Marketing Research

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What are the factors that affect customers choice to buy online ?

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Marketing Research

  1. 1. School of Management Assessment Cover Sheet – Individual assignment March 18th 2010 PIN or Student ID 6100227 Date Due 12 midday Submit through ULearn Student Name Mr. Hemang Joshi No of Words 2188 Words Table of contents & list of references will GU FT Marketing not be included in the word count. Word Programme and Management and The use of appendices is not permitted and Elective Limit Centre students should be aware 2000 (+ or – that work submitted as an appendix will not count towards the final mark. 10%) Module: Marketing Research Individual Assignment I (40%) MARKETING RESEARCH Module Title: Assignment (40%) The purpose of the assignment is to design a survey questionnaire that includes a multiple-item scale and provide a table mapping the source of the items and questions. What are the factors that affect customers’ choice to buy online? This could include online shopping features, website features, security, trust, customer satisfaction; service etc. Identify these factors in previous research and use them to design an online questionnaire. You may choose any product or service to focus the research questions. 1. Write a short section on the factors that influence consumer behaviour when buying online. 2. Summarise recent research in the field that identifies choice factors for buying online. 3. The research instrument should be designed to enable you to test the following hypotheses: a. H0 / H1 – To find out if there is a difference between demographic groups e.g. gender, age, etc. - whichever is the most relevant (Choose only one of these demographic variables) - and perceptions of online shopping features. 4. Construct a short pilot research instrument (survey questionnaire) (to collect interval data) with a maximum of 10 questions:- a. Capture relevant respondent demographics* b. Design at least one multiple-item scale which captures the factors. 5. Using a table: illustrate how the questionnaire items in the multiple item scale link directly to the research question; the theory and previous research; and to the hypotheses. Page 1 of 12
  2. 2. 6. The questionnaire should be an on-line questionnaire using http://www.surveymonkey.com/ which is free for up to 10 questions (multiple-item questions count at ONE question). * Demographics include e.g. age; sex; education; occupations, etc. (For this assignment you are NOT required to collect any data) All references must be listed at the end in full and formatted in the Harvard style. Please make sure the survey instrument is presented in the main body of the assignment – this should be a link to http://www.surveymonkey.com/ FEEDBACK Basis of Assessment Weighting Marks % Presentation and Style 10 Background and inclusion of relevant theory 20 Formulation of research question and research variables 15 Hypothesis formulation 15 Logical development of survey instrument (table) 20 Insight and Interpretation 20 Total 100 FEEDBACK*This mark is subject to moderation and second marking. All marks are provisional marks until after the Examination Board. What did you do well? What did you do less well? How could you improve? What will you do now? Your response Page 2 of 12
  3. 3. Contents No. Title Page No. 1. Introduction 4 2. Literature Review 5 2.1 ASOS Background 5 2.2 E-Service 5 2.3 Trust 6 3. Hypotheses 7 3.1 Variables 7 4. Development of Questionnaire 8 4.1 Questionnaire Distribution 9 5. Summary 10 Page 3 of 12
  4. 4. 1. Introduction The purpose of this assignment is to identify factors that affect customer’s choice to buy online and to design an online questionnaire after reviewing the literature. This assignment will be focused specifically on Asos.com – The online Fashion Store to aid our understanding. In the initial part we shall describe the background of the company. In the next section we will cover the relevant literature on E-Service & Trust which are one of the factors that affect consumer’s choice to buy online. Based on the literature, hypotheses would be developed and variables would be identified. Afterwards, questionnaire would be developed to test the hypotheses and each sections of the questionnaire would be precisely explained and justified. A link to the whole questionnaire would be provided. We shall also describe the choice of how the questionnaire would be administered and give reasons for its justification. In the concluding part, a summary would be given regarding the purpose of the study and recommendations for carrying out a pilot study. Page 4 of 12
