Mamamama

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Mamamama

  1. 1. 2000/2001 Full Time MBA ProgrammeHow is Consumer Behaviour Affected by Online Relationships? A Report by: Stan Maklan Professor Simon Knox Kate Watson for The Chartered Institute of Marketing 17 September 2001 www.cim.co.uk The Chartered Institute of Marketing 2001
  2. 2. Online Consumer Buying Behaviour1. Contents1. Contents 12. Executive Summary 13. Introduction 24. Academic Situation 25. Methodology 3 5.1 Model Selection 3 5.2 Industry and Company Selection 46. Attributes of the Internet 57. Proprietary Consumer Behaviour Models 58. The Five Stage Consumer Buying Process 8 8.1 Need Recognition 8 8.2 Information Search 8 8.2.1 Too Much Choice? 9 8.2.2 Usability 9 8.2.3 Avoiding face to face contact 9 8.2.4 Multi Media Usage 11 8.2.5 Telephone usage 11 8.2.6 Brochures are still important 11 8.3 Evaluation of Alternatives 12 8.3.1 Price & Gender 12 8.3.2 ‘Kicking the tyres’ in car buying 13 8.4 Decision 13 8.4.1 Closing 14 8.4.2 Freedom of Choice 14 8.4.3 Multiple Media 15
  3. 3. Online Consumer Buying Behaviour 8.4.4 Time for reflection 15 8.5 Post purchase behaviour 16 8.5.1 Post Purchase Reconfirmation 16 8.5.2 Ongoing Relationship 16 8.5.3 Recommendations 169. Conclusions 17 9.1 Emotional vs Rational elements of Behaviour 17 9.2 Who is the Online Consumer? 18 9.3 Final Conclusions 1910. Areas for further research 20 10.1 What drives the Consumer’s choice of medium? 20 10.2 Influence of user location on navigation and buying behaviour 20 10.3 Buying roles 2111. Acknowledgements 2212. Bibliography 23
  4. 4. Online Consumer Buying Behaviour2. Executive SummaryThis paper sets out to investigate whether consumer buying behaviour has changed or ischanging because of the influence of online relationships between companies andconsumers. It tests the generic and widely accepted five stage consumer buying modelby looking at online consumer behaviour and attitudes, as observed by Marketing andE-commerce practitioners in detailed interviews and in the data they provided.The Internet has a role to play at every stage of the purchasing process, providing for aricher interaction between consumers and companies. In many ways it seems to answerneeds and provide a solution for deficiencies that already existed. But it would appearthat the Internet is better suited to certain stages in the process than others. It is mostprominent at the information search stage, providing a welcome alternative to long-winded search processes, which are at times intimidating and intrusive. It has sped upthe physical process of searching, and could over time start to alter the consumer buyingprocess.It appears that Internet users have assimilated it into their armoury of shopping mediaand channels rather than using it exclusively. While it certainly answers many rationalneeds, there seems to be a deficiency in its ability to answer all emotional requirements,especially the need for the reassurance of human contact, which is surprisingly high.Given the ABC1 profile of the majority of Internet users, it could be argued that anydifferences between consumer behaviour online and offline is not as much a function ofthe medium as of social class.This analysis of consumer buying behaviour online confirms that the generic five stagemodel still stands rather than offering an alternative paradigm of behaviour.Three areas for further research are highlighted: What drives the consumer’s choice ofmedium? The influence of the user’s location on navigation and buying behaviour, andthe roles played by different parties in the online buying process. Page 1
  5. 5. Online Consumer Buying Behaviour3. IntroductionThe impact of the Internet1 on consumer buying behaviour is a subject that marketersand academics alike have been debating and grappling with for the past few years. Hasit irrevocably changed the way people go about buying on and offline? Is a totallydifferent paradigm therefore required? Models of consumer decision-making processesattempt to explain and predict consumer behaviour, and so provide a basis forMarketing decisions and strategy. If consumers are behaving in a different mannerbecause of the nature of their online relationships, the implications for branding andmarketing activity are huge.4. Academic SituationLittle has been written about the way in which consumers behave online. By contrast,there have been realms (written about the impact of the Internet on the shape ofindustry: how the freeing of information from the physical value chain has affectedstructures and processes. The trade-off between reach and richness of information nolonger holds2. Such authors assume (rather than define) a new paradigm for onlineconsumers making a purchase decision, based on perfect