A comprehensive study of consumer buying

behavior in online shopping

A report submitted towards the partial fulfillment of the
requirements of the two years full-time post graduate diploma in
management

Submitted by: Ranjit Kumar

Post Graduate Diploma in Management

Roll no. : 2K82A34

Session: 2008- 2010

ASIA-PACIFIC INSTITUTE OF MANAGEMENT

3, Institutional Area, Jasola, New Delhi – 110025

Acknowledgement

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 An endeavor over a period can be successful only with the advice and
support of well-wishers. I take this opportunity to express my gratitude and
appreciation to all those who encouraged me to complete this project.

I express my profound and sincere thanks to Mrs. Neha Suri who acted as
a mariner’s compass and steered me throughout my project voyage through his
excellent guidance and constant inspiration.

I also extend my hearty thanks to all the faculty members of ASIA

PACIFIC INSTITUTE OF MANAGEMENT for their external support and
guidance.

Thanks to the almighty god for keeping me strong with high spirit till
the end of the project.

Last but not the least; I am grateful to my parents for providing me

opportunity to be a part of such reputed institute & generous consent to undertake
this project.

Place: New Delhi Ranjit Kumar

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 STUDENT’S DECLERATION

I hereby declare that winter project report submitted as a requirement of

fulfillment of my PGDM course is my original work and not submitted for the
award of any other degree, diploma, fellowship or other similar title or prizes.

Ranjit Kumar

PGDM (2K82A34)

PREFACE

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The PGDM curriculum is so designed that student get enough practical knowledge of business

world which helps them to explore their skills in the corporate world in future.

The PGDM training helps the students to understand and gain knowledge about the industry and

market environment. It develops skills of analyzing and interpreting problems through

application of concepts and techniques of management.

The study of consumer buying behavior in online shopping consists of following chapters.

1) The first chapter will discuss the research questions, limitations and background of the

problem.

2) Second chapter will discuss the literature review of in the area of online consumer behavior.

3) Third chapter will present the theories behind consumer behavior. It will discuss online

consumer behavior in order to continue with the identification of the factors that

influence consumers. The theories of consumer behavior will also be used in order to

identify consumer segments that will show whom the identified factors affect.

4) The fourth chapter will illustrate the way the research has been conducted by presenting the

methodologies and theories used.

5) The next chapter will present and discuss the results from the questionnaire and how the

collected data was distributed among the respondents.

6) The sixth chapter will present the analysis and conclusions of the conducted research.

Executive Summary

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The project titles “A comprehensive study of consumer buying behavior in online shopping” is
undertaken at ASIA PACIFIC INSTITUTE OF MANAGEMENT. The project is related to the
study of consumer buying behavior in online purchasing and what are the factors that influence
this behavior.

The project titles “A comprehensive study of consumer buying behavior in online shopping “is
mainly divided into 5 phases:

• Problem related to online consumer behavior

• Study of literature related to online consumer behavior.

• Theory of online consumer behavior.

• Research methodology.

• Analysis of the results of the survey

• Finding and suggestion.

Online shopping is the process consumers go through when they decide to shop on the Internet. The

Internet has developed into a “new” distribution channel and the evolution of this channel, e-

commerce, has been identified to be the most significant contribution of the information

revolution. Using the Internet to shop online has become one of the primary reasons to use the

Internet, combined with searching for products and finding information about them. Consumers

have never had access to so many suppliers and product/service opinions. Therefore, the Internet

has developed to a highly competitive market, where the competition over the consumer is fierce.

The study is related to analyzing the consumer behavior during online purchases so, that marketers

can benefit from this study and sells their product online according to the consumer purchasing

behavior.

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 TABLE OF CONTENTS

1. INTRODUCTION & RESEARCH OBJECTIVE - 7

2. LITRATURE REVIEW - 10
3. THEORY RELATED TO CONSUMER BEHAVIOR-22
4. RESEARCH METHODOLOGIES - 38
5. RESULTS AND ANALYSIS - 45
6. FINDINGS - 67
7. CONCLUSION- 69
8. RECOMMENDATION -70
9. BIBLOGRAPHY- 71
APPENDIX

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1 Introduction
The introduction chapter will be explaining the purpose of our research. The research questions,

limitations and a background will be presented.

Background
The invention of the Internet has created a paradigm shift of the traditional way people

shop. A consumer is no longer bound to opening times or specific locations; he can become active

at virtually any time and place and purchase products or services. The Internet is a relatively new

medium for communication and information exchange that has become present in our everyday

life. The number of Internet users is constantly increasing which also signifies that online

purchasing is increasing . The rapid increase is explained by the growth in the use of broadband

technology combined with a change in consumer behavior.

The Internet is considered a mass medium that provides the consumer with purchase

characteristics as no other medium. Certain characteristics are making it more

convenient for the consumer, compared to the traditional way of shopping, such as the ability

to at any time view and purchase products, visualize their needs with products, and

discuss products with other consumers . The primary reason people shop over the Internet is

the convenience.

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Online shopping is the process consumers go through when they decide to shop on the Internet. The

Internet has developed into a “new” distribution channel and the evolution of this channel, e-

commerce, has been identified to be the most significant contribution of the information

revolution. Using the Internet to shop online has become one of the primary reasons to use the

Internet, combined with searching for products and finding information about them. Consumers

have never had access to so many suppliers and product/service opinions. Therefore, the Internet

has developed to a highly competitive market, where the competition over the consumer is fierce.

In order to have an impact on and retain consumers in a competitive market, it is important to

identify certain influencing aspects when purchasing online, these can be regarded as factors.

Problem
At any given time there are millions of people online and each of them is a potential customer for a

company providing online sales. Due to the rapid development of the technologies surrounding the

Internet, a company that is interested in selling products from its web site will constantly has to

search for an edge in the fierce competition. Since there are so many potential consumers, it is of

the out most importance to be able to understand what the consumer wants and needs.

Analyzing consumer behavior is not a new phenomenon. The renowned marketing expert

Philip Kolter has published several works on the topic of consumer behavior theories. These

theories have been used for many years not only to understand the consumer, but also

create a marketing strategy that will attract the consumer efficiently. Hence, understanding and

identifying the consumer is closely related to the directions a company will take with their

marketing strategy. These theories can also be applied to identify the online consumer and to

create certain consumer segments. However, some distinctions must still be made when

considering traditional consumer behavior and online consumer behavior.

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Since online retailing is a new retailing medium and online consumer behavior is diverse from

traditional consumer behavior, one must identify what influences the online consumer.

Analyzing the process that the online consumer goes through when deciding and making a

purchase over the Internet, shows some factors that consumers consider. These factors need to be

identified and taken into account by online retailers in order to satisfy consumer demands

and compete in the online market. To further understand how these factors influence different

types of consumers, we must identify segments which will enable us to make comparisons.

Research objective
1) To identify the factors that consumer takes into account while purchasing online.

2) To study the impact of the influencing factors on the customer buying behavior.

3) To study the perception of consumer towards online purchasing.

Limitations
There are a number of factors influencing the online consumer. However, this research will try to

identify the main factors influencing the online consumer and will, therefore, try to limit these to

a few in order to be able to investigate the effect on the online consumer.

Within the field of consumer behavior there are many theories and models that identify the

consumer. This research will limit itself to identifying the consumer through his/her consumer

characteristics and the consumer buying process.

Consumer behavior differs depending on what product or service is bought. Hence, different

factors are of different importance to consumers depending on the product or service. Therefore

this research will limit itself to some products like tickets, study material, electronic goods

and movies and music, since these are the product that is most widely bought on the Internet.

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We will also limit our research to peoples living in Delhi Ncr mainly students, as students are a

population that frequently has to buy course literature. This seemed to be the most appropriate

choice considering the limitations in both time and resources.

2 Literature review
The topic of consumer behavior while purchasing online has been examined under various

contexts over the years. Although researchers from a variety of business disciplines have made

significant progress over the past few years, the scope of these studies is rather broad. The

studies appear relatively fragmented and no unifying theoretical model is found in this research

area. In view of this, I try to give an exhaustive review of the literature and propose a research

framework with three key building blocks (intention, adoption, and continuance) so as to analyze

the online consumer behavior in a systematic way. This proposed framework not only provides

us with a cohesive view of online consumer behavior, but also serves as a salient guideline for

researchers in this area.

1. Title: - Investigating linkages between online purchase behavior variable.

Author: - Vazquez, Delia, Xingang Xu

Source: - International journal of retail & distribution management, 2009

Abstract: - The purpose of this paper is to examine the relationships between the online

consumer behavior constructs of attitude, motivations and information search in order to develop

an online consumer behavior framework.

