TABLE OF CONTENTS
Page
1. Summary 3
2. Introduction 3
2.1 E-commerce consumer behaviour model 3
3. Intervening Variables 5
3.1 Customer service 5
3.2 Advertising 9
4. Conclusions 13
5. Bibliography 14
6. Appendix A – Growth in Web advertising in millions of dollars per year 15
7. Appendix B – Consumer Information Processing Model of Choice 16
1. Summary
This report presents briefly the generic e-commerce consumer behavior model. Its task is to show different ways the companies may use to win a customer and increase their profits concentrating on “intervening variables” represented in the model as far as E-commerce is concerned. The work is divided into three main parts. The introduction leads in the reader into general consumer behavior model. The main part concentrates on vendor controlled techniques of reaching clients and keeping them with the company and in the end it’s summing up the figures in the conclusion section.
2. Introduction
The omnipresent nature of the internet and its universal access makes it an excellent platform for communicating more effectively with customers. To become a successful e-business initiative the company has to figure out how to lure costumers first and how to keep them without relaying on face-to-face interactions further. For marketers, the consumers are the natural starting-point for all decision-making. The consumers are at the centre of everything the marketing-oriented company does or plans: presumably, therefore, understanding how people think and behave in purchase situations is essential to the success of a company. It is impossible to predict all clients’ decisions but knowing the e-commerce consumer behaviour model enable the firm to increase its sales together with reducing the retailing costs.
2.1 E-commerce consumer behaviour model
Economists tell us that people buy in order to maximise utility and obtain “best value for money”. Marketers tell us that the decision-making process is not necessarily based on economics. In fact, very few people consistently buy the cheapest version in the product class. The model shows us that final customer decision depends on three factors:
- Independent variables, the company cannot control or influence o Personal characteristics such as: age, gender, education, ethnicity, lifestyle, psychological, knowledge, values, personality o Environmental characteristics such as: social, cultural, legal, institutional, governmental
- Intervening variables, the company can control and influence o Stimulated by market such as: price, brand, promotions, advertising, product quality, design o E-commerce systems such as: logistic support (payments, delivery), technical support (web design and content, intelligent agents, security), customer service (FAQs, e-mail, call centres, one-to-one contacts)
Normally I'm a nice, normal girl with a nice, normal life in a nice, normal town.
According to Belch and Belch (2007), consumer behavior can be defined as “the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires” (Variawa, 2010). In understanding consumer choice, it is important to understand consumer-buying behavior. There are generally four types of consumer buying behavior that are based on the kind of product being purchased, level of involvement and significant difference between brands (Kotler & Armstrong, 2010). Blackwell, Miniard & Engel (2001), furthur define the different kinds of buying behavior as stated below.
Furthermore, I will explain the application of theory relating to me and my purchase. I will also review the marketing activity of the organization where I purchased from. This is to explain how the two theories have been used in the marketing strategy. In addition, recommendations regarding how the marketing strategy could have been improved by applying the 2 buyer behaviour theories are given.
The natural progression of the Internet and emerging technologies is towards streamlining our lives both personally and professionally. Instantaneous communications and available on-line services continue to reduce the physical distance between individuals. Almost anything is now available in cyberspace from shopping, schooling and education, on-line trading, banking, to social and political on-line communities. On-line service providers are shifting from a product centric approach to a more personal and customized approach to marketing their products and services. The idea of one-to-one marketing is very powerful and has become an important tool for competing in the interactive age. One-to-one marketing takes a customer-orientated approach to selling; customers are treated as individuals with different interests and needs. We respond positively to individual attention; when we visit a web site we want to see products and services of interest to us not every available product. We do not want to waste our time. For many people, time is money and the convenience factor ways heavily on the decision to return to a web site.
It studies about what to buy, why to buy, when to buy, where to buy from, how often they buy& how they use it. It is a complex and multidimensional process and reflects the totality of consumer decisions with respect of acquisition, consumption and disposal activities. Organizations are also realizing that their marketing effectiveness in satisfying consumer needs and wants and profit depends on a deeper understanding of consumer behaviour. Our consumer related behaviour influences the development of technology and introduction of new and improved product and services.
