CKFarn 1 A Model of EC Consumer Behavior zPurchasing decision begins with customer’s reaction to stimuli Vendors’ controlled System Logistic Support Payments,
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1CKFarn
A Model of EC Consumer Behavior
Purchasing decision begins with customer’s reaction to stimuli
Vendors’ controlled System
Logistic
SupportPayments,Delivery
Technical
SupportWeb design,Intelligent-agents
CustomerserviceFAQ,e-mail,Call centers,One-to-one
DecisionMakingProcess
Stimuli
MarketingPrice
PromotionProductQuality
OthersEconomicalTechnology
PoliticalCultural
Buyers’ Decisions
Buy or notWhat to buy
Where (vendor)When
How much to spendRepeat purchases
IndividualCharacteristics
Age, gender, ethnicity,education, lift style,
psychological, knowledge,values, personality
EnvironmentCharacteristics
Social, family,communities
2CKFarn
Consumer Types Individual consumers: get much of the media attention
Organizational buyers: do most of the shopping in cyberspace
Purchasing Types Impulsive buyers: purchase products quickly
Patient buyers: purchase products after making some comparisons
Analytical buyers: do substantial research before making the decision to purchase products or services
Purchasing Experiences Utilitarian: shopping “to achieve a goal” or “complete a task”
Hedonic: shopping because “it is fun and I love it”
A Model of EC Consumer Behavior (cont.)
Variables InfluencingDecision Making Process
Environmental Variables Social variablespeople influenced by family members, friends, co-
workers, “what’s in fashion this year”, Internet communities and discussion groups
Cultural variables Psychology variables Other environmental variables
available information, government regulations, legal constraints, and situational factors
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Consumer Demographics Gender (61% male user & 39% female user)
WOMEN’S PURCHASES BY CATEGORY (1998)
Purchases Category% of Total Category
Purchases (299)% of Total Respondents
Buying (166)Computer Software 15% 39%Books 14% 35%Music 11% 28%Magazines 11% 28%Flowers 11% 28%Women’s Clothing 7% 19%Computer Hardware 5% 12%Games 5% 11%Videos 4% 10%Crafts & Craft Supplier 4% 10%Toys 3% 9%Home Furnishings 2% 6%Children’s Clothing 2% 4%Men’s Clothing 2% 4% Art 2% 4%Jewelry 1% 3%Furniture 1% 2%TOTAL 100%
Consumer Demographics (1998)
Variables Influencing Decision Making Process (cont.)
Age (mostly 21-30 year-old)
Marital status (41% married & 39% single)
Educational level (81% with at least some college education & 50% obtained at least baccalaureate degree)
Ethnicity (87% white in America)
Occupation (26% educational-related field, 22% computers & 22% other professionals)
© Prentice Hall, 2000 8
Variables Influencing Decision Making Process (cont.)
Consumer Demographics Household income (46% at least $50,000/year)
Internet usage profile (Internet access option, length and frequency of web use & access cost)
Internet access option (63% primarily form home & 58% primarily from work or school)
Length and frequency of use (88% access daily & 33% access 10-20 hours a week)
Access cost (67% pay for their own Internet access & 31% paid for by their employers)
© Prentice Hall, 2000 9
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Consumer Buying Patterns
In last six months of 1998: 76% filling out a form on the Web Online purchases are more than
paper catalog purchases for Net buyers
32% spent between $100.00-$500.00
Spending of less than $50.00 decreases steadily as shoppers gain experience
Women are more likely to purchase more in the under $50.00 level, and less likely to purchase at the above $500.00 level
0
10
20
30
40
50
Pe
rce
nt
lessthan$50
$50-$100
$100-$500
$500or
more
Don'tknow
Amount Spent on Webin Last 6 Months of 1998
< 1 Year
1 - 3 Years
> 4 Years
Experience:
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After purchase serviceand evaluation
Purchase and delivery
Alternative evaluation,negotiation and selection
Information search(What? From whom?)