  5. 5. 2. Literature Review 2.1 Background ASOS.com is the UK’s largest independent online fashion store and beauty retailer. ASOS is growing rapidly and is poised to become the market leader in UK online fashion world. The company target market is fashion forward 16-34 year olds (ASOS 2010). ASOS is aiming to personalise its strategy on the website to the extent that customers will feel they are spoken to individually (Marketing Direct 2008). The return policy for goods also gives some sense of security to the consumers as they can claim for a refund of the entire amount or exchange goods to a different size or colour. Furthermore, the company increases the trust of the consumers by ensuring that they respond to the consumer’s query within 1 working hour. ASOS also tries to be close to the consumers by providing a portal for live consumer’s opinions (ASOS 2010). 2.2 E-Service The concept of E-service emerged with the rapid growth of Internet. Companies slowly began to realise that selling electronically is also a potential Point of Sale (POS) for making revenue. With the increasing amount of money being spend on online marketing & e- commerce, service quality in a website is being regarded as an important factor in e- commerce (Yang 2001, cited by Santos 2003).The determinants of success or failure are not just web presence and low price but also electronic service quality (Zeithaml 2002, cited by Lee 2005). Santos (2003) defines e-service quality as overall consumer assessment and judgement of e-service delivery in the virtual market place. According to Santos (2003) e- service is perceived more than just completing an order, responding to queries, email communication & status updates and hence about 70% web budget should be allocated to improving e-service. Online shopping is a very complex process which can be divided into a number of sub- processes such as navigation, online transactions, searching for information and customer interaction. Customers are unlikely to view this entire process separately when visiting an online store but will rather perceive service as an overall outcome (van Riel et al. 2001, cited by Lee 2005). Each & every sub-process will play a vital part in enhancing the overall service quality and consumer satisfaction which might lead to purchase intentions. In addition the ‘ability to handle questions, concerns and frustration from the customer is essential to the customers perception of e-service quality’ (Collier 2006, p 261). Online Consumers also find it easier to compare product and prices than traditional outlets thus expecting higher levels of service. The interactive nature of the internet gives firm the opportunity to communicate with customers to solve their queries and facilitate searching, retrieving and integration of information. The provision of optimum service within the virtual context is essential to a website success, especially since switching costs are quite low. For online customers e- service quality of a high standard is the means by which the potential benefits of the internet will be realised (Yang 2001, cited by Santos 2003). E-service is also multidimensional in nature as it can mean different things to different people. (Loonam & O’ Loughlin, 2008).According to Stafford (2004) age can have a positive Page 5 of 12
  6. 6. relationship to buy online, however a negative relationship was highlighted by Joines (2003). Research is required on the influence of e-services on all customer responses such as perceived service quality, customer satisfaction and purchase intentions (Parasuraman 2000, cited by Lee 2005). 2.3 Trust Trust can be defined as a set of positive expectations regarding another’s conduct (Lewicki 1998, cited by Crossman 2002). Lack of trust has forced many shoppers to withdraw their shopping cart during an online transaction (Kelley 2001, cited by Ragowsky 2008). It is thus very important for companies to provide a safe & secured environment to consumers in order to build trust. Further, an enjoyable experience with the firm’s website might lead to initial trust in the company and may motivate consumers to buy online (Ponnurangam 2006, cited by Tariq 2009). Yoon (2002) describes the mechanism of online trust as security assurance, reputation, web searching, willingness to customise, presentation, technology and interactions. Customers are also often willing to pay a premium price for the websites they trust (Reichheld 2000, cited by Gefen 2003). During online purchases consumers cannot experience goods like the traditional purchases, thus they make decisions from the information provided as well as by their perception of the company. Web users have usually declined to provide information at one time or the other to online companies when asked. Although Security is a major concern to shop online, another factor that concerns customers is the secondary use of their information to third parties. Over 80% of customers do not want websites to resell their personal information to third parties. However despite such opposition to providing information, consumers realise that that personal information is important to online companies & more interestingly they are showing interest in providing such information. (Hoffman, 1999). Customers trust is difficult to build especially in the virtual market place than in the traditional ones. In addition, customers have had more options to choose from online market place & companies are struggling to earn the trust of potential & existing customers (Tariq, 2009). A company’s competency can also influence customer’s online trust to buy online. Features such as company’s size, reputation, willingness to customise & interaction can influence the customer’s online trust (Balasubramanium 2003, cited by Chen 2007). Trust also increases certain aspects of perceived usefulness of a website. Even though this perceived usefulness may be small when doing one-time purchases, customers would like to carry out their tasks such as searching for product information with trusted vendors. It should also be noted that gaining customer’s trust is largely under the control of e-vendor (Gefen, 2003). Page 6 of 12
