Analysis of Factors Affecting Online Consumer Buying Behavior

Table of Contents
Table of Contents........................................................................................................................ 1 Research Topic........................................................................................................................... 4 Analysis of Factors Affecting Online Consumer Buying Behavior...............................................4 ABSTRACT ................................................................................................................................ !"TRO#$CT!O"........................................................................................................................ % Bac&groun'............................................................................................................................. % (roblem................................................................................................................................... % Research (urpose................................................................................................................... ) Significance of the Stu'y ........................................................................................................) Research *uestions ............................................................................................................... ) Research Ob+ectives............................................................................................................... , -imitations............................................................................................................................... , -!T.RAT$R. R./!.0............................................................................................................ 11 23(OT2.S!S #./.-O(4."T5..............................................................................................16 17 #emographics5.................................................................................................................. 16 87 Cultural an' Behavioral Factors5.......................................................................................81 97 4onetary !ncentives5......................................................................................................... 81 47 Ris& (erceptions an' Trust -evel5.....................................................................................81 T2.OR.T!CA-:CO"C.(T$A- FRA4.0OR;.......................................................................81 !'entification of Concepts5....................................................................................................81 Relationship among !'entifie' Concepts...............................................................................84 #efinition of Concepts........................................................................................................... 86 1<(age

Analysis of Factors Affecting Online Consumer Buying Behavior

O(.RAT!O"A-!=AT!O".......................................................................................................... 91 #emographics5...................................................................................................................... 91 Cultural an' Behavioral Factors5...........................................................................................99 Ris& (erceptions an' Trust -evel5.........................................................................................94 Certification by (rofessional Organi>ations5..........................................................................9 .limination of -imitations (ose' By Time an' ?eography5...................................................9 -ac& of Trust An' ?reater Ris&5............................................................................................9% S.-.CT!O" OF 4.T2O#O-O?3 A"# 4.T2O#S...............................................................9% Research 4etho'ology..........................................................................................................9% Sampling Techni@ues............................................................................................................ 9) Sample Si>e.............................................................................................................................. 9) *uestionnaire ....................................................................................................................... 9) S(SS Tables......................................................................................................................... 41 B!B-!O?RA(23....................................................................................................................... 4%

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Analysis of Factors Affecting Online Consumer Buying Behavior

9<(age

Analysis of Factors Affecting Online Consumer Buying Behavior

Research Topic

Analysis of Factors Affecting Online Consumer Buying Behavior

4<(age

Analysis of Factors Affecting Online Consumer Buying Behavior

ABSTRACT
This research is an attempt to analyze factors that affect online shopping behavior of consumers. This is one of the most important issues concerning e-commerce and marketing field in modern business. The objective of this research is to see what impact does demographics (gender, age, education, employment, income , risk perceptions and trust level (perceived risks, uncertainty, security, trust , cultural and behavioral factors (societal!group norms, motivation type, and convenience oriented behavior and monetary incentives have on consumers" online shopping behavior. #or our research we have analyzed more than $% research articles and journals about different factors affecting online consumer buying behavior. This study can be taken as type of correlation study as we are attempting to find the relationship and impact of the variables identified of consumer online buying behavior.

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Analysis of Factors Affecting Online Consumer Buying Behavior

INTRODUCTION
&onsidering the 'usiness to &onsumer (' to & e-commerce model cycle, internet has become very important as the percentage of population using internet has increased over the years and is further increasing.

Bac groun!
(nternet has made businesses global and has helped them in e)panding into a global market. &onsumers today use internet for various purposes such as* looking for product information, product varieties and prices, comparing different products, making online purchasing and other transactions etc. + consumer no longer faces time and location constraints and can order and receive goods virtually anywhere in the world. (nternet has opened new doors and created new opportunities for businesses therefore it has developed into a highly competitive market where companies have to face fierce competition to satisfy customers. This has developed the concept of ,-commerce- as a result, online marketing has become an irreplaceable tool for modern businesses. Therefore it is of prime importance for the companies to identify the factors that affect consumers" online buying behavior to target the customers accordingly.

"roblem
.nderstanding the consumers" behavior is very important for any company so that it can identify what the consumers want and how that want can be fulfilled while retaining the competitive advantage. /imilarly as online retailing is a relatively new concept and not much
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Analysis of Factors Affecting Online Consumer Buying Behavior

research is done in this area, so it is necessary to understand the factors that affect the purchase intention of consumers while shopping online. +s in online buying consumers have unlimited choices, so to stay ahead of competitors companies have to analyze the customers accordingly to satisfy the demand of customers and compete in the highly competitive online market.

Research "ur#ose
The purpose of this research is to primarily identify the factors that impact on consumers while shopping on internet. #urthermore the purpose is to find what factors have a positive impact on their buying decisions.

Significance of the Stu!y

.nderstanding consumers" preferences is as important in online business as it is in brick and mortar business. 0ith the development of e-commerce and high usage of internet among population it is important for companies to know what consumers look for while shopping online and factors that have an impact on their purchase decision. This analysis helps them in deciding how much attention and budget should be allocated to online marketing to compete successfully with the competitors.

Research $uestions
#ollowing are the 1uestions on which our research is based*
$ 4 5 7 2o cultural!societal norms and behavioral characteristics e)ert any positive or negative impact on consumers" behavior regarding online marketing3 2o positive monetary incentives influence consumers" intention to buy online in favor of traditional retail channels3 6ow does gender affect consumer preferences while shopping online3 0hat is the impact of age and income on online buying behavior3 )<(age

Analysis of Factors Affecting Online Consumer Buying Behavior

% 8

2o social media influence individuals to interact with each other3 2o the perceived risks have an influence on online shopping behavior of customers3

Research Ob%ectives
9ur research has the following objectives attained through our research 1uestions* To determine cultural norms : societal practices that favor online mediums for buying. To determine types of motivation and types of behavior that shape consumers" decisions regarding online shopping channels. To 1uantifiably establish link between consumers" behavior regarding online marketing channels and monetary incentives by comparing total transaction costs in average online transaction and average brick and motor transaction cost. To see the impact of the gender of the consumer on while buying on the internet. To determine what is the relation of the impact of age and income of the consumer on their online buying behavior.

