Consumers Online Search and Purchase Behaviour & the Utility of Recommendation Agents in Pakistan

Syeda Sara Tazeen Jaffer Department of Finance, College of Business Management, Institute of Business Management, Karachi, Pakistan [std_6349@iobm.edu.pk, saratazeen@gmail.com, 0321-2570366] Khadija Reza Department of Marketing, College of Business Management, Institute of Business Management, Karachi, Pakistan [std_5926@iobm.edu.pk, khadijay@gmail.com, 0333-2142144]

Plagiarism detected through Turnitin = 5%

Consumers Online Search and Purchase Behaviour & the Utility of Recommendation Agents in Pakistan
Syeda Sara Tazeen Jaffer Department of Finance, College of Business Management, Institute of Business Management, Karachi, Pakistan Khadija Reza Department of Marketing, College of Business Management, Institute of Business Management, Karachi, Pakistan

This paper is about consumers online search and purchase behaviour in Pakistan encompassing 350 participants. Since the trend is towards consumers shifting to online research and shopping. Thus severe competition lies in the field of E-commerce for all existing business and new entrants. Due to which the consumers get overloaded with information causing confusion and frustration. The aim of this paper is to find out the utility of a recommendation agents in Pakistan. The recommendation agent will take the consumers product requirement details/preferences and pick out the most suitable options for the consumer out of the companys complete product suite. This will help the consumer with their search by short listing the products for them as per their preferences making the actual purchase decision less complicated.

Keywords: Recommendation Agents, Online Shopping, Online Search, Online Purchase Behaviour, Ecommerce, Consumer Behaviour

Abstract
Introduction

E-commerce has brought a vast amount of opportunities for the establishment of different channels for business-customer interaction and avenues for sales. The fact that, purchase empowerment is now just a click away has emboldened businesses to provide ease of purchase and home delivery services to their consumers on the web. These interactions between consumers and organisations may arise from search for information regarding the organisation/product, social networking websites, purchase

Page 2 of 16

intention or participation in any other online pursuits. cipation Mobile phones have taken us a step further by providing an even easier and fast access to organizations via internet. Most organizations today are focused on providing their products to consumers through different web apps and it is becoming a fast trend in the sub continent to have this access on the go (Rose, Hair and Clark 2010) It further provides a review on different literature 2010). available towards understanding of the different causes and effects of an interesting and effective Online Consumer Experience (OCE) keeping in view the actual buying experience and everything related in that context. T paper The further provides afresh, the understanding towards eventual impact different factors have on OCE. It helps in the recognition of the antecedents leading to OCE, followed by the n consequences of the OCE and leads towards developing a framework for future testing. Rose, Hair and Clark 2010 further discuss measuring website performance and linking activities of Online search and purchase, considering factors like internet experience and trust of the online environment, risk of online buying and perception of customer services.
Comparison of the traditional face-to-face verses the online customer cont face contexts Offline Context Personal contact High to Medium Information Provision Varies in intensity over different media Time Period for interactions Dictated by the organization Brand Presentation Range of tangible devices used to present the brand Online Context Low Intensive Dictated by the customer. Anytime, anywhere. Audio-visual visual

The extract gives a keen comparison between an online and offline customer experience, the main point of which is the factor pertaining to the degree of personal contact. The online context of customer experience enables decimation of very detailed information which may be lacking in an offline context, information whereby many visual, audio or paper aids may be required. Another factor is the ease and availability of purchase wherever you are, in the confines of your home or a crow re, crowded internet cafe. The interaction of the brand with the consumer is rather limited to the timings he of the organization whereas no such limitation exists online. However, it cannot be compared to the experience that a consumer may have while feeling the product or testing it, a factor that is distinctively ANTECEDENTS missing in the online context.
Extract from Rose, Hair and Clark 2010 International Journal of Management Review 2010 1. Information Processing 2. Perceived ease of use 3. Perceived usefulness 4. Perceived Benefits 5. Perceived Control 6. Skill 7. Trust Propensity 8. Perceived Risk 9. Enjoyment EXPERIENCE 1. Cognitive State 2. Affective State CONSEQUENCE 1. Repurchase Intention CONSEQUENCE 1. Customer Satisfaction