The Purchasing Decision-Making Model
Consumer Purchasing Decision-Making
Need identification(Recognition)
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One-to-One Marketing
Relationship marketing “Overt attempt of exchange partners to build a
long term association, characterized by purposeful cooperation and mutual dependence on the development of social, as well as structural, bonds”
“Treat different customers differently” Able to change the manner its products are
configured or its service is delivered, based on the individual needs of individual customers
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One-to-One Marketing (cont.)
Customer loyalty
Purchase behavior One of the most significant contributors to profitability Increase profits; strengthen market position; become
less sensitive to price competition; increase cross-selling success; save cost, etc.
Real world examples1-800-FLOWERS Amazon.comFederal Express (FedEx)
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Building and maintaining customer loyalty
One-to-One Marketing (cont.)
Maintain continuous interactions between consumers and business
Make a commitment to provide all aspects of the business online
Build different sites for different levels of customers
Willing to invest capital, both human and financial, in the information systems, to insure continuous improvement in the supporting technology as it becomes available
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Building and maintaining customer loyalty
One-to-One Marketing (cont.)
Make a commitment to use the information collected about customers in an ethical manner
Realistic managerial expectations in the payback period and cost recovery
Set acceptable standards for response time in customer service (24-48 hours); Use intelligent agents to expedite and standardize responses whenever possible
Ability to change and customize information and services quickly and inexpensively is a must
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Customer Service A new look and feel
Install Web serverswhich allow eachcustomer to create
individual web pagesthat can be customized
to record purchasesand preferences
Put the burden on thecustomer to treat a
problem or inquiry andreceive information
bit by bit
One-to-One Marketing (cont.)
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Customer Service
ISFLAVIA:ISFLAVIA:
One-to-One Marketing (cont.)
Information can be directed to the customer efficiently Creation of a database which records purchases,
problems and requests is facilitated Information can now be traced and analyzed for
immediate response If customer service options and solutions do not
maintain the same level of excitement and interaction as the advertising and sales presentations, the level of intensity declines and the vendor runs the risk of losing customers
15CKFarn
Market Research for ECAims
Problem definition and
Research objectives
Research methodology,
Data collection plan
Data collection,
Data analysis
Results, Recommendations,
Implementation
Finding relationship between consumers, products, marketing methods, and marketers through information in order to discover marketing opportunities and issues, to establish marketing plans, to better understand the purchasing process, and to evaluate marketing performance
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Market Research for EC (cont.)
Market Segmentation Market segmentation is the process of dividing
a consumer market into meaningful groups for decision-making.
In the past, most marketing approaches have focused on group-based targeted markets, not on a personal way to identify individual consumers who actually purchased and used the products.
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Market Segmentation
Market Research for EC (cont.)
Improved methods of marketing research based on information technologies allow marketers to collect, store, and analyze detailed and personal information in a cost-efficient way.
Example : Wal-Mart Consumer life styles shape psychographic
segmentation of the market. Lifestyles are typically established by consumers
filling out questionnaires about their activities such as work and family, interests and opinions, etc.
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Consumer Market Segmentation Tasks in the US
GeographicRegion
Pacific; Mountains; West North Central;West South Central; East North Central;East south Central; South Atlantic;Middle Atlantic; New England
Size of city, county, or standardmetropolitan statistical area (SMSA)
Under 5,000; 5,000 – 19,999; 20,000 –49,999; 50,000 – 99,999; 100,000 –249,999; 250,000 – 499,999; 500,000 –999,999; 1,000,000 – 3,999,999; 4,000,000or over
Population densityClimate
Urban; suburban; ruralWarm; cold
Market Research for EC (cont.)
Segmentation Bases/Descriptors Possible Categories
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Online Market Research
Market Research for EC (cont.)
Using online technology to conduct surveys More efficient, faster, and cheaper data collection,
and a more geographically diverse audience than those found in off-line surveys
Ability to incorporate radio buttons, data-entry fields and check boxes in the surveys
Eliminating the data reentry errors (from questionnaires to the computer, for analysis)
Not suitable for every customer or product — it is skewed toward highly educated males with high disposal income
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Online Market Research
Market Research for EC (cont.)
