The following section consists of a compilation of relevant theories, key concepts and previous research, which aim to provide the reader with sufficient knowledge to understand the problem, purpose and the research questions of the thesis. That is, by reading this chapter, one will be able to create an accurate picture of the already existing knowledge within the field of study.
One marketer once claimed that the role of marketing is to “deliver a higher standard of living” (Keller & Kotler, 2011). But what is marketing? There are a great many definitions, whereof one, presented by The American Marketing Association, is following:
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
In recent years, the traditional marketing has met a competition that no one could have predicted. According to the report ”ICT Facts and Figures – The world in 2015” by International Telecommunication Union in 2000 the Internet penetration in the world amounted to 6.5 percent. 15 years later, in 2015, the statistics show a corresponding percentage of 43. Moving on to Europe, the report also shows that 82.1 percent of the households had access to Internet in 2015, and the Internet using rate for individuals was 77.6 percent.
The incredible digital development has lately created opportunities that almost resembles a revolution in the marketing area where new distribution channels have appeared. This creates a need for constantly updated research that can follow the pace of development.
The Internet-based electronic commerce is becoming an increasingly popular approach and a channel for people to search for information and purchase products or services through direct interaction with the online store. (Park, C. & Kim, Y. 2003)
From the Global B2C E-commerce Report 2016 by Ecommerce Foundation one can read that 26 percent are e-shoppers worldwide. An e-shopper is here defined as “an individual who regularly bought or ordered goods or services through the Internet”. In this report the definition of B2C e-commerce sales, as another highly relevant concept, reads: Any B2C contract regarding the sale of goods and/or services, fully or partly concluded by a technique or distance communication. Further is in the report stated that e-commerce year amounted to 3.11 percent of the GDP, globally, in 2015.
By studying the report one can also find it clear that the E-commerce is not just a temporary era we can wait for to pass and which will turn into another one, characterized by something significantly different. We can observe a constantly ongoing development which indicates on the opposite. The statistics show that, compared to the 1% growth on the overall retail in Europe, the E-commerce growth reached a percentage of 13.3%. Even though the high growth rate is forecasted to slow down, it is no doubt that Ecommerce is here to stay, and it is not unlikely that the success stems in the ever-growing demand for comfort and efficiency in everyday life (ECommerce Europe, 2016). Although Europe in its whole is moving upwards when it comes to E-retailing, one should not forget that there are probably variations between member countries in terms of shopping behaviour, habits and values. To narrow the field of study further and make it more manageable the focus will be on Sweden, where 75 percent of the population aged 18-79 made online purchases during 2015 according to PostNord (2016).
The fact that Swedish e-commerce grocery market is still not very developed makes this highly relevant to explore further. To understand a consumer market one also needs to understand how consumers behave. A model for this is shown below.
Theory of Planned Behavior
To understand consumers’ behavior, a frequently used model is the theory of planned behavior (TPB). So will also this study do, since it seeks to understand the consumer behavior behind online grocery shopping. TPB is an extension of theory of reasoned action (TRA), (Ajzen, 1985 ; Ajzen, 1991) which helps program implementers design interventions that effectively address a particular behavior (Ajzen. I, 1991). TPB illustrates the relations between beliefs and behaviors by applying three types of terms: attitude toward behavior, subjective norm and perceived behavior control to shape the ending consumers’ purchasing intention and behavior.
Consumers’ purchasing intention
Consumers’ purchasing intention refers to an individual’s plan on buying something in the future. The purchase taking place can be a good, as well as a service. The higher the intention is, the more likely it is for the action or behaviour to take place (Ajzen, 1991).
According to Ajzen (1991), Attitude toward behavior is the degree to which performance of the behavior is positively or negatively valued. It depends on behavioral beliefs which provide a favorable or unfavorable attitude towards the various kinds of positive or negative possible outcomes.
Subjective norm is the perceived social pressure to engage or not to engage in a behavior (Ajzen, 1991), which is determined by normative beliefs that the perceived behavior expectations of important referent individuals and population.
