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A Study of Factors Affecting Online Buying Behavior: A Conceptual Model

Article  in  SSRN Electronic Journal · January 2012


DOI: 10.2139/ssrn.2285350

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A STUDY OF FACTORS AFFECTING ONLINE BUYING BEHAVIOR: A
CONCEPTUAL MODEL

Dr. Ujwala Dange Prof. Vinay Kumar


HOD, Deptt. Of Management, Assistant Professor
Priyadarshini Engineering College, S. B. Patil Institute of Management,
Nagpur Pune

ABSTRACT

This paper examines the key factors which affect buying motives of consumers for online
buying or E- shopping. For this purpose different models from different research scholars
have been studied. One online consumer buying behavior motive model, (FFF Model), has
been designed and suggested on the basis of existing review of literatures. Future research
could use our suggested factors (F), filtering elements (F) and then filtered buying behavior
(F), (FFF Model) framework as a basis to empirically explore the factors affecting the online
consumer purchasing process and to test the suggested model by the interested researchers in
the relevant area of research.

Introduction-
The internet is being developed rapidly since last two decades, and with relevant digital
economy that is driven by information technology also being developed worldwide. After a
long term development of internet, which rapidly increased web users and highly speed
internet connection, and some new technology also have been developed and used for
web developing, those lead to firms can promote and enhance images of product and
services through web site. Therefore, detailed product information and improved service
attracts more and more people changed their consumer behaviour from the traditional
mode to more rely on the internet shopping. On the other hand, more companies have
realized that the consumer behaviour transformation is unavoidable trend, and thus
change their marketing strategy. As the recent researches have indicated that, the internet
shopping particularly in business to consumer (B2C) has risen and online shopping
become more popular to many people. According to the report, The Emerging Digital
Economy II, published by the US Department of Commerce, in some companies, the
weight of e-commerce in total sales is quite high. For instance, the Dell computer
company have reached 18 million dollars sales through the internet during the first
quarter of 1999. As a result, about 30% of its 5.5 billion dollars total sales were achieved
through the internet (Moon, 2004). Therefore, to understand t h e b u y i n g m o t i v e s
f o r internet shopping is a must.

Key words- Consumer behaviour, Factors affecting online consumer behavior, E-Marketing,
E-commerce, Online, Internet. Literature review, framework for online consumer behavior,
intention, motives, consumer characteristics.

Electronic copy available at: http://ssrn.com/abstract=2285350


Review of Literature
People purchase products and services are the most based on their level of trust in this
product or services, and sellers either in the physical store or online shops. Online trust is
the basic and essential element for building a relationship with customers. A present
research shows that online trust is lower level than the face-to-face interactions in the
physical store (Cassell and Bickmore, 2000), and the result from Cheung and Lee (2006)
shows that trustworthiness of Internet merchant (perceived integrity, perceived
competence, and perceived security control) and external environment (third-party
recognition and legal framework) have considerable impact on consumer trust in Internet
shopping. The trustworthiness of E-commerce web site is very relying on the how much
privacy security can be provided. For example, a highly technical competence can be
a factor to influence the trustworthiness (Singh and Sirdeshmukh, 2000). As mentioned
above that the web merchant can provide third-party verification to E-commerce web site,
and while this privacy and security strategies are used, customers will think their E-
commerce transactions through Internet are secure and thus the site is more reliable to
them. Beside this point, if the E-commerce web site can provide the information about
their customer services, location of the office, contact telephone number, and a help
button on the web site, customers could also increase their trustiness as they can feel that
the online retailers is truly exist (Lohse and Spiller, 1998).
According to Li and Zhang’s (2002) taxonomy that developed based on their analysis,
there are ten impacts of relevant factors on online consumer behaviours. These ten
factors could be categorized into five independent variables (external environment,
demographics, personal characteristics, vendor/service/product characteristics, and web
site quality) and five dependent variables (attitude toward online shopping, intention to
shop online, decision making, online purchasing, and consumer satisfaction). The five
independent variables are identified as antecedents, which directly determine attitudes
towards online shopping. In the antecedents, the vendor/service/product characteristics and
web site quality are directly impact on consumer satisfaction. The figure clearly shows
that the antecedents, attitude, intention, decision making, and online purchasing are
series of processing stage. Consumer satisfaction is separated and occurs among at
all possible stages depending on the consumer’s involvement during the Internet
shopping process, and this two ways relationship could influence each reciprocally.
Fishbein’s attitudinal model has been widely used in the marketing context (Lilien et al
1992) 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, Fishbein’s model stops at the adoption level and does not capture other important
factors that explain and predict consumer continuance behavior (repurchase).

