Why do people do what they

do?
„ What do women want?
BUSN 2032 E-Marketing „ Men are from Mars - Women are from
Venus

„ Consumer decision making process

Lecture 5 Consumers and
Technology „ Age of Anxiety - “cocooning”

Consumer decision processes

Consumer Attitudes/NeedsAttitudes and needs
Decision Context / Situation
Situations
Consumer Behaviour
Marketing
activities Problem
Problem
Learning Culture recognition
(memory) recognition
Perception Values „ Satisfying needs and wants is a central
Information
Motives
Consumer
lifestyle Demographics
Search
search
part of the definition of marketing
Personality
Social
Evaluationand
„ CB focuses on understanding needs and
status Evaluation
Emotions References and selection
selection wants and helps build the links back to
groups
strategic market decision making
Household Store
Storechoice andpurchase
choice and purchase

Post purchase
Postpurchase processes
processes

Overall model of consumer behaviour Situations

Context / situation
Neal et al, 1999 Experiences
Experiences

Definitions of Definitions of
consumer behaviour consumer behaviour cont.
„ The behaviour that consumers display in „ Those actions directly involved in
seeking, purchasing, using, evaluating and obtaining, consuming, and disposing of
disposing of products, both goods and products and services, including the
services, and ideas, social causes and decision processes that precede and
places that they expect will satisfy their follow these actions
needs Engel, Blackwell & Miniard
„ process,
„ not just buying but also using and disposing
of these products Bednall, Watson and Kanuk, 1997

1
 Consumers online Inside the Internet Exchange Process
„ Marketers have turned their attention to practical „ What explains consumer buying behavior?
questions such as:
„ Whether a firm’s target market is online, „ Stimuli = marketing communication messages and
„ What these customers do online, cultural, political, economic, and technological factors.
What determines whether they’ll buy from a site and return to a
Individual buyer characteristics = income level,
„
site, „

„ How much of the marketing effort should be devoted to online
channels.
„ Understanding online consumer behavior helps marketers
design marketing mixes that provide value and thus attract
and retain customers.
personality, psychological, social, and personal aspects.
„ Consumers move through a variety of decision
processes based on situational and product attributes.
⇒ To create effective marketing strategies, e-marketers need
to understand what motivates people to buy goods and
services, both in the short and long term.

Developed nations = 15% of the world’s population

= 88% of all Internet users
Rest of World Where Are the Other 5.5 Billion People?
83.5 (16%)
„ In survey of non-Internet users:40% said they have no
Latin America U.S./Canada need for the Internet.
13.4 (3%) 182.8 (33%) ⇒ E-marketers’ are digging deeper for a more thorough
understanding of consumer preferences online and offline.
Asia Pacific
110.0 (21%) „ Main reasons why consumers do not use the Internet:
Europe/Middle Individual, social, cultural, technological, legal, and
political issues.
East
141.6 (27%)
⇒ Without major shifts some countries may not achieve high
levels of Internet adoption among individual consumers for
many years.

Millions of People With Home Internet Access by Region in 2002 „ In these countries the B2B market will lead consumers to
Source: Data from Nielsen//NetRatings the Net where a fast-growing consumer market enticed
businesses online.

Demographic Categories of consumers

„ Gender - men adopt earlier „ innovators
„ Younger people adopt earlier „ early adopters
„ More highly educated, higher income „ early majority
level „ late majority
„ Digital divide - gap between online „ laggards
users and those not online eg richer „ More information, greater experience, less
countries and poorer countries, risk, positive influence of others in the
between ethnic groups social networks

2
 Consumer Innovators
Adoption of innovation -
Dogmatism
Rogers
„

„ Low in Dogmatism (open minded)

- more likely to prefer innovative
products. Prefer advertising
„ knowledge of innovation - driven by
messages that stress factual communication and consumer needs
difference and product benefits. „ persuasion
Show the reasons why.
„ decision
„ High in Dogmatism (closed
minded) - likely to choose „ implementation
established brands. New products „ confirmation
may be accepted if presented in an
authoritative manner (eg
presented by a celebrity etc) Schiffman, Bednall, Watson & Kanuk (1997) page 128

Persuasion Context / Situation

„ Rate of adoption
„ complexity „ Broad technological, social, and cultural forces affect
online consumer behavior.
„ compatibility
„ observability „ Marketers need to study the consumer’s environment or
„ trialability context and how their influence the purchasing process.
„ relative advantage

Technological Issues: Barriers to

Internet adoption Social and Cultural Context
„ Low PC penetration „ Power is shifting to consumers.
„ Communications infrastructure problems.
„ Arab countries, have only 49 telephones per thousand people „ U.S. trends are affecting online exchanges:
versus 133 phones per thousand people worldwide. „ Information overload overwhelms consumers.
„ Internet connections, where they exist, are often slow and „ Bunkering means people are staying at home more.
unreliable.
„ Security and privacy are major concerns.
„ Phone companies charge:
„ Home and work boundaries are dissolving.
„ A per minute charge for local calls.
„ ISP charges for Internet access. „ Anywhere, anytime convenience is critical for busy

„ Government censorship and regulation = slow Internet people.

adoption.