To determine the e)pansion level of social networking sites and their impact on customers and their interactive level with each other. To determine the significance of perceived risk on consumer buying patterns and the loss that is faced by customers through online transactions.

&imitations
There are numerous factors that have an impact on consumers" buying behavior while purchasing online. 6owever we will be concentrating on a few of them so that we can effectively find their impact on consumers.

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Analysis of Factors Affecting Online Consumer Buying Behavior

+lso because consumer preferences also change depending upon the product and services, so we will be limiting our research on a few factors i.e. demographics, risk perception and trust level, cultural and behavioral fact and monetary incentives.

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Analysis of Factors Affecting Online Consumer Buying Behavior

&IT'RATUR' R'(I')
(nternet has become a widely used commercial medium for shopping. (t becomes a fashion to shop online and %5; of internet users reported that they use internet for shopping purposes. +lthough internet has become the fastest growing means for shopping, but still many internet users are <window shoppers= means that they use internet for information gathering purpose for purchasing their products off-line. *Forsythe + Shi, -../0 (nternet shopping provides a number of benefits. #irst of all, internet provides a vast array of information to consumers. (t serves as a medium for consumers to make transaction easy. (t provides a convenient way to shop. (t means that consumers can shop at any time of a day. They can compare prices, browse through different categories and even receive feedback without going to the mall. +lso, internet shopping saves time and money in terms of transportation cost and waiting lines. *Forsythe + Shi, -../0 >ostly internet users are considered as wealthy and educated men. 'ut due to globalization and changing demographics, this concept is changing and internet users moved from being elite to mainstream. This internet market is still dominated by men with 7?; consist of women. +mong adult ratios, 75; of adult internet users claim that they have a college degree. (t means web usage is moving more towards educated people. There are two kinds* one is internet shoppers who actually made a purchase via internet and second is internet browsers who just use internet to gain information about their related product. (nternet shoppers are considered to be well educated than non-internet shoppers. *Forsythe + Shi, -../0 /urveys on internet clearly show that the part of population that is online is more educated, wealthier and relatively younger than the population that does not use internet. 2emography does play a role in determining whether people use internet or not but when once they are online, this factor does not play a significant role in determining their online purchasing behavior. 2emographics are not strong determinant of consumers buying behavior however there is difference in male and female buying patterns. *&i + 1hang, -..-0

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(t is re1uisite for marketing departments of firms operating in today"s fast moving world to make use of online marketing if they want to contribute strategically and from long term perspective towards their entities" sustained competitiveness. @resence of e)tensive information available to customers through online promotional channels has made the purchasing decision process of customers more comprehensive by making customers more knowledgeable. &ustomers can make use of this information to leverage their right to receive product offerings adapted in response to their preferences. *Darban + &i, -.2-0 +ttributes of online shopping includes merchandise, customer service and promotion, navigations and convenience, and security. >erchandising consists of product related features like detailed information of a product, its variety and its assortment. 6igh assortment of a product represents that customer"s needs are satisfied. 'ut it is argued that small online stores are more effective than large online stores in satisfying their customer"s needs. 'ecause the primary purpose of online shopping stores is to provide basic information of a product like the product 1uality and its price. These attributes will in turn decrease a consumer"s search cost and increase the satisfaction level if higher 1uality information is available online. /econd attribute is customer service and promotion. &ustomer services include selection in merchandise, fre1uently asked 1uestions about product categories, salesman friendly behavior and payment policies. @romotion involves lottery schemes and tips. Third category is convenience and navigation. (t is related to store layout, its features as well as the ease to use a product. (t is feasible and convenient for customers when online sites are easy to navigate and fast. *"ar + 3im, -../0 The attribute of online consumers are individuals who are younger, wealthier, more educated with higher knowledge of computer and bigger retail spending. The online shoppers can be categorized as* people of more age who seek convenience, innovation variety. These individuals have a less brand awareness and are price sensitive. They respond positively to advertising and direct marketing. *Deari, 3immel, + &o#e40 +ccording to the survey conducted in Aermany on assessing online information search and online shopping and effects of socio-demographic variables on it, following effects of demographics were found on consumers while shopping online* >en were the first to start
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making online purchases. 6owever women followed them in it and now their number in online shopping is also increasing. #or instance in Aermany in 4??B, a large number of women in1uired about their postal and online buying behavior. >oreover the preferences and choices in buying products online were also different in men and women. 0omen are more likely to buy home furnishing items, apparel and jewelry online whereas men are more interested in buying online products related to computers and electronics. Thus it can be concluded that men make more online purchases than women however gender plays an important role in the selection of products. *Bur olter + 3luge, -.2-0 +ge is also a determinant of intentions for online buying. ,lderly people who do not have much familiarity with internet and computers will not opt it as a medium for purchasing while young people who spend more time online and posses more technical knowledge, are more likely to select it as medium of purchasing. *Deari, 3immel, + &o#e40 Researches have shown inconsistency in consumer online buying behavior regarding ages of the consumers. >i)ed results have been found in this regard. 0hile some of them show that old tend to buy more online than the younger consumers, others show that younger consumers buy online more than the older population. +ccording to the survey conducted in Aermany, consumers of ages ranging from %? to %B years, buying online instead of using postal service, accounts for an increase of more than $%; from 4??C (75; to 4??B (%C; .The consumer percentage of ages ranging from 8? to 8B years was almost $?; from 4??C ($B; to 4??B (4C; Thus it is assume that age does not have a significant impact on consumers" online buying behavior. *Bur olter + 3luge, -.2-0 ,arlier studies showed that there is positive correlation between higher studies and online buying. Time, education and income and inter related and positively lead to consumer satisfaction with online shopping e)perience. The income level of the consumer and his education also impact on consumers" choice of websites for online shopping depending on characteristics such as website appearance the prices of the products on the website, 1uantity and 1uality information and product comparisons. Thus education, income and employment have a positive impact on online buying behavior. *Bur olter + 3luge, -.2-0