information and reached withentirely rational processes. With more information and choice, conveniently andimmediately available, the online consumer is ‘empowered’ as never before:“Where once a sales force, a system of branches, a printing press, a chain of stores, or adelivery fleet served as formidable barriers to entry because they took years and heavyinvestment to build, in this new world, they could suddenly become expensiveliabilities. New competitors on the Internet will be able to come from nowhere to stealcustomers.”31 Use of the phrases ‘online’ and ‘the internet’ in this report refer to the World Wide Web accessed byPersonal Computer. M Commerce and Digital TV have not made enough of an impact to have anyobservable affect on consumer behaviour, although many marketers believe that they again will changethe shape of online shopping when / if they become mainstream2 Evans & Wurster: ‘Strategy and the New Economics of Information’ HBR, Sept/Oct 1997, pp. 71-823 Evans & Wurster: ‘Strategy and the New Economics of Information’ HBR, Sept/Oct 1997, pp. 71-82 Page 2
  6. 6. Online Consumer Buying BehaviourAbout online consumer behaviour, Hoffman and Novak (1996) propose a structuralmodel of consumer navigation behaviour in a ‘Hypermedia computer mediatedenvironment’, concluding that people indulge in either goal-directed activities, wherethe interaction is with the company or product sought, or in experiential activities,where interaction takes place between the consumer and the computer mediatedenvironment. They conclude that it is enduring involvement with a product generatedby experiential ‘flow’ that leads to opinion leadership rather than the situationalinvolvement of task-specific activity.Butler and Peppard (1998) have analysed the traditional 5 stage consumer buyingmodel, identifying new opportunities for organisational strategies arising fromtechnological developments: databases, push technologies, communities and easypayment systems. They emphasise that traditional models and assumptions from thephysical marketplace must be revisited and revised. However their research is notempirical.From the above, it would seem that the hypothesis for this report should be that theInternet has changed the way in which consumers behave during the purchase process.5. MethodologyIn order to test this hypothesis, a model of consumer buying behaviour was selected.Data was then gathered about both consumers’ behaviour online and their statedattitudes, as observed by Marketing and E-commerce practitioners in detailedinterviews.5.1 Model SelectionThe generic and universally accepted ‘5 stage consumer buying process’ was selected totest. This is familiar to all marketers, and provides a wide scope for research andanalysis. The inherent problem in selecting a model to test is that it will either belabelled as too general or too specific, and this falls into the former category. It isaccepted that this is a highly simplified model, even for offline purchasing: it depicts astraightforward, linear process, which in reality is probably circular, it is often iterative, Page 3
  7. 7. Online Consumer Buying Behaviourwith loops backward to previous stages, and the 5 stages can be broken down into manymore pieces. However, by using this model, it is also possible to comment on andperhaps enhance the work carried out by Butler and Peppard (1998).Figure 1: Five Stage Consumer Buying Process Problem or need recognition Information Search Evaluation of Alternatives Purchase Decision Post Purchase Behaviour5.2 Industry and Company SelectionThe business to consumer travel and automotive industries were selected to test. Therewere various reasons for this choice: both involve transactions with a relatively highemotional involvement and high ticket price. Despite the high ticket price, they are bothpurchases which many consumers would conceivably make on a relatively regular basisin their lives. Both industries have well established marketing practices with a good onand offline mix in communication, and, it was hoped, a good understanding of theircustomers. They are both fragmented industries with complex pricing structures,therefore ripe for re-engineering under the influence of the internet, travel beingparticularly well suited because it is an intangible product: “travel is the killerapplication for the internet”.4Three companies were interviewed in each industry, two being well-established offlinebrands, and one having been set up to exploit the opportunities offered by the internet.The companies interviewed were:4 David Soskin, CEO, Cheapflights.com Page 4