Design/methodology/approach - An email survey collected data from 577 UK respondents and

canonical correlations are applied to examine the relationships.

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Findings - The results provide empirical support that attitude is an antecedent variable, and that

motivation variables have a significant causal relationship with information search variables.

Research limitations/implications - Two limitations are identified. Firstly, the data collected

focused on UK respondents, consequently the generalisability of these results is in question and

further research is required. Secondly, the attitude measure could include more items to further

aid reliability.

Originality/value - This research advances the development of the Online Consumer Behavior

literature by adding knowledge on the nature of the relationships between online behaviors

constructs

2. Title: - Role of Referring Website on Online Shopping Behavior.

Author: - HoEun Chung, JungKun Park

Source: - Advances in Consumer Research - North American Conference Proceedings; 2009

Summary: - Despite several attempts have been made to understand online consumer behavior

across from different situational settings, little is known of referring website's functionality on

purchasing behavior. The purpose of the present study is two-folds. Firstly, the study defines

different behavior patterns when consumers visit an online store through a referring website

versus when consumers directly enter to an online store sans a referring website. Secondly, they

investigated on the types of products (i.e. high-involvement product vs. low involvement

product) purchased by access manner. Total number of 3,885 online consumers was used to

conduct the study based on their detailed transaction activities.

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3. Title: - The persuasiveness of online safety cues: The impact of prevention focus compatibility

of Web content on consumers' risk perceptions, attitudes, and intentions.

Author: - Noort, Guda Van, Kerkhof, Peter Fennis, Bob M.

Source: - Journal of Interactive Marketing (John Wiley & Sons); Autumn2008

Summary: - Safety cues are frequently used in online stores to relieve consumers' risk

perceptions concerning online purchases. This paper uses regulatory focus theory (RFT) to

predict the persuasiveness of online safety cues. According to RFT (Higgins, 1997), people

process information differently depending on whether they strive for achieving gains (promotion

focus) or avoiding losses (prevention focus). The aim of the present study is to examine the

impact of the regulatory focus compatibility of Web content on online consumer behavior. Using

different online stores, two experiments show that the effect of online safety cues depends on the

consumers’ regulatory focus. A pilot study demonstrates that safety-oriented Web content lowers

consumers' risk perceptions, but only when in a prevention focus. The main study replicates and

extends this finding by showing that online safety cues both lower consumers' risk perceptions

and engender more favorable attitudes and intentions, depending on the regulatory focus.

4. Title: - Does Gender Moderate the Effect of Online Concerns on purchase likelihood?

Author: - Janda, Swinder

Source: - Journal of Internet Commerce; 2008

Summary: - This study builds on current research related to online consumer behavior and

investigates how four consumer online concerns (privacy, security, credibility, and virtual

experience) relate to people's likelihood of making structural equation modeling techniques.

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Findings indicate that while concerns with security and virtual online purchases. Survey data

were used to simultaneously estimate the five hypothesized relationships by utilizing experience

negatively influence purchase likelihood for all consumers, concerns about privacy and online

information credibility affect purchase likelihood only for female consumers. This study extends

current online marketing theory by empirically establishing the link between key consumer

concerns and likelihood of making online purchases as well as establishing the role of gender as

a moderator in this context. Several implications related to the online marketing of products and

services are also outlined in this research.

5. Title: - Examining Online Purchase Intentions in B2C E-Commerce: Testing an Integrated

Model.

Author: - Ranganathan, C. Jha, Sanjeev

Source: - Information Resources Management Journal; Oct-Dec2007

Summary: - Research on online shopping has taken three broad and divergent approaches viz,

human-computer interaction, behavioral, and consumerist approaches to examine online

consumer behavior, Assimilating these three approaches, this study proposes an integrated model

of online shopping behavior, with four major antecedents influencing online purchase intent:

Web site quality, customer concerns in online shopping, self-efficacy, and past online shopping

experience. These antecedents were modeled as second-order constructs with subsuming first-

order constituent factors. The model was tested using data from a questionnaire survey of 214

online shoppers. Statistical analyses using structural equation modeling was used to validate the

model, and identify the relative importance of the key antecedents to online purchase intent. Past

online shopping experience was found to have the strongest association with online purchase

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intent, followed by customer concerns, Web site quality, and computer self efficacy. The

findings and their implications are discussed.

6. Title: - Literature derived reference models for the adoption of online shopping.

Author: - Chang, Man Kit Cheung, Waiman Lai, Vincent S.

Source: - Information & Management; May2005

Summary: - The aim of the authors of this paper was to identify areas that would aid in

developing a better understanding of the dynamics of a customer’s decision to shop online. To

accomplish this, a review of the empirical studies on the antecedents of online shopping was

performed. From an extensive literature search, a total of 45 relevant articles were identified. The

factors that have been investigated in these studies were classified according to their similarity

and patterns of their findings were identified and analyzed.

7. Title: - Mental models and online consumer behavior.

Author: - Stibel, JM

Source: - Behavior & Information Technology; Mar/Apr2005

Summary: - As the Internet evolves into a medium for communication, commerce and

information gathering, marketers need to focus on creating an experience for a given task that is

intuitive to users. Marketing on the Internet requires an explicit knowledge of not only the user's

needs, but also the information necessary to meet those needs. Understanding and applying

different models of presenting information, the ways in which the information will be used and

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the processes by which people think about that information will enable a more intuitive and

compelling online experience. The current paper applies relevant research in economics,

psychology and marketing to establish a method for analyzing and critiquing different cognitive

paradigms.

8. Title: - A study of perceived risk and risk reduction of purchasing air-tickets online.

Author: - Lisa Hyunjung Kim, Hailin Qu, Dong Jin Kim

Source: - Journal of Travel & Tourism Marketing; May/Jun2009

Summary: - The concept of perceived risk explains consumers' purchasing behavior that

involves risk with unanticipated or uncertain consequences. Using perceived risk theory, this

study explored customers' risk perceptions regarding online air-ticket purchases. This study

discovered that security risk was the most important predictor to overall risk regarding online air-

ticket purchases. In addition, non-purchasers perceived a higher risk than online purchasers, in

terms of performance, security, financial, psychological, and time risks. Regarding risk-reduction

strategies, shopping around over the web was more important to online purchasers than to non-

purchasers. In addition, reputation of web vendor, well-known brand, symbol of security

approval, and recommendation of family and friends were perceived as preferred risk-reduction

strategies when making online air-ticket purchases. Further, this study's results revealed that

respondents' perceived risks of online air-ticket purchases differed according to demographic

characteristics. The implications of the research findings for online marketing activities are

discussed.

9. Title: - Competition between local and electronic markets: how the benefit of buying online

depends on where you live.

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Author: - Chris Forman, Anindya Ghose, Avi Goldfrab

Source: - Management Science; Jan2009

Summary: - Our paper shows that the parameters in existing theoretical models of channel

substitution such as offline transportation cost, online disutility cost, and the prices of online and

offline retailers interact to determine consumer choice of channels. In this way, our results

provide empirical support for many such models. In particular, we empirically examine the

trade-off between the benefits of buying online and the benefits of buying in a local retail store.

How does a consumer's physical location shape the relative benefits of buying from the online

world? We explore this problem using data from Amazon.com on the top-selling books for 1,497

unique locations in the United States for 10 months ending in January 2006. We show that when

a store opens locally, people substitute away from online purchasing, even controlling for

product-specific preferences by location. These estimates are economically large, suggesting that

the disutility costs of purchasing online are substantial and that offline transportation costs

matter. We also show that offline entry decreases consumers' sensitivity to online price

discounts. However, we find no consistent evidence that the breadth of the product line at a local

retail store affects purchases.

10. Title: - What does the e-customer really want?

Author: - Gaile-Sarkane, Elina

Source: - Economics & Management; 2008

Summary: - This paper analyses current situation in customer behavior in electronic environment

in Latvia, and the Baltic States. The author analyzes definition of customer, gives insight in

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customer behavior. Very special role is devoted to different motivation theories and online

consumer motivation. The author presents statistical information about current situation in e-

commerce in Latvia. With an aim to analyze differences in consumer behaving motives in real

market and electronic environment, the author presents results of the survey, accomplished in

Riga, on December 2007 in the age group 18-25. According to the research results target group

uses the e-tools for: e-mailing, information search, peer group activities, online banking and

Skype, but less than 50% for e-shopping. Motives of using e-environment generally are speed,

time saving, rationality and possibility to find more information at the same time. This research

confirms Dennis, French and Mercilec's social motives theory for e-shopping. Research findings

disclosed that today social and personal motives of e-purchasing are different from traditional

market. At the same time for the next generations e-environment could be alternative of real

market and socialization will be provided mostly by the internet and electronic media. Therefore

the author recommends paying more attention to the e-customers and analyzing their behavior in

future.