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Dariables related to demographics have seen to be of significant influence on population using internet and ultimately online shopping. The online buying trend in males is more than that of females. +s males are more likely to use internet for downloading purposes and online shopping than females, a more likely reason for this is that males are more interested to learn about computers and as a result their computer usage is more than the females. Thus it also results in more online buying for men. *"ar + 5un, -.2/0 (n today"s globalized world, social media and social networking sites have increased in number as well as in popularity. /ince the inception of #acebook in 4??7, it has more than one billion active users. @romotion and advertising have a major impact on popularity of social media. /ocial media has also enable customers to state their post purchase behavior through comments. /ocial media also define customer"s perceptions, attitudes and behavior towards a product. /ocial media has helped online businesses to interact easily with their customers at low cost time. &ompanies are trying to participate in social networking sites like #acebook, twitter, myspace and others to succeed in online environments. (t provides an opportunity to companies to interact with their customers and listen to their needs and demands. *(inerean, Cetina, Dumitrescu, + Tichin!elean, -.2/0 /ocial media and advertising via internet has changed the whole world in the global village not only at the interpersonal level but from the perspective of entities as well enabling them to cater unmet customer segments and to enhance positive word of mouth and buzz regarding their product offerings. /ocial media has become the promotional element of marketing mi) that helps entities to establish close relationships with customers and that allows customers to communicate their preferences and needs directly to entities. *6angol! + Faul!s, -..70 6owever, positive impact of social media advertising on entities" sales and on entities" goodwill is limited to the e)tent of targeted customers" perceptions of the social media usage as promotional tool. These perceptions are shaped by group!social identity and group!societal norms and this point out that before using social media for promotional purposes it is re1uisite for firms to create positive and favorable group!social identity and group!societal norms. *1eng, 8uang, + Dou, -..70

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9nline marketing channels has increased the buying power of end users by giving them opportunity to communicate their preferences to entities on a timely basis and by providing the opportunity to comment on the efforts undertaken by entities in response to changed consumer preferences and to spread favorable!unfavorable word of mouth on a wider scale. 9n the positive side, there is also opportunity for firms to gain first mover advantage because of the fast identification of the changing patterns of customers" preferences because time differences in incremental improvements and even in disruptive innovations is continuously diminishing. *Bernoff + &i, -..90 9nline marketing means and online shopping channels, on the one hand, enhance utility and practicality for customers by eliminating the need to travel to the desired market and conduct the transaction. #rom another perspective, online channels for marketing provide customers possessing favorable view regarding usage of online channels with uni1ue and pleasant e)periences in addition to ease in practice and creates a feeling of <hedonism= for them. Total value perceived by customers using online mediums for shopping is the sum of <functional!utility level derived= and <pleasure!hedonistic level derived=. *Chil!ers, Carr, "ec , + Carson, -..20 6owever, two groups can be formed within each dimension- namely, pleasant!unpleasant hedonic e)perience and strengthening!deteriorating utility. This is considerable to note that it is e)tremely difficult to classify e)periences derived from online shopping into e)actly each of these dimensions. Rather, behaviors comprise a mi)ture of these two dimensions. *Ahtola, 279:0 /ome of the factors supported by utilitarian aspect of online buying behavior are savings in cost, greater convenience in completing transaction and more comprehensive data available for making purchase decision. #actor supported by hedonic aspect of online buying behavior is personal desire to gain pleasure from shopping online. 6owever, it is crystal clear that these two dimensions and aspects of motivation do influence online consumer buying behavior either positively or negatively. *"earce + Coughlan, -..;0 0ith the increase in popularity of online promotional channels, entities have now incorporated these e-commerce channels into the promotion <@= of marketing mi) in order to increase and accelerate the pace of communication with targeted customers and to put <trust= at the center of these relationships fostered through communication. *Dellarocas, -../0 9nline interactive
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marketing tools and means are now becoming inevitable area for entities operating in highly dynamic environment to use because these tools e)ert positive impact on brand e1uity, or in other words, these online marketing tools enables companies to create positive brand image on the minds of the targeted segments and to create loyal customer base. *Cal!er, 6althouse, + Schae!el, -..70 ,ngaging and involving targeted customers with the help of online communication channels e)ert positive influence on advertising effectiveness and hence on entities" top line growth by responding to customers" needs in a more timely manner because online channels eliminate boundaries" differences. *3eller, -..70 #actor that influences online buying decisions of targeted customers is convenience oriented behavior of buyers and importance given to the dimension of convenience over the dimension of e)perience. &ustomers that are short of time and face <time poverty= because of vocational and personal activities particularly value more the element of convenience and are willing to sacrifice the opportunity to personally e)amine the 1uality of product offering. *&i + 1hang, -..-0 The first 0harton Dirtual Test >arket survey panel was a close match to ./ online population. Responses from BE5C panelists gave a way for identifying factors predicting what a person bought online. 0hile demographics (age, gender, income, race etc did not predict difference in online buying although males have a slightly high spending rate than females. @eople in ./ spent most of their time online and also due to the fact that they have been using internet for longer time than people in the rest of the world, they are more inclined to do online shopping. The study identified buyer behavior into four categories* $ Fever buy 4 2rop outs 5 Fewbie"s 7 /teadfast buyers

9ne additional finding worth mentioning is the panelist"s percentage making online purchase. (ncreases as a function of time spent on internet. The longer time spent online, resulted in greater chances of making online purchases. #or instance the study showed that in $BBE, 57; of the respondents who had been online for about a month also purchased something online. (n
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Analysis of Factors Affecting Online Consumer Buying Behavior

