Introduction
Consumer behavior is the study of an individual, organization or group that is used to select products, services or ideas to satisfy needs. It also studies the impact of the process of buying over consumers and society. (Kuester, 2012) Consumer shopping behavior is a very complex process for studying. This process varies for every individual depending on their personal choices which is influenced by their social and psychological background. There may be hundreds of active and passive factors which directly or indirectly influence a consumer in buying something.
After the evolution of internet in recent years the modes of shopping have undergone a paradigm shift. Online shopping is slowly replacing the conventional mode of shopping. Its demand is growing steadily in all segments of the market and in coming days it is likely to evolve into a mainstream shopping medium. Online shopping behaviors are not exactly same as conventional shopping. Online shopping is influenced by many other factors and it has made it easier for the companies to track and research on individual consumer behavioral pattern. This essay will highlight how different factors are influencing online shopping and how online shopping behavior of a customer is different from that of conventional shopping.
Background
The boon of internet has interspersed different aspects of our life with shopping being one of them. All over the world people are slowly switching onto online shopping. This sudden surge of customers opting for online shopping has posed a good many challenges to the companies. Now online portals and websites of different companies are turning into virtual showrooms featuring deluge of products. Till very recently this concept was alien to the companies and hence they are not well-prepared to make the best out of this online shopping revolution. Online shopping also has fragmented the customer segments into large numbers. In the past there were many members in the family who never participated actively in the shopping venture but now shopping being easy at the click of a tab, that trend has changed and from old to young everyone is getting hooked onto online shopping.
Online Service/Product Characteristics
Online products are different from its showroom counterparts. In the conventional mode of shopping buyers in most of the cases can touch, feel and get into the experience of using the product even before buying it. However, in case of online shopping the same is not possible. Customers need to make their decision on purchase only by seeing a picture or video and sometimes only the product features
There are many products in the market defined by few characteristics and they have very little to do with touch and feel. (Gorsch, 2001) For instance, airline ticket is searched on the internet based on price. Products valued because of price have a potential to do well as an online product such as movie ticket, hotel room booking and so on. Those products the value of which depends on many parameters require the touch and feel experience before buying and hence they are not suitable for online shopping.
Tangible and intangible attributes also define products. (Lal and Sarvary, 1998) Products that have intangible attribute should be a good choice for online. Intangible products like software cannot even be touched even if you go to a shop. It makes no difference in terms of experiencing the product whether it is bought online or from a store. Intangibility is a strong product attribute for online products. Tangible products may or may not be successful. Some of the tangible products like clothing which require touch, look and feel experience before making the buying decision may not do well as online products. There are several other characteristics of online products. In the context of the continuous change in buying pattern of the consumers, products can be successful even if they lack the above attributes.
Consumer Shopping Behavior over Internet
In this age of internet, online shopping is on the rise. There is an upward trend in doing business and marketing products online. Total global online sales already have crossed $1 trillion in 2012. The online markets are growing in demand in developing countries like India, China, and Thailand. Growing markets have shown more than 100% growth annually in online shopping in past few years. Mature markets like US, UK and Europe are also showing 20% growth rate in online shopping.
Online shoppers are continuously seeking information about new products and new features. However, most important behavior that is becoming more and more used in recent years is the ability to compare prices at one place. People increasingly want to compare the price of similar kind of products in a single space. A survey conducted on online shopping data in 2012 by AC Nielson shows that globally majority of the online shopping are done in books and apparels. It is closely followed by travel related online products, laptops, desktop and computer accessories. One category which is experiencing a phenomenal rise in online shopping is grocery shopping. Though car and car accessories are one of the categories on online shopping that remains lowest in terms of volume but they contribute the highest in terms of monetary value. In recent years, it was observed that many buyers are prone to search and compare products online exhaustively irrespective of their buying decisions. This shows that nowadays the selection process of buying anything starts online for the buyers.