11. Title: - Attitude and age differences in on-line buying.

Author: - Patricia Perotti, Victor Widrick, Stanley

Source: - International Journal of Retail & Distribution Management; 2005

Summary: - This paper examines the shopping and buying behavior of younger and older online

shoppers as mediated by their attitudes toward internet shopping. Design/methodology/approach

- Over 300 students and staff from a US university completed a survey regarding their online

shopping and buying experiences for 17 products. Findings - The results show that, while older

online shoppers search for significantly fewer products than their younger counterparts, they

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actually purchase as much as younger consumers. Attitudinal factors explained more variance in

online searching behavior. Age explained more variance in purchasing behavior if the consumer

had first searched for the product online. Research limitations/implications - The limitations of

the present research are threefold. First, the sample was restricted to university faculty, staff and

students. Second, a better measure of the hedonic motivation construct is needed. Third,

additional independent measures such as income should be included to understand the additional

demographic factors related to online purchase. Practical implications - Retailing managers can

make use of the results as describing multifaceted nature of online shopping and buying

behavior. Age differences (in both directions) were seen for many product categories. In

addition, results indicate that how one measures online shopping impacts on one understands of

age effects on internet shopping. Age was negatively correlated with online pre-purchase search

was positively correlated with online purchasing when pre-purchase search behavior was taken

into account. Originality/value - The present study advances knowledge of the nature of the

relationships among age, attitudes, and online shopping and buying behavior.

12. Title: - The theory of planned behavior and Internet purchasing.

Author: - George, Joey F.

Source: - Internet Research; 2004

Summary: - Several opinion polls have found that many consumers resist making purchases via

the Internet because of their concerns about the privacy of the personal information they provide

to Internet merchants. Using the theory of planned behavior as its basis, this study investigated

the relationships among beliefs about Internet privacy and trustworthiness, along with beliefs

about perceived behavioral control and the expectations of important others, and online

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purchasing behavior. Data were collected from 193 college students. Analysis of the data

indicates that beliefs about trustworthiness positively affect attitudes toward buying online,

which in turn positively affect purchasing behavior. Beliefs about self-efficacy regarding

purchasing positively affect perceived behavioral control, which in turn affects online

purchasing behavior. In short, respondents who believed in the trustworthiness of the Internet

and in their own abilities to buy online were more likely to make Internet purchases than were

those without such beliefs.

13. Title: - Comparing online and non-online shoppers.

Author: - Lokken, Sheri L. Cross, Ginger Wigington Halbert, Linda K Lindsey, Gail Derby,

Christy

Source: - International Journal of Consumer Studies; Mar2003

Summary: - A web-based survey was completed by 130 faculty and staff from a university

located in the south-eastern United States. The purposes of this study were to investigate: (a)

consumer characteristics related to online shopping; (b) benefits of online shopping as perceived

by online shoppers; and (c) concerns about online shopping as perceived by non-online shoppers.

Responses were analyzed using SPSS for tests of chi-square. Findings suggest that the

differences between online shoppers and non-online shoppers correspond with Rogers’ [sup 1]

categories of adopters, and that the educational needs of consumers also differ based on their

previous experience with online shopping.

14. Title: - A longitudinal look at rural consumer adoption of online shopping.

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Author: - Lennon, Sharron J. Kim, Minjeong Kim, Minjeong Jolly, Laura D. Damhorst, Mary

Lynn, Jaspe

Source: - Psychology & Marketing; Apr2007

Summary: - Innovation diffusion theory guided research on the process of online apparel

shopping adoption (i.e., changes in online shopping adoption) among rural consumers. Rural

consumers in 11 states completed surveys in 2000 (n = 2,198) and in 2003 (n = 879). Variables

measured in 2000 were used to predict online apparel purchasing in 2003; structural equation

modeling was used for data analysis and yielded satisfactory fit. Results revealed strong support

for innovation diffusion theory: Previous practice and characteristics of the decision-making unit

(education, income, and innovativeness) affected belief structures. Although beliefs about online

shopping measured in 2000 did not affect online apparel shopping adoption in 2000, they did

affect online apparel shopping adoption in 2003, demonstrating the dynamic nature of innovation

diffusion. Characteristics of the decision-making unit (education, income) indirectly affected

online apparel shopping via their influence on previous practice, which was the strongest

predictor of online apparel purchasing in 2000 and 2003. General beliefs about the Internet and

beliefs about the compatibility of online shopping with respondents' lifestyles predicted online

apparel shopping in 2003, whereas beliefs about the benefits and advantages of online shopping

did not.

15. Title: - An Empirical Study of Consumer Switching from Traditional to Electronic Channels:

A Purchase-Decision Process Perspective.

Author: - Alok Gupta, Bo-chiuan Su, Zhiping Walter

Source: - International Journal of Electronic Commerce; Spring2004

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Summary: - This paper examines the relationship between purchase decisions and channel-

switching intentions. A theoretical model that explains channel-switching intentions was tested

with a sample of 337 consumers. The results show a 52 percent tendency to switch from off-line

to on-line across four product categories: books, airline tickets, wine, and stereo systems. The

order of the switching tendency was consistent with the products' search and experience

attributes. Logistic regression analysis across product categories shows that differences in

channel-risk perceptions, price-search intentions, evaluation effort, and waiting time have a

significant impact on consumer switching from off-line to on-line shopping. Consumers who

purchase on-line perceive significantly lower channel risk, search effort, evaluation effort, and

waiting (delivery) time on-line than off-line and express significantly higher price-search

intentions on-line than off-line. Consumers attracted to off-line channels also perceive lower

search-cost and higher price-search intentions on-line than off-line, but their perceived on-line

search effort and price-search intentions are significantly lower than for consumers attracted to

on-line channels. These results support the important influence of the examined factors on

channel switching. They also suggest that demographics may not be an effective basis for market

segmentation.

3 Theory
This chapter presents the theories behind consumer behavior. It will also discuss online

consumer behavior in order to continue with the identification of the influencing factors. The

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theories of consumer behavior will be used in order to be able to find consumer segments that

will show whom the identified factors affect.

Consumer behavior
Donald Rogan explains the relationship between consumer behavior and marketing strategy. He

states that “strategy is about increasing the probability and frequency of buyer behavior.

Requirements for succeeding in doing this are to know the customer and understand the

consumer’s needs and wants.”

Chisnall points out that human needs and motives are inextricably linked and that the

relationship between them is so very close that it becomes difficult to identify the precise

difference which may characterize them. People may buy new coats because it protects them

against the weather, but their real underlying dominant need may be to follow the latest fashion

trend.

Buyers’ characteristics are important theories from Kotler and it explains the way that the

consumer interprets and receives stimuli from advertisements. The decisions of consumers are

influenced by a number of individual characteristics that are linked to the consumer’s specific

needs.

Consumer characteristics
Consumer characteristics are explained by: Cultural characteristics, Social characteristics,

Personal characteristics, and Psychological Characteristics. These characteristics are identified, by

the marketer, in order to identify the consumer and to be able to decide on the strategy

to what kind of consumer to target. Hence, these characteristics are used in order to segment the

market and target specific consumer groups.

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Cultural characteristics

The Cultural Characteristics are recognized as the main influencer of consumer behavior. These

characteristics are developed by three features underpinning consumer behavior: Culture,

Subculture, and Social Class

Culture is mentioned as the most basic cause of a person’s wants and needs. Kotler argues that

human behavior is mostly learned and that we are exposed to different sets of values and beliefs

from a young age, and that these values influence our behavior and decision making. Hence, these

characteristics are interesting for marketers and important indicators of certain consumer behavior

and taste.

Subcultures are small group formations with a certain number of people that share values and

beliefs such as nationalities, religions or geographic regions. An identified subculture can serve

as an important and effective market segment which can be targeted.

Social class is recognized as a class structure, consisting of a combination of factors which

gather different types of members. Some identified factors are income, age, education, and

wealth.

Social characteristics

The Social Characteristics are divided into three different categories, namely Reference

Groups, Family and Social Role and Status.

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Reference Groups - According to Kotler the effects of the Reference Groups is mainly based

on the belief that a person’s behavior is influenced by many small groups. When a group has a

direct influence it is called a Membership Group, for example: family, neighbors and co-workers.