  8. 8. Online Consumer Buying BehaviourBMW, Lexus and Autobytel.co.uk&BA, Thomas Cook and Cheapflights.comMarketing and E Commerce practitioners were asked about their observations ofconsumer behaviour online, and their resulting corporate strategies to capture thecustomer. The question asked of them all was: How does the Internet affect the traditional buyer behaviour model?6. Attributes of the InternetAll practitioners interviewed agreed on some basic attributes of the Internet: •= Speed •= Up to date information •= Consumer choice - Range and breadth of information •= Convenience & Immediacy •= Direct and personal (allowing one to one communication) •= Interactivity7. Proprietary Consumer Behaviour ModelsIt emerged that some of the companies have defined their own version of the consumerbuying process in their industry.Thomas Cook’s model of buyer behaviour has been developed over the past year fromobservations of consumer behaviour in all media: Page 5
  9. 9. Online Consumer Buying BehaviourFigure 2: Key Stages of the Holiday Booking Cycle, Thomas Cook Wishing Evaluating Wanting Purchase Cycle Experiencing Exploring Booking FilteringThe 5 stages of the generic model are clearly all included:Thomas Cook Model Generic Model 1. Wishing 1. Need recognition 2. Wanting 1. Need recognition / 2. Information Search 3. Exploring 2. Information Search 4. Filtering 3. Evaluation of alternatives 5. Booking 4. Purchase decision 6. Experiencing 5. Post Purchase behaviour 7. Evaluating 5. Post Purchase behaviourAutobytel have defined the key stages in the car buying process5. This appears to be atruncated, action-oriented version of a purchase process, but, again, it fits in with thegeneric model.5 Fletcher Research, Copyright Autobytel UK Ltd: ‘The Second UK Online Car Buying Report’ 1999 Page 6
  10. 10. Online Consumer Buying BehaviourFigure 3: Key Stages of the Car Buying Process, Autobytel Decide Make Research Configure how P urchase P urchase P roducts Car to buy DecisionAutobytel Model Generic Model (1. Need Recognition)1. Research Products 2. Information Search / 3. Evaluation of Alternatives2. Configure Car 2. Evaluation of Alternatives / 3. Purchase Decision3. Decide how to buy 4. Purchase Decision4. Make Purchase Decision 4. Purchase Decision5. Purchase 4. Purchase Decision (5. Post Purchase Behaviour)Since both industry-specific models fit broadly into the generic model, it thereforeseems valid to follow this model and investigate any change in consumer behaviour ateach stage that is due to the Internet. Page 7
  11. 11. Online Consumer Buying Behaviour8. The Five Stage Consumer Buying Process8.1 Need RecognitionBecause of its direct nature, the Internet allows companies to prompt consumers in therecognition of their needs. They do this by banner advertising and by contacting knownprospects directly. For example, BMW will alert customers by email to remind them ofthe long lead-time for manufacture. These are equivalent tools to those used in theoffline world.It doesn’t appear that consumer behaviour in the area of recognising a need has changeddue to the internet: they may or may not respond to such stimuli, as they do in theoffline world, and it is unclear how much their response is driven by the external‘prompt’ or other, internal, motivators.8.2 Information SearchThe Internet seems to have answered an existing need in information searching and hashad the greatest impact on this stage. It immediately provides realms of information inone place, unfettered by physical constraints. Consumers can access up to date detail aswell as information that in the offline world tends to be known only to the seller, such asused car values in the automotive industry. There is no one offline alternative to onlinesearching: consumers have to combine visits to dealerships or travel agents forbrochures, buying and scanning newspapers and magazines, and finding out furtherinformation or information sources from friends.As such it must have compacted the time (and money) spent on the physical search.However, it is unclear whether the mental processes of searching have also beenshortened or whether the search criteria have changed: perhaps not, since Lexus reportsno difference in the kind and level of questions asked online compared to offline at thisstage. Page 8