Problem with Online Shoppers
In case of online shopping the consumer base is not restricted by any boundary. A shopper sitting in Nigeria can be interested in buying a product launched in Switzerland. Companies most of time don’t have any information regarding the customers and the reason for their buying a specific product. Even if a company finds out some information regarding a customer the next question that arises is if there are more like that customer and which corners of the world they come from. To manage and segmentize a customer base that involves customers from all over the world is no mean task. Online competition is increasing day by day and so are expectations of the consumers. Even if a company finds out today about what drives the decision making process for a consumer that may change in a matter of few weeks or months depending on the changeable nature of the online marketplace.
Theoretical Background
There are different theories available to explain online shopping behavior with expectation confirmation theory, theory of reasoned action and innovative diffusion theory being most popular.
Expectation-Confirmation Theory
Expectation-Confirmation Theory aka ECT postulates that when the performance of a product meets the standard of expectation, it results in a post-purchase satisfaction. Similarly, when the performance of a product falls short of the desired expectation, it leads to dissatisfaction. The level of satisfaction and dissatisfaction function as determining factors of the customer's further behavior. If the result is satisfaction the client is likely to return or recommend
The product to his peers, but if the result is dissatisfaction, the client will not return again and will discourage others in his peer group from buying the product.
Reasoned Action
Theory of Reasoned Action aka theory of Planned Behavior suggests that one's intention best predicts his behavior. His intention is determined by three factors - 1) his attitude towards a behavior which is marked by his estimation of an outcome and if the outcome is beneficial for the individual, he is likely to participate in the behavior; 2) his concept of subjective norm which is a kind of peer pressure making the individual brood on what others are likely to believe he should do and 3) finally his perceived behavioral control according to laws and rules meaning that he may or may not participate in a behavior if the laws and regulation prohibit that behavior.
Diffusion of Innovation Theory
Diffusion of Innovation Theory aka DoI theory explains how over a period of time a product gains momentum and spreads among a specific population, resulting in adoption of the product but this adoption depends on the innovativeness of the product and people who adopt a new innovative product are likely to have different characteristics than people who don't. Therefore, while marketing a new product to a target population, it is essential to assume the likely characteristics of the target population that will predict whether or not the product will be adopted. Adopters are of five types - innovators, early adopters, early majority, late majority and laggards. Adoption of an innovation is also determined by five factors including relative advantage, compatibility, complexity, triability and observability.
Buying Behavior
It is seen that online shopping behavior depends on mainly five factors 1) E-stores 2) Logistics Support 3) Product Characteristics 4) Websites Technological/information Characteristics and 5) Homepage presentation.
E-stores are one of the major factors that influence the shopping behavior. E-store of an established brand or an established shopping channel gives the shoppers a confidence to choose that store over others.
Buying a product is not the only thing consumers look for in recent days. They also look at the whole cycle of experience. After a customer buys furniture from a website availing the good deal offered there, if during the delivery the furniture is damaged or broken then despite the good deal of shopping, the damage of the product during delivery would undermine the shopping experience of the customer. This will result in the customer not returning to that e-store again not because it sells bad products but because of the bad logistics support. Online stores like Amazon did a great job of shipping goods across the world which made it such a successful online portal for shopping.
Product characteristics like intangibility, price which we already have discussed in previous section also influences consumers in online shopping.
The amount of information provided in the website also creates a lot of difference. Take the example of online shopping of airline tickets. Initially online ticket purchasing was limited to airline operated websites. Now the trend has changed altogether. Websites like Trevago.com, Priceline.com and some other websites are providing information of price for different airlines in a single space. It gives the consumer an array of options based on which he can search his desired product. This type of online searching capability is definitely creating a differentiation in selecting online portals to shop.
Website design is another essential factor that draws in customers. A website designed meticulously with easy navigation makes shopping easier for the consumers. It enhances the shopping experience and then consumers tend to come back to that website for more shopping. It directly does not influence the shopping process but indirectly creates an environment which facilitates the whole buying process.