Risk of losing people who sign off if they had difficulty in logging on or communicating with researchers
Companies such as E-valuations or Northstar can conduct the research for your company
VALS 2 (values and lifestyles) is a well-known segmentation dividing consumers in the U.S. (developed at SRI International in California)
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Online Market Research Methods
Market Research for EC (cont.)
Process of conducting the researchDefine the research issue and the target marketIdentify newsgroups and Internet communities to studyIdentify specific topics for discussionSubscribe to pertinent groups, register in communitiesSearch discussion group topics and content lists to find the
target marketSearch e-mail discussion groups listsSubscribe to filtering services that monitor groupsRead FAQ’s and instructions of your competitorEnter chat rooms, whenever possible
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Online Market Research Method
Market Research for EC (cont.)
Content of the research instrumentPost strategic queries to news groupsPost surveys on your Web siteOffer rewards for participationPost strategic queries on your Web sitePost relevant content to groups with a pointer to your
Web site surveyPost a detailed survey in special e-mail questionnairesCreate a chat room and try to build a community of
consumers
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Online Market Research Methods
Market Research for EC (cont.)
Target Audience of the StudyCompare your audience to the target populationDetermine your editorial focusDetermine your contentDetermine what Web services to create for each
type of audience
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Consumer Market Research
Market Research for EC (cont.)
Methods of conducting a survey: personal interviews; telephone survey and mail survey
Online market research done on the Net, ranges from client-specific moderated focus groups conducted via chat rooms; to interactive surveys placed on Web sites
The Internet is providing an efficient channel for faster, cheaper and more reliable collection and transmission of marketing information even in multimedia form
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Consumer Market Research Mass marketing research
Process orientationTwo perspectives Content orientationConcept testing
TrackingKeep track of consumers’ Web movements using
cookies—files attached to a user’s browser
Market Research for EC (cont.)
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Intelligent Agents for Consumers
Search Engines Computer programs that can automatically contact
other network resources on the Internet, searching for specific information or key words, and reporting the results
Intelligent Agents Computer programs that help the users to conduct
routine tasks, to search and retrieve information, to support decision making and to act as domain experts
Do more than just “search and match”
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Intelligent Agents for Information Search and Filtering
Intelligent Agents for Consumers (cont.)
Help to determine what to buy to satisfy a specific need by looking for specific products’ information and critically evaluate them
Example : Fireflyuses a collaborative filtering process that can be described as
“word of mouth” to build the profileasks a consumer to rate a number of products, then matches his
ratings with the ratings of other consumers and, relying on the ratings of other consumers with similar tastes, recommend him products that he has not yet rated
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Organizational Buyer’s BehaviorConsumer Types
Demand Individual OrganizationalPurchase volume Smaller LargerNumber of customers Many FewerLocation of buyers Dispersed Geographically concentratedDistribution structure More indirect More directNature of buying More personal More professionalNature of buying influence Single MultipleType of negotiations Simpler More complexUse of reciprocity No YesUse of leasing Lesser GreaterPrimary promotional method
Advertising Personal selling
Characteristic Retail Buyers Organizational Buyers Individual customers Vs. Organizational buyers
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Organizational Buyer’s Behavior (cont.)
Behavioral Model
Vendors’ Controlled Systems
Logistic supportPayments, delivery
Technical supportWeb design, Intelligent-agents
Customer serviceFAQ,E-mail,Call Centers,One-to-one
Decision Making Process (Group or Individual)
Stimuli
MarketingPrice
PromotionProductQuality
OthersEconomicalTechnology
PoliticalCultural
Interpersonal Influences
Authority; status; persuasiveness
IndividualInfluences
Age; gender; ethnicity; education, lift style;
psychological; knowledge; values; personality
OrganizationalInfluences
Policies and procedures; organization structure;
centralized/decentralized; systems used; contracts
Buyers’Decisions
Buy or not; What to buy;Where (vendor);When; Delivery termsPayments
© Prentice Hall, 2000
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