Frame of reference
The frame of reference will mainly cover aspects related to consumer behaviour with respect to the traditional and online environment. Additional theories that will be covered are related to the online market and high-involvement purchases with power to influence consumers in the decision-making process.
Buying behaviour according to Sargeant and West (2001) is the process in which individu-als and groups are affected when they evaluate, acquire, use or dispose of goods, services or ideas.
Arens (2004) stresses the importance of finding a common language for communication, where the study of consumer behaviour enables marketers and companies to understand their consumers and to keep them interested in their offerings. The importance of under-standing consumer behaviour is more specifically attached to; opportunities in the market, selection of target, the marketing mix, and sending appropriate messages. The aim of learn-ing about consumers‟ buying behaviour is, from a business perspective; to be able to more effectively reach consumers and increase the chances for success (Sargeant & West, 2001).
The area of consumer behaviour touches upon a vast amount of ideas and models which makes the selection for relevant parts necessary. The aspects below were chosen with the purpose of this thesis in mind where the more general part concerns the consumer‟s pur-chase decision. The specific parts are on the other hand the influences that the consumer may be exposed to with regards to the purchase, such as the group influence and involve-ment.
Buyer decision process
As presented by Kotler et al. (2005) the buyer decision process consists of five stages; namely need recognition , information search , evaluation of alternatives, purchase decision and post-purchase behaviour. The important notion is that a purchase should be viewed as a process rather than just a single action, as can be seen in figure 2.1. Consumers do not necessarily go through all five steps in every purchase situation since some purchases are less complex than others, as explained in section 2.1.3 and figure 2.4.
The first step of the buying process is the need recognition i.e. consumers feel a difference between their actual state and some desired state. The need can be activated by either internal or external stimuli where the internal stimuli has to do with the consumer‟s normal needs (feeling hungry, thirsty etc.). The external stimuli on the other hand could be a smell that that triggers hunger, an admiration for an object and so on. The understanding of need recognition explains what kind of need is triggered by a particular product which is highly significant from a business or marketer perspective (Kotler et al. 2005).
The second step is the search for information regarding the product that will satisfy the consumer‟s need. As explained above, the consumer may skip some steps due to the com-plexity and importance of the purchase. If the consumer already has a satisfactory product in mind, the search for more information is not likely to occur. The amount of information that is needed is directly linked to the costs and benefits of the search. Factors that play a role here would be ease of accessing information, the amount of information that is present in the beginning, satisfaction of searching and so on. The additional information can be ob-tained through personal sources, commercial sources, public sources and experiential sources. Personal sources are basically the people that the consumer is familiar with in a private manner, such as family, friends and so on. Commercial sources are the broad marketing messages that companies send out in various ways. Public sources are on the other hand media, organisa-tions and such that the consumer can extract information from regarding some specific product. Experiential sources are linked to the testing of the product or previous experi-ences and so on. Companies could save a great amount of resources by identifying the con-sumers‟ sources of information and their respective importance. Once this is done, compa – nies can easily tailor the marketing mix for the purpose of the situation (Kotler et al. 2005).
The third step concerns the evaluation of alternatives that are available to the consumer at the moment. The set of present alternatives is highly affected by the consumer‟s desired benefits that a certain product can provide. One aspect is the relevant product attributes that the consumer is in search of and how important each attribute is thought to be. Other as-pects involve brand beliefs where some brands are preferred over other brands. There are various decision rules which can help consumers when selecting an alternative, ranging from careful calculation to impulse or intuition decision. This means that consumers‟ evaluation process is often dependant on the particular situation and the individual con-sumer (Kotler et al., 2005).
The fourth step, purchase decision, is mainly dependant on the results in the evaluation process, i.e. the consumer decides to buy the product which is most favourable according to the product attributes, brand preference or decision rule in the evaluation process. How-ever, there are also some exceptions from the general purchase decision. The two factors in figure 2.2 that can affect the purchase intention are attitudes of others and unexpected situational factors. People close to the consumer can affect the purchase intention if other people‟s atti-tudes are strong and if the consumer chooses to act in accordance with these attitudes. Un-expected situational factors occur without the consumer‟s control and affect the purchase intention by shifting the circumstances which might force the consumer to reconsider the entire process. The purchase decision has a lot to do with minimising the risk involved with the purchase, which is why the consumer undertake various actions such as; information search, preferring certain brands or excluding products without warranty, to mention a few (Kotler et al., 2005)
The fifth and final step is post-purchase behaviour, which involves further actions based on the consumer‟s satisfaction or dissatisfaction after the product is bought. Satisfaction is present when the consumer’s expectations match or exceed the product‟s perceived performance. When the opposite occurs, the consumer is likely to be dissatisfied. Keeping customers sat-isfied is vital for a company‟s existence and prosperity, since satisfied customers are in gen-eral more willing to; purchase again, spread positive word-of-mouth, exclude competing brands and offerings, and buy other products from the company. Dissatisfied customers on the other hand spread on average almost four times more word-of-mouth than the satisfied customers, although as complaints instead of praises. Negative word-of-mouth reaches far more people and has a greater effect than the positive word-of-mouth which is a clear indi-cation that companies and marketers need to match or exceed the consumers‟ expectations in order to be successful (Kotler et al., 2005).
