The document discusses several topics related to consumer behavior, including: 1. It examines factors that influence consumer decision making such as attitudes, needs, culture, situations, and information search and how marketers can use this understanding. 2. It looks at definitions of consumer behavior and how it involves seeking, purchasing, using, and disposing of products as well as the decision processes involved. 3. It discusses understanding online consumer behavior to help marketers design effective online marketing strategies and the importance of understanding what motivates consumer purchases.

1. Why do people do what they
do?
What do women want?
BUSN 2032 E-Marketing Men are from Mars - Women are from
Venus
Consumer decision making process
Lecture 5 Consumers and
Technology Age of Anxiety - “cocooning”
Consumer decision processes
Consumer Attitudes/Needs
Attitudes and needs
Decision Context / Situation
Situations
Consumer Behaviour
Marketing
activities Problem
Problem
Learning Culture recognition
(memory) recognition
Perception Values Satisfying needs and wants is a central
Information
Motives
Consumer
lifestyle Demographics
Search
search
part of the definition of marketing
Personality
Social
Evaluation
CB focuses on understanding needs and
status Evaluation and
Emotions References and selection
selection wants and helps build the links back to
groups
strategic market decision making
Household Store choice and purchase
Store choice and purchase
Post purchase processes
Postpurchase processes
Overall model of consumer behaviour Situations
Context / situation
Neal et al, 1999 Experiences
Experiences
Definitions of Definitions of
consumer behaviour consumer behaviour cont.
The behaviour that consumers display in Those actions directly involved in
seeking, purchasing, using, evaluating and obtaining, consuming, and disposing of
disposing of products, both goods and products and services, including the
services, and ideas, social causes and decision processes that precede and
places that they expect will satisfy their follow these actions
needs Engel, Blackwell & Miniard
process,
not just buying but also using and disposing
of these products Bednall, Watson and Kanuk, 1997
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2. Consumers online Inside the Internet Exchange Process
Marketers have turned their attention to practical What explains consumer buying behavior?
questions such as:
Whether a firm’s target market is online, Stimuli = marketing communication messages and
What these customers do online, cultural, political, economic, and technological factors.
What determines whether they’ll buy from a site and return to a
site, Individual buyer characteristics = income level,
How much of the marketing effort should be devoted to online personality, psychological, social, and personal aspects.
channels. Consumers move through a variety of decision
processes based on situational and product attributes.
Understanding online consumer behavior helps marketers
design marketing mixes that provide value and thus attract ⇒ To create effective marketing strategies, e-marketers need
and retain customers. to understand what motivates people to buy goods and
services, both in the short and long term.
Developed nations = 15% of the world’s population
= 88% of all Internet users
Rest of World Where Are the Other 5.5 Billion People?
83.5 (16%)
In survey of non-Internet users:40% said they have no
Latin America U.S./Canada need for the Internet.
13.4 (3%) 182.8 (33%) ⇒ E-marketers’ are digging deeper for a more thorough
understanding of consumer preferences online and offline.
Asia Pacific
110.0 (21%) Main reasons why consumers do not use the Internet:
Europe/Middle Individual, social, cultural, technological, legal, and
political issues.
East
141.6 (27%)
⇒ Without major shifts some countries may not achieve high
levels of Internet adoption among individual consumers for
many years.
Millions of People With Home Internet Access by Region in 2002 In these countries the B2B market will lead consumers to
Source: Data from Nielsen//NetRatings the Net where a fast-growing consumer market enticed
businesses online.
Demographic Categories of consumers
Gender - men adopt earlier innovators
Younger people adopt earlier early adopters
More highly educated, higher income early majority
level late majority
Digital divide - gap between online laggards
users and those not online eg richer More information, greater experience, less
countries and poorer countries, risk, positive influence of others in the
between ethnic groups social networks
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3. Consumer Innovators
Adoption of innovation -
Dogmatism
Low in Dogmatism (open minded)
Rogers
- more likely to prefer innovative
products. Prefer advertising
knowledge of innovation - driven by
messages that stress factual communication and consumer needs
difference and product benefits. persuasion
Show the reasons why.
decision
High in Dogmatism (closed
minded) - likely to choose implementation
established brands. New products confirmation
may be accepted if presented in an
authoritative manner (eg
presented by a celebrity etc) Schiffman, Bednall, Watson & Kanuk (1997) page 128
Persuasion Context / Situation
Rate of adoption
complexity Broad technological, social, and cultural forces affect
online consumer behavior.
compatibility
observability Marketers need to study the consumer’s environment or
trialability context and how their influence the purchasing process.
relative advantage
Technological Issues: Barriers to
Internet adoption Social and Cultural Context
Low PC penetration Power is shifting to consumers.
Communications infrastructure problems.
