrated below.

Figure No. 3.9: Time of Adoption of Innovations

13.5%Early
adapters
2.5% 16%
Innovators 34%Early 34%Late Laggards
majority majority

Source: Anandan, C. (2009).Product management. (2nded.). New Delhi, India: Tata McGraw-Hill,
89.
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1- Innovators: One of the most important characteristics of the innovators

is to adopt an innovation within very less time.

2- Early adapters: Though these people do not adopt a new product as

innovators, yet they try the new product early in its life cycle.

3- Early majority: The sheer strength of this category is enough to make

the product or service, a success or failure. These people wait and watch till

the new product is adopted somewhat widely.

4- Late majority: These also form a big chunk of the market. These people

are very skeptical and adopt a new product only after a majority has used

and accepted the product.

5- Laggards: These people are afraid to experiment and are the last

category of people to adopt any new product. They are isolates and resist to

any change, may be because of tradition or convenience.

Whatever has been discussed so far is based on five stages classification

dealing only with adopter categories. Several marketing studies have used a

simple three-part classification to deal with non-adopter categories as well.

A three-part classification which considers both adopters as well as non-

adopters:

1- Early adopters

2- Later adopters

3- Non-adopters
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According to this three-part classification, the early adopters include

innovators of five-part classification; the later adopters include both early

and late majority as well as laggards. The non-adopter group provides for

the possibility that a significant number of consumers in the market simply

may decide not to purchase the new product.

The chances of a product's adoption and subsequent diffusion are largely

dependent on its nature. The rate at which the diffusion of an innovation

takes place is a function of the following ten factors:

1- Type of target group: The target market for the new product is an

important factor in influencing the rate of diffusion. Some groups are more

inclined to accept change than others. In general, affluent, young and highly

educated groups tend to try and accept new products readily.

2- Number of people involved in decision making: This refers to whether

the decision is made by an individual or a group. If fewer individuals are

involved in making the purchase decision, the innovation is likely to spread

more rapidly. When two or more family members are involved in making

the purchase decision, the diffusion will be slower than innovations that

primarily affect one individual.

3- Extent of marketing efforts involved: The diffusion of innovation is

very significantly influenced by the extent of marketing efforts undertaken.

No matter how wonderful an innovation, but unless sufficient numbers are

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informed and convinced of what it can do for them, the diffusion would be

adversely affected. Thus, the rate of diffusion is not completely beyond the

control of the marketer.

4- Need Fulfillment: The more involving and obvious the need that the

innovation satisfies, the faster the diffusion.

5- Compatibility: This refers to the degree to which the innovation is

consistent with the individuals and group's needs attitudes, beliefs and past

experiences. The more consistency, the faster its diffusion.

6- Relative advantage: If consumers perceive an innovation as better in

meeting their relevant need compared to existing ones, the diffusion will be

more rapid. While considering the relative product advantage, consumers

consider both the cost and the performance. To be successful, an innovation

must have either the performance or the cost advantage over existing

alternatives.

7- Complexity: If an innovation is difficult to understand and also difficult

to use, its diffusion would be slower. Product simplicity and ease of use are

important factors in speeding up the process of diffusion.

8- Observability: This refers to the ease with which consumers can observe

the positive of adopting an innovation. The diffusion will be more rapid if

the positive effects easily observable.

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9- Triability: It is the degree to which a product can be tried before

adoption. If consumers can purchase a product in small quantity, then trial

is relatively easy.

10- Perceived risk: The more the risk associated with trying a new product,

slower the diffusion process. The risk in adopting an innovation can be

financial, physical, performance, or social.

Most of the above mentioned factors could cause consumers to reject an

innovation. However, three of the above mentioned are major factors that

inhibit adoption of innovation and diffusion of innovation:

1- Value barrier: Refers to a product's relative advantage compared with

substitute products. When cellular phones were introduced, they were too

expensive for most general consumers relative to the value they could get

from commonly used telephones.

2- Usage barrier: Results when an innovation is incompatible with

consumers' long established practices. Internet shopping is not consistent

with peoples of many countries' shopping habits and its diffusion is

extremely slow in these countries. The problem is that consumers like to

interact with store personnel and to see and, if possible, touch the

merchandise when they shop. Furthermore, shopping for most consumers is

a social occasion and they often shop with friends.

