E-Shoppers’ Behavior

Unit – 4
Determinants of perceived benefits and
risks
Hoffman’s Many-to-Many model
Internet Branding and loyalty
Internet Communities
How the internet is changing Consumer
Behaviour
 Definition:

• E-tailing (less frequently: etailing) is the

selling of retail goods on the Internet. Short
for "electronic retailing," and used in Internet
discussions as early as 1995, the term seems
an almost inevitable addition to e-mail, e-
business, and e-commerce.
 Determinants of perceived benefits
and risks:
• Demographics:
Age: Younger people, as compared to older ones use more
shopping websites/ apps.
Gender: Though both male and female shop online, ‘what’
they shop is what differs.
Education: People with higher education use more internet
and shopping websites than lower educated/ uneducated
ones.
Income: Middle and higher income groups use more online
shopping than lower income groups
• Convenience:
 Empirical research shows that convenient of the internet
is one of the impacts on consumers’ willingness to buy
(Wang et al 2005)online.
 Available round the clock :Research shows that 58
percent chose to shop online because they could shop
after-hours, when the traditional stores are closed and 61
percent of the respondents selected to shop online
because they want to avoid crowds and wailing lines,
especially in holiday shopping (The Tech Faq, 2008). Wang
et al., 2005).
 Some customers use online channels just to escape from
face-to-face interaction with salesperson because they
pressure or uncomfortable when dealing with
salespeople and do not want to be manipulated and
controlled in the marketplace (Goldsmith and Flynn,
2005; Parks, 2008).
• Information:
 Given customers rarely have a chance to touch and feel
product and service online before they make decision,
online sellers normally provide more product information
that customers can use when making a purchase (Lim
and Dubinsky, 2004).
 In addition to get information from its website,
consumers can also benefit from products’ reviews by
other customers.
• Available products and services: E-commerce
has made a transaction easier than it was and online
stores offer consumers benefits by providing more
variety of products and services that they can choose
from (Lim and Dubinsky, 2004; Prasad and Aryasri, 2009).
• Cost & Time efficiency :
 Some websites, EBay for example, offer customers auction or
best offer option, so they can make a good deal for their
product. It also makes shopping a real game of chance and
treasure hunt and makes shopping a fun and entertainment
(Prasad and Aryasri, 2009)
 As such, customers often find shop from the website that is
offering convenience can reduce their psychological costs
(Prasad and Aryasri, 2009).
Impeding Factors:
• Security:
 Security seems to be a big concern that prevent customers
from shopping online (Laudon and Traver, 2009). because
they worried that the online store will cheat them or
misuse their personal information, especially their credit
card (Comegys et al., 2009).
• Tangibility of the product: Customers viewing a
product on computer screen can show a different effect
than actually seeing it in the store (Federal Trade
Commission, 2003).
 For example, customers are less likely to buy clothes
through online channel (Goldsmith and Flynn, 2005)
because they have no chance to try or examine actual
product (Comegys et al., 2009).
• Social Contact:
 While some customers likely to be free from salesperson
pressure, many online shopping would feel difficult to make a
choice and thus get frustrated if there is no experienced
salesperson’s professional assistance (Prasad and Aryasri,
2009)
 There are also consumers who sometimes shop at traditional
store because they want to fulfill their entertainment and
social needs which are limited by online stores (Prasad and
Aryasri, 2009).
• Previous online shopping experience:
 Some online sellers may not agree to refund those products
even though it is not what the customer wanted.
Delivery is another thing that affects online purchasing
decision. Slow or late shipping, for instance, makes customer
walk away from online shopping (Comegys et al., 2009).
 Hoffman’s Many-to-Many Model
The Internet operationalizes a model of distributed computing
that facilitates interactive multimedia many-to-many
communication.
As such, the Internet supports discussion groups (e.g. USENET
news and moderated and unmoderated mailing lists), multi-
player games and communication systems (e.g. MUDs, irc, chat,
MUSEs), file transfer, electronic mail, and global information
access and retrieval systems (e.g. archie, gopher, and the World
Wide Web)
The business implications of this model "[where] the engine of
democratization sitting on so many desktops is already out of
control, is already creating new players in a new game" (Carroll
1994), will be played out in as yet unknown ways for many years
to come.
The primary feature of Figure 1
is a one-to-many
communications process,
whereby the firm (F) transmits
content through a medium to
consumers (C). Depending upon
the medium (i.e. broadcast,
print, billboards), either static
(i.e. text, image and graphics)
and/or dynamic (i.e., audio, full
motion video and animation)
content (see Bornman and von
Solms 1993) can be
incorporated.

