Consumer Purchasing Behavior on Online Shopping Sites

Research Paper

Submitted by:
ANSHUL GUPTA PGDM Marketing Roll No. 123

Under the Guidance of

Hardeep Singh Assistant Professor, SIMSR

Introduction Consumer is the subject of market and the critical strength of existence and development of enterprise. The consumer demand affects an enterprise's marketing decision fundamentally, which is the basic consideration for an enterprise choosing the marketing strategy and tactics.

Today, the world is getting smaller and smaller, hereby making Online Space as its core of business. Net retailers in development must focus on the consumer, as they form the base of their foundation in the changing times. Hence an enterprise's marketing behavior should take the consumer as the core.

By studying the influencing factors of consumer behaviors in online segment, the enterprise can identify the consumer demand, enhance the factors that promote consumer purchasing, and change unfavorable factors, taking the satisfaction of consumer as the start point and ultimate goal of marketing behaviors.

Only by providing high-quality products, reasonable prices, and complete services, and satisfying consumers' material and spiritual needs, can an enterprise earn more customers, increase market shares, and create special core competences and competitive advantages.

Meanwhile, consumers will gradually accept the modern selling mode- online retail. The study of consumers' online purchasing will help retailers who hope to or has already entered the field to apply marketing strategies and impact the consumer purchasing.

Literature Review Online Shopping Behavior v/s Offline Shopping Behavior What Types of Products are most likely to be Purchased Online and Offline?

Earlier studies have focused on why online shopping differs across products. Several studies have shown that high touch products that consumers feel they need to touch, smell or try on are those that require an offline presence at least at the final purchase stage (Chiang and Dholskia 2003; Lynch, Kent, and Srinivasan 2001).

Levin et al. (2003) showed that the special importance of being able to personally handle and inspect the product before purchasing underlies the preference for traditional brick-and-mortar shopping methods for products like clothing, sporting goods, and health and grooming products. At the other extreme, low touch products like airline tickets and computer software are products that generally favor online services because of the special importance placed on shopping quickly. What Types of Consumers are most likely to Purchase Online and Offline?

In sampling a nationwide panel of consumers who had online capabilities at home, Swinyard and Smith (2003) compared those who did and did not make purchases online during the preceding shopping season.

They found that online shoppers were: younger, wealthier, better educated, more computer literate and more likely to spend time on the computer, more likely to find online shopping to be easy and entertaining, and less fearful about financial loss resulting from online transactions.

J. Chu, Marta, Jos & Pradeep K. found out that the same households are more brand loyal, more size loyal, but less price sensitive in the online store than in the offline stores. Light online shoppers are least price sensitive and heavy online shoppers are most price sensitive in the online store. Moderate online shoppers are most price sensitive in the offline stores. Online and offline differences in brand loyalty and price sensitivity are larger for food products than for non-food products and larger for sensory products than for non-sensory products.

Drivers that influence Online Shopping Behavior

Bikram J (2008) empirically studied the factors affecting the online shopping behavior. The various factors that were found to be the determinants in changing behavior were Convenience, Accessibility, Scope, Attraction, Reliability, Experience and Clarity. According to Catherine D (2010), online shoppers perceive online environment as environment, instead of virtual ones which they wish to both understand and explore. Thus various factors like: Page clarity, Site architecture, Visual impact, Marketer informativeness, Sense making potential influence the behavior of consumers shopping online. Yulihas Ri (2011) studied the factors influencing the students buying intention while online shopping with the help of Technology Acceptance Model. His findings concluded that Compatibility, usefulness, ease of use & security have been found to be important predictors toward attitude for online shopping. Saeed Behjati (2012) studied the convergent factors that highlighted from 35 empirical researches regarding online shopping behavior. The cumulative results might support organizations and web designers to understand better their visitors and respond more effectively to their customers' demands, and thus become more effective. Their findings have been shown as below:

Mohamed Khalifa and Moez Limayem suggest that two out of the five facilitating conditions emerged as the most important ones, specifically, site accessibility and transaction efficiency. To enhance the accessibility of an Internet shop, one has to make sure that the site is always up and running (available) and that it can be easily located.

Improving the transaction efficiency, on the other hand, requires the optimization of the cycle times associated with product identification and selection, ordering, delivery, and after-sale service. The other facilitating conditionsproduct description, navigation efficiency, and Web page loading speedare nevertheless significant and should not be neglected. To improve loading speed, the literature provides a number of guidelines for Web designers, such as keeping graphics simple and meaningful, limiting the use of unnecessary animation and multimedia plugin requirements, using thumbnails, providing a text-only option, continuously monitoring the server and the Internet routes, and allowing text to load first, followed by graphics.

To improve navigation efficiency, Web designers should carefully think of their online store layout. Finally, providing a good product description is a significant facilitating condition that can minimize an important drawback of online shopping: the inability of the customer to physically feel and examine the product.

Li Guo in his paper used Analytic Hierarchy Process (AHP) to study the influencing factors of online consumers' purchasing behaviors. The survey was targeted at consumers who had bought stuff online. Following were his findings according to the analysis of survey conducted:

The Security & Privacy factors were the most critical influential factors for consumer online purchase behavior. This was followed by other factors like Prices, Service, design, personal Characteristics & finally the purchase intentions & attitudes. Models used for study of Online Shopping Behavior Researchers studies on the influencing factors of consumers' online purchasing are mainly divided into two aspects. One is to directly use theories or methods, but not the Technology Acceptance Model (TAM). The other is based on the TAM model and its derived model to study the influencing factors of consumers' online shopping.