Reference Groups are the groups to which the person often wants to belong to and to be a part of

but is not. These groups indirectly and directly form a person’s behavior and attitudes. There

are three different ways by which these groups influence a person’s behavior; they may

expose a person to new behaviors and lifestyles, influence a person’s attitudes and self-

concepts and also create a pressure of confirmation by Reference Groups. Another influence

of importance is the opinion leader. An opinion leader is a person that influences others to

follow his believes and attitudes towards certain issues, products or areas.

Family - Family members have a great influence on the buying behavior. The involvement

and influence by different family members varies, both to which degree but also in what way.

Therefore, it is important for marketers to understand which role is played by whom in the family

and direct the advertisement towards the main influencing part of the family.

Roles and Status - Each person belongs to different types of groups and also plays different

roles whilst having different positions in the various groups. Roles are identified by Kotler as

what activities people are expected to perform from other members of the group.

Psychological Characteristics
The psychological characteristics are divided into the following concepts: Motivation,

Perception, Learning, and Beliefs and Attitudes.

Motivation - Motivation refers to a person needs that must be satisfied. These needs are of

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different kind; some are biological, such as hunger, thirst and discomfort, and some are

psychological such as the need for recognition, esteem and belonging. Needs are not satisfied

until they reach a certain point of intensity and become a motive for the consumer to satisfy them.

Kotler discuss several motivation theories, among them are Freud’s and Maslow’s theories of

motivation. Freud argued that a person does not really and fully understand his or her

motivations. Maslow on the other hand wanted to understand why some people set out to satisfy

some needs before others. He then came to the conclusion that human needs are arranged in a

hierarchy from the most pressing to the least pressing, as Kotler explains it. These needs are

listed as psychological needs, safety needs, social needs, esteem needs, and self-actualization

needs. When one need has been satisfied, a person moves on to satisfy the next.

Perception - This characteristic is based on the understanding of how differently we perceive

the same situation or the same stimuli. Kotler explains perception as the process by which

people select, organize, and interpret information. There are three different processes that

decide how we interpret certain information. These are Selective Attention, Selective

Distortion, and Selective Retention.

Learning - Learning is, according to Kotler, an act that changes people’s behavior because of

their experience. It occurs through drives: strong internal wants that call for action, stimuli: object

that drives for certain action, cues: small stimuli that determinate when, where and how the person

will respond and reinforcement: when the response and stimuli towards an object is experienced

more than once.

Beliefs and Attitudes - These are acquired by people through learning and experiencing. They

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influence the buying behavior by making up brands and product images in the consumer’s heads.

A belief is explained by Kotler as a descriptive thought about something and is based on real

knowledge, opinions or faith. Beliefs can also be emotionally charged. Attitudes are described

as a person’s evaluations, feelings, and tendencies towards something, but also determinations of

people such as like and dislikes.

Online Consumer Characteristics

More specific identifications of the online consumer need to be made in order to understand the

online purchase behavior. The identified characteristics are some key characteristics in regard

to the online consumer. These key characteristics were made in order to identify online

consumers and to be able to segment them.

Cultural Online Characteristics

Smith and Rupp identify that the difference in social class creates a difference in purchasing

Online Behavior. Consumers from a higher social class generally purchase more and have a

higher intention to purchase online because there is a higher probability that they possess

a computer and also have greater access to the Internet. Consumers from lower social classes

would not have the same properties. The authors also point out that consumers with lower social

class, and thereby not having the same properties, would not have the needed computer literacy

to be able to leverage a computer.

Social Online characteristics

The social influence on the online consumer comes from new Reference Groups compared to the

traditional way. For the online consumer new Reference Groups were identified as virtual

communities, consisting of discussion groups on a web site. The consumer can read about other

26
people’s experiences and opinions which have shown to have the effect of Reference Groups. Other

Reference Groups, which are identified by Christopher and Huarng, are links to product related

web sites, which encourages product selection and contact information.

Personal Online characteristics

Monsuwé, Dellaert and Ruyter explored the personal online consumer characteristics and

concluded that income has a vital role for online purchasing behavior. The authors discussed Lohse

who pointed out that consumers with higher household income would have a more positive

attitude towards online shopping. This conclusion was explained by the fact that households with

higher income would have a positive correlation with the possession of a computer, Internet

access, and higher education.

Smith and Rupp also identified the age factor as a determinant for online purchase intentions.

They argued that older people who had no frequent interactions with the Internet and the computer

would not use the Internet as a medium for purchases, while young adults would. This was

concluded by that the young adults used the Internet and computers more frequently. Younger

people were also identified to have more technical knowledge. Monsuwé also supported this

judgment by concluding that younger adults usually have greater interest in using new

technologies to browse for information and evaluate alternatives.

Psychological Online Characteristics

Smith and Rupp identified the psychological characteristics of consumer behavior as questions

the online consumer would ask himself before making a purchase online.

Motivation - The consumers is reasoning for incentives to engage in a particular behavior. He may

27
ask himself questions like: should I look around for better price? If online shopping saves me time,

should I shop online more often? How much do I really need this product?

Perception - The consumer is interpreting acquired information by classing it. Questions such

as the following may come about: I feel that this site seems pretty secure. It seems that this site

has a good product but how can I be sure?

Personality - The consumer is adapting to influences of his cognitions. He may ask himself,

what types of Web sites are best suited for his personal buying preferences.

Attitude - The consumer is working out what his likes and dislikes are in respect to a particular

situation. He may ask himself: I am pretty unsure about extra costs, should I really be

buying items from the Internet? If I do not buy the item online, how else can I get it?

Emotions - The consumer is without conscious effort detecting how he is being affected by his

cognitive choice. He may ask himself: The last time I ordered from the Internet I had a really bad

experience. Should I try buying online again? What is the future of buying online? If Web sites

get better should I invest more time in buying online?

Specific Consumer Traits and OnlineBehavior

The online consumer’s characteristics that we have identified to be the most important ones to

have an effect on the online consumer, will be referred to as specific Consumer Traits and how the

consumer uses the Internet will be referred to as Online Behavior.

The online consumer characteristics such as personal, social, and psychological characteristics

need to be identified in order to understand what is important for the online consumer.

28
These characteristics reveal the consumers’ lifestyle and identify who the consumer is and

what attitudes he has towards online shopping.

Therefore, we will be using the following characteristics to segment the online consumer, by

analyzing:

• The consumer’s demographics.

• Life patterns concerning Online Behavior, such as how much the consumer uses the

Internet.

• For what purposes, Internet Usage.

• How much the online consumer shops online, Online Shopping Patterns, can be

used in order to find out what impact certain factors have on different type of

consumers.

• Prior experiences have also been identified to be relevant for what Beliefs and

Attitudes the consumer has towards online shopping and are therefore also important

for the research.

• Social influences have an effect on the consumer in the early decision making

stage and these were referred to as Reference Groups.

These are the consumer characteristics that are relevant for this research and need to be identified

in order to find out who the online consumer is and what affects him when shopping online.

These we will be referred to as Consumer Traits and Online Behavior.

To summarize the prior text and to answer the question what identifies an Online Consumer, one

can draw the conclusion that for this research the important consumer characteristics that need to

be identified are:

29
  Consumer Traits

• Demographics

• Attitude and Beliefs

• Impact of Reference Groups

 Online Behavior

• Webographics

• Online Shopping Patterns

• Internet Usage

Figure 4.1 - The Online Consumer Segment Subdivisions

The outline in the earlier page is an attempt to more closely identify the different influencing

factors and their connection to the online purchase behavior.

Identified Factors affecting Online ConsumerBehavior

30
Price which is a part of the marketing mix is a factor used in order to stimulate the consumer

and is also a communicator, bargain tool, and a competitive weapon. The consumer can use

price as a mean of comparing products, judge relative value for money, and judge product

quality.

The factor Trust is considered to be a concern on the emotional basis in the minds of the

consumers. The consumers have a focus on their safety needs and want to satisfy them before

making a purchase.

The factor Convenience is considered to be a benefit in the eyes of the consumer and a quality

derived from purchasing over the Internet. It is therefore considered to be a motivator and a

benefit to consumers.

We believe that these factors have a significant influence on the consumer when

purchasing online. To further analyze the factors, we study underlying attributes that represent

what way the factors affect the consumers.

The Factor Price

The Internet has become a global marketplace on which consumers can gather and compare

information such as product information and prices. The technologies and innovative business

ideas of the Internet allow sellers to discriminate between buyers and buyers to discriminate

between vendors. Historically, however, prices have been set by negotiations after having

examined the product. The Internet facilitates the scenario that comparisons can be achieved

with ease, overlooking several digital attributes (which can be communicated through the web)

and possibilities with several different vendors simultaneously. On the Internet it is after

all the price comparison prospect that interests price sensitive consumers, whilst another

31
category of consumers focuses on finding unique products with specialized features that might

be difficult to find offline and who, therefore, perhaps even consider the price as

secondary.