Consumers are influenced by a number of social factors in their buying behaviour, such as family, groups, social roles and status. Primary groups are family, friends, neighbours or other groups that the consumer has regular yet informal interaction. Secondary groups on the other hand are less frequent but more formal gatherings like religious groups, organisa-tions, professional associations and so on (Kotler et al., 2005; Sargeant & West, 2001).
Groups influence consumers‟ behaviour in various ways and Kotler et al. (2005) argues that group influence is highest for conspicuous purchases. The similar notion is stated by Sargeant and West (2001), where the authors argue that the greatest group influence is pre-sent for high-risk products. Figure 2.3 shows the extent of group influence with regards to both product and brand choices for four types of products. Conspicuous products fall un-der public luxuries and public necessities since these products are socially visible. The dif-ference between a necessity and luxury lies in how few or how many people own the prod-uct (Kotler et al., 2005).
The weakest group influence is within private necessities since these products are both publicly noticeable and owned by a majority of consumers. The strongest influence on the other hand is for the public luxuries (Bearden & Etzel, 1982).
Additional groups can be reference and aspirational groups, where reference groups influ-ence consumers‟ attitudes by comparing or referring to the group‟s attitudes about a prod-uct or brand. In the case with reference groups, consumers are influenced by their own need to „fit in‟ the group‟s beliefs and attitudes. This need simply comes from valuing and feeling concern for the members of your group, and whose opinions and approval means a lot (Arens, 2004). The high influence of reference groups is strong since consumers regard members of their group as credible (Sargeant & West, 2001). Aspirational groups influence consumers indirectly by acting on their affection for their favourite artist or athlete (Kotler et al., 2005).
The level of involvement is individual and dependent of the consumer‟s interest and/or recognized importance. A certain level of involvement and differences between brands de-cide how motivated the consumer is to process information (see figure 2.4).
Complex buying behaviour – There are several factors that might make consumers highly in-volved, for example when (Kotler et al., 2005); a purchase involves a high risk, products are expensive, there are great differences among brands, products are very self-expressive, and/or when the product is purchased rarely.
In such situations consumers tend to take on a complex buying behaviour. In this case consumers have to process great amounts of information in order to be able to gain knowledge about the product, develop beliefs and attitudes about it, and finally purchase it, e.g. a PC is regarded as complex due to the big differences in terms of technical specifica-tions and brands (Kotler et al., 2005).
Dissonance-reducing buying behaviour – In situations where consumers carry out a dissonance-reducing buying behaviour, the same factors constitute an important role as for the com-plex buying behaviour, except here we only find few differences among brands. Conse-quently, consumers are highly involved, but tend to make quick decisions after learning what choices they have, and price often becomes the primary factor of importance (Kotler et al., 2005).
Habitual buying behaviour – Habitual buying behaviour are undertaken when consumer in-volvement is low. Also here differences among brands are recognised as insignificant, and price is low. The products are bought on a regular basis, and the choice of brand is made by routine (Kotler et al., 2005).
Variety-seeking buying behaviour – Here highly perceived differences among brands often re-sult in brand switching. Consumers have a low-involvement, and often hold a belief about the product before the purchase. Evaluation of the product is instead made during the con-sumption (Kotler et al., 2005).
Communication and persuasion are not synonymous but consumers can be persuaded to some extent with thought-out and well-aimed communication. Two ways of persuading consumers can be by using the central and the peripheral route to persuasion. When con-sumer‟s involvement is high, the central route would be more suitable for persuasion. On the other hand, when consumer‟s involvement is low, the peripheral route would be a bet-ter alternative (Arens, 2004).
The steps of the central route to persuasion begin with consumer‟s high-involvement for a product or message where the attention should be on the „central‟ product-related informa-tion. The peripheral route to persuasion sets off with lower involvement and the attention is put on „peripheral‟ non-product information. The comprehension accents short elabora-tion on shallow and non -product information. Persuasion acts upon non-product beliefs and attitudes towards the communication instead of the product (Arens, 2004).
For high-involvement purchases and when a product has a distinct advantage, the focus should be on product superiority and comparative information. Although, the key to per-suasion is to repeat the message in order to penetrate consumers‟ perceptual screens (Arens, 2004).
Online consumer behaviour
The Internet has become so vital for our everyday life where it has evolved from a theo-retical concept to the reality it is today. There are so many activities on the Internet that not even your imagination can set the boundaries for what is possible. No matter what it is used for, it will be around for a long time and also an elementary part of our society (Grou-cott & Griseri, 2003).