Literature Review

The paper concludes that a positive OCE will lead to customer satisfaction and repurchase from a website and the way forward is through better and easy website navigation,
Page 3 of 16

Extracted from Rose, Hair and Clark 2010 International Journal of Management Review 2010

development of OCE literature consistently with technological developments. Keeping in view the study on OCE, we now review in detail the Decision Making process for the consumer through the Engel-Kollat-Blackwell (EKB) model which discusses the five-stage core processes including problem recognition, search, alternative evaluation, purchase choice and outcomes. There are many external and internal factors that affect the decision making process such as socio-economic factors, online atmosphere and environment, individual and cultural factors. The model adapted from the EKB model and formulated by Darley, Blankson and Luthege 2010 is appended for better understanding. The focus of the article has remained on external search, behavioural intentions, individual and online environmental factors. The paper gives much breadth for future research on the topic. verall purchase decision is likely to be affected by the usage behaviour of the consumer along with the other factors discussed earlier.
Decision Process External Factors

Problem Recognition Individual Characteristics Motives Values Lifestyle Personality

Internal Search External Belief Alternative Evaluation Attitudes Intentions Purchase

Social Influence Culture Reference Grp Family

Situational and Economic Factors

Outcomes

Online Environment Website Quality Website Interface Website Satisfaction Website Experience Disinvestment

Cognitive Dissonance

Consumption

Dissatisfaction/ Satisfaction

Engel-Kollat-Blackwell (EKB) model Extracted from Darley, Blankson and Luthege 2010 Psychology and Marketing 2010

Page 4 of 16

The geographic proximity on a purchase decision is discussed in detail by Janakiraman and Niraj 2011 gives us an interesting perspective on how online shopping has become an easy way of accessing products across the globe. It is also imperative for businesses today to be empowered enough to cater to consumers world over. The paper is a good perspective on how this geographical proximity being a limiting factor earlier in the past, is now strength as businesses strive to create their customer base in far flung areas of the world. According to Poddar, Mosteller and Scholder 2009, the enhancement of the aforementioned online buying capabilities of consumers has also increased the concerns pertaining to online privacy and the usage of data for the purposes of building stronger relationships. It is due to this concern that consumers end up falsifying information asked by online websites relating to personal detail, likes and dislikes etc. It is a struggle between gratifying the firms desire for correct and complete information against their own desire for privacy in the said relationship. The cost of filtering the correct information from the falsified information is quite high and it is difficult too. According to Krill 2000 75% companies in the United States are unable to effectively use the Consumer Relationship Management systems to create comprehensive and accurate profiling of consumers. Furthermore, consumers tend to create false identities or the so-called Guerilla Tactics. It is due to their feelings of losing control of their own data while providing information online. According to the paper, it is imperative for business to create an image of better services based on information exchanges and an impeccable reputation to extract more truthful information. All consumer behaviour and the interrelated factors of online search and ease of purchase all meet at the point of our research objective which is to provide some sort of guidance to the consumer with the help aides. Willemsen et al 2011 discusses the research on the importance of an expert providing the information and the tendency of individuals to then believe this information and utilize it to make informed decision. Likewise if the information is shared through a source that cannot be taken to be credible and does not fall in the realm of expertise on the topic, it might as well be taken lightly and may have little weight in the subject decision. The information provided by an expert is automatically taken as if it was authentic, and has significant weight on the brand attitudes, purchase intention and behaviours of consumers. Gen Su, B. Comer and Lee 2008 gave an interesting perspective on creating such an expert to provide guidance, suggestions or recommendations to consumers while they collect information for their respective purchase decision. The concept of Recommendation agents (RA) is rather common abroad but has not been explored in the Pakistani markets. These RAs can be an excellent solution for the information overload that some consumers tend to avoid and therefore end up making weak purchase decisions. It is a thin line as consumers in most cases may consider that the information provided is too much or too little for an informed decision. A RA would provide a solution to consumers by providing information in the manner that is not overloading and that which is relevant to the needs of the consumer.
Page 5 of 16