However, when online, only digital attributes can be evaluated by the consumer, while offline

non-digital attributes (for which physical inspection of the product is necessary) can be tested .

This could even influence impulsive shoppers to become more cautious about the product as it

can only be inspected digitally. Furthermore, when buying online, additional costs such as

freight charges, customs or prolonged delivery times can influence the online consumer’s decision

to reconsider the transaction even though the price is low. Table 4.1 clarifies the fact that the factor

price has two attributes, saving money and price comparison.

Factors Attributes

Price Saving money

Comparing price

Table 4.1 - The Price factor and its Attributes.

The Factor Trust

Monsuwé conclude that because the Internet is a relatively new way of shopping, it is challenging

for the consumers and therefore perceived by the consumer as risky. They further identify the

salesperson to be a silent source of trust for the consumer, and that the consumer is dependent on

the salespersons’ expertise. But since the salesperson has been removed in online shopping, the

32
authors argue that the basis of consumer trust has disappeared. They further explain that the

consumer is not able to check the quality of an item, nor is he able to monitor the safety of the

security when revealing personal data. The authors, therefore, conclude that if a high level of

security and privacy is communicated to the consumer the result would have a positive effect on

consumer trust and the intention to buy online.

According to Luhmann who has a sociological point of view on the theory of trust, there are

three modes of maintaining expectations about the future, familiarity, confidence and trust. To

experience trust, familiarity and confidence must have been established. However, trust is only

necessary when there is a high perceived risk, such as during a purchase transaction or a similar

action.

The consumer’s previous experience and trust in the computerized

medium is likely to affect his amount of trust in online shopping. According to Lee and Moray

human trust in computerized systems depends on three factors:

1. The perceived technical competence of the system - The systems apparent ability to perform
assigned tasks.

2. The perceived performance level of the system - How fast and reliable it appears to be
able to finish the tasks.

3. The human operators understand of the underlying characteristics and

processes governing the system’s behavior.

Previous knowledge also affects trust. Luhmann states that, "Practical experience tends to teach

us the opposite: the more we know, the better we know what we do not know, and the more

elaborate our risk awareness becomes”.

33
Turban constructed a model that highlights what trust is constituted from when purchasing on the

Internet. According to figure 4.2 which is a scaled version based on “A Trust Model for

Consumer Internet Shopping” by Lee, Matthew K.O, and Efraim Turban, trust is dependent on

the six variables.

Seller Trust in internet

merchant

Competency

Benevolence

Reliability

Understandability Trust in internet

as a shopping
channel
Security and
payment
EC trust

Figure 4.2 - Trust in Electronic Commerce

A company must show the consumer that it is competent in managing information and supporting

the consumer after a purchase is done. If that can be achieved, the consumer is more likely to

"engage in trust related Internet behaviors like purchasing, cooperating, and sharing information".

Table 4.2 shows the factor Trust and its attributes.

34
 Factors Attributes

Trust Perception of safety

Trust in internet channel

Trust in internet as retail shopping

Table 4.2 - The Factor Trust and its Attributes

The Factor Convenience

Convenience is anything that is intended to save time and frustration according to the Swedish

National Encyclopedia. Further definitions of the concept of convenience are:

• The quality of being suitable to ones comfort, purpose or need.

• Personal comfort or advantage.

• something that increases comfort or saves work at a suitable or agreeable time

Online shopping as a new medium for retailing creates a number of different advantages. One

of these is that it is considered to be more convenient to shop online compared to the traditional

way of shopping. The convenience attributes that online shopping provides are:

• Less effort:

• Being able to shop at home

• Time saving

• Being able to shop at any time of the day

Azjen claims that online shopping provides convenience for consumers such as time savings

and search convenience if compared to the traditional way of shopping.

35
Kim and Park also argue that if online shopping is to be perceived as convenient for the

consumer, the consumer must perceive a certain amount of easiness with accessing the Internet

and also with carrying out the behavior with shopping online. The less complexity the consumer

perceives with accessing the Internet the more attention the consumer has to enter the Internet

and search for information.

Saving time is also mentioned by Kim and Park, and it is closely related to information search.

The consumer is not required to leave his home in order to shop online and at the same time

the information search and price comparison process is much more available and easy to

access.

Swaminathan states that consumer characteristics play an important role in the consumer's

decision to shop online. The authors then identify the so called convenient oriented consumer

as the most potential online buyer since they value the convenience of shopping at home as a

large motive for purchase.

The characteristics of convenience with online shopping can be summarized as follows:

Consumers can shop from their homes meaning they do not have to take certain aspects, needed

when shopping in the traditional way, into consideration. Online shopping is, therefore,

considered to require less effort. It is also considered to be time saving, the consumer can search

for products and prices easy through the developed search engines. Through tracking

devices a consumer can at any time check where their package is. Another time aspect of

online shopping is that it allows the consumer to shop at any time of the day, the consumer does

not need to consider if the stores are open or not. Table 4.3 shows the factor Convenience and its

attributes.

36
 Factor Attributes
Convenience Saving time
Less effort
Shopping at any time

Table 4.3 - The Convenience factor with Attributes.

4 Research Methodologies
This chapter will illustrate the way the research has been conducted by presenting the

methodologies and theories used.

37
Choice of methodology
For our own research we decided that the most appropriate approach would be a questionnaire

that would be filled out by some persons in Delhi Ncr region. To encourage the peoples not

to reject the questionnaire outright, and to increase the response rate, the questionnaire

should be limited to maximum of two sheet of A4 paper.

This study started out as an exploratory study but developed into an explanatory study since we

start out with first gaining knowledge about consumer behavior to further being able to gain

knowledge about online consumer behavior. Having this knowledge we continue to identify

specific factors that are of importance when the online consumer is making online

purchases. This information is then used in order to find relationships and correlations between

these variables.

SAMPLING METHODOLOGY
Sampling Technique:
Initially, a rough draft was prepared and a pilot study was done to check the accuracy of the

Questionnaire and certain changes were done to prepare the final questionnaire to make it more

judgmental. The respondents are selected randomly, so we can say that random sampling has

been done. It is an exploratory research study.

Sampling Unit:
The respondents who were asked to fill out the questionnaire in the National Capital Region are

the sampling units. These respondents comprise of the persons who purchase some material from

the online retailer. The people have been interviewed using questionnaire and asked to give their

feedback.

Sample Size:

38
The sample size was restricted to only 100 respondents.

Sampling Area:
The area of the research was National Capital Region (NCR).

Data Collection

Secondary Data
We have mainly used documentary secondary data combined with multiple source data.

Documentary secondary data has been the data collected through different types of research

conducted within the topic, articles, and books that are written on consumer behavior and e-

commerce. This type of data has been the fundamental source for gaining knowledge within

the topic in order for us to be able approach the research problem. The secondary data that we

used for our research is data that has also lead to the conclusion of which factors that will be

examined. The multiple source data that we have used has been in order to choose which product

we would use for our research in order to be able to find the product that is most widely bought

over the Internet.

Primary Data
Primary data for our research was collected through questionnaires. When collecting primary

data one can choose to do interviews, observations, experiments, and questionnaires. Due to the

purpose of our research, only the questionnaire method would be able to approach the topic and

39
be able to collect the answers in a satisfactory manner. In our research the primary data is mainly

concerned with analyzing the respondent in order to later on classify the respondent. Further on,

the primary data will be used to analyze the factors and how these are related to the

respondent. The primary data is conducted in a manner to be able to approach our research and

solve our research questions.

Questionnaire
The questionnaire was designed to collect primary data in order to find firsthand information on

how the respondents value the importance of price, trust, and convenience when making

purchases over the Internet. The questionnaire was designed to, first, collect data that

would be used to find segments among the respondents, and second, to collect data about the

factors price, trust, and convenience. The questions in the questionnaire were based on

the findings from the literature. Questions which were designed to collect data to find

respondent segments were derived from the findings within consumer behavior. Questions

about the factors price, trust, and convenience were derived from the literature found about

the factors when purchasing online. We handed out the questionnaire in Delhi Ncr region and

chose certain classes in order to make sure not to collect data from the same respondent more

than once. We decided that the sample size should be at least of 100 respondents . In order to

analyze the collected data we used the software program MS Excel. The following will present

and discuss the results from the questionnaire.