Study of models
INTERNET SHOPPING AND ITS IMPACT ON CONSUMER BEHAVIOUR, Fayu
Zheng, 2006, The University of Nottingham Mayer, Davis, and Schoorman (1995) defined
trust as, “the willingness of a party to be vulnerable to the actions of another party based
on the expectation that the other will perform a particular action important to the trustor,
irrespective of the ability to monitor or control that other party” (p.712) (Cheung and Lee,
2006). This definition is widely recognized and the most frequently cited (Rousseau, Sitkin,
Burt, & Camerer, 1998).

Electronic copy available at: http://ssrn.com/abstract=2285350


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

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

In summary, the Internet offers a new way to do business and gives fresh shopping
experience to customers. So far, there are many rules and conventions need to be
improved to fit the online environment. For instance, the security must be ensured that
the transactions on the Internet are safe; the privacy must be protected by the web sites;
and the trust transference programs are needed to help engender customer trust in the
Internet shopping environment.
DETERMINANTS OF CONSUMER BEHAVIOR IN AN
E-COMMERCE ENVIRONMENT, Xiang Xue, B.A. Nankai University, 1999
According to Li and Zhang’s (2002) taxonomy that developed based on their analysis,
there are ten impacts of relevant factors on online consumer behaviours. These ten factors
c o u l d be categorized into five independent variables (external environment,
demographics, personal characteristics, vendor/service/product characteristics, and web
site quality) and five dependent variables (attitude toward online shopping, intention to
shop online, decision making, online purchasing, and consumer satisfaction). The five
independent variables are identified as antecedents, which directly determine attitudes
towards online shopping. In the antecedents, the vendor/service/product characteristics and
website quality are directly impact on consumer satisfaction. The figure clearly shows that
the antecedents, attitude, intention, decision making, and online purchasing are series of
processing stage. Consumer satisfaction is separated and occurs among at all possible
stages depending on the consumer’s involvement during the Internet shopping
process, and this two ways relationship could influence each reciprocally.

Figure: Research Model of Consumers’ Online Shopping Attitudes and Behaviours

There are many studies of online consumer behaviours in recent years, most of them
focus on the factors influencing the online consumer behaviours, and the researchers
seems to find different factors in different way. Moreover, there is a variety of studies
which focus on comparisons between online and offline consumer behaviour in relation to
different products has been presented.

Online Consumer Behavior: A Review and Agenda for Future Research, Christy M. K.
Cheung, Lei Zhu, Timothy Kwong, Gloria W.W. Chan, Moez Limayem
A 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 Fishbein’s attitudinal theoretical model
(Fishbein 1967) and the expectation-confirmation model (Oliver 1980), 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.
Fishbein’s attitudinal model has been widely used in the marketing context (Lilien et al
1992) 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, Fishbein’s
model stops at the adoption level and does not capture other important factors that explain
and predict consumer continuance behavior (repurchase).

CONSUMER CONSUMER CONSUMER

ONLINE ONLINE ONLINE

PURCASE PURCHASE RE PURCHASE

INTENTION

INTENTION ADOPTION CONTINUANCE

Figure: Model of Intention, Adoption, and Continuance (MIAC)

Online Merchants and Intermediaries Characteristics

Researchers such as Hoffman and Novak (1996) and Spiller and Lohse (1998) have
suggested 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.
Figure: Framework of Online Consumer Behavior

These five domain areas were integrated into our base model (MIAC) to form a
framework for the study of online consumer behavior. This proposed framework not
only provides us with a cohesive view of online consumer behavior, but also serves as a
salient guidance for researchers in this research area.