Arab countries, have only 49 telephones per thousand people U.S. trends are affecting online exchanges:
versus 133 phones per thousand people worldwide. Information overload overwhelms consumers.
Internet connections, where they exist, are often slow and Bunkering means people are staying at home more.
unreliable.
Security and privacy are major concerns.
Phone companies charge:
A per minute charge for local calls. Home and work boundaries are dissolving.
ISP charges for Internet access. Anywhere, anytime convenience is critical for busy
Government censorship and regulation = slow Internet people.
adoption.
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4. Individual Issues Emotions
Emotion Emotion - state of mental readiness that arises from
a cognitive appraisal of events or thoughts
Involvement is an experience
Flow is often accompanied by physiological processes
beating heart, sweaty palms
Challenge often expressed physically
Control may result in specific actions to affirm or cope with
emotions
Self Efficacy
Positive or negative in valence and high or low in
Attitude to technology arousal
Differentiating Appraisal theory
Affect, moods, emotions and attitudes have often Emotions arise in response to appraisals one
been used interchangeably makes of something of relevance to one’s
Moods may be longer lasting than emotion; but still well being
are transient and particular to times and situations
(Gardner 1985) Appraisal is an evaluation and interpretation
Affect is often used as the umbrella term something of relevance - an incident or
Attitude is sometimes seen as distinct from emotion - episode that happens to one’s self
an overall evaluation See for example Roseman’s (1991) Appraisal
Attitude does not necessarily require arousal Theory of Emotion
Others have emphasised that attitudes contain
Frijda (1986) Stimulus event - event coding -
distinct cognitive and feeling elements linked to
action (A-B-C theory) appraisal action readiness action / arousal
Mood and information processing - Need for Affect
some conflicting or controversial findings (Maio and Esses, 2001)
Recent research highlights a controversy (Hirschman and Stern
1999)
Reliable scale for individual difference
Batra and Stayman suggests that positive mood results in more “need for affect” which is parallel to
heuristic processing
“need for cognition”
Bagozzi suggests that this is because the activation state in
positive moods my be low - no danger Distinct from other measures
But if the decision is interesting or important (high in
involvement) then positive affect facilitates careful, systematic Both an approach and avoidance scale
cognitive processing making it more efficient and effective
(Hirschman and Stern 1999; Isen, 2001) Need for affect positively related to the
Also influences how information is categorised and thought need for cognition - not thinkers and
about
Positive affect encourages variety seeking e.g. IBM and FUD feelers dichotomy
fear, uncertainty and doubt
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5. Emotional responses are
generally shown to be important Flow
Pleasure Flow - the holistic sensation that people feel when they
act with total involvement
Dominance Concept of flow in Web navigation behavior:
Characterized by a seamless sequence of responses
Arousal 1.
facilitated by machine interactivity,
Specifically enjoying online shopping 2. Intrinsically enjoyable,
3. Accompanied by a loss of self-consciousness,
4. Self-reinforcing.
Intrinsic enjoyment
Perceived control
Concentration / attention focus
A basic model of consumer involvement
Involvement
Personal
“Degree of personal relevance” Peter and
characteristics Enduring
Olsen, 1987 Self concept,
Involvement lies in the person not the
personality traits,
involvement
Felt
product or purchase per se Product involvement
Involvement may be situational or characteristics Situational
enduring
Price, symbolic
meaning, risk involvement
compare water heaters and music
Situation
Time, physical, social,
task definition, antecedent state
Control Self efficacy
Need for control online An individual’s assessment of his or her
Need for convenience ability to perform a behaviour
Self efficacy is a major factor that
underlies intrinsic motivation
Perception of ability to use computers
and internet
Perceived skill level
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6. Technology Acceptance Model Motives for shopping
Successfully applied to spreadsheets, voice mail, tele- Personal - role playing, diversion, self
medicine - also useful for Internet shopping adoption
gratification, learning about new trends,
TAM
physical activity, sensory stimulation
Usefulness
Social - communicating, peer group
Attitude Behaviour
attraction, status and authority,
Ease of use
pleasure in bargaining
Ease of use - the degree to which a person believes that
using a system will be free of effort How does Internet shopping compare?
Usefulness - the degree to which a person believes that
using a particular system will enhance performance
Shopping Alternatives Retail choice an interaction of:
Stores Retail marketing strategy
store image by attribute (advertising and other
Internet promotions, price, merchandise mix, store
Catalogue shopping and direct mail personnel etc) or gestalt store location, brands
Personal characteristics of shopper
Home shopping ---Party plan personal and social motivation, shopping
Vending machine orientation, lifestyles, perceived risk
Situational influences *************
time shortages, time of day, task definition, mood
Gestalt or Buzz Promotion
Body Shop Advertising - TV, letterbox drops,
Hastings Street Noosa newspapers
Bunnings Warehouse Special events and entertainment
Nike World? Ads featuring price, specials, discounts -
Paris? loss leaders
Can this feeling be captured in words?