Perceived behavior control
Perceived behavioral control refers to people’s perceptions of their ability to perform a given behavior, which is access to the control beliefs, for example, beliefs about the presence of factors that may facilitate or impede performance of the behavior (Ajzen, 1991).
Intention is an indication of a person’s readiness to perform a given behavior, and it is considered to be the immediate antecedent of behavior (Ajzen, 1991), which is based on attitudes, subjective norm and perceived behavior control.
Behavior is the manifest, observable response in a given situation with respect to a given target (Ajzen, 1991), which is a combination of intentions and perception of behavior control. The single behavior control can be considered across contexts and times to present a more broadly representative measure of behavior (Ajzen, 1991).
Concerned with this study, the theory of planned behavior described that attitudes toward any behavior is determined by one factor, called as behavior believes (Rahman, M, 2013). For example, if one has positive beliefs towards purchasing groceries online and believe it is convenient than traditional stores then he/she would have positive attitudes towards that behavior, vice versa. Normative beliefs in this study can be demonstrated that people surrounding you such as your friend, families, colleges would leave positive or negative suggestions and influence on your decision-making. For example, if your friends tend to buy groceries on Internet and they have excellent experience, when they suggest you and tell you it is a good choice, you will be positively motivated by their suggestions to fulfill subjective forms, “optimistic motivation leads positive subjective norms and intention” to purchase groceries on the Internet (Rahman, M, 2013). Last but not least, control beliefs in this study perform like some people consider shopping groceries online would cost some extra service expenses, however, people who have positive control beliefs would still go for choosing online shopping although it may charge extra delivery cost. The possibility of using TPB framework would be connected into interviews which we use as our method of primary data collection. The interview questions that are listed in Appendix are basically designed in accordance to the theory by Ajzen to explore what kind of factors would influence consumers’ purchase intention when they shop groceries on the Internet.
To understand the consumers’ behaviour, this paper will get help from studying various types of factors. Situational factors, could be explained as temporary conditions that have any influence on how consumers behave (Zeithaml, 1988). A consumer can choose to buy nothing at all or to buy a certain product, but also to buy additional products. In the following a description of some situational factors that play a role for the behaviour of the buyers.
Perceived Product Quality
Product quality is a collection of characteristics and features of a product to meet given requirements. Quality can be defined broadly as superiority or excellence (Zeithaml, 1988). Product quality is divided into objective and perceived quality. In this study, the main focus will be on the perceived quality. Perceived quality can be defined as the consumer’s judgment about a product’s overall excellence or superiorit (Zeithaml, 1988). According to Kotler and Armstrong (2004) “product quality is the ability to demonstrate a product in its function, it includes the overall durability, reliability, accuracy, ease of operation and repair products are also other product attributes”. Perceived product quality has directly influence to purchase intention (Saleem, Abdul Ghafar, et al, 2015). Based on A. Saleem et al (2015), the purchase intention increases or decreases after using the product, which is directly related to the quality of products. If the product quality is high, the consumer purchase intention is also high, and vice versa. In addition, Dunk (2002) also states that product quality can contribute to strategic competitive advantage, and the design and manufacture of product is purposed for meeting customer requirements. The study conducted by Rao, S., Raghunathan, T., & Solis, L. (1997) also illustrates that providing the kind of quality product and services that is required by demanding customers could gain the competitive edge and wider market share. And once the requirements of demanding customers are reached, their customer satisfaction will be improved. Previous experiment showed that product quality is considered as one of dimensions of customer satisfaction as long as it meet final system criteria (Elliott, J.2002). “Customer satisfaction with an online store positively influences purchase intentions” (Lee, G., & Lin, H, 2005). Therefore, amounts of previous literature supported that the product quality is a significant element of the consumer satisfaction and as for the online shopping, customer satisfaction also leaves positive impact on final purchase intention.