The Technology Acceptance Model (TAM) is an information systems theory that models how users come to accept and use a technology. The model suggests that when users are presented with a new technology, a number of factors influence their decision about how and when they will use it, notably:

Perceived usefulness (PU) - This was defined by Fred Davis as "the degree to which a person believes that using a particular system would enhance his or her job performance".

Perceived ease-of-use (PEOU) - Davis defined this as "the degree to which a person believes that using a particular system would be free from effort" (Davis 1989).

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

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

Christy M. K. Cheung, Lei Zhu, Timothy Kwong, Gloria W.W. Chan, Moez Limayem found 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 Fishbeins attitudinal theoretical model (Fishbein 1967) and the expectation-confirmation model (Oliver 1980), they attempt to associate the three elements together and form a base model

Model of Intention, Adoption, and Continuance (MIAC) for the development of an online consumer behavior framework.

Model of Intention, Adoption, and Continuance (MIAC)

Conclusion

The purpose of this study was to conduct a thorough analysis of the literature in the area of online consumer behavior. A common research framework should be taken up to better understand the existing studies and to highlight under-researched areas. 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.

1. Marketers could use intention, adoption and continuance (MIAC) framework as a basis to empirically explore the factors affecting the online consumer purchasing process.

2. Classical consumer behavioral theories provide marketers with a good starting point in understanding online consumer behavior. However, we should take the IT component into serious consideration when doing research in online consumer behavior. Instead of blindly borrowing theories and models from other disciplines, marketers should work out their own behavioral models declaring what is unique and specific to the context of consumer-based electronic commerce.

3. Suggestions for online retailers

a) Strengthen the communication with consumers, and use reliable network security software to ensure the privacy and security of consumers' information, reducing risks of purchasing. To protect consumers' privacy and ensure the security of transaction is the key issue of online marketing, and also the most central concern of transaction parties online, which seriously affects the development of electronic commerce. For online retailers, consumers are the key for solving the security and privacy issue. Online retailers should figure out a way to convince consumers that the security of online transaction is better than they think, their privacy is protected, and the probability of being attacked is quite small. Therefore, online retailers can try to change consumers' ideas by communication and commitment. Besides, they should try the SSL security protocols. For example, the famous Amazon online bookstore is using this security protocol. It declares clearly that: "You are protected by 'Amazon Safe Purchasing Protocol' when you buy books from Amazon. You never have to worry about the security of your credit card."

b) Provide convenient shopping environment, guarantee the consistency of products' quality and information, and improve the satisfaction of consumers . Online retailers should supply supportive services as soon as possible in order to help consumers to complete transactions easily, such as multiple payments, answering consumers' questions simultaneously, offering special information for each consumer, providing interesting information for consumers, recommending relevant products, easy refund and returns. In addition, improve the design of websites and purchasing interfaces and help consumers get necessary information more easily and quickly, making the purchasing more convenient and reliable. Besides, online retailers can weaken the virtual character of network by friendly designs, personnel contacts, and information transparency during the purchasing process, they can better satisfy the needs of consumers who pursuit for convenience and information communication, meet the needs of social-experience consumers, and make different types of

consumers to recognize and accept online purchasing gradually.

c) Enhance the timeliness of logistics, improve the efficiency of distribution, and realize fast, high- quality, and low-cost shipping services. Efficient shipping is the key for developing online purchasing. Only by ensuring the quality of online purchasing, and guaranteeing good services for returns and replacements, can online purchasing be trusted and finally become popular among normal people. Apart from depending on the third-party logistics, we can introduce the fourth-party logistics, make the optimized combination of whole supply chain, and achieve the fast, highqualify, and low-cost shipping.

d) Adhere to honesty and credit, ensure the quality and competitive prices of products, improve the service qualify and fulfill commitments. Honesty and credit are the precondition of developing business, and also the cornerstone and platform of online purchasing. With honesty and credit, online business can step into a bright road. Online retailers can promote shopping websites by means of training classes, seminars, and consumers meetings, providing with network knowledge for potential consumers. By means of guaranteeing competitive prices, improving service qualify, fulfilling commitments, building and maintaining images of websites and stores, online retailers can make their advantages prominent.

e) Customization should provide the information needed to make a purchase decision

f) The checkout process should be easy for the consumer

g) A Common Framework for Online Consumer Behavior can be used: In order to capture the important factors explaining online behavior, a unifying framework should be used that could eventually guide research in this area. Through a close examination of the various literatures, five major domain areas including individual/consumer characteristics, environmental influences, product/service

characteristics, medium characteristics, and online merchant and intermediary characteristics were identified.

Individual/Consumer Characteristics Individual/consumer characteristics refers to the factors specific to the consumer such as demographics, personality, value, lifestyle, attitude, consumer resources, consumer psychological factors (flow, satisfaction, trust), behavioral characteristics (looking for product information, access location, duration, and frequency of usage), motivation, and experience.

Environmental Influences In addition to personal characteristics, environmental factors like culture, social influence, peer influence, and mass media play an important role in affecting consumer purchasing decisions. These factors are also relevant in the context of online consumer behavior and therefore include them in the framework.

Product/Service Characteristics The product/service characteristics mainly refer to knowledge about the product, product type, and frequency of purchase, tangibility, differentiation and price.

Medium Characteristics Attributes such as ease of use, quality, security and reliability are included in the framework. Additionally, web specific factors such as ease of navigation, interface and network speed are also considered in the same.

Online Merchants and Intermediaries Characteristics

Factors like service quality, privacy and security control, brand/reputation, delivery/logistic, after sales services and incentive are included in the framework of online consumer behavior

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