Advertising has been round for centuries; starting with print ads, then evolving into radio and TV adverts. Each form of advertisement requires several different strategies in order to make the advertisement effective and appealing to the consumer. With the ever popular rising of the usage of the internet, online advertisements have also become more popular. According to Dr. David Evans, who received his Ph.D. in Economics, e-commerce, or sales processed online, were equal to 34 billion dollars as of 2008. (Evans, 2) This amount has only grown and will continue to grow as the usage of the internet becomes more and more popular. The heart around this monumental sum of revenue is online advertising. Advertising agencies optimize their online
The Information revolution is changing our daily lives. With the rapid development of computers and the internet, online commerce has become quite common and plays an important role in the modern world. Online business has been booming in recent years. US online retail sales rose an average of 11% in the first three months of 2009 (“US Online Sales Up,” 2009). The growth of online sales may be due to the growing number of consumers who shop online.
Internet advertising is growing before 2000. In 2003 it revenues were increased by 38 percent. It was the highest record at that time. It was a great advantage for the marketers, who were into internet advertisement. ( The economic times, 2004)
E-marketing is a fast growing and rapid platform for any form of business. EBay has been highly successful over recent years and this is a perfect example of an online business. The internal and external environments are constantly changing and in order to keep up with these changes, businesses and organisations must make relevant changes, and generate new strategies to keep up with contemporary developments in e-marketing and to also maintain their position in their market in comparison to their competitors.
E-commerce application is a platform where there is buying and selling of products and services which are done by businesses and consumers via an electronic medium, mostly without using any paper documents. “E-Commerce applications support transactions between businesses and their customers. They provide 24/7 customer support, allowing customers to order products, check orders and track shipping, review previous orders, reorder products, and manage their accounts.” (Auburn SeeWolf llc , 2009-2012)
E-commerce is about two decades old, yet due to its fascinating dimensions, it remains a challenging area for researchers and professionals.
E-commerce or electronic commerce is carrying out business communications and transactions through computers and over networks. It involves buying and selling of goods and services through digital communication. E-commerce also includes transactions on the World Wide Web and the Internet and means such as electronic funds transfer, smart cards and digital cash. E-commerce covers outward facing processes that interact with customers, suppliers and external partners such as sales, marketing, delivery, customer service, purchasing of raw materials and supplies for production.
The research on consumer behavior assists the organization recognize and forecast the purchase behavior of the consumers while they are purchasing a product. Thus, the study of consumer behavior helps the marketers not only to understand what consumer's purchase, but helps to understand why they purchase it (Kumar, 2004). There are a lot of elements which can influence the purchase decision of consumers such as social influences, cultural influences, psychological factors and personal factors (Super Professeur, 2011). Understanding these factors helps the company to market the product on right time to the right consumers in order to generate more profits. On the other hand, if the marketers fail to understand these components that might influence consumers, they will fail to convince the consumers to purchase that product or will fail to meet the demands of consumers. However, consumer behavior is one of the stimulating and challenging areas in marketing studies being a human activity focused on the products and services. Thus understanding the behavior of the consumers is a great challenge. Moreover, it is not easy to get a full picture of consumer behavior as customers make plenty of different buying decision every day and they usually do not know exactly what influences their purchase. In short, basing on all
In today’s competitive world where organizations looking for high profitability and market share, consumers have very important role. Companies are looking for capture consumers in order to get larger market share. For this reason organization developed a number of techniques and tools. One of such tools is consumer behavior which has been come from economic theory. Consumer behavior is mainly studying the factors and situations that can affect purchase decisions of consumers. Consumer behavior is being very important discipline of management sciences which help out to understand of customers’ decision making.
To achieve and maintain success in such a complex system as market it is essential to every marketing person to understand clearly consumer behavior. Understanding consumer behavior is not that easy as it may seem from the first glance. The reason is that there are plenty of various factors that may influence it in one certain way or the other. When considering each of the factors it is also important not to forget that they ought to be analyzed as different parts of one whole picture, that is, in correlation with each other.