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3- Risk barrier: Is concerned with physical, economic, functional, or social

risk for adopting an innovation. If the intensity of perceived risk is high,

consumers are likely to wait and watch till such time that they are

reasonably assured that there are no unusual risks associated with product

adoption.

Diffusion changes during product life cycle. Adoption curves for different

products vary significantly and depend on the type of product.In case of

major innovations, fewer individuals will adopt early but more will be in

the late majority and laggard categories. Several diffusion patterns have

been identified. Two of the more important ones are shown in figures no.

3.10.

The first, S-shaped curve shows a product that has a long introduction stage

as consumers adopt it slowly. For example, between time 1 and time 2, a

relatively small percentage of the total market has adopted the product.

After a certain period the rate of adoption increases dramatically and many

consumers adopt the product within a relatively short period of time.

Subsequently between time 2 and through time 4, a substantial increase

occurs in the number of consumers who have adopted the product. After

that the rate of purchase increases at a decreasing rate and the curve flattens

out. This is typically the case with major innovations.

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Figure No. 3.10: Diffusion and Product Life Cycle

Adoption
%
T1 T2 T3 T4 T5 T1 T2 T3 T4 T5

Time Time
a. S-shaped curve: Slow diffusion b. Exponential curve: Fast diffusion

Sales Introduction Growth Maturity Decline

Time
c. The Product Life Cycle curve

Source: Batra, S. K. &Kazmi, S. H. H. (2004). Consumer behaviour: text and cases. New Delhi,
India: Excel Books, 340.

In general, one might expect an S-shaped diffusion curve when there is

some perceived physical, economic, performance, social, or psychological

risk associated with the innovation.

Before reaching the final decision to adopt the product in question,

consumers might wait to see how other people use and react to it. Another

reason for slow initial diffusion may be that consumers are not sure whether
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the product will be on the market for a long period of time, or whether its

use carries high switching costs. The diffusion of computers followed this

S-shaped curve.

The second, exponential curve represents diffusion of an innovation at a

fast rate and a short introducing stage. In contrast to the S-shaped curve,

exponential diffusion curve starts out much more quickly, with a large

percentage of the market purchasing the product as soon as it is available.

However, during each additional time period, the rate of purchase increases

at a decreasing rate.

The third, (c), is a typical life cycle curve and depicts sales of a product

rather than cumulative of diffusion of an innovation. In case of fads, they

come quickly in the public eye, and are adopted with great enthusiasm and,

subsequently, their decline is fast. Their acceptance cycle is very short and

they tend to attract only a limited following. Generally, fads do not last

long because either they do not satisfy a strong need or fail to satisfy it

well. Mainly it is the amount of media attention along with some other

factors that influence their adoption.

Product life cycle and product diffusion are related but they are of different

concepts. Product life cycle deals with sales of the product over time. The

PLC curve may decline as consumers decide not to purchase the product on
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future occasions. Thus although an innovation such as the rotary dial

telephone may have diffused through an entire market, it has been replaced

by another innovation, the touch-tone phone. Diffusion on the other hand,

focuses on the percentage of the market that has adopted the product.

Complete diffusion is achieved when 100 percent of the market has

purchased the product. Diffusion curve generally continues to increase or at

least level off over a period of time.

In case of continuous innovation, there is frequent revitalization of the

product. The product experiences periods of decline and subsequent

growth. Such products require adoption of new technology at each phase of

technological improvements. For example, computers and their peripherals

are passing through continuous up gradations at short intervals.

Rate of diffusion refers to the cumulative level of adoption of an innovation

over time among groups. In a study, it is found that consumers are adopting

innovations comparatively more readily than they used to. There are four

major reasons that explain why innovations are adopted more quickly:

1- With the increase in household disposable income, new products are

likely to be more affordable.

2- Rapid technological advances require quicker adoption cycles.

3- As technology is becoming more standardized, it reduces consumers'

risk perception associated with the adoption of a new product.

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4- Information regarding innovation is communicated rapidly and is

accessible to the consumers conveniently. Obviously, the more quickly

consumers become aware and gain knowledge about a new product through

mass media and Internet, the faster is communication to various groups.