  12. 12. Online Consumer Buying Behaviour8.2.1 Too Much Choice?It had been assumed that unlimited choice is a good thing, but companies arediscovering the effects of perceived information overload by consumers. Butler andPeppard quote Wilkie (1994) in describing the experience of facing too muchinformation as being ‘psychologically costly’ for consumers. It is this uncertaintywhich can still lead to brand loyalty by default as much online as it can offline. ThomasCook relied on this when branding their site Thomascook.com rather than creating anew brand like Thompson’s ‘The First Resort’.8.2.2 UsabilityConsumers’ “sod it factor”6 is reportedly getting shorter as the internet matures and thecompanies interviewed have come to realise that the design and usability of their site iskey to retaining consumers through the purchase process, and encouraging them toreturn. Cheapflights.com aims to be the easiest, simplest and quickest travel site to use:it is designed for a fictional ‘Auntie Agatha in Tunbridge Wells’ using her firstcomputer. This refers to Hoffman and Novak’s (1996) notion of flow in navigation –whether a search is goal-directed or experiential, navigation must be designed to beintuitive.8.2.3 Avoiding face to face contactLooking at consumers’ dislikes about the traditional car buying process in Figure 4, itseems that the internet is a welcome tool to many (men as well as women) in providingseemingly impartial information in the non-pressured environment of their home oroffice.The main concerns are about pressure selling and being ‘ripped off’. The impersonalnature of the Internet allows consumers to ‘arm’ themselves before facing this barrage.Lexus and BMW report that a high percentage of brochures are ordered online,suggesting that people avoid entering intimidating car showrooms at this stage of thesearch. The travel industry also faces some of this attitude: Thomas Cook evidence6 Darren Payne, Autobytel.co.uk Page 9
  13. 13. Online Consumer Buying Behavioursuggests that Internet users value their anonymity and are less receptive to special offers(only 19% Internet users think it important to be contacted with offers, as opposed to61% phone and 65% shop users). This highlights the importance of a separate period ofinformation collection and thought gathering before a transaction is considered andpressure to buy is effective.Figure 4: Dislikes about Traditional Car Buying 34 Unsure how to do deal 38 32 Confused by jargon 49 48 No on the spot comparisons 53 56 Haggle over price 68 Men Women 58 Hassle while browsing 60 61Impersonal salesman approach 59 63 Worried about ripped off 71 70 Pressure selling 73 0 10 20 30 40 50 60 70 80 % all respondentsSource: Fletcher Research, March 2000. Copyright Autobytel 2000This change in behaviour means a shift in the role of the physical ‘marketplace’ in thebuying process. If car dealers are being used less as an initial source of information,they can sharpen their focus further down the ‘funnel’ on the immediate decision andtransaction, arguably where they have always added the most value anyway.Those consumers who have carried out their information search online are reportedlymuch better prepared and tend to spend less time when they do interact face to face inthe dealership or travel agent. This would be because they are not attempting tocombine the search process with the purchase process. Page 10
  14. 14. Online Consumer Buying Behaviour8.2.4 Multi Media UsageDespite being apparently the answer to many consumers’ prayers about informationsearch, the Internet is still used as one option in a range of media, even at this stage, andcertainly within the entire buying process. This is reflected in companies’ multi-mediaCRM strategies.8.2.5 Telephone usageMost companies interviewed were surprised by the amount that consumers are using thetelephone in conjunction with the Internet – which has resulted in the large amount of‘Call me’ buttons on web sites. It seems that even if all the information is availableonline, many consumers need the reassurance of talking to someone – whether toconfirm what they have read, especially about availability, or to ask very specificquestions. This trend of phone usage for reassurance is even more apparent furtherdown the buying process, especially at the purchase stage.Autobytel confirms that phone use mirrors Internet use, which is mostly during theweek. They are even closing their call centre at weekends. This suggests that ‘deskresearch’ is done at the office, while leisure time is used for offline researching: in thecase of car-buying, visiting dealerships and test driving.The Internet is not necessarily an alternative to pure phone use, however, as the needs ofpure phone and Internet users seem to be different. Thomas Cooks’ proprietary researchshows that telephone users think price is the most important reason for their choice ofchannel, whereas Internet users state convenience. This suggests that differentsociodemographic groups use the two media.8.2.6 Brochures are still importantAlthough the Internet provides plentiful, immediate and up to date information,magazines and brochures are still in demand. As mentioned above, brochures are nowfrequently ordered online, but order numbers have certainly not dropped. They seem tofulfil a different, more emotional and aspirational, aspect of the search process: not only Page 11
