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Innovation
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A Study of Intrinsic and Extrinsic Factors Influencing Consumer Buying Behaviour Online
Teena Bagga and Manas Bhatt
Asia-Pacific Journal of Management Research and Innovation 2013 9: 77
DOI: 10.1177/2319510X13483515
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Article
Abstract
The purpose of this article is to identify the various intrinsic and extrinsic factors which effect the consumers buying behaviour
online. The intrinsic factors are the inner motivations or drives of the consumers and the extrinsic factors are the marketer generated
Internet marketing activities. The article aims at identifying these factors and their relative importance on the consumers purchase
behaviour. The theoretical framework of this article is based on a vast Internet marketing literature. The hypothesised model was
created that took into account the dependent and independent variables which were extracted using an exploratory factor analysis and these variables were used to construct hypotheses which were empirically tested through techniques such as independent
t-tests and ANOVA. A structured questionnaire was used for this purpose and a survey was conducted on a sample of 200 through
judgemental sampling. Questionnaires were filled by respondents in person as well as a pre-defined list of respondents based on their
demographic profile was selected and questionnaires were mailed and posted online. The Exploratory Factor Analysis identified seven
major intrinsic and extrinsic factors which govern the consumers buying behaviour. These seven factors were: Need for Recreation,
Convenience, Website Attributes, Online Advertising, Social Communication, Information Search and Security and privacy concerns.
The importance of these seven factors differ across different demographic variables such as age, income group of consumers and
gender. The article presents a simple approach towards identifying the most effective Internet marketing tools that companies should
employ and also helps in better understanding the online consumer behaviour which differs from the traditional consumer behaviour
across various dimensions.
Keywords
Internet marketing, buying behaviour, online advertising, brick and click, consumer decision making, social networking
Introduction
Today it is not sufficient for any large enterprise to maintain a stronghold in the market by just sticking to the
traditional medium of marketing, that is the Brick and
Mortar system. Organisations need to have an online
presence to keep with the fast paced growth of technology
and changing consumer preferences.
The consumer is changing as well as the market place.
Marketing is taking a new shape and a shift from the traditional 4Ps is inevitable. A McKinsey survey of marketing
executives from around the world shows that in marketing,
things are starting to change and companies are moving
online across the spectrum of marketing activities, from
building awareness to after-sales service and they see
online tools as an important and effective component of
their marketing strategies.
Companies have different options to reach the prospective customers but Internet has become the main medium
for reaching potential clients anywhere across the globe.
Internet has changed the way people used to do things. It
brings the global audience closer and introduces a new
medium of advertising which is quite unique compared to
other advertising media (Spilker, 2010). Similarly search
engines like Google, Yahoo, make the searching of products and services very easy and have become an excellent
source of obtaining new clients as well as a medium of
Brand Building.
The online behaviours of consumers are subtlety
different in nature from traditional consumer behaviour
due to the unique characteristics and interplay of technology and culture (Chau.M, Cole.C et al., 2009). Although
commercial use of the Web has been increasing at an
exponential rate, how the multidimensional aspects
Teena Bagga, Assistant Professor, Department of Information Technology, Amity Business School, Noida, India.
E-mail: tbagga@amity.edu
Manas Bhatt, MBA (Marketing and IT), Amity Business School, Noida, India.
E-mail: manas.bhatt@absolutdata.com
Downloaded from abr.sagepub.com at University of Bucharest on November 14, 2013
78
on Delivery due to the convenience and safety associated with it, but as all websites do not provide this
option it becomes a major influence on consumers
buying intentions online which makes wide availability of payment options and secure browsing a vital
component of the Internet marketing strategy of any
company.
Problem Recognition
Information Search
Evaluation of alternatives
Purchase Decision
Post purchase Behaviour
79
Literature Review
Smith and Chaffey (2005) give a short and basic definition
of Internet marketing as Achieving marketing objectives
through use of electronic communication technology.
According to Hoge (1993), Internet marketingis the
transfer of goods or services from seller to buyer that
involves one or more electronic methods or media. Reppel
and Szmigin (2010) focused on the commercial evolution
of the World Wide Web which has resulted in an environment where consumers engage directly with businesses in
a variety of ways. The Internet has become an indispensable tool for todays businesses. Every business organisation is using it in some way or another these days. Marketing
managers who fail to use the Internet in formulating their
companies marketing strategy will be at a disadvantage.