In the diffusion process communication is a key element that influences

diffusion across markets. Based on a study on adoption of self-diagnostic

medical devices among elderly consumers it is reported that early adopters

were more dependent on mass media for information. Subsequently, they

show greater reliance on friends and family members to help them evaluate

new products and word-of-mouth influence increases in importance as early

adopters progress from awareness to knowledge, evaluation, trial and

adoption.

In the case of later adopters, word-of-mouth tends to be the most important

influence throughout the adoption process. They learn about innovations

from friends and neighbors rather than the mass media.

For diffusion to occur across groups, positive word-of-mouth must first

start within groups. However, favorable word-of-mouth within just groups

is not sufficient for diffusion to occur but requires the spread of information

across different groups. This does happen because consumers spread

information by interacting with individuals outside their own groups.

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Groups are classified as homophilous and heterophilous. Individual within

homophilous groups are likely to be similar and are bound by stronger

reference group ties such as family and peer group. Individuals within

heterophilous groups tend to be dissimilar and ties that hold them together

are weak, such as work associates at higher or lower levels in an

organizational hierarchy or acquaintances with whom the consumer has

only occasional contact. A study found that most word-of-mouth occurred

in homophilous groups (between friend and relatives), while among

heterophilous groups, word-of-mouth occurred in only 18% of

communications among individuals.

Culture may have an important influence on the diffusion of innovation.

Two concepts are worth considering in this regard: cultural context and

cultural homogeneity. Low-context cultures are those that rely primarily on

verbal and written communication in transmitting meaning. They place

more value on individual initiative and rely more on mass media for

communication. The concept of heterophilous groups can be applied to

low-context cultures which are more disparate with wider differences

among groups. High-context cultures rely primarily on non-verbal

communication, with little differences in norms, values and socio-economic

status among groups. The emphasis on non-verbal communication means

that such cultures will place more value on interpersonal contacts and
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associations. In high-context cultures more value is placed on group than on

the individual and the emphasis is on subscribing to the norms and long-

standing rituals of society.

One would expect the rate of diffusion to be rapid in high-

context/homophilous cultures because of their uniformity, leading to

relative ease of transmitting information from one dissimilar group to

another. Another important aspect is that the credibility of information on

new products, services, or ideas is higher because the source is more likely

to be friends or relatives rather than commercial mass media.

A study compared the rate of diffusion of calculators, washing machines

and air conditioners in Japan, South Korea and Taiwan (considered as high-

context cultures) and United States (considered low-context culture). It is

reported that in most cases the rate of adoption was faster in all the three

high-context cultures than it was in the United States.

3.6. Shopping Behaviour:

3.6.1. Shopping Decisions:

The process of shopping involves a number of basic decisions that are made

by the consumer at the time of purchase. Of course, these decisions vary

according to the goods or services sought and from situation to situation,

but they provide a useful overview of what is going on while the consumer
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shops. The consumer makes some or all of the following decisions while

shopping:

1- Which product to buy? In certain cases, as search and alternative

evaluation progress, the consumer begins narrow down the number of

specific product types from which to choose.

2- How many to buy? The consumer decides whether to buy a single item

or multiple items of the same kind.

3- Which brand(s) to buy? The consumer has already decided to buy a

specific type of product, or service and now chooses among brands.

4- The outlet at which to purchase? Once the type of product and the brand

have been decided upon, the consumer must choose where the purchase is

to be made. Alternatively, the outlet may be chosen before the brand is

selected. In some cases, where the product is available from only one

source, there is no outlet decision.

5- When to complete the transaction? The timing of the purchase can

follow immediately upon the earlier decisions or it can occur much later.

6- How to pay? Deciding method of payment-cash, check, debit card,

credit card, or a stores revolving charge plan or lay away program-can

affect all the other purchase decisions.

7- Other decisions? In addition to the preceding decisions, several others

apply to certain purchases in certain situations. They include purchase of

extended warranties; purchase of support items, such as batteries, software,

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cables, etc.; payment for delivery; purchase of installation or setup of

equipment or services; payment for gift-wrapping; and shipping,

arrangements and charges. In some cases, consumers are not able to buy

related materials or services at the same source, because of the lack of

availability or expense, and choose another outlet for them.