$BC7, C7; of the respondents who had been online for five years made an online purchase. +n increasing trend is e)pected in coming years. *<eral! &= &ohse, 27770 (ndividuals" socio-economic factors do have an impact on his buying behavior but this has a little impact on his online shopping preferences. The studies conducted regarding the age of the consumers show mi)ed results however gender and income does have impact on his online shopping intent. (ncome plays a significant role in consumer preferences and his demand for a product. *6oshref, Dolataba!i, Nourba hsh, + "oursaee!i, -.2-0 Dariations in online buying patterns are also due to the variations in the social class of the internet users. The online buyers belonging to higher social class tend to buy more. >oreover their chances to buy online are higher as they are more likely to possess computer and internet. 0hile consumers from lower social class do not possess the same resources their e)perience and knowledge of computers are less and thus sufficient for a successful online buying e)perience. *Deari, 3immel, + &o#e40 9nline shopping mediums provide convenience by eroding time limitation because these channels are available 47 hours a day and by eliminating limitation posed by geography because customers can buy anything they desire from any country they desire. Research findings e)plicated in various research articles indicate that convenience is the most driving factor behind growth of online marketing channels. *Series, -.2-0 'esides convenience oriented buyers, customers that seek variety and also customers that prefer!use both online and retail shopping channels, that is balanced customers, are some of the other customer categories that are reasons behind growing demand for online shopping and are potential segments for entities to target. &ustomer category that possesses the least interest in online shopping channels is store oriented!e)perience oriented customers. *Rohma + S>aminathanb, -..?0 9nline retailing turned into a large business in the late $BBC, mainly because more and more people placed their orders, those were mainly gifts, online. This caused the distribution networks to adapt to the changing environment to cope with the growth. &ompanies that planned for growth of online retailing needed valid estimates of the growth of online shopping. 2ata regarding consumer"s online buying behavior was also needed to facilitate companies to select their online retail
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strategies. #or this purpose, on Fovember $BBE, the 0harton Dirtual Test >arket, an ongoing survey, was started. (t was a panel test. This survey was an online laboratory that helped in gauging customer responses to new online strategies and products offered. *<eral! &= &ohse, 27770 Areater the costs involved in buying online, less will be the desirability level of targeted customers to make use of online channels in favor of traditional retail channels and hence this implies that there is a negative relationship between the price and the e)tent of online buying. The total price in online shopping involves the cost of the product being purchased plus e)penditures incurred on shipping and the costs that customers may have to incur in case of loss of confidential information and privacy related problems. Research articles indicate that a product offering in which there is higher e)tent of uncertainty involves higher overall transaction costs. >oreover, while on one hand online marketing channels erode geography related limitations and consumers can purchase any commodity they like from any part of the world, differences in currency value and currency e)change cost also makes the online purchasing process comple) and uncertain because of fre1uent appreciation and depreciation in currency values in today"s turbulent environment. &larity of the terms and conditions and clarity regarding the entities" physical identity!location modify and positively influence the relationship between transaction cost and consumers" online buying behavior. Research articles indicate that probability that targeted customers will prefer online shopping mediums over traditional retail shopping channels increase if the formal provide some sort of low price!cost saving advantage over the later. >onetary incentives are the key factor behind the likely success of online marketing tools. *Teo, )ang, + &eong, -..?0 @erceived risk is considered to be an important factor in online shopping. &ustomers are uncertain about achieving their desired outcome in online purchase transaction. (t also represents gain or loss associated with online transaction. @erceived risk is considered as an amount of loss faced by internet shopper associated with online purchase transaction. @erceived risk is divided into four types that can influence buyer"s decision in online purchasing. #inancial risk is associated with loss of money and the possibility that credit card can be misused. This is the
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major obstacle in purchasing online as many customers believe that credit cards can be stolen online. This is the reason that many customers are unwilling to give their credit card information online. @roduct performance risk is associated with low performance of product than e)pectations. (t may be due to the poor 1uality of a product. (t also represents customer"s inability to judge the 1uality of a product online. Time or convenience risk is associated with the loss of time that is spent on finding appropriate websites. >ajor problems behind this risk are the downloading pages of websites that are too slow and confusing or disorganized websites. *Forsythe + Shi, -../0 @sychological risk is associated with the disappointment when user"s personal information is disclosed on the internet. *Forsythe + Shi, -../0 @rivacy information is used to send spam mails and e-mails on the internet. The #ederal Trade &ommission (#T& has authority to stop websites from doing such illegal activities and deceiving customers. 'ut it cannot comprehensively control every website from doing such illegal stuff. (n ,arp and 'aumer"s research, it implies that customers should be aware of what kind of information will reveal to which websites. >oreover, due to legal constraints, customers will feel reluctant to shop online and it could create an obstacle for them to shop online. +ccording to survey, it is found that majority customers willing to provide information related to age and gender, only $C; willing to provide their credit card information to well known websites and only 5; willing to provide the same information to unknown sites. /ince this problem can be reduced through third party verification but evidence is not strong enough. *"rof= 3umar + Dr= Dange, -.2-0 .ncertainty is highly involved in internet shopping because this service is new to many customers and buying and selling is conducted in a virtual environment without any physical store. .ncertainty arises from lack of trust in e)change relationship that the delivered product will not meet customers" e)pectations. +nother factor is the amount of information available to customers in buying online than traditional physical store. /elf confidence of customers also plays an important role while shopping online. *3ailani + 3umar, -.220

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>ajor issue in internet shopping is the leakage of personal and monetary information. 'ecause of these issues, many web merchants provide their services acting as a third party to online customers for encryption and password verification. Thus, customers are more confident in providing their information online only because of further verification by third parties. ,ven some websites have secured this issue through certification by professional organizations. 'ut still this problem cannot be totally resolved and many customers lost their money while shopping online. /ometimes customers themselves are responsible for this problem. The reasons could be many. &ustomers sometimes leave their credit card in public where information can be easily seen. They use credit card online in unsecure way, such as giving credit card information to some unknown people or website. &ustomers can also do online shopping with virus in their system. (n >aignan and Gukas"s research ($BBE shows that financial risks and security are the major concern to stop online buying transactions. 9nline trust is the most basic and essential element in building long term relationship with online customers. + research has shown that trust level is lower in online shopping as compared to shopping from physical store. Trust played a major role for buyers in buying products and services. *"rof= 3umar + Dr= Dange, -.2-0

8@"OT8'SIS D'('&O"6'NTA
(n the light of the literature review, we have categorized identified factors on the basis of their nature into four independent variable categories and the null and alternative hypothesis for each of the category is e)plicated in the section below. >oreover, we are making use of nondirectional hypothesis and two Htailed hypothesis, since our objective behind undertaking this research study is to determine the direction and nature of impact e)erted by each of these independent variable categories on our dependent variable and to reach at some meaningful conclusion.

20 Demogra#hicsA
Null 8y#othesis *8o0A
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2emographics do not e)ert any impact on customers" decisions regarding online marketing tools. Alternative 8y#othesis *8a0A 2emographics do influence customers" decisions regarding online marketing tools.