Yannopoulos (2011) discusses how the Internet is impacting the conduct of a firms marketing strategy. The discussion includes the impact of the Internet on product and
brand strategy, pricing strategy, distribution and promotion
strategy.
Hoges (1993) idea of Internet marketing is simple but it
does not touch the important aspect of customer relationship. Strauss and Ansary (2006) defined Internet marketing
in their latest book as the use of information technology in
the process of creating, communicating and delivering
value to customers and for managing customer relationships in ways that benefit the organisation and its stake
holders. This explanation tells that e-marketing is not only
about selling products or providing services through IT but
it is lot more than that. It is not just traditional marketing
using the information technology tools but its a strategic
model to achieve brand value and provide customer
satisfaction.
Thomas (2008) identified the different approaches to
B2B and B2C Internet marketing across cultures. Most of
the studies included determined that the use of Internet
marketing has a positive impact on the firms marketing
performance. The findings also suggest that the Internet
experience and perceived risk play an important role in
consumers purchase likelihood.
To understand the consumer behaviour of online consumers it is important to first understand the relationship between the consumer behaviour and consumer
80
opinion leaders and experts who give expert advice regarding different products and services online. The research
concluded that e-WOM reinforces the consumer decision
making process and e-WOM in consumer generated websites deal with the more positive aspects of products and
services rather than the negative ones, this result was
however contrary to the one hypothesised.
To understand social networks which is another dimension of Internet marketing. Doyle (2007) presented a social
network analyses which focused on identifying the most
important factors which makes consumers confident to
make a purchase decision. The results of the study were
based on case studies from fashion retail and online
surveys. The study indicates that companies should focus
on identifying opinion leaders in social networks and
these opinion leaders will act as advocates of companies
product offerings and reinforce positive word of mouth
in the future.
Another external dimension in consumer decision
making process is information search Rutz & Bucklin
(2011) emphasised that in Internet paid search advertising,
marketers pay for search engines to serve text advertisements in response to keyword searches that are generic (for
example, hotels) or branded (for example, Hilton
Hotels). The authors propose a dynamic linear model to
capture the potential spillover from generic to branded paid
search. The results show that generic search activity positively affects future branded search activity through awareness of relevance. However, branded search does not affect
generic search, demonstrating that the spillover is asymmetric. The findings have implications for understanding
search behaviour on the Internet and the management of
paid search advertising. Taylor et al. (2011) presents
research on Internet advertising, which examines consumer
attitudes towards advertising presented on social media by
users of those media. It was found that consumers reacted
most favourably to advertising which was perceived as
offering entertainment or information value. According to
Edelman, (2010) Digital marketers think of themselves as
publishers of online content, recognise digital marketing as
a means to acquire advocates for their brands and invest in
ways such as monitoring consumers to gain knowledge
about them in order to provide them with a satisfying sales
experience.
To study security and privacy concerns is another
dimension of Internet marketing. Anthony D. Miyazaki
and Ana Fernandez (2001) identify risk perceptions regarding Internet privacy and security for both new and experienced users of Internet technology. They explored risk
perceptions among consumers of varying levels of Internet
experience and how these perceptions relate to online
shopping activity.
81
Research Methodology
From the literature supporting Internet as a tool for marketing for companies worldwide and the impact on consumers decision making and buying behaviour it was evident
that further research is required in this field to better
analyse the effect of Internet marketing which is a growing
phenomenon in both B2B and B2C businesses. Although
the users of Internet are growing day by day and companies
are turning to the non-traditional medium of marketing
through the Internet rather than completely relying on the
Brick and Mortar business model, the impact of Internet
marketing varies from industry to industry and there is a
lack of proper research in terms of consumers belonging to
different demographics. The research work especially in
Figure 1. Hypothesized Research Model
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Source: Collected and compiled by the authors.
Sampling Design
Keeping in mind the time and resource constraints the
sample size estimated taking into account the samples used
in various researches of small (similar) magnitude, the
sample size is estimated to be 200 respondents. A structured questionnaire was prepared and validated by various
professors and academicians. A pilot survey was conducted
on a small sample of 20 respondents to ensure the feasibility of the questionnaire. After making certain adjustments
the final research instrument was formed.