  7. 7. 3. Hypotheses 1. Ho: There is no difference between different age groups and the perception of customers regarding the e-service quality of ASOS. H1: There is a difference between different age groups and perception of customers regarding the e-service quality of ASOS. 2. Ho: There is no difference between gender and trust as a factor to shop online on ASOS. H1: There is a difference between gender and the trust as a factor to shop online on ASOS. 3.1 Variables – Independent & Dependant According to Malhotra (2007) Independent variables are those variables which are “manipulated and whose effects are compared and measured”, while dependent variables are those variables that “measure the effect of the independent variables on the test units” (p.223). In our assignment age & gender are Independent variables whereas dependent Variables are perception of e-service quality & trust respectively. According to Lee (2005) previous studies have revealed that service quality in online environment is an important factor in determining the effectiveness of e-commerce. It is thus of importance to know what the customers perceive regarding the e-service provided by ASOS. There have also been contradictions in research regarding age and how it influences online buying behaviour. As mentioned in the literature, some literature has shown that age influences positively while other studies show that it is negative. Given the contradictions in literature age is being selected to understand its influence specifically in context of ASOS. Trust on the other hand is considered as a noteworthy factor which affects consumers to buy online. The higher the trust of the people the more willing are they to buy online. Given the importance of trust & the potential benefits it offers, trust is an inevitable dependent variable of the assignment. Gender is also said to have impact the way male and female participate in online activities. It has been noted in prior literature that men and women react differently to websites (Ragowsky, 2008). Given their differences gender was selected as a dependent variable. Page 7 of 12
  8. 8. The following table shows the sources of Questionnaire. Variable Item Questions Sources E-service Website Design Q 1 a, b, c, d. Collier (2006) Ease of Use Q 2 a, b, c, d. Collier (2006) Information Quality Q 3 a, b, c, d. Kuo et al.,(2005) Trust Trust on Website Q 4 a, b, c, d. Martin (2008) Security & Policies Q 5 a, b, c, d. Martin (2008) Overall Trust Q6 a, b, c, d. Collier (2006) Table 1 4. Development of Questionnaire Q1&2 Items for the dimension website design & ease to use has been taken from the research done by Collier (2006) on measuring service quality in e-retailing. Website design & ease of use are considered important dimensions for measuring e-service and hence were included in the questionnaire. Web site design has been described as the customer perception of the level of user friendliness in an online store (Parasuraman 1988, cited by Lee 2005).Also website design has an influence on the e-service provided by the firm and it is considered crucial for online stores. It is also considered strong predictors of customer quality judgements (Wofinbarger 2003, cited by Lee 2005). According to Santos (2003) ease of use is one of the most important determinant in the dimension of e-service quality. It is defined as how easy the website is for the customers to conduct external search in cyber space & navigate within the online store. There has always been demand from customers for a website that is easy to use & navigate within (Santos, 2003). Page 8 of 12
  9. 9. Q.3 According to Shchiglik and Barnes (2004) information quality has played a crucial part in evaluating a website. Also, information quality has been show to affect the perceive quality of websites (Brown 2003, cited by Collier 2006).If quality information is not provided on the website it might affect the overall perception of customers regarding e-service. The information resources are so vast and rich it is essential that the desired information is easily available. The items for Information quality were taken from the research done by Kuo et al., (2005). Q 4 to Q7 As mentioned before, trust is a noteworthy factor which affects customer’s choice to buy online. Q4 to Q7 are designed to get a feedback regarding trust. Items of trust in Q4 & Q5 have been taken from research done by Martin (2008). According to Martin (2008) security & privacy policies have a significant influence on trust, hence Q 5 deals specifically with trust related to security & privacy policies. The items of Q 6 have been taken from the method used by collier (2006). Q 7 deals specifically with financial transactions as customers withdraw their shopping cart due to lack of trust (Kelley 2001, cited by Ragowsky 2008). Q 8 & Q9 Question 8 & 9 cover relevant demographic data The questionnaire is available at http://www.surveymonkey.com/s/SZMPW7X A 5 point multi-item Likert Scale questions has been used to collect data from the respondents with five being the maximum & one being the lowest score. A Multiple item scale collects more information & is