Online consumer traits

40
Demographics

Gender

Gender was included in the survey in order to find out how many men and women are

included in the survey. The following table will show the distribution of the male and female

respondents that were included in the survey.

Sex Frequency Percent Cumulative percent

Male 64 64% 64%

Female 36 36% 100%

Total 100 100% --------

41
 Frequency

70 64
60

50

40 36
Frequency
30

20

10

0
Male Female

The distribution of male and female respondents shows a majority of male respondents (64 %),

compared to the male respondents (36%).

Age
Age was included to find out if there is a significant relationship to what impact the factors

price, trust, and convenience have on different age groups. Age is a demographic value that can

also be used in order to further explain and elaborate on some of the other questions that were

used to find segments among the respondents.

Years Frequency Percent Cumulative percent

42
 Less than 20 20 20% 20%

20-30 53 53% 73%

30-35 17 17% 90%

35-45 6 6% 96%

More than 45 4 4% 100%

Total 100 100% ---------

Frequency

60
53

50

40

30 Frequency
20
20 17

10 6
4

0
Less than 20-30 30-35 35-45 Morethan
20 45

90% people are below the age of 35, with a majority 53% people lying in the age group of 20-

30. So, the majority of the respondents were from the young generation. This can also be

explained by that the classes that we had investigated had a majority number of younger peoples.

The reason for this type of age group distribution is due to the fact that the majority of respondents

were students.

43
Annual income

Annual income of the respondents has been asked to find if there is any relation between their

spending on online purchase and their income. The following table will show the distribution of

the annual income of the respondents that were included in the survey.

Annual income Frequency Percent Cumulative percent

Less than 1 lakh 63 63% 63%

1-3 lakh 23 23% 86%

3-5 lakh 8 8% 94%

5-7 lakh 5 5% 99%

More than 7 lakh 1 1% 100%

total 100 100 -------------

44
 Frequency
A majority 86% of the respondents fall below the income level of 3 lakh with 63% of the
60 53
respondents
50
have their income below 1 lakh. It is due to the fact that the majority of the

respondents
40 are students.
30 Frequency
20
20 17

5 Analysis & Results

10 6 4

0
Less 20-30 30-35 35-45 More
than 20 than 45

Question 1 about the product that people often buy online

The responses of the respondents are as follow…

Products Frequency Percent Cumulative percent

Tickets 79 79% 79%

Study material 13 13% 92%

Electronic goods 3 3% 95%

Movie or music 3 3% 98%

Others 2 2% 100%

Total 100 100% ……………….

45
A whopping majority (92%) of the people buys tickets and study material only, may be this is due

to the fact that majorities of the respondants were students and most of them are below the age of

35 year. Now days, people often buy railway tickets, air tickets, movie tickets, cricket match

tickets using the online medium as they found it more convenient. Companies are also promoting

this trend as they find it more convenient for them also.

Question 2 about their average expenditure on online purchasing

The responses of the respondents are as follow…

Expenses Frequency Percent Cumulative percent

Less than 500 13 13 13

500-2500 69 69 82

2500-5000 6 6 88

5000-7500 4 4 92

7500-10000 1 1 93

46
 More than 10000 7 7 100

Total 100 100 ……………..

Here, we got the expected result as majority of the people buy tickets and study material only so

there average expenditure on online purchases is between Rs. 500-2500. Here we got some

expenditure of more than Rs.10000 also, this may be due to the fact that people that people purchases

some electronic items online also.

Attitudes and Beliefs

3) When asked about the past experience with shopping online, the response of the respondents

were……………..

Experience Frequency Percent Cumulative percent

1 ( very bad ) 4 4% 4%
2 2 2% 6%
3 5 5% 11%
4 ( neither ) 14 14% 25%
5 22 22% 47%
6 29 29% 76%
7 ( very good) 24 24% 100%

47
 Total 100 100% …………………..

This question was used in order to see what attitude the respondent had about shopping online.
The measured attitude was mainly derived through questions about the respondent’s prior
experiences. This usually also affects the attitude towards performing an action, in this case the
action was to shop online. The question was, therefore, designed to let the respondent rate their
prior experience for shopping online. A majority of the respondents rate their experience of
shopping online close to very good. The number of respondents with a very good attitude
towards online shopping is high and the distributed attitude declines as less respondents think of
it as a bad experience. Rating number four on the scale is considered as neither a good nor bad
experience. A majority of respondents, overall 75%, do consider their prior experience with online
book purchasing as good. This question is closely related to the following question which
investigates the respondents’ future expectations of online book purchasing. Also the mean comes
out to be 5.31 which mean that the past experience of the people while shopping online is close to
very good.

4) When asked about the future expectation with shopping online, the response of the respondents

were……………..

Future expectation Frequency Percent Cumulative percent

1 ( very bad ) 2 2% 2%
2 2 2% 4%
3 5 5% 9%
4 ( neither ) 10 10% 19%

48
 5 21 21% 40%
6 33 33% 73%
7 ( very good) 27 27% 100%
Total 100 100% ………………..

This question is a part of analyzing the respondents’ attitude towards online book purchases.
Future expectations are highly dependent on respondents’ prior experiences of online book
purchases; this will be further discussed in the analysis of the results. As with prior experiences
the respondents have a highly positive attitude towards future online book purchases. The
majority (91%), of the respondents have rated future expectations with online book
purchases to be positive or neither good nor bad. Not considering the neutral respondents, an
overall 81% of the respondents had positive expectations. Here the mean comes out to be 5.53
which are close to very good so the future expectation of people with shopping online is good.

Impact of Reference Groups

Questions 5, 6, 7
The impact of Reference Groups

49
These questions were designed to find out which of the three Reference Groups, family, friends,
and online forum, that have an impact on the respondent.

5) When asked about whether the opinion and experience of their family affect their purchasing
decisions, the responses of the respondents were...

Family effect Frequency Percent Cumulative percent

1 ( Not at all ) 66 66% 66%
2 6 6% 72%
3 4 4% 76%
4 ( some ) 9 9% 85%
5 8 8% 93%
6 2 2% 95%
7 ( very much) 5 5% 100%
Total 100 100% ………………..

50
 Families as
Reference Groups
have not shown to
have an impact on
online purchases
among peoples. A
majority of 66% do not
consider any of their
families’ opinions and experiences at all when purchasing online. Here the mean comes out to
be 2.13 which means that the opinion of the family do not have any effect on the purchase
decision.

6) When asked about whether the opinions of friends affect the purchase decision, the
responses of the respondents were…….
Friends effect Frequency Percent Cumulative percent
1 ( Not at all ) 37 37% 37%
2 6 6% 43%
3 8 8% 51%
4 ( some ) 17 17% 68%
5 19 19% 87%
6 6 6% 93%
7 ( very much) 7 7% 100%
Total 100 100% ………………..

Here also 37% percent people expressed their opinion that the opinions of the friends does not

51
 affect their
purchase
decision but
in this situation
we can see that
about 49%
people
expressed
that the opinions of their friend affect their purchasing decision to some extent. The reason may
be that people purchases some study material and to trust the internet retailer that usually
consult their friends or may be their liking would be same so they usually consult their friends.
Here the mean value is 3.21 which mean that the opinions of the friend do not matter while
purchasing online.

7) When asked about whether the opinion and experience of people expressed in the online
forums affect their purchasing decisions, the responses of the respondents were...
Friends effect Frequency Percent Cumulative percent
1 ( Not at all ) 66 66% 66%
2 6 6% 72%
3 9 9% 81%
4 ( some ) 8 8% 89%
5 4 4% 93%
6 2 2% 95%
7 ( very much) 5 5% 100%
Total 100 100% ………………..

52
Online forums do not have any impact on the respondents. A majority of 66% of the respondents

do not consider the opinions and experiences discussed on online forums at all. Here the mean

value is 2.04 which mean that the opinions expressed in online forums have no effect on the

purchasing decision.

Online Consumer Behavior

Webographics

Question 8
This question is used in order to investigate how much time the respondent spends online.
The respondent that spends more time online has a higher experience with the Internet which
according to the literature is a reason to buy more online. Hence, this question is closely related to
the respondents shopping patterns. The responses of the respondents were…

Time spent online Frequency Percent Cumulative percent

Less than 2 hr 19 19% 19%

2-5 hr 25 25% 44%

5-8 hr 37 37% 81%

8-11 hr 12 12% 93%

More than 11 hr 7 7% 100%

Total 100 100% ………………..

53
 The

distribution shows that the majority of the respondents spend somewhere between 5 to 8 hours

online each day. The two second major groups are respondents that spend 2 to 5 hours and

respondents that spend less than 2 hr online each day, 25% respectively 19%. These results will

be used in order to find what differs between these respondents and which of the factors price,

trust and convenience has the largest amount of impact. The penetration of the internet has

grown tremendously in cities and this may be the reason that people spent 5-8 hours daily on

internet.