  15. 15. Online Consumer Buying Behaviourbecause of the quality of images which the Internet cannot yet compete with, but alsobecause of their transportability. Brochures can be more socially inclusive than theInternet – they can be shared around, people can show their friends. At the otherextreme, they pass the “3Bs Test”: they can be referred to or just enjoyed in the mostprivate of leisure time, in Bed, in the Bath and on the Bog7.This suggests that that the internet does not fulfil all consumers’ search needs, as earlypro-internet rhetoric implied (Evans & Wurster) since they indulge in different levelswithin the information search stage – rational, emotional, absorbing the big picture andhunting for detail, at different times of the day and in different locations.8.3 Evaluation of AlternativesComparison continues to be an important part of a consumer’s search process online.The Internet is well suited to presenting comparative information, allowingpersonalisable criteria and drawing on a vast range of information. This is why there isa proliferation of comparator sites, like Cheapflights.com in the travel sector, extendingthe offline service provided by the likes of trusted brands ‘Which’ and ‘What Car?’.Manufacturers are realising the importance of this stage, and some now provide theirown comparison information direct to the consumer, like BMW who enables users tocompare BMW models with their competition online. BA does not providecomparisons with other airlines, but does show alternative BA prices for a route atdifferent times in their Fare Explorer function. This does not represent any change inconsumer behaviour because of the Internet, instead it shows that companies whocommunicate via the Internet are adapting to traditional consumer needs.8.3.1 Price & GenderAlthough price is not the main reason that people use the Internet, according to ThomasCook’s research, it is still important, and to some more than others. Jupiter MMXIresearch on buying behaviour in travel in July shows that Cheapflights.com and othersites selling flights only are most favoured by women. This is backed up byCheapflights’ own survey showing a high proportion of female users. This suggests that7 A term created by Nick Hart, Brand & Communications Manager, BMW (GB) Page 12
  16. 16. Online Consumer Buying Behaviourwomen are generally more price-sensitive and keener to shop around. Some offlineresearch carried out in 19928 into offline shopping habits showed that although menclaimed to be more promiscuous shoppers, studies of behaviour showed that womenwere in fact less loyal: men saw shopping as more of a chore than a pleasure. InCheapflights’ userbase we see traditional, offline tendencies being highlighted in themore highly segmented online world.8.3.2 ‘Kicking the tyres’ in car buyingWhether the purchase is a long-awaited and dreamed-of new car or a second hand carbought to get from A to B, the majority of buyers still need to see and test the car ormodel ‘in the flesh’. This stage of the process cannot yet be replaced by the Internet,which cannot yet adequately show whether your golf clubs will fit into the boot, orreplicate the sound of the engine. The Internet can only enable this process by bookinga test drive online.8.4 DecisionThe decision stage can be broken down into several elements, as Autobytel’s model ofconsumer behaviour shows. The consumer must decide on the product and itsconfiguration, decide on the purchase channel, and then go through the process andmechanics of purchasing. All of these are reached by a combination of rational andemotional factors, influenced by the price ticket, the frequency of purchase, thecomplexity of the product and pricing, familiarity with the channel, and trust in thebrand. The personal influence of a dealer or agent face to face can also have greateffect, in terms of discussion and negotiation. It is questionable whether the Internet,purveyor of ‘rational’ information, can provide all of the elements necessary.8 Simon Knox & Tim Denison: ‘Profiling the promiscuous Shopper’ commissioned and published byAIR MILES Travel Promotions Ltd, Nov 1992 Page 13