-0 Cultural an! Behavioral FactorsA

Null 8y#othesis *8o0A &ultural and behavioral factors do not e)ert any impact on customers" decisions regarding online marketing tools. Alternative 8y#othesis *8a0A &ultural and behavioral factors do influence customers" decisions regarding online marketing tools.

/0 6onetary IncentivesA
Null 8y#othesis *8o0A >onetary incentives do not e)ert any impact on customers" decisions regarding online marketing tools. Alternative 8y#othesis *8a0A >onetary incentives do influence customers" decisions regarding online marketing tools.

?0 Ris "erce#tions an! Trust &evelA

Null 8y#othesis *8o0A

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Risk perceptions and trust level do not e)ert any impact on customers" decisions regarding online marketing tools. Alternative 8y#othesis *8a0A Risk perceptions and trust level do influence customers" decisions regarding online marketing tools.

I!4

I!4

J-2istribution Reject 6o if J K -J I!4 ? Reject 6o if J K J I!4

T8'OR'TICA&BCONC'"TUA& FRA6')OR3
I!entification of Conce#tsA
&oncepts!variables deemed important in the conte)t of our problem identification that we have e)tracted from the literature review are listed below*
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&+T,A9R(,/* $ 2emographic #actors* Aender +ge ,ducation ,mployment (ncome

4 &ultural and 'ehavioral #actors* /ocietal!Aroup Forms >otivation Type &onvenience 9riented 'ehavior

5 >onetary (ncentives 7 Risk @erceptions : Trust Gevel* @erceived Risk .ncertainty /ecurity Trust

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% &ertification by @rofessional 9rganizations 8 ,roding Gimitations @osed by Time and Aeography E Gack of Trust and Areater Risk

#.4O?RA(2!CS5 #.4O?RA(2!CS5 ?en'er ?en'er Age Age .'ucation .'ucation .mployment .mployment !ncome !ncome

Theoretical Framework
C$-T$RAC$-T$RA- A B.2A/!ORAFACTORS5 FACTORS5 Societal:?roup Societal:?roup "orms "orms $tilitarian:2e'onic $tilitarian:2e'onic 4otivation 4otivation ConvenienceBOriente' ConvenienceBOriente' Behavior Behavior

17 17 Cost Cost Savings Savings 87 87 Convenience Convenience 97 97 Comprehensive Comprehensive #ata #ata 47 47 (ersonal (ersonal (leasure (leasure CO"S$4.R CO"S$4.R B.2A/!OR B.2A/!OR R.?AR#!"? R.?AR#!"? O"-!". O"-!". S2O((!"? S2O((!"? .ro'ing .ro'ing -imitations -imitations (ose' (ose' By By Time Time A A ?eography ?eography

R!S; R!S; (.RC.(T!O"S (.RC.(T!O"S A A TR$ST TR$ST -./.-./.(erceive' (erceive' Ris& Ris& $ncertainty $ncertainty Security Security Trust Trust

-ac& -ac& of of Trust Trust A A ?reater ?reater Ris& Ris&

C.RT!F!CAT!O C.RT!F!CAT!O " " B3 B3 (ROF.SS!O" (ROF.SS!O" AAOR?A"!=AT!O OR?A"!=AT!O

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Relationshi# among I!entifie! Conce#ts

The first category of independent variable that we e)tracted from our literature review is CDemogra#hicsD comprising five factors. The impact that each of these factors e)ert on consumer behavior regarding online shopping is e)plicated in the following table* FACTORS <en!er I6"ACT ON ON&IN' S8O""IN< 20 Tendency to buy from online channels is more prevalent in male shoppers in comparison to female shoppers. -0 (t is found from our literature review that female shoppers buy mostly consumer products from online mediums while on the contrary, male shoppers prefer to buy electronic commodities from online shopping channels.
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Age

(n light of our literature review, no clear cut distinction can be made among various age groups regarding which age group buys more online in comparison to other age groups.

'!ucation

#indings of research articles that we have incorporated in the literature review indicate that there is the positive!direct correlation between study level and online buying.

'm#loyment

,mployment consumers" buying.

also

positively

influences online

perceptions

regarding

Income

Areater the personal disposable income at hand, greater will be the tendency among targeted customers to buy online.

CCultural an! Behavioral FactorsD is the second category of independent variable that emerged from our literature review and it further comprise three factors. The influence e)erted by each of these factors is highlighted in the following table separately* FACTORS SocietalB<rou# Norms I6"ACT ON ON&IN' S8O""IN< 9verall perceptions prevalent within a

particular group!society!country also impact individual perceptions of people residing in that particular area regarding effectiveness of online marketing tools. #or instance, in @akistan trend to buy online is significantly lower in comparison to ./+ or other
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Analysis of Factors Affecting Online Consumer Buying Behavior

developed countries. UtilitarianB8e!onic 6otivation 20 9ur literature review has indicated that greater the degree of utility!practicality and pleasant!uni1ue e)perience provided by online shopping mediums, greater will be the motivation in targeted customers to buy from online mediums. -0 Giterature review also indicated that it is e)tremely difficult if not impossible to categorized reasons behind giving preference to online shopping channels over traditional brick and motor channels into e)actly these two types of motivation. +lso, total motivation is the sum of these two aspects!dimensions of motivation. /0 These two motivations behind online shopping, if satisfied by entities, provide customers with benefits in the form of cost savings, greater convenience, availability of more com#rehensive !ata an! >ith #leasure, that in turn e)ert positive impact on perception related to online marketing tools. Therefore, these four elements variable are in functioning our as intervening theoretical

framework and because these are im#acting #ositively on our dependent variable, it is connected with the help of !otte! arro> in
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Analysis of Factors Affecting Online Consumer Buying Behavior

green color= ConvenienceEOriente! Behavior 20 (ndividuals suffering time poverty develop preference for convenience and these customers prefer online buying channels over brick and motor shopping channels in light of the literature review. -0 9nline marketing tools provide convenience by ero!ing limitations #ose! by geogra#hy an! time and in turn e)ert positive impact on perceptions related to online shopping. Therefore, this element is functioning in this conte)t as an intervening variable and because the nature of impact is positive, it is connected with the help of green color !otte! line=