3.6.2. Shopping Orientations:

Shopping orientation refers to shopping style of consumers that particularly

emphasizes certain activities or shopping motivations. There are three

distinct approaches to classifying consumer shopping orientation:

3.6.2.1. Psycho graphics-based orientations:

Inactive shoppers: Can best be described by their lack of activity.

They have extremely confined lifestyles and shopping interests and

do not engage in outdoor or do-it-yourself activities. They do not

exhibit any joy or interest in shopping. They are also not particularly

concerned about shopping attributes such as price, service, or

product selection. They may favorably respond to home delivery

services.

Active shoppers: Are viewed as tough shoppers and their

lifestyles are demanding. They are fond of outdoor activities and

undertake do-it-yourself projects. They derive pleasure out of

shopping and their major concern is price in their search for the
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desired item. Active shoppers' orientation is more of an expression

of their demanding lifestyles and they tend to balance price with

quality, fashion and selection in their search for value.

Service shoppers: Are focused on demanding substantial in-store

service when they shop and usually visit conveniently located stores

with friendly, helpful personnel. They are inclined to be impatient if

they have to wait for help from store personnel.

Traditional shoppers: Like outdoor activities but lack enthusiasm

for shopping. They likely to be less price sensitive and do not insist

on store personnel help or attention.

Dedicated fringe shoppers: Seem to be risk takers enjoy do-it-

yourself activities and more are included to try new products. They

have almost a compulsion to exhibit to others that they are different.

True types in this category are not interested in extensive socializing,

not much interested in TV or radio commercials and show little

brand or store loyalty.

Price shoppers: Are extremely price conscious and are willing to

make extensive search efforts to meet their price requirements. They

are avid consumers of all type of advertising to learn about lowest

prices.

Transitional shoppers: are consumers in the early stages of family

life cycle and show practical interest in number of outdoor activities.

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Transitional shoppers display low level of interest in searching for

low prices and more inclined to try new products. Once they are

interested in a product, they tend to make up their minds quickly in

buying it.

3.6.2.2. Motivation-based Orientations:

Chameleons: Are those whose shopping styles change to suit a

particular situation. Their shopping approach is based on the type of

product, how rushed they feel for shopping and the importance of

purchase.

Collectors/gatherers: Tend to have a propensity to stockpile

products or buy large quantities, either to save money or lessen the

need of frequent shopping. They bargain to get the best price and

take advantage of retailer guaranties.

Foragers: Specially buy only the desired products and are willing to

get involved in extended search. They are not particularly loyal to

any store and prefer to go shopping alone.

Hibernates: Show a significant degree of indifference towards

shopping and will often postpone buying products even when

required. Their shopping patterns are opportunistic rather than based

on need.
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Predators: Are speed oriented and shop with a purpose. They

carefully plan their purchases in advance and prefer to shop alone.

Predators do not enjoy shopping activity and tend to select retail

outlets where they are confident of getting the required products

quickly.

Scavengers: Enjoy both the shopping activity and making

purchases. They prefer going to sales events and view shopping as a

means of entertainment. They tend to make many impulse purchases.

3.6.2.3. General shopping orientation:

In-store economizer: Compares prices, uses unit prices, redeems

coupons; shops for bargains and believes a person can save by

shopping in different stores; does not believe grocery shopping is an

important task, nor an opportunity to exercise or breakout of the

normal routine; does not plan menus; is relatively young with a large

family; Is well-educated; prefers stores with many price specials and

quality store brands.

Apathetic or mechanistic: Has negative attitude toward shopping;

has negative feelings about the value or enjoyment of shopping,

menu planning, or cooking; has a small family.

Involved traditional: Has positive attitudes toward trying new

brands, planning comparing prices, and redeeming coupons; has

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positive feelings about the value or enjoyment of shopping, use of

recipes, and menu planning; Is older.

Economy planner: Hot positive attitudes toward using unit prices,

coupons, and newspaper advertisements; compares prices; does not

like to try brands; like to plan menus and recipes; does not like to

change stores; Is below average age; has the largest family size;

looks for convenience; quality of store brands is important.

Homemaker: Believes brand name implies quality; plans menus;

believes grocery shopping is an important task; has negative

attitudes toward shopping in more than one store; is average on all

demographic variables; is relatively less concerned about store

advertising, deals, and friends' outlet choices.