  17. 17. Online Consumer Buying Behaviour8.4.1 ClosingIt appears that online consumer behaviour is not so different to offline behaviour at thisstage. Autobytel have learned this lesson over the past few years. Intending to offer analternative to dealership ‘pressure selling’, their early model provided the customer withinformation and a purchase process, letting them make up their own mind. However,they experienced a huge drop off of customers at purchase stage: if the exact car that aconsumer had decided upon was not immediately available, they merely stated this factand the expected lead-time. This meant that the consumer either waited, or theirpurchase process had to loop back to the Information Search stage. From research,Autobytel learned that their consumers wanted to be helped, not hindered and that theywere not so rigidly rational in their approach that they would not consider alternatives.Closing the sale is more complicated, and less rational, than they had thought.Looking at the offline process, the dealer builds up obligation from their first contactwith customer, sitting them down with a cup of coffee and talking them through theoptions. As the consumer goes through the purchase process, they tend to return towhoever treated them the best. Autobytel are seeking to build this obligation online, byoffering a ‘virtual cup of coffee’. They now offer alternatives when a particular modelor colour is not available, and are able to leverage off the greater choice over range ofmanufacturers and geographical area that the Internet provides.8.4.2 Freedom of ChoiceOnline, consumers respond well to choice at the configuration stage. The carconfigurator on the BMW Direct site has shown that it is very easy to significantlyupgrade a car online. It sounds counter-intuitive that the Internet, where theconsumers’ actions are self-directed, should have greater success at upselling than adealer, who guides the consumer through the process. But it seems that the dealer isoften too keen to get a signature on paper and close the deal to run through all the addedextras. By contrast, on the BMW Direct site, users can see every option and select asmany as they want, in their own time. The average cost per car sold direct is above thethat of BMW’s average company car price. Page 14
  18. 18. Online Consumer Buying Behaviour8.4.3 Multiple MediaMany consumers still use another communication medium either for or as part of thepurchase process. The main exception is the purchase of flights: Thomas Cook reportthat they sell three times as many flights online as other products, and Cheapflights’booking engine is heavily skewed to short, point to point flights.However, Cheapflights also reports that in their information pages, 25% users gostraight to telephone details and Thomas Cook reports that a great number of customerscarry out their initial exploring online, then use the phone or shop to find out availabilityand book. Some even come in with computer print out and ask the agent to book thatexact holiday.There seems to be a strong requirement at the purchase stage for human reassurance thatthe Internet is unable to provide. Much of this can be attributed to concerns about thesecurity of payment, especially with travel prices starting at £100, and cars much higher,with a more complicated structure involving financing options. A lack of familiaritywith the medium may also be responsible (many consumers telephone Thomas Cookafter booking online to make sure it has all worked). The desire for human, real timeinteraction increases as the complexity of the purchase increases: no consumer has yetpaid Autobytel’s £250 commitment deposit online: they are all paid over the telephone.This may also reflect a mistrust of a relatively unknown brand.8.4.4 Time for reflectionConsumers are not executing online in real time. There still seems to be a period ofreflection between the decision being made, and before the transaction actually takesplace. This is shown in the fact that both Cheapflights and Autobytel report their peaktime for booking being Monday morning. Consumers have come to a decision about acar or holiday over the weekend, and go through the mechanics when they get intowork. Consumers are not visibly speeding up their decision-making processes forpurchases of high emotional involvement under the influence of the potentialimmediacy of the Internet. Page 15
  19. 19. Online Consumer Buying Behaviour8.5 Post purchase behaviourThe interviews did not highlight any major differences between post-purchasebehaviour online and offline, although it is clear that the Internet presents furtheropportunities to both consumers and companies.8.5.1 Post Purchase ReconfirmationIn the same way that 22% BMW brochures are requested after the car has been orderedor delivered, so consumers are using the Internet to confirm their choice, find out moreabout the model, or to soak up the promises of the brand.8.5.2 Ongoing RelationshipOngoing, the internet is used as an additional touch point: consumers express theirviews and suggestions by writing and telephone, as well as email, but Lexus has noticedno difference in the content of messages sent through different media. BA can see thatthe Internet is extending the reach of a consumer’s relationship with them, as they havenoted that some customers use their online check in facility without having bookedonline with BA. It would seem to be the case, as Darren Payne at Autobytelcommented, it was a myth that online consumers were disloyal – until recently,companies have not given them the opportunity to be loyal. They need to be offeredrelevant services.8.5.3 RecommendationsThe hype about viral marketing doesn’t seem to have translated into reality: ThomasCook have run successful campaigns, but realise that it takes a lot of trust for consumersto buy online from them. There is a 5-10% click through rate from email newslettersthey send out. As Mike Nalder, Thomas Cook’s Manager of Customer Information andAnalysis, commented “getting their email address is like buying them a drink in a bar:your next question can’t be ‘will you marry me?’” Page 16