more reliable than can be collected by single-item scale (Bergkvist, 2007). Hence multiple item scale has been used in most of the questions. In our assignment we are collecting Ranked (or ordinal data). According to Saunders (2009) scale questions where respondent is asked how strongly they agree or disagree with a statement collect ordinal data. In order to calculate this data we will use Kolmogrov-smirnov or Mann- whitney U test as these tests are most suitable for ordinal data. 4.1 Questionnaire Distribution Online questionnaire would be administered through e-mail as it makes it possible to reach people who are geographically separated. Also online questionnaire saves a lot of time & cost than other methods of distribution. It will also allow the respondent to reply at their own convenient time. A covering letter explaining the purpose of the study will be attached to the email followed by a hyperlink which will direct the reader to survey monkey. A high response rate is possible if the purpose is explained on the first page of the questionnaire Page 9 of 12
  10. 10. (Dillman 2007, cited by Saunders 2009). Utmost care will be taken to abide by the netiquette guidelines. 5. Summary To accomplish the purpose of this assignment literature review of E-service & Trust was done to helps us understand how it affects customers choice to buy online. The literature helped us to develop a hypotheses based on which questions were developed to test these hypotheses. All the questions were developed by using the past research measures used in the virtual context. Before embarking to collect data questionnaire should be pilot tested. The respondents of the pilot study & actual survey should be drawn from the same population. Also, Pilot study is best done by interview even if the actual survey is to be conducted online as it allows interviewers to observe respondents behaviour (Malhotra, 2007). During the pilot study, note should be made regarding the time it took to complete & if any words were found to be ambiguous by the respondents (Bell 2005, cited by Saunders 2009). Page 10 of 12
  11. 11. References ASOS.(2010).About ASOS. Available at http://www.asos.com/infopages/pgeaboutus.aspx [Accessed 1st March 2010] Bergkvist, L., and Rossitier, J.R.(2007). “The predictive validity of multi-item versus Single- item measures of the same constructs”. Journal of Marketing Research. Vol. XLIV, No. 1, pp. 175-184. Collier, J., and Beinstock, C. (2006).”Measuring service quality in E-Retailing”. Journal of Service Research.Vol.8, No. 3, pp. 260-275. Chen, Y.H., and Barnes, S. (2007). “Initial trust and online buyer behaviour”. Industrial Management and Data Systems. Vol. 107, No. 1, pp. 21-36. Crossman, A. (2002). Critical Incidents and the Dynamics of the Psychological Contract. The Anahuac Journal. Unpublished paper presented at ‘British Academy of Management Conference’.London, Sep, 2002. Gefen, D. (2003). “Trust and TAM in online shopping: An Integrated Model”. MIS Quarterly. Vol. 27, No.1, pp. 51-90. Hoffman, D.L., Novak, T.P., and Peralta, M.(1999). “Building Consumer Trust Online”. Communications of the ACM. Vol. 42, No. 4, pp. 80-85. Joines, J., Scherer, C., and Scheufele, D. (2003). “Exploring motivations for consumer web use and their implications for e-commerce”. Journal of Consumer Marketing. Vol. 20, No.2, pp. 90-109. Kuo, T., Lu, I.Y., Huang, C.H., and Wu, G.C.(2005).”Measuring Users Perceived Portal Service Quality:An Empirical Study”. Vol 16, No.3. pp. 309-320. Lee, G., and Lin, H. (2005). “Customer perception of e-service quality in online shopping”. International Journal of Retail and Distribution Management.Vol. 33, No.2, pp. 161-176. Loonam, M., and O’Loughlin, D. (2008). “An observation analysis of e-service quality in online banking”. Journal of Financial Services Marketing. Vol. 13, No. 2, pp. 164-178. Malhotra, N.K.(2007). “Marketing Research An Applied Orientation”.(5th edn).New Jersey:Pearson Prentice Hall. Marketing Direct.ASOS targets the individuals, December 2008, p. 47. Ragowsky, A., and Awad, N.F. (2008). “Establishing Trust in Electronic Commerce Through online word of mouth: An examination across genders”. Journal of Management Information Systems. Vol. 24, No. 4, pp. 101-121. Page 11 of 12
  12. 12. Santos, J. (2003) “E-service quality: a model of virtual service quality dimensions”. Managing Service Quality. Vol. 13, No. 3, pp. 233-246. Stafford, F., Turan, A., and Raisinghani, S. (2004). “International and cross-cultural influences on online shopping behaviour”. Journal of Global Information Management. Vol 7, No.2, pp. 70-87. Shchiglik, C., and Barnes, J.S. (2004).”Evaluating Website Quality in the Airline Industry”. Journal of Computer Information Systems. Vol.44, No.3, pp. 17-25. Saunders, M.N.K., Lewis, P. And Thornhill, A.(2009).Research Methods for Business Students. (5th edn.).Harlow:Prentice Hall. Tariq, A.N., and Eddaou, B. (2009). “Assesing the effect of Trust and Security factors on consumers willingness for online shopping among the Urban Moroccans”. International Journal of Business and Management Science. Vol. 2, No. 1, pp. 17-32. Yoon, S.J. (2002). “The antecedents and consequences of trust in online-purchase decisions”. Journal of Interactive Marketing.Vol. 16 No.2, pp.47-63. Page 12 of 12

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