RAs tend to provide the data in a manner which increases consumer processing capacity for an informed decision. These may be embedded in the website of the retailer or may be active as a separate website for the purpose with respect to certain products or services. According to the classification by Gen Su, B. Comer and Lee 2008, there are two types of RAs, attribute-based and benefit-based. Attribute-based RA focus on the relative advantage of a product features whereas benefit-based RA focuses on benefit of each product feature. The difference of these two types is the degree of specificity of each. Attribute-based RAs tend to be more sophisticated as compared to benefit-based RA in terms of an informed decision. Gen Su, B. Comer and Lee 2008 feel that there are two types of theories underlying the framework of their study. These include the Cost-Benefit Theory and the Value-Percept Diversity Model. The factors pertaining to the costs of information collection for purchase decision making, include consumers assessment of the monetary expenses, physical efforts, psychological strain etc. Whereas the benefits of the same include increment of utility and value addition to the decision making process. Similarly Value-Percept Diversity Model dictates that the satisfaction is a result of cognitive evaluation process. It basically means that if the cost of the product (service) remains the same but the overall benefit increases then the customer would be satisfied. On the flip side, if the benefits remain the same but the costs increase then the customer would go less satisfied. Therefore the concept of RA tends to create a more satisfied buying decision. Consumers tend to find important implications with respect to an electronic RA, such as influence on their perception of website attributes, switching of relevant dimensions of services quality, change in quality of their decision and efforts by RAs towards improving their buying experience. Different types of RAs discussed earlier were attributes-based and benefit-based. This classification can be further broken down into RAs that not only give you results based only attributes, they also take into consideration the weights of the attributes as per the consumers specifications. These are further considered to be beneficial by consumers as they reduce cognitive costs of choosing between different alternatives. Recommendation Agents are not an aim to provide an advice to a consumer, the aim of RAs is to give a comprehensive overview of all the options and to ultimately indicate the best one through its own assessment results. The application of such RAs can be for an array of products and services, be it apparel and clothing or dining services.

Page 6 of 16

Hypotheses Results

HA0 = Consumers are not open to taking guidance from an electronic aid while Shopping online HA1 = Consumers are open to taking guidance from an electronic aid while Shopping online

HB0 = Consumers are not inclined to Recommendation Agents providing advice on weighted product attributes HB1 = Consumers are inclined to Recommendation Agents providing advice on weighted product attributes The sample that was part of this survey included 350 individuals, out of which 75% were males and 25% were females. This is indicative of the active users of internet that we have been able to tap are males and therefore the conclusions that we may draw are more skewed towards their online shopping habits. Almost 97% of the total individuals surveyed are between the ages of 20-40. This is the most active generation on the internet, with the appetite for such products. Individuals in the age groups of 4160 are not too open to change and may find it difficult in adjusting to the options of online shopping as opposed to the traditional brick and mortar option. Further research work can be done on these untapped age groups. Usage of Internet is immensely common and since the subject survey was being conducted online, it was bound to be filled by individuals who frequently use the internet for personal and professional purposes. The data is indicative that the segment that is being studied in this research paper is well aware and educated regarding the internet.

Page 7 of 16

Among those who have become a part of this survey 55% are patient buyers. It is rather common for consumers to put some thought, effort and research in their buying decision, hence the results showing the maximum number of participants to be patient buyers. Impulsive buyers are rather less with only a 16% and Analytical buyers at 29%. Since online shopping is not a common idea in the South Asian region, only 51% of the individuals sampled had ever made a purchase online. The reasons for this could include the lack of buying power and technological backwardness. Furthermore, lack of trust for online, faceless transaction is something that will be achieved over time and sudden acceptance of the same cannot be expected. The factors that promote Online Shopping for consumers include the broad category of Convenience which was selected by 200 participants of the total 350 surveyed. The more specific factors promoting Online Shopping include Home Deliveries, Return and Warranties, Availability of Information & Choices and Ease of Payment. Home Delivery is considered to be the most important factor among given factors for the promotion of Online Shopping. Of all the factors given to the consumers, Home Delivery has been picked as the most motivating factor next to the broader scope of Convenience. The other factors are somewhat in equal weights. Tracing back to the real motivation, behind a purchase decision which leads to online shopping, includes Variety, Price, Quality and Branding. The factor of Quality remains the most important factor for consumers. When making a purchase online or offline in the physical world, consumers want to make no compromise on Quality. For this reason E-Commerce based
Page 8 of 16