Convenience seeker: Hot positive attitudes toward redeeming

coupons but does not use unit pricing; does not like to shop in more

than one store because he or she knows the lay out of the present

store but is willing to visit other stores to see what is new; believes

brand name implies quality; has a low level of education; is very

concerned with convenience in reaching or in moving through the

store; has low concern for store brands.

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3.6.3. Shopping Situations:

A critical factor affecting the location consumers select to visit is the

shopping situation in which they are involved. Three types of shopping

situations are:

1- Convenience shopping: When consumers are engaged in convenience

shopping situations, they are primarily concerned with minimizing their

effort to get the product or service they want. They are indifferent about

which brands to buy or the retailer's image and are somewhat insensitive to

price. Thus, they don't spend much time evaluating different brands or

retailers; they simply want to make the purchase as quickly and easily as

possible. Examples of convenience shopping situations are getting a cup of

coffee during a work break or buying milk for breakfast in the morning.

2- Comparison shopping: Consumers involved in comparison shopping

situations have a general idea about the type of product or service they

want, but they do not have a strong preference for a brand, model, or

specific retailer to patronize. Similar to many convenience shopping

situations, consumers are not particularly brand or store loya1. However,

the purchase decisions are more important to them, so they seek

information and are willing to expend considerable effort planning and

making their purchase decisions. Consumers typically engage in this type

of shopping behaviour when buying furniture, appliances, apparel,

consumer electronics, hand tools, and cameras.

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3- Specialty shopping: When consumers are going specialty shopping,

they know what they want and will not accept a substitute. They are brand

and/or retailer loyal and will pay a premium or spend extra effort, if

necessary, to get exactly what they want. Examples of these shopping

occasions include buying an expensive designer brand perfume or buying a

dress made by a specific designer. The retailer they patronize when

specialty shopping also becomes a destination store. Thus, consumers are

willing to travel to an inconvenient location to patronize a unique gourmet

restaurant or a health food store that specializes in organic vegetables.

Having a convenient location is not as important for retailers selling unique

merchandise or services.

4- Outlet choice: Except for a very small percentage, the vast majority of

sales take place in stores and this trend will continue, though technological

advances promise exciting changes in non-store retailing in the future. A

consumer can follow three basic sequences when making a purchase

decision considering the brand and outlet:

Brand first, outlet second

Outlet first, brand second and

Brand and outlet at the same time.

Frequently, consumers select the brand first and subsequently decide about

the outlets. But for many consumers and product categories, retail stores

constitute the evoked set rather than brands for instance a consumer of
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laptop computer might be familiar with a special retail outlet. She/he may

decide to visit this store and choose a brand from the ones available there.

Using the third approach, the consumer visits a computer retail outlet in

her/his evoked set and evaluates the brands in her/his consideration set in

the store. In this approach, the consumer evaluates the attributes of store

and brands at the same time.

3.6.4. Point-of-purchase (POP) influences:

A number of factors present within the retail outlet environment often

stimulate additional information processing and ultimately influence the

final purchase. As a result of this, it is not uncommon for consumers to visit

a retail outlet with the intention of buying a certain brand and actually buy a

different brand than planned and purchase some additional products as

well. There are five different types of purchases in retail outlets:

1- Specifically planned: Consumer decides a specific brand or item before

visiting the retail outlet and makes that specific purchase.

2- Generally planned: Consumer makes a decision before entering the

retail outlet to buy a product category such as fruits but not the specific

item.

3- Substitute: A change from a specifically or generally planned item to a

functional substitute.
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4- Unplanned: Consumer buys an item that she/he did not have in mind

on entering the retail outlet.

5- In-store decisions: The sum of generally planned, substitute and

unplanned purchases.

3.6.4.1. Factors affecting POP decisions:

1- Discounts and deals: Price discounts and other promotional deals that

offer same-for-less or more-for-the same are generally affect the in-outlet

or POP buying behaviour and increase the sales. Consumers differ in their

deal proneness to deals across product categories and younger and less

educated consumers are more likely to respond to sales promotional deals.

2- Outlet atmosphere: The lay out fixtures, lighting, colors, sounds, odors

and the dress and behaviour of its personnel affect retail store's atmosphere.

