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Trusting Beliefs And Online Purchase Decisions

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Trusting Beliefs And Online Purchase Decisions

  1. 1. Converting Web Site Visitors into Buyers Nathan Earl Promotion Management 11/09/2009
  2. 2. Risk <ul><li>“ 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) </li></ul>
  3. 3. RISK <ul><li>Often times the Risk is high enough to keep online buyers from making online purchases </li></ul><ul><li>This avoidance has led experts to speculate that the immediate threat to e-commerce is consumers’ perception of RISK </li></ul>
  4. 4. Firms Respond to Threat <ul><li>Investing in Web site security </li></ul><ul><li>Technology to protect consumers’ identity and personal & financial information </li></ul><ul><ul><li>By 2005, Web site security was a multibillion dollar industry </li></ul></ul>
  5. 5. Consumers Want More <ul><li>In spite of high investment in Web site security, Marketers still face challenge of convincing consumers of their firm’s trustworthiness </li></ul>
  6. 6. TRUST <ul><li>Establishing TRUST in a computer-mediated environment has proven to be very difficult </li></ul><ul><li>A major challenge is discovering what the consumers’ perception / measure of TRUST actually is </li></ul>
  7. 7. Ways to Establish Trust <ul><li>Privacy Statements </li></ul><ul><li>Security Statements </li></ul><ul><li>High-Investment Web sites </li></ul>
  8. 8. Research <ul><li>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 </li></ul>
  9. 9. Article <ul><li>Converting Web Site Visitors into Buyers: How Web Site Investment Increases Consumer Trusting Beliefs and Online Purchase Intentions </li></ul><ul><li>Ann E. Schlosser, Tiffany Barnett White and Susan M. Lloyd (2006). Journal of Marketing. Vol 70. p. 133-148 </li></ul><ul><li>Investigating the impact on Web site design investments on consumers’ trusting beliefs and online purchase intentions </li></ul>
  10. 10. Conceptual Framework <ul><li>Authors developed a conceptual framework for understanding how “marketing signals” influence consumers’ trust in e-commerce settings </li></ul><ul><ul><li>Marketing signals: Observable actions that help explain the unobservable </li></ul></ul><ul><ul><ul><li>Example—price reduction, advertising expenditures </li></ul></ul></ul><ul><ul><ul><li>Example—investing in high-end Web sites to help convey the firm’s trustworthiness (unobservable) </li></ul></ul></ul>
  11. 11. Signals <ul><li>Different “signals” can influence different PERCEPTIONS of the firms trustworthiness </li></ul><ul><li>This PERCEPTIONS has a direct correlation to the consumer making the actual purchase </li></ul>
  12. 12. Effects of Perceptions <ul><li>The effects vary according to the purpose of the consumer visiting the firm’s site </li></ul><ul><ul><ul><li>Searching </li></ul></ul></ul><ul><ul><ul><li>Browsing </li></ul></ul></ul>
  13. 13. Trust <ul><li>“ Willingness to rely on an exchange partner in whom one has confidence” </li></ul><ul><li>“ Generalized expectancy held by an individual that the word, promise, oral or” written statement of another individual or group can be relied upon” </li></ul><ul><li>“ A belief in a person’s competence to perform a specific task under specific circumstances” </li></ul>
  14. 14. Trusting Beliefs <ul><li>Cognitive Aspects </li></ul><ul><li>Ability </li></ul><ul><li>Benevolence </li></ul><ul><li>Integrity </li></ul><ul><li>Represent a “sentiment or expectation about trustworthiness” </li></ul>
  15. 15. Ability <ul><li>Ability beliefs reflect the consumer’s confidence that the firm has the skills necessary to perform the job </li></ul>
  16. 16. Benevolence <ul><li>Benevolence beliefs reflect confidence that the firm has a positive orientation toward its consumers beyond an “egocentric profit motive” </li></ul>
  17. 17. Integrity <ul><li>Integrity beliefs reflect confidence that the firm adheres to a set of moral principles or professional standards that guide its interactions with customers </li></ul>
  18. 18. Trusting Intentions <ul><li>“ Represent a willingness to make oneself vulnerable to another in the presence of RISK” </li></ul><ul><li>PURCHASE INTENTION </li></ul>
  19. 19. Searchers <ul><li>The consumers who “search” for product information </li></ul><ul><li>Searchers think about and are persuaded more by product information and have a higher visitor-to-buyer ratio </li></ul>
  20. 20. Findings <ul><li>1 st Study—Online purchase intentions depended more on their beliefs about the firm’s Ability rather than Benevolence or Integrity </li></ul><ul><ul><li>Ability is the belief most relevant to Performance </li></ul></ul>
  21. 21. Findings <ul><li>2 nd Study—Privacy and Security statements communicated a firm’s benevolence and integrity, but not ability </li></ul><ul><ul><li>High End Web sites did not convey benevolence or integrity beliefs </li></ul></ul>
  22. 22. Findings <ul><li>3 rd Study—Web site investment and Ability on online purchase intentions are specific to “searchers” and not “browsers” </li></ul><ul><li>“ Browsers”—benevolence and integrity were more important </li></ul>
  23. 23. Findings <ul><li>4 th Study—The higher the RISK perceived by the consumer, the more they relied on Ability beliefs </li></ul>
  24. 24. Conclusion <ul><li>Web site investment influences searchers’ intentions to buy online by influencing one component of trusting beliefs— Ability, versus Benevolence and Integrity </li></ul><ul><li>Investment in High End Web sites is warranted if the majority of your visitors are “searchers” </li></ul>
  25. 25. Conclusion <ul><li>The higher the RISK perceived by the consumer, the more they rely on Ability beliefs </li></ul><ul><ul><li>These beliefs are successfully conveyed to the consumer by the firm through effective “signaling”, like high investment Web sites </li></ul></ul>
  26. 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.

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