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Trusting Beliefs And Online Purchase Decisions

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  • 1. Converting Web Site Visitors into Buyers Nathan Earl Promotion Management 11/09/2009
  • 2. Risk
    • “ Using the internet involves a leap of faith. We type our credit cards numbers and other personal information in order to make a purchase over the Internet and trust that this information will not be used in unauthorized fraudulent ways” (Bargh and McKenna 2004)
  • 3. RISK
    • Often times the Risk is high enough to keep online buyers from making online purchases
    • This avoidance has led experts to speculate that the immediate threat to e-commerce is consumers’ perception of RISK
  • 4. Firms Respond to Threat
    • Investing in Web site security
    • Technology to protect consumers’ identity and personal & financial information
      • By 2005, Web site security was a multibillion dollar industry
  • 5. Consumers Want More
    • In spite of high investment in Web site security, Marketers still face challenge of convincing consumers of their firm’s trustworthiness
  • 6. TRUST
    • Establishing TRUST in a computer-mediated environment has proven to be very difficult
    • A major challenge is discovering what the consumers’ perception / measure of TRUST actually is
  • 7. Ways to Establish Trust
    • Privacy Statements
    • Security Statements
    • High-Investment Web sites
  • 8. Research
    • A recent large-scale study show indicate that despite consumers’ claims that privacy and security policies/statements are important for establishing credibility, consumers refer, instead, to a Web site’s “surface elements”, such as DESIGN
  • 9. Article
    • Converting Web Site Visitors into Buyers: How Web Site Investment Increases Consumer Trusting Beliefs and Online Purchase Intentions
    • Ann E. Schlosser, Tiffany Barnett White and Susan M. Lloyd (2006). Journal of Marketing. Vol 70. p. 133-148
    • Investigating the impact on Web site design investments on consumers’ trusting beliefs and online purchase intentions
  • 10. Conceptual Framework
    • Authors developed a conceptual framework for understanding how “marketing signals” influence consumers’ trust in e-commerce settings
      • Marketing signals: Observable actions that help explain the unobservable
        • Example—price reduction, advertising expenditures
        • Example—investing in high-end Web sites to help convey the firm’s trustworthiness (unobservable)
  • 11. Signals
    • Different “signals” can influence different PERCEPTIONS of the firms trustworthiness
    • This PERCEPTIONS has a direct correlation to the consumer making the actual purchase
  • 12. Effects of Perceptions
    • The effects vary according to the purpose of the consumer visiting the firm’s site
        • Searching
        • Browsing
  • 13. Trust
    • “ Willingness to rely on an exchange partner in whom one has confidence”
    • “ Generalized expectancy held by an individual that the word, promise, oral or” written statement of another individual or group can be relied upon”
    • “ A belief in a person’s competence to perform a specific task under specific circumstances”
  • 14. Trusting Beliefs
    • Cognitive Aspects
    • Ability
    • Benevolence
    • Integrity
    • Represent a “sentiment or expectation about trustworthiness”
  • 15. Ability
    • Ability beliefs reflect the consumer’s confidence that the firm has the skills necessary to perform the job
  • 16. Benevolence
    • Benevolence beliefs reflect confidence that the firm has a positive orientation toward its consumers beyond an “egocentric profit motive”
  • 17. Integrity
    • Integrity beliefs reflect confidence that the firm adheres to a set of moral principles or professional standards that guide its interactions with customers
  • 18. Trusting Intentions
    • “ Represent a willingness to make oneself vulnerable to another in the presence of RISK”
    • PURCHASE INTENTION
  • 19. Searchers
    • The consumers who “search” for product information
    • Searchers think about and are persuaded more by product information and have a higher visitor-to-buyer ratio
  • 20. Findings
    • 1 st Study—Online purchase intentions depended more on their beliefs about the firm’s Ability rather than Benevolence or Integrity
      • Ability is the belief most relevant to Performance
  • 21. Findings
    • 2 nd Study—Privacy and Security statements communicated a firm’s benevolence and integrity, but not ability
      • High End Web sites did not convey benevolence or integrity beliefs
  • 22. Findings
    • 3 rd Study—Web site investment and Ability on online purchase intentions are specific to “searchers” and not “browsers”
    • “ Browsers”—benevolence and integrity were more important
  • 23. Findings
    • 4 th Study—The higher the RISK perceived by the consumer, the more they relied on Ability beliefs
  • 24. Conclusion
    • Web site investment influences searchers’ intentions to buy online by influencing one component of trusting beliefs— Ability, versus Benevolence and Integrity
    • Investment in High End Web sites is warranted if the majority of your visitors are “searchers”
  • 25. Conclusion
    • The higher the RISK perceived by the consumer, the more they rely on Ability beliefs
      • These beliefs are successfully conveyed to the consumer by the firm through effective “signaling”, like high investment Web sites
  • 26. Works Cited Ann E. Schlosser, T. B. (2006). Converting Web Site Visitors into Buyers: How Web Site Investment Increases Consumer Trusting Beliefs and Online Purchase Intentions. Journal of Marketing , 133-148. Hoffman, D. L. (1996). Marketing in Hypermedia Computer-Mediated Environments: Conceptual Foundations. Journal of Marketing , 50-68. Kim, P. H. (2004). Removing the Shadow of Suspicion: The Effects of Apology Versus Denial for Repairing Competence versus Integrity-Based Trust Violations. Journal of Applied Psychology , 104-118. Kumar, N. L.-B. (1995). The Effects of Supplier Fairness on Vulnerable Resellers. Journal of Marketing Research , 54-65. Moorman, C. R. (1993). Factors Affecting Trust in Market Research Relationships. Journal of Marketing , 81- 101. Naquin, C. E. (2003). Online Bargaining and Interpersonal Trust. Journal of Applied Psychology , 113-120. Paul Herbig, J. M. (1994). Marketing signals in industrial markets. Industrial Management and Data Systems , 16-21. Sitkin, S. B. (1993). Explaining the Limited Effectiveness of Legalistic 'Remedies' for Trust/Distrust. Organization Science , 367-92. Sobel, M. (1982). Asymptotic Intervals for Indirect Effects in Structural Equation Models. SanFrancisco: Jossey- Bass.