Or easily related to attributes?
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7. Price Purchase process
Walmart - lower prices always - Ease of buying
successful positioning on price Payment options
Delivery
After sales service
Salesperson or contact
person/personalisation
Online consumers Consumer Resources
More powerful, demanding and
For consumers:
utilitarian
Consumer loyalty online is low overall VALUE = BENEFITS - COSTS
Consumers perceive risk higher online -
Costs = a consumer’s resources for exchange:
credit card fraud and not receiving the Money,
right products Time,
More goal oriented than experience Energy,
Psychic costs.
oriented
More price oriented
Money, Time, Energy, Psychic Cost
⇒ Consumers have to pay by credit card, debit card, Reason Given % Reason Given %
electronic check, or smart card. Page took too long to load 48 Returned the product 10
Did the user get what she wanted for the time she Site was confusing/couldn’t find 45 Site wouldn’t accept credit card 9
invested? product
Internet firms to be sure their sites are well organized and easy to Product not available/in stock 32 Tried/failed to contact customer 8
navigate so users can quickly find what they want. service
Search engines and shopping agents can help consumers find what
they want to leverage their brief forays online. Got logged off / system crashed 26 Site made unauthorized charge to 5
my credit card
⇒ Energy + psychic resources = closely related to time.
Had to contact customer service 20 Ordered product but never came 4
⇒ Sometime = Too much trouble to turn on the computer,
log onto the Internet, and check e-mail. Product took too long to arrive 15 Wrong product arrived and 4
couldn’t return it
⇒ Rising popularity of short text messaging (SMS) via cell
phones and handheld mobile devices. Most Common Reasons for Failed Online Purchases
Source: Boston Consulting Group Study as reported in Wellner (2001)
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8. Value added search
Website influencers mechanisms
Value added search mechanisms Created by internet retailer - bestseller
Positive challenge and stimulation list
From a third party - links to other sites
such as bookclubs
customers themselves - book reviews
Postpurchase consumer behaviour
Challenge - positive
Postpurchase Consumer
dissonance
Shopping sites challenging and complaints
stimulating like a real world shopping
centre or an electronic game
Purchase Usage Evaluation Repurchase
Product
disposal
Post Internet Exchange Relationships
When exchange occurs: 43% of online time = e-mail or other communication
related activities:
Browser bookmarks = quick jump to favorite online
retailer. It is an inexpensive way to keep in touch,
E-mail messages contain hyperlinks to bring consumers It is usually text based = can be easily accomplished
directly to specific information, news reports, or with a slow modem or over a wireless handheld device.
advertised specials. Form new relationships with the people they meet
The Internet has the added feature of automation to online.
facilitate exchange. Spend time in chat rooms, make phone calls, and visit
Specialist intermediaries for complaints online dating sites.
www.ecomplaints.com Communication can take place in communities of
interest.
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9. Entertainment Media Consumption
Consumers use the Internet for entertainment (50%). Consumers are accessing news, weather, sports scores,
and radio broadcasts over the Internet.
Internet’s big promises= audio and visual entertainment: ⇒ Consumers have a limited amount of time to exchange for
media consumption, and that the Internet takes away from
Only 20% of all users have broadband at home; offline media time.
Until more do, firms won’t produce much of this type of ⇒ Consumers use whatever medium is handy when they
online entertainment; want news, including a handheld PDA—another indication
that the Internet has morphed from novelty to utility.
⇒ 33% of Internet users mentioned watching television less often,
⇒ 25% read magazines less frequently,
⇒ 23% read newspapers less often,
⇒ 16% listen to the radio less frequently.
Information Problems with high Internet use
Second to e-mail, consumers spend much of their time
gathering research and information online: HomeNet Project at Carnegie Mellon
How do Internet users find information? found significant declines in social
85% have used search engines. interaction and higher levels of
loneliness and depression
Google.com is the most popular search engine: visitors
spend 25.9 minutes per month there. Users spend 10.8
Stanford study - watch less television
minutes a month on Yahoo! and 6 minutes at MSN. shop less in stores, reading newspapers
Google’s revenue model is entirely advertising based,
Review Questions Discussion Questions
1. What are some of the social, cultural, Why would a growing B2B market lead consumers onto the
technological, and legal issues that slow Internet 1.
adoption in some nations? Internet in countries where penetration was previously low?
2. What is an exchange? 2. What might e-marketers do to accommodate consumers who
3. What individual characteristics influence online are experiential shoppers?
behavior? 3. Do you consider the concept of flow an explanation for what
4. What are the four costs that constitute a some observers call Internet addiction? Explain your answer.
consumer’s resources for exchange? 4. How might e-marketers capitalize on consumer interest in
5. How can e-marketers facilitate Internet relationships as an outcome of Internet activity?
exchange?
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