An uncontrollable yet important component of store atmosphere is the

number of customers present in the store, their characteristics and

behaviour. The outlet atmosphere produces a significant effect on

customers' mood and their willingness to visit and shop around in the store.

3- Out-of-stock situation: When a retail outlet is temporarily out of

stock for a particular brand, this influences a consumers purchase

decision. The consumer has then to decide whether to visit another store

and buy the same brand, switch brands, or delay the purchase and buy the

selected brand after sometime from the same retail store, or just drop the
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idea of buying. Such a situation of temporary non-availability may also

influence consumers attitudes and verbal behaviour.

4- Sales personnel: Sales personnel are considered as one of the most

important in-store factors that influence consumers. This influence can be

understood in terms of exchange theory, which emphasizes that every

interaction involves an exchange of values. Each participant gives

something to the other and hopes to receive something in return. The sales

person, for example, might offer expertise about the product to make the

consumer's choice easier. Or the customer may be reassured because the

sales person is likeable; his tastes are similar and he is perceived as

someone who can be trusted. In case of services, customers and service

personnel often form fairly warm personal relationships termed as

commercial friendships. Commercial relationships are similar to other and

have substantial impact on customer satisfaction, loyalty and positive word

of mouth. Therefore sales personnel, too, can influence unplanned

purchasing.

3.7. E (Online) Buyer Behaviour:

3.7.1. Attitudes toward E- Market:

In a recent study based on an open-ended survey, Jarvenpaa and Todd

described (as cited in Lisboa et al, 2000) a salient structure for attitudes

towards online shopping. It consisted of four main groups of factors,

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inspired by traditional retail patronage, and adapted to the Web shopping

context. These groups of factors can be summarized as:

1- Product perceptions, including the dimensions of price, quality and

variety. Given that the marketing concept of product is rapidly evolving and

becoming increasingly information-based, a further dimension to those

described in Jarvenpaa and Todd' (but also coming out as an unexpected

salient factor in that study) is the information richness of products. It can be

associated to the problem of their lack of tangibility.

2- Shopping experience, described as a mixture of effort, compatibility and

playfulness. In the online context, effort is more mental than physical, and

can involve ease of use and ease of placing and cancelling orders.

Compatibility refers to the consumers' lifestyle and shopping habits.

Finally, playfulness can be described in the internet context, by making use

of the flow construct.

3- Consumer service includes responsiveness, assurance, reliability,

tangibility and empathy. Responsiveness concerns how well prepared

merchants are to meet the diverse needs of shoppers during the different

phases of shopping. Assurance is the degree to which the service provider

instills confidence in customers. Reliability is the degree to which the

service provider can be counted on to deliver on his or her promises. The

concept of tangibility refers to the ability of the vendor to replace the real

product with an information-rich substitute. Finally, empathy is defined as

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the degree to which the vendor is able to adapt to the individual needs of

the consumer.

4- Consumer risk is split into economic, social, performance and personal

risks. The economic risk stems from the possibility of monetary loss

associated with buying a product, Personal risk has to be understood in

terms of the concept of environmental control. Performance risk involves

the perception that a product or service may fail to meet expectations,

Finally, Social risk is concerned with both the consumer's self-perception,

and that of their peers.

3.7.2. What E-Buyers Shop for and Buy Online?

We can look at online sales as divided roughly into two groups: small ticket

and big ticket items. Big ticket items include computer equipment and

consumer electronics, where orders can easily be over $500. Small ticket

items include apparel, books, health and beauty supplies, office supplies,

music, software, videos, and toys, where the average purchase is typically

less than $l00.

In the early days of e-commerce, sales of small ticket items vastly

outnumbered those of large ticket items for a variety of reasons. First

movers on the Web sold these products early on; the purchase price was

low (reduced consumer risk); the items were physically small (shipping

costs were low); margins were high (at least on CDs and software): and
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there was a broad selection of products (e-commerce vendors could

compete on scope when compared to traditional offline stores). But the

recent growth of big ticket items such as computer hardware, consumer

electronics, furniture, and jewelry has changed the overall sales mix.

Consumers are now much more confident spending online for big ticket

items. Although furniture and large appliances were initially perceived as

too bulky to sell online, these categories have rapidly expanded in the last

few years. The types of purchases made also depend on levels of experience

with the Web. New Web users tend primarily to buy small ticket items,

while experienced Web users are more willing to buy large ticket items in

addition to small ticket items.