companies have to take an even more dedicated approach at providing Quality in their products and services. The competition is fierce and a slacking approach can prove to be detrimental for the company. Consumer attitude towards their shopping

experience includes the factor of seeking guidance from peers, family or friends. In our research we have come to find that 63% of our sample is open to taking suggestions and advice for their shopping decision, which sets the stage for the introduction for a recommendation agent. The lesser portion of our sample feels that they are overloaded with information when shopping online. Although the more significant chunk of the sample feel that they dont, it is however an easier feat for the consumer if the information shared on a given product is compiled and presented in an easier and simpler summarization as opposed to sifting all the content available on the internet to make a shopping decision. Of the sample surveyed, close to 90% have never come across a Recommendation Agent, which is cognizant of the fact that it is not a common concept in Pakistan and few have ever encountered such a facility on the Pakistani ecommerce front. The lack of a recommendation agent from the Pakistani websites is due to the lagging behind of our technological development. Individuals who had come across a recommendation agent named website with the option of providing guidance and/or product summaries on the website of a few European countries and the West in general.

Page 9 of 16

Although the market is not aware of the concept of a Recommendation Agent and have never come across it, but a significant portion of the sample surveyed is open to the idea of taking guidance of an Electronic Aid which shopping online. This shows that the market is mature for this next step forward. It is a credit to the development of E-commerce in the South Asian region that the consumers are now open to the idea of sharing their likes, dislikes and ideas on the web. The concept of Recommendation Agents and their utility is further enhanced with the option to take the guidance on just products attributes or take the consumers preference and assign weights to each attribute as indicated by the consumer. This will lead to an in-depth analysis for the consumer; the Recommendation Agent would list products in terms of consumers preference and give the consumer the rationale for such recommendation. CROSS TABULATION Gender * Which factor is most likely to motivate you to shop online? Count Which factor is most likely to motivate you to shop online? 1 2 3 4 5 6 76 41 39 37 37 32 25 5 13 10 25 10 101 46 52 47 62 42 Total 1 262 88 350

Gender Total

1 2

Furthermore, from cross tabulation of gender and motivational factors, we find that males are most motivated to shop online by Convenience and Ease of Payment whereas females are most motivated by Convenience and Home Delivery. Convenience being a broad factor, we will focus more on Ease of Payment and Home Delivery in our discussion.
Page 10 of 16

Males are more prone to using the modes of payment online as compared to females, whereas females are more prone to staying home as is the culture of the subcontinent and thus would prefer Home Delivery as the most important factor. Age group * Which factor is most likely to motivate you to shop online? Count Which factor is most likely to motivate you to shop online? 1 2 3 4 5 6 Age group 1 2 3 4 Total 83 14 2 2 101 32 14 0 0 46 39 9 2 2 52 39 7 1 0 47 53 7 1 1 62 38 4 0 0 42 Total 1 284 55 6 5 350

The Cross tabulation for age groups against most motivating factors for shopping online, show that individuals of ages 20-40 are most motivated by Convenience and Home Delivery. In comparison fewer individuals picked Availability of Choices and Information as these may also be available at a physical storefront. Returns and Warranties are chosen the least as the same is not a common practice in Pakistan or the South Asian region.

