Consumer Behavior Online

October 24, 2002 Haejin Yun

Oct. 24, 2002

Consumer Behavior Online



Oct. 24, 2002

Consumer Behavior Online


Centaur Traditional Consumer Centaur Cyber Consumer A Hybrid Consumer: A combination of Traditional and Cyber. 24. 2002 Consumer Behavior Online 3 . and Wired and Physical. Oct. Rational and Emotional.

‡ More than the bricks-and-clicks business model Oct. ‡ Convergence within the consumer: The new possibilities created by the technology and the enduring behaviors of human beings. Rather than an either/or approach. traditional approaches and new approaches based on new technologies.Convergence ‡ The combination of old and new. 2002 Consumer Behavior Online 4 . the focus of convergence is on "both." This goes beyond the more narrow definition of "convergence" as a combination of technologies. 24.

People are complex. 2. Oct. The new technologies do not replace the old. 24. retaining the same enduring human needs even as they adapt to new technologies and behaviors.Basic Propositions 1. 2002 Consumer Behavior Online 5 .

Marketing challenges brought by the Centaur Customerization Virtual Communities Channel Options Competitive Value Equation Choice Tools Consumer Behavior Online 6 Oct. 5.5 Cs ‡ 1. 2002 . 4. 24. 3. 2.

com. purchase of discount shampoo for her husband Buys ³Sally¶s own´ shampoo and other personal products at Reflect. 24. 2002 .‡ ‡ ‡ ‡ ‡ ‡ ‡ Looks at a tiny city on the southern coast of Norway through a video cam. Chats with her friends who she happens to meet at the counter Returns a pair of Nine West shoes that she bought online at Nordstrom Consumer Behavior Online 7 Sally Anderson Oct. promotion coupon. Receives and forwards a joke by email Picks up and read the day¶s newspaper Grocery shopping at a local supermarket (careful selection of fruits. smell of coffee.

‡ Tries on some dresses and perfumes while waiting for the time when her daughter¶s soccer practice finishes ‡ Buys a book that her friend strongly recommended at Amazon. ‡ Enjoys an afternoon sipping cappuccino at Barnes & Noble ‡ Sends a care package of her son¶s favorite foods to his dorm every two weeks through Peapod ‡ Book a flight for her son at Hotwire. before her visit to her doctor ‡ Watches TV commercials with her husband Oct. 2002 Consumer Behavior Online 8 Sally Anderson .com ‡ Checks different pricing for a same digital picture frame and purchase the cheapest ‡ Visits

Who is the Centaur? ‡ Online Population ± Early Internet users: ³geeky white guys´ ± The online population is more like the offline. general population Diverse segments ± Not based on demographic factors. purchases from catalogs ‡ Heterogeneous ± Generation Y Oct. 24. 2002 Consumer Behavior Online 9 . time pressure. but rather on online experiences. wired lifestyle.

McKinsey Report Connectors: New users. Shop for the best buy 7. Searching multiple domains 6. Bargainers: Online price comparison. 24. 2. spend lots of time online. 3. more offline purchase Samplers: Light users Simplifiers: Efficiency seekers Routiners: Go online for information but not primarily interested in shopping 5. 2002 Consumer Behavior Online 10 Who is the Centaur? .‡ 1. 4. Funsters: Looking for information in entertainmentoriented domains Oct. Surfers: Heavy users.

3. location. location Consumers are islands Customers will accept what you tell them Consumer Behavior Online 11 Oct. 2002 . 2. 4. Only the elite want customerization Price is the bait set by the seller The consumer is on the couch Location. 24. 6.Myths of the Traditional Consumer 1. 5.

The Internet is inherently fascinating and attractive Oct. 2. 5.Myths of the Cyberconsumer 1. 2002 Consumer Behavior Online 12 . 4. People don¶t want to be troubled with shopping Efficiency is all that matters Consumers want to get the best price Consumers are either online or offline Ease of visiting stores will lead to more purchasing 6. 3. 24.

2. ‡ Self-affirmation Symbolic meaning Scripts for shopping Experience Social influences Transaction efficiency or Information efficiency Consumer Behavior Online 13 Oct. 3.Human Motivations 1. 4. 2002 . 24. 5.

‡ Why Shop Online? A. 2002 Consumer Behavior Online 14 . Personality traits « C. Social vaules. Demographics: Age.Describe Online Consumers ‡ How ? A. Pychographics: Religious values. Convenience. Education. Best price. 24. One-stop Shopping Oct. Time saving. Scarborough Research (1999): Combined demographic data with lifestyle data. Gender« B. Income.

2002 Consumer Behavior Online 15 . 24. undesired or aversive transactions.Money ‡ The form of money affects its meaning to consumers. may facilitate transaction for unexpected. but may discourage transaction that provides the consumer with pleasure. The difference in tangibility ‡ Desired transactions Prefer the actual act of the transaction (Giving up money is not painful) ‡ Undesired transaction Prefer the digital and less salient form of payment ‡ The Internet environment separates the meaning of money from its physical being. Oct.