Consumer Behavior in an E-commerce Environment


Li et al. (1999) attempted to identify the factors that could be used to predict a customer's
online buying behavior by testing a linear regression model. Their data were collected by
Clickin Research company from an online survey of national Internet users. The data were
then cross-validated with other similar national surveys (i.e., Greenfield Online) before being
used to test the model. Ten hypotheses which are related to marketing channels, shopping
orientations, and consumer demographics are put forward before introducing the model.
These hypotheses can be divided into three parts. For the channel theory part, researchers
tried to figure out whether online purchasers perceive the Internet offers higher channel
utilities and consider themselves more knowledgeable about the Web as a channel than non-
purchasers. The difference is tested for frequent purchasers vs. occasional purchasers. For the
shopping orientation part, which quantified customers' lifestyle factors, they tried to prove
that online purchasers are more convenient-oriented, less experiential-oriented, and
indifferent to recreation and price orientation. Whether similar situation applies to frequent
purchasers and occasional purchasers is also to be tested. For the demographic part, they tried
to show that online purchasers are better educated and with higher income than non-
purchasers. Age differences are assumed to be insignificant among three types of online
buying status as part of the hypothesis.
A conceptual framework that provides a better insight on factors that affect online purchase
behavior and also a summarization of all the hypotheses is shown in Figure

PROPOSED MODEL

The proposed model: factors, filtering elements and filtered buying behavior (FFF
Model), talks about the factors which affect and motivate the consumer to buy products
and services online, which are the combinations of external as well as internal factors. The
external factors are beyond control of the customer but the internal factors are the elements
of individual (human) traits, psychologies or behaviors. Just after the first step, the
customer faces certain hurdles, named in the model as, filtering elements. After getting
through the filtering elements the refined buying motives evolves. After this refined
buying behavior (motives), the customer goes ahead and shops online.

Factors (External & Internal) affecting consumer buying behavior


The influences on consumer behaviour are often made between external and internal
factors. External factors are come from the environmental conditions, and internal factors
are u s u a l l y from the consumer’s mind. There are many factors could influence
consumer’s behaviours. According to Warner, the external influences could divide into
five sectors: Demographics, socio-economics, technology and public policy; culture; sub-
culture; reference groups; and marketing. The internal influences are variety of
psychological processes, which include attitudes, learning, perception, motivation, self
image, and semiotics (Malcolm). In addition to these, Sheth (1983) also suggested that
the consumers have two types of motives while shopping, which are functional and non-
functional. The functional motives are mostly about the time, shopping place and
consumer’s needs, which could be like one-stop shopping to save time, the environmental
of shopping place such as free parking place, lower cost of products and available to
choose from widely range of products. The non-functional motives are more related with
culture or social values, such as the brand name of the store.

Filtering elements-
Online Security, Privacy, Trust and Trustworthiness
Compare with the in-store shopping, the internet shopping has much higher risks during
the purchasing process. As internet shopping is one of the non-store shopping formats,
others such as mail order (Spence, 1970), telephone shopping (Cox and Rich, 1964),
catalogue (Reynolds, 1974) and so on, which have proved by recent studies shown that
consumers perceive a higher level of risk. Even though the internet provides many
functional advantages, but it still have some disadvantages, such as in the sections of
security, privacy, trust and trustworthiness.
Security
Due to the characteristics of internet, the information across the web could be lost or
stolen quite easily, especially the customer’s personal information and monetary details.
In B2C E-commerce area, there are many web merchants are offering third-party privacy
and security protection, such as encryption and password protections. The web merchants
like TRUSTe provide a third-party verification program for their customers, once a
Internet retailer joining the program, there will be a seal offered by TRUSTe shows that
their commitment to security. Therefore, because of the third party verification, the
customers considered this seal could make them more confident to provide their
information to the site.
Even some websites have secured certified by professional organisation, but still have
some customers lost their money through internet every year. These financial risks are
mostly caused by customers themselves. The reasons could be widely, some customers
have apparent sense of using credit card online in the insecurity way, such as public
credit card details to unknown people or website, leave credit card in the public place
where other people can easily reach, and internet shopping on the computer with virus. In
the Maignan and Lukas’s research (1997) shows that the financial risks have been cited
as a main reason to stop internet shopping, and security has become a major concern both
in online transaction relationships (Rowley, 1999).
The security treats can be made through the network and data transaction, and also
through unauthorized use. Thus, the Internet retailers have responsibility to keep
monetary and personal details of customer’s safety during the process of online shopping.
To improve the effectiveness of the Internet shopping environment could benefit both
sellers and buyers and make much convince to the customers.
Privacy
Another type of risk that consumer will faced is psychological risk, such as
disappointment and frustration of shopping online, which is mainly caused by the privacy
Information lost. On the Internet, the privacy information could be tracked and collected,
and then it can be used to sharing with third parties, in order to send spam mails or emails.
The Federal Trade Commission (FTC) has statutory authority to prohibit the web site to
acquire information by “unfair and deceptive” trade practices (Earp and Baumer, 2001);
however, it does not have ability to comprehensively control every activity among the
Internet.
According to Earp and Baumer’s research, because of the lack of legal remedies, this
implies electronic customers should be aware of privacy risk and it could affect
customer’s obstacle to shopping on the Internet. Moreover, it also leads to customers
more carefully to decide what kind of information will be revealed online, and to which
web site. From the survey results, most of customers willing to reveal their gender and
ages, and 18% of respondents willing to provide credit card details to well-known web
site while only 3% of respondents indicated willingness to provide the same information
to lesser-known web sites. Moreover, web site that has privacy statement and third-party
verification could reduce some customer concerns, but the evidence is not strong. Overall,
customers are being very carefully to reveal their personal information since the legal
environment of Internet is uncertain.