CHI SQUARE TEST Would you like to take guidance from an electronic aid when making online shopping decisions? HA0 = Consumers are not open to taking guidance from an electronic aid while Shopping online HA1 = Consumers are open to taking guidance from an electronic aid while Shopping online Observed N 1 211 2 139 Total 350 Test Statistics Would you like to take guidance from an electronic aid when making online shopping decisions? Chi-Square(a) 14.811 Df 1 Asymp. Sig. .0001 Expected N 175.0 175.0 Residual 36.0 -36.0

Page 11 of 16

Since critical value from the chi-square distribution table for degrees of freedom being 1 and = 0.01 is 6.635. Since 14.811>6.635 for the test, the decision is to reject the null hypothesis. This leads this research to the conclusion that consumers are open to taking guidance from an electronic aid while shopping online and that the market is mature enough for such a system to be introduced. Would you like to take guidance from an electronic aid when making online shopping decisions? HB0 = Consumers are not inclined to Recommendation Agents providing advice on weighted product attributes HB1 = Consumers are inclined to Recommendation Agents providing advice on weighted product attributes Observed N 1 211 2 139 Total 350 Test Statistics Would you prefer the said electronic analysis/recommendation based on 12.446 1 .0001 aid to give its Expected N 175.0 175.0 Residual 36.0 -36.0

Chi-Square(a) Df Asymp. Sig.

The critical value from the chi-square distribution table for degrees of freedom being 1 and = 0.01 is 6.635. Since 12.446>6.635 for the test, the decision is to reject the null hypothesis. This is leads this research to the conclusion that consumers are inclined to recommendation agents which provided guidance based on weighted products attributes based on the weights assigned to attributes by consumers. The market is willing to open up to such technological advancements. The gist of this research paper is the consideration of consumers online search and purchase behaviour in Pakistan, its maturity and openness to accepting such technological advances. It is also our finding that if consumers were to be given the ability to share their likes, dislikes and general preferences, the concept of recommendation agent would be welcomed and its utility would be proven beyond all doubt in the Pakistani Market. Furthermore, the concept of guidance while shopping online based
Page 12 of 16

Conclusion

on weights assigned to products attributes by consumers would also be received and accepted by consumers in Pakistan. There are further avenues for research on Recommendation Agents to which this Research Paper can prove to be a premise to. The design and launch of a Recommendation Agent may be taken up for further research and such a concept could be launched in the Pakistani market based on such research. The Recommendation Agent can be launched for multiple industries, such as Furniture, Cars, and Apparel etc. A short model for a Recommendation could be for the Clothing industry, whereby a boutique could launch a Recommendation Agent to their website. If the consumer were to share details of their body structure and size, the Recommendation Agent could share which clothes out of the products available would suit the consumer the most, in terms of fitting, fall of the garment, etc.
1. Susan Rose, Neil Hair and Moira Clark, (2011), Online Customer Experience: A Review of the Business-to-Consumer Online Purchase Context, International Journal of Management Reviews, Vol. 13, 24-39 (2011), DOI: 10.1111/j.14682370.2010.00280.x 2. Jan Moller Jensen, (2011), Shopping Orientation and Online Travel Shopping: the Role Travel Experience, International Journal of Tourism Research 14, 56-70 (2012), DOI: 10.1002/jtr.835 3. Amit Poddar, Jill Mosteller, and Pam Scholder Ellen, (2009), Consumers Rules of Engagement in Online Information Exchanges, The Journal of Consumer Affairs, Vol. 43, No. 3, 2009, ISSN 0022-0078 William K. Darley, Charles Blankson and Denise J. Luethge, (2010), Toward an Integrated Framework for Online Consumer Behaviour and Decision Making Process: A Review, Psychology & Marketing, Vol. 27(2): 94-116 (February 2010), DOI: 10.1002/mar.20322 George R. Milne, Lauren I. Labrecque, and Cory Cromer, (2009), Toward an Understanding of the Online Consumers Risky Behaviour and Protection Practices, The Journal of Consumer Affairs, Vol. 43, No. 3, 2009, ISSN: 0022-0078 Tibert Verhagen, Jaap Boter and Thomas Adelaar, (2010), The Effect of Product Type on Consumer Preferences for Website Content Elements: An Empirical Study, Journal of Computer-Mediated Communication, 16, (2010) 139-170, DOI: 10.1111/j.10836101.2010.01536.x Lotte M. Willemsen, Peter C. Neijens, Fred Bronner and Jan A. de Ridder, (2011), Highly Recommended! The Content Characteristics and Perceived Usefulness of Online Consumer Reviews, Journal of Computer-Mediated Communication, 17 (2011) 19-38, DOI: 10.1111/j.1083-6101.2011.01551.x Chia-Lin Hsu, Kuo-Chien Chang and Mu-Chen Chen, (2011), Flow Experience and Internet Shopping Behaviour: Investigating the Moderating Effect of Consumer Characteristics, Systems Research and Behavioral Science, Syst. Res. (2011), DOI: 10.1002/sres.1101