3.7.3. How E-Buyers Find Vendors Online?

Followings are E-buyers methods of search or purchase of products based

on their rank in frequency of usage:

1- Using search engines

2- Going directly to the company Web site

3- Going to comparison shopping sites

4- Going to product rating sites

5- Clicking on banners

Advantages of shopping online are Cost effectiveness, Convenience,

Easiness, Saves time, Fits in with other activities, Access to breadth and
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depth of products, Easy search of many alternatives, Personalization of

presentation and merchandise and Access to favourable prices.

Arguably, the largest factor preventing more people from shopping online

is the trust factor; the fear that online merchants will cheat them, lose

their credit card information, or use personal information they give them to

invade their personal privacy, bombarding them with unwanted e-mail, and

pop-up ads. Secondary factors can be summarized as hassle factors, like

shipping costs, returns, and inability to touch and feel the product.

3.7.4. Models of E- Buyer Behaviour:

1- Click stream model: In this online model, Web site features, along with

consumer skills, product characteristics, attitudes towards online

purchasing, and perceptions about control over the Web environment come

to the fore.

Clickstream behaviour refers to the transaction log that consumers establish

as they move about the Web, from search engine, to a variety of sites, then

to a single site, then to a single page, and then, finally, to a decision to

purchase. These precious moments are similar to point of purchase

moments in traditional retail. The most important clickstream factors are:

Number of days since last visit, Speed of clickstream behaviour, Number of

products viewed during last visit, Number of pages viewed, Number of

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products viewed, Supplying personal information (trust), Number of days

since last purchase and Number of past purchases.

Clickstream marketing takes maximum advantage of the internet

environment. It presupposes no prior knowledge of the customer (and in

that sense is privacy-regarding), and can be developed dynamically as

customers use the internet.

Figure No. 3.11: The Click Stream Model

Brand

Culture Marketing
communications
stimuli Purchasing
attitudes
Click stream behaviour

Social norms Firm capabilities

Perceived Purchase
behavioural
Psychological Website controls
factors Features
Intervening
factors
Consumer skills
Background
demographic
factors
Product
characteristics

Source: Laudon, K. C. & Traver C.G. (2009).E-Commerce: Business, technology, society.

(4thed.).New Delhi, India, Pearson Education Inc, 349.
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In this general model of online consumer behaviour, the decision to

purchase is shaped by background demographic factors, several intervening

factors, and finally influenced greatly by clickstream behaviour very near to

the precise moment of purchase.

2- Buyer behaviour in EC (E Commerce) environment model

Next figure shows the basics of consumer behaviour in the EC environment

model. The model is composed of the following parts:

1- Intervening or moderating variables are variables within the vendors'

control. They are divided into market stimuli (on the left) and EC systems

(at the bottom).

2- The decision-making variable, which is shown in the center of the

exhibit, is influenced by the independent and intervening variables. This

process ends with the buyers' decisions (shown on the right) resulting from

the decision-making process.

3- The dependent variables describe types of decisions made by buyers (in

the box at the right).

4- Independent (or uncontrollable) variables, which are shown at the top of

figure, can be categorized as personal characteristics and environmental

characteristics.
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Figure No. 3.12: Buyer Behaviour in the EC Environment Model

Independent uncontrollable variables Personal characteristics Environmental characteristics

Age Social (interaction, pressure)

Gender Culture/Community
Ethnicity Other (Legal, institutional,
Education
government regulations)
Lifestyle
Psychological Political
Knowledge Technological
Values
Personality

Market stimuli Buyers decisions

Price Buy or not

Brand What to buy
Variety Decision-making Where (vendor)?
Promotion process (group or When (how often)?
Product Quality individual)
Vendor controlled intervening variables

Product availability
Customization

Dependent variables
(Results)

EC systems (technology and web site variables)

Logistic support and Customer

Technical support
other service

Accessibility
Payments Web design
FAQs
Delivery Intelligent
E-mail
Content agents for scratch
Callcenters
Security comparisons
One-to-one

Source: Turban .E, King .D, Viehland .D. & Lee .J, (2009). Electronic commerce: A managerial
perspective. (4thed.).New Delhi, India: Pearson Education Inc, 183.

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