The third and the last independent variable category are C"erceive! Ris an! Trust &evelD. This category further comprises four factors and all these factors are modified by the presence of <Certification by "rofessional Organi4ationsD and hence this variable in this conte)t is playing the role of mo!erating variable= This moderating variable e)ert #ositive influence on the relationship between independent-dependent variable by re!ucing the eFtent of #erceive! ris an! uncertainty involve! in online transactions an! conseGuently by eFerting #ositive im#act on security an! #rotection level= The individual impact of each of these factors on the dependent variable is summarized below* FACTORS I6"ACT ON ON&IN' S8O""IN<
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Analysis of Factors Affecting Online Consumer Buying Behavior

"erceive! Ris

20 Giterature review indicated that greater the degree of perceived risk in online transactions, greater will be the reluctance level to use this medium for shopping. -0 This perceived risk can result from risk of low product performance, risk of financial loss, risk of loss of confidential information and risk of loss of precious time.

Uncertainty

20 Areater the degree of uncertainty less will be the e)tent of usage of online shopping mediums and hence there is a negative correlation between these two variables. -0 .ncertainty is the product of lack of trust and the presence of risk and hence in this conte)t, these two elements are functioning as intervening variables. /ince theses intervening variables are e)erting negative im#act on our dependent variable, these are connected with re! color !otte! line instead of green color dotted line.

Security

There is positive correlation between our dependent variable and security in light of the literature review. &urrently, the e)tent of security in online transactions is not satisfactory.
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Analysis of Factors Affecting Online Consumer Buying Behavior

Trust

Trust positively influences our dependent variable. 6owever, at present time, customers particularly in developing and underdeveloped countries, e)perience significant trust related issues in case of online transactions.

Definition of Conce#ts
In!e#en!ent (ariablesA 20 Demogra#hicsA /tudy of various groups of population on the basis of various factors and dimensions by applying statistical techni1ues is referred to as demographics. <en!erA femininity. AgeA The stage in the life cycle of a living being e)pressed in the number of years. '!ucationA (t is the means for ac1uiring necessary knowledge and skills for the purpose of adopting the desired profession!vocation and to make one learned and sophisticated individual. 'm#loymentA (t is the vocation that human beings adopt for the purpose of living and to meet monetary and financial re1uirements of life. IncomeA (t is the primary purpose behind adopting any vocation and profession and it is the medium that enables human beings to meet their financial!monetary re1uirements and obligations.
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(t is the categorization of living beings on the basis of masculinity and

Analysis of Factors Affecting Online Consumer Buying Behavior

-0 Cultural an! Behavioral FactorsA &ultural factors comprise characteristics that are uni1ue to a particular group and society such as beliefs, values, customs, teachings, traditions and norms while behavioral factors comprise characteristics that are uni1ue to an individual and the characteristics that one e)hibit in his!her conduct and the characteristics that are shaped by one"s psychological state. SocietalB<rou# NormsA These are the specific patterns of living and conduct that are prevalent in a particular society!country!group. UtilitarianB8e!onic 6otivationA This is the type of motivation- namely, utility oriented and pleasure oriented that is inherent in one"s behavior. ConvenienceEOriente! BehaviorA This is the type of preference- namely, convenience oriented and e)perience oriented, that is inherent in one"s behavior. /0 Ris "erce#tions an! Trust &evelA Risk is the danger inherent in undertaking any action and in e)ecuting any task while trust is the degree of confidence on something. "erceive! Ris A Risk is the danger that something will go wrong and in statistical terms, this can be stated as the probability of error. UncertaintyA (t is linked with risk and there is a universal rule that higher the uncertainty, higher will be risk. SecurityA (t is the degree and level of protection offered by something. TrustA (t is the degree and level of confidence on something.

De#en!ent (ariableA
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Analysis of Factors Affecting Online Consumer Buying Behavior

20 Consumer Behavior Regar!ing Online TransactionsA &onsumer behavior is the set of characteristics e)hibited by targeted customers" deportment!conduct towards the product offering!service provided by the targeting entity. This behavior can be favorable as well as unfavorable towards entities. 6o!erating (ariableA 20 Certification by "rofessional Organi4ationsA This is the confirmation of accuracy done by any legal entity possessing the authority of another entity!individual!information. Intervening (ariablesA 20 'ro!ing &imitations "ose! by Time + <eogra#hyA These limitations or hindrances are caused because of inability to travel fast enough to e)ploit opportunities or to undertake desired actions timely and because of lack of opportunity of 47 hours service in case of the most of the brick and motor entities. -0 &ac of Trust an! <reater Ris A These two factors are interlinked in the way that higher the degree of risk, lower will be the level of trust. 6ence, there e)ists negative relationship between these two variables.

O"'RATIONA&I1ATION
Demogra#hicsA
Scale *For All Demogra#hic Factors0A

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$(poor usage level , 4(medium poor usage level , 5(similar usage level , 7(medium good usage level , %(e)cellent usage level FACTOR <en!er O"'RATIONA&I1ATION 20 0hat is usage e)tent of online shopping channels among male shoppers3 -0 0hat is usage e)tent of online shopping channels among female shoppers3 Age 20 0hat is usage e)tent of online shopping channels among elder shoppers3 -0 0hat is usage e)tent of online shopping channels among younger shoppers3 '!ucation 20 0hat is usage e)tent of online shopping channels among highly educated shoppers3 -0 0hat is usage e)tent of online shopping channels among undereducated shoppers3 'm#loyment 20 0hat is usage e)tent of online shopping channels among blue collar workers!laborers3 -0 0hat is usage e)tent of online shopping channels among white collar workers!office position holders3 Income 20 0hat is usage e)tent of online shopping channels among rich shoppers3 -0 0hat is usage e)tent of online shopping
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Analysis of Factors Affecting Online Consumer Buying Behavior

channels among poor shoppers3

Cultural an! Behavioral FactorsA

Scale *For All Cultural + Behavioral Factors0A $(/trongly 2isagree , 4(2isagree , 5(Feutral , 7(+gree , %(/trongly +gree FACTOR SocietalB<rou# Norms O"'RATIONA&I1ATION 2oes the e)tent of usage of online buying channels is more in developed countries in comparison countries3 UtilitarianB8e!onic 6otivation 20 2oes the e)tent of practical benefits!easiness provided by entities in online transactions impact customers" utilitarian motivation to engage in online buying3 -0 2oes customers engage in online buying to derive pleasure through uni1ue and different e)perience gained through online buying in comparison to traditional buying3 ConvenienceEOriente! Behavior 2o customers prefer to save their time and cost spent in travelling to reach any physical store by making use of online buying channels3 to developing!underdeveloped