3
Individual Issues Emotions
„ Emotion „ Emotion - state of mental readiness that arises from
a cognitive appraisal of events or thoughts
„ Involvement „ is an experience
„ Flow „ is often accompanied by physiological processes
beating heart, sweaty palms
„ Challenge „ often expressed physically
„ Control „ may result in specific actions to affirm or cope with
emotions
„ Self Efficacy
„ Positive or negative in valence and high or low in
„ Attitude to technology arousal

Differentiating Appraisal theory

„ Affect, moods, emotions and attitudes have often
been used interchangeably
„ Moods may be longer lasting than emotion; but still
are transient and particular to times and situations
(Gardner 1985)
„ Affect is often used as the umbrella term
„ Attitude is sometimes seen as distinct from emotion -
an overall evaluation
„ Attitude does not necessarily require arousal
Others have emphasised that attitudes contain
„
distinct cognitive and feeling elements linked to
action (A-B-C theory)
„ Emotions arise in response to appraisals one
makes of something of relevance to one’s
well being
„ Appraisal is an evaluation and interpretation
„ something of relevance - an incident or
episode that happens to one’s self
„ See for example Roseman’s (1991) Appraisal
Theory of Emotion
„ Frijda (1986) Stimulus event - event coding -
appraisal action readiness action / arousal

Mood and information processing - Need for Affect

some conflicting or controversial findings (Maio and Esses, 2001)

Recent research highlights a controversy (Hirschman and Stern

„
1999)
„ Reliable scale for individual difference
„ Batra and Stayman suggests that positive mood results in more “need for affect” which is parallel to
heuristic processing
“need for cognition”
„ Bagozzi suggests that this is because the activation state in
positive moods my be low - no danger „ Distinct from other measures
„ But if the decision is interesting or important (high in
involvement) then positive affect facilitates careful, systematic „ Both an approach and avoidance scale
cognitive processing making it more efficient and effective
(Hirschman and Stern 1999; Isen, 2001) „ Need for affect positively related to the
„ Also influences how information is categorised and thought need for cognition - not thinkers and
about
„ Positive affect encourages variety seeking e.g. IBM and FUD feelers dichotomy
fear, uncertainty and doubt

4
Emotional responses are
generally shown to be important Flow
„ Pleasure „ Flow - the holistic sensation that people feel when they
act with total involvement
„ Dominance „ Concept of flow in Web navigation behavior:
Characterized by a seamless sequence of responses
„ Arousal 1.
facilitated by machine interactivity,
„ Specifically enjoying online shopping 2. Intrinsically enjoyable,
3. Accompanied by a loss of self-consciousness,
4. Self-reinforcing.
„ Intrinsic enjoyment
„ Perceived control
„ Concentration / attention focus

A basic model of consumer involvement

Involvement
Personal
„ “Degree of personal relevance” Peter and
characteristics Enduring
Olsen, 1987 Self concept,

„ Involvement lies in the person not the

personality traits,
involvement
Felt
product or purchase per se Product involvement
„ Involvement may be situational or characteristics Situational
enduring
Price, symbolic
meaning, risk involvement
„ compare water heaters and music
Situation
Time, physical, social,
task definition, antecedent state

Control Self efficacy

„ Need for control online „ An individual’s assessment of his or her
„ Need for convenience ability to perform a behaviour
„ Self efficacy is a major factor that
underlies intrinsic motivation
„ Perception of ability to use computers
and internet
„ Perceived skill level

5
Technology Acceptance Model Motives for shopping
„ Successfully applied to spreadsheets, voice mail, tele- „ Personal - role playing, diversion, self
medicine - also useful for Internet shopping adoption
gratification, learning about new trends,
„ TAM
physical activity, sensory stimulation
Usefulness
„ Social - communicating, peer group
Attitude Behaviour
attraction, status and authority,
Ease of use
pleasure in bargaining
„ Ease of use - the degree to which a person believes that
using a system will be free of effort „ How does Internet shopping compare?
„ Usefulness - the degree to which a person believes that
using a particular system will enhance performance

Shopping Alternatives Retail choice an interaction of:

„ Stores „ Retail marketing strategy
„ store image by attribute (advertising and other
„ Internet promotions, price, merchandise mix, store
„ Catalogue shopping and direct mail personnel etc) or gestalt store location, brands
„ Personal characteristics of shopper
„ Home shopping ---Party plan „ personal and social motivation, shopping

„ Vending machine orientation, lifestyles, perceived risk

„ Situational influences *************
„ time shortages, time of day, task definition, mood

Gestalt or Buzz Promotion

„ Body Shop „ Advertising - TV, letterbox drops,
„ Hastings Street Noosa newspapers
„ Bunnings Warehouse „ Special events and entertainment
„ Nike World? „ Ads featuring price, specials, discounts -
„ Paris? loss leaders
„ Can this feeling be captured in words?
Or easily related to attributes?