9) When asked about the reason for using internet and rank from 1 to 5 with 1 as least and 5 as
the highest rank. The responses of the respondents were…

Rank 1 2 3 4 5

54
Fun 28 28 13 10 21

Work 10 11 20 49 10

Information 29 5 24 2 40

e-mail 3 19 32 20 26

Shopping 30 37 11 19 3

The summarized rank ordering is obtained from the following calculations…

Fun = 1x28 + 2x28 + 13x3 + 4x10 + 5x21 = 268

Work = 10x1 + 2x11 + 3x20 + 4x49 + 5x10 = 338

Information = 29x1 + 5x2 + 24x3 + 4x2 + 5x40 = 319

Email = 3x1 + 19x2 + 32x3 + 20x4 + 26x5 = 347

Shopping = 30x1 + 37x2 + 11x3 + 19x4 + 3x5 = 228

So, from the above calculation we find the order of ranking from highest to lowest as email,
work, information, fun and shopping. The interesting conclusion that comes from this ranking
is that people spent very least time for shopping purpose on the internet and it is least preferred.
Most of the time people use internet for email and work purposes also internet has become a
vast pool of information so people uses internet for the information purpose.

Identified Attributes
Price

55
Question 10) Do you consider saving money when shopping online.

This is the first attribute of the factor price and involves the respondents’ attitude
towards saving money when purchasing books online. The respondent was asked two
questions in order for us to establish their attitude. This question examined if the respondent
agrees with the fact that purchasing online saves money. The responses of the respondents were…
Consider saving Frequency Percent Cumulative percent

money
1 ( Not at all ) 0 0% 0%
2 0 0% 0%
3 2 2% 2%
4 ( some ) 19 19% 21%
5 21 21% 42%
6 38 38% 80%
7 ( very much) 20 20% 100%
Total 100 100% ………………..

Saving money while purchasing books online compared to purchasing from a regular store, we can
see from the above data that the respondent give great importance to saving money when they
purchase online. 38% of the respondents felt that they saved money and it is important to save

56
money when they purchase online and give it a rating of 6. In total we can see that about 77%
people give some importance to saving money while purchasing online. The reason for the
values being so high canned be that even thought of Comparing prices, through different price
comparison websites, before purchasing online. Here the mean value comes out to be 5.55 which is
very close to very much, it means that people consider about saving money a lot while purchasing
online.

Question 11) Do you take advantage of price comparison possibility on the web?

This question investigates whether the respondents compare prices through different comparison
sites on the Internet before purchasing online. This question indicated the attitude of
respondents towards comparing prices before purchasing online. The responses of the
respondents were…
Take advantage of Frequency Percent Cumulative percent

price comparison

possibility of web
1 ( Not at all ) 1 1% 1%
2 4 4% 5%
3 3 3% 8%
4 ( neither ) 36 36% 44%
5 19 19% 63%
6 9 9% 72%
7 ( very much) 28 28% 100%
Total 100 100% ………………..

57
 Almost everyone uses this
type of comparison prior to
purchasing, more or less
often, and a large group
(28%) of the respondents does so very often. This displays an overall positive attitude towards
comparing price over the Internet even though the largest group of 36 respondents (36%) considers
comparing price over the Internet as neither positive nor negative. This can be
concluded by the fact that the respondents might not compare prices but think that it is important.
This then translates into neither a positive nor a negative attitude towards comparing prices when
purchasing books online. The respondent might also compare prices but does not find it
important. Here the mean value comes out to be 5.07 which indicate that people take advantage of
the price comparison possibility very much.

So, from the above two question we can conclude that price is a very important factor when
people make online purchases.

Trust
Question 12) is it secure to purchase online?

This question investigates what the respondents overall attitude is towards the first attribute we
identified that constitutes the factor trust. This attribute involves the respondent overall attitude
towards security when purchasing online. The responses of the respondents were…

Secure to purchase Frequency Percent Cumulative percent

online
1 ( Not at all ) 0 0% 0%

58
 2 1 1% 1%
3 3 3% 4%
4 ( neither ) 21 21% 25%
5 30 30% 55%
6 16 16% 71%
7 ( very much) 29 29% 100%
Total 100 100% ………………..

This
question
examine
whether
the

respondents feel that it is safe to purchase online, and if it is important to feel secure while
purchasing online. The second largest category (29%) feels secure and also thinks it is important to
feel secure when purchasing books online. The largest (30%), with just one respondent more, is the
category slightly more positive than “neither”. Hence, the distribution of the respondents reveals
that they generally have a more positive attitude towards feeling secure when purchasing online.
Here the mean value comes out to be 5.44 which mean that people feel very much secure while
purchasing online.

59
Question 13) Do you trust internet as a retail channel.

This question investigates the respondents’ attitude towards the Internet as a medium for retailing.
We have identified this attribute as the second one of the factor trust. The responses of the
respondents were…

Trust in internet as a Frequency Percent Cumulative percent

retail channel
1 ( Not at all ) 1 1% 1%
2 1 1% 2%
3 7 7% 9%
4 ( neither ) 46 46% 55%
5 27 27% 82%
6 7 7% 89%
7 ( very much) 11 11% 100%
Total 100 100% ………………..

The

respondents were asked to rate whether they trust the Internet as a distribution channel, and also
if it is important to trust the Internet as distribution channel. The majority does not feel that the

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Internet is a completely trustworthy distribution channel. This result could have been derived
from respondents that do not trust the Internet as a distribution channel, yet they believe
that it is important that it is trustworthy. Here the mean value comes out to be 4.62 which
indicates that people does not find it important to have trust on the internet on the retail
channel.

Question 14) Do you trust internet retailer.

This question investigated the respondents overall attitude towards the trust in the Internet
retailer. The results showed the respondents overall attitude towards the third and last attribute
constituting the factor trust. The responses of the respondents were…
Trust in internet Frequency Percent Cumulative percent

retailer
1 ( Not at all ) 0 0% 0%
2 0 0% 0%
3 1 1% 1%
4 ( neither ) 20 20% 21%
5 30 30% 51%
6 11 11% 62%
7 ( very much) 38 38% 100%
Total 100 100% ………………..

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 Frequency

40 38
35 30
30
25 20
20 Frequency
15 11
10
5 0 0 1
0
1 ( Not 2 3 4 ( 5 6 7 ( very
at all ) neither much)
)

The majority trust the internet retailer, while they also feel that it is important to trust the retailer
when proceeding with a purchase. Only one respondent fell into the negative part of the scale.
This indicates the trust in Internet retailer and is almost always needed for the consumer to
make a purchase from an Internet retailer. Here the mean value comes out to be 5.65 which
mean that people have very much trust on the internet retailer.

Convenience
Question 15) Does purchasing online involves less effort compared to purchasing at a
physical store?

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This question examines one of the attributes that constitutes the factor convenience and is
included in the questionnaire in order to find out if the respondents perceive that purchasing
online involves less effort than compared to purchasing in a store. This question is also a part
of the factor convenience and the overall attitude the respondents have towards the factor
convenience.

Less effort Frequency Percent Cumulative percent

1 ( Not at all ) 4 4% 4%
2 3 3% 7%
3 6 6% 13%
4 ( neither ) 33 33% 46%
5 24 24% 70%
6 7 7% 77%
7 ( very much) 23 23% 100%
Total 100 100% ………………..

The majority (33%) of the respondents did find purchasing online neither convenient nor
inconvenient when it involved the attribute less effort. The further distribution of all the
respondents had a positive attitude towards the attribute less effort. This is clearly shown by that

63
one of the largest respondent groups (23%) is the group with the highest value that perceived
purchasing online as always involving less effort compared to purchasing in store. Hence, there
is an overall a positive attitude towards this attribute among the respondents. Here the mean
value comes out to be 4.83 which means that people does not feel that purchasing online
involve less effort.

Question 16) Do you consider it important to purchase at any time of the day.

This question involves how the respondent perceives the ability to being able to purchase books
online at any time of the day. The responses of the respondents were…
At any time of the day Frequency Percent Cumulative percent
1 ( Not at all ) 2 2% 2%
2 6 6% 8%
3 45 45% 53%
4 ( neither ) 39 39% 92%
5 2 2% 94%
6 4 4% 98%
7 ( very much) 2 2% 100%
Total 100 100% ………………..