4.

5.

6.

7.

8.

References

Further Research Prospects

Page 13 of 16

9. Ramkumar Janakiraman and Rakesh Niraj, (2011), The Impact of Geographic Proximity on What to Buy, How to Buy and Where to Buy: Evidence from High-Tech Durable Goods Market, Decision Sciences, Vol. 42, No. 4, November 2011 10. Hung-Jen Su, Lucette B. Comer and Sanghyun Lee, (2008), The Effect of Expertise on Consumers Satisfaction with the Use of Interactive Recommendation Agents, Psychology & Marketing, Vol. 25(9): 859-880 (September 2008), DOI: 10.1002/mar.20244 11. Viswanath Venkatesh and Ritu Agarwal, (2006), Turning Visitors into Customers: A UsabilityCentric Perspective on Purchase Behaviour in Electronic Channels, Management Science, Vol. 52, No. 3, March 2006, pp. 367-382, ISSN 0025-1909 12. Gerald Haubl, Valerie Trifts, (2000), Consumer Decision Making in Online Shopping Environments: The Effects of Interactive Decision Aids, Marketing Science (2000), Vol. 19, No. 1, pp. 4-21, ISSN 1526-548X 13. Wendy W. Moe and Peter S. Fader, (2004), Dynamic Conversion Behaviour at E-Commerce Sites, Management Science, Vol. 50, No. 3, (Mar., 2004), pp. 326-335, DOI: 10.1287/mnsc.1040.0153 14. Eric J. Johnson, Wendy W. Moe, Peter S. Fader, Steven Bellman, Gerald L. Lohse, (2004), On the Depth and Dynamics of Online Search Behaviour, Management Science, Vol. 50, No. 3 (Mar., 2004), pp. 299-308, DOI: 10.1287/mnsc.1040.0194

Page 14 of 16

Appendix A: Survey Questionnaire

Consumers' Online Search and Purchase Behavior and Utility of Recommendation Agents in Pakistan
This is a research being conducted by students of Institute of Business Management (IoBM) for the course of ECommerce. Kindly fill out the survey below. We are striving to provide genuine and authentic information and results through our research. * Required Gender *

Male Female

Age group *

20-30 31-40 41-50 51-60

Do you use the internet ? *

Yes No

What type of a buyer are you ? *

Impulsive Buyer - buying decision without much thought Patient Buyer - buying decision after some comparisons Analytical Buyer - buying decision after thorough research

Have you ever made a purchase online ? *

Yes No

In your understanding, what are the most important factors that promote online shopping ? *Check more than one options if applicable

Convenience Ease of Payment Availability of Choices Availability of Information Home Delivery Returns and Warranties

Page 15 of 16

Which factor is most likely to motivate you to shop online ? *

Convenience Ease of Payment Availability of Choices Availability of Information Home Delivery Returns and Warranties

What factor effects your buying decision the most ? *

Variety Price Quality Branding

Do you seek guidance for your shopping decisions ? *

Yes No

When shopping online, do you feel overloaded with Information?

Yes No

Have you ever come across an electronic aid that guides you with respect to your shopping decisions ?If No, please skip the next question

Yes No

If Yes, kindly mention the website/URL

Would you like to take guidance from an electronic aid when making online shopping decisions ?

Yes No

Would you prefer the said electronic aid to give its analysis/recommendation based on

Comparison based only Product's Attribute Comparison based on Weights assigned to attributes of products by yourself

Page 16 of 16