6
 Price Purchase process
„ Walmart - lower prices always - „ Ease of buying
successful positioning on price „ Payment options
„ Delivery
„ After sales service
„ Salesperson or contact
person/personalisation

Online consumers Consumer Resources

„ More powerful, demanding and
„ For consumers:
utilitarian
„ Consumer loyalty online is low overall VALUE = BENEFITS - COSTS
„ Consumers perceive risk higher online -
Costs = a consumer’s resources for exchange:
credit card fraud and not receiving the „ Money,
right products „ Time,
„ More goal oriented than experience „ Energy,
„ Psychic costs.
oriented
„ More price oriented

Money, Time, Energy, Psychic Cost

⇒ Consumers have to pay by credit card, debit card, Reason Given % Reason Given %
electronic check, or smart card. Page took too long to load 48 Returned the product 10
„ Did the user get what she wanted for the time she Site was confusing/couldn’t find 45 Site wouldn’t accept credit card 9
invested? product
„ Internet firms to be sure their sites are well organized and easy to Product not available/in stock 32 Tried/failed to contact customer 8
navigate so users can quickly find what they want. service
„ Search engines and shopping agents can help consumers find what
they want to leverage their brief forays online. Got logged off / system crashed 26 Site made unauthorized charge to 5
my credit card
⇒ Energy + psychic resources = closely related to time.
Had to contact customer service 20 Ordered product but never came 4
⇒ Sometime = Too much trouble to turn on the computer,
log onto the Internet, and check e-mail. Product took too long to arrive 15 Wrong product arrived and 4
couldn’t return it
⇒ Rising popularity of short text messaging (SMS) via cell
phones and handheld mobile devices. Most Common Reasons for Failed Online Purchases
Source: Boston Consulting Group Study as reported in Wellner (2001)

7
 Value added search
Website influencers mechanisms
„ Value added search mechanisms „ Created by internet retailer - bestseller
„ Positive challenge and stimulation list
„ From a third party - links to other sites
such as bookclubs
„ customers themselves - book reviews

Postpurchase consumer behaviour

Challenge - positive
Postpurchase Consumer
dissonance
„ Shopping sites challenging and complaints

stimulating like a real world shopping

centre or an electronic game
Purchase Usage Evaluation Repurchase

Product
disposal

Post Internet Exchange Relationships

„ When exchange occurs:
„ Browser bookmarks = quick jump to favorite online
retailer.
„ E-mail messages contain hyperlinks to bring consumers
directly to specific information, news reports, or
advertised specials.
„ The Internet has the added feature of automation to
facilitate exchange.
„ Specialist intermediaries for complaints
www.ecomplaints.com
„ 43% of online time = e-mail or other communication
related activities:
„ It is an inexpensive way to keep in touch,
„ It is usually text based = can be easily accomplished
with a slow modem or over a wireless handheld device.
„ Form new relationships with the people they meet
online.
„ Spend time in chat rooms, make phone calls, and visit
online dating sites.
„ Communication can take place in communities of
interest.

8
 Entertainment
„ Consumers use the Internet for entertainment (50%).
„ Internet’s big promises= audio and visual entertainment:
„ Only 20% of all users have broadband at home;
„ Until more do, firms won’t produce much of this type of
online entertainment;
Information
Second to e-mail, consumers spend much of their time
„
gathering research and information online:
„ How do Internet users find information?
„ 85% have used search engines.
„ Google.com is the most popular search engine: visitors
spend 25.9 minutes per month there. Users spend 10.8
minutes a month on Yahoo! and 6 minutes at MSN.
„ Google’s revenue model is entirely advertising based,
Review Questions
1. What are some of the social, cultural,
technological, and legal issues that slow Internet
adoption in some nations?
2. What is an exchange?
3. What individual characteristics influence online
behavior?
4. What are the four costs that constitute a
consumer’s resources for exchange?
5. How can e-marketers facilitate Internet
exchange?
Media Consumption
„ Consumers are accessing news, weather, sports scores,
and radio broadcasts over the Internet.
⇒ Consumers have a limited amount of time to exchange for
media consumption, and that the Internet takes away from
offline media time.
⇒ Consumers use whatever medium is handy when they
want news, including a handheld PDA—another indication
that the Internet has morphed from novelty to utility.
⇒ 33% of Internet users mentioned watching television less often,
⇒ 25% read magazines less frequently,
⇒ 23% read newspapers less often,
⇒ 16% listen to the radio less frequently.
Problems with high Internet use
„ HomeNet Project at Carnegie Mellon
found significant declines in social
interaction and higher levels of
loneliness and depression
„ Stanford study - watch less television
shop less in stores, reading newspapers
Discussion Questions
Why would a growing B2B market lead consumers onto the
1.
Internet in countries where penetration was previously low?
2. What might e-marketers do to accommodate consumers who
are experiential shoppers?
3. Do you consider the concept of flow an explanation for what
some observers call Internet addiction? Explain your answer.
4. How might e-marketers capitalize on consumer interest in
relationships as an outcome of Internet activity?