The
group of
39% of
the

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respondents considers this attribute as neither important nor unimportant. The overall distribution
of the respondents perceived it more as unimportant and showed a negative attitude towards the
attribute. This can be derived from the fact that the respondents agreed on the possibility to being
able to purchase online at any time but did not find it important. Here the mean value comes out
be 3.53 which mean that people do not find it important to purchase at any time of the day.

Question 17) Does purchasing online save time compared to purchasing at a store?

This attribute of convenience is saving time when purchasing online compared to when
purchasing in a store. As the previous question, this question is a part of further estimation of the
factor convenience and the overall attitude the respondent has towards convenience. The
respondents rated to what extent they believed that purchasing online saves them time, and how
important it is to them to save time when purchasing online compared to purchasing at a
store. The results then indicated the respondents overall attitude towards this attribute. The
responses of the respondents were…
Saving time Frequency Percent Cumulative percent
1 ( Not at all ) 4 4% 4%
2 1 1% 5%
3 5 5% 10%
4 ( neither ) 30 30% 40%
5 20 20% 60%
6 6 6% 66%
7 ( very much) 34 34% 100%
Total 100 100% ………………..

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The two big majority groups(34% respectively 30%) found purchasing online either as always

time saving or that neither it saves time nor is more time consuming than purchasing at store. The

overall distribution of the respondents had showed a positive attitude towards the attribute

purchasing online saves time compared to purchasing at a store. This is a logical conclusion that

can be derived from the fact that when purchasing online from a computer at home does not

involve having to leave the home, which can be considered as timesaving. Here the mean value

comes out to be 5.15 which means that people feels that online shopping saves time compared

to shopping from a store.

Findings

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 1) From this study we find that tickets are the most purchased material online as they found
it more convenient to purchase tickets online than purchasing tickets from a ticket
counter.

2) The average expenditure made by people on online purchases would vary from Rs 500 –
Rs 2500, the reason may be that they mostly purchases tickets and study material like
books using online retail channel.

3) The past experience of the people while purchasing online is close to very good and they
expect that there will be improvement in online purchasing medium and their future
experience will also be very good.

4) Talking about the social factor that influence the purchasing decision we found that
opinion of the family does not affect the purchasing decision to much extent.

5) The opinion of the friends also does not matter much so that if affect the purchasing
decision of a consumer.

6) When we talk about the online forum than we found that it does not have any effect on
the consumer purchasing decision and people generally do not refer to the opinions and
experience expressed by the people on these forums.

7) The average time spent by the people on internet in cities is around 5-8 hours and most of
the people spent 5-8 hours daily on internet.

8) We found that the main reason for using internet by peoples is for email, followed by
work and information gathering. Here we found that people uses internet least for
purchasing purposes.

9) We found that price is an important factor that people consider while purchasing online
and they thought of saving money while purchasing online. They also take advantages of
price comparison possibility of different material on the web.

10) We found that most of the people feel secure while purchasing online and they do not
find it important to have trust on the internet as a retail channel. We also found that
people have trust on the internet retailer very much.

11) When we enquire about the convenience factor and asked people whether purchasing
online involve less effort than purchasing from a store, the result were contrasting and
people do not feel that it involves less effort to a great extent than purchasing from a
store.

12) When we enquire that it is an important functional benefit of online medium to purchase
at any time of the day, we found that people do not feel it an important factor. The reason

67
 may be that when they purchase online at any time of the day it does not delivered to
them immediately.

13) People feel that online purchasing saves time but most of them do not feel this attribute
much important.

14) When looking at the three factors identified .i.e. price, trust and convenience, we
find that people give more emphasis on the price for of online purchasing.

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 Conclusion
When a consumer purchases online, he or she is affected by various factors. The main

influencing factors have been identified as Price, Trust, and Convenience. The Price factor

exists because prices are often lower on Internet stores compared to physical stores due to

lower costs. Purchasing online can greatly benefit the consumer in terms of convenience and

saving money. It is also convenient to shop on various sites with different assortments, from the

home. Trust is evidently needed since the consumer must share detailed personal and financial

information when purchasing a book online. These types of data include the full name, delivery

address and credit card number for example, which makes Trust an important factor.

To be able to see how these factors affect consumers, we conducted a survey. We found that the

factor Price is of the highest concern to the people and that the factors Trust and Convenience had

lower impact on the people. We found that tickets are the most purchased items on internet and

people spend around Rs. 500 – Rs 2500 on an average monthly on online shopping. In this way

we first identified the factors that influence the online purchase behavior and find how the

attributes of these factors influence the online purchase behavior. We have found that the overall

perception of the people towards online purchasing is positive. In this way we fulfill our research

objective.

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 Recommendation

1) The majority of all the respondents were overall mainly concerned with the factor Price.

So the retailers need to offer discount, offers some prizes for bulk purchases and start

some contests to promote the buying.

2) They should maintain transparency in their process and conduct. They should work like a

reliable retailer.

3) The customer loyalty could even be enhanced by a Loyalty Program that rewards and

encourages loyal buying behavior.

4) They should focus on customer satisfaction and to get feedback from them so that they

can provide better facilities.

5) They should focus on the price competition and try maintaining their price according to

their competitor.

6) They should focus on the convenience factor of the consumer and try to deliver them the

product quickly and on time.

7) They should make the transaction process more transparent so that consumer can rely on

them.

8) They have the valuable information of the consumer so they should leak them to others

and never cheat a customer.

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 Reference

Marketing management by Philip kotler, 12th edition

Consumer behaviour: concepts and application By Loudon.

Statistics for management by ‘Levin and rubin’

Internet sources: -

1) www.wikipedia.org

2) www.google.com

3) http://www.articlesnatch.com/topic/consumer+buying+behavior

Articles: -

1) ‘The relationship between consumer characteristics and attitude toward online shopping’,
Marketing Intelligence and Planning, 21: 1, 37-44

2) ‘Strategic online customer decision making: leveraging the transformational power of the
Internet’, Online Information Review 27: 6, 418 - 432.

3) ‘A consumer shopping channel extension model: attitude shift toward the online store’,
Journal of Fashion Marketing and Management 9: 1, 106-121.

4) ‘The Internet Shopper ’, Journal of Advertising Research 39.

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 Appendix
QUESTIONNAIRE

1) Which product you often purchase online?

Ticket Study Material (books) Electronic Goods movies or music others

2) Average expenses in Rs. Spent on online purchasing per month.

Less than 500 500-2500 2500-5000 5000-7500 7500-10000 > 10000

3) My past experiences with shopping online have been on an average

Very Bad 1 2 3 4 5 6 7 Very Good (Please Encircle)

4) My future expectations with shopping online are

Very Bad 1 2 3 4 5 6 7 Very Good (Please Encircle)

5) The opinions and experiences of my family affect my purchase decision.

Not at all 1 2 3 4 5 6 7 Very much (Please Encircle)

6) The opinions and experiences of my friend affect my purchase decision.

Not at all 1 2 3 4 5 6 7 Very much (Please Encircle)

7) The opinions and experiences discussed in online forums affect my purchase decision.

Not at all 1 2 3 4 5 6 7 Very much (Please Encircle)

8) How much time you spent online daily?

< 2 hr 2- 5 hr 5-8 hr 8-11 hr > 11 hr

9) What is the main reason for using internet? (Rank 1 to 5 with 1 as least and 5 as highest)

Fun Work Information E-Mail Shopping

10) Do you consider saving money when shopping online.

Not at all 1 2 3 4 5 6 7 Very much (Please Encircle)

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11) Do you take advantage of price comparison possibility on the web?

Not at all 1 2 3 4 5 6 7 Very much (Please Encircle)

12) Is it secure to purchase online?

Not at all 1 2 3 4 5 6 7 Very much (Please Encircle)

13) Do you trust internet as a retail channel.

Not at all 1 2 3 4 5 6 7 Very much (Please Encircle)

14) Do you trust internet retailer.

Not at all 1 2 3 4 5 6 7 Very much (Please Encircle)

15) Does purchasing online involve less effort compared to purchasing at a physical store?

Not at all 1 2 3 4 5 6 7 Very much (Please Encircle)

16) Do you consider it important to purchase at any time of the day.

Not at all 1 2 3 4 5 6 7 Very much (Please Encircle)

17) Does purchasing online save time compared to purchasing at a store?

Not at all 1 2 3 4 5 6 7 Very much (Please Encircle)

Name:
Age group: - Less than 20 20-30 30-35 35-45 More than 45
(please tick)
Annual income: - Less than 1 Lakh 1-3 Lakh 3-5 Lakh 5-7 Lakh
More than 7 lakh (please tick)
Gender: - Male Female

Thanking you

Ranjit kumar

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