  20. 20. Online Consumer Buying BehaviourCheapflights relies very heavily on offline word of mouth recommendations for itstraffic. They benefit greatly from Travel Editors recommendations in the press.Looping back up to the need recognition and information search stages, this suggeststhat consumers remain more influenced by offline media than new online tools.9. ConclusionsA couple of themes have emerged throughout the analysis that I would like to highlightbelow.9.1 Emotional vs Rational elements of BehaviourThe five stage consumer buying model describes the purchase process as a rational,cognitive activity. As has been seen in this analysis, all buying decisions mix rational,cognitive decisions and emotional reactions. The balance of these depends on thecontext and objective of the purchase: is it a second car to do the school run, or is it adream car that you have waited for all your life? Is this just a flight that you know theprice of, or is this your honeymoon on an idyllic Caribbean island?The Internet itself seems to provide more for the more rational element in the purchasedecision. It is an impersonal medium, the visual quality of which is not yet advancedenough for high quality images. Considering that one of the main uses of the web by theautomotive industry is to provide more detailed technical information than a brochure,and bearing in mind the use by consumers of other media for emotional reassurance, itmakes sense to think that it enables rational thinking.However there are clues that consumers are reacting in an emotional way to the Internet.The experience of BMW Direct’s car configurator upselling so successfully can belooked at in two ways: rational decisions being taken about a new car with all theinformation provided, or the creation before your eyes of a personalised dream, withnavigation becoming experiential. There must be an element of the latter, since we haveseen the extent of emotion in the purchase process. Page 17
  21. 21. Online Consumer Buying BehaviourIt would seem that it is not as straightforward as a medium serving either emotional orrational needs: they have the ability to be used in both ways by consumers.9.2 Who is the Online Consumer?It is easy to think that the online consumer is very different to the offline consumer:being better informed, demanding ever quicker responses, and wanting to control theprocess of interaction.Although statistics vary enormously, one clear fact is that the majority of people whoaccess the Internet are in the higher sociodemographic groups. Thomas Cook realisedthis, and quickly changed the balance of their online product offering: having putpackage holidays online, they have started to source more flights for short breaks. Ifthis is the case, then Internet users are not representative of the population as a whole,and it is unlikely that their behaviour would exactly match that of the generalpopulation.Offline, ABC1s are typically ‘time poor, cash rich’, they tend to be self-reliant andrequire convenience above other factors. Figure 5 shows the results of Thomas Cook’sresearch into the reason behind consumers’ choice of medium, Internet users state‘convenience’ as the main reason. In many ways, the Internet has answered a need thatthese people have always had, and is perhaps better suited to their shopping habits thanare traditional shopping media.The Internet is at the ‘early adopters’ or at most the ‘early majority’ stage in its life.The point at the moment is not to understand how buyers behave online, but how itsmain users, ABC1s, behave offline. If and when other sociodemographic groups goonline in any volume (through whatever access methods), those differences that thereare in the online buying process compared to the offline world may well decrease yetfurther. Page 18