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Ris "erce#tions an! Trust &evelA

Scale *For All Ris "erce#tions + Trust &evel Factors0A $(/trongly agree , 4(agree , 5(Feutral , 7(2isagree , %(/trongly 2isagree FACTOR "erceive! Ris O"'RATIONA&I1ATION 20 2oes the inability to physically e)amine the product and the related risk of low product performance in online transactions in comparison to traditional retail transactions impact customers" decision to buy online3 -0 2oes the danger that the product may be of inferior 1uality and the related risk of financial loss in online transactions in comparison to traditional retail transactions impact customers" decision to buy online3 /0 2oes the risk that the entity may misuse private and confidential information in online transactions in comparison to traditional retail transactions impact customers" decision to buy online3 ?0 2oes the risk that in case of fraud, precious time and money will be wasted in online transactions in comparison to traditional retail transactions impact customers" decision to buy online3 Uncertainty 20 2o customers perceive greater degree of risk
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Analysis of Factors Affecting Online Consumer Buying Behavior

in online shopping channels in comparison to traditional shopping channels3 Security 2o customers have concerns regarding

protection of confidential data in online shopping channels in comparison to traditional shopping channels3 Trust 2o customers e)perience lack of trust in online shopping channels in comparison to traditional shopping channels3

Certification by "rofessional Organi4ationsA

ScaleA $(poor usage level , 4(medium poor usage level , 5(similar usage level , 7(medium good usage level , %(e)cellent usage level #+&T9R &ertification by @rofessional 9rganizations 9@,R+T(9F+G(J+T(9F 20 0hat is the e)tent of usage of websites that are certified by third parties3 -0 0hat is the e)tent of usage of websites that are not certified by third parties3

'limination of &imitations "ose! By Time an! <eogra#hyA

ScaleA
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Analysis of Factors Affecting Online Consumer Buying Behavior

$(/trongly 2isagree , 4(2isagree , 5(Feutral , 7(+gree , %(/trongly +gree FACTOR O"'RATIONA&I1ATION

'limination of &imitations "ose! by Time 20 2oes the 47 hour shopping service provided an! <eogra#hy by online shopping channels in comparison to traditional shopping stores considered favorable by customers3 -0 2oes the opportunity provided by online shopping channels to purchase any commodity from any country without the need to travel considered favorable by customers3

&ac of Trust An! <reater Ris A

9perationalization and the relevant scale already summarized in the table of <Risk @erceptions and Trust Gevel=.

S'&'CTION OF 6'T8ODO&O<@ AND 6'T8ODS

Research 6etho!ology
9ur research topic <+nalysis of factors affecting online consumer buying behavior= calls for making use of the research strategy!methodology of </urvey=. This is because of the reason that we are measuring abstract variables!constructs by operationalizing them or in other words by 1uantifying them with the help of assignment of numerical values to nominal variables. >oreover, since the aim is to 1uantifiably support our 1ualitative variables!judgments- our research is 1uantitative in nature. #rom the data collection methods available in 1uantitative studies, we are making use of <Luestionnaire /urvey= instead of </tructured 9bservation= since observation is only possible in brick and motor stores.
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Analysis of Factors Affecting Online Consumer Buying Behavior

Sam#ling TechniGues
/ince no sampling frame, that is, overall population from which to draw!select sample is available, we are making use of non probability sampling. +lso, since our purpose is to observe the variables of interest generally, probability sampling cannot be applied because of non availability of the sampling frame. #rom the techni1ues available within non probability sampling, <&onvenience /ampling= is the most appropriate for our research topic.

Sam#le Si4e
0e are making use of sample size of %?, that is, we will administer our 1uestionnaire survey to %? respondents most conveniently available and the provided responses will then be analyzed with the help of </@//= in order to reach at any appropriate!sound conclusion.

$uestionnaire
This 1uestionnaire survey is part of a mandatory project of <Research >ethods= and the primary purpose is to determine the importance!preference given to online shopping channels and the importance!preference given to traditional retail shopping channels by customers. ,fforts are made to ensure the anonymity of respondents by not asking any personal information. @lease provide as accurate answer as possible. Thank you for your cooperation.

<'ND'RA

>+G,

#,>+G,

A<'A

HHHHHHHHHHHHHHHHHHHHHHHHHHHHH

No=

Statements

Strongly Disagree *20

Disagree

Uncertain

Agree

Strongly Agree *:0

*-0

*/0

*?0

20

Giteracy!education level e)erts impact on customers" perceptions regarding effectiveness of online

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Analysis of Factors Affecting Online Consumer Buying Behavior

marketing tools. -0 ,mployment nature (blue collar!white collar impact customers" decisions regarding use of online channels. ,mployment rank (low rank!high rank impact customers" decisions regarding use of online channels. (ncome level of customers is an important factor in shaping customers" decisions regarding use of online shopping channels. &ustomers with high disposable income prefer to make use of online shopping tools. @erceptions prevalent regarding the effectiveness of online marketing tools within a particular society shape actual online buying decisions of customers. .sage of online shopping channels is more in developed countries in comparison to developing countries. .sage of online shopping channels is positively influenced by the number of benefits (both monetary and non-monetary provided by these channels. @ersonal desire!motivation to make use of online shopping channels is an important factor influencing the success of online
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/0

?0

:0

I0

;0

90

70

Analysis of Factors Affecting Online Consumer Buying Behavior

shopping mediums. 2.0 &ustomers with preference for convenience over physical e)amination tend to buy more online. Areater the convenience provided by online shopping channels, greater will be the e)tent of their usage. Gess the degree of perceived risk, greater will be the usage of online marketing tools. Areater the degree of perceived trust, greater will be the usage of online marketing tools. (nitiatives to reduce uncertainty by entities using online marketing positively impact effectiveness of online shopping channels. Areater the degree of security provided by online shopping tools, greater will be the e)tent of their usage. &ustomers prefer to make use of certified websites for online shopping purposes.