Pre-Decision Making Process
The whole consumer online shopping decision making process is influenced by two major factors 1) Personal Characteristics /independent variables 2) Intervening Variables. (Turban, 2010).
Personal characteristics are mainly defined by the mindset of an individual. This refers to the typical orientation of the buyer. The problem here is that every individual mindset is different. Our minds are often guided by our individual thoughts, emotions and environmental factors. Mindset determines the propensity to shopping. It is often found that online shoppers are more objective and focused than experimental shoppers (Robert Proctor, 2005). Objective customers are often goal oriented and they value their time spent over the buying process. Lots of objective consumers are found to be the buyers of electronic goods. Experimental buyers do not get into shopping based on preconceived notions or purely based on visual attractions. This type of buyers often search the online market only to gather more information and that search process may not be associated with the actual buying process (Saaksjarvi, 2007). Even if experimental buyers come to a portal with prior knowledge and experience of buying something then also they love to spend time searching things just for the recreation part of it. It is therefore very important to understand the mindset of individuals as that is the first thing that determines if a buyer is an avid online buyer or what type of online buying pattern can be expected from that person.
Factors Influencing Consumer behavior
There are many factors that influence the actual buying process and the consumer. It is a very complex mixture of environmental, social, cultural, racial and personal attributes. Each of these attributes has many variables which directly or indirectly controls the online shopping process. There are some factors which are controllable and there are some which are not. Personality of a consumer is very individualistic and cannot be influenced so it is uncontrollable. On the other hand, medium of exchange, information etc. are factors which are controllable.
If we just take an in-depth look in order to figure out the causes influencing the buyer’s decision then we will be able to find out some basic factors. Buyer during the process of buying chooses product, brand, dealer (website) and timing and this process is influenced by three factors. Web Experience is the factor which is controllable. Marketing stimuli is the standard factors which draws in customers to a particular product segment and often is controllable and can be enhanced with proper marketing campaign. Personal and environmental factors are often uncontrollable but it shows some pattern of buying which can be used to market the right product.
Online Purchase Intentions
Another fundamental factor which also needs investigation is why someone buys something, what the intention is and what the guiding factors are. In many cases we experience that we may end up buying products that we didn’t have any plan of buying.
The main factor that influences the online purchasing intention is the overall experience of buying. The web design, easy availability of information, attractiveness, quality of content and simple transaction process often encourages a potential consumer to become the actual buyer of a product or services (Wan, 2009).
Trust factor is another big factor that influences buying decision. If a consumer trusts his action of purchasing from online shopping portal then also the shopping intentions of a consumer increases considerably. On the other hand, lack of trust resists the customer’s buying intention.
Consumer characteristics also facilitate online shopping intentions. People aware of and conversant with the computer technology are more willing to show buying intention in online shopping portal. Buying intention also gets influenced by the past experiences of a consumer. If a consumer has a good past shopping experience, he is more likely to return to the online shopping portal. Further there are many demographic, cultural and social factors contributing to a person’s intention to buy online. For example, consumers in America are more avid buyers of online products than a similarly educated, experienced and technology literate buyer in India.
Conclusion
Consumer behavior in online shopping is a multi-step process. First the consumer intentions of buying online is generated based on criteria like web design , simplicity of transaction , buyer technological knowledge, social and cultural factors and trust. Once a buyer based on its background and experiences shows intention to buy online the actual consumer shopping decision making process starts. In this process different buyers are influenced differently. Objective buyers are often influenced by the information content, ease of transaction, price comparison and previous shopping experience. On the other hand, an experimental buyer often comes to the shopping process with an open mind and is not easily influenced by outwardly factors. Often they are guided by internal beliefs, attitudes and individual characteristics. Online shopping is on a rise all across the world because of its convenience, time saving and best price features. In recent future more and more people will buy online and then this process of consumer decision making will be more important for the companies. With increase in number of online players and consumers the future buying and decision making process will be even more complex to understand. The good thing about online shopping will be that the data availability will be enormous and thus the analysis of those data of buying will help determine the companies to facilitate the buying decision making process.
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