The typical Internet user today is a young person and the more rare Internet users are the persons over 35. The interesting information is that in 2001, female Internet users over-took men in the USA and it is also stated that women are more and more willing to make online purchases (Groucott & Griseri, 2003).
According to Turban et al. (2006a), the more experience consumers have with the Internet and online purchases, the more likely it is that they will spend more money online, which clearly is another interesting finding with regards to online consumer behaviour.
The increased competition in the online environment has made the acquiring and retaining of customers more complex than ever before. The key here is to be able to understand the consumer behaviour online in order to find success (Turban et al., 2006a).
The model regarding online consumer behaviour was selected as a contrast to the tradi-tional consumer behaviour. The time constraint related to this thesis affected the amount of empirical data that could be collected which resulted in an investigation focusing on the behaviour of the traditional buyer. These empirical outcomes of the traditional consumer behaviour will be compared with the online consumer behaviour theories in order to form a meaningful comparison of the consumer behaviour in the traditional and online envi-ronment. Similarly, the section regarding trust in e-commerce is relevant for understanding the complexity of online purchases from different angles and to put the different types of trust in the picture.
The e-commerce consumer behaviour model is quite broad in describing the consumer be-haviour in the online environment (see figure 2.5). The central part of the model is more focused on the actual purchase and the various steps related to the purchase process. This part is quite similar to the traditional five-step buyer decision process (see figure 2.1) where identical steps are present with the exception that this process is focused on aspects con-cerning the online environment (see table 2.1)
E-commerce consumer behaviour model
The model can be divided into four main variables, where each variable has sub-variables (see figure 2.5). The independent or uncontrollable variables comprise personal characteristics and environmental characteristics. The intervening or moderating variables hold the business aspect and its control in the form of market stimuli and EC systems. Found in the centre of the model is the decision-making process which is influenced by the two previously men-tioned variables (independent and intervening). The whole model ends with the dependent variables or results which are the buyer‟s decisions box (Turban et al., 2006a).
Personal characteristics involve demographics, behaviour and individual factors. These fac-tors influence online consumer behaviour in various ways, for instance; consumers with high levels of education and/or income are correlated with higher amount of online shop-ping. Another finding is that the more experience consumers have with online shopping, the more likely it is that they will spend more money online. Personal characteristics also affect why consumers do not buy, where the two most influencing reasons are shipping fees (51 percent) and inconvenience of assessing the product‟s quality (44 percent). The least mentioned reason for not buying online is the occurrence of a negative experience (only 1,9 percent) (Turban et al., 2006a).
Environmental characteristics consist of social, cultural/community, political, technological and other environmental variables. With regards to the purpose of this thesis, most weight is put on the social factors. The social variables play a major part in online purchasing (Turban et al., 2006a), as does group influence in traditional purchasing (Kotler et al., 2005). These aspects are quite alike since both consider how family members, friends, co-workers, neighbours and so on influence the consumer. The important difference is that the online environment enables consumers to communicate through online communities and discussion groups (Turban et al., 2006a).
The intervening or moderating variables are comprised by product and brand offerings, marketing mix, and supporting systems and services. The market stimuli aspects are quite common with the stimuli in the traditional environment but the services and systems differ somewhat from the ones in the traditional environment. For example, online payments are different from traditional payments as well as customer contact which differ in the sense that online consumers cannot physically see the salesperson or feel the atmosphere at the company (Turban et al., 2006a).
The independent and the intervening variables influence the decision-making process where the focus in this thesis is on the individual buyer rather than the group (or organiza-tional) buyer. The previously mentioned buyer decision process (in section 2.1.1) could ra-tionally be applied even in the online environment since it consists of quite general steps. The Web-based customer decision support system is basically a framework based on the steps of the buyer decision model (see table 2.1). Each generic step is supported by cus-tomer decision support system (CDSS) facilities and Internet and Web facilities. Certainly, the CDSS facilities can be seen as purpose-built tools aimed at consumer decision-making, the Internet and Web facilities on the other hand are more general tools that can be used in decision-making (Turban et al., 2006a).
1.4 Research questions
2 Frame of reference
2.1 Consumer behaviour
2.2 Online consumer behaviour
3.1 The empirical study
3.2 The quantitative research
3.3 The qualitative research
3.4 Critical data collection and treatment.
3.5 Research methods
3.6 Preparing survey data for analysis
3.7 Systematic research approach
4 Empirical findings
4.1 The survey
4.2 The interviews
5.1 Traditional consumer behaviour
5.2 Online consumer behaviour
5.3 Summary of the analysis
6.1 Confronting the traditional market
7.2 Further research
List of Appendices
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T h e t r a d i t i o n a l v s . t h e on l i n e m ar k e t A study of consumer behaviour and consumer preferences in the purchase of high-involvement products