220

2-0

2/0

2?0

2:0

2I0

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Analysis of Factors Affecting Online Consumer Buying Behavior

2;0

,limination of limitation posed by geographical boundaries is a significant convenience!benefit provided by online shopping mediums. 47 hours service provided by online shopping channels is a significant convenience!benefit in comparison to most traditional retail shopping channels. Mour willingness towards online shopping instead of going to a traditional physical store.

290

270

S"SS Tables
FreGuency Table <en!er of Res#on!ent #re1uency @ercent Dalid male female Total >issing /ystem Total 45 4E %? $ %$ 7%.$ %4.B BC.? 4.? $??.? Dalid @ercent 78.? %7.? $??.? &umulative @ercent 78.? $??.?

0e selected the sample size consisting of %? respondents. 9ut these %?, 45 were males and 4E were females. The male percentage accounts for 78; of the total sample selected. 0hile the percentage was %7; of the total sample.
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Analysis of Factors Affecting Online Consumer Buying Behavior

Age of Res#on!ent #re1uency Dalid $%-4? years 4$-4% years 48-5? years 5$-5% years 58-7? years Total >issing Total /ystem $ 4E $$ C 5 %? $ %$ @ercent 4.? %4.B 4$.8 $%.E %.B BC.? 4.? $??.? Dalid @ercent 4.? %7.? 44.? $8.? 8.? $??.? &umulative @ercent 4.? %8.? EC.? B7.? $??.?

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Analysis of Factors Affecting Online Consumer Buying Behavior

The age group of the respondents selected is divided into % groups, as mentioned in the table above. The group of $%-4? years age comprised of 4; of the selected sample. The second group of 4$-4% years age comprised of %4; of the sample. The third group is consisting 4$.8; of the population. The forth group comprises of $%.E; of the total sample selected. The last group consists of %.B; of the sample. Correlations (mpact on online consumer buying behavior .745NN .??4 %? .44? .$48 %? .$55 .5%B %? .$55 .5%B %? %? %? $

&ultural and Risk behavioral perceptions 2emographics factors and trust level 2emographics @earson &orrelation /ig. (4-tailed F &ultural and behavioral @earson &orrelation factors /ig. (4-tailed F Risk perceptions and trust level @earson &orrelation /ig. (4-tailed F (mpact on online consumer buying behavior @earson &orrelation /ig. (4-tailed F %? .%77NN .??? %? .$CE .$B7 %? .745NN .??4 %? %? .4%B .?E? %? .44? .$48 %? $ .%77NN .??? %? $ .$CE .$B7 %? .4%B .?E? %? $

NN. &orrelation is significant at the ?.?$ level (4-tailed . 9ur first independent variable, demographics show that the correlation is ?.745.The positive value shows that there is a positive correlation between the independent and dependent variable.

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Analysis of Factors Affecting Online Consumer Buying Behavior

+n increase in the demographics will cause an increase in the dependent variable i.e. impact on the online consumer buying behavior. The magnitude of the relationship moderate. The p value is ?.??4 against the alpha value ?.?$. The error is minimum and the result is significant. The second independent variable, cultural and behavioral factors show that the correlation is ?.44?.The positive value shows that there is a positive correlation between the independent and dependent variable. +n increase in the independent will cause an increase in the dependent variable i.e. impact on the online consumer buying behavior. The magnitude of the relationship is weak. The p value is ?.5%B against the alpha value ?.?$.The error level is more than alpha and the result is not significant. The third independent variable, risk perceptions and trust level, show that the correlation is ?.$55.The positive value shows that there is a positive correlation between the independent and dependent variable. +n increase in the independent will cause an increase in the dependent variable i.e. impact on the online consumer buying behavior. The magnitude of the relationship is weak. The p value is ?.5%B against the alpha value ?.?$.The error level is more than alpha and the result is not significant. Regression

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(ariables 'ntere!BRemove!b >odel $ Risk perceptions and trust level, 2emographics, &ultural and behavioral factorsa Dariables ,ntered Dariables Removed >ethod

. ,nter

a. +ll re1uested variables entered. b. 2ependent Dariable* (mpact on online consumer buying behavior 6o!el Summary >odel $ R .74Ca R /1uare .$C5 +djusted R /1uare .$4B /td. ,rror of the ,stimate .8C?

a. @redictors* (&onstant , Risk perceptions and trust level, 2emographics, &ultural and behavioral factors

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ANO(Ab >odel $ Regression Residual Total /um of /1uares 7.E%8 4$.487 48.?4? df 5 78 7B >ean /1uare $.%C% .784 # 5.74B /ig. .?4%a

a. @redictors* (&onstant , Risk perceptions and trust level, 2emographics, &ultural and behavioral factors b. 2ependent Dariable* (mpact on online consumer buying behavior

Coefficientsa .nstandardized &oefficients >odel $ (&onstant 2emographics &ultural and behavioral factors Risk perceptions and trust level ' $.?48 .%E4 -.?7B .$8C /td. ,rror $.E84 .4$5 .4E7 .5C% .74C -.?4B .?8? /tandardized &oefficients 'eta t .%C4 4.8CC -.$EE .758 /ig. .%85 .?$? .C8? .88%

a. 2ependent Dariable* (mpact on online consumer buying behavior The regression e1uation is as under*

MO a P bQ
(n this e1uation M is the dependent variable, online consumer buying behavior a is constant value Q is independent variable ( i.e. demographics, cultural and behavioral factors, risk and perception and trust level b is the slope of the line.
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Analysis of Factors Affecting Online Consumer Buying Behavior

The value of R s1. is ?.$C5 or $C.5;. (t shows that $C.5; of the variance in the dependent variable (online consumer buying behavior is e)plained by the independent variable (i.e. demographics, cultural and behavioral factors, risk and perception and trust level and C$.E; of the variance remains une)plained by independent variable.

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Analysis of Factors Affecting Online Consumer Buying Behavior

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