Perceived Product Price
Price is the amount of money a consumer sacrifices to obtain a product, which can further be classified into objective and perceived product price (Zeithaml, 1988). In this case only perceived product price will be used, since the purpose of the thesis is to get the consumers’ point of view on the different factors and in this case the product’s price. Perceived price is individual believe of the price in relation to the quality of the product (Nguyen, T., & Gizaw, A. 2014). The study by Chang, T., & Wildt, A. (1994) demonstrates that “purchase intention is shown to be positively influenced by perceived value, which mediates the influence of perceived price and perceived quality”, Between this relationship, which also includes that the perceived value is positively influenced by product quality and negatively influenced by product price, and purchase intention is positively influenced by the perceived value (Chang, T.,
& Wildt, A. 1994). From this it reveals that purchase intention is negatively influenced by product price which means when customer perceived price of goods goes up, their purchase intention will decrease. As for the grocery products, sometimes the online selling products may have a discount that the physical store do not own. Thus the perceived price is different between online shoppers and offline shoppers and their purchase intention is changed as well.
Perceived Potential Risks
The theory of perceived risk has been applied to explain consumer’s behaviour in decision making since the 1960s (Hsin Chang, H., & Wen Chen, S. 2008). Perceived risk can be defined as “the nature and amount of uncertainty perceived by consumers in contemplating a particular purchase decision” (D. F. Cox & Rich, 1964). Therefore, it can be one of the most important factors that could affect customer purchase intention as consumer are used to avoid risks when purchasing. Mitchell (1999) states that perceived risks have a powerful impact on consumer behavior due to people are more motivated to avoid risks than maximum utility when purchase products. In the past, the perceived risks are mainly concerned with product quality. However, nowadays in terms of online grocery shopping, more types of risks appear. Another important elements that consumer emphasize is the security of the purchasing approach, in other word, is the website security. The web perceived security is “the extent to which one believes that the Web is secure for transmitting sensitive information (e.g. credit card or social security number)” (Salisbury, W. et al, 2001). Bennett, P., & Harrell, G. (1975) also tested the relationship between confidence and purchase intention, which justifies that buyers’ confidence in brand of products is relevant to predicting purchase intention and also to their actual purchase behavior. Besides the specific figures show that the lower perceived risks lead to higher purchase intention.
Time pressure are described as the degree of consumers consider themselves are busy (Srinivasan and Ratchford, 1991). Busy consumers would be willing to save time from doing the shopping activities and they take consuming time and energy on the grocery shopping as disadvantages. Therefore time saving is usually regards as one of the shopping convenience elements when people choose to shop online or offline with two different forms of expressions. Firstly, conventional grocery stores generally have the limited opening hours shorter than 24h, which restricts consumers shopping flexibility. However, online grocery shopping allows you to shop anytime at the day or night, which provides fewer external restrictions and more convenience (Schröder and Zaharia, 2008) Chocarro also verified the assumption that the nearer it is close to store closing-time, the greater possibility of online purchase (Chocarro, R, 2013) On the other hand, time-related factors also perform in whether you need to leave home to get grocery products. Time-saving plays a vital role in online and offline grocery shopping, as you can have direct access to all of grocery products on the website, which saves unnecessary time to sort wanted goods among clusters of products. In addition, according to Chocarro that the greater the time pressures, the higher the probability of online purchase (Chocarro, R, 2013), thus if there is no need for you to spend time to physical store, shopping grocery products online would save time. Furthermore, in the light of Verhoef, P. and Langerak, F. (2001), they expect consumer who suffered more time pressure to perceive the relative advantage and compatibility of electronic grocery shopping as higher, and they support their assumption that the larger the time pressure they receive, the larger the perceived relative advantage and compatibility of electronic grocery shopping will be. Hence, time-saving factor has a close relationship in shopping grocery online.
1.2 Problem discussion
1.3. Purpose and research questions
2. Theoretical Framework
2.3. Theory of Planned Behavior
2.4 Situational Factors
3. Methodology and Method
4. Results/Empirical Findings
5.1. Current consumer behavior towards online grocery shopping
5.2. Attitudes towards online grocery shopping
6. Discussion and conclusions
6.1. Contributions and Further investigations
List of references
GET THE COMPLETE PROJECT