Trust and Trustworthiness


Mayer, Davis, and Schoorman (1995) defined trust as, “the willingness of a party to be
vulnerable to the actions of another party based on the expectation that the other will
perform a particular action important to the trustor, irrespective of the ability to monitor
or control that other party” (p.712) (Cheung and Lee, 2006). This definition is widely
recognized and the most frequently cited (Rousseau, Sitkin, Burt, & Camerer, 1998) People
purchase products and services are the most based on their level of trust in this product
or services, and sellers either in the physical store or online shops. Online trust is the basic
and essential element for building a relationship with customers. A present research
shows that online trust is lower level than the face-to-face interactions in the physical
store (Cassell and Bickmore, 2000).

EXTERNAL FACTORS
Demographics,

Socio-economics,

Technology and
FILTERING
Public policy;
ELEMENTS
Culture;

Sub- culture; SECURITY


CONCERN
Reference groups;

and Marketing
BUYING PRIVACY FILTERED
BUYING BUYING
MOTIVES CONCERN
MOTIVES
INTERNAL FACTORS
Attitudes, TRUST &
TRUSTWORTHI-
Learning,
NESS
Perception,

Motivation,

Self image, and

Semiotics
Fig: online consumer buying behavior motive model, Factors (F), Filtering elements (F)
and Filtered buying motive (F); (FFF Model).

Limitation of the study and future research


The purpose of this study was to find the factors affecting online consumer buying
behavior thorough analysis of the literature in the area of online consumer behavior. A
research framework was suggested to better understand existing studies and to highlight
under-researched areas. Our findings show that the literature on online consumer
behavior is rather fragmented. Most studies investigated intention and adoption of online
shopping while continuance behavior (repurchase) is seriously under-researched.
Moreover, our analysis helped us to identify several fruitful directions for future research.
Future research could use our suggested factors, filtering elements and then filtered
buying behavior (FFF Model) framework as a basis to empirically explore the factors
affecting the online consumer purchasing process.
We invite researchers to pay more attention to the under-researched areas highlighted by
our analysis.

REFERENCES:

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University of Nottingham
2. Online Consumer Behavior: A Review and Agenda for Future Research, Christy M. K.
Cheung, Lei Zhu, Timothy Kwong, Gloria W.W. Chan, Moez Limayem, 2003
Determinants of consumer behavior in an, e-commerce environment, Xiang Xue,
B.A. Nankai University, 1999, The University of Maine August, 2002
3. Intangibility and Perceived Risk in Online Environments, Axel Eggert, Joumal of
Marketing Management, 2006, 22, 553-572
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Len Tiu Wright, Brunel University, UK
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Bikram Jit Rishi, Journal of Marketing & Communication, January -April 2008 Vol. 3
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519-533
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