  22. 22. Online Consumer Buying BehaviourFigure 5: Reasons for choice of brand and channel 56 Reputation 50 35 39 Shop Price 50 Phone 46 Internet 50 Convenience 77 79 0 10 20 30 40 50 60 70 80 90Source – Thomas Cook proprietary research9.3 Final ConclusionsThis analysis of consumer buying behaviour online confirms the generic five stagemodel rather than offering an alternative paradigm of behaviour.It appears that Internet users have assimilated it into their armoury of shopping mediaand channels rather than using it exclusively. While it certainly answers many rationalneeds, there seems to be a deficiency in its ability to answer all emotional requirements,especially the reassurance of human contact.The Internet has a role to play at every stage of the purchasing process, providing for aricher interaction between consumers and companies. But it would appear that theInternet is better suited to certain stages in the process than others. It is most prominentat the information search stage, where it has sped up the physical process of searching,and could over time start to change consumer’s behaviour. Page 19
  23. 23. Online Consumer Buying BehaviourThe Internet seems to answer needs and provide a solution for deficiencies that alreadyexisted. Especially in the information search stage, it provides a welcome alternative tolong-winded search processes, which are at times intimidating and intrusive. Consumerbehaviour online is not as much a function of the medium as of social class.10. Areas for further research10.1 What drives the Consumer’s choice of medium?This report suggests several explanations as to what makes a consumer use a certainmedium at a certain time: convenient access to information, the belief that they will geta good price, reassurance, security, the stage they are at in the buying process. Or itcould just be whatever is physically convenient for them at that moment in time. Itwould be interesting to investigate this area further.10.2 Influence of user location on navigation and buying behaviourThe two main points of Internet access in the UK are home and office, and many peoplehave access at both. Despite the fact that there are about twice as many people withaccess at home as those with access at work, the indications for peak usage times in thisproject suggested that office use was dominant.The graph below shows a difference in the emphasis on surfing and searching behaviourin the office and at home. It can be deduced that online activity is more goal-directed inthe office, and more experiential at home. It would be interesting to look in more detailat the influence of the user’s location on their engagement in a buying process, and howthey use the Internet in that process. Page 20
  24. 24. Online Consumer Buying BehaviourFigure 6: Home and Office Internet use 66 Searching 75 80 E Mail 57 48 Surfing 35 Home Office 17 News 35 20 Entertainment 20 20 Downloading 13 0 10 20 30 40 50 60 70 80 90Source: UK Internet User Monitor, Nov 1999; Fletcher Research10.3 Buying rolesOffline, it is acknowledged that different roles are played by different parties in thepurchase of an emotionally-involving item, and this is especially true of a car or aholiday that will be used or experienced by more than one person. The effect of theInternet on these roles did not really come across in this project, partly becausecompanies do not yet have the level of data on their consumers that would enable themto identify the protagonists. Page 21
  25. 25. Online Consumer Buying Behaviour11. AcknowledgementsThe author would like to thank the following for giving their time and opinions: - Mike Nalder, Manager of Customer Information & Analysis, Thomas Cook - Martin Lock, Head of Commercial E Commerce, British Airways - David Soskin, Joint CEO, Cheapflights.com - Darren Payne, Managing Director, Autobytel.co.uk - Richard Downes, E Commerce & CRM Manager, BMW (GB) Ltd - Matthew Button, Marketing Manager, Lexus UK - Simon Knox - Stan Maklan Page 22
  26. 26. Online Consumer Buying Behaviour12. BibliographyFletcher Research, Copyright Autobytel UK Ltd: ‘The Third UK Online Car BuyingReport’ 2000Fletcher Research, Copyright Autobytel UK Ltd: ‘The Second UK Online Car BuyingReport’ 1999Thomas Cook proprietary researchHoffman D. L. & Novak T. P.: ‘Marketing in Hypermedia Computer-MediatedEnvironments (CMEs): conceptual foundations’ Journal of Marketing, vol 60 July 1996Philip B Evans & Thomas S Wurster: ‘Strategy and the New Economics of Information’HBR, Sept/Oct 1997Reichheldt & Schefter: ‘E Loyalty: Your Secret Weapon on the Web’ HBR, July/Aug2000Butler P. & Peppard J.: ‘Consumer Purchasing on the Internet: processes and prospects’EMJ, Oct 1998, pp. 600-610, vol. 16 (5)Simon Knox & Tim Denison: ‘Profiling the promiscuous Shopper’ commissioned andpublished by AIR MILES Travel Promotions Ltd, Nov 1992Jupiter MMXI Press Release: ‘Over 4.5 million Britons log on for their holidays thissummer’ 6 August 2001 (www.jmm.com)Mark Hodson: ‘Online Travel Finally Clicks’ Sunday Times Travel, 13 May 2001 Page 23

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