No interaction between Mass Media

consumers and firms is present
in this model.
Figure 2, based upon traditional models of communication from sender
to receiver, presents a simplified model o f interpersonal communication.
The solid and dashed lines indicate communication flows through a
medium for two distinct individuals.

Interactivity is the key feature distinguishing Figure 2 from Figure 1.

Figure 3 shows the range of communication relationships
possible in a hypermedia CME (Computer Mediated
Environment).

Consumers can interact with the medium (e.g., "surf the

Web" using browsing software) as can firms (e.g. business-to-
business marketing as in CommerceNet).

In addition, firms can provide content to the medium (e.g., a

firm establishes a corporate Web server).

 A hypermedia CME can also be used for computer-mediated

communication among consumers and/or firms (through the
medium), and also potentially for one-to-many mass
communication, although applications of the latter have met
with considerable consumer resistance (e.g., Godwin 1994b).
 Internet Branding and Loyalty:

Creating and Maintaining Brands on Internet:

Elements of a Brand -> Differentiation, Relevance and Perceived Value

Emotional Branding Vs Rational Branding

Traditionally, firms used emotional branding in their advertising and promotion efforts to establish
and maintain brands.

“Brand is and emotional shortcut between a company and its customer” – Ted Leonhardt.

Online Shoppers “initiate” the process, seek information and “listen” to the message provided by
the company. Therefore, rational branding has to be used to create and maintain brands online.

Rational Branding relies on the cognitive appeal of the specific help offered, not on a broad
emotional appeal. Eg: Email services provide mailing service and in-turn display Ads on each page.

Brand leveraging Strategies: Working well for well established web sites to extend their dominant
positions to other products and services. Ex: Yahoo! – acquired GeoCities and Broadcast.com

Brand Consolidation Strategies: Establishing online registries for own store and creating a single
registry that connects various complementary online stores . Eg: WeddingChannel.com
Costs of Online Branding – Paradigm Shift

In the year 1998, a large number of companies began spending

significant amount of money to build new brands on the web.
Amazon.com - $133 million
BarnesandNoble.com - $70 million

Transferring existing brands to the web or using the web to maintain an

existing brand is much easier and less expensive than creating an
entirely new brand on the web.
 Promoting any company’s web presence should be an integral part
of the brand development and maintenance.
 The Company’s URL should always be included on the product
packaging and in mass media advertising like radio, television, and in
print.
 Ensuring that the site appears in search engine listings is also very
important.
 Factors influencing customers towards Online shopping *

Customer Loyalty Index (CLI):

CLI= (Customer Satisfaction)x(Customer retention)x(customer

recommendation)

Online Customer loyalty can be achieved and enhanced through:

Building Trust -
Ensuring Security
Offering variety
Dynamic and personalized communication
Rational Branding
Incentives, offers, discounts for repeat purchases, smooth handling of
returns.
Under – commit and over – deliver
Integrating Customer care call center with the website.
 Virtual Communities/ Web Communities/ Online Communities

Def: A virtual place where people with similar characteristics meet on a regular
basis.

WELL: one of the first web communities, authors and readers of “Whole Earth
Review, 1985
TRIPOD, 1995, Massachusetts, offered participants web page space, chat rooms,
news and weather updates, health info, etc.
Theglobe.com, 1995,project of students of Cornell University.

Why?

Helps strengthen brands

CRM
SEO
Ads
Add value to users

Online communities can be created for free or by paying fee. Eg. Wordpress,
Facebook, Twitter, Ning, etc. are free !
“Communities already exist and the question you should ask is
how you can help them do what they want to do”
– Mark Zuckerberg.
 How Internet is changing e-Shoppers’ Behavior:

 Growth of internet – awareness as well as usage

 Buyer Controlled not Marketer controlled. Not “Push” , “Pull” strategies effective.

 Search Dominated: helps narrow down solutions and compare alternatives

 Growth of Social Media

 M-commerce Vs E- commerce:

1) Local mobile searches (85.9 billion) are projected to exceed desktop searches
(84 billion) for the first time in 2015 (eMarketer).

2)Three out of four mobile searches trigger follow-up actions Google/Nielsen).

3)80 percent (80%) of customers abandon a mobile site if they have a bad
user experience (Google).
 Growth of personalized buying behavior:
An Accenture report, entitled “Energizing Global Growth: Understanding the
Changing Consumer,” concludes that companies able to capitalize on these changes
with speed and agility are more likely to capture a portion of the trillions of dollars in
global growth over the next few years.

The same report found that nearly three-quarters (73%) of business executives
said consumer behavior has changed drastically in the last three years. Seventy-four
percent (74%) said they do not fully understand the consumer changes under way.
Eighty percent (80%) said they believe that their companies are not taking full
advantage of the opportunities these changes present