2002 Consumer Behavior Online 16 .Information ‡ Two types of online information 1. Information as a means to an end ± eg. Information as an end ± Information is a product itself ± eg. Information search to buy a car or calculating the level of body fat Oct. Read online news 2. 24.

Information ‡ Information in the decision-making process ± Information Search Information Evaluation Choice Information Search 1. Facilitates through the wide array of information available on the Internet & the variety of search engines B. Taxes consumers¶ processing ability Economics of information & Information overload Oct. The Internet facilitates Information Search or makes it difficult ? A. 24. 2002 Consumer Behavior Online 17 .

Oct. Given limits to people¶s processing capabilities. ‡ Information Overload 1. 24.Information ‡ Economics of Information 1. As the costs decrease. larger amounts of information to consider may result in poorer quality decision. People will continue searching for information as long as the benefits of each new piece are not exceeded by the costs of it. 2. 2002 Consumer Behavior Online 18 . the number of alternatives (the size of a consideration set) increases.

the more accurate the final decision may result ‡ Decision Heuristic Oct.Information Information evaluation ‡ How consumers structure the information in decision making (create a representation of the information): past experience or environmental factors ‡ Effort/Accuracy approach The more effort people invest. 24. 2002 Consumer Behavior Online 19 .

Goods ‡ Types of goods ‡ 1. Physical ‡ 2. 2. ‡ Forms of good ‡ 1. Credence: Can't be easily evaluated even after being consumed. Experience: Can be evaluated only after being consumed. 24. Digital Oct. ‡ 3. 2002 Consumer Behavior Online 20 . Search: The benefits of consumption can be understood just with attribute descriptions.

Search goods: Can facilitate consumers' ability to obtain attribute information. Experience goods: Difficult to provide enough experience for consumers to assess the benefits of the product Offline trial & Online purchase ‡ 3. But may have a damaging effect on decision quality. 2002 Consumer Behavior Online 21 .Goods How the Internet affects « ‡ 1. Credence: How to help consumers form a set of beliefs about the quality of the product? Access to other people's beliefs about the quality of the product such as product testimonials Oct. 24. ‡ 2.

± Perishability: Cannot be stored in warehouses Oct. 2002 Consumer Behavior Online 22 .Services Differences between goods and services ‡ Goods ± Tangibility ± Specificity (Particularism) ‡ Services ± Inseparability: Service cannot be separated from its consumption ± Heterogeneity: The variation that may exist because a service is performed by different people in a different places at different times. 24.

24. Oct.Status ‡ Status: The rank or evaluation of one person. relative to a comparison group of peers ‡ Scarcity: the motivating factor for Status ‡ How the Internet affects « ± The Internet may help obtain scarce resource ± Demonstrating high levels of Internet-related skills may confer a higher status ± The impersonality of the Internet may decrease hierarchical communications patterns. 2002 Consumer Behavior Online 23 .

Love ‡ The effects of the Internet on emotional well-being ± Very positive: Online social support groups ± But may decrease the amount of interpersonal interaction ± Fewer social cues only for informational communication ? Oct. 24. 2002 Consumer Behavior Online 24 .

orderprocessing software Oct. 24.An Involvement Continuum for E-Commerce ‡ Phase I: Familiarity with the Internet and use of the Internet by employees ‡ Phase II: The Internet used to communicate features and benefits of its products or services ‡ Phase III: Conduct transactions-related activities online ‡ Phase IV: Front-end applications augmented by back-end applications ± Front-end applications: customer service applications ± Back-end applications: sales lead database. 2002 Consumer Behavior Online 25 .

2002 Consumer Behavior Online 26 . and Process ‡ Netcentricity: The percentage of revenues due to online activity as a portion of the total revenues earned by a company ‡ Platform approach: Operating in a team across different organizational functions ‡ Internet time Expectation about the amount of time shortened ‡ Information acceleration Product cycles shortened Oct. 24. Structure.Company Revenue.

2002 Consumer Behavior Online 27 . 24.Challenges of the Internet: 5 Cs ‡ Company ± Employee growth rate: higher in the infrastructure segment. lower in the intermediary segment ± Decreased employee productivity due to Web surfing ‡ Channel ± The Internet as a distribution channel ± Infomediaries: Manage the transmission of distributionrelated information ‡ Consumer ± Lower search costs Empowered consumers Oct.

E*TRADE vs.Challenges of the Internet: 5 Cs ‡ (Market) Condition ± Marketing activities more directly affected by the environmental factors such as technology and public policy. Merrill Lynch) Oct. 24. 2002 Consumer Behavior Online 28 . ‡ Competition ± Internet Time Shorter product cycles & Decreased product differentiation ± Strategic alliances rather than zero-sum approaches (eg. AOL & Time Warner merger) ± Same product & different means of consumption (eg.

Sign up to vote on this title
UsefulNot useful