The questionnaire consists of 19 statements on a 5-point
Likert scale and also a set of dichotomous and multiple
choice questions. The data was collected using judgmental
sampling approach wherein 220 questionnaires were
mailed to a pre decided list of respondents based on different demographic variables such as age, income and gender
to get a better representation from each group. The questionnaires were validated for redundancies and an effective
sample of 200 respondents was selected after rejecting 20
questionnaires.
The demographic profile of respondents is summarised
in the above table. 40 per cent of the respondents belong
82
Profile
Frequency
Percent
%
Cumulative
Percent
%
AGE PROFILE
Less than 20 Yrs
28
14
14
2025 Years
2530 Years
Above 30 Years
80
76
16
40
38
8
54
92
100
200
100
104
52
52
96
48
100
200
100
Total
GENDER
Males
Females
Total
FAMILY INCOME
Less than 2 Lac
25 Lac
58 Lac
More than 8 Lac
Total
12
36
60
92
200
18
30
46
100
24
54
100
to the age group of 2025 years, 52 per cent of the respondents were males and 46 per cent of the respondents belong
to the highest income group of above 8 lac.
H13: There is a significant difference in importance assigned to various dimensions influencing consumer buying
behaviour between different income groups.
H01: H02 and H03 are the null hypotheses whereas H11, H12
and H13 are the corresponding alternate hypotheses.
The first hypotheses was tested using an Independent
samples t-test whereas the other two hypotheses were
tested using a oneway ANOVA test for comparison of
means.
Data Analysis
The primary research focused on certain factors which
were derived after an in-depth review of literature. A factor
analysis was performed for the purpose of dimension
reduction which reduces the number of factors by clubbing
them together to further refine the results and give us a
better understanding of the most important factors in the
research.
Reliability
The Cronbachs Alpha model was applied to know the
reliability of the data collected through the Likert scale. A
score of 0.6 and above is considered to be reliable. A score
of 0.702 shows that the data collected through the Likert
scale is reliable, that is, data is consistent and worthy of
reliance or trust. A reliability of .0702 means that about
more than half of the variance of the observed score is
attributable to truth and less than half is attributable to
error. It can also be said that a reliability of .702 means the
variability is about 70 per cent true ability and 30 per cent
error. Hence the research can be carried out on this data set.
Table 2. Cronbachs Alpha Reliability Test
Reliability Statistics
Cronbachs Alpha
No. of Items
.702
.702
19
Approx. Chi-Square
Df
Sig.
0.741
1244.606
171
0.000
83
Sample Adequacy
The Kaiser-Meyer-Olkin (KMO) measure of sampling
adequacy is an index used to examine the appropriateness
of factor analysis. High values (between 0.5 and 1.0) indicate factor analysis is appropriate. Values below 0.5 imply
that factor analysis may not be appropriate. A set of 19
statements describe various factors which were considered
to be important in influencing consumer buying behaviour.
Table 4. Total Variance Explained and Eigen Values of the Extracted Factors
Total Variance Explained
Initial Eigenvalues
Component
Total
% of Variance Cumulative %
3.071
16.162
16.162
3.071
16.162
16.162
2.339
12.312
12.312
2.593
13.646
29.808
2.593
13.646
29.808
2.232
11.748
24.060
2.278
11.989
41.798
2.278
11.989
41.798
2.069
10.889
34.949
1.759
9.257
51.054
1.759
9.257
51.054
1.964
10.334
45.283
1.461
7.689
58.743
1.461
7.689
58.743
1.786
9.398
54.681
1.324
6.970
65.713
1.324
6.970
65.713
1.583
8.329
63.010
1.022
5.377
71.091
1.022
5.377
71.091
1.535
8.080
71.091
.936
4.927
76.018
.864
4.549
80.567
10
.798
4.202
84.769
11
.605
3.182
87.951
12
.544
2.862
90.813
13
.433
2.278
93.091
14
.358
1.885
94.976
15
.318
1.675
96.651
16
.241
1.270
97.921
17
.168
.883
98.804
18
.128
.672
99.477
19
.099
.523
100.000
0.130
0.215
0.056
0.255
0.647
0.117
0.326
0.031
0.021
0.147
0.039
0.862
0.155
0.028
0.699
0.120
0.127
0.241
0.117
0.168
0.142
(Table 5 continued)
84
(Table 5 continued)
Rotated Component Matrixa
Component
1
0.588 0.305
0.174
0.204
0.206
0.432
0.072
0.772
0.259
0.083
0.135
0.020
0.056
0.067
0.074
0.148
0.144
0.015
0.053
0.197
0.340
0.032
0.501
0.293
0.186
0.096 0.319
0.186
0.042
0.015
0.095
0.804
0.257 0.002
0.789
0.295
0.136
0.014
0.569
0.8480.
0.254 0.191
0.194
0.459
0.320
0.252
0.236
0.125
0.517
0.023
0.268
0.137
0.023
0.048
0.698
0.028
0.262
0.129
0.312
0.098
0.082
0.076
0.641
0.050
0.101
0.365
0.152
0.752
0.138
0.063
0.607
0.069
0.284
0.296 567
0.205
0.715 0.112
0.067
0.072
0.378 0.145
0.161
0.2380.
0.034 0.013
0.045
0.377
0.735
0.333 0.054
0.065 0.183
0.846
0.070
0.001
0.132 0.021
0.328 0.070
0.209
0.276
0.432
0.358
0.716
0.158
0.066
0.112
0.167
0.081
0.065
0.752
85
Items
Statements
Items
Statements
Factor Loadings
0.699
0.501
0.585
0.789
0.772
17
0.846
Factor Loadings
Factor Loadings
13
0.641
14
0.752
Items
Statements
Factor Loadings
0.848
15
0.567
86
Statements
Factor Loadings
0.647
0.862
16
0.735
18
0.716
Statements
11
Factor Loadings
0.696
12
0.715
Factor Loadings
0.804
10
0.517
19
0.752
87
25 Lac
58 Lac
Sig.
1.777
1.963
2.1333
2.3467
118.935
0.000
Security Concerns
2.8333
3.27778
2.96667
2.91304
6.112
0.000
Information Search
2.6667
2.88867
2.64460
2.67336
1.309
0.001
2.5
2.833
3.1333
2.891
3.721
0.273
Convenience
2.22
2.08333
2.01667
2.00738
1.449
0.012
Website Attributes
2.0
2.7222
2.40
2.26087
6.052
0.230
Social Networking
2.778
2.777
2.6447
2.5797
1.108
0.347
Table 7. Age-wise Summary of Means and ANOVA of Dimensions Influencing Consumer Buying Behaviour
Age wise importance of dimensions
ANOVA
Less than 20 Years
2025 Years
2530 Years
1.78571
2.3167
3.2860
Sig.
28.646
0.000
Security Concerns
3.21429
2.9250
3.05263
Information Search
2.5240
1.8833
2.52626
2.6250
6.687
0.000
2.58350
3.827
0.011
3.42857
2.8
2.8158
Convenience
1.95243
1.9375
2.34211
3.25
8.402
0.000
2.25
18.476
0.000
Website Attributes
2.7143
2.3
Social Networking
2.6686
2.5167
2.5421
2.25
3.202
0.024
2.80695
2.49975
3.393
0.019
88
Females
Sig
Need for
Recreation
2.25962
1.91667
0.148 5.640
0.000
Security
Concerns
3.000
2.97917
0.032 0.309
0.758
Information
Search
2.64112
2.70829
0.039 0.646
0.519
Advertising
and
Promotions
3.09615
2.75000
0.845 3.627
0.000
Convenience
2.19235
2.51396
0.203 5.526
0.000
Website
Attributes
2.44231
2.29167
0.036 1.629
0.105
Social
Networking
2.76927
2.51383
0.403 3.016
0.003
Sig (2-tailed)
89
INTERNET MARKETING
INTRINSIC FACTORS
ONLINE
ADVERTISING
WEBSITE
ATTRIBUTES
SOCIAL MEDIA
MARKETING
DEPENDENT
VARIABLE
FACTOR C3
FACTOR C2
EXTRINSIC FACTORS
FACTOR C1
90
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